SC 14D9

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
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                                 SCHEDULE 14D-9
                     SOLICITATION/RECOMMENDATION STATEMENT
                      PURSUANT TO SECTION 14(D)(4) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
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                           TRIAD SYSTEMS CORPORATION
                           (Name of Subject Company)
 
                           TRIAD SYSTEMS CORPORATION
                      (Name of Person(s) Filing Statement)
 
                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                         (Title of Class of Securities)
 
                                  895818 20 1
                     (CUSIP Number of Class of Securities)
 
                                JAMES R. PORTER
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                           TRIAD SYSTEMS CORPORATION
                                3055 TRIAD DRIVE
                              LIVERMORE, CA 94550
                                 (510) 449-0606
                 (Name, address and telephone number of persons
                authorized to receive notice and communications
                    on behalf of person(s) filing statement)
 
                                    COPY TO:
 
                             DANIEL COOPERMAN, ESQ.
                       MCCUTCHEN, DOYLE, BROWN & ENERSEN
                         MARKET POST TOWER, SUITE 1500
                             55 SOUTH MARKET STREET
                               SAN JOSE, CA 95113
 
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ITEM 1. SECURITY AND SUBJECT COMPANY.
 
     The name of the subject company is Triad Systems Corporation, a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 3055 Triad Drive, Livermore, California 94550. The title of
the class of equity securities to which this statement relates is the Company's
common stock, par value $.001 per share ("Share", collectively the "Shares"),
including the related common stock purchase rights (the "Rights") issued
pursuant to the Amended and Restated Rights Agreement, dated as of December 6,
1993 (the "Rights Agreement"), between the Company and Chemical Trust Company of
California, as Rights Agent, which will be inapplicable to the Merger (as
defined below).
 
ITEM 2. TENDER OFFER OF BIDDER.
 
     This statement relates to the tender offer by CCI Acquisition Corp., a
Delaware corporation ("Purchaser") and an affiliate of Cooperative Computing,
Inc., a Texas corporation ("Parent"), to purchase all outstanding Shares at a
price of $9.25 per Share, net to the seller in cash, on the terms and subject to
the conditions set forth in the Offer to Purchase, dated October 23, 1996 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are filed respectively as
Exhibits 1 and 2 hereto and are incorporated herein by reference. The Offer is
disclosed in a Tender Offer Statement on Schedule 14D-1 and Schedule 13D, dated
October 23, 1996 (the "Schedule 14D-1"), which was filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules promulgated by the
Commission thereunder. The Offer is being made by Purchaser pursuant to the
Agreement and Plan of Merger, dated as of October 17, 1996 (the "Merger
Agreement"), among Parent, Purchaser and the Company.
 
     In addition, pursuant to the Merger Agreement, the Company expects to
distribute to its stockholders ownership interests in an entity that will own,
directly or indirectly, certain real property located in Livermore, California
and related assets of the Company (the "Spin-Off"). See Item 3(b)(2), "The
Spin-Off". The Merger Agreement provides that such distribution will be made in
the form of a dividend payable to the record holders of the Shares immediately
prior to the acceptance of Shares in the Offer. The payment of such dividend is
contingent upon the consummation of the Offer and is subject to a number of
conditions, including compliance with all applicable laws, including state and
federal securities laws.
 
     As set forth in the Schedule 14D-1, the address of the principal executive
officers of each of the Purchaser and Parent is 6207 Bee Cave Road, Austin,
Texas 78746.
 
ITEM 3. IDENTITY AND BACKGROUND.
 
     (a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
 
     (b) Except as described herein and in Schedule I hereto, to the knowledge
of the Company, as of the date hereof, there are no material contracts,
agreements, arrangements or understandings, or any potential or actual conflicts
of interest between the Company or its affiliates and (1) the Company and its
executive officers, directors or affiliates or (2) Parent and Purchaser and
their respective executive officers, directors and affiliates.
 
     (1) Certain Contracts, Agreements, Arrangements or Understandings and any
Actual or Potential Conflicts of Interest Between (A) the Company or its
Affiliates and (B) the Company and its Executive Officers, Directors or
Affiliates.
 
     Agreements Between the Company and Richard C. Blum & Associates, L.P.
Richard C. Blum ("Mr. Blum") has been a director of the Company since August 3,
1992 and is currently President and Chairman of Richard C. Blum & Associates,
L.P. ("Blum"). On August 3, 1992, the Company issued one million Units (the
"Units"), with each Unit consisting of one share of Senior Cumulative
Convertible Preferred Stock (the "Preferred Stock") and a warrant ("Warrant") to
purchase 3.5 shares of the Company's Common Stock, for an aggregate purchase
price of $20 million, pursuant to a Unit Purchase Agreement with
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Blum and certain investors dated as of July 2, 1992, as amended by the First
Amendment to Unit Purchase Agreement dated as of August 3, 1992 (the "Unit
Purchase Agreement"). Under the terms of the Unit Purchase Agreement, the
holders of the Preferred Stock were granted certain rights and preferences with
respect to dividends, voting rights, liquidation and redemption, among others.
In addition, the holders of the Preferred Stock and the Warrants were issued
certain registration rights for the Preferred Stock, the Warrants and the Common
Stock issuable upon conversion or exercise. In connection with the issuance of
the Preferred Stock, the Company, Blum and the other investors entered into
certain other additional agreements set forth in the Unit Purchase Agreement.
The foregoing summary is qualified in entirety by reference to the Unit Purchase
Agreement, a copy of which is filed as Exhibit 3 hereto and is hereby
incorporated herein by reference.
 
     Pursuant to an Exchange Agreement and Second Amendment to Unit Purchase
Agreement by and among the Company, Blum and certain investors dated March 31,
1995 (the "Exchange Agreement"), the Company effected an exchange ("Exchange")
of all the outstanding Units (consisting of 1,000,000 shares of Preferred Stock
and associated Warrants to purchase 3.5 million shares of the Company's Common
Stock) held by entities affiliated with Blum for an aggregate of $10,000,000 and
2,222,222 shares of the Company's Common Stock. Following the Exchange, entities
affiliated with Blum held approximately 13% of the Company's Common Stock. Mr.
Blum maintained his seat on the Company's Board of Directors (the "Board" or the
"Board of Directors"). In connection with the Exchange, the holders of the Units
agreed to Rule 144(e) restrictions under the Securities Act of 1933 on transfers
relating to the shares of Common Stock received in the Exchange. On the date of
the Exchange, the Company also paid to holders of the Units accrued and unpaid
dividends through the date of closing, amounting in the aggregate to $200,000.
The foregoing summary is qualified in entirety by reference to the Exchange
Agreement, a copy of which is filed as Exhibit 4 hereto and is hereby
incorporated by reference.
 
     Interests of Certain Persons in the Offer and the Merger. In considering
the recommendations of the Board set forth in Item 4(a) below, the Company's
stockholders (the "Stockholders") should be aware that certain members of the
Board of Directors have interests in the Merger and the Offer which are
described in Schedule I below and which may present them with certain conflicts
of interest. The Board of Directors was aware of these potential conflicts and
considered them along with the other factors described in Item 3(b)(2) below.
 
     (2) Certain Contracts, Agreements, Arrangements or Understandings and any
Actual or Potential Conflicts of Interest Between (A) the Company or its
Affiliates and (B) the Purchaser and its Executive Officers, Directors or
Affiliates.
 
     For a description of certain agreements and understandings between the
Company, on the one hand, and Parent or certain affiliates of Parent, on the
other, see the information set forth in Item 4 hereof under the heading
"Background of the Transactions; Past Contacts, Transactions and Negotiations
with Parent and Purchaser."
 
  The Merger Agreement
 
     The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the Merger Agreement, a copy of
which is filed as Exhibit 5 hereto and is hereby incorporated herein by
reference.
 
     The Offer. The Merger Agreement provides for the commencement of the Offer,
in connection with which the Purchaser has expressly reserved the right to waive
certain conditions of the Offer; however, without the prior written consent of
the Company, Purchaser has agreed not to (i) decrease the Offer Price or the
form of consideration therefor or decrease the number of Shares sought pursuant
to the Offer, (ii) change, in any material respect, the conditions to the Offer,
(iii) impose additional material conditions to the Offer, (iv) waive the
condition that there shall be validly tendered and not withdrawn prior to the
time the Offer expires a number of Shares which constitutes at least 51% of the
Shares outstanding on a fully-diluted basis (as defined in the Merger Agreement)
on the date of purchase, (v) extend the expiration date of the Offer (except
that Purchaser may extend the expiration date of the Offer (a) as required by
law, (b) for up to ten
 
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business days after the initial expiration date or for longer periods (not to
exceed 90 calendar days from the date of commencement) in the event that any
condition to the Offer is not satisfied, or (c) for one or more times for an
aggregate period of up to 15 days (not to exceed 90 calendar days from the date
of commencement) for any reason other than those specified in the immediately
preceding clauses (a) or (b)), or (vi) amend any term of the Offer in any manner
materially adverse to holders of Shares; provided, however, that, except as set
forth above, Purchaser may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission.
 
     Board Representation. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its subsidiaries of such number of Shares which
represents at least 51% of the outstanding Shares on a fully-diluted basis (as
defined in the Merger Agreement), and from time to time thereafter, Parent shall
be entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors of
the Board) as will give Parent, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board equal to the product of (x) the number
of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the "Board Percentage"). The Company has agreed,
upon request of Parent, to promptly satisfy the Board Percentage by increasing
the size of the Board or using its best efforts to secure the resignations of
such number of directors as is necessary to enable Parent's designees to be
elected to the Board and to cause Parent's designees promptly to be so elected,
provided that no such action shall be taken which would result in there being,
prior to the consummation of the Merger, less than two directors of the Company
that are not affiliated with Parent. Following the election or appointment of
Parent's designees pursuant to the Merger Agreement and prior to the
effectiveness of the Merger, as provided in the Merger Agreement (the "Effective
Time"), any amendment or termination of the Merger Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Purchaser or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of the directors of the Company then in office who are Continuing
Directors. The term "Continuing Directors" means (i) each member of the Board on
the date of the Merger Agreement who voted to approve the Merger Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such Continuing Director by a majority of the Continuing Directors then on the
Board.
 
     Consideration to be Paid in the Merger. The Merger Agreement provides that
upon the terms (but subject to the conditions) set forth in the Merger
Agreement, Purchaser will be merged with and into the Company, which shall be
the surviving corporation (the "Surviving Corporation"). In the Merger, at the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holders of any of the Shares, each Share issued
and outstanding immediately prior to the Effective Time (excluding Shares owned
directly or indirectly by the Company or any of its subsidiaries or by Parent,
Purchaser or any other subsidiary of Parent and Shares in respect of which
appraisal rights have been validly exercised) shall be converted into the right
to receive $9.25 per share in cash, without any interest thereon, less any
required withholding taxes. Each share of the capital stock of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of Common Stock, par value
$.01 per share, of the Surviving Corporation.
 
     Stockholder Meeting. The Merger Agreement provides that as soon as
practicable after the date thereof, the Company and Parent shall prepare and
file with the Commission a proxy statement (if required by applicable law) in
definitive form relating to a meeting of the Stockholders to approve the Merger
(as may be amended from time to time, the "Proxy Statement"). Pursuant to the
Merger Agreement, the Company is required to use its best efforts to respond to
all Commission comments with respect to the Proxy Statement and to cause the
Proxy Statement to be mailed to the Stockholders at the earliest practicable
date. The Merger Agreement also provides that the Company will, as soon as
practicable following the acceptance for payment of and payment for Shares in
the Offer, duly call, give notice of, convene and hold a meeting (the "Special
Meeting") of its Stockholders for the purpose of approving the Merger Agreement
and the transactions contemplated thereby. At the Special Meeting, Parent shall
cause all the Shares then owned by
 
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Parent and Purchaser and any of their subsidiaries or affiliates to be voted in
favor of the Merger. Notwithstanding the foregoing, the Merger Agreement
provides that in the event if Purchaser acquires at least 90% of the outstanding
Shares in the Offer, the Merger may be effected without a meeting of the
Stockholders in accordance with Section 253 of the Delaware General Corporation
Law (the "DGCL").
 
     Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and power, capital structure, corporate authorization,
noncontravention, consents and approvals, Commission filings, information
supplied, compliance with applicable laws, litigation, taxes, pension and
benefit plans and ERISA, absence of certain changes or events, absence of
material liabilities, opinion of financial advisor, vote required, labor
matters, intangible property, environmental matters, real property, board
recommendation, material contracts, related party transactions, indebtedness,
liens and other matters.
 
     Parent and Purchaser have also made certain representations and warranties
with respect to corporate existence and power, corporate authorization, consents
and approvals, noncontravention, information supplied, board recommendation,
financing, and other matters.
 
     Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, except
as otherwise provided in the Merger Agreement or consented to by Parent, the
Company and its subsidiaries will conduct their business in the usual, regular
and ordinary course of business in substantially the same manner as conducted
prior to the date of the Merger Agreement and shall use all reasonable efforts
to preserve intact their business organizations, keep available the services of
its current officers and employees and preserve relationships with third parties
with whom they have business dealings to the end that their goodwill and ongoing
business shall not be impaired in any material respect at the Effective Time.
The Company has further agreed that it shall not, nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make any other
distributions in respect of any of its capital stock (other than the Spin-Off);
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase or otherwise
acquire any shares of its capital stock, except as required by the terms of its
securities already outstanding or as contemplated by the Merger Agreement or
employee benefit and dividend reinvestment plans in effect as of October 17,
1996; (iv) grant any options, warrants or rights to purchase Shares or amend or
reprice any option or any of the Company's stock option plans; (v) amend the the
Company's 1990 Employee Stock Purchase Plan (the "ESPP"), permit any person not
a participant in the ESPP on October 17, 1996 to become a participant in the
ESPP, or permit any participant in the ESPP to increase such participant's
current payroll deductions with respect to the ESPP; or (vi) issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares of its
capital stock, any Company voting debt or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, Company voting debt
or convertible securities, other than (a) issuances of shares upon the exercise
of options granted under stock option plans of the Company which were
outstanding as of October 17, 1996, or in satisfaction of stock grants or stock
based awards made prior to October 17, 1996 pursuant to stock option plans of
the Company or based upon individual agreements such as employment agreements or
executive termination agreements (in each case, as in effect on October 17,
1996), or the issuance of options to purchase up to 75,000 Shares in connection
with an offer of employment outstanding on the date of October 17, 1996; and (b)
issuances by a wholly owned subsidiary of its capital stock to its parent; (vii)
make or propose to make any changes in its Certificate of Incorporation or
Bylaws; (viii) acquire or agree to acquire by merger or consolidation or
purchase a substantial equity interest in or substantial portion of assets of
any corporation, partnership, association or other business organization or
division thereof; (ix) sell, lease, encumber or otherwise dispose of, or agree
to sell, lease (whether such lease is an operating or capital lease), encumber
or otherwise dispose of, any of its assets except for dispositions of real
property or non-material dispositions in the ordinary course of business
consistent with past practice which are not material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole; (x) authorize,
recommend, or propose to adopt a plan of complete or partial liquidation or
dissolution except as permitted by the Merger Agreement; (xi) take or agree to
take any action that would result in any of the Company's representations or
warranties contained in the Merger Agreement being untrue in any material
respects or any of the Company's covenants contained in the
 
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Merger Agreement not being satisfied in all material respects; (xii) increase in
any manner the compensation of directors, officers or key employees, other than
in the ordinary course and consistent with past practice, pay or agree to pay
any pension, retirement allowance or other employee benefit not required or
contemplated by any benefit plans or pension plans of the Company as in effect
on October 17, 1996 to any such director, officer or key employee, enter into
any new, or materially amend any existing, employment, severance or termination
agreement with any such director, officer or key employee or, except as may be
required by law, become obligated under any new employee benefit plan or pension
plan; (xiii) assume or incur indebtedness for borrowed money or act as guarantor
for any such indebtedness, issue or sell any debt securities or warrants or
rights to acquire debt securities or guarantee any debt securities of others, or
enter into any lease or create any mortgages, liens or security interests on
Company property or enter into any "keep well" or other agreement or arrangement
to maintain the financial condition of another person other than certain
arrangements disclosed in the Merger Agreement; (xiv) enter into any contract,
agreement or other document or instrument that would be required to be filed
with the Commission or enter into any amendment, modification or waiver under
any contract, agreement or other document or instrument previously filed with
the Commission which amendment, modification or waiver would be required to be
so filed; (xv) take any action, other than in the ordinary course of business
consistent with past practice or as required by the Commission or by law, with
respect to accounting policies, procedures and practices; or (xvii) incur any
capital expenditures in excess of $2,000,000, or any product or software
development costs in excess of $4,000,000 in the aggregate.
 
     Other Agreements. The Company, Parent and Purchaser have agreed to use
their respective best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement and the Stockholders
Agreement, subject, as applicable, to Stockholder approval, including
cooperating fully with the other party, including by provision of information
and making of all necessary filings in connection with, among other things,
approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder (the "HSR Act"). Parent and the Company
have also made certain agreements regarding publicity, access to information and
confidentiality.
 
     No Solicitation. From and after the date of the Merger Agreement until the
termination thereof, neither the Company nor any of its subsidiaries, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) (such officers,
directors, employees, representatives, agents, affiliates, investment bankers,
attorneys and accountants collectively referred to as "Representatives"), will
directly or indirectly initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal (as defined below), or enter
into or maintain or continue discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain an Acquisition Proposal or agree
to or endorse any Acquisition Proposal, and neither the Company nor any of its
subsidiaries will authorize or permit any of its Representatives to take any
such action, and the Company shall notify Parent orally (within one business
day) and in writing (as promptly as practicable) of all of the relevant details
relating to, and all material aspects of, all inquiries and proposals which it
or any of its subsidiaries or any of their respective Representatives may
receive relating to any of such matters and, if such inquiry or proposal is in
writing, the Company shall deliver to Parent a copy of such inquiry or proposal
promptly; provided, however, that the Board is not prohibited from (i)
furnishing information to, or entering into discussions with, any person or
entity that makes an unsolicited written bona fide Acquisition Proposal and in
respect of which such person or entity has the necessary funds or commitments
therefor if, and only to the extent that, (A) the Board, after consultation with
and based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith that such
action is necessary for the Board to comply with its fiduciary duties to
stockholders under applicable law, (B) prior to taking such action, the Company
(x) provides reasonable notice to Parent to the effect that it is taking such
action and (y) receives from such person or entity an executed confidentiality
agreement in reasonably customary form, and (C) the Company shall promptly and
continuously advise Parent as to all of the relevant details relating to, and
all material aspects of, any such discussions or negotiations, or (ii) failing
to make or withdrawing or modifying its recommendation to the holders of the
Shares to approve the Merger
 
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Agreement and the transactions contemplated thereby, including the Merger, and
to accept the Offer and tender their Shares pursuant thereto, if there exists an
Acquisition Proposal and the Board, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board to comply with its fiduciary duties to stockholders under applicable
law. The term "Acquisition Proposal" means any of the following transactions
(other than transactions between the Company, Parent and Purchaser contemplated
in the Merger Agreement) involving the Company or any of its subsidiaries: (i)
any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets
(other than real property) of the Company and its subsidiaries taken as a whole,
in a single transaction or series of transactions; (iii) any tender offer or
exchange offer for 15% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
 
     Fees and Expenses. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expense, except
as otherwise provided in the Merger Agreement and except with respect to claims
for damages incurred as a result of the breach of the Merger Agreement. In
addition, the Company has agreed to pay Parent a fee in immediately available
funds equal to $4,000,000 upon the termination of the Merger Agreement in
accordance with the terms thereof if any of the following events occurs (each, a
"Trigger Event"): (i) the Board shall have withdrawn or adversely modified, or
taken a public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders Agreement; or (ii) an Acquisition Proposal has been recommended or
accepted by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by the Merger Agreement)
with respect to an Acquisition Proposal. In the event (i) the Merger Agreement
shall be terminated in accordance with its terms, (ii) at or prior to such
termination, any person or group of persons shall have made an Acquisition
Proposal (each such person or member of a group of such persons being referred
to as a "Designated Person"), and (iii) either (A) a transaction contemplated by
the term "Acquisition Proposal" shall be consummated, on or before the 90th day
following the termination of the Merger Agreement, with any Designated Person or
any affiliate of any Designated Person or (B) the Company or any of its
subsidiaries shall enter into an agreement, on or before the 90th day following
the termination of the Merger Agreement, with respect to an Acquisition Proposal
with any Designated Person or any affiliate of any Designated Person and a
transaction contemplated by the term "Acquisition Proposal" shall thereafter be
consummated with such Designated Person or affiliate thereof, then the Company
shall pay to Parent a fee in immediately available funds equal to $4,000,000,
such fee to be paid contemporaneously with the consummation of the contemplated
transaction. Any amounts payable to Parent pursuant to the foregoing that are
not paid when due shall bear interest at the rate of 9% per annum from the date
due through and including the date paid.
 
     Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction
prior to the Closing Date (as defined in the Merger Agreement) of the following
conditions: (i) the Merger Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of a majority of the Shares
entitled to vote thereon if such vote is required by applicable law; provided
that Parent and Purchaser shall vote all Shares purchased pursuant to the Offer
in favor of the Merger, (ii) the waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, (iii) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that prior to invoking the condition, each
party shall use all commercially reasonable efforts to have any such decree,
ruling, injunction or order vacated, (iv) no statute, rule, order, decree or
regulation shall have been enacted or promulgated by any government or
governmental agency or authority which prohibits the consummation of the Merger;
and (v) Purchaser shall have accepted for payment and paid for the Shares
tendered in the Offer such that, after such acceptance and payment, Parent and
its affiliates shall own, at consummation of the Offer, a majority of the
outstanding Shares of the Company; provided that this condition
 
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shall be deemed to have been satisfied if Purchaser fails to accept for payment
and pay for Shares pursuant to the Offer in violation of the terms and
conditions of the Offer.
 
     Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent, by (a) mutual written consent of the
Company and Parent or by mutual action of their respective Boards of Directors;
(b) either the Company or Parent, (i) prior to consummation of the Offer if
there has been a breach of any representation, warranty, covenant or agreement
on the part of the other set forth in the Merger Agreement, which breach has not
been cured within three business days following receipt by the breaching party
of notice of such breach, or (ii) if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Merger
shall have become final and non-appealable; (c) either the Company or Parent, so
long as such party has not breached its obligations under the Merger Agreement,
if the Merger shall not have been consummated on or before February 18, 1997;
provided, that such right to terminate the Merger Agreement under this clause
shall not be available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date; (d) Parent or the Company in the
event that a Trigger Event has occurred (see "Fees and Expenses" above); (e)
Parent in the event an Acquisition Proposal has been made to the Company and the
Company shall fail to reaffirm its approval or recommendation of the Offer, the
Merger, the Merger Agreement and the Stockholders Agreement on or before the
fifth business day following the date on which such Acquisition Proposal shall
have been made; (f) Parent, if the Offer terminates, is withdrawn, abandoned or
expires by reason of the failure to satisfy any of the conditions described in
Section 14 of the Offer to Purchase; or (g) the Company, if the Offer shall have
expired or have been withdrawn, abandoned or terminated without any Shares being
purchased by Purchaser thereunder on or prior to the 90th day after the date of
commencement of the Offer. In the event of termination of the Merger Agreement
by either the Company or Parent as provided therein, the Merger Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent, Purchaser or the Company, or their respective affiliates, officers,
directors or shareholders, except to the extent that such termination results
from the material breach by a party to the Merger Agreement of any of its
representations or warranties, or any of its covenants or agreements (subject to
certain limitations) or as otherwise provided in the Merger Agreement.
 
     Indemnification. The Merger Agreement provides that the Company shall, and
from and after the Effective Time, the Surviving Corporation shall, indemnify,
defend and hold harmless each person who was at the date of the Merger
Agreement, or had been at any time prior to the date of the Merger Agreement or
who becomes prior to the Effective Time, an officer or director of the Company
or any of its subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorneys' fees and expenses),
liabilities or judgments or amounts paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of the Company or any
of its subsidiaries whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to the Merger Agreement or the transactions contemplated thereby,
in each case to the full extent a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be, and Parent and the
Surviving Corporation, as the case may be, shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law. All rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
 
                                        7
   9
 
     Directors' and Officers' Insurance. For a period of three years after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company and its subsidiaries (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties) with respect to matters arising before the Effective Time,
provided that the Surviving Corporation shall not be required to pay an annual
premium for such insurance in excess of 175% of the last annual premium paid by
the Company prior to the date of the Merger Agreement, but in such case shall
purchase as much coverage as possible for such amount.
 
     Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided, however, that after the Merger Agreement is
approved by the Stockholders, no such amendment or modification shall reduce the
amount or change the form of consideration to be delivered to the Stockholders
of the Company.
 
     Timing. The Merger Agreement provides that the closing of the Merger shall
occur on the second business day after satisfaction of the conditions set forth
in the Merger Agreement (or as soon as practicable thereafter following
satisfaction or waiver of such conditions). The Merger shall become effective
upon such filing or at such time thereafter as may be provided in the
certificate of merger to be filed with the Secretary of State of the State of
Delaware, as provided in the DGCL, on the date of the closing of the Merger or
as soon as practicable thereafter.
 
     The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
 
     Delaware Law. The Board has approved the Merger Agreement and the
transactions contemplated thereby, including the Offer, the Merger and the
Stockholders Agreement, and the entry by Purchaser into the Stockholders
Agreement for purposes of Section 203 of the DGCL. Accordingly, the restrictions
of Section 203 do not apply to the transactions contemplated by the Offer, the
Merger Agreement or the Stockholders Agreement. Section 203 of the DGCL prevents
an "interested stockholder" (generally, a stockholder owning 15% or more of a
corporation's outstanding voting stock or an affiliate or associate thereof)
from engaging in a "business combination" (defined to include a merger and
certain other transactions) with a Delaware corporation for a period of three
years following the date on which such stockholder became an interested
stockholder unless (i) prior to such date, the corporation's board of directors
approved either the business combination or the transaction which resulted in
such stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in such stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding shares
owned by certain employee stock plans and persons who are directors and also
officers of the corporation) or (iii) on or subsequent to such date, the
business combination is approved by the corporation's board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock not owned by the interested stockholder. As described above, the foregoing
description of Section 203 of the DGCL does not apply to the Offer or the Merger
(or the transactions contemplated thereby).
 
  The Stockholders Agreement
 
     The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the
Stockholders Agreement, a copy of which is filed as Exhibit 6 hereto and is
hereby incorporated herein by reference.
 
     Tender of Shares. Simultaneously with the execution of the Merger
Agreement, Parent, Purchaser and certain Stockholders, including all of the
members of the Board (the "Selling Stockholders") entered into the Stockholders
Agreement, under the terms of which, each of the Selling Stockholders has (i)
agreed to validly
 
                                        8
   10
 
tender and not to withdraw pursuant to and in accordance with the terms of the
Offer, not later than the fifth business day after commencement of the Offer,
the respective number of Shares owned beneficially by him or it; (ii)
acknowledged that the transfer by such Selling Stockholder of his or its Shares
to Purchaser will pass to and unconditionally vest in Purchaser good and valid
title to such Shares free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever and (iii) agreed to
permit Parent and Purchaser to publish and disclose his or its identity and
ownership of Shares and the nature of his or its commitments, arrangements and
understandings under the Stockholders Agreement in the documents relating to the
Offer and, if stockholder approval for the Merger is required, in any proxy
statement relating thereto (including all documents and schedules filed with the
Commission). In addition, Parent and Purchaser have acknowledged in the
Stockholders Agreement that the Company may, in order to assist Stockholders who
are also employees of the Company in complying with their obligations to tender
Shares hereunder, lend funds to such Stockholders upon terms specified in the
Merger Agreement in order to fund all or a portion of the exercise price under
the stock options of the Company held by such Stockholders, provided that the
failure of the Company to lend such funds will not relieve any such Stockholder
of its obligations under the Stockholders Agreement.
 
     Voting. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Stockholders, however called,
or in connection with any written consent of the Stockholders, such Selling
Stockholder will vote (or cause to be voted) the Shares held of record or
beneficially owned by such Stockholder, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof, and each of the other actions contemplated by the Merger
Agreement and the Stockholders Agreement and any actions required in furtherance
thereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or the Stockholders
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case of
each of the matters referred to in clauses (C)(1), (2), or (3), is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by the
Stockholders Agreement and the Merger Agreement. The Selling Stockholders
further agreed not to enter into any agreement or understanding with any person
or entity the effect of which would be inconsistent or violative of the
provisions and agreements described above. In addition, each Selling Stockholder
granted to Parent a proxy to vote the Shares of such Stockholder in accordance
with the provisions and agreements described above.
 
     Representations, Warranties, Covenants and Other Agreements. In connection
with the Stockholders Agreement, the Selling Stockholders have made certain
customary representations, warranties and covenants, including with respect to
(i) their ownership of the Shares, (ii) their authority to enter into and
perform their obligations under the Stockholders Agreement, (iii)
noncontravention, (iv) the absence of liens and encumbrances on and in respect
of their Shares, (v) restrictions on the transfer of their Shares, (vi) the
solicitation of Acquisition Proposals, and (vii) the waiver of their appraisal
rights.
 
     Termination. Other than as provided therein, the Stockholders Agreement
terminates by its terms upon the termination of the Merger Agreement by Parent.
 
                                        9
   11
 
  The Rights Agreement
 
     The following is a summary of the material terms of the Rights Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the Rights Agreement, a copy of
which is filed as Exhibit 7 hereto and is hereby incorporated herein by
reference.
 
     The Company has advised Parent that pursuant to the Rights Agreement, on
October 28, 1988 the Board of Directors of the Company declared a dividend
distribution of one Right for each Share outstanding at the close of business on
November 8, 1988 (the "Rights Record Date") and with respect to any Shares
issued thereafter until the earlier of the Distribution Date (as defined below)
or the Rights Expiration Date (as defined below). Except as set forth below,
each Right, when it becomes exercisable, entitles the registered holder to
purchase from the Company one share of Common Stock (the "Rights Common Stock")
of the Company at a purchase price of $47.00 per share of Rights Common Stock,
subject to adjustment (the "Rights Purchase Price"). The description and terms
of the Rights are set forth in the Rights Agreement.
 
     Initially, the Rights were and continue to be attached to all certificates
representing Shares outstanding, and no separate certificates evidencing the
Rights (the "Rights Certificates") were or have been distributed. The Rights
will separate from the Common Stock and a "Distribution Date" will occur upon
the earlier of (i) the first date of a public announcement by the Company or an
Acquiring Person (as defined below) (or such earlier date as a majority of the
Board of Directors shall become aware) that a person or group of affiliated or
associated persons has become an Acquiring Person, or (ii) the tenth day (or
such later date as the Board of Directors shall determine) after the date of the
commencement by any person or entity (other than an Exempt Person (as defined
below)) of, or of the first public announcement of the intent of any person or
entity (other than an Exempt Person) to commence (which intention to commence
remains in effect for five business days after such announcement), a tender
offer or exchange offer that would result in such person or group becoming an
Acquiring Person. Except as set forth below, an "Acquiring Person" is a person
or group of affiliated or associated persons who, without prior approval of the
Board, has acquired beneficial ownership of 20% or more of the outstanding
Shares. The term Acquiring Person excludes (A) an "Exempt Person", which is
defined as (i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan or employee stock plan of the Company or of any subsidiary
of the Company or (iv) any person or entity organized, appointed, established or
holding Common Stock for or pursuant to the terms of any such plan, and (B)
parties to that certain Unit Purchase Agreement, dated as of July 2, 1992, as
amended (the "Unit Purchase Agreement"), among the Company, Blum, and certain
other purchasing parties thereto, so long as certain standstill provisions with
respect to such parties pursuant to the Unit Purchase Agreement remain in
effect.
 
     Until the occurrence of the Distribution Date, (i) the Rights will be
evidenced by the Share certificates and will be transferred with and only with
such Shares certificates, (ii) new Share certificates issued after the Rights
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Shares
outstanding will also constitute the transfer of the Rights associated with the
Shares represented by such certificate. Pursuant to the Rights Agreement, the
Company shall not be required to issue fractions of Rights or Rights Common
Stock, and in lieu thereof shall pay to holders of record of such Rights or
Rights Common Stock the then current market value of such Right or Rights Common
Stock.
 
     As soon as practicable after the occurrence of the Distribution Date,
Rights Certificates will be mailed to holders of record of Shares as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Only Shares issued prior to the
earlier of the Distribution Date or the Rights Expiration Date will be issued
with Rights.
 
     The Rights are not exercisable until the occurrence of the Distribution
Date. The Rights will expire at the close of business on November 9, 1998,
unless earlier redeemed by the Company as described below (the "Rights
Expiration Date").
 
     In the event that, at any time following the Distribution Date, any person
becomes an Acquiring Person (subject to certain exceptions described below),
each holder of a Right will thereafter have the right to
 
                                       10
   12
 
receive, upon exercise of the Right, that number of Shares (or, in certain
circumstances, cash, property or other securities of the Company) having a
current market value equal to two times the Rights Purchase Price.
Notwithstanding the foregoing, following the occurrence of the event set forth
in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person shall not be adjusted as described above and any holder of any such Right
(including any purported transferee or subsequent holder) shall continue to
receive upon the exercise of such Right the number of shares of Rights Common
Stock otherwise provided in the Rights Agreement without giving effect to the
adjustment described above. For example, at an exercise price of $50 per Right,
each Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in this paragraph would entitle its holder to
purchase $100 worth of Shares (or other consideration, as noted above) for $50.
Assuming that the Shares had a per share market value of $10 at such time, the
holder of each valid Right would be entitled to purchase ten Shares for $50.
 
     In the event that, at any time on or following the Distribution Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger which
follows a "Permitted Offer" described below), or (ii) 50% or more of the
Company's assets or earning power is sold, mortgaged or transferred, each holder
of a Right shall thereafter have the right to receive, upon exercise and payment
of the Rights Purchase Price in accordance with the terms of the Rights
Agreement, common stock or other securities of the acquiring company offered as
consideration for Common Stock in such transaction having a market value at the
time of the transaction equal to two times the Rights Purchase Price. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Triggering Events."
 
     The Rights Purchase Price payable, and the number of shares of Rights
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision or split of the outstanding
shares of Common Stock into a greater number, (ii) in the event the Company
combines or consolidates the Common Stock into a smaller number of shares or
effects a reverse split of outstanding shares of Common Stock, or (iii) in the
event the Company issues any shares of capital stock in a reclassification of
the Common Stock.
 
     With certain exceptions, no adjustment in the Rights Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Rights
Purchase Price . No fractional shares of Rights Common Stock will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market price of
the Rights Common Stock on the last trading date prior to the date of exercise.
 
     At any time prior to the earlier of the date on which any person or entity
becomes an Acquiring Person or November 9, 1998, the Company may redeem the
Rights in whole, but not in part, at a price (the "Redemption Price") of $.01
per Right by resolution of the Board of Directors. Notice of the redemption of
the Rights shall be mailed to each holder of record of Rights within 10 days of
such resolution, and the redemption of the Rights may be made effective at such
time, on such basis, and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon such action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
 
     Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company including, without limitation, the right
to vote or to receive dividends.
 
     Other than those provisions relating to the Redemption Price of the Rights,
the Company and Rights Agent may amend the Rights Agreement, (i) prior to the
time any person becomes an Acquiring Person, in any manner the Company deems
necessary or desirable, and (ii) following the time a person becomes an
Acquiring Person, in order to cure any ambiguity and to make changes which do
not adversely affect the interests of holders of Rights Certificates.
 
     THE COMPANY HAS DETERMINED THAT (I) THE OFFER IS AN OFFER TO PURCHASE ALL
OF THE OUTSTANDING SHARES AND THE BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED
THAT THE OFFER DESCRIBED HEREIN IS FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S STOCKHOLDERS (A "PERMITTED OFFER") AND (II) THE PRICE PER SHARE TO BE
PAID IN
 
                                       11
   13
 
THE MERGER IS OF THE SAME FORM AND AMOUNT AS THE PURCHASER SHALL PAY IN THE
OFFER, THE ACQUISITION OF SHARES PURSUANT TO THE OFFER OR THE CONSUMMATION OF
THE MERGER WILL NOT (A) CAUSE ANY PERSON TO BECOME AN ACQUIRING PERSON, (B)
CAUSE A DISTRIBUTION DATE TO OCCUR OR CAUSE OR REQUIRE THE DISTRIBUTION OF ANY
RIGHTS CERTIFICATES TO THE RECORD HOLDERS OF SHARES, OR (C) GIVE RISE TO A
RIGHTS TRIGGERING EVENT. IN ADDITION, THE COMPANY HAS AGREED, PURSUANT TO THE
MERGER AGREEMENT, TO TAKE ALL ACTION NECESSARY SO AS TO RENDER THE RIGHTS
AGREEMENT INAPPLICABLE TO THE MERGER AGREEMENT, THE STOCKHOLDERS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY SUCH AGREEMENTS. PURSUANT TO THE RIGHTS
AGREEMENT, UPON THE CONSUMMATION OF THE OFFER AND THE MERGER, THE RIGHTS SHALL
EXPIRE.
 
  The Spin-Off
 
     The following is a summary of certain of the terms of the Merger Agreement
relating to the Spin-Off. This summary is not a complete description of the
terms of the Merger Agreement relating to the Spin-Off and is qualified in its
entirety by reference to the full text thereof, which is incorporated herein by
reference. See "The Merger Agreement" above.
 
     Pursuant to the terms of the Merger Agreement, immediately prior to the
acceptance of Shares in the Offer, the Company will declare a dividend, payable
to then record holders of Shares, consisting of ownership interests in Spinco
which will own, directly or indirectly, certain assets specified in the Merger
Agreement (the "Designated Assets"), the payment of such dividend to be
contingent upon the consummation of the Offer and subject to compliance with all
applicable laws. The Designated Assets include (i) all real estate located in
Triad Park, Livermore, California, owned by the Company (approximately 206
acres); (ii) all buildings (three buildings comprising 220,000 square feet) and
improvements therein (not including cubicles, furnishings and office equipment)
occupied and used by employees of the Company and located in Triad Park,
Livermore, California; (iii) all improvements in and to Triad Park not yet sold
to the City of Livermore, California; and (iv) copies of all books and records
related to the foregoing assets. Although the fair market value of the
Designated Assets will be determined by appraisal, the current book value of the
Designated Assets, net of indebtedness assumed, is approximately $23.7 million,
or approximately $1.20 per Share on a fully diluted basis.
 
     The form of entity that will be used for Spinco, all transactions related
to such dividend (including, without limitation, any intercompany transfers) and
all documents, agreements and instruments related to such dividend and related
transactions (including, without limitation, any agreements between Spinco and
the Company or any of its subsidiaries providing for the allocation of expenses
or liabilities and indemnification) (the "Spin-Off Documents"), shall be in form
and substance reasonably acceptable to Parent and the Company. Notwithstanding
the foregoing, (i) all indebtedness of the Company or any of its subsidiaries
(other than the Company's Revolving Credit Loan Agreement with Comerica
Bank-California) secured, in whole or in part, by any of the Designated Assets
shall be assumed by Spinco and shall be paid, when due, by Spinco and the
Company shall be released from any liability with respect thereto, (ii) all
costs and expenses solely attributable to the transactions related to such
dividend (including, without limitation, any necessary and reasonable fees and
expenses of counsel, accountants and advisors and any filing fees), whether
before or after the consummation of the Offer, shall be paid by Spinco when such
amounts are due, (iii) Spinco shall indemnify and hold the Company and its
subsidiaries harmless from and against any loss, cost, damage or expense
(including, without limitation, the reasonable fees and expenses of counsel)
arising out of or related to any failure of Spinco to discharge the obligations
specified in clause (i) or clause (ii), (iv) Spinco shall indemnify and hold
Parent, the Company and its subsidiaries harmless from and against any taxes
(and any fees, costs and expenses with respect to such taxes or any dispute
thereof) attributable to, arising out of or relating to (a) Spinco, (b) the
formation of Spinco, (c) the transfer of the Designated Assets to Spinco by the
Company or any of its subsidiaries, (d) the assumption or refinancing of any
liabilities with respect to the Designated Assets, (e) the sale, exchange,
distribution, dividend or other distribution of any assets by Spinco, (f) the
sale, exchange, distribution, dividend or other disposition of interests in
Spinco by the Company or any of its Subsidiaries, and (g) any steps which are
attendant to or necessary in connection with any of the foregoing transactions,
which indemnification obligations shall survive until 60 days after the
expiration of the applicable statute of limitations with respect to the
assessment of taxes relating to the foregoing transactions,
 
                                       12
   14
 
and which indemnification obligations shall be due and payable at such times as
taxes (including estimated taxes) become due and payable (plus interest from the
date of unreimbursed payment by the Company at a rate of 9% per annum) (with the
filing of tax returns and calculation of the estimated tax amount (the
"Estimated Tax Amount") being based upon an appraisal of the Designated Assets
by an independent appraiser mutually acceptable to Parent and the Company and a
certification of the adjusted bases of the Designated Assets provided by Price
Waterhouse & Co. or such other "big six" accounting firm as may be agreed to by
Parent and the Company, the costs of which appraisal and certification will be
paid by Spinco) and at such time as there is a final determination of a
deficiency with respect to such reported taxes (plus interest from the date of
unreimbursed payment by the Company at a rate of 9% per annum), (v) with respect
to the taxes identified in the immediately preceding clause (iv), the Company
will not agree, without Spinco's consent, to any extension of the applicable
statute of limitations, which consent will not be unreasonably withheld, and
such consent will not be required if the failure to agree to such extension may
reasonably be expected to result in the proposed assessment of a deficiency for
material taxes unrelated to Spinco or in liability for indemnified taxes which
exceeds Spinco's cash, notes receivable from real property sales and cash
equivalent assets at such time, and (vi) any such indemnification shall be made
on an after-tax basis and shall be adjusted to take into account any tax
benefits and tax detriments attributable to the indemnified loss and to the
receipt or accrual of an indemnification payment hereunder (including any
additional payments pursuant to this clause (vi)). The Company will use its best
efforts to facilitate the dividend and shall seek all consents necessary
(including, without limitation, the consent of the Company's lenders) to
consummate the dividend and related transactions as soon as practicable, subject
to the conditions described herein.
 
     Prior to payment of the dividend, the current lease agreement with respect
to the home office building will be amended to provide for (1) continuation of
the current rent for two years; (2) adjustment of the rental for the succeeding
three years at the current market rental rate at the beginning of such
succeeding three years; and (3) adjustment of the term of the lease to five
years with a five year option to renew at a rental equal to the current market
rental rate at the beginning of such renewal term. "Current market rental rate"
shall be determined by the Company and Spinco, each selecting an appraiser to
make such determination, and if such appraisers cannot agree, then they shall
select a third appraiser whose determination shall be final and binding on all
parties. Each party shall bear the cost of its appraiser and the cost of the
third appraiser, if necessary, shall be split evenly between the parties.
Finally, under no circumstances shall the rental rate referred to in (2) above
be less than the rental rate in effect prior to such adjustment or more than 1.2
multiplied by the rental rate in effect prior to such adjustment. In addition,
the lease agreement shall be amended to provide that the Company may sublease
the property with the consent of the landlord, which consent will not be
unreasonably withheld, and that in the event the Company shall sublease the
property and shall receive in rent thereunder an amount in excess of the rent
payable under the lease, such excess shall be paid to the landlord.
 
     In order to facilitate the orderly management of Spinco, following payment
of the dividend for a period of one year the Company will provide (at no cost to
Spinco) at least two cubicles of office space, telephone and secretarial support
to two employees of Spinco and will give such Spinco employees reasonable access
to such other office equipment as is reasonable and necessary. Furthermore, at
the time of payment of the dividend, the Company shall cause Spinco to have at
least $100,000 in cash or cash equivalent assets available to it (any such
amounts that do not represent proceeds from the sale of Designated Assets shall
be subject to repayment by Spinco). All funds received in respect of sales of
Designated Assets from the date of the Merger Agreement through the date of the
payment of the dividend shall be credited to the account of Spinco, but shall be
available to satisfy the obligations of Spinco to Company under the Merger
Agreement.
 
     Company shall not be required to pay the dividend until such time as Spinco
has either (i) paid all amounts owed by it to Company with respect to the
Estimated Tax Amount, third party costs related to the dividend or related
transactions or similar matters for which Spinco has agreed to pay or for which
there are existing indemnity claims which it has agreed to indemnify the Company
or (ii) have made adequate and commercially reasonable provision for the prompt
payment of any such amounts from time to time in the future as such amounts are
paid or become due and payable by the Company. Such additional terms and
provisions, when negotiated by the parties, shall, together with the applicable
provisions of the Merger
 
                                       13
   15
 
Agreement, be set forth in customary documentation with respect to spin-off
transactions, all of which shall be finalized by the parties prior to the
consummation of the Offer.
 
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
 
     (a) The Board of Directors has approved the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, has determined that the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement are fair to and in the best interests of the Company's stockholders
and recommends that the stockholders of the Company accept the Offer and tender
their Shares.
 
     A copy of a letter to all stockholders of the Company communicating the
recommendation of the Board of Directors is filed as Exhibit 8 hereto and is
incorporated herein by reference.
 
     (b)
 
     Background of the Transaction; Past Contacts, Transactions and Negotiations
with Parent and Purchaser
 
     During the period from August 1994 through January 1996, certain members of
senior management of the Company and Parent met on at least five occasions and
discussed, in general terms, a possible business alliance or business
combination between Parent and the Company. Although neither price nor the
specific terms of any business combination were discussed at any of the
meetings, it was assumed by the parties that the Company, as a public company,
would be the surviving entity in any business combination. Following the January
1996 meeting, management of Parent determined that acquisition of the Company by
Parent would best enable Parent and its shareholders to achieve their strategic
goals.
 
     In June 1996, Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware
limited partnership ("Hicks Muse") and Parent entered into a confidentiality
agreement whereby Hicks Muse agreed to treat as confidential certain information
provided to it by Parent. During June and July 1996, on several occasions
representatives of Parent met, and had telephone conversations, with
representatives of Hicks Muse regarding a potential acquisition of the Company
by Parent. During this period, representatives of Hicks Muse conducted a due
diligence review of Parent. At certain of the meetings, Parent made a formal
presentation regarding the potential acquisition, including estimates of
requisite financing, market information, and pro forma financial information and
projections (which, with respect to the Company, were based solely on the
publicly-available information filed by the Company with the Commission). In
July 1996, Parent received a verbal commitment from Hicks Muse that Hicks Muse
or an affiliate thereof would provide equity financing for the acquisition of
the Company and would also assist in arranging debt financing for the
transaction.
 
     During the last week of July and the first two weeks of August 1996,
representatives of Chase Securities Inc. ("CSI") and Coopers & Lybrand visited
Parent's offices to conduct a due diligence review of Parent. At the conclusion
of their due diligence review, CSI made an oral commitment, subject to certain
conditions, to provide debt financing for the acquisition of the Company by
Parent.
 
     On August 21, 1996 members of senior management of Parent met with members
of senior management of the Company and a representative of Blum at the
Company's offices in Livermore, California. Blum is the beneficial owner of
approximately 11.3% of the Company's outstanding Shares and Mr. Blum is a
director of the Company. At that meeting, Parent first introduced the idea of an
acquisition of the Company by Parent or an affiliate thereof and indicated that
it had arranged for the financing of such a transaction. The meeting was
adjourned and reconvened on August 22, 1996. Messrs. Hicks and Blum, along with
other representatives of Blum, joined the reconvened meeting, at which time the
possible transaction was discussed. At that meeting, Parent stated that it was
prepared to proceed with an acquisition of the Company at a price of $7.50 per
share. This proposal did not contemplate the Spin-Off, which was subsequently
negotiated by the parties. The participants also discussed the possibility of
Blum rolling over the Shares beneficially owned by it into an investment in
Parent in connection with an acquisition of the Company by Parent. Accordingly,
on August 29, 1996, Parent and Blum entered into a confidentiality agreement
whereby Blum agreed to treat as confidential certain information provided to it
by Parent. On September 3 and 4, 1996, representatives of Blum visited the
Parent's headquarters to conduct a due diligence review of Parent.
Representatives of Hicks Muse were also present.
 
                                       14
   16
 
     On September 5, 1996, during a regularly scheduled meeting of the Board,
the potential acquisition by Parent was discussed generally by the Board. The
Board authorized the Company to continue discussions with Parent regarding a
potential transaction. In connection therewith, Mr. Blum informed Mr. Hicks (a)
that Blum was not willing to consider any transaction that was not made
available to all stockholders of the Company and (b) that although the Board was
prepared to entertain Parent's proposal, it considered the price of $7.50 per
Share inadequate.
 
     On September 9, 1996, Blum informed Parent in writing that Blum would not
participate in a transaction involving the Company that was not made available
to all of the Company's stockholders. Accordingly, Blum decided that it would
not roll over its investment in the Company into Parent.
 
     On September 24, 1996, Hicks Muse delivered a commitment letter to Parent
providing for, among other things and subject to certain conditions, an
investment by Hicks Muse or an affiliate thereof in the common equity of Parent,
and the purchase of debt securities of Parent to be funded at the consummation
of the Merger.
 
     On September 27, 1996, Hicks Muse delivered a letter to the Company stating
that Hicks Muse and Parent were prepared to offer to purchase all of the
outstanding Shares at a price of $9 per Share in cash. This proposal also did
not contemplate the Spin-Off which was subsequently negotiated by the parties.
On October 3, 1996, the Board held a special meeting to review the proposed
offer from Hicks Muse and Parent and concluded that, in order to maximize the
consideration to be received by the Company's stockholders, the real estate
owned by the Company in Livermore, California, should be excluded from the
transaction and the Company should seek an increase in the cash price per share.
Over the next two weeks, representatives of Parent, the Company, Hicks Muse and
Blum negotiated the details of the structure of the transaction, including the
Spin-Off and the Offer Price.
 
     On October 16, 1996, Chase Manhattan Bank ("Chase") and CSI delivered a
commitment letter dated October 16, 1996, among Purchaser, Chase and CSI to
Purchaser regarding certain debt financing in connection with the Offer and the
Merger, subject to the terms and conditions set forth therein.
 
     On October 16, 1996, the Board unanimously approved the Offer, the Merger,
the Merger Agreement, and the Spin-Off at a special meeting, and, in the early
morning hours of October 17, 1996, Purchaser, Parent and the Company executed
the Merger Agreement, and Parent, the Company and the Selling Stockholders
executed the Stockholders Agreement. On October 17, 1996, the Company and Parent
issued a joint press release announcing the execution of the Merger Agreement.
On October 23, 1996, Purchaser commenced the Offer.
 
     Reasons for the Recommendation of the Board of Directors
 
     At its October 16, 1996 meeting, discussed above, the Board of Directors
met to consider the Offer, the Merger and the other transactions contemplated by
the Merger Agreement. In such meeting, the Board of Directors unanimously (i)
determined that each of the Merger Agreement, the Offer and the Merger is fair
to and in the best interests of the Stockholders, (ii) approved the execution,
delivery and performance of the Merger Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated thereby, including the
Offer and the Merger, and (iii) resolved to recommend acceptance of the Offer,
approval and adoption of the Merger Agreement and approval of the Merger by the
holders of the Shares.
 
     In so doing, the Board of Directors considered, among other factors,
considered the following:
 
          (i)   the extensive negotiations between the Company and Parent, 
     leading to the belief of the Board of Directors that $9.25 per Share 
     represented the highest price per Share that could be negotiated with 
     Parent;
 
          (ii)  the substantial premium which $9.25 per Share represents over
     current and recent trading prices;
 
          (iii) the opinion of Hambrecht & Quist LLC ("Hambrecht & Quist") to
     the effect that, as of the date of its opinion and based upon and subject
     to certain matters stated therein, the consideration to be
 
                                       15
   17
 
     received by the holders of the Shares pursuant to the Offer was fair from a
     financial point of view to such holders. The full text of the Hambrecht &
     Quist opinion, which sets forth the assumptions made, matters considered
     and limitations on the review undertaken by Hambrecht & Quist, is attached
     hereto as Exhibit 9. Stockholders are urged to read the Hambrecht & Quist
     opinion carefully and in its entirety for assumptions made, matters
     considered and limits of the review by Hambrecht & Quist;
 
          (iv) the terms of the Offer, the Merger and the Merger Agreement,
     including the structural features of the Offer and the Merger providing for
     a prompt cash tender offer for all outstanding shares to be followed by a
     merger for the same consideration, thereby enabling stockholders to obtain
     the benefits of the transaction in exchange for their Shares at the
     earliest possible time; and
 
          (v)  the expectation that the Stockholders, after receiving a price of
     $9.25 per Share, would also receive ownership interests in an entity that
     would own, directly or indirectly, certain real property and related assets
     of the Company with a current book value of approximately $1.20 per Share
     on a fully diluted basis.
 
     In view of the variety of factors considered by the Board of Directors, the
Board of Directors did not find it practical to, and did not, quantify or
otherwise assign relative weights to the foregoing factors or determine that any
factor was of particular importance. Rather, the Board of Directors viewed its
recommendation as being based on the totality of the information presented to
and considered by it.
 
  Opinion of Financial Advisor
 
     The Board of Directors engaged Hambrecht & Quist to act as its financial
advisor in connection with the Offer and to render an opinion as to the fairness
from a financial point of view to the holders of the outstanding shares of Triad
Common Stock. Hambrecht & Quist rendered its oral opinion (subsequently
confirmed in writing) on October 16, 1996 to the Board of Directors that, as of
such date, the consideration to be received by such holders in the proposed
Offer is fair to the holders of Triad Common Stock from a financial point of
view. A copy of Hambrecht & Quist's opinion, dated October 16, 1996, which sets
forth the assumptions made, matters considered, the scope and limitations of the
review undertaken and the procedures followed by Hambrecht & Quist is attached
as Exhibit 9 to this Schedule 14D-9. Triad stockholders are advised to read the
opinion in its entirety. Stockholders should note that the opinion expressed by
Hambrecht & Quist was provided for the information of the Board of Directors in
its evaluation of the Offer and does not constitute a recommendation to any
Stockholder as to whether such Stockholder should accept the Offer. No
limitations were placed on Hambrecht & Quist by the Board of Directors with
respect to the investigation made or the procedures followed in preparing and
rendering its opinion.
 
     In connection with its review of the Offer, and in arriving at its opinion,
Hambrecht & Quist among other things: (i) reviewed the publicly available
consolidated financial statements of Triad for recent years and interim periods
to date and certain other relevant financial and operating data of Triad made
available to Hambrecht & Quist from published sources and from the internal
records of Triad; (ii) discussed with certain members of the management of Triad
the business, financial condition and prospects of the Company; (iii) reviewed
certain internal financial and operating information, including certain
projections, relating to Triad prepared by the management of Triad; (iv)
reviewed the recent reported prices and trading activity for the Common Stock
and compared such information and certain financial information of Triad with
similar information for certain other companies engaged in businesses Hambrecht
& Quist considered comparable to that of Triad; (v) reviewed the financial
terms, to the extent publicly available, of certain comparable acquisition
transactions; (vi) reviewed the Merger Agreement, documents pertaining to the
Offer and certain other materials to be filed with the Commission in connection
with the Offer; and (vii) performed such other analyses and examinations and
considered such other information, financial studies, analyses and
investigations and financial, economic and market data as Hambrecht & Quist
deemed relevant. In connection with its review of the Offer, Hambrecht & Quist
was not requested to, and did not, formally solicit indications of interest from
any other parties in connection with a possible acquisition of, or business
combination with, Triad.
 
                                       16
   18
 
     Hambrecht & Quist did not assume any responsibility for independent
verification of any of the information concerning Triad considered in connection
with its review of the Offer and, for purposes of its opinion, Hambrecht & Quist
assumed and relied upon the accuracy and completeness of all such information.
Hambrecht & Quist did not prepare or obtain any independent evaluation or
appraisal of any of the assets or liabilities of Triad, nor did it conduct a
physical inspection of the properties and facilities of Triad. With respect to
the financial forecasts and projections made available to Hambrecht & Quist and
used in its analyses, Hambrecht & Quist assumed that they reflect the best
currently available estimates and judgments of the expected future financial
performance of Triad. Hambrecht & Quist assumed that Triad was not a party to
any pending transactions, including external financings, recapitalizations or
merger discussions, other than the Merger and those in the ordinary course of
conducting its business. Hambrecht & Quist's opinion was necessarily based upon
market, economic, financial and other conditions as they existed and could be
evaluated as of the date of its opinion, and any change in such conditions would
require a reevaluation of that opinion.
 
     The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The summary
of the Hambrecht & Quist analyses set forth below does not purport to be a
complete description of the presentation by Hambrecht & Quist to the Board of
Directors. In arriving at its opinion, Hambrecht & Quist did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, Hambrecht & Quist believes that its analyses and the
summary set forth below must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the summary
set forth below, without considering all factors and analyses, could create an
incomplete view of the processes underlying the analyses set forth in the
Hambrecht & Quist presentation to the Board of Directors and its opinion. In
performing its analyses, Hambrecht & Quist made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Triad. The analyses
performed by Hambrecht & Quist (and summarized below) are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than suggested by such analyses. Additionally, analyses
relating to the values of businesses do not purport to be appraisals or to
reflect the prices at which businesses actually may be sold.
 
     Comparable Company Analysis. Hambrecht & Quist reviewed and compared
selected historical and projected financials, operating and stock market
performance data of certain publicly traded turnkey computer system and customer
service companies that Hambrecht & Quist considered comparable based on market
value, industry focus, operating structure or corporate structure. This
comparison provided the Revenue, Earnings Before Depreciation, Amortization,
Interest and Taxes, Earnings Before Interest and Taxes, and Price-Earning
("P/E") multiples to be used in further analysis. The companies included the
following: Automatic Data Processing Inc., CompuCom Systems Inc., Delphi Systems
Inc., Information Resources Inc., Policy Management Systems Corp., Reynolds and
Reynolds Company, and Shared Medical Systems Corp.
 
     All multiples were based on closing stock prices on October 15, 1996. The
foregoing multiples of equity value implied an equity valuation for Triad
ranging from a low of approximately $164.9 million to a high of approximately
$176.6 million. The multiples of enterprise value implied an equity valuation
for Triad ranging from a low of approximately $164.5 million to a high of
approximately $187.8 million. Hambrecht & Quist compared these figures with an
implied equity valuation in the Offer (excluding the net value of the real
estate assets to be dividended to shareholders) of $181.2 million.
 
     Discounted Cash Flow Analysis. Hambrecht & Quist analyzed the theoretical
valuation of Triad based on the discounted cash flow of the projected financial
performance under three basic scenarios: (i) Triad meets current internal
expectations for results over the next five years (the "Base Case"); (ii) Triad
exceeds current revenue and profitability expectations ("Accelerated Recovery
Case"); and (iii) Triad substantially misses current expectations for revenue
growth and profitability ("Delayed Recovery Case"). Hambrecht & Quist makes no
representation as to the validity of any scenario. To estimate the total present
value of Triad's business, before giving effect to its capital structure,
Hambrecht & Quist discounted to present value the projected stream of after-tax
cash flows through 2001 and the hypothetical value of selling the entire
business (the "Terminal Value") for all three scenarios.
 
                                       17
   19
 
     In the analysis for all three cases, Hambrecht & Quist used discount rates
ranging from 13% to 17%. The Terminal Value under all scenarios was based upon
multiples of one to one and one-half times projected revenue for the year 2001.
The range of one to one and one-half times projected revenue reflects the range
of revenue multiples derived from the Comparable Merger and Acquisition
Analysis, as described below. In all cases, the discounted cash flow analysis
yielded a value that was independent of the net value of the real estate assets
to be dividended to shareholders.
 
     Using the Base Case, Hambrecht & Quist calculated a range of present equity
values, including $182.3 million at a 13% discount rate and a 1.00x exit
multiple, $165.7 million at a 15% discount rate and a 1.00x exit multiple,
$150.7 million at a 17% discount rate and a 1.00x exit multiple, $220.0 million
at a 13% discount rate and a 1.25x exit multiple, $200.4 million at a 15%
discount rate and a 1.25x exit multiple, $182.5 million at a 17% discount rate
and a 1.25x exit multiple, $257.8 million at a 13% discount rate and a 1.50x
exit multiple, $235.1 million at a 15% discount rate and a 1.50x exit multiple,
and $214.4 million at a 17% discount rate and a 1.50 exit multiple.
 
     Using the Accelerated Recovery Case, Hambrecht & Quist calculated a range
of present equity values, including $193.5 million at a 13% discount rate and a
1.00x exit multiple, $176.1 million at a 15% discount rate and a 1.00x exit
multiple, $160.4 million at a 17% discount rate and a 1.00x exit multiple,
$232.4 million at a 13% discount rate and a 1.25x exit multiple, $211.9 million
at a 15% discount rate and a 1.25x exit multiple, $193.3 million at a 17%
discount rate and a 1.25x exit multiple, $271.4 million at a 13% discount rate
and a 1.50x exit multiple, $247.7 million at a 15% discount rate and a 1.50x
exit multiple, and $226.2 million at a 17% discount rate and a 1.50x exit
multiple.
 
     Using the Delayed Recovery Case, Hambrecht & Quist calculated a range of
present equity values, including $138.8 million at a 13% discount rate and a
1.00x exit multiple, $125.2 million at a 15% discount rate and a 1.00x exit
multiple, $112.9 million at a 17% discount rate and a 1.00x exit multiple,
$170.8 million at a 13% discount rate and a 1.25x exit multiple, $154.7 million
at a 15% discount rate and a 1.25x exit multiple, $140.0 million at a 17%
discount rate and a 1.25x exit multiple, $202.8 million at a 13% discount rate
and a 1.50x exit multiple, $184.1 million at a 15% discount rate and a 1.50x
exit multiple, and $167.1 million at a 17% discount rate and a 1.50x exit
multiple.
 
     Stock Trading History Analysis. Hambrecht & Quist examined the trading
history in terms of both price and volume for Triad Common Stock from October
15, 1993 to October 15, 1996. The data indicated that, over the period, Triad
had traded at an average price of $5.48 and that the Triad shares had performed,
on a relative basis, worse than a broadly weighted index of turnkey computer
system and customer service companies traded on Nasdaq and NYSE.
 
     Selected Comparable Transaction Analysis. Hambrecht & Quist compared the
Offer with selected comparable merger and acquisition transactions. Hambrecht &
Quist analyzed the Offer in comparison with the premiums in the following
comparable transactions: Triad Systems Corp./Pace Automotive System Ltd.,
American Business Information Inc./Digital Directory Assistance, All-Comm Media
Corp/Metro Services Group, Triad Systems Corp./Computer System Dynamics Inc.,
Investor Group/TRW Inc. Information Systems and Services, Value Health
Inc./Medintell Systems, Oracle Corp./Information Resources-On-Line, Primark
Corp./Disclosure Inc., Trans Union/DATEQ Information Network, Automatic Data
Processing Inc./AutoInfo, Thomson Corp./Information Access Co., Reed Elsevier
PLC/Mead Data Central, and Medaphis Corp./AdvaCare Inc. Hambrecht & Quist
reviewed the available premiums paid in such transactions, and it noted that the
median premium paid over the trading price one day prior to the announcement of
the transaction in the foregoing transactions was 27.7%; the median premium paid
over the trading price four weeks prior to the announcement of the transaction
in the foregoing transactions was 23.2%. Hambrecht & Quist determined that the
Offer of $9.25 represented a premium paid over the trading price one day prior
to the announcement of the transaction of 68.2%; and the premium paid over the
trading price four weeks prior to the announcement of the transaction was 89.7%.
Hambrecht & Quist noted that the median multiple of the latest twelve month's
revenue paid in the above transactions was 1.0x. Hambrecht & Quist determined
that the Offer of $9.25 per share represented a multiple of 1.4x of Triad's
latest twelve month's revenue.
 
                                       18
   20
 
     Hambrecht & Quist did not attempt to prepare any further quantitative
valuation analyses based on this comparable transaction analysis because
Hambrecht & Quist believed that any comparative multiples that might be derived
based upon earnings or other financial data of other such companies would not be
meaningful. This view is based upon the fact that the companies comprising the
comparable mergers and acquisition group were experiencing operating losses, or
the operating results were not available and a comparison would not be relevant
or possible.
 
     No company or transaction used in the above analysis is identical to Triad,
CCI or the proposed Merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values of
the companies or company to which they are compared. The foregoing description
of Hambrecht & Quist's opinion is qualified in its entirety by reference to the
full text of such opinion, which is attached as Exhibit 9 to this Schedule
14D-9.
 
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
 
     Hambrecht & Quist, as part of its investment banking services, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, corporate restructurings, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Pursuant to an engagement
letter, dated October 7, 1996, Triad has agreed to pay Hambrecht & Quist an
initial retainer of $25,000 and a fee of $200,000 upon delivery of the fairness
opinion. Triad has agreed to reimburse Hambrecht & Quist for its reasonable out
of pocket expenses, and to indemnify Hambrecht & Quist against certain
liabilities, including liabilities under the federal securities laws or relating
to or arising out of Hambrecht & Quist's engagement as financial advisor.
 
     Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to the Stockholders with respect to the Offer.
 
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
 
     (a) To the best of the Company's knowledge, no transactions in the Shares
have been effected during the past 60 days by the Company or by an executive
officer, director, affiliate or subsidiary of the Company.
 
     (b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates or subsidiaries presently intend to tender into the Offer
any Shares which are held of record or beneficially owned by such persons,
except that Stanley F. Marquis, the Company's Vice President, Finance and Chief
Financial Officer, presently intends to sell approximately 5,000 Shares into the
open market on or about October 28, 1996.
 
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
 
     (a) Except as set forth in this Schedule 14D-9, the Company has not
undertaken any negotiations in response to the Offer, and no negotiations are
underway, which relate to or would result in (i) an extraordinary transaction
involving the Company, (ii) a purchase, sale or transfer of a material amount of
the assets of the Company, (iii) a tender offer for or other acquisition of
securities by or of the Company or (iv) a material change in the present
capitalization or dividend policy of the Company.
 
     (b) Except as described in Item 3(b) and Item 4 above, there are presently
no transactions, board resolutions, agreements in principle or signed contracts
in response to the Offer which relate to or would result in one or more of the
matters referred to in paragraph (a) of this Item 7.
 
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
 
     Purchaser and Parent have informed the Company that, except as described in
this Item 8, based on a review of publicly available filings made by the Company
with the Commission and other publicly available information concerning the
Company, but without any independent investigation thereof, neither company is
 
                                       19
   21
 
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares as contemplated herein
or of any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required for
the acquisition or ownership of Shares by Purchaser as contemplated herein.
Should any such approval or other action be required, Purchaser and Parent have
informed the Company that they currently contemplate that such approval or other
action will be sought, except as described below under "State Takeover Laws."
While, except as otherwise expressly described in this Item 8, Purchaser has
informed the Company that it does not presently intend to delay the acceptance
for payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, Purchaser could
decline to accept for payment or pay for any Shares tendered.
 
     State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws, that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
 
     Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company has approved, among other things, the Offer and the
Merger for purposes of Section 203 of the DGCL.
 
     Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser has informed the Company that
it does not believe that any state takeover statutes apply to the Offer or the
Merger and that it has currently not complied with any state takeover statute or
regulation. Purchaser has informed the Company that it reserves the right to
challenge the applicability or validity of any state law purportedly applicable
to the Offer or the Merger and nothing in the Offer to Purchase or any action
taken in connection with the Offer or the Merger is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser has
informed the Company that it might be required to file certain information with,
or to receive approvals from, the relevant state authorities, and that it might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case,
Purchaser has informed the Company that it may not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer.
 
     Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by the Company and
Parent, respectively, of a Notification and Report Form with respect to the
Offer, unless either the Company or Parent receives a request for additional
information or documentary material from the Antitrust Division of the
Department of Justice (the "Antitrust Division") or the Federal Trade Commission
(the "FTC") or unless early termination of the waiting period is granted. The
Company expects to file a
 
                                       20
   22
 
Notification and Report Form with respect to the Offer as soon as practicable
following commencement of the Offer. If, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional information
or documentary material from the Company concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by the Company
with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
the Company. In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. Moreover, the Merger Agreement generally provides that
the Offer may be extended for an aggregate period of not more than 60 days in
the event that any condition to the Offer is not satisfied.
 
     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
 
                                       21
   23
 
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
 
          
Exhibit 1    Offer to Purchase, dated October 23, 1996.
Exhibit 2    Letter of Transmittal, dated October 23, 1996.
Exhibit 3    Unit Purchase Agreement, dated as of July 2, 1992, between the Company, Richard
             C. Blum & Associates, Inc., and certain investors, as amended by the First
             Amendment to Unit Purchase Agreement, dated as of August 3, 1992.(1)
Exhibit 4    Exchange Agreement and Second Amendment to Unit Purchase Agreement, dated as of
             March 31, 1995, between the Company, Richard C. Blum & Associates, L.P., and
             certain investors.(2)
Exhibit 5    Agreement and Plan of Merger, dated October 17, 1996, among Parent, Purchaser and
             the Company.
Exhibit 6    Stockholders Agreement, dated October 17, 1996, among Parent, Purchaser and the
             Selling Stockholders.
Exhibit 7    Amended and Restated Rights Agreement, dated as of December 6, 1993, between the
             Company and Chemical Trust Company of California, as Rights Agent.(3)
Exhibit 8    Letter to Stockholders of Triad Systems Corporation, dated October 23, 1996.*
Exhibit 9    Opinion of Hambrecht & Quist LLC, dated October 16, 1996.*
Exhibit 10   Text of Press Release, dated October 17, 1996.


 
- ---------------
 
 *  Enclosed with Schedule 14D-9 mailed to Stockholders.
 
(1) Filed as Exhibit 10.4 to Triad Systems Corporation's Report on Form 8-K
    (File No. 0-9505) as filed with the Securities and Exchange Commission on
    August 17, 1992 and incorporated herein by reference.
 
(2) Filed as Exhibit No. 1 to Triad Systems Corporation's Report on Form 8-K
    (File No. 0-9505) as filed with the Securities and Exchange Commission on
    May 10, 1995 and incorporated herein by reference.
 
(3) Filed as Exhibit 4.2 to Triad Systems Corporation's Annual Report on Form
    10-K for the fiscal year ended September 30, 1993 (File No. 0-9505) as filed
    with the Securities and Exchange Commission and incorporated herein by
    reference.
 
                                       22
   24
 
                                   SIGNATURE
 
     After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
 
October 23, 1996
 
                                            TRIAD SYSTEMS CORPORATION
 
                                            By      /s/ STANLEY F. MARQUIS
                                               ---------------------------------
                                                       Stanley F. Marquis
                                               Vice President, Finance and Chief
                                                       Financial Officer
 
                                       23
   25
 
                                                                      SCHEDULE I
 
                   INFORMATION WITH RESPECT TO THE INTERESTS
                   OF CERTAIN PERSONS IN THE OFFER AND MERGER
 
     In considering the recommendations of the Board of Directors set forth in
Item 4(a) of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of which this Schedule I is a part, the Company's stockholders
should be aware that certain members of the Board of Directors have interests in
the Merger and the offer which are described below and which may present them
with certain conflicts of interest.
 
 Interests of Certain Board Members with Respect to Compensation for Services
 Provided to the Company
 
     During fiscal 1996, non-employee members of the Board of Directors received
the following compensation: (i) $10,000 annual retainer fee; (ii) $1,000 per
scheduled or special board meeting or special committee meeting; (iii) $500 per
scheduled committee meeting or telephonic board or committee meeting; and (iv)
nonqualified stock options pursuant to the Company's Amended and Restated
Outside Directors' Stock Option Plan.
 
 Interests of Executive Officers and Directors with Respect to Shares Currently
 Held and Shares Subject to the Company's Stock Options
 
     The Company's 1982 Amended and Restated Stock Option Plan, 1990 Stock
Option Plan and Amended and Restated Outside Directors Stock Option Plan each
provides that in the event of the direct or indirect sale or exchange by the
stockholders of the Company of more than fifty percent (50%) of the stock of the
Company to one person or entity (other than the Company or any subsidiary or
employee benefit plan thereof), or to an affiliated group of persons or entities
(other than the Company or any subsidiary or employee benefit plan thereof), all
outstanding options shall become fully exercisable and fully vested as of the
date immediately prior to the consummation of such sale. In connection with the
Merger, all outstanding options under such plans will automatically become fully
vested upon the Effective Time (as defined in the Merger Agreement), and upon
the Effective Time, each option will be canceled. In return for the cancellation
of options under the Company's option plans, each optionee will receive an
amount equal to the product of (i) the excess, if any, of $9.25 over the per
Share exercise price of the option, and (ii) the number of Shares for which the
option is unexercised.
 
     The Company's 1990 Employee Stock Purchase Plan (the "Purchase Plan")
permits the Board of Directors to establish a different term for an offering as
well as a different commending and/or ending date for an offering. In connection
with the Merger, the Board of Directors has provided that as of the date
immediately following the last payday occurring prior to the expiration date of
the Offer (the "Final Purchase Date"), (i) Shares will be purchased with payroll
deductions accumulated during the Purchase Plan offering in operation
immediately prior to the Final Purchase Date, and (ii) the Purchase Plan will
terminate, subject to the consummation of the Merger.
 
     To the knowledge of the Company, directors and officers of the Company, as
a group, beneficially own, directly or indirectly, or exercise control or
direction over 4,585,057 Shares, representing approximately 22% of the
outstanding Shares on a "fully-diluted basis" (as defined in the Merger
Agreement).
 
                                       I-1
   26
 
     The directors and executive officers of the Company will be entitled to
receive, as contemplated by the Merger Agreement, cash consideration as set
forth in the table below (not including cash payments for the purchase of up to
4,500 Shares issuable to officers, excluding Mr. Porter, under the Purchase
Plan):
 


                                                             SHARES AND OPTION AMOUNTS WITH RESPECT TO
                                                           THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
                                               DOLLAR      ----------------------------------------------
                                               AMOUNT        OPTIONS
                                  OWNED       AT OFFER      CONVERTED       DOLLAR         TOTAL CASH
             NAME                SHARES         PRICE        TO CASH      AMOUNT(1)     CONSIDERATION(2)
- ------------------------------- ---------    -----------   -----------    ----------    -----------------
                                                                         
Richard C. Blum................ 1,998,158    $18,482,961        14,000    $   54,250      $ 18,537,211
James R. Porter................   608,464      5,628,292       349,736     2,181,497         7,809,789
William W. Stevens.............   430,340      3,980,645             0             0         3,980,645
Henry M. Gay...................    50,396        466,163        44,000       213,000           679,163
George O. Harmon...............         0              0        44,000       213,000           213,000
Stanley F. Marquis.............    56,425        521,931        99,869       611,787         1,133,718
Shane Gorman...................   156,788      1,450,289        78,500       472,438         1,922,727
Thomas A. King.................    46,000        425,500       200,000     1,116,875         1,542,375
M. Edward Molkenbuhr...........     4,000         37,000        70,000       272,500           309,500
Thomas J. O'Malley.............    59,437        549,792        57,500       333,688           883,480
Chad A. Schneller..............       500          4,625       100,000       450,000           454,625
Dan F. Dent....................       500          4,625        40,000       155,625           160,250
Bruce M. Blanco................    19,000        175,750        28,000       155,350           331,100
Patrick J. Bormann.............     5,444         50,357        24,000       110,000           160,357
          Total................ 3,435,452    $31,777,930     1,149,605    $6,340,010      $ 38,117,940

 
- ---------------
 
(1) Aggregate offer price less aggregate exercise price.
 
(2) Excluding aggregate exercise price.
 
  Interests of James R. Porter with Respect to Employment with the Surviving
Corporation
 
     James R. Porter, President, Chief Executive Officer and a member of the
Board of Directors, has agreed to become the Chairman of the Board of the
Directors of the Surviving Corporation. The terms of Mr. Porter's employment,
including the nature of his job responsibilities and compensation structure,
have not been agreed upon.
 
  Severance Benefits
 
     In 1989, the Board adopted resolutions setting forth a severance policy for
executive officers and other employees of the Company (the "1989 Resolutions").
In the Merger Agreement, the Company has represented and warranted that the
Board has unanimously adopted resolutions rescinding the 1989 Resolutions,
retroactive to the date of the adoption of the 1989 Resolutions, and adopting a
severance pay policy the terms of which are to consist of the arrangements
described in the 1989 Resolutions, modified as follows: (A) employees (other
than executive officers) shall be eligible for severance benefits in accordance
with such policy only if they are involuntarily terminated without cause by the
Company and its subsidiaries within six (6) months following a change in control
(as defined in the 1989 Resolutions); (B) executive officers of the Company
shall be eligible for severance benefits in accordance with such policy only if
they are involuntarily terminated by the Company and its subsidiaries within
twelve (12) months following a change in control (defined as described above) of
the Company; (C) the Board of Directors shall have the right to clarify the
terms of such severance policy at any time and from time to time, including, but
not limited to, resolving any ambiguities or supplying any omission in such
severance policy; (D) the Board shall have the right to amend or terminate such
severance policy in its sole discretion at any time and from time to time,
except no such amendment or termination which materially and adversely affects
the rights of any employee of the Company or any of its subsidiaries under the
severance policy shall be effective with respect to: (i) any person whose
employment with the Company and its subsidiaries has terminated prior to the
date of such
 
                                       I-2
   27
 
amendment or termination, (ii) any such employee for a period of six months
beginning on the date of a change in control (defined as described above) of the
Company and (iii) any executive officer of the Company for a period of twelve
months beginning on the date of a change in control (defined as described
above); and (E) for all purposes of the severance policy, the date of a change
in control of the Company involving a person or an affiliated group of persons
shall be the date of the earliest to occur of any of the events defined in the
1989 Resolutions with respect to such person or affiliated group of persons.
 
                                       I-3
   28
 
                                 EXHIBIT INDEX
 


   EXHIBIT                                                                               PAGE
   NUMBER                              DOCUMENT DESCRIPTION                             NUMBER
- --------------------------------------------------------------------------------------  ------
                                                                                  
Exhibit 1    Offer to Purchase, dated October 23, 1996.
Exhibit 2    Letter of Transmittal, dated October 23, 1996.
Exhibit 3    Unit Purchase Agreement, dated as of July 2, 1992, between the Company,
             Richard C. Blum & Associates, Inc., and certain investors, as amended by
             the First Amendment to Unit Purchase Agreement, dated as of August 3,
             1992.(1)
Exhibit 4    Exchange Agreement and Second Amendment to Unit Purchase Agreement, dated
             as of March 31, 1995, between the Company, Richard C. Blum & Associates,
             L.P., and certain investors.(2)
Exhibit 5    Agreement and Plan of Merger, dated October 17, 1996, among Parent,
             Purchaser and the Company.
Exhibit 6    Stockholders Agreement, dated October 17, 1996, among Parent, Purchaser
             and the Selling Stockholders.
Exhibit 7    Amended and Restated Rights Agreement, dated as of December 6, 1993,
             between the Company and Chemical Trust Company of California, as Rights
             Agent.(3)
Exhibit 8    Letter to Stockholders of Triad Systems Corporation, dated October 23,
             1996.*
Exhibit 9    Opinion of Hambrecht & Quist LLC, dated October 16, 1996.*
Exhibit 10   Text of Press Release, dated October 17, 1996.

 
- ---------------
 
 *  Enclosed with Schedule 14D-9 mailed to Stockholders.
 
(1) Filed as Exhibit 10.4 to Triad Systems Corporation's Report on Form 8-K
    (File No. 0-9505) as filed with the Securities and Exchange Commission on
    August 17, 1992 and incorporated herein by reference.
 
(2) Filed as Exhibit No. 1 to Triad Systems Corporation's Report on Form 8-K
    (File No. 0-9505) as filed with the Securities and Exchange Commission on
    May 10, 1995 and incorporated herein by reference.
 
(3) Filed as Exhibit 4.2 to Triad Systems Corporation's Annual Report on Form
    10-K for the fiscal year ended September 30, 1993 (File No. 0-9505) as filed
    with the Securities and Exchange Commission and incorporated herein by
    reference.

EX-99.1

   1
 
                           OFFER TO PURCHASE FOR CASH
                     ALL OUTSTANDING SHARES OF COMMON STOCK
                       (INCLUDING THE ASSOCIATED RIGHTS)
 
                                       OF
 
                           TRIAD SYSTEMS CORPORATION
                                       AT
 
                              $9.25 NET PER SHARE
 
                                       BY
 
                             CCI ACQUISITION CORP.

                                AN AFFILIATE OF
 
                          COOPERATIVE COMPUTING, INC.
 
         THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
     NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 20, 1996, UNLESS EXTENDED.
 
     THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (A) DETERMINED THAT
EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, (B) APPROVED THE EXECUTION,
DELIVERY AND PERFORMANCE OF THE MERGER AGREEMENT AND THE RELATED STOCKHOLDERS
AGREEMENT REFERENCED BELOW AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND (C) RESOLVED TO RECOMMEND
ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
APPROVAL OF THE MERGER BY THE HOLDERS OF COMPANY COMMON STOCK.
 
     PURSUANT TO THE MERGER AGREEMENT, THE COMPANY EXPECTS TO DISTRIBUTE TO ITS
STOCKHOLDERS OWNERSHIP INTERESTS IN AN ENTITY THAT WILL OWN, DIRECTLY OR
INDIRECTLY, CERTAIN REAL PROPERTY AND RELATED ASSETS OF THE COMPANY. THE MERGER
AGREEMENT PROVIDES THAT SUCH DISTRIBUTION WILL BE MADE IN THE FORM OF A DIVIDEND
PAYABLE TO THE RECORD HOLDERS OF COMPANY COMMON STOCK IMMEDIATELY PRIOR TO THE
ACCEPTANCE OF SHARES IN THE OFFER. THE PAYMENT OF SUCH DIVIDEND IS CONTINGENT
UPON THE CONSUMMATION OF THE OFFER AND IS SUBJECT TO A NUMBER OF CONDITIONS,
INCLUDING COMPLIANCE WITH ALL APPLICABLE LAWS.
 
     PARENT AND PURCHASER HAVE ENTERED INTO A STOCKHOLDERS AGREEMENT WITH
CERTAIN SELLING STOCKHOLDERS, WHICH INCLUDE ALL OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF THE COMPANY, PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH
STOCKHOLDERS HAVE AGREED TO VALIDLY TENDER (AND NOT WITHDRAW) IN THE OFFER, UPON
THE TERMS AND SUBJECT TO THE CONDITIONS THEREOF, APPROXIMATELY 18% OF THE
COMPANY'S OUTSTANDING SHARES (CALCULATED ON A FULLY DILUTED BASIS) AT THE OFFER
PRICE.
 
     THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 51% OF THE OUTSTANDING
SHARES, AND THE FUNDING CONDITION. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1
AND 14 HEREOF.
                             ---------------------
   2
 
                                   IMPORTANT
 
     Any stockholder desiring to tender all or a portion of such stockholder's
Shares and the associated Rights should either (1) complete and sign the Letter
of Transmittal (or a manually signed facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to the Depositary and either deliver the certificates for
such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 hereof or (2) request his broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for him. Any stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Shares.
 
     Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedure for book-entry transfer on a timely basis should tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
 
     Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust companies.
 
                  -------------------------------------------
 
                      The Dealer Manager for the Offer is:
 
                             CHASE SECURITIES INC.
                  -------------------------------------------
 
October 23, 1996
 
                                        2
   3
 
                               TABLE OF CONTENTS
 


                                                                                          PAGE
                                                                                          ----
                                                                                    
INTRODUCTION............................................................................    4
 1.   Terms of the Offer................................................................    5
 2.   Acceptance for Payment and Payment for Shares.....................................    7
 3.   Procedure for Tendering Shares....................................................    8
 4.   Withdrawal Rights.................................................................   10
 5.   Certain Federal Income Tax Consequences of the Offer, the Merger and the
      Spin-Off..........................................................................   11
 6.   Price Range of the Shares; Dividends on the Shares................................   13
 7.   Effect of the Offer on the Market for the Shares, Nasdaq Stock Market Listing,
      Exchange Act Registration and Margin Securities...................................   13
 8.   Certain Information Concerning the Company........................................   14
 9.   Certain Information Concerning Purchaser, Parent, Hicks Muse and HM Inc...........   16
10.   Source and Amount of Funds........................................................   17
11.   Background of the Offer...........................................................   24
12.   Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement;
      the Stockholders Agreement; the Rights Agreement; the Spin-Off; Other Matters.....   25
13.   Dividends and Distributions.......................................................   38
14.   Certain Conditions of the Offer...................................................   38
15.   Certain Legal Matters.............................................................   40
16.   Fees and Expenses.................................................................   41
17.   Miscellaneous.....................................................................   42
Schedule I -- Directors and Executive Officers of Parent, Purchaser and HM Inc..........   I-1

 
                                        3
   4
 
To the Holders of Common Stock of
Triad Systems Corporation:
 
                                  INTRODUCTION
 
     CCI Acquisition Corp., a Delaware corporation ("Purchaser") and an
affiliate of Cooperative Computing, Inc., a Texas corporation ("Parent"), hereby
offers to purchase all of the outstanding shares of the common stock, $.001 par
value (the "Common Stock"), of Triad Systems Corporation, a Delaware corporation
(the "Company"), and the associated common stock purchase rights (the "Rights";
and together with the Common Stock, the "Shares") at a purchase price of $9.25
per Share (the "Offer Price"), net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements hereto
or thereto, collectively constitute the "Offer").
 
     The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 17, 1996, among Parent, Purchaser and the Company (the "Merger
Agreement"). The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, subject to the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company surviving the Merger. Pursuant
to the terms of the Securities Purchase Agreement, dated as of October 16, 1996,
entered into among Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware
limited partnership ("Hicks Muse"), Parent, and Applied Data Specialty, Inc.,
and, Canadian Aftermarket Network, Inc., both of which are Texas corporations
and affiliates of Parent, and Purchaser (the "Securities Purchase Agreement"),
the stockholders of Purchaser have agreed to contribute all of the issued and
outstanding common stock of Purchaser to Parent prior to the consummation of the
Offer (as a result of which, Purchaser will become a wholly owned subsidiary of
Parent). Accordingly, the Company will become a direct wholly owned subsidiary
of Parent (the "Surviving Corporation"). In the Merger, each issued and
outstanding Share (other than Shares owned by stockholders of the Company who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares under
Delaware law ("Dissenting Shares") and Shares directly or indirectly owned by
the Company or any subsidiary of the Company, Parent, Purchaser or any other
subsidiary of Parent) will be converted at the effective time of the Merger (the
"Effective Time") into the right to receive the Offer Price in cash, without
interest and less any required withholding taxes (the "Merger Consideration").
In addition, pursuant to the Merger Agreement, the Company expects to distribute
to its stockholders ownership interests in an entity that will own, directly or
indirectly, certain real property and related assets of the Company (the
"Spin-Off"). The Merger Agreement provides that such distribution will be made
in the form of a dividend payable to the record holders of the Shares
immediately prior to the acceptance of Shares in the Offer. The payment of such
dividend is contingent upon the consummation of the Offer and is subject to a
number of conditions, including compliance with all applicable laws, including
state and federal securities laws.
 
     The Board of Directors of the Company (the "Board") has unanimously (i)
determined that each of the Merger Agreement, the Offer and the Merger is fair
to and in the best interests of the stockholders of the Company (the
"Stockholders"), (ii) approved the execution, delivery and performance of the
Merger Agreement and the Stockholders Agreement referenced below and the
consummation of the transactions contemplated thereby, including the Offer and
the Merger, and (iii) resolved to recommend acceptance of the Offer, approval
and adoption of the Merger Agreement and approval of the Merger by the holders
of the Shares.
 
     Hambrecht & Quist LLC, the Company's financial advisor ("Hambrecht &
Quist"), has delivered to the Company its written opinion, dated October 16,
1996, that the consideration to be received by holders of the Shares pursuant to
the Offer is fair to such Stockholders from a financial point of view. A copy of
the opinion of Hambrecht & Quist is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission")
 
                                        4
   5
 
in connection with the Offer. A copy of the Schedule 14D-9 is being furnished to
the Stockholders concurrently herewith.
 
     The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined in
Section 1 below) that number of Shares (the "Minimum Number of Shares") which
would represent, on a fully diluted basis, at least 51% of the outstanding
Shares (the "Minimum Tender Condition"). The Offer is also subject to certain
other conditions. See Sections 1 and 14.
 
     The Company has informed Purchaser that, as of September 30, 1996, (i)
17,749,158 Shares were issued and outstanding and (ii) 1,838,190 Shares were
reserved for issuance upon the exercise of outstanding stock options
(collectively, "Triad Options") granted by the Company. In addition, the Company
has informed Parent that an estimated 113,500 Shares will be issued under the
Company's 1990 Employee Stock Purchase Plan (the "ESPP") prior to the Expiration
Date. Based on the foregoing, at least 10,047,433 Shares must be validly
tendered and not withdrawn in the Offer in order for the Minimum Tender
Condition to be met.
 
     Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Stockholders Agreement, dated October 17, 1996 (the
"Stockholders Agreement"), with certain Stockholders of the Company (the
"Selling Stockholders") owning, in the aggregate, 3,537,094 (or approximately
18.0%) of the outstanding Shares calculated on a fully-diluted basis (as defined
in the Merger Agreement). Pursuant to the Stockholders Agreement, the Selling
Stockholders, which include all of the members of the Board, have agreed to
validly tender pursuant to the Offer and not withdraw all Shares which are owned
of record or beneficially by them prior to the Expiration Date.
 
     The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote of the Stockholders. Under the Delaware General Corporation
Law ("DGCL"), the Stockholder vote necessary to approve the Merger will be the
affirmative vote of at least a majority of the outstanding Shares, including
Shares held by Purchaser and its affiliates. If the Minimum Tender Condition is
met and the Offer is consummated, Purchaser will own a sufficient number of
shares to cause the Merger to be approved. If Purchaser acquires at least 90% of
the outstanding Shares pursuant to the Offer or otherwise, Purchaser would be
able to effect the Merger pursuant to the "short-form" merger provisions of
Section 253 of the DGCL, without prior notice to, or any action by, any other
Stockholder. In each event, Purchaser intends to effect the Merger as promptly
as practicable following the purchase of Shares in the Offer. See Section 12.
 
     The Merger Agreement, the Stockholders Agreement and the Spin-Off are more
fully described in Section 12. Certain Federal income tax consequences of the
sale of Shares pursuant to the Offer, the exchange of Shares for the Merger
Consideration pursuant to the Merger and the Spin-Off are described in Section
5.
 
     Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer or the
Merger. Purchaser will pay all charges and expenses of Chase Securities Inc., as
the dealer manager (the "Dealer Manager"), ChaseMellon Shareholder Services,
L.L.C., as the depositary (the "Depositary"), and ChaseMellon Shareholder
Services, L.L.C., as the information agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
 
1. TERMS OF THE OFFER
 
     Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section 4
below prior to the Expiration Date. As used in the Offer, the term "Expiration
Date" shall mean 12:00 midnight, New York City time, on Wednesday, November 20,
1996, unless and until Purchaser, in accordance with the terms of the Offer and
the Merger Agreement, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as
 
                                        5
   6
 
so extended by Purchaser, shall expire. As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1(c)(6) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
 
     In the event that the Offer is not consummated, Purchaser may seek to
acquire additional Shares through open market purchases, privately negotiated
transactions, or otherwise, upon such terms and conditions and at such prices as
it shall determine, which may be more or less than the Offer Price and could be
for cash or other consideration.
 
     The Offer is conditioned upon, among other things, satisfaction of each of
the Minimum Tender Condition and the Funding Condition (as defined herein), and
the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act"). The Offer is also subject to certain
other conditions set forth in Section 14 below. Subject to the terms of the
Merger Agreement, Purchaser expressly reserves the right (but shall not be
obligated) to waive any or all of the conditions of the Offer. Subject to the
terms of the Merger Agreement, if by the Expiration Date any or all of the
conditions of the Offer are not satisfied or waived, Purchaser reserves the
right (but shall not be obligated) to (i) extend the period during which the
Offer is open and, subject to the rights of tendering Stockholders to withdraw
their Shares, retain all tendered Shares until the Expiration Date, (ii) waive
or reduce the Minimum Tender Condition or waive any or all of the conditions of
the Offer and, subject to complying with applicable rules and regulations of the
Commission, accept for payment or purchase all validly tendered Shares and not
extend the Offer, or (iii) terminate the Offer and not accept for payment any
Shares and return promptly all tendered Shares to tendering Stockholders.
 
     Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to the Depositary and by making a public announcement
of such extension. There can be no assurance that Purchaser will exercise its
right to extend the Offer. Purchaser also expressly reserves the right, subject
to applicable laws (including applicable regulations of the Commission
promulgated under the Exchange Act), and to the terms of the Merger Agreement,
at any time or from time to time, (i) to delay acceptance for payment of or
payment for any Shares, regardless of whether the Shares were theretofore
accepted for payment, or to terminate the Offer and not accept for payment or
pay for any Shares not theretofore accepted for payment or paid for, upon the
occurrence of any of the conditions specified in Section 14 below, by giving
oral or written notice of such delay in payment or termination to the
Depositary, and (ii) to amend the Offer in any respect, by giving oral or
written notice to the Depositary. Any extension, delay in payment, termination
or amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such announcement other than by
issuing a release to the Dow Jones News Service or as otherwise may be required
by law. The reservation by Purchaser of the right to delay acceptance for
payment of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires that Purchaser pay the consideration
offered or return the Shares deposited by or on behalf of Stockholders promptly
after the termination or withdrawal of the Offer. Any delay in acceptance for
payment or payment beyond the time permitted by applicable law will be
effectuated by an extension of the period of time during which the Offer is
open.
 
     Pursuant to the terms of the Merger Agreement, Parent and Purchaser
expressly reserved the right to amend or modify the terms of the Offer, except
that, without the prior written consent of the Company, Purchaser may not (and
Parent shall not cause Purchaser to) (i) decrease the Offer Price or the form of
consideration therefor or decrease the number of Shares sought pursuant to the
Offer, (ii) change, in any material respect, the conditions to the Offer, (iii)
impose additional material conditions to the Offer, (iv) waive the Minimum
Tender Condition, (v) extend the Expiration Date (except that Purchaser may
extend the Expiration Date (a) as required by law, (b) for up to ten business
days after the initial Expiration Date or for longer periods (not to exceed 90
calendar days from the date of commencement) in the event that any condition to
the Offer is not satisfied, or (c) for one or more times for an aggregate period
of up to 15 days
 
                                        6
   7
 
(not to exceed 90 calendar days from the date of commencement) for any reason
other than those specified in the immediately preceding clauses (a) and (b)), or
(vi) amend any term of the Offer in any manner materially adverse to holders of
Shares; provided, however, that, except as set forth above, Purchaser may waive
any other condition to the Offer in its sole discretion; and provided further,
that the Offer may be extended in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the Commission. Assuming the prior satisfaction or
waiver of the conditions to the Offer, Purchaser shall accept for payment, and
pay for, in accordance with the terms of the Offer, all Shares validly tendered
and not properly withdrawn pursuant to the Offer as soon as practicable after
the Expiration Date.
 
     The Commission has announced that, under its interpretation of Rules
14d-4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a
tender offer or information concerning a tender offer may require that the
tender offer be extended so that it remains open a sufficient period of time to
allow security holders to consider such material changes or information in
deciding whether or not to tender or withdraw their securities. The minimum
period during which an offer must remain open following material changes in the
terms of the Offer or information concerning the Offer, other than a change in
price or a change in percentage of securities sought, will depend upon the facts
and circumstances, including the relative materiality of the terms or
information. If Purchaser decides to increase or, subject to the consent of the
Company, to decrease the consideration in the Offer, to make a change in the
percentage of Shares sought or, subject to the consent of the Company, to change
or waive the Minimum Tender Condition and, if at the time that notice of any
such changes is first published, sent or given to Stockholders, the Offer is
scheduled to expire at any time earlier than the tenth business day after (and
including) the date of such notice, then the Offer will be extended at least
until the expiration of such period of ten business days.
 
     The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares by Purchaser.
 
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
 
     Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) and,
under the terms of the Offer, pay for Shares that are validly tendered and not
properly withdrawn on or prior to the Expiration Date, as soon as practicable
after the later of the following dates: (i) the Expiration Date and (ii) the
date of satisfaction or waiver of all of the conditions to the Offer set forth
herein. Purchaser expressly reserves the right, in its discretion, subject to
applicable laws and regulations, to delay acceptance for payment of or payment
for Shares in order to comply, in whole or in part, with any applicable law,
government regulation or condition contained herein. See Section 14 below.
 
     In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to such Shares) and (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees, and all other documents required by the Letter of
Transmittal. See Section 3 below.
 
     For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to tendering
Stockholders whose Shares have theretofore been accepted for payment. If, for
any reason,
 
                                        7
   8
 
acceptance for payment of any Shares tendered pursuant to the Offer is delayed,
or Purchaser is unable to accept for payment Shares tendered pursuant to the
Offer, then, without prejudice to Purchaser's rights under Section 14, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn, except to the extent that the tendering
Stockholders are entitled to withdrawal rights as described in Section 4 below
and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no
circumstances will interest on the Offer Price be paid by Purchaser, regardless
of any delay in making such payment.
 
     If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for such Shares
not purchased or tendered will be returned pursuant to the instructions of the
tendering Stockholder without expense to the tendering Stockholder (or, in the
case of Shares delivered by book-entry transfer, into the Depositary's account
at a Book-Entry Transfer Facility (as defined in Section 3) pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility) as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
 
     If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
 
     Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its or Parent's affiliates the right to
purchase Shares tendered pursuant to the Offer; however no such transfer or
assignment will release Purchaser from its obligations under the Offer or
prejudice the rights of tendering Stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
 
3. PROCEDURE FOR TENDERING SHARES
 
     Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (a) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date and either (i) certificates
representing Shares must be received by the Depositary at any such address prior
to the Expiration Date or (ii) such Shares must be delivered pursuant to the
procedures for book-entry transfer set forth below and a Book-Entry Confirmation
(as defined below) must be received by the Depositary prior to the Expiration
Date or (b) the tendering Stockholder must comply with the guaranteed delivery
procedures set forth below. No alternative, conditional or contingent tenders
will be accepted.
 
     Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at such Book-Entry Transfer
Facility in accordance with that Book-Entry Transfer Facility's procedure for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to, and received
by, the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, or the tendering Stockholder
must comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account at
a Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
 
     Signature Guarantee. Signatures on Letters of Transmittal must be
guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Exchange Act) or of the National
 
                                        8
   9
 
Association of Securities Dealers, Inc. (the "NASD"), or by a commercial bank or
trust company having an office or correspondent in the United States or by any
other "Eligible Guarantor Institution" (as defined in Rule 17A.d-15 under the
Exchange Act) (each of the foregoing constituting an "Eligible Institution"),
unless the Shares tendered thereby are tendered (i) by a registered holder of
Shares who has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If the certificates representing
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal or if payment is to be made or certificates for Shares not
accepted for payment or not tendered are to be issued to a person other than the
registered holder, then the certificates representing Shares must be endorsed or
accompanied by appropriate stock powers, in each case signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed as described above
and as provided in the Letter of Transmittal. See Instructions 1 and 5 of the
Letter of Transmittal.
 
     Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, such Shares may nevertheless be tendered if all of the
following guaranteed delivery procedures are compiled with:
 
          (i) such tender is made by or through an Eligible Institution;
 
          (ii) a properly completed and duly executed Notice of Guaranteed
     Delivery, substantially in the form provided by Purchaser herewith, is
     received by the Depositary as provided below prior to the Expiration Date;
     and
 
          (iii) the certificates for all tendered Shares in proper form for
     transfer or a Book-Entry Confirmation with respect to all tendered Shares,
     together with a properly completed and duly executed Letter of Transmittal
     (or a manually signed facsimile thereof) and any other documents required
     by the Letter of Transmittal, are received by the Depositary within three
     Nasdaq Stock Market trading days after the date of execution of such Notice
     of Guaranteed Delivery.
 
     THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED
BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN
ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF
GUARANTEED DELIVERY.
 
     IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY.
 
     THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
 
     Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or Book-Entry Confirmation with
respect to) such Shares, and a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantee and all other documents required by the Letter of
Transmittal.
 
     BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER OR THE MERGER, EACH
SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL
INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE
LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL. SEE
SECTION 5 BELOW.
 
                                        9
   10
 
     Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time or receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive or to amend any of the conditions of the
Offer. Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of the Purchaser, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
 
     Other Requirements. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such Stockholder's rights with
respect to the Shares tendered by such Stockholder and purchased by Purchaser
and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares, on or after the date of the Offer. All such
powers of attorney and proxies shall be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such Stockholder with
respect to such Shares (and any other Shares or other securities so issued in
respect of such purchased Shares) will be revoked, without further action, and
no subsequent powers of attorney and proxies may be given (and, if given, will
not be deemed effective) by such Stockholder. The designees of Purchaser will be
empowered to exercise all voting and other rights of such Stockholder with
respect to such Shares (and any other Shares or securities so issued in respect
of such purchased Shares) as they in their sole discretion may deem proper,
including, without limitation, in respect of any annual or special meeting of
the Stockholders, or any adjournment or postponement thereof, or in connection
with any action by written consent in lieu of any such meeting or otherwise
(including any such meeting or action by written consent to approve the Merger).
Purchaser reserves the absolute right to require that, in order for Shares to be
validly tendered, immediately upon Purchaser's acceptance for payment of such
Shares, Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including voting at any meeting of Stockholders then
scheduled.
 
     A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Stockholder's acceptance of the terms and conditions of
the Offer. Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering Stockholder and
Purchaser upon the terms and conditions of the Offer.
 
4. WITHDRAWAL RIGHTS
 
     Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided herein, may also be withdrawn at
any time after December 21, 1996. If Purchaser extends the Offer, is delayed in
its purchase of or payment for Shares or is unable to purchase or pay for Shares
for any reason, then, without prejudice to the rights of Purchaser hereunder,
tendered Shares may be retained by the Depositary on behalf of Purchaser and may
not be withdrawn except to the extent that tendering Stockholders are entitled
to withdrawal rights as set forth in this Section 4.
 
     The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or return Shares deposited by or on behalf of Stockholders promptly
after the termination or withdrawal of the Offer.
 
                                       10
   11
 
     For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing Shares have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering Stockholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn, and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution
(except in the case of Shares tendered for the account of an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the applicable Book-Entry Transfer
Facility to be credited with the withdrawn Shares. All questions as to form and
validity (including time of receipt) of notice of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination shall be final and
binding on all parties. No withdrawal of Shares shall be deemed to have been
properly made until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failing to give such notification.
 
     Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
 
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER, THE MERGER AND THE
SPIN-OFF
 
     The following is a summary of the material federal income tax consequences
of the Offer, the Merger and the Spin-Off to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
the Merger Consideration in the Merger (including any cash amounts received by
dissenting Stockholders pursuant to the exercise of appraisal rights). The
discussion applies only to holders of Shares in whose hands Shares are capital
assets, and may not apply to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation, or to holders of Shares who
are not citizens or residents of the United States.
 
     THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER, THE
MERGER AND THE SPIN-OFF, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL
AND FOREIGN TAX LAWS.
 
     Receipt of the Offer Price or the Merger Consideration. The receipt by a
holder of Shares of the Offer Price or the Merger Consideration (including any
cash amounts received by dissenting Stockholders pursuant to the exercise of
appraisal rights) in exchange for such Shares will be a taxable transaction for
federal income tax purposes. In general and subject to the effect of the
Spin-Off discussed below, for federal income tax purposes, a holder of Shares
will recognize gain (or loss) equal to the difference between his adjusted tax
basis in the Shares sold pursuant to the Offer or converted to cash in the
Merger and the amount of cash received therefor. Gain (or loss) must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain (or loss) will be capital gain (or loss) and will
be long-term gain (or loss) if, on the date of sale (or, if applicable, the
Effective Time), the Shares were held for more than one year.
 
     The Spin-Off. Contingent upon the consummation of the Offer, the Company
expects to declare a dividend payable to Stockholders of record immediately
prior to the acceptance of Shares in the Offer consisting of ownership interests
in an entity ("Spinco") that will own, directly or indirectly, certain real
property and related assets of the Company. Receipt by holders of Shares of the
stock of Spinco pursuant to the Spin-Off will be a taxable event. Following the
consummation of the Offer and the occurrence of the Merger, Purchaser currently
intends to cause the Company to file its tax returns and information returns on
 
                                       11
   12
 
the basis that the Spin-Off is a distribution of the stock of Spinco subject to
Section 301 of the Internal Revenue Code of 1986, as amended (the "Code").
However, the authorities governing the treatment of the Spin-Off for federal
income tax purposes are unclear, and consequently, the amount and character of
the taxable income or loss recognized upon such receipt is uncertain.
 
     Assuming the Spin-Off will be treated as a distribution subject to Section
301 of the Code, the amount of the distribution will equal the fair market value
of the shares of Spinco, and such distribution of the shares of Spinco will be
taxable to the holders of Shares at the time the shares of Spinco are
unqualifiedly subject to their demands. The amount distributed would be taxable
as a dividend (and hence as ordinary income) for federal income tax purposes to
the extent of the Company's current and accumulated earnings and profits
allocable to the distribution of the shares of Spinco. Under generally
applicable rules, the amount, if any, of the dividend that exceeds such earnings
and profits would first be treated as a non-taxable return of capital to the
extent of the Stockholder's tax basis in such Stockholder's Shares, and such
Stockholder's tax basis would be reduced accordingly (but not below zero), and
thereafter as capital gain, long-term capital gain if the holder has held the
Shares for more than one year. In the case of the Spin-Off, however, at the time
of the distribution of the stock of Spinco the holders of Shares who tendered
pursuant to the Offer will have previously disposed of such Shares in exchange
for the Offer Price (and, in the event the Merger occurs prior to the Spin-Off,
the holders of Shares receiving Merger Consideration will have previously
disposed of such Shares in exchange for Merger Consideration). As a result, if
the Spin-Off is taxed as a distribution under Section 301 of the Code and if the
amount of the distribution exceeds the allocable earnings and profits of the
Company, the proper calculation of the resultant gain (or loss) is unclear; the
amount, if any, of such excess may be treated as capital gain. The determination
of a corporation's earnings and profits requires complex factual and legal
analyses; moreover, the amount of a corporation's current earnings and profits
cannot be determined until the close of the taxable year of the distribution. To
the extent that the receipt of the Spinco shares is treated as a dividend under
the foregoing rules, certain corporate stockholders may be eligible for the
dividends received deduction with respect to such dividend, subject to certain
holding period and other limitations.
 
     It is possible, however, that instead of being taxed for federal income tax
purposes as a distribution under Section 301 of the Code, the distribution of
the stock of Spinco would be taxed as consideration received in constructive
redemption of the Shares in conjunction with the sale of the Shares for the
Offer Price or the Merger Consideration, as the case may be. If this treatment
applies, a holder of Shares would recognize gain or loss equal to the difference
between (i) the sum of the Offer Price or the Merger Consideration and the fair
market value of the Spinco shares received and (ii) such holder's adjusted tax
basis in the Shares. Holders of Shares should be aware that because the Spin-Off
may occur in a taxable year which succeeds the year of receipt of the Offer
Price or the Merger Consideration, a Stockholder may be required to treat a
portion of such Stockholder's Shares (and hence a corresponding portion of such
Stockholder's adjusted tax basis in the Shares) as being redeemed by the Company
in exchange for the shares of Spinco. As a consequence, such Stockholder may
recognize a greater amount of capital gain in the earlier year than would be the
case if the Spin-Off is treated for tax purposes as giving rise to dividend
income (as discussed above), subject to recognizing correspondingly reduced
income equal to such allocated basis in Shares in the succeeding year. Any such
gain (or loss) (including with respect to a deemed redemption) will be capital
gain or loss and will be long-term capital gain (or loss) if, on the date of the
exchange, the Stockholder has held the Shares for more than one year.
 
     Regardless of whether the receipt of the shares of Spinco is treated as a
distribution under Section 301 of the Code or as consideration for the
constructive redemption of shares, a holder's tax basis in the shares of Spinco
generally will be equal to the fair market value of the Spinco shares on the
date of the distribution, and a new holding period will begin for the Spinco
shares. In addition, the federal tax consequences described above may vary with
respect to persons who purchase Shares after the consummation of the Offer but
prior to the Effective Time of the Merger.
 
     Backup Withholding. Payments in connection with the Offer, the Merger or
the Spin-Off may be subject to "backup withholding" at a 31% rate. Backup
withholding generally applies if the Stockholder (a) fails to furnish his social
security number or other taxpayer identification number ("TIN"), (b) furnishes
an
 
                                       12
   13
 
incorrect TIN, (c) fails properly to report interest or dividends or (d) under
certain circumstances, fails to provide a certified statement, signed under
penalties of perjury, that the TIN provided is his correct number and that he is
not subject to backup withholding. Backup withholding is not an additional tax
but merely an advance payment, which may be refunded to the extent it results in
an overpayment of tax. Certain persons generally are exempt from backup
withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Each Stockholder should consult with
his own tax advisor as to his qualification for exemption from withholding and
the procedure for obtaining such exemption.
 
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
 
     According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995 (the "Company 10-K"), the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1996 (the "Company 10-Q") and
information supplied to Purchaser by the Company, the Shares commenced trading
on Nasdaq Stock Market under the symbol "TRSC" on December 18, 1979. Based on
the foregoing, the Company has never paid regular cash dividends on the Shares;
further, the Merger Agreement prohibits the Company from declaring or paying any
dividend or distribution on the Shares (other than the Spin-Off). The following
table sets forth, for the periods indicated, the high and low closing sales
prices per Share on the Nasdaq Stock Market.
 


                                                                            HIGH     LOW
                                                                            ----     ----
                                                                               
    Fiscal Year 1995:
      First Quarter....................................................... $5 3/8   $4 5/8
      Second Quarter......................................................  6        5
      Third Quarter.......................................................  7 5/8    5 5/8
      Fourth Quarter......................................................  7 5/8    5 1/8
    Fiscal Year 1996:
      First Quarter.......................................................  6 3/8    5 1/4
      Second Quarter......................................................  6 3/4    5 1/2
      Third Quarter.......................................................  6 7/8    5 1/4
      Fourth Quarter......................................................  6 5/8    4 3/4
    Fiscal Year 1997:
      First Quarter (through October 22, 1996)............................  9 11/16  5

 
     On October 16, 1996, the last full trading day before the public
announcement of Purchaser's intention to acquire the Shares, the closing sales
price per Share on the Nasdaq Stock Market was $5.50. On October 22, 1996, the
last full trading day before the commencement of the Offer, the closing sales
price per Share on the Nasdaq Stock Market was $9 11/16 per Share. Stockholders
are urged to obtain current market quotations for the Shares.
 
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ STOCK MARKET
   LISTING, EXCHANGE ACT REGISTRATION AND MARGIN SECURITIES
 
     The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
 
     The extent of the public market for the Shares and, according to the
published guidelines of the NASD, the continued trading of the Shares on the
Nasdaq Stock Market, after commencement of the Offer, will depend upon the
number of holders of Shares remaining at such time, the interest in maintaining
a market in such Shares on the part of securities firms, the possible
termination of registration of such Shares under the Exchange Act, as described
below, and other factors.
 
                                       13
   14
 
     The Company has informed Purchaser that, as of September 30, 1996,
17,749,158 Shares were outstanding. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, trading of the Shares on the Nasdaq Stock
Market is discontinued, the liquidity of and market for the Shares could be
adversely affected. Purchaser cannot predict whether or to what extent the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future prices to be greater or less than the
Offer Price.
 
     The Shares are currently registered under Section 12(g) of the Exchange
Act. Registration of the Shares under the Exchange Act may be terminated upon
application by the Company to the Commission if the Shares are neither listed on
a national securities exchange nor held by more than 300 holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the Commission and could make certain provisions of the
Exchange Act no longer applicable to the Company such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
144A promulgated under the Securities Act of 1933, as amended, may be impaired
or eliminated.
 
     Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following consummation of the
Merger.
 
     The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the loan value of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for listing on the Nasdaq Stock
Market.
 
8. CERTAIN INFORMATION CONCERNING THE COMPANY
 
     The Company is a Delaware corporation with its principal executive offices
located at 3055 Triad Drive, Livermore, California 94550. According to the
Company 10-K, the Company is a leading provider of business and information
management solutions for the automotive aftermarket and the hardlines and lumber
industry. The Company offers customers a variety of proprietary database
products with periodic updates, software and hardware products, financing and
ongoing support services.
 
     Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the Company 10-K, the
Company 10-Q and the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all of the financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
 
                                       14
   15
 
                           TRIAD SYSTEMS CORPORATION
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
                                 (IN THOUSANDS)
 
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
 


                                                                          
                                                                          
                                                                          
                                                                          
                                             NINE MONTHS    NINE MONTHS
                                                ENDED          ENDED          YEAR ENDED SEPTEMBER 30,
                                              JUNE 30,       JUNE 30,      ------------------------------
                                                1996           1995            1995             1994
                                             -----------    -----------    -------------    -------------
                                             (UNAUDITED)    (UNAUDITED)
                                                                                
Total revenues.............................   $ 125,602      $ 127,270       $ 175,077        $ 167,278
Operating income...........................       1,542         14,075          20,532           19,361
Income (loss) before income taxes and
  extraordinary
  charge...................................      (1,186)         8,819          13,591           11,902
Provision for (benefit from) income
  taxes....................................        (451)         3,351           5,165            4,523
Income (loss) before extraordinary
  charge...................................        (735)         5,468           8,426            7,379
Extraordinary charge on repurchase of debt,
  net of taxes.............................          --            153             396              143
Net income (loss)..........................        (735)         5,315           8,030            7,236

 
CONSOLIDATED BALANCE SHEET DATA:
 


                                                                           
                                                                           
                                                                                  AT SEPTEMBER 30,
                                             AT JUNE 30,    AT JUNE 30,    ------------------------------
                                                1996           1995            1995             1994
                                             -----------    -----------    -------------    -------------
                                             (UNAUDITED)    (UNAUDITED)   
                                                                                
Total current assets.......................   $  37,291      $  37,913       $  34,777        $  38,386
Total assets...............................     134,059        131,087         132,709          136,363
Notes payable and current portion of
  long-term debt...........................       7,575          6,699           3,032            6,773
Total current liabilities..................      37,366         37,193          33,346           38,302
Long-term debt.............................      50,806         52,756          52,577           56,633
Total liabilities..........................     119,533        122,114         118,488          124,222
Stockholders' equity.......................      14,526          8,973          14,221           12,141

 
     Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance therewith, the Company files
periodic reports, proxy statements and other information with the Commission
under the Exchange Act relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the Commission located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies may be obtained
upon payment of the Commission's prescribed fees by writing to its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549.
 
     Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although Purchaser and Parent do not have any knowledge
that any such information is untrue, neither Purchaser nor Parent takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
 
                                       15
   16
 
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, HICKS MUSE AND HM INC.
 
     Purchaser, a Delaware corporation, was organized to acquire all the
outstanding Shares pursuant to the Merger Agreement and has not conducted any
unrelated activities since its organization. All of the outstanding capital
stock of Purchaser (the "Purchaser Stock") is owned by Glenn E. Staats and
Preston W. Staats, Jr., who are currently the sole stockholders of Parent (the
"Parent Stockholders"). Pursuant to the terms of the Securities Purchase
Agreement, the Parent Stockholders have agreed to contribute the Purchaser Stock
to Parent prior to the consummation of the Offer, as a result of which
contribution, Purchaser will become a wholly owned subsidiary of Parent. The
principal executive offices of Purchaser are located at 6207 Bee Cave Road,
Austin, Texas 78746.
 
     Parent, a Texas corporation, is a provider of business and information
technology solutions to the automotive aftermarket industry. The principal
executive offices of Parent are located at 6207 Bee Cave Road, Austin, Texas
78746. Parent offers customers electronic catalogs, interchange and other
database products, as well as enterprise wide software applications integrated
with computer hardware and full implementation and ongoing support. Parent also
provides facilities management services to many of its large customers. Glenn E.
Staats and Preston W. Staats, Jr. may convey a significant portion of their
shares in Parent to certain employees and others in connection with the
transactions contemplated hereby.
 
     Hicks Muse has agreed, pursuant to the Securities Purchase Agreement, to
make an equity investment in Parent simultaneously with the consummation of the
Offer, the proceeds of which investment Parent intends to contribute to
Purchaser to use, along with the proceeds of the Tender Facility (as defined
below), to purchase Shares in the Offer and to pay the expenses of the
transactions contemplated by the Offer. A portion of such equity investment may
be made by affiliates of Hicks Muse or by certain other persons designated by
Hicks Muse. The ultimate general partner of Hicks Muse is Hicks Muse Fund III
Incorporated, a Texas corporation ("HM Inc."). The principal executive offices
of Hicks Muse are located at 200 Crescent Court, Suite 1600, Dallas, Texas
75201. For a description of the Securities Purchase Agreement, see Section 10.
 
     During the last five years, none of Purchaser, Parent, Hicks Muse or HM
Inc., or, to the best knowledge of Purchaser or Parent, any of the persons
listed in Schedule I (i) has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
Federal or state securities laws or finding any violation of such laws. The
name, business address, present principal occupation or employment, five-year
employment history and citizenship of each director and executive officer of
Purchaser, Parent, and HM Inc. are set forth in Schedule I.
 
     None of Purchaser, Parent, Hicks Muse or HM Inc. or, to the best knowledge
of Purchaser or Parent, any of the persons listed in Schedule I or any associate
or majority owned subsidiary of any such persons, beneficially owns or has a
right to acquire any equity security of the Company. None of Purchaser, Parent,
Hicks Muse or HM Inc. or, to the best knowledge of Purchaser or Parent, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
 
     Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent, Hicks Muse or HM Inc. or, to the best knowledge of Purchaser or Parent,
any of the persons listed in Schedule I has any contract, arrangement,
understanding or relationship (whether or not legally enforceable) with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies; (ii) there have been no contacts,
negotiations or transactions between Purchaser, Parent, Hicks Muse or HM Inc. or
any of their respective subsidiaries or, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I on the one hand, and the Company
or any of its directors, officers or affiliates, on the other hand, that are
required to be disclosed pursuant to the rules and regulations of the
Commission.
 
                                       16
   17
 
10. SOURCE AND AMOUNT OF FUNDS
 
     Parent and Purchaser estimate that the total amount of funds required by
the Purchaser to purchase all of the 17,749,158 Shares issued and outstanding,
the 1,838,190 Shares issuable upon the exercise of outstanding Triad Options and
the estimated 113,500 Shares issuable under the ESPP, pursuant to the Offer and
the Merger (net of proceeds receivable by the Company upon exercise of the Triad
Options and contributions under the ESPP aggregating $7.6 million) will be
approximately $174.7 million. In addition, Parent and Purchaser estimate that
the total amount of funds required to refinance certain existing indebtedness of
the Company and Parent, provide for working capital and pay fees and expenses
incurred in connection with the Offer and the Merger will be approximately $61.3
million.
 
     The Parent and Purchaser expect to obtain debt and equity financing in an
aggregate amount of approximately $236 million for the purchase of Shares by the
Purchaser in the Offer and the payment of related fees and expenses, and the
refinancing of certain of existing indebtedness of the Company and Parent, of
which up to $140 million will be obtained from the bank facilities described
below, and a minimum of $95 million will be obtained from the sale by Parent of
its common stock to Hicks Muse (which amount will be contributed by Parent to
the capital of Purchaser (the "Equity Financing")). At the closing of the
Merger, Parent and Purchaser expect that the Company, as the Surviving
Corporation, will obtain the funds to refinance the borrowings of Parent,
Purchaser, and the Company under each of the Tender Facility and the Interim
Facility described below and to finance the purchase price of permitted
acquisitions and for general corporate purposes, through bank borrowings by the
Company in an aggregate amount of up to $170 million.
 
     The following table has been prepared by Parent and Purchaser after
discussions with management of the Company and sets forth the approximate
amounts, proposed sources, and uses of funds necessary to consummate the Offer
and the Merger:
 
                                                                      
    Sources:
      Bank financing.......................................................  $140,000,000
      Sale of Common Stock.................................................    96,000,000
                                                                             ------------
              Total........................................................  $236,000,000
                                                                             ============
    Uses:
      Purchase stock of the Company(1).....................................  $174,700,000
      Refinance existing debt of the Company...............................    36,700,000
      Refinance existing debt of Parent....................................     5,100,000
      Working capital requirements.........................................     4,000,000
      Transaction costs....................................................    15,500,000
                                                                             ------------
              Total........................................................  $236,000,000
                                                                             ============

    
 
- ---------------
 
(1) Amount represents the amount payable to purchase the 17,749,158 Shares
    issued and outstanding, the 1,838,190 Shares issuable upon the exercise of
    outstanding Triad options and the estimated 113,500 Shares issuable under
    the ESPP, net of proceeds receivable by the Company upon exercise of the
    Triad Options and contributions under the ESPP aggregating $7.6 million).
 
  Credit Facilities
 
     The following is a summary of the material terms of the Bank Commitment
Letter (as defined below). This summary is not a complete description of the
terms and conditions thereof and is qualified in its entirety by reference to
the full text thereof which is incorporated herein by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Bank Commitment Letter may be examined, and copies thereof may be obtained,
as set forth in Section 8 above.
 
     Pursuant to a commitment letter, dated October 16, 1996, among Purchaser,
the Chase Manhattan Bank ("Chase") and Chase Securities Inc. ("CSI") (the "Bank
Commitment Letter"), Chase has committed to provide for (i) a senior credit
facility of up to $103.5 million, which may be used to finance the Offer (and a
 
                                       17
   18
 
portion of which may be used by Parent in order to refinance certain of its
indebtedness and to provide for its general corporate requirements) (the "Tender
Facility"), (ii) a senior credit facility of up to $36.5 million to be made
available to the Company until the date of the Merger to provide for the
refinancing or defeasance of certain indebtedness of the Company (the "Interim
Facility") and (iii) a senior credit facility of up to $170.0 million which may
be used in order to finance the Merger and certain related expenses, to
refinance certain indebtedness of the Company (including the Interim Facility),
to repay amounts owing under the Tender Facility and to provide financing for
future acquisitions in the same line of business and for other general corporate
purposes (the "Merger Facility", and together with the Tender Facility and the
Interim Facility, the "Credit Facilities").
 
     Chase's commitment under the Bank Commitment Letter and CSI's agreement to
perform the services described therein are subject to (a) their not becoming
aware after the date of the Bank Commitment Letter of any information or other
matter which in their reasonable judgment (i) is materially inconsistent in a
material and adverse manner with any information or other matter disclosed to
them prior to the date of the Bank Commitment Letter (including any material
potential liability or contingent obligation not reflected in the Projections
(as defined in the Bank Commitment Letter)) or (ii) could reasonably be expected
to have a material adverse effect on the business, operations, financial
condition or prospects of Parent, Purchaser, the Company and their subsidiaries
taken as a whole or on their ability to perform the covenants and obligations in
a timely manner under the financing agreements, (b) there not having occurred a
material disruption of or material adverse change in financial, banking or
capital market conditions that, in their reasonable judgment, could materially
impair the syndication of any of the Credit Facilities, (c) their satisfaction
that there shall have been no competing offering, placement or arrangement of
any debt securities or bank financing by or on behalf of Parent, Purchaser, the
Company, Hicks Muse or any of their respective affiliates prior to and during
the syndication of the Credit Facilities (which, in the case of Hicks Muse or
any of its other affiliates, would materially impair the syndication of the
Credit Facilities), (d) the negotiation, execution and delivery on or before
January 15, 1997 of definitive documentation with respect to the Credit
Facilities reasonably satisfactory to Chase and its counsel and (e) the other
conditions set forth in the term sheets included in the Bank Commitment Letter.
 
     Tender Facility. The borrower of the Tender Facility will be Purchaser,
provided that to the extent that Parent will refinance any of its existing
indebtedness of up to $5.1 million (the "Parent Refinancing") or will require
funds for its general corporate purposes of up to $3.4 million, Parent will be
permitted to be a borrower or Purchaser will be permitted to make intercompany
advances to Parent therefor (the "Parent Uses"). Loans under the Tender Facility
will be available for multiple draws (the "Tender Loans") which, once repaid,
may not be reborrowed. The proceeds of the Tender Loans will be used to finance,
in part, (i) the acquisition by Purchaser of not less than 51% of the Shares,
(ii) the payment of interest, fees and other expenses incurred in connection
with the Offer and the Merger and (iii) the Parent Uses. The Tender Facility
will be repayable at any time after three months following the closing date upon
demand but in no event later than the earlier of the date of the Merger and six
months after the closing date.
 
     The Tender Loans bear interest at floating rates (equalling the highest of
(i) the prime rate announced by Chase, (ii) the secondary market rate for
certificates of deposit plus 1% or (iii) the federal funds effective rate from
time to time plus 0.5%) or Eurodollar rates, plus certain applicable margins.
 
     The Tender Facility will be guaranteed by Parent and each of its direct and
indirect subsidiaries other than the Company and its subsidiaries and certain
foreign subsidiaries (each of Parent and such subsidiaries being referred to as
a "Tender Credit Party"). The Tender Facility will be secured by a perfected
first priority pledge of (i) all of the capital stock of Purchaser and, unless
Purchaser owns at least 90% of all of the shares of the Company, all shares of
the Company owned by Purchaser or any affiliate or designee thereof, whether
acquired in the Offer or otherwise, (ii) all intercompany notes, and (iii) to
the extent permitted under its existing contractual obligations, the material
tangible and intangible assets of Parent.
 
     The definitive financing documentation with respect to the Tender Facility
will contain customary representations, warranties and covenants (including,
without limitation the following: limitations on indebtedness; liens; mergers,
consolidations, liquidations, and dissolutions; sales of assets; leases;
dividends, stock
 
                                       18
   19
 
repurchases and other payments in respect of capital stock; capital
expenditures; investments, loans and advances; optional payments of subordinated
debt; modifications of equity and debt instruments; transactions with
affiliates; sale and leasebacks; changes in fiscal year; negative pledge
clauses; and, in the case of Purchaser, conduct of business or the incurrence of
liabilities other than those related to the Offer and the Merger). Certain
negative covenants will include customary exceptions. The Tender Facility will
also contain customary events of default (including nonpayment of principal when
due, nonpayment of interest, fees or other amounts within certain time periods,
material inaccuracy of representations and warranties, violation of covenants
with a grace period in the case of certain affirmative covenants, cross-default,
bankruptcy, certain ERISA events, material judgments, actual or asserted
invalidity of any loan document or change of control).
 
     Chase's obligation to fund the Tender Facility is contingent upon a number
of material conditions, including: (i) each Tender Credit Party shall have
executed and delivered satisfactory definitive financing documentation with
respect to the Tender Facility; (ii) Parent shall have received the Equity
Financing and shall have contributed all proceeds thereof to Purchaser for use
in connection with the Offer; (iii) the Offer shall have been (or shall
concurrently be) consummated pursuant to the Merger Agreement; the Spin-Off
shall have occurred prior to (or concurrently with) the Merger as contemplated
in the Merger Agreement in such a manner as to provide the Company with a
release in respect of its indebtedness secured by the real estate distributed
pursuant thereto; and no material provision of the Merger Agreement or the
Securities Purchase Agreement shall have been amended, supplemented, waived or
otherwise modified without the prior written consent of Chase, as agent under
the Credit Facilities (the "Agent"); (iv) the Board shall have approved the
Offer; (v) Purchaser shall have acquired, concurrently with the making of the
first loans not less than 51% of the Common Stock of the Company, and there
shall not have been any material change in the Shares outstanding on October 16,
1996 (net of treasury shares and after giving effect to any dilution), other
than the issuance of options to acquire shares under the Company's stock option
plans as of such date; (vi) the documents and materials filed publicly by
Parent, Purchaser and the Company in connection with the Offer and the Merger
shall be reasonably satisfactory in form and substance to the Agent; (vii) the
capital structure, corporate structure, ownership and management of each Tender
Credit Party after the Offer and as contemplated by the Merger Agreement shall
be reasonably satisfactory in all respects, Parent, Purchaser and their
subsidiaries shall have no outstanding indebtedness, liens or preferred equity
after giving effect to the Offer other than indebtedness or liens under the
Tender Facility or existing on October 16, 1996 (to the extent not refinanced in
the Parent Refinancing), and such other indebtedness, liens or preferred equity
as shall be approved by the Lenders, and the sources and uses of funding for the
Offer and Merger shall be as set forth in the Bank Commitment Letter; (viii) all
fees and expenses required to be paid on or before the closing date to the
Lenders, the Agent and CSI shall have been paid; (ix) all governmental,
shareholder and third party approvals necessary or advisable in connection with
the Offer, the Merger, the financing contemplated by the Bank Commitment Letter
and the continuing operations of Parent, Purchaser, the Company and their
subsidiaries after the Offer, the Merger and the contemplated contribution (the
"Surviving Corporation Contribution") by Parent after the consummation of the
Merger of its assets (other than the stock of the Surviving Corporation) to the
Surviving Corporation shall have been obtained and be in full force and effect
(or there shall be a plan reasonably satisfactory to the Agent for obtaining
thereof) and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Offer, the
Merger, the Surviving Corporation Contribution or the financing thereof; (x) the
Lenders shall have received (A) a satisfactory projected pro forma balance sheet
of Parent, Purchaser, the Company and their subsidiaries as at the closing date,
consistent with the statement of proposed sources and uses as set forth in the
Bank Commitment Letter, (B) audited financial statements of the Company for 1992
through 1995, (C) unaudited financial statements of the Parent for 1992 through
1995 and satisfactory evidence of a satisfactory review thereof by a nationally
recognized accounting firm, and (D) unaudited interim combined financial
statements of each of Parent, Purchaser, the Company for each fiscal month (if
reasonably available) and quarterly period ended subsequent to December 31, 1995
as to which such financial statements are available, and such financial
statements shall not, in the reasonable judgment of the Lenders, reflect any
material adverse change in the financial condition of any of them as reflected
in the financial statements or projections previously furnished to the Lenders,
and the Lenders shall be satisfied that projected combined financial results for
Parent, Purchaser
 
                                       19
   20
 
and the Company for the 1996 fiscal year will be achieved; (xi) the Lenders
shall have received a reasonably satisfactory business plan or budget for Parent
and Purchaser and their subsidiaries (including the Company) (the "Business
Plan") for the remainder of the 1996 fiscal year and the fiscal year 1997; (xii)
the Lenders shall be satisfied that, following the Offer, the Merger and the
Surviving Corporation Contribution, the leasing subsidiaries of the Surviving
Corporation will have available to them independent financing in amounts and on
terms that will enable them to support the sales of the Surviving Corporation as
necessary to achieve the Business Plan; (xiii) the Lenders shall have received
the results of a recent lien, tax and judgment search and such search shall
reveal no liens on any of their assets (other than the real estate which is the
subject of the Spin-Off) except for liens permitted by the credit documentation
or liens to be discharged in connection with the contemplated transactions;
(xiv) all actions necessary or advisable to perfect the lien of the Agent shall
have been taken and all fees shall have been paid or duly provided for; (xv) the
Agent shall have received satisfactory evidence that the fees and expenses to be
incurred in connection with the Offer, the Merger and the financing thereof
shall not exceed an amount reasonable and customary for transactions of this
type; (xvi) the Lenders shall have received a satisfactory solvency opinion from
an independent valuation firm satisfactory to the Agent which shall document the
solvency of Parent, Purchaser, the Surviving Corporation and their subsidiaries
taken as a whole after giving effect to the Offer, the Merger, the Surviving
Corporation Contribution and the other transactions contemplated hereby; (xvii)
the Lenders shall have received a satisfactory environmental audit or review
with respect to the material real property owned or leased by Parent, Purchaser,
the Company and their subsidiaries; (xviii) the Agent shall have determined that
reasonably satisfactory insurance relating to Parent, Purchaser, the Company and
their subsidiaries will be in place after the Offer and the Merger; (xiv) the
leases entered into by Parent in connection with the Spin-Off shall be on terms
and conditions reasonably satisfactory to the Agent; (xv) the Lenders shall have
received such legal opinions, documents and other instruments as are customary
for transactions of this type or as they may reasonably request.
 
     Chase's obligations to fund each Tender Loan are subject to certain
on-going conditions including: (i) all representations and warranties in the
definitive financing documentation with respect to the Tender Facility
(including, without limitation, the material adverse change and litigation
representations) being true and correct in all material respects and (ii) there
being no default or event of default in existence at the time of, or after
giving effect to the making of, such Tender Loan.
 
     Interim Facility. The borrower of the Interim Facility will be the Company.
Loans under the Interim Facility will be available for multiple draws (the
"Interim Loans") which, once repaid, may not be reborrowed. The Interim Loans
will be used to finance, in part, the refinancing or defeasance of the existing
indebtedness of the Company. The Interim Loans will be repayable at any time
after three months following the closing date of the Interim Facility upon
demand but in no event later than the earlier of the date of the Merger and six
months after such closing date.
 
     The Interim Loans bear interest at a floating rate (equalling the highest
of (i) the prime rate announced by Chase, (ii) the secondary market rate for
certificates of deposit plus 1% or (iii) the federal funds effective rate from
time to time plus 0.5%) or Eurodollar rates, plus certain applicable margins.
 
     The Interim Facility will be guaranteed by each of the direct and indirect
subsidiaries of the Company (each, an "Interim Credit Party") other than certain
foreign subsidiaries. The Interim Facility will be secured by a perfected first
priority security interest in all of the material tangible and intangible assets
of the Company and its subsidiaries to the extent permitted under the existing
contractual obligations of the Company and its subsidiaries.
 
     The Interim Facility will contain customary representations, warranties and
covenants (including, without limitation, limitations on indebtedness; liens;
mergers, consolidations, liquidations, and dissolutions; sales of assets;
leases; dividends, stock repurchases and other payments in respect of capital
stock; capital expenditures; investments, loans and advances; optional payments
of subordinated debt; modifications of equity and debt instruments; transactions
with affiliates; sale and leasebacks; changes in fiscal year; negative pledge
clauses). Certain negative covenants will include customary exceptions. The
Interim Facility will also contain customary events of default (including
nonpayment of principal when due, nonpayment of interest,
 
                                       20
   21
 
fees or other amounts within certain time periods, material inaccuracy of
representations and warranties, violation of covenants with a grace period in
the case of certain affirmative covenants, cross-default, bankruptcy, certain
ERISA events, material judgments, actual or asserted invalidity of any loan
document or change of control).
 
     Chase's obligations to lend under the Interim Facility is contingent upon a
number of material conditions, including: (i) each Tender Credit Party shall
have executed and delivered satisfactory definitive financing documentation with
respect to the Tender Facility, (ii) the first loans shall have been made under
the Tender Facility and the conditions precedent thereto shall have been
satisfied, (iii) all actions necessary or advisable to perfect the lien of the
Agent shall have been taken and all fees shall have been paid or duly provided
for, and (iv) the Lenders shall have received such legal opinions, documents and
other instruments as are customary for transaction of this type or as they may
reasonably request.
 
     Chase's obligations to fund each Interim Loan are subject to certain
on-going conditions including: (i) all representations and warranties in the
definitive financing documentation with respect to the Interim Facility
(including, without limitation, the material adverse change and litigation
representations) being true and correct in all material respects and (ii) there
being no default or event of default in existence at the time of, or after
giving effect to the making of, such Interim Loan.
 
     Merger Facility. The borrower of the Merger Facility will be the Company,
as the Surviving Corporation. Loans under the Merger Facility will be available
in the form of a six-year senior secured $135.0 million term loan (the "Term
Loan") and a six-year senior secured $35.0 million revolving loan (the
"Revolving Loan" and together with the Term Loan, the "Merger Loans"), of which
up to an agreed amount may be used for letters of credit and swing line loans.
The Term Loan will be repayable pursuant to an amortization schedule to be
agreed upon, and the Revolving Loan is repayable on a date approximately six
years after the closing date of the Merger Facility. The proceeds of the Term
Loan will be used to (i) refinance the borrowings of Purchaser and Parent under
the Tender Facility, (ii) finance the payment of the consideration payable in
the Merger to remaining holders of shares, (iii) refinance all or such portion
of the indebtedness of the Company outstanding after the Merger, including the
Interim Facility, (iv) pay fees and expenses of the Merger and the Tender Offer,
and (v) to finance general corporate expenditures. The proceeds of the Revolving
Loan shall be used for working capital purposes and other general corporate
purposes of the Company and its subsidiaries and, for the Merger in an amount
not to exceed $5.0 million.
 
     The Merger Loans will bear interest at a floating rate (equalling the
highest of (i) the prime rate announced by Chase, (ii) the secondary market rate
for certificates of deposit plus 1% or (iii) the federal funds effective rate
from time to time plus 0.5%) or Eurodollar rates, plus certain applicable
margins.
 
     The Merger Loans will be subject to mandatory prepayment provisions from
the net proceeds from sales or issuances of debt or equity, the sale or other
disposition by Parent, the Company or any of their respective subsidiaries of
assets and excess cash flow, subject to certain exceptions.
 
     The Merger Facility will be guaranteed by Parent and each of its direct and
indirect subsidiaries (each a "Merger Credit Party") other than the Company and
certain foreign subsidiaries. The Merger Facility will be secured by a perfected
first priority security interest in (i) all of the capital stock of the Company
and each of its direct and indirect subsidiaries (provided that if the pledge of
all of the capital stock of any foreign subsidiary would have adverse tax
consequences, only 65% of the capital stock of such foreign subsidiary shall be
required to be pledged) and (ii) all tangible and intangible assets except for
those assets as to which the agent shall determine that the costs of obtaining
such a security interest are excessive in relation to the value of the security
to be afforded thereby.
 
     The Merger Facility will contain customary representations, warranties and
covenants (including, without limitation, the following: limitations on
indebtedness; liens; mergers, consolidations, liquidations, and dissolutions;
sales of assets; leases; dividends, stock repurchases and other payments in
respect of capital stock; capital expenditures; investments, loans and advances;
optional payments of subordinated debt; modifications of equity and debt
instruments; transactions with affiliates; sale and leasebacks; changes in
fiscal year; negative pledge clauses; changes in lines of business; and changes
in passive holding company status of Parent after the
 
                                       21
   22
 
consummation of the Merger). The Merger Facility will also contain customary
events of default (including nonpayment of principal when due, nonpayment of
interest, fees or other amounts within certain time periods, material inaccuracy
of representations and warranties, violation of covenants with a grace period in
the case of certain affirmative covenants, cross-default, bankruptcy, certain
ERISA events, material judgments, actual or asserted invalidity of any loan
document or change of control).
 
     Chase's obligations to lend under the Merger Facility is contingent upon a
number of material conditions, including: (i) each Merger Credit Party shall
have executed and delivered satisfactory definitive financing documentation with
respect to the Merger Facility, (ii) all obligations of Purchaser or the
Surviving Corporation under the Tender Facility and the Company under the
Interim Facility shall have been refinanced with the proceeds of the Merger
Facility, (iii) the Spin-Off shall have occurred on a basis that provides to the
Company a release from its obligations under the indebtedness secured by the
underlying real estate, the Merger shall have been (or shall be concurrently
therewith) consummated pursuant to the Merger Agreement and all required
stockholder approval to effect the Merger shall have been obtained, and no
material provision of the Merger Agreement shall have been amended,
supplemented, waived or otherwise modified without the prior written consent of
the Agent; (iv) except for certain agreed indebtedness, neither Purchaser nor
the Surviving Corporation shall have any outstanding indebtedness, liens or
preferred equity after giving effect to the Merger other than such indebtedness,
liens or preferred equity as shall be approved by the Lenders, (v) the documents
and materials filed publicly by Parent, Purchaser and the Company in connection
with the Offer and the Merger shall have been furnished to the Agent, (vi) the
Lenders, the Agent and CSI shall have received all fees and expenses required to
be paid on or before the closing date; (vii) except for certain agreed
approvals, all governmental, shareholder and third party approvals necessary or
advisable in connection with the Merger, the Spin-Off, the Surviving Corporation
Contribution, the financing contemplated by the Bank Commitment Letter and the
continuing operations of Parent, Purchaser and their subsidiaries after the
Merger and the Surviving Corporation Contribution shall have been obtained and
be in full force and effect and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
Offer, the Merger, the Spin-Off, the Surviving Corporation Contribution or the
financing thereof; (viii) all actions necessary or advisable to perfect the lien
of the Agent shall have been taken and all fees shall have been paid or duly
provided for; (ix) the Agent shall have received satisfactory evidence that the
fees and expenses to be incurred in connection with the Offer, the Merger and
the financing thereof shall not exceed an amount reasonably and customary for
transactions of this type; (x) the Agent shall have determined that reasonably
satisfactory insurance relating to Parent, Purchaser, the Company and their
subsidiaries will be in place after the Offer and the Merger; and (xi) the
Lenders shall have received such legal opinions, documents and other instruments
as are customary for transactions of this type or as they may reasonably
request.
 
     Chase's obligations to fund each Merger Loan are subject to certain
on-going conditions including: (i) all representations and warranties in the
definitive financing documentation with respect to the Merger Facility
(including, without limitation, the material adverse change and litigation
representations) being true and correct in all material respects and (ii) there
being no default or event of default in existence at the time of, or after
giving effect to the making of, such Merger Loan.
 
     The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock (including the Shares) if such credit is secured
directly or indirectly by margin stock. The Purchaser believes that the
financing of the acquisition of the Shares will be in full compliance with or
not subject to the margin regulations.
 
  THE SECURITIES PURCHASE AGREEMENT
 
     The following is a summary of the material terms of the Securities Purchase
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Securities Purchase Agreement may be examined, and copies thereof may be
obtained, as set forth in Section 8 above.
 
                                       22
   23
 
     Pursuant to the Securities Purchase Agreement, Hicks Muse has agreed to
make the Equity Financing simultaneously with the consummation of the Offer, the
proceeds of which Parent intends to contribute to Purchaser to use, along with
the proceeds from the Tender Facility, to purchase the Shares in the Offer and
to pay the expenses of the transactions contemplated by the Offer.
 
     The Securities Purchase Agreement provides that prior to and as a condition
of the Equity Financing, the Parent Stockholders will contribute all the capital
stock of Purchaser to Parent, at which time Purchaser will become a wholly owned
subsidiary of Parent. The Securities Purchase Agreement also provides that
Applied Data Specialty, Inc. and Canadian Aftermarket Network, Inc., which are
affiliates of Parent (wholly owned by the Parent Stockholders), will be merged
with and into Parent prior to and as a condition to the Equity Financing. Hicks
Muse's obligation to consummate the Equity Financing is also conditioned upon
there being validly tendered and not withdrawn prior to the time the Offer
expires a number of Shares which constitutes at least 51% of the Shares on a
fully-diluted basis and such Shares having been accepted for payment by
Purchaser in accordance with the terms of the Offer and the Offer having
otherwise been consummated.
 
     In addition, the Equity Financing is conditioned upon certain other
customary closing conditions, including but not limited to (i) the
representations and warranties of Parent and the Parent Stockholders being true
and complete in all material respects as of the closing of the Equity Financing,
(ii) Parent and the Parent Stockholders having complied with and performed all
of their covenants and conditions to be complied with or performed prior to
closing (iii) Parent having obtained all approvals, consents or waivers
scheduled in the Securities Purchase Agreement or required to be scheduled
therein or necessary or advisable to the consummations of the transactions
contemplated thereby (iv) the expiration or termination of the applicable HSR
Act waiting period and (v) there being no order, decree or judgement of any
court, agency or governmental entity (as defined therein) being rendered against
any party to the Securities Purchase Agreement which would render it unlawful as
of the closing date to effect the transactions contemplated thereby in
accordance with its terms.
 
     The Securities Purchase Agreement provides that it may be terminated (i) by
mutual written consent of Hicks Muse and Parent; (ii) by either Hicks Muse or
Parent if the closing of the Equity Financing shall not have occurred on or
before February 1, 1997; (iii) by either Hicks Muse or Parent if there shall
have been entered a final, nonappealable order or injunction or any governmental
entity restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof; (iv) by either Hicks Muse or
Parent if, prior to the closing, Parent or the Parent Stockholders with respect
to Hicks Muse, or Hicks Muse with respect to Parent, is in material breach of
any representation, warranty, covenant or agreement contained in the Securities
Purchase Agreement and such breach shall not be cured within fifteen (15) days
of the date of notice of default served by the party claiming such material
default, provided that such terminating party shall not also be in material
breach of such agreement at the time notice of termination is delivered; (vi) by
either Hicks Muse or Parent if the Merger Agreement shall have been terminated;
or (vii) by Hicks Muse in the event it shall request Parent to terminate the
Merger Agreement or Offer in accordance with its rights under the Securities
Purchase Agreement.
 
     The Securities Purchase Agreement provides that without the express written
consent of Hicks Muse, neither Parent nor Purchaser shall amend or modify the
Merger Agreement or the terms of the Offer or waive any condition of or right
under or with respect to the Offer or the Merger Agreement. Each of Parent and
Purchaser also agrees to exercise its rights under the Merger Agreement in
accordance with the reasonable requests of Hicks Muse (including without
limitation the right to terminate the Merger Agreement in the event it has such
right). Notwithstanding the foregoing, neither Parent nor Purchaser is required
to take any action that would cause it to breach the Merger Agreement. Further,
nothing in the Securities Purchase Agreement prevents Parent or Purchaser from
terminating the Merger Agreement or the Offer in accordance with their
respective terms without the consent of Hicks Muse.
 
     Pursuant to the Securities Purchase Agreement in the event the Offer is not
consummated and Parent, Canadian Aftermarket Network, Inc. or Applied Data
Specialty, Inc. receives any fee from the Company or any of its affiliates (as
defined) in the nature of a topping fee, bust-up fee or any similar arrangement
(the "Company Topping Fee"), such company agrees to pay to Hicks Muse a fee
equal to 50% of the Company
 
                                       23
   24
 
Topping Fee after deduction of any portion of such fee Purchaser and its
affiliates are required to pay to their financing sources for the Offer (other
than to Parent and Hicks Muse and their affiliates).
 
11. BACKGROUND OF THE OFFER
 
     During the period from August 1994 through January 1996, certain members of
senior management of the Company and Parent met on at least five occasions and
discussed, in general terms, a possible business alliance or business
combination between Parent and the Company. Although neither price nor the
specific terms of any business combination were discussed at any of the
meetings, it was assumed by the parties that the Company, as a public company,
would be the surviving entity in any business combination. Following the January
1996 meeting, management of Parent determined that acquisition of the Company by
Parent would best enable Parent and its shareholders to achieve their strategic
goals.
 
     In June 1996, Hicks Muse and Parent entered into a confidentiality
agreement whereby Hicks Muse agreed to treat as confidential certain information
provided to it by Parent. During June and July 1996, on several occasions
representatives of Parent met, and had telephone conversations, with
representatives of Hicks Muse regarding a potential acquisition of the Company
by Parent. During this period, representatives of Hicks Muse conducted a due
diligence review of Parent. At certain of the meetings, Parent made a formal
presentation regarding the potential acquisition, including estimates of
requisite financing, market information, and pro forma financial information and
projections (which, with respect to the Company, were based solely on the
publicly-available information filed by the Company with the Commission). In
July 1996, Parent received a verbal commitment from Hicks Muse that Hicks Muse
or an affiliate thereof would provide equity financing for the acquisition by
Parent of the Company and would also assist in arranging debt financing for the
transaction.
 
     During the last week of July and first two weeks of August 1996,
representatives of CSI and Coopers & Lybrand visited Parent's offices to conduct
a due diligence review of Parent. At the conclusion of their due diligence
review, Chase made an oral commitment, subject to certain conditions, to provide
debt financing for the acquisition of the Company by Parent.
 
     On August 21, 1996 members of senior management of Parent met with members
of senior management of the Company and a representative of Richard C. Blum &
Associates, L.P. ("Blum") at the Company's offices in Livermore, California.
Blum is the beneficial owner of approximately 11.3% of the Company's outstanding
Shares and Richard C. Blum, Chairman and President of Blum, is a director of the
Company. At that meeting, Parent first introduced the idea of an acquisition of
the Company by Parent or an affiliate thereof and indicated that it had arranged
for the financing of such a transaction. The meeting was adjourned and
reconvened on August 22, 1996. Messrs. Hicks and Blum, along with other
representatives of Blum, joined the reconvened meeting, at which time the
possible transaction was discussed. At that meeting, Parent stated that it was
prepared to proceed with an acquisition of the Company at a price of $7.50 per
share. This proposal did not contemplate the Spin-Off, which was subsequently
negotiated by the parties. The participants also discussed the possibility of
Blum rolling over the Shares beneficially owned by it into an investment in
Parent in connection with an acquisition of the Company by Parent. Accordingly,
on August 29, 1996, Parent and Blum entered into a confidentiality agreement
whereby Blum agreed to treat as confidential certain information provided to it
by Parent. On September 3 and 4, 1996, representatives of Blum visited Parent's
headquarters to conduct a due diligence review of Parent. Representatives of
Hicks Muse were also present.
 
     On September 5, 1996, during a regularly scheduled meeting of the Board,
the potential acquisition by Parent was discussed generally by the Board. The
Board authorized the Company to continue discussions with Parent regarding a
potential transaction. In connection therewith, Mr. Blum informed Mr. Hicks (a)
that Blum was not willing to consider any transaction that was not made
available to all stockholders of the Company and (b) that although the Board was
prepared to entertain Parent's proposal, it considered the price of $7.50 per
Share inadequate.
 
     On September 9, 1996, Blum informed Parent in writing that Blum would not
participate in a transaction involving the Company that was not made available
to all of the Company's stockholders. Accordingly, Blum decided that it would
not roll over its investment in the Company into Parent.
 
                                       24
   25
 
     On September 24, 1996, Hicks Muse delivered a commitment letter to Parent
providing for, among other things and subject to certain conditions, an
investment by Hicks Muse or an affiliate thereof in the common equity of Parent,
and the purchase of debt securities of Parent to be funded at the consummation
of the Merger.
 
     On September 27, 1996, Hicks Muse delivered a letter to the Company stating
that Hicks Muse and Parent were prepared to offer to purchase all of the
outstanding Shares at a price of $9 per Share in cash. This proposal also did
not contemplate the Spin-Off which was subsequently negotiated by the parties.
On October 3, 1996, the Board held a special meeting to review the proposed
offer from Hicks Muse and Parent and concluded that, in order to maximize the
consideration to be received by the Company's stockholders, the real estate
owned by the Company in Livermore, California, should be excluded from the
transaction and the Company should seek an increase in the cash price per share.
Over the next two weeks, representatives of Parent, the Company, Hicks Muse and
Blum negotiated the details of the structure of the transaction, including the
Spin-Off and the Offer Price.
 
     On October 16, 1996, Chase and CSI delivered the Bank Commitment Letter to
Purchaser regarding certain debt financing in connection with the Offer and the
Merger, subject to the terms and conditions set forth therein.
 
     On October 16, 1996, the Board unanimously approved the Offer, the Merger,
the Merger Agreement, and the Spin-Off at a special meeting, and, in the early
morning hours of October 17, 1996, Purchaser, Parent and the Company executed
the Merger Agreement, and Parent, the Company and the Selling Stockholders
executed the Stockholders Agreement. On October 17, 1996, the Company and Parent
issued a joint press release announcing the execution of the Merger Agreement.
On October 23, 1996, Purchaser commenced the Offer.
 
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
    AGREEMENT; THE STOCKHOLDERS AGREEMENT; THE RIGHTS AGREEMENT; THE SPIN-OFF;
    OTHER MATTERS
 
  Purpose of the Offer and the Merger; Plans for the Company
 
     The purpose of the Offer and the Merger is to enable Parent, through
Purchaser, to acquire, in one or more transactions, control of the Board, and
the entire equity interest in, the Company. The Offer is intended to increase
the likelihood that the Merger will be completed promptly.
 
     Parent intends, from time to time after completion of the Offer, to
evaluate and review the Company's assets, operations, management and personnel
and consider what, if any, changes would be desirable in light of circumstances
which then exist. Parent reserves the right to take such actions or effect such
changes as it deems advisable.
 
     Following the completion of the Merger, Parent presently intends to
integrate the Company's business with Parent's existing operations. Parent
regards this integration as an opportunity to achieve certain cost savings.
 
     Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of assets, involving the Company or any subsidiary or any
other material changes in the Company's capitalization, dividend policy,
corporate structure, business or composition of its management.
 
  THE MERGER AGREEMENT
 
     The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
 
                                       25
   26
 
     The Offer. The Merger Agreement provides for the commencement of the Offer,
in connection with which the Purchaser has expressly reserved the right to waive
certain conditions of the Offer; however, without the prior written consent of
the Company, Purchaser has agreed not to (i) decrease the Offer Price or the
form of consideration therefor or decrease the number of Shares sought pursuant
to the Offer, (ii) change, in any material respect, the conditions to the Offer,
(iii) impose additional material conditions to the Offer, (iv) waive the
condition that there shall be validly tendered and not withdrawn prior to the
time the Offer expires a number of Shares which constitutes at least 51% of the
Shares outstanding on a fully-diluted basis (as defined in the Merger Agreement)
on the date of purchase, (v) extend the expiration date of the Offer (except
that Purchaser may extend the expiration date of the Offer (a) as required by
law, (b) for up to ten business days after the initial expiration date or for
longer periods (not to exceed 90 calendar days from the date of commencement) in
the event that any condition to the Offer is not satisfied, or (c) for one or
more times for an aggregate period of up to 15 days (not to exceed 90 calendar
days from the date of commencement) for any reason other than those specified in
the immediately preceding clauses (a) or (b)), or (vi) amend any term of the
Offer in any manner materially adverse to holders of Shares; provided, however,
that, except as set forth above, Purchaser may waive any other condition to the
Offer in its sole discretion; and provided further, that the Offer may be
extended in connection with an increase in the consideration to be paid pursuant
to the Offer so as to comply with applicable rules and regulations of the
Commission.
 
     Board Representation. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its subsidiaries of such number of Shares which
represents at least 51% of the outstanding Shares on a fully-diluted basis (as
defined in the Merger Agreement), and from time to time thereafter, Parent shall
be entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors of
the Board of the Company) as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board equal to the
product of (x) the number of directors on the Board (giving effect to any
increase in the number of directors pursuant to the Merger Agreement) and (y)
the percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being the "Board Percentage"). The
Company has agreed, upon request of Parent, to promptly satisfy the Board
Percentage by increasing the size of the Board or using its best efforts to
secure the resignations of such number of directors as is necessary to enable
Parent's designees to be elected to the Board and to cause Parent's designees
promptly to be so elected, provided that no such action shall be taken which
would result in there being, prior to the consummation of the Merger, less than
two directors of the Company that are not affiliated with Parent. Following the
election or appointment of Parent's designees pursuant to the Merger Agreement
and prior to the Effective Time of the Merger, any amendment or termination of
the Merger Agreement, extension for the performance or waiver of the obligations
or other acts of Parent or Purchaser or waiver of the Company's rights
thereunder shall require the concurrence of a majority of the directors of the
Company then in office who are Continuing Directors. The term "Continuing
Directors" means (i) each member of the Board on the date of the Merger
Agreement who voted to approve the Merger Agreement and (ii) any successor to
any Continuing Director that was recommended to succeed such Continuing Director
by a majority of the Continuing Directors then on the Board.
 
     Consideration to be Paid in the Merger. The Merger Agreement provides that
upon the terms (but subject to the conditions) set forth in the Merger
Agreement, Purchaser will be merged with and into the Company. In the Merger, at
the Effective Time, by virtue of the Merger and without any action on the part
of Purchaser, the Company or the holders of any of the Shares, each Share issued
and outstanding immediately prior to the Effective Time (excluding Shares owned
directly or indirectly by the Company or any of its subsidiaries or by Parent,
Purchaser or any other subsidiary of Parent and Dissenting Shares) shall be
converted into the right to receive $9.25 per share in cash, without any
interest thereon, less any required withholding taxes. Each share of the capital
stock of Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
 
     Stockholder Meeting. The Merger Agreement provides that as soon as
practicable after the date thereof, the Company and Parent shall prepare and
file with the Commission a proxy statement (if required by
 
                                       26
   27
 
applicable law) in definitive form relating to a meeting of the Stockholders to
approve the Merger (as may be amended from time to time, the "Proxy Statement").
Pursuant to the Merger Agreement, the Company is required to use its best
efforts to respond to all Commission comments with respect to the Proxy
Statement and to cause the Proxy Statement to be mailed to the Stockholders at
the earliest practicable date. The Merger Agreement also provides that the
Company will, as soon as practicable following the acceptance for payment of and
payment for Shares in the Offer, duly call, give notice of, convene and hold a
meeting (the "Special Meeting") of its Stockholders for the purpose of approving
the Merger Agreement and the transactions contemplated thereby. At the Special
Meeting, Parent shall cause all the Shares then owned by Parent and Purchaser
and any of their subsidiaries or affiliates to be voted in favor of the Merger.
Notwithstanding the foregoing, the Merger Agreement provides that in the event
if Purchaser acquires at least 90% of the outstanding Shares in the Offer, the
Merger may be effected without a meeting of the Stockholders in accordance with
Section 253 of the DGCL.
 
     Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and power, capital structure, corporate authorization,
noncontravention, consents and approvals, Commission filings, information
supplied, compliance with applicable laws, litigation, taxes, pension and
benefit plans and ERISA, absence of certain changes or events, absence of
material liabilities, opinion of financial advisor, vote required, labor
matters, intangible property, environmental matters, real property, board
recommendation, material contracts, related party transactions, indebtedness,
liens and other matters.
 
     Parent and Purchaser have also made certain representations and warranties
with respect to corporate existence and power, corporate authorization, consents
and approvals, noncontravention, information supplied, board recommendation,
financing, and other matters.
 
     Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, except
as otherwise provided in the Merger Agreement or consented to by Parent, the
Company and its subsidiaries will conduct their business in the usual, regular
and ordinary course of business in substantially the same manner as conducted
prior to the date of the Merger Agreement and shall use all reasonable efforts
to preserve intact their business organizations, keep available the services of
its current officers and employees and preserve relationships with third parties
with whom they have business dealings to the end that their goodwill and ongoing
business shall not be impaired in any material respect at the Effective Time.
The Company has further agreed that it shall not, nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make any other
distributions in respect of any of its capital stock (other than the Spin-Off);
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase or otherwise
acquire any shares of its capital stock, except as required by the terms of its
securities already outstanding or as contemplated by the Merger Agreement or
employee benefit and dividend reinvestment plans in effect as of October 17,
1996; (iv) grant any options, warrants or rights to purchase Shares or amend or
reprice any option or any of the Company's stock option plans; (v) amend the
ESPP, permit any person not a participant in the ESPP on October 17, 1996 to
become a participant in the ESPP, or permit any participant in the ESPP to
increase such participant's current payroll deductions with respect to the ESPP;
or (vi) issue, deliver or sell, or authorize or propose to issue, deliver or
sell, any shares of its capital stock, any Company voting debt or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Company voting debt or convertible securities, other than (a) issuances
of shares upon the exercise of options granted under stock option plans of the
Company which were outstanding as of October 17, 1996, or in satisfaction of
stock grants or stock based awards made prior to October 17, 1996 pursuant to
stock option plans of the Company or based upon individual agreements such as
employment agreements or executive termination agreements (in each case, as in
effect on October 17, 1996), or the issuance of options to purchase up to 75,000
Shares in connection with an offer of employment outstanding on the date of
October 17, 1996; and (b) issuances by a wholly owned subsidiary of its capital
stock to its parent; (vii) make or propose to make any changes in its
Certificate of Incorporation or Bylaws; (viii) acquire or agree to acquire by
merger or consolidation or purchase a substantial equity interest in or
substantial portion of assets of any corporation, partnership, association or
other business organization or division thereof; (ix) sell,
 
                                       27
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lease, encumber or otherwise dispose of, or agree to sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, any
of its assets except for dispositions of real property or non-material
dispositions in the ordinary course of business consistent with past practice
which are not material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole; (x) authorize, recommend, or propose to adopt a
plan of complete or partial liquidation or dissolution except as permitted by
the Merger Agreement; (xi) take or agree to take any action that would result in
any of the Company's representations or warranties contained in the Merger
Agreement being untrue in any material respects or any of the Company's
covenants contained in the Merger Agreement not being satisfied in all material
respects; (xii) increase in any manner the compensation of directors, officers
or key employees, other than in the ordinary course and consistent with past
practice, pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any benefit plans or pension
plans of the Company as in effect on October 17, 1996 to any such director,
officer or key employee, enter into any new, or materially amend any existing,
employment, severance or termination agreement with any such director, officer
or key employee or, except as may be required by law, become obligated under any
new employee benefit plan or pension plan; (xiii) assume or incur indebtedness
for borrowed money or act as guarantor for any such indebtedness, issue or sell
any debt securities or warrants or rights to acquire debt securities or
guarantee any debt securities of others, or enter into any lease or create any
mortgages, liens or security interests on Company property or enter into any
"keep well" or other agreement or arrangement to maintain the financial
condition of another person other than certain arrangements disclosed in the
Merger Agreement; (xiv) enter into any contract, agreement or other document or
instrument that would be required to be filed with the Commission or enter into
any amendment, modification or waiver under any contract, agreement or other
document or instrument previously filed with the Commission which amendment,
modification or waiver would be required to be so filed; (xv) take any action,
other than in the ordinary course of business consistent with past practice or
as required by the Commission or by law, with respect to accounting policies,
procedures and practices; or (xvii) incur any capital expenditures in excess of
$2,000,000, or any product or software development costs in excess of $4,000,000
in the aggregate.
 
     Other Agreements. The Company, Parent and Purchaser have agreed to use
their respective best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement and the Stockholders
Agreement, subject, as applicable, to Stockholder approval, including
cooperating fully with the other party, including by provision of information
and making of all necessary filings in connection with, among other things,
approvals under the HSR Act. Parent and the Company have also made certain
agreements regarding publicity, access to information and confidentiality.
 
     No Solicitation. From and after the date of the Merger Agreement until the
termination thereof, neither the Company nor any of its subsidiaries, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) (such officers,
directors, employees, representatives, agents, affiliates, investment bankers,
attorneys and accountants being collectively referred to as "Representatives"),
will, directly or indirectly, initiate, solicit or encourage (including by way
of furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain an Acquisition Proposal
or agree to or endorse any Acquisition Proposal, and neither the Company nor any
of its subsidiaries will authorize or permit any of its Representatives to take
any such action, and the Company shall notify Parent orally (within one business
day) and in writing (as promptly as practicable) of all of the relevant details
relating to, and all material aspects of, all inquiries and proposals which it
or any of its subsidiaries or any of their respective Representatives may
receive relating to any of such matters and, if such inquiry or proposal is in
writing, the Company shall deliver to Parent a copy of such inquiry or proposal
promptly; provided, however, that the Board is not prohibited from (i)
furnishing information to, or entering into discussions with, any person or
entity that makes an unsolicited written bona fide Acquisition Proposal and in
respect of which such person or entity has the necessary funds or commitments
therefor if, and only to the extent that, (A) the Board, after consultation with
and based upon the advice of independent legal counsel
 
                                       28
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(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to stockholders under applicable law, (B) prior to
taking such action, the Company (x) provides reasonable notice to Parent to the
effect that it is taking such action and (y) receives from such person or entity
an executed confidentiality agreement in reasonably customary form, and (C) the
Company shall promptly and continuously advise Parent as to all of the relevant
details relating to, and all material aspects of, any such discussions or
negotiations, or (ii) failing to make or withdrawing or modifying its
recommendation to the holders of the Shares to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger, and to accept the
Offer and tender their Shares pursuant thereto, if there exists an Acquisition
Proposal and the Board, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board to comply with its fiduciary duties to stockholders under applicable
law. The term "Acquisition Proposal" means any of the following transactions
(other than the transactions between the Company, Parent and Purchaser
contemplated in the Merger Agreement) involving the Company or any of its
subsidiaries: (i) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 15% or more of the
assets (other than real property) of the Company and its subsidiaries taken as a
whole, in a single transaction or series of transactions; (iii) any tender offer
or exchange offer for 15% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act
in connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
 
     Fees and Expenses. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expense, except
as otherwise provided in the Merger Agreement and except with respect to claims
for damages incurred as a result of the breach of the Merger Agreement. In
addition, the Company has agreed to pay Parent a fee in immediately available
funds equal to $4,000,000 upon the termination of the Merger Agreement in
accordance with the terms thereof if any of the following events occurs (each, a
"Trigger Event"): (i) the Board shall have withdrawn or adversely modified, or
taken a public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders Agreement; or (ii) an Acquisition Proposal has been recommended or
accepted by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by the Merger Agreement)
with respect to an Acquisition Proposal. In the event (i) the Merger Agreement
shall be terminated in accordance with its terms, (ii) at or prior to such
termination, any person or group of persons shall have made an Acquisition
Proposal (each such person or member of a group of such persons being referred
to as a "Designated Person"), and (iii) either (A) a transaction contemplated by
the term "Acquisition Proposal" shall be consummated, on or before the 90th day
following the termination of the Merger Agreement, with any Designated Person or
any affiliate of any Designated Person or (B) the Company or any of its
subsidiaries shall enter into an agreement, on or before the 90th day following
the termination of the Merger Agreement, with respect to an Acquisition Proposal
with any Designated Person or any affiliate of any Designated Person and a
transaction contemplated by the term "Acquisition Proposal" shall thereafter be
consummated with such Designated Person or affiliate thereof, then the Company
shall pay to Parent a fee in immediately available funds equal to $4,000,000,
such fee to be paid contemporaneously with the consummation of the contemplated
transaction. Any amounts payable to Parent pursuant to the foregoing that are
not paid when due shall bear interest at the rate of 9% per annum from the date
due through and including the date paid.
 
     Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction
prior to the Closing Date of the following conditions: (i) the Merger Agreement
and the Merger shall have been approved and adopted by the affirmative vote of
the holders of a majority of the Shares entitled to vote thereon if such vote is
required by applicable law; provided that Parent and Purchaser shall vote all
Shares purchased pursuant to the Offer in favor of the Merger, (ii) the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired, (iii) no temporary restraining
order, preliminary or permanent
 
                                       29
   30
 
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that prior to invoking the condition, each
party shall use all commercially reasonable efforts to have any such decree,
ruling, injunction or order vacated, (iv) no statute, rule, order, decree or
regulation shall have been enacted or promulgated by any government or
governmental agency or authority which prohibits the consummation of the Merger;
and (v) Purchaser shall have accepted for payment and paid for the Shares
tendered in the Offer such that, after such acceptance and payment, Parent and
its affiliates shall own, at consummation of the Offer, a majority of the
outstanding Shares of the Company; provided that this condition shall be deemed
to have been satisfied if Purchaser fails to accept for payment and pay for
Shares pursuant to the Offer in violation of the terms and conditions of the
Offer.
 
     Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent by (a) mutual written consent of the
Company and Parent or by mutual action of their respective Boards of Directors;
(b) either the Company or Parent, (i) prior to consummation of the Offer if
there has been a breach of any representation, warranty, covenant or agreement
on the part of the other set forth in the Merger Agreement, which breach has not
been cured within three business days following receipt by the breaching party
of notice of such breach, or (ii) if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Merger
shall have become final and non-appealable; (c) either the Company or Parent, so
long as such party has not breached its obligations under the Merger Agreement,
if the Merger shall not have been consummated on or before February 18, 1997;
provided, that such right to terminate the Merger Agreement under this clause
shall not be available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date; (d) Parent or the Company in the
event that a Trigger Event has occurred (see "Fees and Expenses" above); (e)
Parent in the event an Acquisition Proposal has been made to the Company and the
Company shall fail to reaffirm its approval or recommendation of the Offer, the
Merger, the Merger Agreement and the Stockholders Agreement on or before the
fifth business day following the date on which such Acquisition Proposal shall
have been made; (f) Parent, if the Offer terminates, is withdrawn, abandoned or
expires by reason of the failure to satisfy any of the conditions described in
Section 14 of this Offer to Purchase; or (g) the Company, if the Offer shall
have expired or have been withdrawn, abandoned or terminated without any Shares
being purchased by Purchaser thereunder on or prior to the 90th day after the
date of commencement of the Offer. In the event of termination of the Merger
Agreement by either the Company or Parent as provided therein, the Merger
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company, or their respective
affiliates, officers, directors or shareholders, except to the extent that such
termination results from the material breach by a party to the Merger Agreement
of any of its representations or warranties, or any of its covenants or
agreements (subject to certain limitations) or as otherwise provided in the
Merger Agreement.
 
     Indemnification. The Merger Agreement provides that the Company shall, and
from and after the Effective Time, the Surviving Corporation shall, indemnify,
defend and hold harmless each person who was at the date of the Merger
Agreement, or had been at any time prior to the date of the Merger Agreement or
who becomes prior to the Effective Time, an officer or director of the Company
or any of its subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorneys' fees and expenses),
liabilities or judgments or amounts paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of the Company or any
of its subsidiaries whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to the Merger Agreement or the transactions contemplated thereby,
in each case to the full extent a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be, and Parent and the
Surviving Corporation, as the case may be, shall pay expenses in advance of the
final disposition of any such action or proceeding to each
 
                                       30
   31
 
Indemnified Party to the full extent permitted by law. All rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the Indemnified Parties
with respect to matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities.
 
     Directors' and Officers' Insurance. For a period of three years after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company and its subsidiaries (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties) with respect to matters arising before the Effective Time,
provided that the Surviving Corporation shall not be required to pay an annual
premium for such insurance in excess of 175% of the last annual premium paid by
the Company prior to the date of the Merger Agreement, but in such case shall
purchase as much coverage as possible for such amount.
 
     Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided, however, that after the Merger Agreement is
approved by the Stockholders, no such amendment or modification shall reduce the
amount or change the form of consideration to be delivered to the Stockholders
of the Company.
 
     Timing. The Merger Agreement provides that the closing of the Merger shall
occur on the second business day after satisfaction of the conditions set forth
in the Merger Agreement (or as soon as practicable thereafter following
satisfaction or waiver of such conditions). The Merger shall become effective
upon such filing or at such time thereafter as may be provided in the
certificate of merger to be filed with the Secretary of State of the State of
Delaware, as provided in the DGCL, on the date of the closing of the Merger or
as soon as practicable thereafter.
 
     The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
 
     Delaware Law. The Board of the Company has approved the Merger Agreement
and the transactions contemplated thereby, including the Offer, the Merger and
the Stockholders Agreement, and the entry by Purchaser into the Stockholders
Agreement for purposes of Section 203 of the DGCL. Accordingly, the restrictions
of Section 203 do not apply to the transactions contemplated by the Offer, the
Merger Agreement or the Stockholders Agreement. Section 203 of the DGCL prevents
an "interested stockholder" (generally, a stockholder owning 15% or more of a
corporation's outstanding voting stock or an affiliate or associate thereof)
from engaging in a "business combination" (defined to include a merger and
certain other transactions) with a Delaware corporation for a period of three
years following the date on which such stockholder became an interested
stockholder unless (i) prior to such date, the corporation's board of directors
approved either the business combination or the transaction which resulted in
such stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in such stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding shares
owned by certain employee stock plans and persons who are directors and also
officers of the corporation) or (iii) on or subsequent to such date, the
business combination is approved by the corporation's board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock not owned by the interested stockholder. As described above, the foregoing
description of Section 203 of the DGCL does not apply to the Offer or the Merger
(or the transactions contemplated thereby).
 
                                       31
   32
 
THE STOCKHOLDERS AGREEMENT
 
     The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Stockholders Agreement may be examined, and copies thereof may be obtained, as
set forth in Section 8 above.
 
     Tender of Shares. Simultaneously with the execution of the Merger
Agreement, Parent, Purchaser and each of the Selling Stockholders entered into
the Stockholders Agreement. Upon the terms and subject to the conditions of such
agreement, each of the Selling Stockholders has (i) agreed to validly tender and
not to withdraw pursuant to and in accordance with the terms of the Offer, not
later than the fifth business day after commencement of the Offer, the
respective number of Shares owned beneficially by him or it; (ii) acknowledged
that the transfer by such Selling Stockholder of his or its Shares to Purchaser
will pass to and unconditionally vest in Purchaser good and valid title to such
Shares free and clear of all claims, liens, restrictions, security interests,
pledges, limitations and encumbrances whatsoever and (iii) agreed to permit
Parent and Purchaser to publish and disclose his or its identity and ownership
of Shares and the nature of his or its commitments, arrangements and
understandings under the Stockholders Agreement in the documents relating to the
Offer and, if stockholder approval for the Merger is required, in any proxy
statement relating thereto (including all documents and schedules filed with the
Commission). In addition, Parent and Purchaser have acknowledged in the
Stockholders Agreement that the Company may, in order to assist Stockholders who
are also employees of the Company in complying with their obligations to tender
Shares hereunder, lend funds to such Stockholders upon terms specified in the
Merger Agreement in order to fund all or a portion of the exercise price under
the Triad Options held by such Stockholders, provided that the failure of the
Company to lend such funds will not relieve any such Stockholder of its
obligations under the Stockholders Agreement.
 
     Voting. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Stockholders, however called,
or in connection with any written consent of the Stockholders, such Selling
Stockholder will vote (or cause to be voted) the Shares held of record or
beneficially owned by such Stockholder, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof, and each of the other actions contemplated by the Merger
Agreement and the Stockholders Agreement and any actions required in furtherance
thereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or the Stockholders
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case of
each of the matters referred to in clauses (C)(1), (2), or (3), is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by the
Stockholders Agreement and the Merger Agreement. The Selling Stockholders
further agreed not to enter into any agreement or understanding with any person
or entity the effect of which would be inconsistent or violative of the
provisions and agreements described above. In addition, each Selling Stockholder
granted to Parent a proxy to vote the Shares of such Stockholder in accordance
with the provisions and agreements described above.
 
     Representations, Warranties, Covenants and Other Agreements. In connection
with the Stockholders Agreement, the Selling Stockholders have made certain
customary representations, warranties and covenants,
 
                                       32
   33
 
including with respect to (i) their ownership of the Shares, (ii) their
authority to enter into and perform their obligations under the Stockholders
Agreement, (iii) noncontravention, (iv) the absence of liens and encumbrances on
and in respect of their Shares, (v) restrictions on the transfer of their
Shares, (vi) the solicitation of Acquisition Proposals, and (vii) the waiver of
their appraisal rights.
 
     Termination. Other than as provided therein, the Stockholders Agreement
terminates by its terms upon the termination of the Merger Agreement by Parent.
 
RIGHTS AGREEMENT
 
     The Company has advised Parent that pursuant to the Rights Agreement, on
October 28, 1988 the Board declared a dividend distribution of one Right for
each Share outstanding at the close of business on November 8, 1988 (the "Rights
Record Date") and with respect to any Shares issued thereafter until the earlier
of the Distribution Date (as defined below) or the Rights Expiration Date (as
defined below). Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company one
share of Common Stock (the "Rights Common Stock") of the Company at a purchase
price of $47.00 per share of Rights Common Stock, subject to adjustment (the
"Rights Purchase Price"). The description and terms of the Rights are set forth
in the Rights Agreement. The following is a summary of the material terms of the
Rights Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, a copy of which has been filed with the Commission as Exhibit 4.2
to the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1993.
 
     Initially, the Rights were and continue to be attached to all certificates
representing Shares outstanding, and no separate certificates evidencing the
Rights (the "Rights Certificates") were or have been distributed. The Rights
will separate from the Common Stock and a "Distribution Date" will occur upon
the earlier of (i) the first date of a public announcement by the Company or an
Acquiring Person (as defined below) (or such earlier date as a majority of the
Board of Directors shall become aware) that a person or group of affiliated or
associated persons has become an Acquiring Person, or (ii) the tenth day (or
such later date as the Board of Directors shall determine) after the date of the
commencement by any person or entity (other than an Exempt Person (as defined
below)) of, or of the first public announcement of the intent of any person or
entity (other than an Exempt Person) to commence (which intention to commence
remains in effect for five business days after such announcement), a tender
offer or exchange offer that would result in such person or group becoming an
Acquiring Person. Except as set forth below, an "Acquiring Person" is a person
or group of affiliated or associated persons who, without prior approval of the
Board, has acquired beneficial ownership of 20% or more of the outstanding
Shares. The term Acquiring Person excludes (A) an "Exempt Person", which is
defined as (i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan or employee stock plan of the Company or of any subsidiary
of the Company or (iv) any person or entity organized, appointed, established or
holding Common Stock for or pursuant to the terms of any such plan, and (B)
parties to that certain Unit Purchase Agreement, dated as of July 2, 1992, as
amended (the "Unit Purchase Agreement"), among the Company, Blum, and certain
other purchasing parties thereto, so long as certain standstill provisions with
respect to such parties pursuant to the Unit Purchase Agreement remain in
effect.
 
     Until the occurrence of the Distribution Date, (i) the Rights will be
evidenced by the Share certificates and will be transferred with and only with
such Shares certificates, (ii) new Share certificates issued after the Rights
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Shares
outstanding will also constitute the transfer of the Rights associated with the
Shares represented by such certificate. Pursuant to the Rights Agreement, the
Company shall not be required to issue fractions of Rights or Rights Common
Stock, and in lieu thereof shall pay to holders of record of such Rights or
Rights Common Stock the then current market value of such Right or Rights Common
Stock.
 
     As soon as practicable after the occurrence of the Distribution Date,
Rights Certificates will be mailed to holders of record of Shares as of the
close of business on the Distribution Date and, thereafter, the separate
 
                                       33
   34
 
Rights Certificates alone will represent the Rights. Only Shares issued prior to
the earlier of the Distribution Date or the Rights Expiration Date will be
issued with Rights.
 
     The Rights are not exercisable until the occurrence of the Distribution
Date. The Rights will expire at the close of business on November 9, 1998,
unless earlier redeemed by the Company as described below (the "Rights
Expiration Date").
 
     In the event that, at any time following the Distribution Date, any person
becomes an Acquiring Person (subject to certain exceptions described below),
each holder of a Right will thereafter have the right to receive, upon exercise
of the Right, that number of Shares (or, in certain circumstances, cash,
property or other securities of the Company) having a current market value equal
to two times the Rights Purchase Price. Notwithstanding the foregoing, following
the occurrence of the event set forth in this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person shall not be adjusted as described
above and any holder of any such Right (including any purported transferee or
subsequent holder) shall continue to receive upon the exercise of such Right the
number of shares of Rights Common Stock otherwise provided in the Rights
Agreement without giving effect to the adjustment described above. For example,
at an exercise price of $50 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in this
paragraph would entitle its holder to purchase $100 worth of Shares (or other
consideration, as noted above) for $50. Assuming that the Shares had a per share
market value of $10 at such time, the holder of each valid Right would be
entitled to purchase ten Shares for $50.
 
     In the event that, at any time on or following the Distribution Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger which
follows a "Permitted Offer" described below), or (ii) 50% or more of the
Company's assets or earning power is sold, mortgaged or transferred, each holder
of a Right shall thereafter have the right to receive, upon exercise and payment
of the Rights Purchase Price in accordance with the terms of the Rights
Agreement, common stock or other securities of the acquiring company offered as
consideration for Common Stock in such transaction having a market value at the
time of the transaction equal to two times the Rights Purchase Price. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Rights Triggering Events."
 
     The Rights Purchase Price payable, and the number of shares of Rights
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision or split of the outstanding
shares of Common Stock into a greater number, (ii) in the event the Company
combines or consolidates the Common Stock into a smaller number of shares or
effects a reverse split of outstanding shares of Common Stock, or (iii) in the
event the Company issues any shares of capital stock in a reclassification of
the Common Stock.
 
     With certain exceptions, no adjustment in the Rights Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Rights
Purchase Price . No fractional shares of Rights Common Stock will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market price of
the Rights Common Stock on the last trading date prior to the date of exercise.
 
     At any time prior to the earlier of the date on which any person or entity
becomes an Acquiring Person or November 9, 1998, the Company may redeem the
Rights in whole, but not in part, at a price (the "Redemption Price") of $.01
per Right by resolution of the Board of Directors. Notice of the redemption of
the Rights shall be mailed to each holder of record of Rights within 10 days of
such resolution, and the redemption of the Rights may be made effective at such
time, on such basis, and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon such action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
 
     Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company including, without limitation, the right
to vote or to receive dividends.
 
                                       34
   35
 
     Other than those provisions relating to the Redemption Price of the Rights,
the Company and Rights Agent may amend the Rights Agreement, (i) prior to the
time any person becomes an Acquiring Person, in any manner the Company deems
necessary or desirable, and (ii) following the time a person becomes an
Acquiring Person, in order to cure any ambiguity and to make changes which do
not adversely affect the interests of holders of Rights Certificates.
 
     THE COMPANY HAS INFORMED PARENT AND PURCHASER THAT, BECAUSE (I) THE OFFER
IS AN OFFER TO PURCHASE ALL OF THE OUTSTANDING SHARES AND THE BOARD OF DIRECTORS
HAS UNANIMOUSLY DETERMINED THAT THE OFFER DESCRIBED HEREIN IS FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (A "PERMITTED OFFER") AND (II) THE
PRICE PER SHARE TO BE PAID IN THE MERGER IS OF THE SAME FORM AND AMOUNT AS THE
PURCHASER SHALL PAY IN THE OFFER, THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER OR THE CONSUMMATION OF THE MERGER WILL NOT (A) CAUSE ANY PERSON TO BECOME
AN ACQUIRING PERSON, (B) CAUSE A DISTRIBUTION DATE TO OCCUR OR CAUSE OR REQUIRE
THE DISTRIBUTION OF ANY RIGHTS CERTIFICATES TO THE RECORD HOLDERS OF SHARES, OR
(C) GIVE RISE TO A RIGHTS TRIGGERING EVENT. IN ADDITION, THE COMPANY HAS AGREED,
PURSUANT TO THE MERGER AGREEMENT, TO TAKE ALL ACTION NECESSARY SO AS TO RENDER
THE RIGHTS AGREEMENT INAPPLICABLE TO THE MERGER AGREEMENT, THE STOCKHOLDERS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY SUCH AGREEMENTS. PURSUANT TO THE
RIGHTS AGREEMENT, UPON THE CONSUMMATION OF THE OFFER AND THE MERGER, THE RIGHTS
SHALL EXPIRE.
 
THE SPIN-OFF
 
     The following is a summary of certain of the terms of the Merger Agreement
relating to the Spin-Off. This summary is not a complete description of the
terms of the Merger Agreement relating to the Spin-Off and is qualified in its
entirety by reference to the full text thereof, which is incorporated herein by
reference. See "The Merger Agreement" above.
 
     Pursuant to the terms of the Merger Agreement, immediately prior to the
acceptance of Shares in the Offer, the Company will declare a dividend, payable
to then record holders of Shares, consisting of ownership interests in Spinco,
which will own, directly or indirectly, certain assets specified in the Merger
Agreement (the "Designated Assets"), the payment of such dividend to be
contingent upon the consummation of the Offer and subject to compliance with all
applicable laws. The Designated Assets include (i) all real estate located in
Triad Park, Livermore, California, owned by the Company (approximately 206
acres); (ii) all buildings (three buildings comprising 220,000 square feet) and
improvements therein (not including cubicles, furnishings and office equipment)
occupied and used by employees of the Company and located in Triad Park,
Livermore, California; (iii) all improvements in and to Triad Park not yet sold
to the City of Livermore, California; and (iv) copies of all books and records
related to the foregoing assets. Although the fair market value of the
Designated Assets will be determined by appraisal, the current book value of the
Designated Assets, net of indebtedness assumed, is approximately $23.7 million,
or approximately $1.20 per Share on a fully diluted basis.
 
     The form of entity that will be used for Spinco, all transactions related
to such dividend (including, without limitation, any intercompany transfers) and
all documents, agreements and instruments related to such dividend and related
transactions (including, without limitation, any agreements between Spinco and
the Company or any of its subsidiaries providing for the allocation of expenses
or liabilities and indemnification) (the "Spin-Off Documents"), shall be in form
and substance reasonably acceptable to Parent and the Company. Notwithstanding
the foregoing, (i) all indebtedness of the Company or any of its subsidiaries
(other than the Company's Revolving Credit Loan Agreement with Comerica
Bank-California) secured, in whole or in part, by any of the Designated Assets
shall be assumed by Spinco and shall be paid, when due, by Spinco and the
Company shall be released from any liability with respect thereto, (ii) all
costs and expenses solely attributable to the transactions related to such
dividend (including, without limitation, any necessary and reasonable fees and
expenses of counsel, accountants and advisors and any filing fees), whether
before or after the consummation of the Offer, shall be paid by Spinco when such
amounts are due, (iii) Spinco shall indemnify and hold the Company and its
subsidiaries harmless from and against any loss, cost, damage or expense
(including, without limitation, the reasonable fees and expenses of counsel)
arising out of or related to any failure of Spinco to discharge the obligations
specified in clause (i) or clause (ii), (iv) Spinco shall indemnify and hold
Parent, the Company and its subsidiaries harmless from and against any taxes
(and any
 
                                       35
   36
 
fees, costs and expenses with respect to such taxes or any dispute thereof)
attributable to, arising out of or relating to (a) Spinco, (b) the formation of
Spinco, (c) the transfer of the Designated Assets to Spinco by the Company or
any of its subsidiaries, (d) the assumption or refinancing of any liabilities
with respect to the Designated Assets, (e) the sale, exchange, distribution,
dividend or other distribution of any assets by Spinco, (f) the sale, exchange,
distribution, dividend or other disposition of interests in Spinco by the
Company or any of its Subsidiaries, and (g) any steps which are attendant to or
necessary in connection with any of the foregoing transactions, which
indemnification obligations shall survive until 60 days after the expiration of
the applicable statute of limitations with respect to the assessment of taxes
relating to the foregoing transactions, and which indemnification obligations
shall be due and payable at such times as taxes (including estimated taxes)
become due and payable (plus interest from the date of unreimbursed payment by
the Company at a rate of 9% per annum) (with the filing of tax returns and
calculation of the estimated tax amount (the "Estimated Tax Amount") being based
upon an appraisal of the Designated Assets by an independent appraiser mutually
acceptable to Parent and the Company and a certification of the adjusted bases
of the Designated Assets provided by Price Waterhouse & Co. or such other "big
six" accounting firm as may be agreed to by Parent and the Company, the costs of
which appraisal and certification will be paid by Spinco) and at such time as
there is a final determination of a deficiency with respect to such reported
taxes (plus interest from the date of unreimbursed payment by the Company at a
rate of 9% per annum), (v) with respect to the taxes identified in the
immediately preceding clause (iv), the Company will not agree, without Spinco's
consent, to any extension of the applicable statute of limitations, which
consent will not be unreasonably withheld, and such consent will not be required
if the failure to agree to such extension may reasonably be expected to result
in the proposed assessment of a deficiency for material taxes unrelated to
Spinco or in liability for indemnified taxes which exceeds Spinco's cash, notes
receivable from real property sales and cash equivalent assets at such time, and
(vi) any such indemnification shall be made on an after-tax basis and shall be
adjusted to take into account any tax benefits and tax detriments attributable
to the indemnified loss and to the receipt or accrual of an indemnification
payment hereunder (including any additional payments pursuant to this clause
(vi)). The Company will use its best efforts to facilitate the dividend and
shall seek all consents necessary (including, without limitation, the consent of
the Company's lenders) to consummate the dividend and related transactions as
soon as practicable, subject to the conditions described herein.
 
     Prior to payment of the dividend, the current lease agreement with respect
to the home office building will be amended to provide for (1) continuation of
the current rent for two years; (2) adjustment of the rental for the succeeding
three years at the current market rental rate at the beginning of such
succeeding three years; and (3) adjustment of the term of the lease to five
years with a five year option to renew at a rental equal to the current market
rental rate at the beginning of such renewal term. "Current market rental rate"
shall be determined by the Company and Spinco, each selecting an appraiser to
make such determination, and if such appraisers cannot agree, then they shall
select a third appraiser whose determination shall be final and binding on all
parties. Each party shall bear the cost of its appraiser and the cost of the
third appraiser, if necessary, shall be split evenly between the parties.
Finally, under no circumstances shall the rental rate referred to in (2) above
be less than the rental rate in effect prior to such adjustment or more than 1.2
multiplied by the rental rate in effect prior to such adjustment. In addition,
the lease agreement shall be amended to provide that the Company may sublease
the property with the consent of the landlord, which consent will not be
unreasonably withheld, and that in the event the Company shall sublease the
property and shall receive in rent thereunder an amount in excess of the rent
payable under the lease, such excess shall be paid to the landlord.
 
     In order to facilitate the orderly management of Spinco, following payment
of the dividend for a period of one year the Company will provide (at no cost to
Spinco) at least two cubicles of office space, telephone and secretarial support
to two employees of Spinco and will give such Spinco employees reasonable access
to such other office equipment as is reasonable and necessary. Furthermore, at
the time of payment of the dividend, the Company shall cause Spinco to have at
least $100,000 in cash or cash equivalent assets available to it (any such
amounts that do not represent proceeds from the sale of Designated Assets shall
be subject to repayment by Spinco). All funds received in respect of sales of
Designated Assets from the date of the Merger Agreement through the date of the
payment of the dividend shall be credited to the account of Spinco, but shall be
available to satisfy the obligations of Spinco to Company under the Merger
Agreement.
 
                                       36
   37
 
     Company shall not be required to pay the dividend until such time as Spinco
has either (i) paid all amounts owed by it to Company with respect to the
Estimated Tax Amount, third party costs related to the dividend or related
transactions or similar matters for which Spinco has agreed to pay or for which
there are existing indemnity claims which it has agreed to indemnify the Company
or (ii) have made adequate and commercially reasonable provision for the prompt
payment of any such amounts from time to time in the future as such amounts are
paid or become due and payable by the Company. Such additional terms and
provisions, when negotiated by the parties, shall, together with the applicable
provisions of the Merger Agreement, be set forth in customary documentation with
respect to spin-off transactions, all of which shall be finalized by the parties
prior to the consummation of the Offer.
 
OTHER MATTERS
 
     Severance Benefits. In 1989, the Board adopted resolutions setting forth a
severance policy for executive officers and other employees of the Company (the
"1989 Resolutions"). In the Merger Agreement, the Company has represented and
warranted that the Board has unanimously adopted resolutions rescinding the 1989
Resolutions, retroactive to the date of the adoption of the 1989 Resolutions,
and adopting a severance pay policy the terms of which are to consist of the
arrangements described in the 1989 Resolutions, modified as follows: (A)
employees (other than executive officers) shall be eligible for severance
benefits in accordance with such policy only if they are involuntarily
terminated without cause by the Company and its subsidiaries within six (6)
months following a change in control (as defined in the 1989 Resolutions); (B)
executive officers of the Company shall be eligible for severance benefits in
accordance with such policy only if they are involuntarily terminated by the
Company and its subsidiaries within twelve (12) months following a change in
control (defined as described above) of the Company; (C) the Board shall have
the right to clarify the terms of such severance policy at any time and from
time to time, including, but not limited to, resolving any ambiguities or
supplying any omission in such severance policy; (D) the Board shall have the
right to amend or terminate such severance policy in its sole discretion at any
time and from time to time, except no such amendment or termination which
materially and adversely affects the rights of any employee of the Company or
any of its subsidiaries under the severance policy shall be effective with
respect to: (i) any person whose employment with the Company and its
subsidiaries has terminated prior to the date of such amendment or termination,
(ii) any such employee for a period of six months beginning on the date of a
change in control (defined as described above) of the Company and (iii) any
executive officer of the Company for a period of twelve months beginning on the
date of a change in control (defined as described above); and (E) for all
purposes of the severance policy, the date of a change in control of the Company
involving a person or an affiliated group of persons shall be the date of the
earliest to occur of any of the events defined in the 1989 Resolutions with
respect to such person or affiliated group of persons.
 
     Appraisal Rights. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the DGCL to dissent and
demand appraisal of, and payment in cash for the fair value of, their Shares.
Such rights, if the statutory procedures are complied with, could lead to a
judicial determination of the fair value (excluding any element of value arising
from accomplishment or expectation of the Merger) required to be paid in cash to
such dissenting holders for their Shares. Any such judicial determination of the
fair value of Shares could be based upon considerations other than or in
addition to the Offer Price and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the Offer Price or the Merger Consideration.
 
     If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A Stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
 
     Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
 
                                       37
   38
 
     Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless, among other things, the Merger is
completed more than one year after termination of the Offer. If applicable, Rule
13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority Stockholders be filed with the
Commission and disclosed to minority Stockholders prior to consummation of the
Merger.
 
13. DIVIDENDS AND DISTRIBUTIONS
 
     If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (c) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or operations, conditional or otherwise, to acquire,
any of the foregoing, then subject to the provisions of Section 14 below,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
 
     If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or make other distributions on
the Shares or issue with respect to the Shares (other than the Spin-Off), any
additional Shares, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, payable or
distributable to Stockholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to Purchase or its nominee or transferee
on the Company's stock transfer records, then, subject to the provisions of
Section 14 below, (a) the Offer Price may, in the sole discretion of Purchaser,
be reduced by the amount of any such cash dividend or cash distribution and (b)
the whole of any such noncash dividend, distribution or issuance to be received
by the tendering Stockholders will (i) be received and held by the tendering
Stockholders for the account of Purchaser and will be required to be promptly
remitted and transferred by each tendering Stockholder to the Depositary for the
account of Purchaser, accompanied by appropriate documentation of transfer, or
(ii) at the direction of Purchaser, be exercised for the benefit of Purchaser,
in which case the proceeds of such exercise will promptly be remitted to
Purchaser. Pending such remittance and subject to applicable law, Purchaser will
be entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by
Purchaser in its sole discretion.
 
     Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing herein shall constitute a waiver by Purchaser or Parent of any of its
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
 
14. CERTAIN CONDITIONS OF THE OFFER
 
     Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any Shares
tendered, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and may amend or
terminate the Offer (whether or not any Shares have theretofore been purchased
or paid for) if, (i) there have not been validly tendered and not withdrawn
prior to the Expiration Date a number of Shares which constitutes 51% of the
Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the meaning, as of any date: the number of Shares
outstanding, together with Shares the Company may be required to issue pursuant
to obligations outstanding at that date under employee stock option or other
benefit plans, or otherwise), or (ii) any applicable waiting periods under the
HSR Act shall not have expired or been terminated prior to the Expiration Date;
or (iii) the debt financing sources for Purchaser
 
                                       38
   39
 
shall not have provided the applicable debt financing to Purchaser pursuant to
the financing commitment with respect thereto previously delivered to the
Company by Purchaser (the "Funding Condition"); or (iv) at any time on or after
the date of the Merger Agreement and before acceptance for payment of, or
payment for, such Shares any of the following events shall occur or shall be
deemed by Purchaser to have occurred:
 
          (A) there shall have been any statute, rule or regulation enacted,
     entered or enforced or deemed applicable, or any decree, order or
     injunction entered or enforced by any government or governmental authority
     in the United States or by any court in the United States that: (1)
     restrains or prohibits the making or consummation of the Offer or the
     Merger, (2) makes the purchase of or payment for some or all of the Shares
     pursuant to the Offer or the Merger illegal, (3) imposes material
     limitations on the ability of Purchaser, the Company or any of their
     respective affiliates or subsidiaries effectively to acquire or hold, or
     requiring Purchaser, the Company or any of their respective affiliates or
     subsidiaries to dispose of or hold separate, any material portion of the
     assets or the business of the Company and its subsidiaries taken as a
     whole, or imposes limitations on the ability of Purchaser, the Company or
     any of their respective affiliates or subsidiaries to continue to conduct,
     own or operate, as heretofore conducted, owned or operated, all or any
     material portion of the businesses or assets of the Company and its
     subsidiaries taken as a whole, (4) imposes or results in material
     limitations on the ability of Purchaser or any of its affiliates to
     exercise full rights of ownership of the Shares purchased by them,
     including, without limitation, the right to vote the Shares purchased by
     them on all matters properly presented to the stockholders of the Company;
     or (5) prohibits or restricts in a material manner the financing of the
     Offer;
 
          (B) any change (or any condition, event or development involving a
     prospective change) shall have occurred in the business, operations, assets
     or condition (financial or otherwise) of the Company and its Subsidiaries
     taken as a whole;
 
          (C) there shall have occurred (1) any general suspension of trading
     in, or limitation on prices for, securities on any national securities
     exchange or in the over-the-counter market in the United States for a
     period in excess of five hours, (2) the declaration of a banking moratorium
     or any suspension of payments in respect of banks in the United States, (3)
     any material adverse change in United States currency exchange rates or a
     suspension of, or a limitation on, the markets therefor, (4) the
     commencement of a war, armed hostilities or other international or national
     calamity, directly or indirectly involving the United States, (5) any
     limitations (whether or not mandatory) imposed by any governmental
     authority on the nature or extension of credit or further extension of
     credit by banks or other lending institutions, or (6) in the case of any of
     the foregoing, a material acceleration or worsening thereof;
 
          (D) the representations and warranties of the Company contained in the
     Merger Agreement (without giving effect to any "Material Adverse Effect",
     "materiality" or similar qualifications contained therein) shall not be
     true and correct in all material respects as of the date of consummation of
     the Offer as though made on and as of such date except (1) for changes
     specifically permitted by the Merger Agreement and (2) that those
     representations and warranties which address matters only as of a
     particular date shall remain true and correct as of such date;
 
          (E) the obligations of the Company contained in the Merger Agreement
     (without giving effect to any "Material Adverse Effect", "materiality" or
     similar qualifications contained therein) shall not have been performed or
     complied with in all material respects by the Company;
 
          (F) the Merger Agreement shall have been terminated in accordance with
     its terms;
 
          (G) prior to the purchase of Shares pursuant to the Offer, an
     Acquisition Proposal for the Company exists and the Board shall have
     withdrawn or materially modified or changed (including by amendment of the
     Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
     Offer, the Merger Agreement or the Merger; or
 
          (H) Parent, Purchaser and the Company shall not have reached agreement
     as to the Spin-Off Documents and the transactions contemplated thereby in
     accordance with the provisions of the Merger Agreement relating thereto.
 
                                       39
   40
 
     The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by Purchaser or any of
its affiliates) giving rise to any such condition or may be waived by Purchaser,
in whole or in part, from time to time in its sole discretion, except as
otherwise provided in the Agreement. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time. Any determination by Purchaser concerning any
of the events described herein shall be final and binding.
 
15. CERTAIN LEGAL MATTERS
 
     Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation thereof, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any Governmental Authority that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser and Parent currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 15, Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken or in order to obtain any such approval or other action. If
certain types of adverse action are taken with respect to the matters discussed
below, Purchaser could decline to accept for payment or pay for any Shares
tendered. See Section 14 above for certain conditions to the Offer.
 
     State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws, that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
 
     Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
properly approved, among other things, the Offer and the Merger for purposes of
Section 203 of the DGCL.
 
     Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither Purchaser nor
Parent has currently complied with any state takeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals
 
                                       40
   41
 
from, the relevant state authorities, and Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, Purchaser may not be
obligated to accept for payment or pay for any Shares tendered pursuant to the
Offer.
 
     Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Parent of a
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent expects to file a Notification and Report Form with respect to
the Offer as soon as practicable following commencement of the Offer. If, within
the initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or documentary material from Parent concerning
the Offer, the waiting period will be extended and would expire at 11:59 p.m.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with the
consent of Parent. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Moreover, the Merger Agreement generally
provides that the Offer may be extended for an aggregate period of not more than
60 days in the event that any condition to the Offer is not satisfied.
 
     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
 
16. FEES AND EXPENSES
 
     Chase Securities Inc. is acting as Dealer Manager in connection with the
Offer and has provided certain financial advisory services to Parent in
connection with the proposed acquisition of the Company. Parent has agreed to
pay Chase Securities a fee of $250,000 which became payable upon execution of
the Merger Agreement. In addition, Parent has agreed to reimburse Chase
Securities for all out-of-pocket expenses incurred by Chase Securities,
including the reasonable fees of its counsel, and to indemnify Chase Securities
and certain related persons against certain liabilities and expenses, including
certain liabilities under the federal securities laws.
 
     Purchaser has retained ChaseMellon Shareholder Services, L.L.C. to act as
the Information Agent and as the Depositary in connection with the Offer. The
Information Agent and the Depositary each will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-of-
pocket expenses and will be indemnified against certain liabilities and expenses
in connection therewith, including certain liabilities under the federal
securities laws.
 
     Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
 
                                       41
   42
 
17. MISCELLANEOUS
 
     The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser by Chase Securities or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
 
     Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. Such Schedule and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in the manner set forth in Section 8 above (except that they
will not be available at the regional offices of the Commission).
 
     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
 
                                            CCI ACQUISITION CORP.
 
                                            COOPERATIVE COMPUTING, INC.
 
October 23, 1996
 
                                       42
   43
 
                                                                      SCHEDULE I
 
       DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER AND HM INC.
 
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
 
     The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the address of each director and officer is 6207 Bee
Cave Road, Austin, Texas 78146 and each such person is a citizen of the United
States.
 


                                                     PRESENT PRINCIPAL OCCUPATION
                    NAME AND                          OR EMPLOYMENT AND FIVE-YEAR
                BUSINESS ADDRESS                          EMPLOYMENT HISTORY
    -----------------------------------------  -----------------------------------------
                                            
    Glenn E. Staats..........................  Chairman of the Board (1985-present);
                                               Director, President and Chief Executive
                                               Officer (1976-present)
    Preston W. Staats, Jr. ..................  Director, Secretary and Executive Vice
                                               President (1978-present)
    Marsha A. Staats.........................  Director (1985-present); Physician and
                                               Instructor, Central Texas Medical
                                               Foundation (1992-present); Private
                                               Practice, Internal Medicine (1990-1992)
    Sharon W. Staats.........................  Director (1985-present); Vice President,
                                               Licensing and Database Services (1995-
                                               present); Chief Financial Officer
                                               (1978-1995)
    Matthew Hale.............................  Chief Financial Officer (April
                                               1995-present); Chief Financial Officer,
                                               Arrowsmith Technology, Inc. (April
                                               1993-March 1995); Controller, MasPar
                                               Systems Corporation (October 1991-March
                                               1993); Vice President, Finance, Masstor
                                               Systems Corporation. (December
                                               1988-August 1991).

 
                                       I-1
   44
 
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
 
     The following table sets forth the name, business address, present
principal occupation or employment and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
Purchaser. Unless otherwise indicated below, the address of each director and
officer is: 6207 Bee Cave Road, Austin, Texas 78146 and each such person is a
citizen of the United States.
 


                                                     PRESENT PRINCIPAL OCCUPATION
                    NAME AND                          OR EMPLOYMENT AND FIVE-YEAR
                BUSINESS ADDRESS                          EMPLOYMENT HISTORY
    -----------------------------------------  -----------------------------------------
                                            
    Thomas O. Hicks..........................  Director (October 16, 1996-present);
      Hicks, Muse, Tate & Furst Incorporated   Chairman of the Board and Chief Executive
      200 Crescent Court, Suite 1600           Officer, Hicks, Muse, Tate & Furst
      Dallas, Texas 75201                      Incorporated (1989-present)
    Lawrence D. Stuart, Jr...................  Director (October 16, 1996-present);
      Hicks, Muse, Tate & Furst Incorporated   Managing Director and Principal, Hicks,
      200 Crescent Court, Suite 1600           Muse, Tate & Furst Incorporated (October
      Dallas, Texas 75201                      1995-present); Managing
                                               Director -- Dallas Office, Weil, Gotshal
                                               & Manges LLP (1988-September 1995)
    Glenn E. Staats..........................  Director and President (October 16,
                                               1996); Chairman of the Board, Cooperative
                                               Computing, Inc. (1985-present); Director,
                                               President and Chief Executive Officer,
                                               Cooperative Computing, Inc.
                                               (1976-present)
    Preston W. Staats, Jr. ..................  Director and Executive Vice President
                                               (October 16, 1996); Director, Secretary
                                               and Executive Vice President, Cooperative
                                               Computing, Inc. (1978-present)
    Patrick K. McGee.........................  Vice President (October 16,
      Hicks, Muse, Tate & Furst Incorporated   1996-present); Vice President, Hicks,
      200 Crescent Court, Suite 1600           Muse, Tate & Furst Incorporated
      Dallas, Texas 75201                      (1994-present); Vice President, Merrill
                                               Lynch & Co. (1994); Associate, Merrill
                                               Lynch & Co. (1990-1994)

 
                                       I-2
   45
 
C. DIRECTORS AND EXECUTIVE OFFICERS OF HICKS, MUSE FUND III INCORPORATED
 
     The following table sets forth the name, business address, present
principal occupation or employment and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
Hicks, Muse Fund III Incorporated, the ultimate general partner of Hicks Muse.
Unless otherwise indicated below, the address of each director and officer is
200 Crescent Court, Suite 1600, Dallas, Texas 75201, and each such person is a
citizen of the United States.
 


                                                     PRESENT PRINCIPAL OCCUPATION
                    NAME AND                          OR EMPLOYMENT AND FIVE-YEAR
                BUSINESS ADDRESS                          EMPLOYMENT HISTORY
    -----------------------------------------  -----------------------------------------
                                            
    Thomas O. Hicks..........................  Chairman of the Board, President, Chief
                                               Executive Officer, Chief Operating
                                               Officer and Secretary (May 1996-present);
                                               Chairman of the Board and Chief Executive
                                               Officer, Hicks, Muse, Tate & Furst
                                               Incorporated (1989-present)
    John R. Muse.............................  Managing Director and Principal,
                                               Executive Vice President and Treasurer
                                               (May 1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (1989-present)
    Charles W. Tate..........................  Managing Director and Principal,
                                               Executive Vice President (May
                                               1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (1991-present)
    Jack D. Furst............................  Managing Director and Principal,
                                               Executive Vice President (May
                                               1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (1989-present)
    Lawrence D. Stuart, Jr...................  Managing Director and Principal,
                                               Executive Vice President (May
                                               1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (October 1995-present);
                                               Managing Partner -- Dallas Office, Weil,
                                               Gotshal & Manges LLP (1988-September
                                               1995)
    Alan B. Menkes...........................  Managing Director and Principal,
                                               Executive Vice President (May
                                               1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (April 1996-present); Vice
                                               President, Hicks, Muse, Tate & Furst
                                               Incorporated (1992-1996); The Carlyle
                                               Group (1988-1992)
    Michael J. Levitt........................  Managing Director and Principal,
                                               Executive Vice President (May
                                               1996-present); Managing Director and
                                               Principal, Hicks, Muse, Tate & Furst
                                               Incorporated (April 1996-present);
                                               Managing Director and Deputy Head of
                                               Investment Banking, Smith Barney Inc.
                                               (1993-1996); Morgan Stanley & Co.
                                               (1986-1993)

 
                                       I-3
   46
 
     Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each Stockholder or
his broker, dealer, commercial bank, trust company or other nominee to the
Depositary, at one of the addresses set forth below:
 
                        The Depositary for the Offer is:
                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
 


                   By Mail:                            By Hand/Overnight Delivery:
                                           
                 P.O. Box 798                                  120 Broadway
               Midtown Station                                  13th Floor
              New York, NY 10018                            New York, NY 10271
          Attention: Reorganization                     Attention: Reorganization
                  Department                                    Department

 
                           By Facsimile Transmission:
 
                                 (201) 329-8936
                        (For Eligible Institutions Only)
                      Confirm by Telephone: (201) 296-4983
 
     Any questions and request for assistance or additional copies of this
Offering Circular, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
addresses below. You may also contact your local broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
 
                    The Information Agent for the Offer is:
 
                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
 
                        450 West 33rd Street, 15th Floor
                            New York, New York 10001
                            Toll Free (800) 241-6594

EX-99.2

   1
 
                             LETTER OF TRANSMITTAL
 
                        TO TENDER SHARES OF COMMON STOCK
                       (INCLUDING THE ASSOCIATED RIGHTS)
 
                                       OF
 
                           TRIAD SYSTEMS CORPORATION
 
                       PURSUANT TO THE OFFER TO PURCHASE
                             DATED OCTOBER 23, 1996
 
                                       BY
 
                             CCI ACQUISITION CORP.
 
                                  AN AFFILIATE
 
                                       OF
 
                          COOPERATIVE COMPUTING, INC.
 
         THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
     NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 20, 1996, UNLESS EXTENDED.
 
                        The Depositary for the Offer is:
                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
 


                     By Mail:                                  By Hand/Overnight Delivery:
                                                
                   P.O. Box 798                                       120 Broadway
                  Midtown Station                                      13th Floor
                New York, NY 10018                                 New York, NY 10271
             Attention: Reorganization                          Attention: Reorganization
                    Department                                         Department

 
                           By Facsimile Transmission:
 
                                 (201) 329-8936
                        (For Eligible Institutions Only)
                      Confirm by Telephone: (201) 296-4983
 
     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
 
     THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
 
     This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Triad Systems Corporation (the "Stockholders") if certificates
evidencing Shares ("Certificates") are to be forwarded herewith or if delivery
of Shares is to be made by book-entry transfer to an account maintained by
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The Depository
Trust Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC")
(each a "Book-Entry Transfer Facility") pursuant to the procedures set forth
under "Procedure for Tendering Shares" in the Offer to Purchase (as defined
below).
 
     Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to
Purchase) with respect to, their Shares and all other required documents to the
Depositary prior to the Expiration Date (as defined under "General Terms of the
Offer" in the Offer to Purchase) may tender their Shares according to the
guaranteed delivery procedure set forth under "Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase. See Instruction 2
hereof. Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
   2
 
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
    MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
    FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
    TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
 
   Name of Tendering Institution:
                                 -----------------------------------------------
 
   Check Box of Book-Entry Transfer Facility:
 
   / / DTC          / / PDTC
 
   Account Number:
                  --------------------------------------------------------------
 
   Transaction Code Number:
                           -----------------------------------------------------
 
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
    DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
    PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
 
   Name(s) of Registered Holder(s):
                                   ---------------------------------------------
 
   Window Ticket Number (if any):
                                 -----------------------------------------------
 
   Date of Execution of Notice of Guaranteed Delivery:
                                                      --------------------------
 
   Name of Institution that Guaranteed Delivery:
                                                --------------------------------
 
   If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry
    Transfer Facility:
 
   / / DTC          / / PDTC
 
   Account Number:
                  --------------------------------------------------------------
 
   Transaction Code Number:
                           -----------------------------------------------------
 
                                                                              
- ---------------------------------------------------------------------------------------------------------
                                     DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------
  NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)        SHARES       NUMBER OF SHARES     NUMBER OF
   (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)      CERTIFICATE      REPRESENTED BY        SHARES
          APPEAR(S) ON THE CERTIFICATE(S)             NUMBER(S)(1)   CERTIFICATE(S)(1)    TENDERED(2)
- ---------------------------------------------------------------------------------------------------------
                                                   ------------------------------------------------------
                                                   ------------------------------------------------------
                                                   ------------------------------------------------------
                 AFFIX LABEL HERE
                                                   ------------------------------------------------------
                                                   ------------------------------------------------------
                                                   ------------------------------------------------------
                                                   ------------------------------------------------------
                                                                        Total Shares
- ---------------------------------------------------------------------------------------------------------
 (1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
 (2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered
     to the Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------


   3
 
                          SPECIAL PAYMENT INSTRUCTIONS
                        (SEE INSTRUCTIONS 1, 5, 6 AND 7)
     To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
 
Issue (check appropriate box(es)):
 
     / / Check to:
 
     / / Certificate to:
 
Name:
- ----------------------------------------------
                             (Please Type or Print)
 
Address:
- --------------------------------------------
 
- ------------------------------------------------------
 
- ------------------------------------------------------
                               (Include Zip Code)
 
- ------------------------------------------------------
                  (Tax Identification or Social Security No.)
                           (See Substitute Form W-9)
 
     Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
 
                              / / DTC     / / PDTC
                                  (check one)
 
- ------------------------------------------------------
                           (DTC/PDTC Account Number)
 
                         SPECIAL DELIVERY INSTRUCTIONS
                        (SEE INSTRUCTIONS 1, 5, 6 AND 7)
 
     To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
 
Mail (check appropriate box(es)):
 
     / / Check to:
 
     / / Certificate to:
 
Name:
- ----------------------------------------------
                             (Please Type or Print)
 
Address:
- --------------------------------------------
 
- ------------------------------------------------------
 
- ------------------------------------------------------
                               (Include Zip Code)
 
- ------------------------------------------------------
                  (Tax Identification or Social Security No.)
 
                   NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
 
Ladies and Gentlemen:
 
     The undersigned hereby tenders to CCI Acquisition Corp., a Delaware
corporation ("Purchaser") and an affiliate of Cooperative Computing, Inc., a
Texas corporation, the above-described shares of common stock, $.001 par value
(the "Common Stock"), of Triad Systems Corporation, a Delaware corporation (the
"Company"), together with the associated common stock purchase rights (the
"Rights"; and together with the Common Stock, the "Shares") at a purchase price
of $9.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 23, 1996 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
 
     Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns and transfers to,
or upon the order of, Purchaser all right, title and interest in and to all of
the Shares that are being tendered hereby and any and all other Shares or other
securities issued or issuable in respect of such Shares on or after October 23,
1996 (a "Distribution") and irrevocably constitutes and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares (and any Distributions), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver certificates (the "Certificates") evidencing such
Shares (and any Distributions), or transfer ownership of such Shares (and any
Distributions) on the account books maintained by a Book-Entry Transfer Facility
(as defined in the Offer to Purchase) together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser upon receipt by the Depositary, as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
   4
 
     The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares (and any Distributions) tendered hereby, including, without limitation,
the right to vote such Shares (and any Distributions) in such manner as each
such attorney and proxy or his substitute shall, in his sole discretion, deem
proper. All such powers of attorney and proxies, being deemed to be irrevocable,
shall be considered coupled with an interest in the Shares tendered herewith.
Such appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by the undersigned with respect to such
Shares (and any Distributions) will be revoked, without further action, and no
subsequent powers of attorney's and proxies may be given with respect thereto
(and, if given, will be deemed ineffective). The designees of Purchaser will,
with respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper, including, without limitation, in respect of
any annual or special meeting of the stockholders of the Company, or any
adjournment or postponement thereof, or in connection with any action by or
written consent in lieu of any such meeting or otherwise. Purchaser reserves the
absolute right to require that, in order for Shares to be deemed validly
tendered, immediately upon the acceptance for payment of such Shares, Purchaser
or its designees are able to exercise full voting rights with respect to such
Shares (and any Distributions), including voting at any meeting of stockholders
of the Company then scheduled.
 
     The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distributions) tendered hereby and that when such Shares (and any
Distributions) are accepted for payment and paid for by Purchaser, Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances, and that the Shares (and any
Distributions) tendered hereby will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of Shares (and any Distributions) tendered
hereby. In addition, the undersigned shall promptly remit and transfer to the
Depositary for the account of Purchaser any and all Distributions issued to the
undersigned on or after October 23, 1996 in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by Purchaser in its sole discretion.
 
     All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
 
     The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in "Procedure for Tendering Shares" in the Offer
to Purchase and in the instructions hereto will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares upon the terms
and subject to the conditions of the Offer. The undersigned recognizes that,
under certain circumstances set forth in the Offer to Purchase, Purchaser may
not be required to accept for payment any of the Shares tendered hereby or may
accept for payment fewer than all of the Shares tendered hereby.
 
     Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to, the person(s) so indicated. Unless
otherwise indicated herein under "Special Payment Instructions," in the case of
a book-entry delivery of Shares, please credit the account maintained at the
Book-Entry Transfer Facility indicated above with respect to any Shares not
accepted for payment. The undersigned recognizes that Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any Shares
from the name of the registered holder thereof if Purchaser does not accept for
payment any of the Shares tendered hereby.
   5
 
                                  INSTRUCTIONS
             FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
    1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange (registered under Section 6 of the
Exchange Act) by a member firm of the National Association of Securities
Dealers, Inc., by a commercial bank or trust company having an office or
correspondent in the United States or by any other "Eligible Guarantor
Institution" (bank, stockholder, savings and loan association or credit union
with membership approved signature guarantee medallion program) as defined in
Rule 17Ad-15 under the Exchange Act (each of the foregoing constituting an
"Eligible Institution"), unless the Shares tendered hereby are tendered (i) by
the registered holder (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of such Shares who has
completed neither the box entitled "Special Payment Instructions" nor the box
entitled "Special Delivery Instructions" herein or (ii) for the account of an
Eligible Institution. See Instruction 5. If the Certificates are registered in
the name of a person other than the signer of this Letter of Transmittal, or if
payment is to be made or delivered to, or Certificates evidencing unpurchased
Shares are to be issued or returned to, a person other than the registered
owner, then the tendered Certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the Certificates, with the signatures on
the Certificates or stock powers guaranteed by an Eligible Institution as
provided herein. See Instruction 5.
 
    2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders if Certificates evidencing Shares are to be forwarded herewith or
if delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth under "Procedure for Tendering Shares -- Book-Entry Transfer"
in the Offer to Purchase. For a stockholder to validly tender Shares pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either (i) Certificates for tendered Shares must be received
by the Depositary at one of such addresses on or prior to the Expiration Date or
(ii) Shares must be delivered pursuant to the procedures for book-entry transfer
set forth under "Procedure for Tendering Shares -- Book-Entry Transfer" in the
Offer to Purchase and a Book-Entry Confirmation must be received by the
Depositary on or prior to the Expiration Date or (b) the tendering stockholder
must comply with the guaranteed delivery procedures set forth below and under
"Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase.
 
    Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase. Pursuant to such procedures (i) such tender must be made by or through
an Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
Certificates representing all tendered Shares in proper form for transfer, or a
Book-Entry Confirmation with respect to all tendered Shares, together with a
Letter of Transmittal (or a manually-signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq Stock Market trading days after the date of
execution of such Notice of Guaranteed Delivery. If Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) must accompany each such
delivery.
 
    THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
 
    No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
 
    3. INADEQUATE SPACE. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
 
    4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, a new Certificate for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent,
without expense, to be person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
 
    5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
 
    If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
 
    If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
 
    If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of each person's authority to so act must be
submitted.
 
    If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
 
    If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
 
    6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will
pay or cause to be paid any transfer taxes with respect to the transfer and sale
of Shares to it or its order pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted hereby) if
Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other
   6
 
than the registered holder(s), or if tendered Certificates are registered in the
name of any person other than the person(s) signing this Letter of Transmittal,
the amount of any transfer taxes (whether imposed on the registered holder(s) or
such person) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
 
    Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
 
    7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and/or such
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal must be completed. If any tendered Shares
are not purchased for any reason and such Shares are delivered by Book-Entry
Transfer Facility, such shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility.
 
    8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses or telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or
brokers, dealers, commercial banks and trust companies and such materials will
be furnished at Purchaser's expense.
 
    9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's sole discretion.
 
    10. BACKUP WITHHOLDING TAX. Except in the case of foreign persons, each
tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided
under "Important Tax Information" below, and to certify that the stockholder is
not subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the tendering stockholder to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares. The
tendering stockholder should indicate in the box in Part I of the Substitute
Form W-9 if the tendering stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the stockholder
has indicated in the box in Part I that a TIN has been applied for and the
Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% of all payments of the purchase price, if any, made thereafter
pursuant to the Offer until a TIN is provided to the Depositary. A tendering
stockholder who is a foreign person (i.e., who is not a citizen or resident of
the United States) should provide the Depositary with a completed Form W-8.
Please contact the Depositary, if necessary, in order to obtain a copy of Form
W-8.
 
    11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, ChaseMellon Shareholder Services, L.L.C. at
1-800-241-6594. The holders will then be instructed as to the procedure to be
followed in order to replace the Certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
 
    IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY
CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS AND/OR SIGNATURES) MUST
BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
 
                           IMPORTANT TAX INFORMATION
 
    Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payor) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, such stockholder should so indicate on
the Substitute Form W-9. See Instruction 10. If the Depositary is not provided
with the correct TIN, the stockholder may be subject to a $50 penalty imposed by
the Internal Revenue Service (the "IRS"). In addition, payments that are made to
such stockholders with respect to Shares purchased pursuant to the Offer may be
subject to backup federal income tax withholding.
 
    Certain stockholders are not subject to these backup withholding and
reporting requirements. In order for a foreign person to qualify as an exempt
recipient, such stockholders generally must submit a Form W-8. Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions. Other exempt recipients should complete Form W-9 in order to avoid
the possible imposition of backup withholding.
 
    If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the IRS.
 
PURPOSE OF SUBSTITUTE FORM W-9
 
    To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, generally a
stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN) and that (i) such
stockholder is exempt from backup withholding or (ii) such stockholder has not
been notified by the IRS that he is subject to backup withholding as a result of
failure to report all interest or dividends or (iii) the IRS has notified the
stockholder that he is not longer subject to backup withholding.
 
WHAT NUMBER TO GIVE THE DEPOSITARY
    The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
   7
 
                                   IMPORTANT
 
                 STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
                              FORM W-9 ON REVERSE
 
- --------------------------------------------------------------------------------
                        (Signature(s) of Stockholder(s)
 
Dated:
- ------------------------------, 199__
 
     (Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Certificate or on a security position listing or by person(s) authorized to
become registered holder(s) by Certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
 
                                    Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                             (Please Type or Print)
 
                             Capacity (Full Title):
- --------------------------------------------------------------------------------
                              (See Instruction 5)
 
                                    Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                               (Include Zip Code)
 
Area Codes and Telephone Numbers:
      -------------------------------------------------------------------
                                                     (Home)
 
                                ------------------------------------------------
                                                   (Business)
 
Taxpayer Identification or Social Security No.
           ----------------------------------------------------------
                                      (Complete Substitute Form W-9 on Reverse)
 
                           GUARANTEE OF SIGNATURE(S)
                           (SEE INSTRUCTIONS 1 AND 5)
 
- --------------------------------------------------------------------------------
                            Authorized Signature(s)
 
- --------------------------------------------------------------------------------
                                     (Name)
 
- --------------------------------------------------------------------------------
                                 (Name of Firm)
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                          (Address Including Zip Code)
 
- --------------------------------------------------------------------------------
                        (Area Code and Telephone Number)
 
Dated:
- ------------------------------, 199__
                                                                               '
   8
 
                                                                  
- ---------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ---------------------------------------------------------------------------------------------------------
 
 SUBSTITUTE                      PLEASE PROVIDE YOUR TIN IN THE BOX AT   Part I -- Social Security Number
 FORM W-9                        RIGHT AND CERTIFY BY SIGNING AND DATING  OR Employer Identification
                                 BELOW                                   Number
 DEPARTMENT OF THE TREASURY     --------------------------------------   -------------------------------
 INTERNAL REVENUE SERVICE        Name                                    (If awaiting TIN, write "Applied
                                 --------------------------------------  For")
 PAYER'S REQUEST FOR TAXPAYER    Business Name                          ---------------------------------
 IDENTIFICATION NUMBER (TIN)
                                 Please check appropriate box:           Part II -- For Payees exempt
                                 / /  Individual/Sole Proprietor     /   from backup withholding, see the
                                 /  Corporation                          enclosed Guidelines for
                                                                         Certification of Taxpayer
                                 / /  Partnership    / /  Other          Identification Number on
                                --------------------------------------   Substitute Form W-9, check the
                                 Address                                 Exempt box below, and complete
                                --------------------------------------   the Form W-9.
                                 City, State, Zip Code                   Exempt / /


 
 Certification -- Under penalties of perjury, I certify that:
 
 (1) The Number shown on this form is my correct Taxpayer Identification Number
     (or I am waiting for a number to be issued to me); and
 (2) I am not subject to backup withholding either because (a) I am exempt from
     backup withholding, or (b) I have not been notified by the Internal
     Revenue Service ("IRS") that I am subject to backup withholding as a
     result of a failure to report all interest or dividends, or (c) the IRS
     has notified me that I am no longer subject to backup withholding.
 Certification Instructions -- You must cross out item (2) above if you have
 been notified by the IRS that you are subject to backup withholding because of
 underreporting interest or dividends on your tax return. However, if after
 being notified by the IRS that you were subject to backup withholding, you
 received another notification from the IRS that you were no longer subject to
 backup withholding, do not cross out item (2). (Also see instructions in the
 enclosed Guidelines.)
- --------------------------------------------------------------------------------
 
                                   SIGNATURE
 -----------------------------------------------------------               DATE
                     --------------------------------, 199
                                     -----
    NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
          BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
          OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
          CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
          FOR ADDITIONAL INSTRUCTIONS.
 
          YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
          IN PART I OF THE SUBSTITUTE FROM W-9.
 
             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
 
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments of the Offer Price made to me thereafter will be withheld until I
provide a number.
 
                                   SIGNATURE
- ------------------------------------------------------                      DATE
                        ---------------------------, 199
                                      ---
 
                                             
    The Information Agent for the Offer is:           The Dealer Manager for the Offer is:
            CHASEMELLON SHAREHOLDER                          CHASE SECURITIES INC.
                SERVICES, L.L.C.                                270 Park Avenue
       450 West 33rd Street -- 15th Floor                   New York, New York 10017
            New York, New York 10001                             (212) 270-3939
                 1-800-241-6594

EX-99.5

   1
                                                                  EXHIBIT (c)(1)

                          AGREEMENT AND PLAN OF MERGER

                                     AMONG

                          COOPERATIVE COMPUTING, INC.,

                             CCI ACQUISITION CORP.

                                      AND

                           TRIAD SYSTEMS CORPORATION

                            DATED OCTOBER 17, 1996
   2
                               TABLE OF CONTENTS



Section                                                                    Page
- -------                                                                    ----
                                                                          
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2
       THE OFFER  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2
              1.1    The Offer.   . . . . . . . . . . . . . . . . . . . .     2
              1.2    Offer Documents.   . . . . . . . . . . . . . . . . .     3
              1.3    Company Actions  . . . . . . . . . . . . . . . . . .     3
              1.4    Directors  . . . . . . . . . . . . . . . . . . . . .     5

ARTICLE II  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
       THE MERGER   . . . . . . . . . . . . . . . . . . . . . . . . . . .     6
              2.1    The Merger   . . . . . . . . . . . . . . . . . . . .     6
              2.2    Closing  . . . . . . . . . . . . . . . . . . . . . .     6
              2.3    Effective Time of the Merger   . . . . . . . . . . .     6
              2.4    Effects of the Merger  . . . . . . . . . . . . . . .     7

ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     7
       EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
       THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES   . . . . .     7
              3.1    Effect on Capital Stock  . . . . . . . . . . . . . .     7
              3.2    Conversion of Securities.  . . . . . . . . . . . . .     8
              3.3    Payment for Shares   . . . . . . . . . . . . . . . .     8
              3.4    Stock Transfer Books   . . . . . . . . . . . . . . .    10
              3.5    Company Stock Plans  . . . . . . . . . . . . . . . .    11
              3.6    Dissenting Shares  . . . . . . . . . . . . . . . . .    11

ARTICLE IV  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12
       REPRESENTATIONS AND WARRANTIES   . . . . . . . . . . . . . . . . .    12
              4.1    Representations and Warranties of the Company  . . .    12
              4.2    Representations and Warranties of Parent and
                     Sub  . . . . . . . . . . . . . . . . . . . . . . . .    30

ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    32
       COVENANTS RELATING TO CONDUCT OF BUSINESS  . . . . . . . . . . . .    32
              5.1    Covenants of the Company   . . . . . . . . . . . . .    32

ARTICLE VI  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    37
       ADDITIONAL AGREEMENTS  . . . . . . . . . . . . . . . . . . . . . .    37
              6.1    Preparation of the Proxy Statement; Company
                     Stockholders Meeting; Merger without a
                     Company Stockholders Meeting   . . . . . . . . . . .    37
              6.2    Access to Information  . . . . . . . . . . . . . . .    38
              6.3    Settlements  . . . . . . . . . . . . . . . . . . . .    38
              6.4    Fees and Expenses  . . . . . . . . . . . . . . . . .    38
              6.5    Brokers or Finders   . . . . . . . . . . . . . . . .    39
              6.6    Indemnification; Directors' and Officers'
                     Insurance  . . . . . . . . . . . . . . . . . . . . .    40






                                       i
   3
                                                                          
              6.7    Best Efforts   . . . . . . . . . . . . . . . . . . .    41
              6.8    Conduct of Business of Sub   . . . . . . . . . . . .    42
              6.9    Publicity  . . . . . . . . . . . . . . . . . . . . .    42
              6.10   Spin-Off of Certain Real Estate  . . . . . . . . . .    42

ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    45
       CONDITIONS PRECEDENT   . . . . . . . . . . . . . . . . . . . . . .    45
              7.1    Conditions to Each Party's Obligation to
                     Effect the Merger  . . . . . . . . . . . . . . . . .    45

ARTICLE VIII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    46
       TERMINATION AND AMENDMENT  . . . . . . . . . . . . . . . . . . . .    46
              8.1    Termination  . . . . . . . . . . . . . . . . . . . .    46
              8.2    Effect of Termination  . . . . . . . . . . . . . . .    47
              8.3    Amendment  . . . . . . . . . . . . . . . . . . . . .    47
              8.4    Extension; Waiver  . . . . . . . . . . . . . . . . .    47

ARTICLE IX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    47
       GENERAL PROVISIONS   . . . . . . . . . . . . . . . . . . . . . . .    47
              9.1    Nonsurvival of Representations,
                     Warranties    and Agreements   . . . . . . . . . . .    47
              9.2    Notices  . . . . . . . . . . . . . . . . . . . . . .    47
              9.3    Interpretation   . . . . . . . . . . . . . . . . . .    49
              9.4    Counterparts   . . . . . . . . . . . . . . . . . . .    49
              9.5    Entire Agreement; No Third Party
                     Beneficiaries; Rights of Ownership   . . . . . . . .    49
              9.6    Governing Law  . . . . . . . . . . . . . . . . . . .    49
              9.7    No Remedy in Certain Circumstances   . . . . . . . .    49
              9.8    Assignment   . . . . . . . . . . . . . . . . . . . .    50







                                       ii
   4
                           GLOSSARY OF DEFINED TERMS

                                                                          
1989 Resolutions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
1990 ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Acquisition Proposal  . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
Board Percentage  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
CERCLA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
Certificates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
Closing Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
Code  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Company Common Stock  . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . .  25
Company Litigation  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Company Rights Agreement  . . . . . . . . . . . . . . . . . . . . . . . . .   4
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Company Stockholder Approval  . . . . . . . . . . . . . . . . . . . . . . .  16
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . .  38
Constituent Corporations  . . . . . . . . . . . . . . . . . . . . . . . . .   6
Continuing Directors  . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
CSD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
Designated Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Designated Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Designated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
DGCL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
Effective Time  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
Environmental Costs and Liabilities . . . . . . . . . . . . . . . . . . . .  26
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Exchange Act  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Final Purchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
GAAP  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Gains and Transfer Taxes  . . . . . . . . . . . . . . . . . . . . . . . . .  16
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
Hazardous Material  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Indebtedness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .  40
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
Injunction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
IRSA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . .  12
Merger Consideration  . . . . . . . . . . . . . . . . . . . . . . . . . . .   8







                                      iii
   5
                                                                          
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Offer Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Option Consideration  . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
OSHA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Parent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Paying Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
Payment Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Real Property Leases  . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
Rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Schedule 14D-1  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Schedule 14D-9  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Securities Act  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Shares  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Spin-Off Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Spinco  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Stock Option Plans  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Stockholders Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Subsidiary  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15







                                       iv
   6
                          AGREEMENT AND PLAN OF MERGER


              THIS AGREEMENT AND PLAN OF MERGER, dated as of October 17, 1996
(the "Agreement"), is made and entered into by Cooperative Computing, Inc., a
Texas corporation ("Parent"), CCI Acquisition Corp., a Delaware corporation
("Sub"), and Triad Systems Corporation, a Delaware corporation (the "Company").

              WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger of Sub with and into the Company, upon the terms and
subject to the conditions set forth in the Agreement;

              WHEREAS, to effectuate the acquisition, Parent and the Company
each desire that Sub commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.001 per share, of the Company
("Shares" or "Company Common Stock"), upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously
approved such tender offer and agreed to recommend to its stockholders that
they accept the tender offer and tender their Company Common Stock pursuant
thereto;

              WHEREAS, the holders of the issued and outstanding common stock
of Sub will contribute that stock to Parent prior to the consummation of the
Offer, as a result of which, Sub will become a wholly-owned subsidiary of
Parent;

              WHEREAS, Parent and Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
contemporaneously with the execution and delivery hereof, certain beneficial
and record holders of the Company Common Stock enter into agreements
(collectively, the "Stockholders Agreement") providing for certain matters with
respect to their Shares (including the tender of their Shares and certain other
actions relating to the Offer (as defined in Section 1.1)) and the other
transactions contemplated by this Agreement and in order to induce Parent and
Sub to enter into this Agreement, the Company has approved the execution and
delivery by Parent and such stockholders of the Stockholders Agreement, and
such stockholders have agreed to execute and deliver the Stockholders
Agreement; and

              WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to consummation
thereof;

              NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein





   7
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:

                                   ARTICLE I
                                   THE OFFER

              1.1    The Offer.    (a)     Provided that none of the events set
forth in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the
public announcement of the execution and delivery of this Agreement), Sub shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all
outstanding shares of the Company Common Stock (together with the associated
Rights (as hereinafter defined)) at a price of $9.25 per share, net to the
seller in cash (the "Offer Consideration").  As used in this Agreement,
"Rights" shall mean the Common Stock Purchase Rights  issued pursuant to the
Company Rights Agreement (as defined below).  Except where the context
otherwise requires, all references herein to the shares of Common Stock shall
include the associated Rights.  The obligation of Parent and Sub to commence
the Offer, consummate the Offer, accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.

              (b)    Parent and Sub expressly reserve the right to amend or
modify the terms of the Offer, except that, without the prior written consent
of the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease
the Offer Consideration or the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which constitutes at least 51% of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the following meaning, as of any date: the number
of shares of Company Common Stock outstanding, together with Shares which the
Company may be required to issue pursuant to obligations outstanding at that
date under employee stock option or similar benefit plans, or otherwise), (v)
extend the expiration date of the Offer (except that Sub may extend the
expiration date of the Offer (a) as required by law, (b) for up to ten (10)
business days after the initial expiration date or for longer periods (not to
exceed 90 calendar days from the date of commencement) in the event that any
condition to the Offer is not satisfied, or (c) for one or more times for an
aggregate period of up to 15 days (not to exceed 90 calendar days from the date
of commencement) for any reason other than those specified in the immediately
preceding clause (a) or clause (b)), or (vi) amend any term of the Offer in any
manner materially adverse to





                                       2
   8
holders of shares of Company Common Stock; provided, however, that, except as
set forth above, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the United States Securities
and Exchange Commission (the "SEC").  Assuming the prior satisfaction or waiver
of the conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration date thereof.

              1.2    Offer Documents.  As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase and related
letter of transmittal and other ancillary Offer documents and instruments
pursuant to which the Offer will be made (collectively with any supplements or
amendments thereto, the "Offer Documents") and shall contain (or shall be
amended in a timely manner to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law, and shall conform in all
material respects with the requirements of the Exchange Act and any other
applicable law; provided, however, that no agreement or representation hereby
is made or shall be made by Parent or Sub with respect to information supplied
by the Company expressly for inclusion in, or with respect to Company
information derived from the Company's public SEC filings that is included or
incorporated by reference in, the Offer Documents.  Parent, Sub and the Company
each agree promptly to correct any information provided by them for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Sub further agrees to take all lawful
action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Company Common
Stock, in each case as and to the extent required by applicable law.  In
conducting the Offer, Parent and Sub shall comply in all material respects with
the provisions of the Exchange Act and any other applicable law.  The Company
and its counsel shall be given the opportunity to review and comment on the
Offer Documents and any amendments thereto prior to the filing thereof with the
SEC.

              1.3    Company Actions.  The Company hereby consents to the Offer
and represents that (a) its Board of Directors (at a meeting duly called and
held) has unanimously (i) determined that each of this Agreement, the Offer and
the Merger are fair to and in the best interests of the stockholders of the
Company, (ii) approved the execution, delivery and performance of this
Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated hereby and thereby, including the





                                       3
   9
Offer and the Merger, and such approval constitutes approval of the foregoing
for purposes of Section 203 of the Delaware General Corporation Law, as amended
(the "DGCL"), (iii) resolved to recommend acceptance of the Offer, approval and
adoption of this Agreement and the Stockholders Agreement and approval of the
Merger by the holders of Company Common Stock, (iv) taken all action necessary
in respect of the Amended and Restated Rights Agreement, dated as of December
6, 1993, between the Company and Chemical Trust Company of California, as
Rights Agent (the "Company Rights Agreement"), so as to render the Company
Rights Agreement inapplicable to any and all of the execution, delivery and
performance of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
Offer and the Merger (such necessary action to include, without limitation,
taking action to provide that none of Parent and its affiliates will become an
"Acquiring Person" and that no "Stock Acquisition Date" or "Distribution Date"
(as such terms are defined in the Company Rights Agreement) will occur as a
result of such execution, delivery and performance or such consummation), and
(v) adopted the resolutions described in Section 4.1(i)(xiii) regarding certain
employee severance benefits, and (b) Hambrecht & Quist, LLP has delivered to
the Board of Directors of the Company its written opinion that the Offer
Consideration to be received by the holders of Company Common Stock in the
Offer is fair, from a financial point of view, to such holders.  The Board of
Directors of the Company may withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement, the Stockholders Agreement or the
Merger only if the Board of Directors of the Company, in good faith and based
upon the advice of outside counsel, deems it necessary to do so in order to
properly fulfill such Board's fiduciary obligations.  The Company hereby
consents to the inclusion in the Offer Documents of the recommendation referred
to in this Section 1.3.  The Company hereby agrees to file with the SEC
simultaneously with the filing by Parent and Sub of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the Exchange Act
and any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law.  The Company, Parent and Sub each agree promptly to
correct any information provided by them for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect and the Company further agrees to take all lawful action necessary to
cause the Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable





                                       4
   10
law.  Parent, Sub and their counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and any amendments thereto prior to the filing
thereof with the SEC.  In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Parent with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its
transfer agent to furnish, Parent with such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Company Common Stock.  Subject to
the requirements of applicable law, and except for such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Sub and each of their
affiliates, associates, partners, employees, agents and advisors shall hold in
confidence the information contained in such labels and lists, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, in accordance with its terms, shall deliver promptly
to the Company all copies of such information then in their possession.

              1.4    Directors.  (a)       Promptly upon the purchase by Parent
or any of its subsidiaries of such number of shares of Company Common Stock
which represents at least 51% of the outstanding shares of Company Common Stock
(on a fully diluted basis), and from time to time thereafter, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors
on the Board of Directors of the Company) as will give Parent, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to the product of (x) the number of directors
on the Board of Directors of the Company (giving effect to any increase in the
number of directors pursuant to this Section 1.4) and (y) the percentage that
such number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall,
upon request by Parent, promptly satisfy the Board Percentage by (i) increasing
the size of the Board of Directors of the Company or (ii) using its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected to the Board of Directors of the
Company and shall cause Parent's designees promptly to be so elected, provided
that no such action shall be taken which would result in there being, prior to
the consummation of the Merger, less than two directors of the Company that are
not affiliated with Parent.  At the request of Parent, the Company shall take,
at the Company's expense, all lawful action necessary to effect any such
election, including, without limitation, mailing to its stockholders the
information required by Section





                                       5
   11
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless such
information has previously been provided to the Company's stockholders in the
Schedule 14D-9.

              (b)    Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of directors of the Company then in office who are "Continuing
Directors".  The term "Continuing Director" shall mean (i) each member of the
board of directors on the date hereof who voted to approve this Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such Continuing Director by a majority of the Continuing Directors then on the
board of directors.


                                   ARTICLE II
                                   THE MERGER

              2.1    The Merger.  Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time.  At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a direct wholly owned subsidiary of
Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under the name "Triad Systems Corporation."

              2.2    Closing.  Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., New York time, on the second business day after
satisfaction of the conditions set forth in Section 7.1 (or as soon as
practicable thereafter following satisfaction or waiver of the conditions set
forth in Sections 7.2 and 7.3) (the "Closing Date"), at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, unless
another date, time or place is agreed to in writing by the parties hereto.

              2.3    Effective Time of the Merger.  Subject to the provisions
of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable on or after the Closing Date.  The Merger shall become effective





                                       6
   12
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").

              2.4    Effects of the Merger.       (a)    The Merger shall have
the effects as set forth in the applicable provisions of the DGCL.

              (b)    The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.

              (c)    The Certificate of Incorporation of the Company shall be
amended and restated in its entirety as set forth on Exhibit B hereto and, from
and after the Effective Time, such amended and restated Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.

              (d)    The Bylaws of the Company shall be amended and restated in
their entirety as set forth on Exhibit C hereto and, from and after the
Effective Time, such amended and restated Bylaws shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by applicable law,
the Certificate of Incorporation or the Bylaws.


                                  ARTICLE III
                  EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
             THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

              3.1    Effect on Capital Stock.  At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:

              (a)    Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.

              (b)    Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock
and other shares of capital stock of the Company owned by Parent or Sub shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor.





                                       7
   13
              3.2    Conversion of Securities.  At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any of the shares thereof:

              (a)        (i)       Subject to the other provisions of this
Section 3.2, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding shares owned, directly or
indirectly, by the Company or any Subsidiary (as defined below) of the Company
or by Parent, Sub or any other Subsidiary of Parent and Dissenting Shares (as
defined in Section 3.6)) shall be converted into the right to receive the Offer
Consideration, payable to the holder thereof, without any interest thereon,
less any required withholding taxes (the "Merger Consideration"), upon
surrender and exchange of the Certificates (as defined in Section 3.3).  As
used in this Agreement, the word "Subsidiary", with respect to any party, means
any corporation, partnership, joint venture or other organization, whether
incorporated or unincorporated, of which:  (i) such party or any other
Subsidiary of such party is a general partner; (ii) voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation, partnership, joint venture or other organization
is held by such party or by any one or more of its Subsidiaries, or by such
party and any one or more of its Subsidiaries; or (iii) at least 25% of the
equity, other securities or other interests is, directly or indirectly, owned
or controlled by such party or by any one or more of its Subsidiaries, or by
such party and any one or more of its Subsidiaries.

                        (ii)       All such shares of Company Common Stock,
when converted as provided in Section 3.2(a)(i), no longer shall be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each Certificate previously evidencing such Shares shall thereafter represent
only the right to receive the Merger Consideration.  The holders of
Certificates previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the Company
Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.

              3.3    Payment for Shares.   (a)    Paying Agent. Prior to the
Effective Time, Sub shall appoint a United States bank or trust company
reasonably acceptable to the Company to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration, and Sub shall deposit or
shall cause to be deposited with the Paying Agent in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article III, through the Paying Agent (the
"Payment Fund"), immediately available funds in





                                       8
   14
amounts necessary to make the payments pursuant to Section 3.2(a)(i) and this
Section 3.3 to holders (other than the Company or any Subsidiary of the Company
or Parent, Sub or any other Subsidiary of Parent, or holders of Dissenting
Shares).  The Paying Agent shall, pursuant to irrevocable instructions, pay the
Merger Consideration out of the Payment Fund.

              The Paying Agent shall invest portions of the Payment Fund as
Parent directs in obligations of or guaranteed by the United States of America,
in commercial paper obligations receiving the highest investment grade rating
from both Moody's Investors Services, Inc. and Standard & Poor's Corporation,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Company Common Stock entitled thereto as
contemplated by this Section.  The Surviving Corporation shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of Permitted Investments.  All earnings on Permitted Investments shall
be paid to the Surviving Corporation.  If for any reason (including losses) the
Payment Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 3.3, the Surviving
Corporation shall in any event be liable for payment thereof.  The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.

              (b)    Payment Procedures.  As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company or any
Subsidiary of the Company or Parent, Sub or any other Subsidiary of Parent) of
a Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i)
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as the Surviving Corporation reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor.  Upon surrender of a Certificate
for cancellation to the Paying Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in respect thereof cash in an amount equal to the product of (x) the
number of shares of Company Common Stock represented by such Certificate and
(y) the Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled.  Absolutely no interest shall be paid or accrued on the
Merger Consideration payable upon the surrender of





                                       9
   15
any Certificate.  If payment is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition
of payment that the Certificate so surrendered shall be promptly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the surrendered Certificate or
established to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable.  Until surrendered in accordance with the
provisions of this Section 3.3(b), each Certificate (other than Certificates
representing Shares owned by Parent or any subsidiary of Parent or held in the
treasury of the Company) shall represent for all purposes only the right to
receive the Merger Consideration.

              (c)    Termination of Payment Fund; Interest.  Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article III and the instructions set forth in
the letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled.  All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.

              (d)    No Liability.  Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.

              (e)    Withholding Rights.  The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by the Surviving Corporation.

              3.4    Stock Transfer Books.  At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.





                                      10
   16
On or after the Effective Time, any certificates presented to the Paying Agent
or Parent for any reason shall be converted into the Merger Consideration.

              3.5    Company Stock Plans.  (a)  At the Effective Time, each
holder of a then outstanding option to purchase Shares under the Company's 1982
Amended and Restated Stock Option Plan, 1990 Stock Option Plan, and Amended and
Restated Outside Directors Stock Option Plan (collectively, the "Stock Option
Plans"), whether or not then exercisable (the "Options"), shall, in settlement
thereof, receive for each Share subject to such Option an amount (subject to
any applicable withholding tax) in cash equal to the difference between the
Offer Consideration and the per Share exercise price of such Option to the
extent such difference is a positive number (such amount being hereinafter
referred to as, the "Option Consideration"); provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
Upon receipt of the Option Consideration, the Option shall be canceled.  The
surrender of an Option to the Company in exchange for the Option Consideration
shall be deemed a release of any and all rights the holder had or may have had
in respect of such Option.  Prior to the Effective Time, the Company shall
obtain all necessary consents or releases from holders of Options under the
Stock Option Plans and take all such other lawful action as may be necessary to
give effect to the transactions contemplated by this Section 3.5.  All Stock
Option Plans shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any Subsidiary
thereof shall be canceled as of the Effective Time, and the Company shall take
all action necessary to ensure that following the Effective Time no participant
in any Stock Option Plan or other plans, programs or arrangements shall have
any right thereunder to acquire equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof and to terminate all such plans.

              (b)    The Company shall take all actions reasonably necessary to
cause the last day of the current "Offering Period" (as such term is defined in
the Company's 1990 Employee Stock Purchase Plan (as amended to date, the "1990
ESPP")) to be the date immediately following the last payday occurring prior to
the expiration date of the Offer and apply the funds within the participant's
withholdings account on such expiration date to the purchase of whole Shares in
accordance with the terms of the 1990 ESPP.  The Company shall cause the 1990
ESPP to be terminated effective as of the Final Purchase Date.

              3.6    Dissenting Shares.  Notwithstanding any other





                                     11
   17
provisions of this Agreement to the contrary, shares of Company Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal
for such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration.  Such stockholders instead shall be entitled
to receive payment of the appraised value of such shares of Company Common
Stock held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Common Stock under such Section 262 shall
thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock.


                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

              4.1    Representations and Warranties of the Company.  The
Company represents and warrants to Parent and Sub as follows:

              (a)    Organization, Standing and Power.  Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business it
is conducting, or the operation, ownership or leasing of its properties, makes
such qualification necessary, other than in such jurisdictions where the
failure so to qualify would not have a Material Adverse Effect (as defined
below) with respect to the Company.  The Company has heretofore made available
to Parent complete and correct copies of its and its Subsidiaries' respective
Certificates of Incorporation and Bylaws.  All Subsidiaries of the Company and
their respective jurisdictions of incorporation or organization are identified
on Schedule 4.1(a).  As used in this Agreement:  a "Material Adverse Effect"
shall mean, with respect to any party, the result of one or more events,
changes or effects which, individually or in the aggregate, would have a
material adverse effect on the business, operations, assets or condition
(financial or otherwise) of such party and its Subsidiaries, taken as a whole.





                                      12
   18
              (b)    Capital Structure.  As of the date hereof, the authorized
capital stock of the Company consists of 50,000,000 Shares and 1,000,000 shares
of Preferred Stock, $.01 par value ("Preferred Stock").  At the close of
business on September 30, 1996:  (i) 17,749,158 Shares were issued and
outstanding; (ii) no shares of Preferred Stock were issued and outstanding;
(iii) 1,838,190 Shares were reserved for issuance pursuant options outstanding
under the Stock Option Plans; (iv) 290,219 Shares remain available for issuance
pursuant to the 1990 ESPP, (v) except for the issuance of Shares pursuant to
the exercise of the Options, there are no employment, executive termination or
similar agreements providing for the issuance of Shares; (vi) 645,184 Shares
were held by the Company; and (vii) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company stockholders may vote
("Company Voting Debt") were issued or outstanding.  Since September 30, 1996,
no additional Shares have been made available for issuance under the 1990 ESPP.
As of September 30, 1996, the total amount of funds on deposit in all
participants' withholdings accounts for the current Offer Period under the 1990
ESPP was $416,000.  All outstanding Shares are validly issued, fully paid and
nonassessable and are not subject to preemptive or other similar rights.  No
Shares are owned by any Subsidiary of the Company.  Except as set forth on
Schedule 4.1(b), all outstanding shares of capital stock of the Subsidiaries of
the Company are owned by the Company or a direct or indirect Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature.  Except as set forth in this Section 4.1(b) and except for
changes since September 30, 1996 resulting from the exercise of employee stock
options granted prior to such date pursuant to the Stock Option Plans or from
the issuance of Shares under the 1990 ESPP as contemplated by Section 3.5(b) of
this Agreement and except for the potential issuance of options to purchase up
to 75,000 Shares that may be granted in connection with an offer of employment
outstanding on the date of this Agreement, there are outstanding:  (i) no
shares of capital stock, Company Voting Debt or other voting securities of the
Company; (ii) no securities of the Company or any Subsidiary of the Company
convertible into, or exchangeable or exercisable for, shares of capital stock,
Company Voting Debt or other voting securities of the Company or any Subsidiary
of the Company; and (iii) no options, warrants, calls, rights (including
preemptive rights), commitments or agreements to which the Company or any
Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or any
Company Voting Debt or other voting securities of the Company or of any
Subsidiary of the Company, or obligating the Company or any Subsidiary of the
Company to grant, extend or





                                      13
   19
enter into any such option, warrant, call, right, commitment or agreement.
Since September 30, 1996, the Company has not (i) granted any options, warrants
or rights to purchase shares of Company Common Stock (except for the potential
issuance of options to purchase up to 75,000 Shares that may be granted in
connection with an offer of employment outstanding on the date of this
Agreement), or (ii) amended or repriced any Option or Stock Option Plans, and
set forth on Schedule 4.1(b) is a list of all outstanding options, warrants and
rights to purchase shares of Company Common Stock and the exercise prices
relating thereto.  Except for the Stockholders Agreement and the Unit Purchase
Agreement, dated as of July 7, 1992, between the Company, Richard C. Blum &
Associates, Inc., and certain investors, as amended by the First Amendment to
Unit Purchase Agreement, dated as of August 3, 1992, and the Exchange Agreement
and Second Amendment to Unit Purchase Agreement, dated as of March 31, 1995,
there are not as of the date hereof and there will not be at the Effective Time
any stockholder agreements, voting trusts or other agreements or understandings
to which the Company is a party or by which it is bound relating to the voting
of any shares of the capital stock of the Company which will limit in any way
the solicitation of proxies by or on behalf of the Company from, or the casting
of votes by, the stockholders of the Company with respect to the Merger.  There
are no restrictions on the Company to vote the stock of any of its
Subsidiaries.

              (c)    Authority; No Violations; Consents and Approvals.

                  (i)       The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the Company Stockholder
Approval (as defined in Section 4.1(c)(iii)), to consummate the transactions
contemplated hereby.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject, if
required with respect to consummation of the Merger, to the Company Stockholder
Approval.  This Agreement has been duly executed and delivered by the Company
and, subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and assuming that this Agreement constitutes the
valid and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms except that
the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).

                 (ii)       Except as set forth on Schedule 4.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not





                                      14
   20
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration (including pursuant to any put right)
of any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets or property, or
right of first refusal with respect to any asset or property (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss, creation or right of first refusal, a "Violation"),
pursuant to (A) any provision of the Certificate of Incorporation or Bylaws of
the Company or any of its Subsidiaries or (B) except as to which requisite
waivers or consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in paragraph
(iii) of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in any
Violation of (1) any loan or credit agreement, note, mortgage, deed of trust,
indenture, lease, Company Employee Benefit Plan (as defined in Section 4.1(i)),
Company Permit (as defined in Section 4.1(f)), or any other agreement,
obligation, instrument, concession, franchise, or license, except for any
Violations that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and except that each
holder of the Company's 12.25% Senior Notes due 1999 shall have the right, at
such holder's option and in the manner provided in the Indenture, dated August
1, 1992, between the Company and Security Pacific National Trust Company (New
York) to require the Company to redeem all or any portion of such holder's
Senior Notes and except that no representation is made as to that certain
Revolving Credit Loan Agreement, dated as of June 30, 1992, by and between the
Company and Comerica Bank-California, as amended to date, and that certain
First Deed of Trust and Assignment of Rents, Security Agreement and Fixture
Filing, dated August 23, 1988, by 3055 Triad Dr. Corp. and Mason-McDuffie
Financial Corporation, as Trustee, for the benefit of The Variable Annuity Life
Insurance Company, or (2) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries or
their respective properties or assets (collectively, "Laws").  The Board of
Directors of the Company has taken all actions necessary under the DGCL,
including approving the transactions contemplated by this Agreement and the
Stockholders Agreement, to ensure that Section 203 of the DGCL does not, and
will not, apply to the transactions contemplated in this Agreement or the
Stockholders Agreement.

                (iii)       No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its domestic Subsidiaries, and to the





                                      15
   21
best knowledge of either of the Company's Chief Executive Officer and the
Company's Chief Financial Officer (the "Designated Officers") with respect to
any of the Company's foreign Subsidiaries, in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for:  (A) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and the expiration or termination of the applicable waiting period
thereunder; (B) the filing with the SEC of (x) a proxy statement (if required
by applicable law) in definitive form relating to a meeting of the holders of
Company Common Stock to approve the Merger (such proxy statement as amended or
supplemented from time to time being hereinafter referred to as the "Proxy
Statement"), (y) the Schedule 14D-9 in connection with the Offer, and (z) such
reports under and such other compliance with the Exchange Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby; (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (D) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws; (E) such filings and approvals as may be required by any
foreign pre-merger notification, securities, corporate or other law, rule or
regulation; (F) such filings in connection with any state or local tax which is
attributable to the beneficial ownership of the Company's or its Subsidiaries'
real property, if any (collectively, the "Gains and Transfer Taxes"); (G) such
other such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; and (H) the approval of this Agreement and the
Merger by the holders of a majority of the outstanding Shares ("Company
Stockholder Approval") .

              (d)    SEC Documents.  The Company has made available to Parent a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since January 1,
1993 and prior to the date of this Agreement (the "Company SEC Documents"),
which are all the documents (other than preliminary material) that the Company
was required to file with the SEC since such date.  As of their respective
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Documents, and none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.  The financial statements of the Company included in





                                      16
   22
the Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, which will not be material,
either individually or in the aggregate) the consolidated financial position of
the Company and its consolidated Subsidiaries as of their respective dates and
the consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.

              (e)    Information Supplied.  None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in
(i) any of the Offer Documents will, at the time the Offer Documents are first
published, sent or given to holders of Company Common Stock, and at any time
they are amended or supplemented, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, on the
date it is first mailed to the holders of the Company Common Stock or at the
time of the Company's Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.  If at any time prior
to the expiration date of the Offer or the Effective Time any event with
respect to the Company or any of its Subsidiaries, or with respect to other
information supplied by the Company for inclusion in the Offer Documents or the
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, the Offer Documents or the Proxy Statement, as the case
may be, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company.  The Proxy Statement, insofar as it relates to
the Company or its Subsidiaries or other information supplied by the Company
for inclusion therein will comply as to form, in all material respects, with
the provisions of the Exchange Act or the rules and regulations thereunder.

              (f)    Compliance with Applicable Laws.  The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits"), except where
the failure to hold any such Company Permits could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.  The Company and its Subsidiaries are in compliance with the terms of
the Company Permits, except where the failure to be in compliance could not
reasonably be expected,





                                      17
   23
individually or in the aggregate, to have a Material Adverse Effect on the
Company.  Except as disclosed in the Company SEC Documents, the businesses of
the Company and its Subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity.  As of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened.

              (g)    Litigation.  Except as disclosed in the Company SEC
Documents, there is no suit, action or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Subsidiary
of the Company ("Company Litigation"), nor is there any material judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company ("Company
Order").  In addition, except as set forth on Schedule 4.1(g), the aggregate
amount of all claims and judgments pending, or to the knowledge of the Company,
threatened pursuant to all Company Litigation and Company Orders, excluding
individual, unrelated claims or judgments of less than $100,000 each, does not
exceed $2,500,000.

              (h)    Taxes.  Except as set forth on Schedule 4.1(h) hereto:

                  (i)       All Tax Returns required to be filed by or with
       respect to the Company and each of its Subsidiaries have been duly and
       timely filed, and all such Tax Returns are true, correct and complete in
       all material respects.  The Company and each of its Subsidiaries has
       duly and timely paid (or there has been paid on its behalf) all Taxes
       that are due, or claimed or asserted by any taxing authority to be due,
       from or with respect to it.  With respect to any period for which Taxes
       are not yet due with respect to the Company or any Subsidiary, the
       Company and each of its Subsidiaries has made due and sufficient current
       accruals for such Taxes in accordance with GAAP in the most recent
       financial statements contained in the Company SEC Documents.  The
       Company and each of its Subsidiaries has made (or there has been made on
       its behalf) all required estimated Tax payments sufficient to avoid any
       material underpayment penalties.  The Company and each of its
       Subsidiaries has withheld and paid all Taxes required by all applicable
       laws to be withheld or paid in connection with any amounts paid or owing
       to any employee, creditor, independent contractor or other third party.





                                      18
   24
                 (ii)       There are no outstanding agreements, waivers, or
       arrangements extending the statutory period of limitation applicable to
       any claim for, or the period for the collection or assessment of,
       material Taxes due from or with respect to the Company or any of its
       Subsidiaries for any taxable period.  No audit or other proceeding by
       any court, governmental or regulatory authority, or similar person is
       pending or threatened in regard to any Taxes due from or with respect to
       the Company or any of the Subsidiaries or any Tax Return filed by or
       with respect to the Company or any Subsidiary, other than normal and
       routine audits by non-federal governmental authorities.  No material
       assessment of Taxes is proposed against the Company or any of its
       Subsidiaries or any of their assets.

                (iii)       No election under Section 338 of the Code has been
       made or filed by or with respect to the Company or any of its
       Subsidiaries.  No consent to the application of Section 341(f)(2) of the
       Code (or any predecessor provision) has been made or filed by or with
       respect to the Company or any of its Subsidiaries or any of their
       assets.  None of the Company or any of its Subsidiaries has agreed to
       make any adjustment pursuant to Section 481(a) of the Code (or any
       predecessor provision) by reason of any change in any accounting method,
       and there is no application pending with any taxing authority requesting
       permission for any changes in any accounting method of the Company or
       any of its Subsidiaries.  None of the assets of the Company or any of
       its Subsidiaries is or will be required to be treated as being owned by
       any person (other than the Company or its Subsidiaries) pursuant to the
       provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
       amended and in effect immediately before the enactment of the Tax Reform
       Act of 1986.

                 (iv)       None of the Company or any of its Subsidiaries is a
       party to, is bound by, or has any obligation under, any Tax sharing
       agreement, Tax allocation agreement or similar contract.

                  (v)       There is no contract, agreement, plan or
       arrangement covering any person that, individually or collectively,
       could give rise to the payment of any amount that would not be
       deductible by the Company or any of its Subsidiaries by reason of
       Section 280G of the Code.

                 (vi)        Schedule 4.1(h) accurately sets forth (i) the
       amount of all deferred intercompany gains for purposes of Treasury
       Regulation section 1.1502-13 (including any predecessor regulation) with
       respect to the Company and its Subsidiaries; and (ii) the amount of any
       excess loss account with respect to the stock of each of the
       Subsidiaries for





                                      19
   25
       purposes of Treasury Regulation section 1.1502-19 (including any 
       predecessor regulation).

                (vii)       "Code" shall mean the Internal Revenue Code of
       1986, as amended.  "Taxes" shall mean all taxes, charges, fees, levies,
       or other similar assessments or liabilities, including without
       limitation (a) income, gross receipts, ad valorem, premium, excise, real
       property, personal property, sales, use, transfer, withholding,
       employment, payroll, and franchise taxes imposed by the United States of
       America, or by any state, local, or foreign government, or any
       subdivision, agency, or other similar person of the United States or any
       such government; and (b) any interest, fines, penalties, assessments, or
       additions to taxes resulting from, attributable to, or incurred in
       connection with any Tax or any contest, dispute, or refund thereof.
       "Tax Returns" shall mean any report, return, or statement required to be
       supplied to a taxing authority in connection with Taxes.

              (i)    Pension And Benefit Plans; ERISA.

                  (i)       To the best knowledge of the Designated Officers,
       Schedule 4.1(i)(i) sets forth a complete and correct list of:

                     (A)    all "employee benefit plans", as defined in Section
                     3(3) of ERISA, under which Company or any of its
                     Subsidiaries has any obligation or liability, contingent
                     or otherwise ("Benefit Plans"); and

                     (B)    all employment or consulting agreements, bonus or
                     other incentive compensation, deferred compensation,
                     salary continuation during any absence from active
                     employment for disability or other reasons, severance,
                     sick days, stock award, stock option, stock purchase,
                     tuition assistance, club membership, employee discount,
                     employee loan, or vacation pay agreements, policies or
                     arrangements which Company or any of its Subsidiaries
                     maintains or has any obligation or liability (contingent
                     or otherwise) with respect to any current officer,
                     director or employee of Company or any of its Subsidiaries
                     which individual arrangement has a cost to the Company or
                     any of its Subsidiaries in excess of $10,000 per year (the
                     "Employee Arrangements").

                 (ii)       With respect to each Benefit Plan and Employee
       Arrangement, a complete and correct copy of each of the following
       documents (if applicable) has been provided to Purchaser: (i) the most
       recent plan and related trust





                                      20
   26
       documents, and all amendments thereto; (ii) the most recent summary plan
       description, and all related summaries of material modifications
       thereto; (iii) the most recent Form 5500 (including schedules and
       attachments); (iv) the most recent IRS determination letter; (v) the
       most recent actuarial reports (including for purposes of Financial
       Accounting Standards Board report no. 87, 106 and 112).

                (iii)       Company and its Subsidiaries have not during the
       preceding six years had any obligation or liability (contingent or
       otherwise) with respect to a Benefit Plan which is described in Section
       3(37), 4(b)(4), 4063 or 4064 of ERISA.

                 (iv)       To the best knowledge of the Designated Officers,
       the Benefit Plans and their related trusts intended to qualify under
       Sections 401 and 501(a) of the Code, respectively, are qualified under
       such sections.  To the best knowledge of the Designated Officers, any
       voluntary employee benefit association which provides benefits to
       current or former employees of the Company and its Subsidiaries, or
       their beneficiaries, is and has been qualified under Section 501(c)(9)
       of the Code.

                  (v)       All contributions or other payments required to
       have been made by Company and its Subsidiaries to or under any Benefit
       Plan or Employee Arrangement by applicable law or the terms of such
       Benefit Plan or Employee Arrangement (or any agreement relating thereto)
       have been timely and properly made.

                 (vi)       To the best knowledge of the Designated Officers,
       the Benefit Plans and Employee Arrangements have been maintained and
       administered in all material respects in accordance with their terms and
       applicable laws.

                (vii)       Except as disclosed in Schedule 4.1(i)(vii), there
       are no pending or, to the best knowledge of the Designated Officers,
       threatened actions, claims or proceedings against or relating to any
       Benefit Plan or Employee Arrangement other than routine benefit claims
       by persons entitled to benefits thereunder.

               (viii)       Except as disclosed in Schedule 4.1(i)(viii),
       Company and its Subsidiaries do not maintain or have an obligation to
       contribute to retiree life or retiree health plans which provide for
       continuing benefits or coverage for current or former officers,
       directors or employees of the Company or any of its Subsidiaries except
       (i) as may be required under Part 6 of Title I of ERISA) and at the sole
       expense of the participant or the participant's beneficiary or (ii) a
       medical expense reimbursement account plan pursuant to Section 125 of
       the Code.





                                      21
   27
                 (ix)       Except as disclosed in Schedule 4.1(i)(ix), none of
       the assets of any Benefit Plan is stock of the Company or any of its
       affiliates, or property leased to or jointly owned by the Company or any
       of its affiliates.

                  (x)       Except as disclosed in Schedule 4.1(i)(x) or in
       connection with equity compensation, neither the execution and delivery
       of this Agreement nor the consummation of the transactions contemplated
       hereby will (i) result in any payment becoming due to any employee
       (current, former or retired) of Company and its Subsidiaries, (ii)
       increase any benefits under any Benefit Plan or Employee Arrangement or
       (iii) result in the acceleration of the time of payment of, vesting of
       or other rights with respect to any such benefits.

                 (xi)       Company and its Subsidiaries have no liability
       (contingent or otherwise) under Section 4069 of ERISA by reason of a
       transfer of an underfunded pension plan.

                (xii)       The representations and warranties set forth in the
       immediately preceding clauses (i) through (xi) shall apply to the
       Benefit Plans and Employee Arrangements of Computer System Dynamics,
       Inc. ("CSD") that were in existence at the time of the acquisition of
       CSD by the Company pursuant to that certain Stock Purchase Agreement,
       dated June 14, 1996, subject to the following qualifications:  (A) each
       such representation and warranty that is not otherwise qualified as
       being "to the best knowledge of the Designated Officers" shall be deemed
       so qualified and (B) each such representation and warranty shall be
       subject to the exceptions disclosed with respect to the particular
       representation and warranty on Schedule 4.1(i)(xii) hereto.

               (xiii)       Schedule 4.1(i)(xiii)(a) sets forth a true, correct
       and complete copy of certain resolutions of the board of directors of
       the Company duly adopted at the meeting thereof held on January 4, 1989
       (the "1989 Resolutions"); prior to the adoption of the resolutions
       identified in the next sentence, the 1989 Resolutions had not been
       amended, modified or repealed in any respect and were in full force and
       effect; neither the Company, any of its Subsidiaries, nor any of their
       respective employees, agents or representatives, has made any
       representation, warranty, covenant or agreement that the 1989
       Resolutions would not, or could not, be amended, modified or repealed
       solely by the Company; from and after the adoption of the resolutions
       referenced in the next succeeding sentence, the 1989 Resolutions have
       ceased to be of any force or effect; and no written or oral agreements
       have been entered into pursuant to the authority granted in the 1989
       Resolutions or





                                      22
   28
       otherwise evidencing any of the matters referenced in the 1989
       Resolutions.  The board of directors of the Company has unanimously
       adopted resolutions rescinding the 1989 Resolutions, retroactive to the
       date of the adoption of the 1989 Resolutions, and adopting a severance
       pay policy the terms of which are to consist of the arrangements
       described in the 1989 Resolutions, modified as follows:

                     (A)  Employees (other than executive officers) shall be
              eligible for severance benefits in accordance with such policy
              only if they are involuntarily terminated without cause by the
              Company and its subsidiaries within six (6) months following a
              change in control (as defined in the 1989 Resolutions).

                     (B)  Executive officers of the Company shall be eligible
              for severance benefits in accordance with such policy only if
              they are involuntarily terminated by the Company and its
              subsidiaries within twelve (12) months following a change in
              control (defined as described above) of the Company.

                     (C)  The Board of Directors of the Company shall have the
              right to clarify the terms of such severance policy at any time
              and from time to time, including, but not limited to, resolving
              any ambiguities or supplying any omission in such severance
              policy.

                     (D)  The Board of Directors of the Company shall have the
              right to amend or terminate such severance policy in its sole
              discretion at any time and from time to time, except no such
              amendment or termination which materially and adversely affects
              the rights of any employee of the Company or any of its
              subsidiaries under the severance policy shall be effective with
              respect to: (i) any person whose employment with the Company and
              its subsidiaries has terminated prior to the date of such
              amendment or termination, (ii) any such employee for a period of
              six months beginning on the date of a change in control (defined
              as described above) of the Company and (iii) any executive
              officer of the Company for a period of twelve months beginning on
              the date of a change in control (defined as described above).

                     (E)  For all purposes of the severance policy, the date
              of a change in control of the Company involving a person or an
              affiliated group of persons shall be the date of the earliest to
              occur of any of the events defined in the 1989 Resolutions with
              respect to such person or affiliated group of persons.





                                      23
   29
              (j)    Absence of Certain Changes or Events.  Except as disclosed
in the Company SEC Documents filed after September 30, 1995, as set forth on
Schedule 4.1(j), or as contemplated by this Agreement, since September 30,
1995, the business of the Company and its Subsidiaries has been carried on only
in the ordinary and usual course and there has not been any material adverse
changes (either individually or in the aggregate) in the business, operations
or financial condition of the Company.

              (k)    No Undisclosed Material Liabilities.  To the best
knowledge of the Designated Officers, except as specifically and individually
set forth on Schedule 4.1(k) or the other schedules hereto (specific reference
to which shall be made on Schedule 4.1(k)), there are no liabilities of the
Company or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are material to the
Company and its Subsidiaries considered as a whole other than:  (i) liabilities
reflected on the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996; and (ii) liabilities under this Agreement.

              (l)    Opinion of Financial Advisor.  The Company has received
the opinion of Hambrecht & Quist LLP, dated October 16, 1996, to the effect
that, as of the date hereof, the Offer Consideration to be received by the
holders of Company Common Stock in the Offer and the Merger Consideration to be
received by the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, a signed, true and complete copy of
which opinion shall be delivered to Parent, and such opinion has not been
withdrawn or modified.

              (m)    Vote Required.  In the event that Section 253 of the DGCL
is inapplicable and unavailable to effectuate the Merger, the affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to approve the Merger and
this Agreement and the transactions contemplated hereby.

              (n)     Labor Matters.

                  (i)       Neither the Company nor any of its Subsidiaries is
       a party to any labor or collective bargaining agreement, and no
       employees of Company or any of its Subsidiaries are represented by any
       labor organization.  Within the preceding three years, there have been
       no representation or certification proceedings, or petitions seeking a
       representation proceeding, pending or, to the knowledge of the Company,
       threatened in writing to be brought or filed with the National Labor
       Relations Board or any other labor relations tribunal or authority.
       Within the preceding three years, to the knowledge of Company, there





                                      24
   30
       have been no organizing activities involving Company and its
       Subsidiaries with respect to any group of employees of Company or any of
       its Subsidiaries.

                 (ii)       There are no strikes, work stoppages, slowdowns,
       lockouts, material arbitrations or material grievances or other material
       labor disputes pending or threatened in writing against or involving
       Company or any of its Subsidiaries.  There are no unfair labor practice
       charges, grievances or complaints pending or, to the knowledge of
       Company, threatened in writing by or on behalf of any employee or group
       of employees of Company or any of its Subsidiaries.

                (iii)       There are no complaints, charges or claims against
       Company or any of its Subsidiaries pending or, to the knowledge of
       Company, threatened to be brought or filed with any governmental
       authority, arbitrator or court based on, arising out of, in connection
       with, or otherwise relating to the employment or termination of
       employment of any individual by Company or any of its Subsidiaries.

                 (iv)       Each of the Company and its Subsidiaries is in
       material compliance with all laws, regulations and orders relating to
       the employment of labor, including all such laws, regulations and orders
       relating to wages, hours, WARN, collective bargaining, discrimination,
       civil rights, safety and health, workers' compensation and the
       collection and payment of withholding and/or social security taxes and
       any similar tax except for immaterial non-compliance.

                  (v)       There has been no "mass layoff" or "plant closing"
       as defined by the Worker Adjustment Retraining and Notification Act, as
       amended, with respect to Company and its Subsidiaries within the six (6)
       months prior to Closing.

              (o)    Intangible Property.  To the best knowledge of the
Designated Officers, each of the Company and its Subsidiaries own or have a
right to use each trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design and copyright owned,
used or useful in connection with the operation of the businesses of each of
the Company and its Subsidiaries as well as a list of all registrations thereof
and pending applications therefor, and each license or other contract relating
thereto (collectively, the "Company Intangible Property") necessary for the
operation of its respective business, free and clear of any and all liens,
claims or encumbrances, except where the failure to own or have a right to use
such property could not reasonably be expected to have a Material Adverse
Effect on the Company.  Except to the extent that such could not reasonably be
expected to have a Material Adverse Effect on the Company, the use of the
Company Intangible Property by the Company or its Subsidiaries does not
conflict





                                      25
   31
with, infringe upon, violate or interfere with or constitute an appropriation
of any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark, brand
mark, brand name, computer program, database, industrial design, copyright or
any pending application therefor of any other person.

              (p)    Environmental Matters.

                  (i)       For purposes of this Agreement:

                     (A)    "Environmental Costs and Liabilities" means any and
              all losses, liabilities, obligations, damages, fines, penalties,
              judgments, actions, claims, costs and expenses (including,
              without limitation, fees, disbursements and expenses of legal
              counsel, experts, engineers and consultants and the costs of
              investigation and feasibility studies and clean up, remove,
              treat, or in any other way address any Hazardous Materials)
              arising from or under any Environmental Law.

                     (B)    "Environmental Law" means any applicable law
              regulating or prohibiting Releases into any part of the natural
              environment, or pertaining to the protection of natural
              resources, the environment and public and employee health and
              safety including, without limitation, the Comprehensive
              Environmental Response, Compensation, and Liability Act
              ("CERCLA") (42 U.S.C. Section  9601 et seq.), the Hazardous
              Materials Transportation Act (49 U.S.C. Section  1801 et seq.),
              the Resource Conservation and Recovery Act (42 U.S.C. Section
              6901 et seq.), the Clean Water Act (33 U.S.C. Section  1251 et
              seq.), the Clean Air Act (33 U.S.C. Section  7401 et seq.), the
              Toxic Substances Control Act (15 U.S.C. Section  7401 et seq.),
              the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
              Section  136 et seq.), and the Occupational Safety and Health Act
              (29 U.S.C. Section  651 et seq.) ("OSHA") and the regulations
              promulgated pursuant thereto, and any such applicable state or
              local statutes, including, without limitation, the Industrial
              Site Recovery Act ("IRSA"), and the regulations promulgated
              pursuant thereto, as such laws have been and may be amended or
              supplemented through the Closing Date;

                     (C)    "Hazardous Material" means any substance, material
              or waste which is regulated by any public or governmental
              authority in the jurisdictions in which the applicable party or
              its Subsidiaries conducts business, or the United States,
              including, without limitation, any material or substance which is
              defined as a "hazardous waste," "hazardous material," "hazardous
              substance," "extremely hazardous waste" or





                                      26
   32
              "restricted hazardous waste," "contaminant," "toxic waste" or
              "toxic substance" under any provision of Environmental Law and
              shall also include, without limitation, petroleum, petroleum
              products, asbestos, polychlorinated biphenyls and radioactive
              materials;

                     (D)    "Release" means any release, spill, effluent,
              emission, leaking, pumping, injection, deposit, disposal,
              discharge, dispersal, leaching, or migration into the indoor or
              outdoor environment, or into or out of any property; and

                     (E)    "Remedial Action" means all actions, including,
              without limitation, any capital expenditures, required by a
              governmental entity or required under any Environmental Law, or
              voluntarily undertaken to (I) clean up, remove, treat, or in any
              other way ameliorate or address any Hazardous Materials or other
              substance in the indoor or outdoor environment; (II) prevent the
              Release or threat of Release, or minimize the further Release of
              any Hazardous Material so it does not endanger or threaten to
              endanger the public health or welfare of the indoor or outdoor
              environment; (III) perform pre-remedial studies and
              investigations or post-remedial monitoring and care pertaining or
              relating to a Release; or (IV) bring the applicable party into
              compliance with any Environmental Law.

                 (ii)       The operations of the Company and its Subsidiaries
       have been and, as of the Closing Date, will be, in compliance in all
       material respects with all Environmental Laws;

                (iii)       The Company and its Subsidiaries have obtained and
       will, as of the Closing Date, maintain all permits required under
       applicable Environmental Laws for the continued operations of their
       respective businesses, except such permits the lack of which would not
       materially impair the ability of the Company and its Subsidiaries to
       continue operations;

                 (iv)       The Company and its Subsidiaries are not subject to
       any outstanding written orders or material contracts with any
       Governmental Entity or other person respecting (A) Environmental Laws,
       (B) Remedial Action or (C) any Release or threatened Release of a
       Hazardous Material;

                  (v)       The Company and its Subsidiaries have not received
       any written communication alleging, with respect to any such party, the
       violation of or liability under any





                                      27
   33
       Environmental Law, which violation or liability is outstanding;

                 (vi)       Neither the Company nor any of its Subsidiaries has
       any contingent liability in connection with the Release of any Hazardous
       Material into the indoor or outdoor environment (whether on-site or
       off-site) which would be reasonably likely to result in the Company and
       its Subsidiaries incurring Environmental Costs and Liabilities in excess
       of $100,000;

                (vii)       The operations of the Company or its Subsidiaries
       do not involve the transportation, treatment, storage or disposal of
       hazardous waste, as defined and regulated under 40 C.F.R. Parts 260-270
       (in effect as of the date of this Agreement) or any state equivalent;

               (viii)       There is not now, nor to the knowledge of the
       Company has there been in the past, on or in any property of the Company
       or its Subsidiaries any of the following:  (A) any underground storage
       tanks or surface impoundments, (B) any asbestos-containing materials, or
       (C) any polychlorinated biphenyls;

                 (ix)       No judicial or administrative proceedings are
       pending or, to the knowledge of the Company, threatened against the
       Company and its Subsidiaries alleging the violation of or seeking to
       impose liability pursuant to any Environmental Law and there are no
       investigations pending or, to the knowledge of the Company, threatened
       against the Company or any of its Subsidiaries under Environmental Laws;
       and

                  (x)       None of the exceptions set forth on Schedule 4.1(p)
       are reasonably likely to result in the Company and its Subsidiaries
       incurring Environmental Costs and Liabilities in excess of $100,000
       individually or in the aggregate.

              (q)    Real Property.

                  (i)       Schedule 4.1(q)(i) sets forth all of the real
       property owned in fee by the Company and its Subsidiaries.  Each of the
       Company and its Subsidiaries has good and marketable title to each
       parcel of real property owned by it free and clear of all mortgages,
       pledges, liens, encumbrances and security interests, except (1) those
       reflected or reserved against in the balance sheet of the Company dated
       as of June 30, 1996 and (2) taxes and general and special assessments
       not in default and payable without penalty and interest.





                                      28
   34
                 (ii)       Each lease, sublease or other agreement
       (collectively, the "Real Property Leases") under which the Company or
       any of its Subsidiaries uses or occupies or has the right to use or
       occupy, now or in the future, any real property is valid, binding and in
       full force and effect, all rent and other sums and charges payable by
       the Company and its Subsidiaries as tenants thereunder are current, no
       termination event or condition or uncured default of a material nature
       on the part of the Company or any such Subsidiary or, to the Company's
       knowledge, the landlord, exists under any Real Property Lease.  Each of
       the Company and its Subsidiaries has a good and valid leasehold interest
       in each parcel of real property leased by it free and clear of all
       mortgages, pledges, liens, encumbrances and security interests, except
       (i) those reflected or reserved against in the balance sheet of the
       Company dated as of June 30, 1996 and (ii) taxes and general and special
       assessments not in default and payable without penalty and interest.

              (r)    Board Recommendation.  The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (who constituted 100% of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, and the execution and delivery of the Stockholders
Agreement and the transactions contemplated thereby, taken together, are fair
to and in the best interests of the stockholders of the Company and has
approved the same, and (ii) resolved to recommend that the holders of the
shares of Company Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger, and accept the Offer and tender
their shares of Company Common Stock pursuant thereto.

              (s)    Material Contracts.  Each contract, agreement or other
document or instrument to which the Company or any of its Subsidiaries is a
party that was required to be filed as an exhibit to the Company's annual
report on Form 10-K for the year ended September 30, 1995 was so filed and,
from and after September 30, 1995, neither the Company nor any of its
Subsidiaries has entered into any contract, agreement or other document or
instrument (other than this Agreement) that is required to be filed with the
SEC that has not been so filed on or before the date of this Agreement or any
amendment, modification or waiver under any contract, agreement or other
document or instrument that was previously so filed, which amendment,
modification or waiver is required to be so filed.  Neither the Company nor any
of its Subsidiaries is a party to an employment agreement.

              (t)    Related Party Transactions.  No director, officer,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its Subsidiaries  (i) has borrowed any
monies from or has outstanding





                                      29
   35
any indebtedness or other similar obligations to the Company or any of its
Subsidiaries; (ii) owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries or (3) participating in
any transaction to which the Company or any of its Subsidiaries is a party or
(iii) is otherwise a party to any contract, arrangement or understanding with
the Company or any of its Subsidiaries.

              (u)    Indebtedness.   Except as set forth in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996,
neither the Company nor any of its Subsidiaries has any outstanding
indebtedness for borrowed money or representing the deferred purchase price of
property or services or similar liabilities or obligations, including any
guarantee in respect thereof ("Indebtedness"), or is a party to any agreement,
arrangement or understanding providing for the creation, incurrence or
assumption thereof.

              (v)    Liens.  Except as set forth on Schedule 4.1(v), neither
the Company nor any of its Subsidiaries has granted, created or suffered to
exist with respect to any of its assets, any mortgage, pledge, charge,
hypothecation, collateral assignment, lien (statutory or otherwise),
encumbrance or security agreement of any kind or nature whatsoever.

       4.2    Representations and Warranties of Parent and Sub.  Parent and Sub
represent and warrant to the Company as follows:

       (a)    Organization, Standing and Power.  Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect with respect to Parent.  Parent and
Sub have heretofore made available to the Company complete and correct copies
of their respective Certificates of Incorporation and Bylaws.

              (b)    Authority; No Violations; Consents and Approvals.





                                      30
   36
                  (i)       Each of Parent and Sub has all requisite corporate
       power and authority to enter into this Agreement and to consummate the
       transactions contemplated hereby.  The execution and delivery of this
       Agreement and the consummation of the transactions contemplated hereby
       have been duly authorized by all necessary corporate action on the part
       of Parent and Sub.  This Agreement has been duly executed and delivered
       by each of Parent and Sub and assuming this Agreement constitutes the
       valid and binding agreement of the Company, constitutes a valid and
       binding obligation of Parent and Sub enforceable in accordance with its
       terms except that the enforcement hereof may be limited by (a)
       bankruptcy, insolvency, reorganization, moratorium, fraudulent
       conveyance or other similar laws now or hereafter in effect relating to
       creditors' rights generally and (b) general principles of equity
       (regardless of whether enforceability is considered in a proceeding at
       law or in equity).

                 (ii)       The execution and delivery of this Agreement and
       the consummation of the transactions contemplated hereby by each of
       Parent and Sub will not result in any Violation (as defined in Section
       4.1(c)(ii)) pursuant to any provision of the respective Articles or
       Certificates of Incorporation or Bylaws of Parent or Sub or, except as
       to which requisite waivers or consents have been obtained and assuming
       the consents, approvals, authorizations or permits and filings or
       notifications referred to in paragraph (iii) of this Section 4.2(b) are
       duly and timely obtained or made and, if required, the Company
       Stockholder Approval has been obtained, result in any Violation of any
       loan or credit agreement, note, mortgage, indenture, lease, or other
       agreement, obligation, instrument, concession, franchise, license,
       judgment, order, decree, statute, law, ordinance, rule or regulation
       applicable to Parent or Sub or their respective properties or assets,
       which would have a Material Adverse Effect with respect to Parent.

                (iii)       No consent, approval, order or authorization of, or
       registration, declaration or filing with, notice to, or permit from any
       Governmental Entity, is required by or with respect to Parent or Sub in
       connection with the execution and delivery of this Agreement by each of
       Parent and Sub or the consummation by each of Parent or Sub of the
       transactions contemplated hereby, except for:  (A) filings under the HSR
       Act; (B) the filing with the SEC of (x) the Schedule 14D-1 in connection
       with the commencement and consummation of the Offer and (y) such reports
       under and such other compliance with the Exchange Act and the rules and
       regulations thereunder, as may be required in connection with this
       Agreement and the transactions contemplated hereby; (C) the filing of
       the Certificate of Merger with the Secretary of State of the State of
       Delaware; (D) such





                                      31
   37
       filings and approvals as may be required by any applicable state
       securities, "blue sky" or takeover laws; (E) such filings and approvals
       as may be required by any foreign pre-merger notification, securities,
       corporate or other law, rule or regulation; (F) such filings in
       connection with any Gains and Transfer Taxes; and (G) such other such
       filings and consents as may be required under any environmental, health
       or safety law or regulation pertaining to any notification, disclosure
       or required approval necessitated by the Merger or the transactions
       contemplated by this Agreement.

              (c)    Information Supplied.  None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the
SEC, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.  If at any time prior
to the Effective Time any event with respect to Parent or Sub, or with respect
to information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or
the Proxy Statement, shall occur which is required to be described in an
amendment of, or a supplement to, such documents, such event shall be so
described to the Company.

              (d)    Board Recommendation.  The Board of Directors of the
Parent, at a meeting duly called and held, has by the vote of those directors
present determined that each of the Offer and the Merger is fair to and in the
best interests of Parent and has approved the same.

              (e)    Financing.  Parent and Sub have delivered to the Company
true and complete copies of commitments obtained by Parent and Sub from
financially responsible third parties in respect of the debt and equity
financing for the transactions contemplated hereby.


                                   ARTICLE V
                   COVENANTS RELATING TO CONDUCT OF BUSINESS

              5.1    Covenants of the Company.  During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
as to the Company and its Subsidiaries that (except as expressly contemplated
or permitted by this





                                      32
   38
Agreement, or to the extent that Parent shall otherwise consent in writing):

              (a)    Ordinary Course.  The Company and its Subsidiaries shall
carry on its businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and shall use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall not be impaired
in any material respect at the Effective Time.

              (b)    Dividends; Changes in Stock.  The Company shall not, nor
shall it permit any of its Subsidiaries to:  (i) declare or pay any dividends
on or make other distributions in respect of any of its capital stock; (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as required by the terms of its securities
outstanding on the date hereof, as contemplated by this Agreement or as
contemplated by employee benefit and dividend reinvestment plans as in effect
on the date hereof.

              (c)    Issuance of Securities.  The Company shall not, nor shall
it permit any of its Subsidiaries to, (i) grant any options, warrants or
rights, to purchase shares of Company Common Stock, (ii) amend or reprice any
Option or Stock Option Plan, (iii) amend the 1990 ESPP, permit any person not a
participant in the 1990 ESPP on the date of this Agreement to become a
participant in the 1990 ESPP, or permit any participant in the 1990 ESPP to
increase such participant's current payroll deductions with respect to the 1990
ESPP, or (iv) issue, deliver or sell, or authorize or propose to issue, deliver
or sell, any shares of its capital stock of any class or series, any Company
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible
securities, other than:  (A) the issuance of Shares upon the exercise of
Options granted under Stock Option Plans which are outstanding on the date
hereof, or in satisfaction of stock grants or stock based awards made prior to
the date hereof pursuant to Stock Option Plans or based upon any individual
agreements such as employment agreements or executive termination agreements
(in each such case, as in effect on the date hereof), or the issuance of
Options to purchase up to 75,000 Shares in connection with an offer of
employment outstanding on the date of this Agreement; and (B) issuances by a
wholly-owned Subsidiary of its capital stock to its parent.





                                      33
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              (d)    Governing Documents.  The Company shall not amend or
propose to amend its Certificate of Incorporation or Bylaws.

              (e)    No Solicitation.  From and after the date hereof until the
termination of this Agreement, neither the Company or any of its Subsidiaries,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries)
(such officers, directors, employees, representatives, agents, affiliates,
investment bankers, attorneys and accountants being referred to herein,
collectively, as "Representatives"), will, directly or indirectly, initiate,
solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall notify Parent orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to, and all
material aspects of, all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing contained in this Section 5.1(e) shall prohibit the Board
of Directors of the Company from:

                  (i)       furnishing information to, or entering into
       discussions or negotiations with, any person or entity that makes an
       unsolicited written, bona fide Acquisition Proposal and in respect of
       which such person or entity has the necessary funds or commitments
       therefor if, and only to the extent that, (A) the Board of Directors of
       the Company, after consultation with and based upon the advice of
       independent legal counsel (who may be the Company's regularly engaged
       independent legal counsel), determines in good faith that such action is
       necessary for the Board of Directors of the Company to comply with its
       fiduciary duties to stockholders under applicable law, (B) prior to
       taking such action, the Company (x) provides reasonable prior notice to
       Parent to the effect that it is taking such action and (y) receives from
       such person or entity an executed confidentiality agreement in
       reasonably customary form, and (C) the Company shall promptly and
       continuously advise Parent as to all of the relevant details relating
       to, and all material aspects, of any such discussions or negotiations,
       or





                                      34
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                 (ii)       failing to make or withdrawing or modifying its
       recommendation referred to in Section 4.1 if there exists an Acquisition
       Proposal and the Board of Directors of the Company, after consultation
       with and based upon the advice of independent legal counsel (who may be
       the Company's regularly engaged independent counsel), determines in good
       faith that such action is necessary for the Board of Directors of the
       Company to comply with its fiduciary duties to stockholders under
       applicable law.

For purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions between the Company, Parent and Sub
contemplated hereunder) involving the Company or any of its Subsidiaries:  (i)
any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets
(other than real property) of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 15% or more of the outstanding shares of capital
stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.

              (f)    No Acquisitions.  The Company shall not, nor shall it
permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof.

              (g)    No Dispositions.  Other than:  (i) dispositions of real
property or (ii) dispositions in the ordinary course of business consistent
with past practice which are not material, individually or in the aggregate, to
such party and its Subsidiaries taken as a whole, the Company shall not, nor
shall it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of, any of its assets.

              (h)    SEC Filings.  The Company shall promptly provide Parent
(or its counsel) with copies of all filings made by the Company with the SEC or
any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.

              (i)    No Dissolution, Etc.  Except as otherwise permitted or
contemplated by this Agreement, the Company shall not authorize, recommend,
propose or announce an intention to





                                      35
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adopt a plan of complete or partial liquidation or dissolution of the Company
or any of its Subsidiaries.

              (j)    Other Actions.  Except as contemplated by this Agreement,
the Company will not nor will it permit any of its Subsidiaries to take or
agree or commit to take any action that is reasonably likely to result in any
of the Company's representations or warranties hereunder being untrue in any
material respect or in any of the Company's covenants hereunder or any of the
conditions to the Merger not being satisfied in all material respects.

              (k)    Certain Employee Matters.  The Company and its
Subsidiaries shall not (without the prior written consent of Parent):  (i)
grant any increases in the compensation of any of its directors, officers or
key employees, other than in the ordinary course of business and consistent
with past practice; (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required or contemplated by any of the existing
Company Benefit Plans or Company Pension Plans as in effect on the date hereof
to any such director, officer or key employee, whether past or present; (iii)
enter into any new, or materially amend any existing, employment or severance
or termination agreement with any such director, officer or key employee; or
(iv) except as may be required to comply with applicable law, become obligated
under any new Company Employee Benefit Plan or Company Pension Plan, which was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder.  The foregoing shall not prohibit
the Company from lending funds to its respective employees that hold Options to
fund all or a portion of the exercise price under the Options held by such
employees in order that such employees may tender the Shares issuable upon the
exercise of such Options in the Offer.  Each such loan shall be limited to an
amount no greater than the aggregate exercise price under such employee's
Options, shall bear interest at the prime rate announced from time to time by
Chase Manhattan Bank, and shall be due and payable upon the consummation of the
Offer.

              (l)    Indebtedness; Agreements.

                  (i)       Except as set forth on Schedule 5.1(l)(i), the
       Company shall not, nor shall the Company permit any of its Subsidiaries
       to, assume or incur (which shall not be deemed to include entering into
       credit agreements, lines of credit or similar arrangements until
       borrowings are made under such arrangements) any indebtedness for
       borrowed money or guarantee any such indebtedness or issue or sell any
       debt securities or warrants or rights to acquire any debt securities of
       such party or any of its Subsidiaries or guarantee any debt securities
       of others or enter into any





                                      36
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       lease (whether such lease is an operating or capital lease) or create
       any mortgages, liens, security interests or other encumbrances on the
       property of the Company or any of its Subsidiaries in connection with
       any indebtedness thereof, or enter into any "keep well" or other
       agreement or arrangement to maintain the financial condition of another
       person.

                 (ii)       The Company shall not, nor shall the Company permit
       any of its Subsidiaries to, enter into any contract, agreement or other
       document or instrument that would be required to be filed as an exhibit
       to an annual report on Form 10-K for the Company and the Company shall
       not, nor shall the Company permit any of its Subsidiaries to, enter into
       any amendment, modification or waiver under any contract, agreement or
       other document or instrument that was previously filed with the SEC,
       which amendment, modification or waiver would be required to be so
       filed.  The Company shall not, nor shall the Company permit any of its
       Subsidiaries to, enter into any employment agreement.

              (m)    Accounting.  The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC or by law, with respect to accounting policies, procedures
and practices.

              (n)    Capital Expenditures; Product Development Costs.  The
Company and its Subsidiaries shall not incur any capital expenditures in excess
of $2,000,000.  The Company and its Subsidiaries shall not incur any product or
software development costs in excess of $4,000,000 in the aggregate.


                                   ARTICLE VI
                             ADDITIONAL AGREEMENTS

              6.1    Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting.

              (a)    As soon as practicable following the date hereof, the
Company and Parent shall prepare and file with the SEC the Proxy Statement.
The Company shall use its best efforts to respond to all SEC comments with
respect to the Proxy Statement and to cause the Proxy Statement to be mailed to
the Company's stockholders at the earliest practicable date.

              (b)    The Company will, as soon as practicable following the
acceptance for payment of and payment for shares of Company Common Stock by Sub
in the Offer, duly call, give notice of, convene and hold the Company
Stockholders Meeting for the purpose of approving this Agreement and the
transactions contemplated hereby.  At the Company Stockholders Meeting, Parent
shall cause all of the shares of Company Common Stock then owned by Parent





                                      37
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and Sub and any of their Subsidiaries or affiliates to be voted in favor of the
Merger.

              (c)    Notwithstanding the foregoing clauses (a) and (b), in the
event that Parent or any Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree, at the request of Sub, to take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.

              (d)    Sub shall promptly submit this Agreement and the
transactions contemplated hereby for approval and adoption by its stockholders
by written consent of such stockholders.

              6.2    Access to Information.  Upon reasonable notice, each of
the Company or Parent, as the case may be, shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, potential financing sources and their employees, accountants, counsel and
other representatives), access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, such party shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other party, (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to SEC requirements and (b) all
other information concerning its business, properties and personnel as such
other party may reasonably request.  The Confidentiality Agreement, dated as of
October 8, 1996, between Parent and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.

              6.3    Settlements.  Neither the Company nor any of its
Subsidiaries shall effect any settlements of any legal proceedings arising out
of or related to the execution, delivery or performance of this Agreement or
the Stockholders Agreement or the consummation of any of the transactions
contemplated hereby or thereby without the consent of Parent.

              6.4    Fees and Expenses.    (a)  Except as otherwise provided in
this Section 6.4 and except with respect to claims for damages incurred as a
result of the breach of this Agreement, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense.

              (b)    The Company agrees to pay Parent a fee in immediately
available funds equal to $4,000,000 upon the





                                      38
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termination of this Agreement under Section 8.1, if any of the events set forth
below occurs (each, a "Trigger Event"):

              (i)    the Board of Directors of the Company shall have withdrawn
       or adversely modified, or taken a public position materially
       inconsistent with, its approval or recommendation of the Offer, the
       Merger, this Agreement or the Stockholders Agreement; or

              (ii)   an Acquisition Proposal has been recommended or accepted
       by the Company or the Company shall have entered into an agreement
       (other than a confidentiality agreement as contemplated by Section
       5.1(e)) with respect to an Acquisition Proposal.

              (c)    In the event (i) this Agreement shall be terminated in
accordance with its terms, (ii) at or prior to such termination, any person or
group of persons shall have made an Acquisition Proposal (each such person or
member of a group of such persons being referred to herein as a "Designated
Person"), and (iii) either (A) a transaction contemplated by the term
"Acquisition Proposal" shall be consummated, on or before the 90th day
following the termination of this Agreement, with any Designated Person or any
affiliate of any Designated Person or (B) the Company or any of its
Subsidiaries shall enter into an agreement, on or before the 90th day following
the termination of this Agreement, with respect to an Acquisition Proposal with
any Designated Person or any affiliate of any Designated Person and a
transaction contemplated by the term "Acquisition Proposal" shall thereafter be
consummated with such Designated Person or affiliate thereof, then the Company
shall pay to Parent a fee in immediately available funds equal to $4,000,000,
such fee to be paid contemporaneously with the consummation of the contemplated
transaction.

              (d)    Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the rate of 9% per annum from the date due
through and including the date paid.

              6.5    Brokers or Finders.   (a)    The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finders fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Hambrecht &
Quist LLP, whose fees and expenses will be paid by the Company in accordance
with the Company's agreements with such firm (copies of which have been
delivered by the Company to Parent prior to the date of this Agreement).

              (b)    Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled





                                      39
   45
to any broker's or finders fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, except
for affiliates of Parent.

              6.6    Indemnification; Directors' and Officers' Insurance.
(a)  The Company shall, and from and after the Effective Time, the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its
Subsidiaries (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director or officer of the Company or
any of its Subsidiaries whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent a corporation is permitted under the
DGCL to indemnify its own directors or officers as the case may be (and Parent
and the Surviving Corporation, as the case may be, will pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law).  Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain counsel satisfactory to them and
the Company (or them and the Surviving Corporation after the Effective Time)
and the Company (or after the Effective Time, the Surviving Corporation) shall
pay all fees and expenses of such counsel for the Indemnified Parties promptly
as statements therefor are received; and (ii) the Company (or after the
Effective Time, the Surviving Corporation) will use all reasonable efforts to
assist in the vigorous defense of any such matter, provided that neither the
Company nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent which consent shall not unreasonably
be withheld.  Any Indemnified Party wishing to claim indemnification under this
Section 6.6, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company (or after the Effective Time, the
Surviving Corporation) (but the failure so to notify shall not relieve a party
from any liability which it may have under this Section 6.6 except to the
extent such failure prejudices such party), and shall deliver to the Company
(or after the Effective Time, the Surviving Corporation) the





                                      40
   46
undertaking contemplated by Section 145(e) of the DGCL.  The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties.  The Company and Sub agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the Indemnified Parties
with respect to matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities.

              (b)    For a period of three years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties) with respect to matters arising before the Effective Time,
provided that Parent shall not be required to pay an annual premium for such
insurance in excess of 175% of the last annual premium paid by the Company
prior to the date hereof, but in such case shall purchase as much coverage as
possible for such amount.  The last annual premium paid by the Company was
$169,100.

              (c)    The provisions of this Section 6.6 shall be in addition
to, and shall not limit, the indemnification agreements entered into between an
indemnified party and the Company prior to the date hereof, all of which
agreements are identified on Schedule 6.6 hereof and true and correct copies of
which have previously been delivered to Parent.  The provisions of this Section
6.6 are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his heirs and his personal representatives and shall be
binding on all successors and assigns of Sub, the Company and the Surviving
Corporation.

              6.7    Best Efforts.  Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Stockholders Agreement, subject, as applicable, to the Company
Stockholder Approval, including cooperating fully with the other party,
including by provision of information and making of all necessary filings in
connection with, among other things, approvals under the HSR Act.  In case at
any time after the





                                      41
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Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the Constituent Corporations, the proper officers and directors of
each party to this Agreement shall take all such necessary action.

              6.8    Conduct of Business of Sub.  During the period of time
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.

              6.9    Publicity.  The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Offer and the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as
may be required by applicable law or by obligations arising under the Company's
listing agreement with Nasdaq, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press
release or making any such public announcement.

              6.10   Spin-Off of Certain Real Estate.  Immediately prior to the
acceptance of Shares in the Offer, the Company shall declare a dividend,
payable to then record holders of Shares, consisting of ownership interests in
an entity ("Spinco") that will own, directly or indirectly, the assets
specified on Schedule 6.10(a) hereto (the "Designated Assets"), the payment of
such dividend to be contingent upon the consummation of the Offer and subject
to compliance with all applicable laws.  The form of entity that will be used
for Spinco, all transactions related to such dividend (including, without
limitation, any intercompany transfers) and all documents, agreements and
instruments related to such dividend and related transactions (including,
without limitation, any agreements between Spinco and the Company or any of its
Subsidiaries providing for the allocation of expenses or liabilities and
indemnification) (the "Spin-Off Documents"), shall be in form and substance
reasonably acceptable to Parent and the Company.  Notwithstanding the
foregoing, it is agreed that (i) all indebtedness of the Company or any of its
Subsidiaries (other than the Company's Revolving Credit Loan Agreement with
Comerica Bank-California) secured, in whole or in part, by any of the
Designated Assets shall be assumed by Spinco and shall be paid, when due, by
Spinco and the Company shall be released from any liability with respect
thereto, (ii) all costs and expenses solely attributable to the transactions
related to such dividend (including, without limitation, any necessary and
reasonable fees and expenses of counsel, accountants and advisors and any
filing fees), whether before or after the consummation of the Offer, shall be
paid by Spinco when such amounts are due, (iii) Spinco shall indemnify and hold
the Company and its





                                      42
   48
Subsidiaries harmless from and against any loss, cost, damage or expense
(including, without limitation, the reasonable fees and expenses of counsel)
arising out of or related to any failure of Spinco to discharge the obligations
specified in clause (i) or clause (ii), (iv) Spinco shall indemnify and hold
Parent, the Company and its Subsidiaries harmless from and against any Taxes
(and any fees, costs and expenses with respect to such Taxes or any dispute
thereof) attributable to, arising out of or relating to (a) Spinco, (b) the
formation of Spinco, (c) the transfer of the Designated Assets to Spinco by the
Company or any of its Subsidiaries, (d) the assumption or refinancing of any
liabilities with respect to the Designated Assets, (e) the sale, exchange,
distribution, dividend or other distribution of any assets by Spinco, (f) the
sale, exchange, distribution, dividend or other disposition of interests in
Spinco by the Company or any of its Subsidiaries, and (g) any steps which are
attendant to or necessary in connection with any of the foregoing transactions,
which indemnification obligations shall survive until sixty days after the
expiration of the applicable statute of limitations with respect to the
assessment of Taxes relating to the foregoing transactions, and which
indemnification obligations shall be due and payable at such times as Taxes
(including estimated Taxes) become due and payable (plus interest from the date
of unreimbursed payment by the Company at a rate of 9% per annum) (with the
filing of Tax Returns and calculation of the "Estimated Tax Amount" being based
upon an appraisal of the Designated Assets by an independent appraiser mutually
acceptable to Parent and the Company and a certification of the adjusted bases
of the Designated Assets provided by Price Waterhouse & Co. or such other "big
six" accounting firm as may be agreed to by Parent and the Company, the costs
of which appraisal and certification will be paid by Spinco) and at such time
as there is a final determination of a deficiency with respect to such reported
Taxes (plus interest from the date of unreimbursed payment by the Company at a
rate of 9% per annum), (v) with respect to the Taxes identified in the
immediately preceding clause (iv), the Company will not agree, without Spinco's
consent, to any extension of the applicable statute of limitations, which
consent will not be unreasonably withheld, and such consent will not be
required if the failure to agree to such extension may reasonably be expected
to result in the proposed assessment of a deficiency for material Taxes
unrelated to Spinco or in liability for indemnified Taxes which exceeds
Spinco's cash, notes receivable from real property sales and cash equivalent
assets at such time, and (vi) any indemnification under this Section 6.10 shall
be made on an after-tax basis and shall be adjusted to take into account any
Tax benefits and Tax detriments attributable to the indemnified loss and to the
receipt or accrual of an indemnification payment hereunder (including any
additional payments pursuant to this clause (vi)).  The Company will use its
best efforts to facilitate the dividend and shall seek all consents necessary
(including, without limitation, the consent of the Company's lenders) to
consummate the dividend and related transactions.





                                      43
   49
              It is understood and agreed that prior to payment of the
dividend, the current lease agreement with respect to the home office building
will be amended to provide for (1) continuation of the current rent for two
years; (2) adjustment of the rental for the succeeding three years at the
current market rental rate at the beginning of such succeeding three years; and
(3) adjustment of the term of the lease to five years with a five year option
to renew at a rental equal to the current market rental rate at the beginning
of such renewal term.  It is understood and agreed that the "current market
rental rate" shall be determined by the Company and Spinco, each selecting an
appraiser to make such determination, and that if such appraisers cannot agree,
then they shall select a third appraiser whose determination shall be final and
binding on all parties.  Each party shall bear the cost of its appraiser and
the cost of the third appraiser, if necessary, shall be split evenly between
the parties.  Finally, under no circumstances shall the rental rate referred to
in (2) above be less than the rental rate in effect prior to such adjustment or
more than 1.2 multiplied by the rental rate in effect prior to such adjustment.
In addition, the lease agreement shall be amended to provide that the Company
may sublease the property with the consent of the landlord, which consent will
not be unreasonably withheld, and that in the event the Company shall sublease
the property and shall receive in rent thereunder an amount in excess of the
rent payable under the lease, such excess shall be paid to the landlord.

              In order to facilitate the orderly management of Spinco,
following payment of the dividend for a period of one year Company will provide
(at no cost to Spinco) at least two cubicles of office space, telephone and
secretarial support to two employees of Spinco and will give such Spinco
employees reasonable access to such other office equipment as is reasonable and
necessary.  Furthermore, at the time of payment of the dividend, Spinco shall
have at least $100,000 in cash or cash equivalent assets available to it (any
such amounts that do not represent proceeds from the sale of Designated Assets
shall be subject to repayment by Spinco).  All funds received in respect of
sales of Designated Assets from the date hereof through the date of the payment
of the dividend shall be credited to the account of Spinco, but shall be
available to satisfy the obligations of Spinco to Company hereunder.

              Company shall not be required to pay the dividend until such time
as Spinco has either (i) paid all amounts owed by it to Company with respect to
the Estimated Tax Amount, third party costs related to the dividend or related
transactions or similar matters for which Spinco has agreed to pay or for which
there are existing indemnity claims which it has agreed to indemnify the
Company or (ii) have made adequate and commercially reasonable provision for
the prompt payment of any such amounts from time to time in the future as such
amounts are paid or become due and payable by the Company.  The parties
understand and agree that





                                      44
   50
terms and provisions with respect to the dividend and related transactions, in
addition to those set forth herein, will be necessary and appropriate in
connection with the transactions contemplated by this Section 6.10.  Such
additional terms and provisions, when negotiated by the parties, shall,
together with the provisions of this Section 6.10, be set forth in customary
documentation with respect to spin-off transactions, all of which shall be
finalized by the parties prior to the closing of the Offer.


                                  ARTICLE VII
                              CONDITIONS PRECEDENT

              7.1    Conditions to Each Party's Obligation to Effect the
Merger.  The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:

              (a)    Stockholder Approval.  This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the Shares entitled to vote thereon if such vote is required by
applicable law; provided that the Parent and Sub shall vote all Shares
purchased pursuant to the Offer or the Stockholders Agreement in favor of the
Merger.

              (b)    HSR Act.  The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.

              (c)    No Injunctions or Restraints.  No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such decree, ruling, injunction
or order vacated.

              (d)    Statutes; Consents.  No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any government or
governmental agency or authority which prohibits the consummation of the
Merger.

              (e)    Payment for Shares.  Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered in the Offer such
that, after such acceptance and payment, Parent and its affiliates shall own,
at consummation of the Offer, a majority of the outstanding shares of the
Company Common Stock; provided that this condition shall be deemed to have been
satisfied if Sub fails to accept for payment and pay for Shares pursuant to the
Offer in violation of the terms and conditions of the Offer.





                                      45
   51
                                  ARTICLE VIII
                           TERMINATION AND AMENDMENT

              8.1    Termination.  This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:

              (a)    by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;

              (b)    by either the Company or Parent (i) prior to the
consummation of the Offer if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other set forth in this
Agreement which breach has not been cured within three business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable;

              (c)    by either the Company or Parent, so long as such party has
not breached its obligations hereunder, if the Merger shall not have been
consummated on or before February 18, 1997; provided, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before
such date;

              (d)    by Parent or Company in the event that a Trigger Event has
occurred under Section 6.4(b);

              (e)    by Parent in the event an Acquisition Proposal has been
made to the Company and the Company shall fail to reaffirm its approval or
recommendation of the Offer, the Merger, this Agreement and the Stockholders
Agreement on or before the fifth business day following the date on which such
Acquisition Proposal shall have been made;

              (f)    by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition set
forth in Exhibit A hereto; or

              (g)    by the Company, if the Offer shall have expired or have
been withdrawn, abandoned or terminated without any shares of Company Common
Stock being purchased by Sub thereunder on or prior to the 90th day after the
date of commencement of the Offer pursuant to Section 1.2 hereof.





                                      46
   52
              8.2    Effect of Termination.  In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (i) with respect to this
Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) to
the extent that such termination results from the material breach by a party
hereto of any of its representations or warranties, or of any of its covenants
or agreements, in each case, as set forth in this Agreement except as provided
in Section 9.7.

              8.3    Amendment.  Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time prior to the Effective Date with respect to any of
the terms contained herein; provided, however, that, after this Agreement is
approved by the Company's stockholders, no such amendment or modification shall
reduce the amount or change the form of consideration to be delivered to the
stockholders of the Company.

              8.4    Extension; Waiver.  At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed:  (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions contained
herein.  Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party.  The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.


                                   ARTICLE IX
                               GENERAL PROVISIONS

              9.1    Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof.  The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.

              9.2    Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or





                                      47
   53
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered personally, telegraphed or telecopied or, if mailed,
five business days after the date of mailing to the following address or
telecopy number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:

              (a)    if to Parent or Sub, to:

                     Cooperative Computing, Inc. or
                     CCI Acquisition Corp.
                     6207 Bee Cave Road
                     Austin, Texas  78746-5146
                     Attn:  Glenn Staats
                     Telephone:  (512) 328-2300
                     Telecopy:   (512) 329-6461

              with a copy to:

                     Weil, Gotshal & Manges
                     100 Crescent Court
                     Suite 1300
                     Dallas, Texas  75201-6950
                     Attn:  Thomas A. Roberts
                     Telephone:  (214) 746-7748
                     Telecopy:   (214) 746-7777

                     and

                     Hicks, Muse, Tate & Furst Incorporated
                     200 Crescent Court
                     Suite 1600
                     Dallas, Texas  75201-6950
                     Attn:  Lawrence D. Stuart, Jr.
                     Telephone:  (214) 740-7365
                     Telecopy:   (214) 740-7313

              (b)    if to the Company, to:

                     Triad Systems Corporation
                     3055 Triad Drive
                     Livermore, California  94550
                     Attn:  James Porter
                     Telephone:  (510) 449-0606
                     Telecopy:   (510) 455-6917

              with copies to:

                     McCutchen, Doyle, Brown & Enersen, LLP
                     55 South Market Street
                     Suite 1500
                     San Jose, California  95113-2373
                     Attn:  Daniel Cooperman





                                      48
   54
                     Telephone:  (408) 947-8400
                     Telecopy:   (408) 947-4750


              9.3    Interpretation.  When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated.  The table of contents, glossary of defined terms
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the word "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".  The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.

              9.4    Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.

              9.5    Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership.  This Agreement (together with the Confidentiality Agreement, the
Stockholders Agreement and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereto and, except as provided in Section 6.6, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.

              9.6    Governing Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

              9.7    No Remedy in Certain Circumstances.  Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes the Agreement impossible to perform in which case this
Agreement shall terminate pursuant to Article VIII hereof.  Except as otherwise
contemplated by this Agreement, to the extent that a party hereto took an
action inconsistent





                                      49
   55




herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall incur no liability or obligation unless such party did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.

              9.8    Assignment.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
any newly-formed direct wholly-owned Subsidiary of Parent.  Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.





                                      50
   56





              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.



                                           COOPERATIVE COMPUTING, INC.


                                           By: /s/ GLENN E. STAATS
                                              --------------------------------
                                           Name: Glenn E. Staats
                                                ------------------------------
                                           Title: President
                                                 -----------------------------
                                                                              
                                                                              
                                                                              
                                           CCI ACQUISITION CORP.              
                                                                              
                                                                              
                                           By: /s/ PATRICK K. MCGEE
                                              --------------------------------
                                           Name: Patrick K. McGee
                                                ------------------------------
                                           Title: Vice President
                                                 -----------------------------
                                                                              
                                                                              
                                           TRIAD SYSTEMS CORPORATION          
                                                                              
                                                                              
                                           By: /s/ JAMES R. PORTER
                                              --------------------------------
                                           Name: James R. Porter
                                                ------------------------------
                                           Title: President and Chief
                                                 -----------------------------
                                                  Executive Officer
                                                 -----------------------------
                                                                              
                                                                              


                                      51
   57
                                                                       EXHIBIT A



              The capitalized terms used in this Exhibit A shall have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of October 17, 1996, among Cooperative Computing, Inc. ("Parent"), CCI
Acquisition Corp. ("Sub") and Triad Systems Corporation ("Company") (the
"Merger Agreement") to which this Exhibit A is attached.


                            CONDITIONS TO THE OFFER

              Notwithstanding any other provision of the Offer, Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered, and may amend or terminate
the Offer (whether or not any Shares have theretofore been purchased or paid
for), if (i) there have not been validly tendered and not withdrawn prior to
the time the Offer shall otherwise expire a number of Shares which constitutes
51% of the Shares outstanding on a fully-diluted basis on the date of purchase
("on a fully-diluted basis" having the following meaning, as of any date:  the
number of Shares outstanding, together with Shares the Company may be required
to issue pursuant to obligations outstanding at that date under employee stock
option or other benefit plans, or otherwise); (ii) any applicable waiting
periods under the HSR Act shall not have expired or been terminated prior to
the expiration of the Offer; (iii) the debt financing sources for Sub shall not
have provided the applicable debt financing to Sub pursuant to the financing
commitment with respect thereto previously delivered to the Company by Sub; or
(iv) at any time on or after the date of the Merger Agreement and before
acceptance for payment of, or payment for, such Shares any of the following
events shall occur or shall reasonably be deemed by Sub to have occurred:

              (A)    there shall have been any statute, rule or regulation
       enacted, entered or enforced or deemed applicable, or any decree, order
       or injunction entered or enforced by any government or governmental
       authority in the United States or by any court in the United States
       that:  (1) restrains or prohibits the making or consummation of the
       Offer or the Merger, (2) makes the purchase of or payment for some or
       all of the Shares pursuant to the Offer or the Merger illegal, (3)
       imposes material limitations on the ability of Sub, the Company or any
       of their respective 




                                     A-1
   58
       affiliates or Subsidiaries effectively to acquire or hold, or requiring
       Sub, the Company or any of their respective affiliates or Subsidiaries 
       to dispose of or hold separate, any material portion of the assets or
       the business of the Company and its Subsidiaries taken as a whole, or
       imposes limitations on the ability of Sub, the Company or any of their
       respective affiliates or Subsidiaries to continue to conduct, own or
       operate, as heretofore conducted, owned or operated, all or any material
       portion of the businesses or assets of the Company and its Subsidiaries
       taken as a whole, (4) imposes or results in material limitations on the
       ability of Sub or any of its affiliates to exercise full rights of
       ownership of the Shares purchased by them, including, without
       limitation, the right to vote the Shares purchased by them on all
       matters properly presented to the stockholders of the Company; or (5)
       prohibits or restricts in a material manner the financing of the Offer;
        
              (B)  any change (or any condition, event or development involving
       a prospective change) shall have occurred in the business, operations,
       assets or condition (financial or otherwise) of the Company and its
       Subsidiaries taken as a whole;

              (C)  there shall have occurred (1) any general suspension of
       trading in, or limitation on prices for, securities on any national
       securities exchange or in the over-the-counter market in the United
       States for a period in excess of five hours, (2) the declaration of a
       banking moratorium or any suspension of payments in respect of banks in
       the United States, (3) any material adverse change in United States
       currency exchange rates or a suspension of, or a limitation on, the
       markets therefor, (4) the commencement of a war, armed hostilities or
       other international or national calamity, directly or indirectly
       involving the United States, (5) any limitations (whether or not
       mandatory) imposed by any governmental authority on the nature or
       extension of credit or further extension of credit by banks or other
       lending institutions, or (6) in the case of any of the foregoing, a
       material acceleration or worsening thereof;

              (D)  the representations and warranties of the Company contained
       in the Merger Agreement (without giving effect to any "Material Adverse
       Effect", "materiality" or similar qualifications contained therein)
       shall not be true and correct in all material respects as of the date of




                                     A-2
   59
       consummation of the Offer as though made on and as of such date except
       (1) for changes specifically permitted by the Merger Agreement and (2)
       that those representations and warranties which address matters only as
       of a particular date shall remain true and correct as of such date;

              (E)  the obligations of the Company contained in the Merger
       Agreement (without giving effect to any "Material Adverse Effect",
       "materiality" or similar qualifications contained therein) shall not
       have been performed or complied with in all material respects by the
       Company;

              (F)  the Merger Agreement shall have been terminated in
       accordance with its terms;

              (G)  prior to the purchase of Shares pursuant to the Offer, an
       Acquisition Proposal for the Company exists and the Board shall have
       withdrawn or materially modified or changed (including by amendment of
       the Schedule 14D-9) in a manner adverse to Sub its recommendation of
       the Offer, the Merger Agreement or the Merger; or

              (H)  Parent, Sub and the Company shall not have reached
       agreement as to the documents and transactions described in Section 6.10
       in accordance with such Section 6.10.

              The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement.  The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time.  Any determination by Sub concerning any of the events
described herein shall be final and binding.





                                     A-3

EX-99.6

   1
                                                                  Exhibit (c)(2)



                             STOCKHOLDERS AGREEMENT

              THIS STOCKHOLDERS AGREEMENT, dated as of October 17, 1996, is
made and entered into by Cooperative Computing, Inc., a Texas corporation
("Parent"), CCI Acquisition Corp., a Delaware corporation ("Sub"), and the
other parties signatory hereto (each a "Stockholder", and collectively, the
"Stockholders").

                              W I T N E S S E T H:

              WHEREAS, concurrently herewith, Parent, Sub and Triad Systems
Corporation, a Delaware corporation (the "Company"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");

              WHEREAS, in furtherance of the Merger, Parent and the Company
desire that, as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, Sub commence a cash
tender offer to purchase all outstanding shares of Company Common Stock (as
defined in Section 1), including all of the Shares (as defined in Section 2)
owned beneficially by the Stockholders; and

              WHEREAS, the holders of the issued and outstanding common stock
of Sub will contribute that stock to Parent prior to the consummation of the
Offer, as a result of which, Sub will become a wholly-owned subsidiary of
Parent;

              WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;

              NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

              1.     Definitions.  For purposes of this Agreement:

              (a)    "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.  Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include





                                      1
   2
securities Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as within the meanings of Section 13(d)(3) of the Exchange
Act.

              (b)    "Company Common Stock" shall mean at any time the common
stock, $.001 par value, of the Company.

              (c)    "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.

              2.     Tender of Shares.

              (a)    Each Stockholder hereby agrees to validly tender (and not
to withdraw) pursuant to and in accordance with the terms of the Offer, not
later than the fifth business day after commencement of the Offer pursuant to
Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, the
number of shares of Company Common Stock set forth opposite such Stockholder's
name on Schedule I hereto (the "Existing Shares", and together with any shares
of Company Common Stock acquired by such Stockholder after the date hereof and
prior to the termination of this Agreement whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise, the "Shares"), Beneficially Owned by him or it.  Each Stockholder
hereby acknowledges and agrees that the Parent's obligation to accept for
payment and pay for Shares in the Offer, including the Shares Beneficially
Owned by such Stockholder, is subject to the terms and conditions of the Offer.

              (b)    The transfer by each Stockholder of his or its Shares to
Sub in the Offer shall pass to and unconditionally vest in Sub good and valid
title to the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.

              (c)    Each Stockholder hereby agrees to permit Parent and Sub to
publish and disclose in the Offer Documents and, if Company Stockholder
Approval is required under applicable law, the Proxy Statement (including all
documents and schedules filed with the SEC) his or its identity and ownership
of Company Common Stock and the nature of his or its commitments, arrangements
and understandings under this Agreement.

              (d)    Parent and Sub acknowledge that the Company may, in order
to assist Stockholders who are also employees of the Company in complying with
their obligations to tender Shares hereunder, lend funds to such Stockholders
upon the terms specified in the Merger Agreement in order to fund all or a
portion of the exercise price under the Options held by such





                                       2
   3
Stockholders.  The failure of the Company to supply such funds shall not
relieve any such Stockholder of his obligations hereunder.

              3.     Provisions Concerning Company Common Stock.

              (a)    Each Stockholder hereby agrees that during the period
commencing on the date hereof and continuing until the first to occur of the
Effective Time or termination of the Merger Agreement in accordance with its
terms, at any meeting of the holders of Company Common Stock, however called,
or in connection with any written consent of the holders of Company Common
Stock, such Stockholder shall vote (or cause to be voted) the Shares held of
record or Beneficially Owned by such Stockholder, whether issued, heretofore
owned or hereafter acquired, (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or this Agreement; and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement):  (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its Subsidiaries; (C) (1) any
change in a majority of the persons who constitute the board of directors of
the Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action which, in the case of each of the matters referred to in
clauses C (1), (2), (3) or (4), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement.  Such Stockholder shall not enter into any agreement or
understanding with any person or entity the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 3.

              (b)    Each Stockholder hereby grants to Parent a proxy to vote
the Shares of such Stockholder as indicated in Section 3(a).  Each Stockholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Stockholder with respect to such Shares.





                                       3
   4
              4.     Other Covenants, Representations and Warranties.  Each
Stockholder hereby represents and warrants to Parent as follows:

              (a)    Ownership of Shares.  Such Stockholder is either (i) the
record and Beneficial Owner of, or (ii) the Beneficial Owner but not the record
holder of, the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto.  On the date hereof, the Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder.  Such Stockholder has sole
voting power and sole power to issue instructions with respect to the matters
set forth in Sections 2 and 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Existing Shares set forth opposite such Stockholder's name on
Schedule I hereto, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.

              (b)    Power; Binding Agreement.  Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement.  The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement or voting trust.  This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms.  There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such stockholder of the
transactions contemplated hereby.  If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.

              (c)    No Conflicts.  Except for (i) filings under the HSR Act,
if applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (B) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or compliance by
such Stockholder with any of the provisions hereof shall (1) conflict





                                       4
   5
with or result in any breach of any applicable organizational documents
applicable to such Stockholder, (2) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Stockholder is a party or by which such Stockholder or any
of such Stockholder's properties or assets may be bound, or (3) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.

              (d)    No Encumbrances.  Except as required by Section 2 and for
the proxy granted under Section 3(b), such Stockholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever.

              (e)    No Finder's Fees.  No broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of such Stockholder.

              (f)    No Solicitation.  No Stockholder shall, in his or its
capacity as such, directly or indirectly, solicit (including by way of
furnishing information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Parent or any affiliate of Parent)
with respect to the Company that constitutes an Acquisition Proposal, except as
permitted by Section 5.1(e) of the Merger Agreement.  If any Stockholder
receives any such inquiry or proposal, then such Stockholder shall promptly
inform Parent of the terms and conditions, if any, of such inquiry or proposal
and the identity of the person making such proposal.  Each Stockholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.

              (g)    Restriction on Transfer, Proxies and Non-Interference.
Except as required by Section 2 or Section 3(b), no Stockholder shall, directly
or indirectly:  (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of such





                                       5
   6
Stockholder's Shares or any interest therein; (ii) grant any proxies or powers
of attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.

              (h)    Waiver of Appraisal Rights.  Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have.

              (i)    Reliance by Parent.  Such Stockholder understands and
acknowledges that Parent and Sub are entering into the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.

              (j)    Further Assurances.  From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.

              5.     Stop Transfer.  Each Stockholder agrees with, and
covenants to, Parent that such Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof).  In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.

              6.     Termination.  Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the termination of the Merger Agreement in accordance with its
terms by Parent.

              7.     Stockholder Capacity.  No person executing this Agreement
who is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director.
Each Stockholder signs solely in his or her capacity as the record and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Shares.





                                       6
   7
              8.     Confidentiality.  The Stockholders recognize that
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein.  In this connection, pending public disclosure thereof, each
Stockholder hereby agrees not to disclose or discuss such matters with anyone
not a party to this Agreement (other than such Stockholder's counsel and
advisors, if any) without the prior written consent of Parent, except for
filings required pursuant to the Exchange Act and the rules and regulations
thereunder or disclosures such Stockholder's counsel advises are necessary in
order to fulfill such Stockholder's obligations imposed by law, in which event
such Stockholder shall give notice of such disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.

              9.     Miscellaneous.

              (a)    Entire Agreement.  This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.

              (b)    Certain Events.  Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors.  Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.

              (c)    Assignment.  This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.

              (d)    Amendments, Waivers, Etc.  This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
with respect to any one or more Stockholders, except upon the execution and
delivery of a written agreement executed by the relevant parties hereto;
provided that Schedule I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.





                                       7
   8
              (e)    Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery.  All communications hereunder shall be delivered
to the respective parties at the following addresses:

   If to Stockholder:       At the addresses set forth on Schedule I hereto.

   If to Parent or Sub:     Cooperative Computing, Inc. or
                            CCI Acquisition Corp.
                            6207 Bee Cave Road
                            Austin, Texas  78746-5146
                            Attn:  Glenn Staats
                            Telephone:  (512) 328-2300
                            Telecopy:   (512) 329-6461
                            
              copies to:    Hicks, Muse, Tate & Furst Incorporated
                            200 Crescent Court
                            Suite 1600
                            Dallas, Texas  75201
                            Telephone:  (214) 740-7365
                            Telecopy:  (214) 740-7313
                            Attention:  Lawrence D. Stuart, Jr.
                            
                            Weil, Gotshal & Manges
                            100 Crescent Court
                            Suite 1300
                            Dallas, Texas  75201
                            Telephone:  (214) 746-7748
                            Telecopy:  (214) 746-7777
                            Attention:  Thomas A. Roberts

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

              (f)      Severability.  Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.





                                       8
   9
                 (g)      Specific Performance.  Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.

                 (h)      Remedies Cumulative.  All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

                 (i)      No Waiver.  The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.

                 (j)      No Third Party Beneficiaries.  This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.

                 (k)      Governing Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

                 (l)      Descriptive Headings.  The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.

                 (m)      Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.





                                       9
   10
                 IN WITNESS WHEREOF, Parent, Sub and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.


                              COOPERATIVE COMPUTING, INC.       
                              
                              
                              By: /s/ MATTHEW HALE
                                 ----------------------------------------------
                              Name: Matthew Hale
                                   --------------------------------------------
                              Title: Vice President and Chief Financial Officer
                                    -------------------------------------------
                              
                              
                              CCI ACQUISITION CORP.
                              
                              
                              By: /s/ PATRICK K. MCGEE
                                 ----------------------------------------------
                              Name: Patrick K. McGee
                                   --------------------------------------------
                              Title: Vice President
                                    -------------------------------------------
                              
                              
                              STOCKHOLDERS:
                              
                              THE COMMON FUND FOR NONPROFIT ORGANIZATIONS
                              
                                      By:  Richard C. Blum & Associates, 
                                           L.P., investment manager
                              
                              
                                      By: /s/ ALEXANDER L. DEAN, JR.
                                         --------------------------------------
                                      Name: Alexander L. Dean, Jr.
                                           ------------------------------------
                                      Title: Managing Director
                                            -----------------------------------
                              
                              
                              BK CAPITAL PARTNERS IV, LIMITED PARTNERSHIP
                              
                                      By:  Richard C. Blum & Associates, 
                                           L.P., general partner
                              
                              
                                      By: /s/ ALEXANDER L. DEAN, JR.
                                         --------------------------------------
                                      Name: Alexander L. Dean, Jr.
                                           ------------------------------------
                                      Title: Managing Director
                                            -----------------------------------





                                       10
   11
                            BK CAPITAL PARTNERS III, LIMITED PARTNERSHIP 
                         
                                    By:  Richard C. Blum & Associates, 
                                         L.P., general partner
                         
                         
                                    By: /s/ ALEXANDER L. DEAN, JR.      
                                       ----------------------------------------
                                    Name:   Alexander L. Dean, Jr.             
                                         --------------------------------------
                                    Title:  Managing Director                  
                                          -------------------------------------
                         
                         
                            BK CAPITAL PARTNERS II, A CALIFORNIA 
                            LIMITED PARTNERSHIP
                         
                                    By:  Richard C. Blum & Associates, 
                                         L.P., general partner
                         
                         
                                    By: /s/ ALEXANDER L. DEAN, JR.
                                       ----------------------------------------
                                    Name:   Alexander L. Dean, Jr.
                                         --------------------------------------
                                    Title:  Managing Director                  
                                          -------------------------------------
                         
                         
                                     /s/ RICHARD C. BLUM*
                                    -------------------------------------------
                                    Richard C. Blum
                         
                                     /s/ JAMES R. PORTER
                                    -------------------------------------------
                                    James R. Porter
                         
                                     /s/ WILLIAM W. STEVENS
                                    -------------------------------------------
                                    William W. Stevens
                         
                                     /s/ HENRY M. GAY
                                    -------------------------------------------
                                    Henry M. Gay
                         
                                     /s/ GEORGE O. HARMON
                                    -------------------------------------------
                                    George O. Harmon


AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
                                          *By: /s/ JOHN H. STEINHART
                                              ---------------------------------
TRIAD SYSTEMS CORPORATION                  Name: John H. Steinhart             
                                                -------------------------------
By: /s/ JAMES R. PORTER                          Attorney-in-Fact              
   -------------------------------                                             
      Name:  James R. Porter
      Title: President and Chief
             Executive Officer





                                       11
   12
                                 SCHEDULE 1 TO
                             STOCKHOLDERS AGREEMENT




                                           
================================================================================
          Name and Address                                    
           of Stockholder                                Number of Shares Owned
================================================================================
                                                      
The Common Fund for Nonprofit Organizations         
c/o Richard C. Blum & Associates, L.P.              
    909 Montgomery Street                           
    San Francisco, California 94113                                   1,111,111
- --------------------------------------------------------------------------------
BK Capital Partners IV, L.P.                        
c/o Richard C. Blum & Associates, L.P.              
    909 Montgomery Street                           
    San Francisco, California 94113                                     275,936
- --------------------------------------------------------------------------------
BK Capital Partners III, L.P.                       
c/o Richard C. Blum & Associates, L.P.              
    909 Montgomery Street                           
    San Francisco, California 94113                                     500,000
- --------------------------------------------------------------------------------
BK Capital Partners II, L.P.                        
c/o Richard C. Blum & Associates, L.P.              
    909 Montgomery Street                           
    San Francisco, California 94113                                     111,111
- --------------------------------------------------------------------------------
Richard C. Blum                                     
909 Montgomery Street                               
San Francisco, California 94113                                          12,000
- --------------------------------------------------------------------------------
James R. Porter                                     
3055 Triad Drive                                    
Livermore, California  94550                                            958,200
- --------------------------------------------------------------------------------
William W. Stevens                                  
3055 Triad Drive                                    
Livermore, California  94550                                            430,340
- --------------------------------------------------------------------------------
Henry M. Gay                                        
3055 Triad Drive                                    
Livermore, California  94550                                             94,396
- --------------------------------------------------------------------------------
George O. Harmon                                    
3055 Triad Drive                                    
Livermore, California  94550                                             44,000
                                                    
TOTAL                                                                 3,537,094
================================================================================
                                            





                                       12

EX-99.8

   1
                    [TRIAD SYSTEMS CORPORATION LETTERHEAD]

                                                           October 23, 1996


Dear Triad Stockholders:

     I am pleased to inform you that, on October 17, 1996, the Company entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Cooperative
Computing, Inc. ("CCI") and CCI Acquisition Corp., an affiliate of CCI ("CCI
Acquisition"), pursuant to which CCI Acquisition is commencing a cash tender
offer (the "Offer") to purchase all outstanding shares of the Company's Common
Stock at $9.25 per share. Following the completion of the Offer, upon the terms
and subject to the conditions of the Merger Agreement, CCI Acquisition will be
merged (the "Merger") into the Company, and each share of the Company's Common
Stock not purchased in the Offer (other than any shares owned by the Company or
any subsidiary of the Company, CCI or CCI Acquisition) will be converted into
the right to receive $9.25 per share in case, without interest. Upon
comsummation of these transactions, CCI and its affiliates will own the entire
equity interest in the Company.

     In addition, in connection with the Offer and the Merger, the Company
expects to distribute, pro rata, to stockholders of record immediately prior to
the consummation of the Offer, all of the equity interests in Triad Park
Realty, a company to be formed, that will own the real estate of the Company
located at Triad Park, Livermore, California. The fair market value of such
real estate is subject to appraisal, its current net book value is
approximately $23.7 million, or about $1.20 per share.

     THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER, THE
MERGER AND THE MERGER AGREEMENT, DETERMINED THAT THE OFFER AND MERGER ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, AND RECOMMENDS THAT
TRIAD STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.

     In reaching its decision, the Board of Directors gave careful
consideration to a number of factors described in the enclosed Schedule 14D-9
that is being filed today with the Securities and Exchange Commission. Among
other things, the Board of Directors considered the opinion of Hambrecht &
Quist LLC that the consideration to be received by Triad stockholders in the
Offer and Merger is fair to such holders from a financial point of view.

     Accompanying this letter, in addition to the attached Schedule 14D-9
relating to the Offer, is the Offer to Purchase, dated October 23, 1996, of CCI
and CCI Acquisition, together with related materials including a Letter of
Transmittal to be used for tendering your shares. These documents set forth the
terms and conditions of the Offer and the Merger, provide detailed information
about these transactions and include instructions as to how to tender your
shares. I urge you to read the enclosed materials carefully.
   2
        Your investment and support over the years are very much appreciated. 
I wish you strong returns from all of your investments.

                                         Very best wishes,



                                         /S/ JAMES R. PORTER
                                         -------------------
                                         James R. Porter
                                         President and Chief Executive Officer






                                      2

EX-99.9

   1
                                                                  EXHIBIT (a)(7)



 This announcement is neither an offer to purchase nor a solicitation of an
  offer to sell Shares.  The Offer is made solely by the Offer to Purchase
   dated October 23, 1996 (the "Offer to Purchase") and the related Letter
   of Transmittal, and is being made to all holders of Shares.  The Offer
    is not being made to (nor will tenders be accepted from or on  behalf
      of) holders of Shares in any jurisdiction in which  the making of
       the Offer or the acceptance thereof would  not be in compliance
          with the laws of such jurisdiction.  In any jurisdiction
            where the securities, blue sky or other laws require
                the Offer to be made by a licensed broker or
                dealer, the Offer shall be deemed to be made
                 on behalf of CCI Acquisition Corp. by Chase
                      Securities, Inc., or one or more
                        registered brokers or dealers
                         licensed under the laws of
                             such jurisdiction.


                      NOTICE OF OFFER TO PURCHASE FOR CASH
                     ALL OUTSTANDING SHARES OF COMMON STOCK
                       (INCLUDING THE ASSOCIATED RIGHTS)
                                       OF
                           TRIAD SYSTEMS CORPORATION
                                       AT
                              $9.25 NET PER SHARE
                                       BY
                             CCI ACQUISITION CORP.
                                AN AFFILIATE OF
                          COOPERATIVE COMPUTING, INC.

         CCI Acquisition Corp., a Delaware corporation ("Purchaser") and an
affiliate of Cooperative Computing, Inc., a Texas corporation ("Parent"), is
offering to purchase all of the outstanding shares of the common stock, $0.001
par value (the "Common Stock"), of Triad Systems Corporation, a Delaware
corporation (the "Company"), and the associated common stock purchase rights
(the "Rights"; and together with the Common Stock, the "Shares") at a purchase
price of $9.25 per share (the "Offer Price"), net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").

***************************************************************************
*                                                                         *
*  THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW     *
*       YORK CITY TIME, ON WEDNESDAY, NOVEMBER 20, 1996, UNLESS           *
*                         THE OFFER IS EXTENDED.                          *
*                                                                         *
***************************************************************************



         The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of October 17, 1996, among Parent, Purchaser and the Company (the
"Merger Agreement").  The Merger Agreement provides, among other things, for
the commencement of the Offer by Purchaser and further provides that, subject
to the satisfaction or waiver of certain conditions, Purchaser will be merged
with and into the Company (the "Merger"), with the Company surviving the
Merger.  Pursuant to the terms of a Securities Purchase Agreement, dated as of
October 16, 1996, the stockholders of Purchaser have agreed to contribute all
of the issued and outstanding common stock of Purchaser to Parent prior to the
consummation of the Offer (as a result of which, Purchaser will become a wholly
owned subsidiary of Parent).  Accordingly, the Company shall survive the Merger
as a direct wholly owned subsidiary of Parent (the "Surviving Corporation").
In the Merger, each issued and outstanding Share (other than Shares owned by
stockholders of the Company who shall have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
   2
appraisal for such shares under Delaware law and Shares directly or indirectly
owned by the Company or any subsidiary of the Company, Parent, Purchaser or any
other subsidiary of Parent) will be converted at the effective time of the
Merger (the "Effective Time") into the right to receive the Offer Price in
cash, without interest and less any required withholding taxes (the "Merger
Consideration").

         THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
(A) DETERMINED THAT EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS
FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (THE
"STOCKHOLDERS"), (B) APPROVED THE EXECUTION, DELIVERY AND PERFORMANCE OF THE
MERGER AGREEMENT AND THE RELATED STOCKHOLDERS AGREEMENT REFERENCED BELOW AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, AND (C) RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER, APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER BY THE
STOCKHOLDERS.

         THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 51%
OF THE OUTSTANDING SHARES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS AS SET FORTH IN THE MERGER AGREEMENT.

         Pursuant to the Merger Agreements, the Company expects to distribute
to its stockholders ownership interests in an entity that will own, directly or
indirectly, certain real property and related assets of the Company.  The
Merger Agreement provides that such distribution will be made in the form of a
dividend payable to the record holders of the Shares immediately prior to the
acceptance of Shares in the Offer.  The payment of such dividend is contingent
upon the consummation of the Offer and is subject to a number of conditions,
including compliance with all applicable laws, including state and federal
securities laws.

         Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Stockholders Agreement, dated October 17, 1996 (the
"Stockholders Agreement"), with certain Stockholders of the Company (the
"Selling Stockholders") owning, in the aggregate, 3,537,094 (or approximately
18.0%) of the outstanding Shares calculated on a fully-diluted basis (as
defined in the Merger Agreement).  Pursuant to the Stockholders Agreement, the
Selling Stockholders, which include all of the members of the Board of
Directors of the Company, have agreed to validly tender pursuant to the Offer
and not withdraw all Shares which are owned of record or beneficially by them
prior to the Expiration Date.

         For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment (and thereby purchased) tendered Shares as, if and when
Purchaser gives oral or written notice to ChaseMellon Shareholder Services,
L.L.C., as the Depositary (in such capacity, the "Depositary"), of the
Purchaser's acceptance of such Shares for payment. Payment for Shares purchased
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering Stockholders for the
purpose of receiving payment from Purchaser and transmitting payment to
tendering Stockholders whose shares have theretofore been accepted for payment.
In all cases, payment for Shares purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates for such Shares
(or a timely confirmation of a book-entry transfer of Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (each, a "Book-Entry Transfer Facility") pursuant to
the procedure set forth in Section 3 of the Offer to Purchase) and (ii) the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed with all required signature guarantees, and all
other documents required by the Letter of Transmittal.  Under no circumstances
will interest on the Offer Price be paid by Purchaser, regardless of any delay
in making such payment.

         The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Wednesday, November 20, 1996, unless and until Purchaser, in
accordance with the terms of the Offer and the Merger Agreement, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.  Subject to the terms of the
Merger Agreement, Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension.  There can be no assurance that Purchaser will exercise its right to
extend the Offer. Purchaser also expressly reserves the right, subject to
applicable laws (including





                                       2
   3
applicable regulations of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended), and to the terms of the
Merger Agreement, at any time or from time to time, (i) to delay acceptance for
payment of or payment for any Shares, regardless of whether the Shares were
theretofore accepted for payment, or to terminate the Offer and not accept for
payment or pay for any Shares not theretofore accepted for payment or paid for,
upon the occurrence of any of the conditions specified in Section 14 of the
Offer to Purchase, by giving oral or written notice of such delay in payment or
termination to the Depositary, and (ii) to amend the Offer in any respect, by
giving oral or written notice to the Depositary.  Any extension, delay in
payment, termination or amendment will be followed as promptly as practicable
by public announcement, the announcement in the case of an extension to be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.  Without limiting the manner in
which Purchaser may choose to make any public announcement, Purchaser will have
no obligation to publish, advertise or otherwise communicate any such
announcement other than by issuing a press release to the Dow Jones News
Service or as otherwise may be required by law.

         Tenders of Shares made pursuant to the Offer are irrevocable, except
as otherwise provided below.  Shares tendered pursuant to the Offer may be
withdrawn any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Purchaser, may also be withdrawn at any time after
December 21, 1996.  For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase.  Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder, if different from that of the person who
tendered such Shares.  If certificates evidencing Shares have been delivered or
otherwise identified to the Depositary, then prior to the release of such
certificates, the tendering Stockholder must also submit the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn, and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase) (except in the
case of Shares tendered for the account of an Eligible Institution).  If Shares
have been tendered pursuant to the procedure for book-entry transfer set forth
in Section 3 of the Offer to Purchase, the notice of withdrawal must specify
the name and number of the account at the applicable Book-Entry Transfer
Facility to be credited with the withdrawn Shares.  All questions as to form
and validity (including time of receipt) of a notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination shall be
final and binding on all parties.  No withdrawal of Shares shall be deemed to
have been properly made until all defects and irregularities have been cured or
waived.  None of Purchaser, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failing to give such notification.

         The Company has provided Purchaser with its stockholder list and
security position listings for the purpose of disseminating the Offer to
Stockholders.  The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares by the Purchaser.

         The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.

         THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

         Requests for copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer documents may be directed to the Information
Agent as set forth below, and copies will be furnished promptly at the
Purchaser's expense.  Questions or requests for assistance may be directed to
the Information Agent or the Dealer Manager.  No fees or commissions will be
payable to brokers, dealers or other persons (other than the Dealer Manager,
the Depositary and the Information Agent) in connection with the solicitation
of tenders of shares pursuant to the Offer.


                    The Information Agent for the Offer is:





                                       3

EX-99.10

   1
                                                                  EXHIBIT (a)(8)


         HICKS, MUSE, TATE & FURST AND COOPERATIVE COMPUTING, INC.
             TO ACQUIRE TRIAD SYSTEMS CORP. IN TRANSACTION VALUED
                        AT APPROXIMATELY $300 MILLION


- --TRIAD SHAREHOLDERS TO RECEIVE $9.25 PER SHARE IN CASH FOR THEIR TRIAD STOCK,
         REPRESENTING A 68 PERCENT PREMIUM OVER TRIAD'S CLOSING PRICE
                              ON OCTOBER 16TH--

  --TRIAD SHAREHOLDERS WILL ALSO RECEIVE SHARES OF A SPIN-OFF THAT INCLUDES
       ALL OF TRIAD'S REAL PROPERTY LOCATED IN LIVERMORE, CALIFORNIA--



DALLAS, TEX., AUSTIN, TEX. AND LIVERMORE, CALIF., Oct. 17, 1996 -- Hicks, 
Muse, Tate & Furst Incorporated, of Dallas, a leading private investment
firm, Cooperative Computing, Inc. (CCI), of Austin, a provider of
information-management solutions to large warehouse distributors in the
automotive aftermarket business, and Triad Systems Corporation (NASDAQ: TRSC),
of Livermore, Calif., which provides information systems to the independent
jobber segment of the automotive parts aftermarket as well as to retail
hardware and lumber dealers, today announced that they have signed a definitive
agreement under which a company newly formed, and jointly owned, by Cooperative
Computing, Inc. and Hicks Muse will acquire Triad.  Hicks Muse estimates the
combined enterprise value of CCI and Triad at approximately $300 million.

Under the agreement, which was unanimously approved by Triad's Board of
Directors, Hicks Muse and CCI will commence within five business days a cash
tender offer for all outstanding shares of Triad at a price of $9.25 per share,
representing a premium of 68 percent over Triad's closing price on the Nasdaq
National Market System of $5.50 per share on October 16, 1996.

In addition, Triad shareholders will receive shares in a spun-off entity whose
assets will consist of Triad's real property in Livermore, Calif., including
its 220,000-square-foot corporate headquarters and approximately 150 acres of
property held for sale in the Triad Park development.  The spun-off real estate
entity will assume approximately $20.7 million of indebtedness currently
secured by the spun-off real estate.  Over time, the real estate entity will
liquidate its real estate portfolio, with proceeds used to pay expenses
(including taxes), repay secured debt and distribute any remaining proceeds to
current Triad shareholders.  Triad management has not expressed a view as to
the ultimate cash distribution to be realized by current Triad shareholders.

The tender offer will be followed by a "back-end" merger in which any Triad
shares that remain outstanding after the tender offer will be exchanged for
cash at the same price. Triad has 19,587,000 fully diluted shares outstanding,
valuing the cash portion of the consideration to be paid for outstanding shares
at approximately $181.2 million.
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Cooperative Computing, Inc. founded in 1976 by Glenn E. Staats, Ph.D., is a
privately held firm that has experienced rapid growth in developing highly
sophisticated program distribution solutions for the automative aftermarket and
related industries.  The company is well-known for its long-term investment in
research and development to produce leading-edge information solutions for its
clients.  CCI's market focus has been on providing solutions to larger
warehouse distributors and their customer networks.  Total integration of the
"automative aftermarket information highway" is the company's principal
strategic goal.

Triad Systems Corporation is known for its focus on the independent jobber
segment of the automotive aftermarket, where it has excelled in developing and
delivering innovative solutions.  Triad is also known for providing business
solutions for the hardlines (hardware) and lumber marketplace.  Founded in
1972, Triad has been a pioneer in sales and marketing strategies to its target
markets.

Thomas O. Hicks, Chairman and Chief Executive Officer of Hicks Muse, said: 
"We are pleased to be partnering with CCI's owners, Glen and Preston Staats,
and Triad to create a platform company in the growing information services and
management industry."

Glenn E. Staats will be President and Chief Executive Officer of the new
Cooperative Computing, Inc. as well as its largest individual shareholder, and
Preston W. Staats, Ph.D., his brother, will be its Chief Operating Officer. 

James R. Porter, currently President and Chief Executive Officer of Triad, has
agreed to serve as Chairman of the Board of the new Cooperative Computing, Inc.

Glenn Staats said: "My brother and I look forward to working with Jim Porter
and our counterparts at Triad to build the value of the combined enterprise for
our respective customers, business partners and employees."

Mr. Porter of Triad said:  "We believe this transaction represents a very
attractive opportunity for our shareholders to maximize the value of their
investment in Triad.  The combination of CCI and Triad will also benefit our
automotive-aftermarket and other customers by enhancing our ability to help
them use information-management systems to improve their operating efficiency. 
It will also position us for continued growth in the businesses we are
currently in and others we may choose to pursue."

The parties expect to complete the transaction by calendar year-end.  Upon
completion, the combined entity will be known as Cooperative Computing, Inc.,
with the current CCI and Triad becoming separate, wholly owned subsidiaries.

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Following transaction completion, the company will continue to maintain
offices and operations in both Austin and Livermore.  In that regard, CCI,
under the agreement, will enter into a five-year lease of Triad's Livermore
facilities, for an annual rent of $2.5 million in each of the first two years,
adjusted to market rates in years three through five.

Triad's financial advisor with respect to the transaction is Hambrecht & Quist,
which has also rendered an opinion that the transaction is fair to Triad
shareholders from a financial point of view.  Richard C. Blum & Associates,
L.P., assisted Triad in the negotiations.

As part of the agreement, Hicks Muse will invest $100 million in the combined
entity.  The Chase Manhattan Bank has committed to provide the bank financing
for the acquisition, and ChaseMellon Shareholder Services, L.L.C. will serve as
Depositary Agent and Information Agent.

The tender offer is conditioned upon there being validly tendered and not
withdrawn shares representing at least a majority of Triad's fully diluted
shares outstanding and expiration of the applicable Hart-Scott-Rodino waiting
period, as well as customary closing conditions.

It is expected that CCI will file tender offer materials with the Securities 
and Exchange Commission and distribute them promptly to Triad stockholders.

Hicks, Muse, Tate & Furst Incorporated is a leading private investment firm. 
Over the past six years, Hicks Muse has completed, or currently has pending,
more than 55 transactions with an aggregate value in excess of $9 billion. 
Headquartered in Dallas, the firm also has offices in New York City, St. Louis,
and Mexico City.

                                    # # #


Contacts:  Hicks Muse/CCI                        Triad Systems         
           Roy Winnick                           Tim Mehren            
           Kekst and Company                     (510) 449-0606        
           (212) 593-2655