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As filed with the Securities and Exchange Commission on August 28, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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THE TITAN CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 3033 Science Park Road 95-2588754
(State or other jurisdiction of San Diego, California 92121 (I.R.S. Employer
incorporation or organization) (Address of Principal Executive Identification No.)
Offices and Zip Code)
</TABLE>
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Copies to:
BERNARD M. HIRL DAVID A. HAHN, ESQ
The Titan Corporation Latham & Watkins
3033 Science Park Road 701 B Street
San Diego, California 92121 San Diego, California 92101
(Name and address of agent for service) (619) 236-1234
(619) 552-9500
(Telephone number, including area code, of agent for service)
-----------------
Approximate date of commencement of proposed sale to public: From time to time
after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered pursuant
to dividend or reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share (1) Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value. . . . . . . . . . . . 2,249,867 $3.75 $8,437,001 $2,909.31
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low sales
prices of Common Stock on the New York Stock Exchange on August 22, 1996.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
PROSPECTUS
THE TITAN CORPORATION
2,249,867 shares of Common Stock, $.01 par value per share
This Prospectus relates to 2,249,867 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of The Titan Corporation (the "Company")
which may be offered from time to time by Jack D. Witt, Robert Johnson, Prabhav
V. Maniyar, The Pelot Family Trust, Clyde E. Gartley, Robert Barnhart, Horace P.
Jones and Madeline N. Jones, John W. Smith and Barbara K. Smith, Edmund P.
Krauklin Trust 4/27/93, The Alvin and Choko Mendis Family Trust, David R. Conner
or Sandra H. Conner, Mary Campbell, Joretta L. Slack, Joretta A. Watts, Joseph
A. Whitam and Martha J. Whitam, John and Rae Spruill and Edward J. and Bernice
J. Brown (the "Selling Stockholders"). Such shares of Common Stock are
hereinafter referred to as the "Securities."
All of the Securities are to be offered for the account of the Selling
Stockholders. The Securities may be offered and sold from time to time by the
Selling Stockholders, in each case in open market transactions, in private or
negotiated transactions or in a combination of such methods of sale, at fixed
prices, at prices then prevailing on the New York Stock Exchange (the "NYSE") at
the time of sale, at prices related to such prevailing market prices, or at
negotiated prices. To the extent required, the amounts of the Securities to be
sold, purchase prices, public offering prices, the names of any agents, dealers
or underwriters, and any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying Prospectus Supplement or,
if appropriate, a post effective amendment to the Registration Statement. The
Selling Stockholders reserve the sole right to accept and, together with any
agent of the Selling Stockholder, to reject in whole or in part any proposed
purchase of the Securities. The Selling Stockholders will pay any sales
commissions or other seller's compensation applicable to such transactions.
The Company will not receive any of the proceeds from the sale of the
Securities by the Selling Stockholders. The Company issued the Securities in
May 1996 in connection with the acquisition of Eldyne, Inc. and Unidyne
Corporation. The Company has agreed to pay all costs of the registration of the
Securities. Such costs, fees and disbursements are estimated to be
approximately $25,000.
SEE "RISK FACTORS" BEGINNING AT PAGE 6 OF THIS PROSPECTUS FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE SECURITIES.
The Common Stock to be registered hereunder is listed for trading on
the NYSE (Symbol: TTN).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS.ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August 28, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661 and at 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additional information with
respect to this offering may be provided in the future by means of supplements
or "stickers" to the Prospectus. The Commission maintains a web site on the
World Wide Web that contains reports, proxy statements and other information
filed by registrants under the Exchange Act, including the Company, at
"http://www.sec.gov."
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Commission under the Securities Act of 1933,
as amended, covering the shares of Common Stock covered by this Prospectus. This
Prospectus omits certain information and exhibits included in that Registration
Statement, copies of which may be obtained upon payment of a fee prescribed by
the Commission or may be examined free of charge at the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock is traded on the NYSE (Symbol: TTN), and
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference and shall be
deemed a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 and June 30, 1996;
(c) The description of the Company's Common Stock included in the
Company's Registration Statement on Form 8-B under the Securities
Exchange Act of 1934, file no. 0-2641.
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(d) The Company's Current Reports on Form 8-K, dated March 6, 1996,
April 25, 1996 and June 6, 1996 (as amended by Form 8-K/A dated
August 7, 1996).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date this Prospectus is filed with the
Commission and prior to the filing of a post effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference in this
Prospectus and to be a part of it from the respective dates of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Titan undertakes to provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of any such
person, a copy of its Annual Report to Stockholders for the last fiscal year and
any or all of the information that has been incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into the foregoing documents). Requests for such
information should be directed to The Titan Corporation, Attention: General
Counsel, 3033 Science Park Road, San Diego, California 92121, (619) 552-9500.
3
<PAGE>
TABLE OF CONTENTS
PAGE
The Company 5
Recent Acquisition 6
Risk Factors 6
Entry Into Commercial Business 7
Recent Losses 7
Non-Compliance with Bank Covenants; Need
for Additional Liquidity 8
1995 Restructuring 8
Reliance on Major Software Customer 9
Dependence on Government Contracts 9
Integration of Eldyne/Unidyne Operations 10
Reliance on Key Personnel 10
Fluctuations in Quarterly Results 10
Possible Volatility of Stock Price 11
Competition 11
Use of Proceeds 11
Selling Stockholders and Plan of Distribution 11
Experts 14
Legal Matters 14
4
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THE COMPANY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE
MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE
NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO "TITAN" OR THE
"COMPANY" INCLUDE THE TITAN CORPORATION AND ITS SUBSIDIARIES.
Titan provides sophisticated communications and information systems
products and services to large commercial and government customers. Titan
utilizes its core satellite and wireless communications and large-scale software
applications technology and expertise to target rapidly growing markets.
In its communications business, Titan specializes in the development and
production of advanced satellite terminals, voice/data modems, networking
systems and other products used to provide reliable and secure communications
for a variety of voice, data and video applications. In the commercial
marketplace, Titan applies its technology and expertise to provide bandwidth
efficient and cost-effective satellite earth stations for telephony services in
locations with little or no wired telephony infrastructure. Titan also offers a
conditional access system which provides secure distribution of satellite,
wireless or cable TV video programming. In the government area, as a result of
its proprietary technology the Company is a leading provider of secure ultra
high frequency ("UHF") communications systems to the U.S. military community.
In the current environment of limited resources and multiplying defense
requirements, the government is placing increasing reliance on secure
communications systems that allow forces to collect and assimilate information
and rapidly respond to hostile situations.
The Company's information systems business provides systems design and
object-oriented software development services to assist commercial and
government customers engineer new information systems or re-engineer existing
information systems to address the migration from legacy systems to distributed
computing environments utilizing the Internet and/or a dedicated intranet.
These design activities involve implementing a distributed network systems
architecture that satisfies a customer's specific requirements while taking into
account existing hardware and software systems. Titan provides a complete
integrated system solution to a client's requirements using both commercial
hardware and software as well as custom or semi-custom Titan-developed software.
Titan's commercial business focuses on the telecommunications and, to a lesser
extent, financial services industries. The Company's government funded efforts
include developing and implementing enterprise-wide information networks for
intelligence agencies, NATO and the Federal Aviation Administration where it can
capitalize on its extensive knowledge of such customers' operations and needs.
In addition to the Company's core communications and systems businesses,
Titan's technology and expertise permit it to bid for externally-funded research
and development projects in selected areas. These projects generate
technologies that Titan believes can generate additional value for the Company.
Titan is exploiting these contracts and its technologies by developing new
businesses and through licensing, joint venturing or sales to third parties.
For
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example, Titan has developed new businesses in medical product sterilization
and environmental services.
The Company is executing its strategy through four business segments
which focus on the unique needs of its customer base and Titan's unique
capabilities: Defense Systems, which includes defense communications and
government information systems; Software Systems, the commercial information
systems business; Communications Systems, the commercial satellite and
broadband communications business; and Emerging Technologies. The Defense
Systems, Software Systems and Communications Systems segments represent the
Company's core information and communications systems and service businesses.
The Company's principal offices are located at 3033 Science Park Road,
San Diego, California 92121, and the Company's phone number is (619) 552-9500.
The Company's internet address on the world-wide web is "http://www.titan.com".
RECENT ACQUISITION
On May 24, 1996, the Company consummated the acquisition of three
privately-held affiliated businesses: Eldyne, Inc., a California corporation
("Eldyne"); Unidyne Corporation, a Virginia corporation ("Unidyne"); and
Diversified Control Systems, LLC, a Nevada limited liability company ("DCS").
Eldyne, Unidyne and DCS are information technology businesses that provide the
Department of Defense and other government customers with systems research,
development and prototyping, fleet integration, insertion of technology into
existing systems, control systems and life cycle support. Further information
is provided in the Company's current reports on Form 8-K filed April 25, 1996
and June 6, 1996 (as amended by Form 8-K/A dated August 7, 1996).
RISK FACTORS
Prospective investors should carefully consider the specific risk
factors set forth below as well as the other information in this Prospectus or
incorporated by reference before deciding to purchase the Common Stock offered
hereby. Certain statements in this Prospectus or incorporated by reference that
are not historical fact constitute "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. Such forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results of the Company to be materially different
from results expressed or implied by such forward-looking statements. Such
risks, uncertainties and other factors include, but are not limited to, the
following risks:
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ENTRY INTO COMMERCIAL BUSINESS
The Company's revenues historically have been derived principally from
business with the Department of Defense and other government agencies. Since
1992, the Company has pursued a strategy that includes using the technology from
its defense business to build commercial business. This strategy presents both
significant opportunities and significant risks for the Company. Many of the
Company's commercial businesses, such as broadband communications (secure
television), satellite communications and medical sterilization, remain in an
early stage. As such, the Company is subject to all the risks inherent in the
operation of a start-up venture, including the need to develop and maintain
marketing, sales and customer support capabilities, to secure appropriate third
party manufacturing arrangements, to respond to the rapid technological advances
inherent in these markets, to secure the necessary financing to support these
activities and ultimately to design and manufacture products acceptable to
buyers in its target markets. In addition, many of the opportunities in the
broadband communications and satellite communications businesses are large
international projects which require long lead times in the contract process.
The Company's efforts to address these risks have required, and will continue to
require, significant expenditures and dedicated management time and other
resources. There can be no assurance that the Company will be successful in
addressing these risks or in developing these commercial businesses.
Certain investments in the Company's start-up commercial ventures have
been capitalized and are included in the Company's balance sheet, primarily
within the captions of Property and Equipment, Other Assets and Inventory. At
June 30, 1996, these capitalized investments aggregated approximately $15.4
million, and consisted of approximately $9.0 million net book value of the
Company's two medical sterilization facilities, approximately $4.3 million of
capitalized software costs in the Company's broadband communications unit and
approximately $2.1 million of non-recurring engineering costs related to
inventory of the commercial satellite communications business. None of the
medical sterilization, broadband communications or satellite communications
businesses has yet generated sufficient revenues to achieve profitability and
there can be no assurance that either will do so.
RECENT LOSSES
The Company reported net losses of $3.8 million and $1.6 million for
the year ended December 31, 1995 and the six months ended June 30, 1996,
respectively. The Company's net loss for the six months ended June 30, 1996
was due primarily to continuing losses in the commercial Communications
System segment. The Company plans to continue to make substantial
investments in the Communications System segment, principally in the
broadband communications business, and expects that the Communications
Segment will incur significant losses during the remainder of 1996. There
can be no assurance that the Company will achieve profitability in the future.
7
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NON-COMPLIANCE WITH BANK COVENANTS; NEED FOR ADDITIONAL LIQUIDITY
The Company's continued investment in its emerging commercial business,
particularly within the Communications Systems segment, has created significant
demands on the Company's capital resources. During the six months ended June
30, 1996, the Company used $3.2 million in cash for operating requirements. The
Company's bank line of credit agreement requires the Company to have annual
positive net income, as defined, prohibits two consecutive quarterly losses and
contains other financial covenants which require the Company to maintain
stipulated levels of tangible net worth, a minimum interest coverage ratio and a
specified quick ratio. As of June 30, 1996, the Company was not in compliance
with the covenants relating to consecutive quarterly losses and ratios of total
liabilities to tangible net worth and minimum interest coverage. The Company
has obtained a waiver from the bank for these conditions as of June 30, 1996,
subject to the bank's right to secure the outstanding obligations under the line
of credit with the Company's assets, if is so chooses. The Company's Eldyne and
Unidyne Subsidiaries also have a bank line of credit, which is secured by the
assets of those entities and Diversified Control Systems. The line of credit
agreement contains certain financial covenants that require each of Eldyne and
Unidyne to maintain stipulated levels of tangible net worth, working capital and
leverage. At June 30, 1996, Eldyne and Unidyne were not in compliance with
certain of these financial covenants and have obtained a waiver from the bank
for these conditions as of June 30, 1996. There can be no assurance that the
Company, Eldyne or Unidyne will achieve compliance with the covenants of their
respective line of credit agreements or that future waivers of non-compliance
may be obtained from their respective banks.
Cash requirements for the remainder of 1996 will continue to be
significant. The Company intends to continue its investment in the further
development of business ventures within the Communications Systems segment. To
finance this investment the Company is investigating a combination of
alternatives that include continued working capital management, utilization of
the remaining availability under the bank line of credit ($3.1 million available
under the Company's $17 million bank line of credit at August 26, 1996), and new
debt and equity sources. There can be no assurance that the Company will be
successful in obtaining such additional funding. In such event, the Company
would have to reassess its investment in its commercial businesses.
1995 RESTRUCTURING
The Company recorded a charge of approximately $5.4 million in 1995
relating to a plan of restructuring designed to focus the Company on its core
businesses and better to position the Company for growth and strategic
transactions. As part of the restructuring, the Company redefined its business
into four segments: Defense Systems, Software Systems, Communications Systems
and Emerging Technologies. The restructuring also involves the dispositions of
certain businesses not central to the Company's long-term strategy, significant
reorganizations of its Software Systems segment and medical products
sterilization business, personnel reductions and other actions associated with
reorganizing the structure of the
8
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Company. There can be no assurance that the Company will be able to implement
these restructuring activities or that there will not be further restructurings.
RELIANCE ON MAJOR SOFTWARE CUSTOMER
The Company's Software Systems business has been substantially dependent
on business from a major telecommunications company to develop and support
access carrier client/server software applications. Revenues from this customer
totaled approximately $9.7 million, 24.3 million, $24.5 million and $4.9
million, or 9%, 18%, 18% and 8% of total revenues, in the years ended December
31, 1993, 1994, 1995 and in the six months ended June 30, 1996, respectively.
In the second half of 1995, the Company began to experience reduced demand from
this customer and this trend continued during the first six months of 1996. The
Company believes that this reduced demand resulted primarily from the customer's
reassessment of its overall business process reengineering program. In
addition, the Company has now completed major portions of existing work for this
customer which contributed to the trend of declining revenues. In addition, in
the second quarter of 1996, the Company also incurred additional costs in
connection with a negotiated conclusion of certain programs with such customer.
The loss of this customer, or a substantial delay or further decrease in the
amount of its business, would have a material adverse effect on the Company's
results of operations and financial condition.
DEPENDENCE ON GOVERNMENT CONTRACTS
Titan's U.S. Government customers include the Navy, Army, Air Force,
Federal Emergency Management Agency, Department of Commerce, National
Aeronautics and Space Administration, Federal Aviation Administration,
Defense Nuclear Agency, and other U.S. and allied government agencies. The
Company's business is dependent to a large extent upon continued funding from
these sources. U.S. defense budgets have been declining in real terms since
the mid-1980's and may continue to do so in the foreseeable future. Further
significant reductions in defense expenditures could adversely affect the
Company's results of operations and financial condition. For the years ended
December 31, 1993, 1994, and 1995, and the six months ended June 30, 1996,
direct and indirect government business represented approximately 75%, 68%,
58% and 68%, respectively, of the Company's revenues. These percentages will
be impacted going forward by the Company's acquisition in May 1996 of Eldyne,
Inc., Unidyne Corporation and Diversified Control Systems, substantially all
of the revenues of which is derived from direct and indirect U.S. government
business.
The Company's contracts with the government and subcontractors to prime
contractors are subject to termination for the convenience of the government,
termination, reduction, or modification in the event of change in the
government's requirements or budgetary constraints. When the Company
participates as a subcontractor, such contracts are also subject to the failure
or inability of the prime contractor to perform its prime contract. In
addition, the Company's contract-related costs and fees, including allocated
indirect costs, are subject to audits and adjustments by negotiation between the
Company and the U.S. Government.
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In addition to the right to terminate, U.S. Government contracts are
conditioned upon the continuing availability of Congressional appropriations.
Congress usually appropriates funds on a fiscal year basis even though contract
performance may take several years. Consequently, at the outset of a major
program, the contract is usually incrementally funded and additional funds are
normally committed to the contract by the procuring agency as appropriations are
made by Congress for future fiscal years.
INTEGRATION OF ELDYNE/UNIDYNE OPERATIONS
In May 1996, the Company acquired Eldyne, Inc., Unidyne Corporation
and Diversified Control Systems, LLC. These companies provide the Department
of Defense and other government customers with systems research, development
and prototyping, fleet integration, insertion of technology into existing
systems, control systems and life cycle support. The integration of these
businesses into the Company requires the dedication of management resources
which may detract from attention to the day-to-day business of the remainder
of the Company. In addition, the Company intends to seek to reduce expenses
of the combined operations through consolidation of facilities and other
expense reductions. There can be no assurance, however, that the Company will
be able to reduce expenses or that there will not be material adverse effects
relating to the integration of these operations into the Company.
RELIANCE ON KEY PERSONNEL
The Company's success depends in large part upon its ability to attract
and retain highly qualified technical and management personnel, including
without limitation, computer programmers proficient in the C++ language,
telecommunications engineers and technical and management personnel with the
high-level security clearances required for much of the Company's classified
work. Most of the Company's key personnel are not subject to employment or
noncompetition agreements. Competition for such personnel from other companies,
academic institutions, government entities and other organizations is intense.
There can be no assurance that the Company will be successful in hiring or
retaining such key personnel.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's results of operations are subject to considerable
fluctuations from quarter to quarter due to changes in demand for the Company's
products or services and other factors, and there can be no assurance that the
Company will be profitable in any particular quarter. Demand for the Company's
products and services in each of the markets it serves can vary significantly
from quarter to quarter due to revisions in budgets or schedules for customer
projects requiring the Company's products or services, changes in demand for the
customers' products which incorporate or utilize the Company's products or
services and other factors beyond the Company's control. In addition, demand
for products in the emerging secure television and commercial satellite
businesses is highly uncertain given the emerging nature of the Company's
technology and other established competing products and technologies.
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POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has from time to time
fluctuated widely and in the future may be subject to similar fluctuations in
response to quarter-to-quarter variations in the Company's operating results,
announcements of technological innovations or new products by the Company or its
competitors, general conditions in the industries in which the Company competes
and other events or factors. In addition, in recent years broad stock market
indices, in general, and the securities of companies with emerging businesses,
in particular, have experienced substantial price fluctuations. Such broad
market fluctuations also may adversely affect the future trading price of the
Common Stock. In addition, sales of substantial amounts of Common Stock in the
public market following this offering could adversely affect the future trading
price of the Common Stock.
COMPETITION
The industries and markets in which the Company competes are highly
competitive. The Company encounters intense competition in most of its business
areas from numerous other companies, many of which have far greater name
recognition and financial, technological, marketing and customer service
resources than the Company. The Company's ability to compete in its markets
depends to a large extent on its ability to provide high quality products and
services with shorter lead times at lower prices than its competitors.
USE OF PROCEEDS
All of the Securities offered hereby will be sold for the account of the
Selling Stockholders. The Company will not receive any part of the proceeds.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
All of the Securities offered hereby will be sold for the account of the
Selling Stockholders. Except as set forth below, the Selling Stockholders' plan
of distribution is set forth on the cover page of this Prospectus. Additional
information regarding the Selling Stockholders is as set forth below.
NAME OF SELLING STOCKHOLDER NUMBER OF SECURITIES OWNED
Jack D. Witt (1) 1,510,917 (2)
David R. Conner or Sandra H. Conner 151,949
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Joretta L. Slack 116,792
Robert Johnson 8,333
Prabhav V. Maniyar 45,000
The Pelot Family Trust 66,667
Clyde E. Gartley 66,667
Joretta A. Watts 27,695
Robert Barnhart 22,605
Horace P. Jones and Madeline N. Jones 68,500
John W. Smith and Barbara K. Smith 50,005
Edmund P. Krauklin Trust 04/27/93 10,960
Alvin M. Mendis and Choko Mendis, Trustees, 47,265
U.D.T. Dated April 3, 1989, the Alvin and
Choko Mendis Family Trust
Mary Campbell 4,110
Joseph A. Whitam and Martha J. Whitam 7,192
John and Rae Spruill 34,250
Edward J. and Bernice J. Brown 10,960
------------
Total 2,249,867
(1) Mr. Witt also received 500,000 shares of a newly created Series B
Cumulative Convertible Redeemable Preferred Stock of Titan with an
aggregate liquidation preference of $3,000,000 (the "Series B
Preferred Stock") in connection with Titan's acquisition of Eldyne,
Inc. The Series B Preferred Stock accrues dividends at a rate of 6%
per annum payable quarterly in arrears, has a liquidation preference
of $6.00 per share plus accrued and unpaid dividends (the
"Liquidation Preference") and is entitled to one vote per
outstanding share, voting together with the holders of outstanding
Titan Common Stock on all matters submitted for a stockholder vote.
The Series B Preferred Stock is convertible at the
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holder's option into shares of Titan Common Stock at a conversion
price of $9.00 per share (subject to customary anti-dilution
adjustments) after six months and prior to eighteen months after the
date of issuance. The Series B Preferred Stock also is redeemable
at the Liquidation Preference (i) at the holder's option, from the
second and until the fifth anniversaries of the date of issuance,
and (ii) at Titan's option, after the fifth anniversary of the date
of issuance through the tenth anniversary of issuance. In addition,
208,333 shares of the Series B Preferred Stock issued to Witt have
been deposited into an escrow account for a period of up to twenty-
four months (subject to extension in certain circumstances) to
provide indemnification to Titan for breaches of the acquisition
agreements and certain other defined matters.
Also in connection with the acquisitions, Titan and Witt entered
into a retainer agreement, pursuant to which Witt was retained as a
consultant of Titan for six years following the closing in exchange
for an aggregate consulting fee of approximately $1,900,000, payable
over the six-year term of the retainer agreement.
Titan and Witt also entered into a stockholder's agreement pursuant
to which Witt has agreed for a period of two years to cause all
shares of Titan Common Stock and Series B Preferred Stock which Witt
has the right to vote to be voted in proportion to the vote of the
other outstanding voting securities of the Company in respect of
each proposal submitted for a stockholder vote. In addition, the
shares received by Witt are subject to certain transfer
restrictions. Titan also granted Witt observation rights at its
Board of Director meetings for a period of two years as long as he
continues to own at least 5% of the outstanding Titan Common Stock.
(2) Includes 333,333 shares of Common Stock issuable upon conversion of
Series B Preferred Stock. As of August 21, 1996, the number of
Securities owned by Mr. Witt represented 7.33% of the outstanding
shares of the Company's common stock (9.22% assuming conversion of
the Series B Preferred Stock). Each other Selling Stockholder owns
less than 1% of the Company's Common Stock.
Prabhav V. Maniyar is Senior Vice President, Corporate Development of
the Company. Also, David R. Conner, Joretta L. Slack, John W. Smith, Bernice J.
Brown and Robert Johnson are employees of the Company. Except as set forth
above, the Selling Stockholders have had no positions, offices or other material
relationships with the Company (or had any such positions, offices or material
relationships within the past three years), and does not own greater than one
percent of the Common Stock of the Company.
13
<PAGE>
EXPERTS
The audited financial statements incorporated by reference in this
registration statement, to the extent and to the periods indicated in their
report, have been audited by Arthur Andersen LLP independent public accountants,
as indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
LEGAL MATTERS
David A. Hahn, Esq., Senior Vice President, General Counsel and
Secretary has rendered an opinion as to the legality of the Securities offered
hereby.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of expenses incurred in
connection with this Registration Statement. All such expenses will be paid by
the Company
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee . . . . . $2,909
Accounting fees . . . . . . . . . . . . . . . . . . . . . . . $5,000
Company legal fees and expenses . . . . . . . . . . . . . . . . $12,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . $1,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . $4,091
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000
</TABLE>
All of the above items except the registration fee are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Law") empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement of such action, suit or proceeding, provided that
such officer or director acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation's best interest,
and, for criminal proceedings, had no reasonable cause to believe his or her
conduct was illegal. A Delaware corporation may indemnify officers and
directors against expenses (including attorney's fees) in connection with the
defense or settlement of an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses which such officer or director
actually and reasonably incurred.
15
<PAGE>
The Restated Certificate of Incorporation of Titan contains a
provision to limit the personal liability of the directors of Titan for
violations of their fiduciary duty, except to the extent such limitation of
liability is prohibited by the Delaware Law. This provision eliminates each
director's liability to Titan or its stockholders for monetary damages except
(i) for any breach of the director's duty of loyalty to Titan or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
In addition, Titan has entered into indemnity agreements with its
executive officers and directors whereby the Company obligates itself to
indemnify such officers and directors from any amounts which the officer or
director becomes obligated to pay because of any claim made against him or her
arising out of any act or omission committed while he or she is acting in his or
her capacity as a director and/or officer of the Corporation.
Titan maintains directors and officers liability insurance coverage
that insures its officers and directors against certain losses that may arise
out of their positions with the Corporation and insures the Corporation for
liabilities it may incur to indemnify its officers and directors.
ITEM 16. EXHIBITS
See Index to Exhibits, attached hereto.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post effective amendment to this registration statement;
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which
16
<PAGE>
was offered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply to
information required to be included in a post-effective amendment by those
paragraphs which are contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on August 20, 1996.
THE TITAN CORPORATION
By: /s/ GENE W. RAY
-------------------------
Gene W. Ray, President
POWER OF ATTORNEY
Each person whose signature appears below authorizes J. Sidney Webb and
Gene W. Ray, and either of them, with full power of substitution and
resubstitution, his true and lawful attorneys-in-fact, for him in any and all
capacities, to sign any amendments (including post-effective amendments) to this
Registration Statement and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Director and
/s/ J. SIDNEY WEBB Chairman of the Board August 20, 1996
- -----------------------
J. Sidney Webb
Director, President and
/s/ GENE W. RAY Chief Executive Officer August 20, 1996
- -----------------------
Gene W. Ray
Chief Financial and
/s/ BERNARD M. HIRL Accounting Officer August 20, 1996
- -----------------------
Bernard M. Hirl
/s/ CHARLES R. ALLEN Director August 20, 1996
- -----------------------
Charles R. Allen
Director August 20, 1996
- -----------------------
Joseph F. Caligiuri
/s/ DANIEL J. FINK Director August 20, 1996
- -----------------------
Daniel J. Fink
/s/ ROBERT E. La BLANC Director August 20, 1996
- -----------------------
Robert E. La Blanc
/s/ THOMAS G. POWNALL Director August 20, 1996
- -----------------------
Thomas G. Pownall
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
2.1 Agreement and Plan of Reorganization of Eldyne, Inc. dated
as of April 19, 1996 by and among Eldyne, Inc., Jack Witt,
ELD Acquisition Sub, Inc. and The Titan Corporation, which
was exhibit 2.1 to Registrant's Form 8-K dated May 24, 1996,
is incorporated herein by this reference.
2.2 Agreement and Plan of Reorganization of Unidyne Corporation
dated as of April 19, 1996 by and among Unidyne Corporation,
Jack Witt, UNI Acquisition Sub, Inc. and The Titan Corporation,
which was exhibit 2.2 to Registrant's Form 8-K dated May 24,
1996, is incorporated herein by this reference.
4.1 Certificate of Designations of Series B Cumulative Convertible 20
Redeemable Preferred Stock
4.2 Registration Rights Agreement, dated May 24, 1996, which
was exhibit 2 to Schedule 13D filed on behalf of Mr. Jack D.
Witt on June 5, 1996, is incorporated herein by this
reference.
4.3 Stockholders Agreement, dated May 24, 1996, which
was exhibit 1 to Schedule 13D filed on behalf of Mr. Jack D.
Witt on June 5, 1996, is incorporated herein by this
reference.
5 Opinion and Consent of David A. Hahn 34
23.1 Consent of Arthur Andersen LLP 35
23.2 Consent of David A. Hahn (Included in Exhibit 5) -
24 Power of Attorney (Included on the Signature Page) -
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
SERIES B CUMULATIVE, CONVERTIBLE, REDEEMABLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
THE TITAN CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify that,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Corporation's Board of Directors has adopted the
following resolution, which resolution remains in full force and effect as of
the date hereof:
WHEREAS, the Board of Directors of The Titan Corporation (the
"Corporation") is authorized, within the limitations and restrictions stated in
the Corporation's Restated Certificate of Incorporation, as amended, to fix by
resolution or resolutions the designation of each series of Preferred Stock (the
"Preferred Stock") and the powers, preferences and relative participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, including, without limiting the generality of the foregoing, such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution or resolutions of the
Board of Directors under the General Corporation Law of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of Preferred Stock and the number of shares constituting such series:
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such series
of Preferred Stock on the terms and with the provisions herein set forth:
20
<PAGE>
(1) DESIGNATION. The designation of the series of Preferred Stock
authorized by this resolution shall be "Series B Cumulative Convertible
Redeemable Preferred Stock" (the "Series B Preferred Stock"). The number of
shares of Series B Preferred Stock authorized for issuance shall be 500,000.
(2) DIVIDENDS.
(a) Holders of the outstanding shares of the Series B Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative preferential cash dividends accruing at the per share rate of 6% per
annum ($0.36) (the "Dividend Rate") and no more, payable in arrears on each July
31, October 31, January 31 and April 30 respectively (each such date being
hereinafter referred to as a "Dividend Payment Date"), commencing on July 31,
1996. If any Dividend Payment Date is not a business day, then the Dividend
Payment Date shall be on the next succeeding day that is a business day. Each
such dividend will be payable to holders of record as they appear on the stock
books of the Corporation on such record dates, not less than 10 nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Dividends on the Series B Preferred Stock shall accrue (whether or
not declared) on a daily basis from the previous Dividend Payment Date, except
that the first dividend shall accrue from the date of first issuance of the
Series B Preferred Stock. Accrued but unpaid dividends shall not bear interest.
Dividends will cease to accrue in respect of the Series B Preferred Stock on any
date of redemption relating to the Series B Preferred Stock (a "Redemption
Date"), unless the Corporation shall default in delivering the cash payable by
the Corporation upon such redemption pursuant to paragraphs 5 and 6. Dividends
(or cash amounts equal to accrued and unpaid dividends) payable on the Series B
Preferred Stock shall be computed on the basis of a 360-day year of twelve 30-
day months.
(b) No full dividend shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities (as
defined in paragraph 3) for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum set apart
sufficient for such payment on the Series B Preferred Stock through the most
recent Dividend Payment Date. If any dividends are not paid or set apart in
full, as aforesaid, upon the shares of the Series B Preferred Stock and any
Parity Securities, all dividends declared upon the Series B Preferred Stock and
any Parity Securities shall be declared pro rata so that the amount of dividends
declared per share on the Series B Preferred Stock and such Parity Securities
shall in all cases bear to each other the same ratio that accrued dividends per
share on the Series B Preferred Stock and such Parity Securities bear to each
other. Unless full cumulative dividends, if any, accrued on all outstanding
shares of the Series B Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum set apart sufficient for such payment
through the most recent Dividend Payment Date, no dividend shall be declared or
paid or set aside for payment or other distribution declared or made upon the
Common Stock or upon any other Junior Securities (other than a dividend or
distribution paid in shares of, or warrants, rights or options exercisable for
or convertible into, Common Stock or any other Junior Securities), nor shall any
Common Stock or any other Junior Securities be redeemed, purchased or otherwise
acquired for any consideration, nor may any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such securities, by
the Corporation, except
21
<PAGE>
by conversion into or exchange for Junior Securities. Holders of the shares of
the Series B Preferred Stock shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative dividends as
provided in paragraph 2(a).
(c) Subject to the foregoing provisions of this paragraph 2, the
Board of Directors may declare and the Corporation may pay or set apart for
payment dividends and other distributions on any of the Junior Securities or
Parity Securities, and may redeem, purchase or otherwise acquire out of funds
legally available therefor any Junior Securities, and the holders of the shares
of the Series B Preferred Stock shall not be entitled to share therein.
(d) Any dividend payment made on shares of the Series B Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to shares of the Series B Preferred Stock.
(e) All dividends paid with respect to shares of the Series B
Preferred Stock pursuant to this paragraph 2 shall be paid pro rata to the
holders entitled thereto.
(f) Holders of shares of the Series B Preferred Stock shall be
entitled to receive the dividends provided for in this paragraph 2 in preference
to and in priority over any dividends upon any of the Junior Securities.
(3) RANK. The Series B Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, dissolution and winding up of the
Corporation, rank prior to the common stock, par value $.01 per share (the
"Common Stock"), of the Corporation and on a parity with the $1.00 Cumulative
Convertible Preferred Stock, par value $1.00 per share and the Series A
Preferred Stock, par value $1.00 per share, of the Corporation. All equity
securities of the Corporation to which the Series B Preferred Stock ranks prior,
including the Common Stock, are collectively referred to herein as the "Junior
Securities," all equity securities of the Corporation with which the Series B
Preferred Stock ranks on a parity, including the $1.00 Cumulative Convertible
Preferred Stock and the Series A Preferred Stock, are collectively referred to
herein as the "Parity Securities" and all equity securities of the Corporation
to which the Series B Preferred Stock ranks junior, whether with respect to
dividends or upon liquidation, dissolution, winding-up or otherwise, are
collectively referred to herein as the "Senior Securities." The Series B
Preferred Stock shall be subject to the creation of Junior Securities, Parity
Securities and Senior Securities.
(4) LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders, after payment or provision for payment of any Senior Securities,
an amount per share of Series B Preferred Stock in cash equal to the sum of (i)
$6.00, plus (ii) all accrued and unpaid dividends thereon to the date of
liquidation, dissolution or winding up (the "Liquidation Preference"), before
any payment shall be made or any assets distributed to the holders of any of the
Junior Securities. If the assets of the Corporation are not sufficient to pay
in
22
<PAGE>
full the liquidation payments payable to the holders of outstanding shares of
the Series B Preferred Stock and any Parity Securities, then the holders of all
such shares shall share ratably in such distribution of assets in accordance
with the amount that would be payable on such distribution if the amounts to
which the holders of outstanding shares of Series B Preferred Stock and the
holders of outstanding shares of such Parity Securities are entitled were paid
in full. Except as provided in this paragraph 4(a), holders of Series B
Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation.
(b) For the purposes of this paragraph 4, the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets of
the Corporation, the consolidation or merger of the Corporation with or into one
or more other corporations or the consolidation or merger of one or more
corporations with or into the Corporation shall be deemed to be voluntary or
involuntary liquidation, dissolution or winding up.
(5) REDEMPTION BY THE HOLDERS.
(a) REDEMPTION. At the written request delivered to the Corporation
by any holder of Series B Preferred Stock (a "Requesting Series B Holder")
between the second and fifth anniversaries of the first date of issuance of a
share of Series B Preferred Stock, inclusive, the Corporation shall redeem
(unless otherwise prevented by law) at a redemption price (the "Redemption
Price"), payable in cash, equal to 100% of the Liquidation Preference per share
all, but not less than all, of the Series B Preferred Stock held by such
Requesting Holder. Each date on which the Corporation receives such a request
from a Requesting Series B Holder shall be referred to as an "Early Redemption
Date."
(b) PROCEDURE FOR REDEMPTION BY THE HOLDERS.
(i) A Requesting Series B Holder's request for redemption
shall be sent to the Corporation at its principal executive offices by first
class mail, postage prepaid, and must be received by the Corporation during the
period described in paragraph 5(a). Such written request shall state: (i) the
name and address of such holder and (ii) the number of shares of Series B
Preferred Stock to be redeemed.
(ii) No later than 20 days after receipt of the written request
from a Requesting Series B Holder pursuant to paragraph 5(a) hereof, the
Corporation shall provide written notice of the request for redemption of Series
B Preferred Stock to each other holder of record of such stock, notifying such
holders of the election of the Requesting Series B Holder to redeem such shares,
the Redemption Price and the applicable Early Redemption Date.
(iii) From and after such applicable Early Redemption Date,
unless there shall have been a default in payment of the applicable Redemption
Price, all rights of a Requesting Series B Holder (except the right to receive
the applicable Redemption Price upon presentation and surrender of their
certificate or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever.
23
<PAGE>
(6) REDEMPTION BY THE CORPORATION.
(a) OPTIONAL REDEMPTION. On the first day after the fifth
anniversary of the first date of issuance of a share of Series B Preferred Stock
and before the Mandatory Redemption Date (as defined in paragraph 6(b)), in
accordance with paragraph 6(c) hereof, the Corporation, at its option, may
redeem (subject to the legal availability of funds therefor) all, but not less
than all, outstanding shares of the Series B Preferred Stock at the Redemption
Price, payable in cash.
(b) MANDATORY REDEMPTION. On the tenth anniversary of the first date
of issuance of a share of Series B Preferred Stock (the "Mandatory Redemption
Date"), in accordance with paragraph 6(c) hereof, the Corporation shall redeem
(subject to the legal availability of funds therefor) all outstanding shares of
the Series B Preferred Stock at the Redemption Price, payable in cash.
(c) PROCEDURE FOR REDEMPTION BY THE CORPORATION.
(i) Notice of redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
date fixed for any redemption of Series B Preferred Stock pursuant to paragraph
6(a) or 6(b) hereof, to each holder of record of the shares of Series B
Preferred Stock at such holder's address as the same appears on the stock
register of the Corporation; provided, however, that no failure to give such
notice nor any defect therein shall affect the validity of the proceeding for
the redemption of any shares of Series B Preferred Stock to be redeemed except
as to the holder to whom the Corporation has failed to mail said notice or
except as to the holder whose notice was defective. Such notice shall state:
(A) the Redemption Date; (B) the number of shares of Series B Preferred Stock to
be redeemed; (C) the Redemption Price; and (D) the place or places where
certificates for such shares are to be surrendered for payment of the Redemption
Price.
(ii) Notice having been mailed as aforesaid, from and after the
Redemption Date (unless default shall be made by the Corporation in providing
money for the payment of the Redemption Price of the shares called for
redemption) said shares shall no longer be deemed to be outstanding and shall
have the status of authorized but unissued shares of Preferred Stock,
unclassified as to series, and shall not be reissued as shares of Series B
Preferred Stock and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the Redemption
Price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at the
Redemption Price aforesaid.
(7) STATUS OF REDEEMED SHARES. Shares of Series B Preferred Stock which
have been issued and reacquired in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of the
class of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of the Preferred Stock; provided however, that
24
<PAGE>
no such issued and reacquired shares of Series B Preferred Stock shall be
reissued or sold as Series B Preferred Stock.
(8) CONVERSION RIGHTS.
(a) RIGHT OF CONVERSION. Subject to and upon compliance with the
provisions of this paragraph 8, each share of Series B Preferred Stock shall, at
the option of the holder thereof, be convertible at any time commencing on the
six month anniversary of the first date of issuance of a share of Series B
Preferred Stock and until the eighteenth month anniversary of the first date of
issuance of a share of Series B Preferred Stock, inclusive, into that number of
fully paid and non-assessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $6.00 by the
Conversion Price in effect at such time and by surrender of such share so to be
converted in the manner provided in paragraph 8(b).
(b) MANNER OF EXERCISE OF CONVERSION PRIVILEGE. In order to exercise
the conversion privilege, the holder of one or more shares of Series B Preferred
Stock to be converted shall surrender such shares at any of the offices or
agencies to be maintained for such purpose by the Corporation accompanied by the
funds, if any, required by the last paragraph of this section 8(b) and shall
give written notice by first class mail, postage prepaid, to the Corporation at
such office or agency that the holder elects to convert the shares of Series B
Preferred Stock specified in said notice. Such notice shall also state the name
or names, together with address or addresses, in which the certificate or
certificates for shares of Common Stock which shall be issuable in such
conversion shall be issued. Each share of Series B Preferred Stock surrendered
for conversion shall, unless the shares issuable on conversion are to be issued
in the same name as the name in which such share is registered, be accompanied
by instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder or his duly authorized attorney and an amount sufficient
to pay any transfer or similar tax. As promptly as practicable after the
surrender of such shares of Series B Preferred Stock and the receipt of such
notice, instruments of transfer and funds, if any, as aforesaid, the Corporation
shall issue and shall deliver at such office or agency to such holder, or on his
written order a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such share of Series B Preferred
Stock in accordance with the provisions of this paragraph 8 and a check or cash
in respect of any fractional interest in a share of Common Stock arising upon
such conversion, as provided in paragraph 8(c).
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which such shares of Series B
Preferred Stock shall have been surrendered and such notice (and any applicable
instruments of transfer and any required taxes) received by the Corporation as
aforesaid, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby at such time on such date, and such conversion shall be at
the Conversion Price in effect at such time on such date, unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect
25
<PAGE>
on the date upon which such shares of Series B Preferred Stock shall have been
surrendered and such notice received by the Corporation.
Any shares of Series B Preferred Stock surrendered for conversion
during the period from the close of business on the record date for any dividend
payment to the opening of business on the related dividend payment date shall be
accompanied by payment, in funds acceptable to the Corporation, of an amount
equal to the dividend otherwise payable on such dividend payment date; provided,
however, that no such payment need be made if there shall exist at the time of
conversion a default in the payment of dividends on the shares of Series B
Preferred Stock. An amount equal to such payment shall be paid by the
Corporation on such dividend payment date to the holder of such shares of Series
B Preferred Stock at the close of business on such record date; provided,
however, that if the Corporation shall default in the payment of dividends on
such dividend payment date, such amount shall be paid to the person who made
such required payment. Except as provided for above in this paragraph, no
adjustment shall be made for dividends accrued on any shares of Series B
Preferred Stock converted or for dividends on any shares issued upon the
conversion of such shares as provided in this paragraph.
(c) CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No fractional
shares or scrip representing fractions of shares of Common Stock shall be issued
upon conversion of Series B Preferred Stock. In lieu of any fractional interest
in a share of Common Stock which would otherwise be deliverable upon the
conversion of any share of Series B Preferred Stock, the Corporation shall pay
to the holder of such shares an amount in cash (computed to the nearest cent)
equal to the closing price (as defined below) on the business day next preceding
the day of conversion multiplied by the fractional interest that otherwise would
have been deliverable upon conversion of such share. The "closing price" for
each day shall be the closing price for such business day as reported by The New
York Stock Exchange, or such other national securities exchange or automated
quotation system upon which the Common Stock is then listed for trading.
(d) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price
shall mean and be $9.00, subject to adjustment from time to time by the
Corporation as follows:
(i) In case the Corporation shall (A) pay a dividend
or make a distribution on its Common Stock in shares of Common Stock, (B)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (C) combine its outstanding shares of Common Stock into a smaller number
of shares, or (D) issue by reclassification of its Common Stock any shares of
capital stock of the Corporation, then in each such case the Conversion Price in
effect immediately prior to such action shall be adjusted so that the holder of
any share of Series B Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or other
capital stock of the Corporation which he would have owned or been entitled to
receive immediately following such action had such share been converted
immediately prior to the occurrence of such event. An adjustment made pursuant
to this paragraph 8(d)(i) shall become effective immediately after the record
date, in the case of a dividend or distribution, or immediately after the
effective date, in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph 8(d)(i), the
holder of any share of Series B Preferred Stock thereafter surrendered for
conversion
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shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Corporation, the Board
of Directors (whose determination shall be conclusive and shall be described in
a statement filed by the Corporation with the stock transfer or conversion
agent, as appropriate) shall determine the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock or shares of
Common Stock and other capital stock.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its outstanding shares of Common Stock entitling them
(for a period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock at a price per share less than
the current market price per share (as determined pursuant to paragraph
8(d)(iv)) of the Common Stock (other than pursuant to any stock option,
restricted stock or other incentive or benefit plan or stock ownership or
purchase plan for the benefit of employees, directors or officers or any
dividend reinvestment plan of the Corporation in effect at the time hereof or
any other similar plan adopted or implemented hereafter), then the Conversion
Price in effect immediately prior thereto shall be adjusted so that it shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of issuance of such rights or warrants by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants (immediately
prior to such issuance) plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase at such current
market price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants
(immediately prior to such issuance) plus the number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment shall be
made successively whenever any rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; provided, however, in
the event that all the shares of Common Stock offered for subscription or
purchase are not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the Conversion Price shall be
readjusted to the Conversion Price which would have been in effect had the
numerator and the denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common Stock actually
delivered upon the exercise of such rights or warrants rather than upon the
number of shares of Common Stock offered for subscription or purchase. In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Common Stock at less than such current market price, and
in determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received by the Corporation
for such rights or warrants, the value of such consideration, if other than
cash, to be determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Corporation with
the stock transfer or conversion agent, as appropriate).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Common Stock or capital
stock (other than Common Stock), evidences of its indebtedness or assets
(including securities and cash, but excluding any cash dividends paid by the
Corporation in the ordinary course or pursuant to the terms of any of the Parity
Securities, and excluding dividends or distributions payable in stock for which
adjustment is made pursuant to paragraph 8(d)(i)) or rights or warrants to
subscribe for or
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purchase securities of the Corporation (excluding those referred to in paragraph
8(d)(ii)), then in each such case the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the record date of such distribution by a fraction
of which the numerator shall be the current market price per share as determined
pursuant to paragraph 8(d)(iv) of the Common Stock less the fair market value on
such record date (as determined by the Board of Directors, whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the stock transfer or conversion agent, as appropriate) of the
portion of the capital stock or assets or the evidences of indebtedness or
assets so distributed to the holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock, and of
which the denominator shall be such current market price per share of Common
Stock. Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such distribution.
(iv) For the purpose of any computation under
paragraphs 8(d)(ii) and (iii), the current market price per share of Common
Stock on any date shall be deemed to be the average of the closing price (as
defined in paragraph 8(c)) for the shorter of (A) 30 consecutive trading days
ending on the last full trading day prior to the Time of Determination or (B)
the period commencing on the date next succeeding the first public announcement
of the issuance of such rights or warrants or such distribution through such
last full trading day prior to the Time of Determination. For purposes of the
foregoing, the term "Time of Determination" shall mean the time and date of the
earlier of (I) the record date for determining stockholders entitled to receive
the rights, warrants or distributions referred to in paragraphs 8(d)(ii) and
(iii) or (II) the commencement of "ex-dividend" trading on the exchange or
market referred to in the definition of "closing price." In addition, "trading
day" shall mean a day on which the securities exchange specified for purposes of
this paragraph 8 shall be open for business or, if the shares of Common Stock
shall not be listed on such exchange for such period, a day with respect to
which quotations of the character referred to in paragraph 8(c) shall be
reported.
(v) In any case in which this paragraph 8(d) shall
require that an adjustment be made immediately following a record date or an
effective date the Corporation may elect to defer (but only until the filing by
the Corporation with the stock transfer or conversion agent, as the case may be,
of the certificate required by paragraph 8(d)(vii)) issuing to the holder of any
share of Series B Preferred Stock converted after such record date or effective
date the shares of Common Stock issuable upon such conversion over and above the
shares of Common Stock issuable upon such conversion on the basis of the
Conversion Price prior to adjustment, and paying to such holder any amount of
cash in lieu of a fractional share.
(vi) No adjustment in the Conversion Price shall be
required to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any adjustments
which by reason of this paragraph (vi) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 8(d) shall be made to the nearest cent or to
the nearest 1/1000th of a share, as the case may be. Anything in this paragraph
8(d) to the contrary notwithstanding, the Corporation shall be entitled to make
such reduction in the Conversion Price, in addition to those required by this
paragraph 8(d), as it in its discretion shall determine to be
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advisable in order that any stock dividend, subdivision of shares, distribution
of rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the Corporation to
its stockholders shall not be taxable to the recipients. Except as set forth in
paragraphs 8(d)(i), (ii) and (iii) above, the Conversion Price shall not be
adjusted for the issuance of Common Stock, or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing, in exchange for cash, property or services.
(vii) Whenever the Conversion Price is adjusted as
herein provided, (A) the Corporation shall promptly file with the stock transfer
or conversion agent, as appropriate, a certificate setting forth the Conversion
Price after such adjustment and a brief statement of the facts requiring such
adjustment and the manner of computing the same, which certificate shall be
conclusive evidence of the correctness of such adjustment, and (B) the
Corporation shall also mail or cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each holder of record of shares of Series B
Preferred Stock a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price. The stock transfer or conversion
agent, as the case may be, shall not be under any duty or responsibility with
respect to the certificate required by this paragraph 8(d)(vii) except to
exhibit the same to any holder of shares of Series B Preferred Stock who
requests to inspect it.
(viii) In the event that at any time, as a result of an
adjustment made pursuant to paragraph 8(d)(i), the holder of any share of Series
B Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of the Corporation other than shares of Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any share of Series B Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in this
paragraph.
(ix) The Corporation from time to time may decrease the
Conversion Price by any amount for any period of time if the period is at least
20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Series B Preferred Stock a notice of the decrease at least
15 days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(e) NOTICE TO HOLDERS PRIOR TO CERTAIN CORPORATE ACTIONS. In
case:
(i) the Corporation shall take any action which would
require an adjustment in the Conversion Price pursuant to paragraph 8(d); or
(ii) the Corporation shall authorize the granting to
the holders of its Common Stock generally of rights or warrants to subscribe for
or purchase any shares of stock of any class or of any other rights; or
(iii) there shall be any reorganization or
reclassification of the Common Stock (other than a subdivision or combination of
the outstanding Common Stock and
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other than a change in the par value of the Common Stock), or any merger or
consolidation to which the Corporation is a party or any statutory exchange of
securities with another corporation and for which approval of any stockholders
of the Corporation is required, or any sale or transfer of all or substantially
all of the assets of the Corporation; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then in each such case the Corporation shall cause to be given to the holders of
shares of Series B Preferred Stock and the stock transfer or conversion agent,
as appropriate, as promptly as possible, but in any event at least 20 days prior
to the applicable date hereinafter specified, a notice stating (A) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such distribution, rights or
warrants are to be determined, or (B) the date on which such reorganization,
reclassification, merger, consolidation, sale, transfer, statutory exchange,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities, cash
or other property deliverable upon such reorganization, reclassification,
merger, consolidation, sale, transfer, statutory exchange, dissolution,
liquidation or winding-up. Failure to give such notice or any defect therein
shall not affect the legality or validity or the proceedings described in
paragraphs 8(e)(i), (ii), (iii) or (iv).
(f) RESERVATION OF SHARES OF COMMON STOCK. The Corporation
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued shares of
Common Stock or its issued shares of Common Stock held in its treasury, or both,
for the purpose of effecting conversions of shares of Series B Preferred Stock,
the full number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock not theretofore converted and on
or before (and as a condition of) taking any action that would cause an
adjustment of the Conversion Price resulting in an increase in the number of
shares of Common Stock deliverable upon conversion above the number thereof
previously reserved and available therefor, the Corporation shall take all such
action so required. For purposes of this paragraph 8(f), the number of shares
of Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock shall be computed as if at the
time of computation all outstanding shares of Series B Preferred Stock were held
by a single holder.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value (if any) of the shares of Common
Stock deliverable upon conversion of the shares of Series B Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and non-assessable shares of Common Stock at such adjusted
Conversion Price.
(g) TRANSFER TAXES, ETC. The Corporation shall pay any and
all documentary stamp, issue or transfer taxes, and any other similar taxes
payable in respect of the
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issue or delivery of shares of Common Stock upon conversions of shares of Series
B Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other than
that of the holder of the shares of Series B Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(h) MERGER OR CONSOLIDATION OR SALE OF ASSETS.
Notwithstanding any other provision herein to the contrary, in case of any
merger or consolidation to which the Corporation is a party (other than a merger
or consolidation in which the Corporation is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, or the securities or other property of
another corporation), or in case of any sale or transfer to another corporation
of the property of the Corporation as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition), then lawful
provision shall be made by the corporation formed by such consolidation or the
corporation whose securities, cash or other property will immediately after the
merger or consolidation be owned, by virtue of the merger or consolidation, by
the holders of Common Stock immediately prior to the merger or consolidation, or
the corporation which shall have acquired such assets or securities of the
Corporation (collectively the "Formed, Surviving or Acquiring Corporation"), as
the case may be, providing that the holder of each share of Series B Preferred
Stock then outstanding shall have the right thereafter to convert such share
into the kind and amount of securities, cash or other property receivable upon
such merger, consolidation, sale, transfer or statutory exchange by a holder of
the number of shares of Common Stock into which such share of Series B Preferred
Stock might have been converted immediately prior to such merger, consolidation,
sale, transfer or statutory exchange assuming such holder of Common Stock did
not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such merger, consolidation,
sale, transfer or statutory exchange (provided that, if the kind or amount of
securities, cash or other property receivable upon such merger, consolidation,
sale, transfer or statutory exchange is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this paragraph 8(h) the kind
and amount of securities, cash or other property receivable upon such merger,
consolidation, sale, transfer or statutory exchange for each non-electing share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the non-electing shares). The Formed, Surviving or Acquiring Corporation, as
the case may be, shall make provision in its certificate or articles of
incorporation or other constituent documents to the end that the provisions set
forth in this paragraph 8(h) shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares of stock
or other securities or property thereafter deliverable on the conversion of the
Series B Preferred Stock.
The above provisions of this paragraph 8(h) shall similarly apply
to successive mergers, consolidations, sales, transfers or statutory exchanges.
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(i) Covenant as to Common Stock. The Corporation covenants
that all shares of Common Stock which may be delivered upon conversions of
shares of Series B Preferred Stock will upon delivery be duly and validly issued
and fully paid and non-assessable, free of all liens and charges and not subject
to any preemptive rights.
The Corporation covenants that if any shares of Common Stock to
be provided for the purpose of conversion of shares of Series B Preferred Stock
hereunder require registration with or approval of any governmental authority
under any Federal or State law before such shares may be validly issued upon
conversion, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.
The Corporation further covenants that it will, if permitted by
the rules of the exchange on which shares of Common Stock are traded, list and
keep listed so long as the Common Stock shall be so listed on such exchange, all
Common Stock issuable upon conversion of the shares of Series B Preferred Stock.
(9) VOTING RIGHTS.
(a) The holders of record of shares of Series B Preferred Stock shall
not be entitled to any voting rights except as hereinafter provided in this
paragraph 9 or as otherwise provided by law.
(b) Except as otherwise provided in the Restated Certificate of
Incorporation, as amended, or by law, the holders of outstanding shares of
Series B Preferred Stock shall be entitled to vote on all matters submitted to a
vote of the holders of the Common Stock, voting together with the holders of the
Common Stock (and any other class or series of capital stock of the Corporation
entitled to vote together with the Common Stock) as one class. Each outstanding
share of the Series B Preferred Stock shall be entitled to one vote per share.
(10) PROTECTIVE PROVISION. Without the approval of at least a majority of
the outstanding shares of Series B Preferred Stock, the Corporation shall not
amend its Restated Certificate of Incorporation, as amended, to alter or change
any rights, preferences or privileges of the Series B Preferred Stock so as
materially and adversely to affect the Series B Preferred Stock.
IN WITNESS WHEREOF, THE TITAN CORPORATION has caused this certificate to be
made under the seal of the Corporation this ____ day of May, 1996.
David A. Hahn
Senior Vice President, General Counsel and Secretary
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EXHIBIT 5
August 27, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
In my capacity as general counsel of The Titan Corporation, a Delaware
corporation (the "Company"), I have examined the Registration Statement,
together with exhibits thereto, to be filed with you relating to the
registration of 2,249,867 shares of common stock, $0.01 par value per share (the
"Common Stock"), issued in connection with the Company's acquisition of Eldyne,
Inc. and Unidyne Corporation (the "Acquisition") and issuable upon conversion of
the Company's Series B Cumulative Convertible Redeemable Preferred Stock (the
"Series B Preferred Stock") issued in the Acquisition. I am familiar with the
proceedings taken and to be taken by the Company in connection with the issuance
of the Common Stock and the authorization of such issuance, and have examined
such documents and such questions of law and fact as I have deemed necessary in
order to express the opinion hereinafter stated.
Based on the foregoing, it is my opinion that the shares of Common
Stock issued in connection with the Acquisition and issuable upon conversion of
the Series B Preferred Stock have been duly authorized, and the Common Stock
issued in connection with the Acquisition is, and the Common Stock issuable upon
conversion of the Series B Preferred Stock when issued in accordance with the
terms thereof will be, legally and validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
above referenced Registration Statement.
Very truly yours,
/s/ DAVID A. HAHN, ESQ.
------------------------
David A. Hahn, Esq.
Senior Vice President
General Counsel and Secretary
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 28, 1996
and July 31, 1996 included by reference in The Titan Corporation's Form 10-K for
the year ended December 31, 1995 and Form 8-K/A dated August 7, 1996,
respectively, and to all references to our firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
San Diego, California
August 26, 1996
