UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
The Titan Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
888266103
(CUSIP Number)
Mr. Jack D. Witt
1402 Gamble Lane
Escondido, CA 92029
(619) 565-4250
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 24, 1996
(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box [_].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five
percent of the class of securities described in Item 1; and (2) has
filed no amendment subsequent thereto reporting beneficial ownership of
five percent or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 888266103
Page 2 of 6 Pages
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Mr. Jack D. Witt Social Security Number:
###-##-####
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
SEC USE ONLY
3
SOURCE OF FUNDS*
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [_]
CITIZENSHIP OR PLACE OF ORGANIZATION
6 United States
NUMBER OF SOLE VOTING POWER
7 1,177,584
SHARES
SHARED VOTING POWER
BENEFICIALLY 8 0
OWNED BY SOLE DISPOSITIVE POWER
9 1,177,584
EACH
SHARED DISPOSITIVE POWER
PERSON 10 0
WITH
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
11 1,177,584
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
12 [_]
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 7.36%
TYPE OF REPORTING PERSON*
14 IN
Item 1. Security and Issuer.
Security: The Titan Corporation Common Stock,
Par Value $.01 per share
Issuer: The Titan Corporation (Titan), a
Delaware Corporation
Address: 3033 Science Park Road
San Diego, California 92121
Item 2. Identity and Background.
Name: Jack D. Witt
Address: 1402 Gamble Lane
Escondido, California
92029
Principal Occupation: Consultant
Citizenship: U.S.
Mr. Witt has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors). Nor has Mr. Witt, during the last five
years, been subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Witt acquired the 1,177,584 shares of Common
Stock on May 24, 1996 in connection with Titan's acquisition (the
Acquisition) of Eldyne, Inc. and Unidyne Corporation.
Also in connection with the Acquisition, Mr. Witt
acquired 500,000 shares of Series B Cumulative Convertible
Redeemable Preferred Stock (Series B Preferred Stock) of Titan.
The Series B Preferred Stock is entitled to one vote per 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 Witt's option into shares of
Titan Common Stock at a conversion price of $9.00 per share
(subject to customary anti-dilution adjustments) from November 24,
1996 through November 24, 1997. If all shares of Series B
Preferred Stock were convertible and converted, the percentage of
Titan Common Stock owned by Witt would be 9.25%.
Item 4. Purpose of Transaction.
The acquisition of shares of Common Stock described
herein was made for investment purposes. Witt may, in the future,
purchase or dispose of additional shares of Common Stock. Witt
does not have any present plan or proposal which would relate to or
result in a transaction of the kind described in paragraphs (a)
through (j) of Item 4 of Schedule 13D of the Securities Exchange
Act of 1934, as amended.
Item 5. Interest in Securities of the Issuer.
Mr. Witt is the sole beneficial owner of 1,177,584
shares of Titan Common Stock. Mr. Witt is also the sole beneficial
owner of 500,000 shares of Series B Preferred Stock of Titan. Such
shares of Series B Preferred Stock are convertible into 333,333
shares of Titan Common Stock from November 24, 1996 through
November 24, 1997. Mr. Witt has sole voting and investment power
with respect to all such shares; provided, however, that pursuant
to a Stockholder's Agreement entered into between Witt and Titan in
connection with the Acquisition, Witt has agreed for a period of
two years to vote all shares of Titan Common Stock and Series B
Preferred Stock in proportion to the vote of the other outstanding
voting securities of Titan in respect of each proposal submitted
for a stockholder vote.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
Titan and Witt have entered into a Stockholder's
Agreement pursuant to which Witt has agreed for a period of two
years from May 24, 1996 to vote all shares of Titan Common Stock
and Titan Series B Preferred Stock in proportion to the vote of the
other outstanding voting securities of Titan in respect of each
proposal submitted for a stockholder vote.
Titan, Witt and certain other persons are parties to
a registration rights agreement pursuant to which all shares of
Titan Common Stock issued in connection with the Acquisition and
issuable upon conversion of the Series B Preferred Stock will be
registered under the Securities Act of 1933, as amended.
Witt has pledged 250,000 shares of Titan Common
Stock as security for a $900,000 promissory note of Witt in favor
of Joretta Watts.
Item 7. Material to be Filed as Exhibits.
1. Stockholder's Agreement dated as of May 24,
1996 between The Titan Corporation and Jack
D. Witt.
2. Registration Rights Agreement dated as of May
24, 1996 among The Titan Corporation, Jack D.
Witt and others.
3. Note and Stock Pledge Modification Agreement,
dated as of May 24, 1996, by and between Jack
D. Witt, Glenna J. Witt and Joretta Watts.
4. Stock Pledge Agreement, dated as of January
30, 1996, by and among Jack D. Witt, Glenna
J. Witt, Unidyne Corporation and Joretta
Watts.
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Dated: May 30, 1996
By:
/s/
Jack D.
Witt
Exhibit 1
STOCKHOLDER'S AGREEMENT
This STOCKHOLDER'S AGREEMENT (this "Agreement")
dated as of May 24, 1996 is by and among The Titan Corporation, a
Delaware corporation (the "Company") and Mr. Jack Witt ("Witt").
In order to induce the Company to enter into the Agreement and Plan
of Reorganization of Eldyne, Inc. and the Agreement and Plan of
Reorganization of Unidyne Corporation dated the date hereof
(collectively, the "Reorganization Agreements"), Witt agreed to
execute and deliver this Agreement. The execution and delivery of
this Agreement is a condition to the closings under the
Reorganization Agreements.
The parties hereby agree as follows:
1. Voting of Stock. For a period of two (2)
years from and after the closing under the Reorganization
Agreements, Witt shall cause all shares of the Company's common
stock, $.01 par value per share ("Common Stock"), and preferred
stock, $1.00 par value per share (collectively, the "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 vote of the Company's
stockholders.
2. Transfer Restrictions.
(a) Witt shall not directly or indirectly sell or
otherwise transfer in any manner any shares of Common Stock
received by Witt pursuant to the Reorganization Agreements or upon
conversion of Series B Cumulative Convertible Redeemable Preferred
Stock (such Common Stock, the "Reorganization Shares") (or enter
into agreements or undertakings with respect to any of the
foregoing) except that (i) Witt may register Reorganization Shares
for sale pursuant to the Registration Rights Agreement of even date
herewith by and between the Company and Witt and others; provided,
however, that any sales or other transfers by Witt pursuant to the
Registration Rights Agreement shall be subject to a maximum of
20,000 Reorganization Shares in each day on a non-cumulative basis;
(ii) after two (2) years from the date hereof, Witt may sell
Reorganization Shares in the manner permitted by Rule 144, as
presently in effect, promulgated under the Securities Act of 1933,
as amended, (the "Securities Act"); (iii) Witt may sell
Reorganization Shares in any tender offer made by the Company for
its Common Stock or any tender offer approved by the Company's
Board of Directors; and (iv) Witt may sell Reorganization Shares in
other transactions with the Company's prior consent, which consent
shall not be unreasonably withheld or delayed.
(b) Witt shall not directly or indirectly sell or
otherwise transfer in any manner any shares of the Company's Series
B Cumulative Convertible Redeemable Preferred Stock (the "Series B
Preferred Stock") (or enter into agreements or undertakings with
respect to any of the foregoing).
(c) The Company may enter a stop transfer order
with the transfer agent (or agents) and the registrar (or
registrars) of the Reorganization Shares held by Witt prohibiting
transfers except in compliance with the requirements of this
Agreement. The Company agrees to remove promptly any stop transfer
order with respect to, and issue promptly unlegended certificates
in substitution for, certificates for any such Reorganization
Shares that are no longer subject to or are to be transferred in
compliance with the restrictions contained in this Agreement.
3. Legends. Witt agrees that the certificates
representing the Reorganization Shares and the Series B Preferred
Stock shall bear the following legends:
"THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND
VOTING SET FORTH IN A STOCKHOLDER'S
AGREEMENT DATED AS OF MAY ___, 1996.
A COPY OF SUCH AGREEMENT MAY BE
OBTAINED FROM THE COMPANY UPON
REQUEST.
THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND
MAY NOT BE TRANSFERRED OR
HYPOTHECATED WITHOUT PRIOR
REGISTRATION UNDER SAID ACT OR AN
EXEMPTION THEREFROM ESTABLISHED TO
THE SATISFACTION OF THE COMPANY."
4. Recapitalizations, Exchanges, Etc. Affecting
the Company's Stock. The provisions of this Agreement shall apply,
to the fullest extent set forth herein, to any and all shares of
capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets, or
otherwise) that may be issued in respect of, in exchange for, or in
substitution of the Company's Stock and shall be appropriately
adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the
date hereof.
5. Injunctive Relief. In the event of a breach
or threatened breach of this Agreement by Witt, the parties agree
that money damages, alone, would be an inadequate remedy, and that
the Company may apply for and obtain injunctive and other equitable
relief without necessity of bond or other security, to prevent or
remedy such breach.
6. Piggyback Registrations.
(a) Each time the Company decides to file a
registration statement under the Securities Act (other than on
Forms S-4 or S-8) covering an underwritten public offering of its
Common Stock, the Company shall give written notice thereof to
Witt. The Company shall, at its expense, include in such
registration statement such shares of Common Stock which Witt
requests in writing within 20 days after such written notice has
been given. The Common Stock of Witt shall be included in the
underwriting on the same terms and conditions as the Common Stock
otherwise being sold through the underwriters.
(b) Notwithstanding Section 6(a), if in the good
faith judgment of the managing underwriter of such offering the
inclusion of all of the shares of Common Stock requested by Witt to
be registered would interfere with the successful marketing of the
Common Stock to be offered by the underwriters, the Common Stock to
be included at the request of Witt shall be reduced to such smaller
number as may be determined by the managing underwriter of such
offering.
7. Miscellaneous.
(a) Successors, Assigns and Transferees. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, heirs,
legatees, successors and assigns, but shall not be binding on any
third party to whom Witt has transferred or sold his Reorganization
Shares in accordance with clauses (i)-(iii) of Section 2(a) hereof.
Each transferee of Reorganization Shares from Witt or a subsequent
transferor (excluding transferees who acquired their shares in
accordance with clauses (i)-(iii) of Section 2(a) hereof) shall
take such Reorganization Shares subject to the same restrictions as
existed in the hands of the transferor. Reorganization Shares sold
to the public pursuant to an effective Registration Statement shall
no longer by subject to any of the provisions of this Agreement.
(b) Disputes. Any controversy or dispute
between the Company and Witt, including the enforceability of this
arbitration clause, shall be settled by binding arbitration before
a single arbitrator in San Diego, California in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association, Expedited Procedures. The governing law of such
arbitration shall be as set forth in Section 7(c) hereof. Judgment
upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
(c) Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to choice of law or conflicts of law principles.
(d) Contravention. If any provision of this
Agreement contravenes any applicable law or regulation, the
remainder of the Agreement shall be given effect as though such
provision was not present, and in a manner so as to achieve the
objective of such provision as nearly as possible without
contravening the law.
(e) Integration. This Agreement is the only
agreement between these parties on this subject matter, and
supersedes any and all prior agreements and understandings on this
subject.
(f) Amendment. This Agreement may be amended,
modified or supplemented only by written agreement of the party or
parties hereto against whom enforcement of such amendment,
modification or supplement is sought.
(g) Termination. The parties' respective
obligations under this Agreement shall terminate upon the second
anniversary of the date of the closing under the Reorganization
Agreements, except that Witt's obligations under Section 2(b)
hereof shall survive until such time as all outstanding shares of
the Company's Series B Preferred Stock shall have been converted or
redeemed by the Company.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
THE TITAN
CORPORATION
By: David A.
Hahn
Title: Senior
Vice President,
General Counsel and Secretary
JACK WITT
Exhibit 2
THE TITAN CORPORATION
____________________
REGISTRATION RIGHTS AGREEMENT
Dated as of April 24, 1996
THE TITAN CORPORATION
3033 Science Park Road
San Diego, California 92121
This Registration Rights Agreement ("Agreement") is
made and entered into as of May 24, 1996, by and among The Titan
Corporation, a Delaware corporation (the "Company"), Jack Witt
("Witt") and the other persons listed on the signature pages hereto
(Witt and such other persons being herein referred to collectively
as the "Investors" and individually as an "Investor"). In order to
induce the Investors to enter into or approve, as applicable, the
Agreement and Plan of Reorganization of Eldyne, Inc. dated April
19, 1996 and the Agreement and Plan of Reorganization of Unidyne,
Inc. dated April 19, 1996 (together, the "Reorganization
Agreements"), the Company has agreed to provide the registration
rights set forth in this Agreement. The execution of this
Agreement is a condition to the closings under the Reorganization
Agreements.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Board: The Board of Directors of the Company.
Claim: Any loss, claim, damages, liability or
expense (including the reasonable costs of investigation and
legal fees and expenses).
Common Stock: The common stock, par value $.01 per
share, of the Company.
Equity Security: Any capital stock of the Company
or any security convertible, with or without consideration,
into any such stock, or any security carrying any warrant or
right to subscribe to or purchase any such stock, or any
such warrant or right.
Exchange Act: The Securities Exchange Act of 1934,
as from time to time amended.
Holder: The beneficial owner of a Registrable
Security. For all purposes of this Agreement, the Company
shall be entitled to treat the record owner of a Registrable
Security as the beneficial owner of such security unless the
Company has been given written notice of the existence and
identity of a different beneficial owner.
Indemnified Holder: Any Holder of Registrable
Securities, any officer, director, employee or agent of any
such Holder and any Person who controls any such Holder
within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act.
Misstatement: An untrue statement of a material
fact or an omission to state a material fact required to be
stated in a Registration Statement or Prospectus or
necessary to make the statements in a Registration
Statement, Prospectus or preliminary prospectus not
misleading.
Person: A natural person, partnership, corporation,
business trust, association, joint venture or other entity
or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in any
Registration Statement, as supplemented by any and all
prospectus supplements and as amended by any and all post-
effective amendments and including all material incorporated
by reference in such prospectus.
Registration: A registration pursuant to Section 2
hereof.
Registration Expenses: The out-of-pocket expenses
of the Registration, including:
(1) all registration and filing fees
(including fees with respect to filings required to
be made with the National Association of Securities
Dealers);
(2) fees and expenses of compliance with
securities or blue sky laws (including fees and
disbursements of counsel for selling holders in
connection with blue sky qualifications of the
Registrable Securities and determinations of their
eligibility for investment under the laws of such
jurisdictions as the holders of a majority of the
Registrable Securities being sold may designate);
(3) printing expenses;
(4) fees and disbursements of counsel for
the Company, and of not more than one firm of
attorneys for the sellers of the Registrable
Securities; and
(5) fees and disbursements of all
independent certified public accountants of the
Company incurred specifically in connection with
such Registration.
Registrable Securities: (a) All shares of Common
Stock issued to the Investors pursuant to the Reorganization
Agreements, (b) all shares of Common Stock issued upon
conversion of the Company's Series B Cumulative Convertible
Redeemable Preferred Stock, and (c) any securities issued or
issuable with respect to such Common Stock by way of a stock
dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or
reorganization; provided that any such share or other
security shall be deemed to be a Registrable Security only
if and so long as it is a Transfer Restricted Security.
Registration Statement: The registration statement
which covers Registrable Securities pursuant to the provi-
sions of this Agreement, including the Prospectus included
in such registration statement, amendments (including post-
effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated
by reference in such registration statement.
Securities Act: The Securities Act of 1933, as from
time to time amended.
SEC: The Securities and Exchange Commission.
Transfer Restricted Security: A security that has
not been sold to or through a broker, dealer or underwriter
in a public distribution or other public securities
transaction or sold in a transaction exempt from the
registration and prospectus delivery requirements of the
Securities Act under Rule 144 promulgated thereunder (or any
successor rule). The foregoing notwithstanding, a security
shall remain a Transfer Restricted Security until (i) all
stop transfer instructions or notations and restrictive
legends with respect to such security have been lifted or
removed and (ii) the Holder of such security has received at
Company expense an opinion of counsel to the Company, to the
effect that such shares in such Holder's hands are freely
transferable in any public or private transaction without
registration under the Securities Act (or such Holder has
waived receipt of such opinion).
underwritten registration or underwritten offering:
A registration in which securities of the Company are sold
to an underwriter for distribution to the public.
2. Registration
(a) Timing of Registration
The Company shall file the Registration Statement
under the Securities Act covering the shares of Registrable
Securities that are the subject of this Agreement as promptly as
practicable after the closing of the transactions contemplated by
the Reorganization Agreements.
If the Company furnishes to the Holders of
Registrable Securities a copy of a resolution of the Board
certified by the Secretary of the Company stating that in the good
faith judgment of the Board it would be seriously detrimental to
the Company and its stockholders for such Registration Statement to
be filed promptly after the closing under the Reorganization
Agreements, the Company shall have the right to defer such filing
for a period of not more than 90 days; provided that during such
time the Company may not file a registration statement for
securities to be issued and sold for its own account or that of
anyone other than the Holder or Holders of Registrable Securities
requesting such registration.
3. Hold-Back Agreements
(a) By Holders of Registrable Securities
Upon the written request of the managing underwriter
of any underwritten offering of the Company's securities, a Holder
of Registrable Securities shall not sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of
any Registrable Securities (other than those included in such
registration) without the prior written consent of such managing
underwriter for a period (not to exceed 30 days before the
effective date and 90 days thereafter) that such managing
underwriter reasonably determines is necessary in order to effect
the underwritten public offering; provided that each of the
officers and directors of the Company shall have entered into
substantially similar holdback agreements with such managing
underwriter covering at least the same period.
4. Registration Procedures
In connection with the Registration Statement pursuant to
Section 2 hereof, the Company will use its reasonable best efforts
to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended plan of distribution
thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) subject to Section 2(a), prepare and file with the
SEC as soon as practicable after the closing under the
Reorganization Agreements the Registration Statement with respect
to the Registrable Securities and use its best efforts to cause
such Registration Statement to become effective and remain
effective until the earlier of (i) the time that the Registrable
Securities covered by such Registration Statement have been sold or
(ii) the time that the Registrable Securities covered by such
Registration Statement may be sold pursuant to Rule 144(k)
promulgated under the Securities Act, but in any event not later
than the third anniversary of the date hereof; provided that before
filing the Registration Statement or Prospectus or any amendments
or supplements thereto, the Company shall furnish to the Holders of
the Registrable Securities covered by such Registration Statement
draft copies of all such documents proposed to be filed, which
documents will be subject to the review of such Holders, and the
Company shall not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which the
Holders of a majority of the Registrable Securities covered by such
Registration Statement shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement, and such
supplements to the Prospectus, as may be requested by Holders of a
majority of the Registrable Securities or as may be required by the
rules, regulations or instructions applicable to the registration
form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective
until all Registrable Securities covered by such Registration
Statement are sold in accordance with the intended plan of
distribution set forth in such Registration Statement or supplement
to the Prospectus or for such shorter period of time during which
such Registration Statement must be kept effective by the terms of
this Agreement;
(c) promptly notify the selling Holders of Registrable
Securities and (if requested) confirm such advice in writing,
(1) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect
to the Registration Statement or any post-effective
amendment, when the same has become effective,
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus
or for additional information,
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose,
(4) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, and
(5) of the existence of any fact which results in
the Registration Statement, the Prospectus or any document
incorporated therein by reference containing a Misstatement;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time;
(e) furnish to each selling Holder of Registrable
Securities, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(f) deliver to each selling Holder of Registrable
Securities without charge, as many copies of each Prospectus (and
each preliminary prospectus) as such Persons may reasonably
request, the Company hereby consenting to the use of each such
Prospectus (or preliminary prospectus) by each of the selling
Holders of Registrable Securities in connection with the offering
and sale of the Registrable Securities covered by such Prospectus
(or preliminary prospectus);
(g) prior to any public offering of Registrable
Securities, register or qualify or cooperate with the selling
Holders of Registrable Securities and their respective counsel in
connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or
blue sky laws of such jurisdictions as such selling Holders may
designate in writing and do anything else necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that the
Company shall not be required to qualify generally to do business
in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process in
any such jurisdiction where it is not then so subject;
(h) use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof to consummate the disposition of such Registrable
Securities;
(i) if the Registration Statement or the Prospectus
contains a Misstatement, prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not
contain a Misstatement;
(j) make available for inspection by representatives of
the Holders of a majority of the Registrable Securities being sold
and any attorney or accountant retained by such sellers all
financial and other records and pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any such representative, attorney or accountant in
connection with the Registration; provided that any records,
information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such Persons
unless disclosure of such records, information or documents is
required by court or administrative order; and
(k) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date
of the Registration Statement, which statements shall cover said
12-month periods.
5. Registration Expenses
(a) Registration
The Company shall bear all Registration Expenses
incurred in connection with the Registration Statement.
(b) Company Expenses
The Company also will pay its internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in
connection with any listing of the securities to be registered on a
securities exchange, and the fees and expenses of any Person,
including special experts, retained by the Company.
6. Indemnification
(a) Indemnification by Company
The Company agrees to indemnify and hold harmless
each Indemnified Holder from and against all Claims arising out of
or based upon any Misstatement or alleged Misstatement, except
insofar as such Misstatement or alleged Misstatement was based upon
information furnished in writing to the Company by such Indemnified
Holder expressly for use in the document containing such
Misstatement or alleged Misstatement.
The foregoing notwithstanding, the Company shall not
be liable to the extent that any such Claim arises out of or is
based upon a Misstatement or alleged Misstatement in a Prospectus,
(x) if such Misstatement or alleged Misstatement is corrected in an
amendment or supplement to such Prospectus and (y) having
previously been furnished by or on behalf of the Company with
copies of the Prospectus as so amended or supplemented, such
Indemnified Holder thereafter fails to deliver such Prospectus as
so amended or supplemented prior to or concurrently with the sale
to the person who purchased a Registrable Security from such
Indemnified Holder and who is asserting such Claim.
(b) Indemnification Procedures
If any action or proceeding (including any
governmental investigation or inquiry) shall be brought or asserted
against an Indemnified Holder in respect of which indemnity may be
sought from the Company, such Indemnified Holder shall promptly
notify the Company in writing, and the Company shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all
expenses.
Such Indemnified Holder shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such separate
counsel shall be the expense of such Indemnified Holder unless (i)
the Company has agreed in writing to pay such fees and expenses,
(ii) the Company shall have failed to assume the defense of such
action or proceeding or has failed to employ counsel reasonably
satisfactory to such Indemnified Holder in any such action or
proceeding or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include both such
Indemnified Holder and the Company, and such Indemnified Holder
shall have been advised by counsel that there may be one or more
legal defenses available to such Indemnified Holder that are
different from or additional to those available to the Company.
If such Indemnified Holder notifies the Company in
writing that it elects to employ separate counsel at the expense of
the Company as permitted by the provisions of the preceding
paragraph, the Company shall not have the right to assume the
defense of such action or proceeding on behalf of such Indemnified
Holder. The foregoing notwithstanding, the Company shall not be
liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for such Indemnified Holder
and any other Indemnified Holders (which firm shall be designated
in writing by such Indemnified Holders) in connection with any one
such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances.
The Company shall not be liable for any settlement
of any such action or proceeding effected without its written
consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless such Indemnified
Holders from and against any loss or liability by reason of such
settlement or judgment.
(c) Indemnification by Holder of Registrable Securities
Each Holder of Registrable Securities agrees to
indemnify and hold harmless the Company, its directors and officers
and each Person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from
the Company to such Holder, but only with respect to information
relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement, Prospectus or
preliminary prospectus. In no event, however, shall the liability
hereunder of any selling Holder of Registrable Securities be
greater than the dollar amount of the proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
In case any action or proceeding shall be brought
against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought
against a Holder of Registrable Securities, such Holder shall have
the rights and duties given the Company, and the Company or its
directors or officers or such controlling person shall have the
rights and duties given to each Holder, by Sections 6(a) and 6(b)
above.
(d) Contribution
If the indemnification provided for in this Section
6 is unavailable to an indemnified party under Section 6(a) or
Section 6(c) above (other than by reason of exceptions provided in
those Sections) in respect of any Claims referred to in such
Sections, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such
Claims in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and of the Indemnified Holder
on the other in connection with the statements or omissions which
resulted in such Claims as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result
of the Claims referred to above shall be deemed to include, subject
to the limitations set forth in Section 6(b), any legal or other
fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
The relative fault of the Company on the one hand
and of the Indemnified Holder on the other shall be determined by
reference to, among other things, whether the Misstatement or
alleged Misstatement relates to information supplied by the Company
or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such Misstatement or alleged Misstatement.
The Company and each Holder of Registrable
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 6(d),
an Indemnified Holder shall not be required to contribute any
amount in excess of the amount by which (i) the total price at
which the securities that were sold by such Indemnified Holder and
distributed to the public were offered to the public exceeds (ii)
the amount of any damages which such Indemnified Holder has
otherwise been required to pay by reason of such Misstatement.
No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
7. Exchange Act Reporting Requirements
The Company shall timely file such information, documents
and reports as the Commission may require or prescribe under
Section 13 or 15(d) (whichever is applicable) of the Exchange Act.
In addition, the Company shall take such other measures and file
such other information, documents and reports, as shall hereafter
be required by the Commission as a condition to the availability of
Rule 144 under the Securities Act (or any successor provision) and
the use of Form S-3.
The Company shall forthwith upon request furnish any Holder
of Registrable Securities (i) a written statement by the Company
that it has complied with such reporting requirements, (ii) a copy
of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents filed by the Company with
the Commission as such Holder may reasonably request in availing
itself of an exemption for the sale of Registrable Securities
without registration under the Securities Act.
The purpose of the foregoing requirements are (x) to enable
any such Holder to comply with the current public information
requirements contained in paragraph (c) of Rule 144 under the
Securities Act (or any successor provision) and (y) to qualify the
Company for the use of registration statements on Form S-3.
8. Suspension of Sales
Upon receipt of written notice from the Company that a
Registration Statement or Prospectus contains a Misstatement, each
Holder of Registrable Securities shall forthwith discontinue
disposition of Registrable Securities until such Holder has
received copies of the supplemented or amended Prospectus required
by Section 4(i) hereof, or until such Holder is advised in writing
by the Company that the use of the Prospectus may be resumed, and,
if so directed by the Company, such Holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent
file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt
of such notice.
9. Miscellaneous
(a) Remedies
Each Holder of Registrable Securities, in addition
to being entitled to exercise all rights provided herein, in the
Reorganization Agreements and granted by law, including recovery of
damages, shall be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason
of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) No Inconsistent Agreements
The Company shall not on or after the date of this
Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof.
Other than as disclosed on Schedule I attached
hereto, the Company has not previously entered into any agreement
with respect to its securities granting any registration rights to
any Person. The rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the Holders of the
Company's securities under any such agreements.
(c) Amendments and Waivers
The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or sup-
plemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained
the written consent of the Holders of at least a majority of the
outstanding shares of Registrable Securities.
(d) Notices
All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(1) if to a Holder of Registrable Securities, at
the most current address given by such Holder to the Company in
accordance with the provisions hereof, which address initially is,
with respect to each Investor, the address set forth on such
Investor's signature page of the Reorganization Agreement, with a
copy to Alan S. Rich, Esq., 2141 Palomar Airport Road, Suite 350,
Carlsbad, California 92009; and
(2) if to the Company, initially at its address
set forth in the Reorganization Agreements, Attention:
Corporate Secretary, and thereafter at such other address,
notice of which is given in accordance with the provisions
hereof, with a copy to Latham & Watkins, 701 B Street, Suite
2100, San Diego, California 92101, Attention: Scott N.
Wolfe, Esq.
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing
overnight delivery. The Company shall promptly provide a list of
the most current addresses of the Holders of Registrable Securities
given to it in accordance with the provisions hereof to any such
Holder for the purpose of enabling such Holder to communicate with
other Holders in connection with this Agreement.
(e) Successors and Assigns
This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.
The foregoing notwithstanding, the registration rights granted the
Holders of Registrable Securities under this Agreement may not be
transferred without the prior written consent of the Company.
(f) Counterparts
This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.
(g) Headings
The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(i) Severability
In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be affected
or impaired thereby.
(j) Forms
All references in this Agreement to particular forms
of registration statements are intended to include all successor
forms which are intended to replace, or to apply to similar
transactions as, the forms herein referenced.
(k) Entire Agreement
This Agreement and the Reorganization Agreements are
intended by the parties as the final expression of their agreement
and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein or therein with respect to the registration
rights granted by the Company with respect to the securities issued
pursuant to the Reorganization Agreements. This Agreement and the
Reorganization Agreements supersede all prior agreements and
understandings between the parties with respect to such subject
matter.
[signature pages follow]
[Registration Rights Agreement]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
THE TITAN
CORPORATION
By: /s/
Gene W. Ray
Title:
President and
Chief Executive Officer
JACK WITT
By: /s/
Jack D. Witt
INVESTOR
By:
Exhibit 3
NOTE AND STOCK PLEDGE MODIFICATION AGREEMENT
THIS NOTE AND STOCK PLEDGE MODIFICATION AGREEMENT,
dated as of May 24th, 1996, by and between JACK D. WITT and GLENNA J.
WITT, husband and wife, (collectively "Maker" and "Pledgor"); and
JORETTA WATTS, or her assigns or successors-in-interest ("Noteholder"
and "Pledgee");
WITNESSES:
WHEREAS, by a Stock Purchase and Sale Agreement
("Sale Agreement") dated as of December 21, 1994, Maker conveyed to
Noteholder certain stock described in a Stock Pledge Agreement
("Pledge Agreement") dated as of January 30, 1995 as security for a
purchase money note ("Note") dated as of January 30, 1995, in the
original amount of ONE MILLION THREE HUNDRED FIFTY THOUSAND SIX
HUNDRED AND NO/100 DOLLARS ($1,350,600.00) payable to the order of
JORETTA WATTS who is the current holder of the Note; and
WHEREAS, Maker and Noteholder now desire to modify
the Note and Pledge Agreement as set forth herein.
NOW, THEREFORE, in consideration of the promises and
covenants set forth in this Note and Stock Pledge Modification
Agreement ("Agreement"), and other good and valuable consideration,
the Maker and Noteholder agree to modify the Note as follows:
1. MODIFICATION OF THE NOTE: The original Note is
hereby modified as follows:
Interest shall accrue on the unpaid principal balance
of NINE HUNDRED THOUSAND DOLLARS ($900,000.00) from the date of this
Agreement, until paid, at the rate of nine percent (9%) per annum.
Principal and interest shall be payable at Noteholder's address as
stated in the original Note or such other place as Noteholder may
designate in twelve (12) equal consecutive quarterly installments of
EIGHTY-SIX THOUSAND FOUR HUNDRED AND FIFTEEN DOLLARS AND SIXTY-SIX
CENTS ($86,415.66) on the twenty-fourth (24th) day of each third
(3rd) month beginning July 24, 1996, and continuing until the entire
principal sum and all accrued interest thereon is fully paid, and
with the remaining principal sum and all accrued indebtedness, if not
sooner paid, due and payable on April 24, 1999.
Notwithstanding the foregoing, the entire outstanding
principal balance together with all accrued interest thereon shall
become at once due and payable on demand of the Noteholder at any
time on or after April 24, 1999.
Noteholder agrees that a copy of this Agreement will
be attached to the Note. The Noteholder further agrees that the Note
and the Modification Agreement attached thereto shall constitute a
single obligation of Owner to pay the sum of NINE HUNDRED THOUSAND
DOLLARS ($900,000.00) on the terms and conditions set forth in the
Note as modified by this Agreement.
2. MODIFICATION OF THE STOCK PLEDGE AGREEMENT
a. The Pledge Agreement is hereby modified to
show that the shares of stock pledged to Noteholder set forth in
paragraph 3 shall be replaced with Two Hundred and Fifty Thousand
(250,000) shares of common voting stock of The Titan Corporation
("Titan"), a Delaware corporation publicly traded on the NYSE. The
shares are represented by stock certificate numbers NYS 113732, and
NYS 11373 registered in the name of Jack D. Witt.
b. The provisions of paragraphs 3, 5(f) and
5(g) of the Pledge Agreement requiring Pledgor to own at least 51% of
the shares of voting shares and 46% of the nonvoting shares of
Unidyne corporation stock shall be altered to require that Pledgor
own Two Hundred and Fifty Thousand (250,000) shares of Titan common
voting stock during the term of the Pledge Agreement.
3. NO VERBAL MODIFICATION: No statement, promise,
representation or other verbal modification hereof by any person
shall be binding upon any of the parties hereto.
4. RATIFICATION: Except as specifically modified
herein, the Note and Stock Pledge Agreement are hereby ratified and
confirmed as in full force and effect. The provisions hereof are not
intended to create a new obligation to pay money but only to modify
and extend an existing obligation.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in their respective names:
MAKER AND PLEDGOR:
/s/
JACK D. WITT
/s/
GLENNA J. WITT
NOTEHOLDER AND PLEDGEE:
/s/
JORETTA WATTS
STATE OF CALIFORNIA
AT LARGE
I, the undersigned, a Notary Public do hereby certify
that JACK D. WITT, whose name is signed to the foregoing writing
bearing the date the 24th day of May, 1996, has acknowledged the same
before me.
GIVEN under my hand and seal this ____ day of June,
1996.
Notary
Public
My Commission Expires:
STATE OF CALIFORNIA
AT LARGE
I, the undersigned, a Notary Public do hereby certify
that GLENNA J. WITT, whose name is signed to the foregoing writing
bearing the date the _____ day of May, 1996, has acknowledged the
same before me.
GIVEN under my hand and seal this ____ day of June,
1996.
Notary
Public
My Commission Expires:
COMMONWEALTH OF VIRGINIA
AT LARGE
I, the undersigned, a Notary Public do hereby certify
that JORETTA WATTS and whose name is signed to the foregoing writing
bearing the date of the 24th day of May, 1996, has acknowledged the
same before me.
GIVEN under my hand and seal, this ____ day of June,
1996.
Notary
Public
My Commission Expires:
94209005
note-mod.bcp
Exhibit 4
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement"), is
made as of the 30th day of January, 1995, by and among Jack D. Witt
and Glenna J. Witt ("Pledgor"), Unidyne Corporation, a Virginia
corporation ("Unidyne Corporation"), and Joretta Watts ("Pledgee").
R E C I T A L S:
1. Unidyne Corporation, Jack D. Witt, and Pledgee
are parties to a Stock Purchase Agreement, dated December 19, 1994
(the "SPA") pursuant to which Pledgee sold Two Thousand Three Hundred
and Four (2,304) shares of the issued and outstanding stock of
Unidyne Corporation, constituting not less than 60.92% of the total
issued and outstanding capital stock of Unidyne Corporation (the
"Shares") to Pledgor.
2. Pursuant to the SPA, Pledgor made and
delivered to Pledgee (i) a promissory note payable to Pledgee dated
January 30, 1995 in the original principal amount of Five Hundred
Thousand Dollars ($500,000.00), and (ii) a promissory note payable to
Pledgee dated January 30, 1995 in the original principal amount of
One Million Three Hundred Fifty Thousand Six Hundred Dollars
($1,350,600.00) (individually and collectively the "Note").
3. Pursuant to the SPA and to induce Pledgee to
enter into the SPA, Pledgor agreed to pledge at all times until the
Note is repaid in full 51% of each class of issued and outstanding
voting shares on a fully diluted basis, and 46% of each class of
issued and outstanding nonvoting shares, on a fully diluted basis, of
Unidyne Corporation (the "Pledged Shares") to Pledgee in accordance
with this Pledge Agreement as security for all obligations owed under
the Note.
NOW, THEREFORE, in consideration of the foregoing and
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the parties, the parties agree as
follows:
1. Definitions. All words and phrases defined
in the SPA will have the same meanings and definitions in this Pledge
Agreement unless otherwise specifically defined in this Pledge
Agreement.
2. Obligations. The word "Obligations" means
the obligation of Pledgor to:
a. pay all sums due under the provisions
of the Note in accordance with the terms of such instrument including
any extensions, modifications, renewals and/or substitutions; and
b. pay all reasonable costs, expenses and
attorneys' fees now or afterward chargeable to, incurred by, or
disbursed by Pledgee under this Pledge Agreement to enforce the terms
of this Pledge Agreement.
3. Pledge. For value received, Pledgor grants a
first priority perfected security interest in and pledges to Pledgee,
its successors and assigns, the Pledged Shares, which as of the date
of this Pledge Agreement consist of 1929 shares of Unidyne
Corporation stock and are represented by Stock Certificate Number
____, as security for all of the Obligations owed to Pledgee. This
pledge includes the following:
a. The Pledged Shares and the
certificates representing the Pledged Shares, and all distributions,
dividends, cash, securities and other property at any time received,
receivable or otherwise distributed in respect of, or in exchange
for, any or all of the Pledged Shares;
b. Any and all additional shares of
capital stock of Unidyne Corporation at any time and from time to
time acquired or secured by the Pledgor and all certificates
representing such additional shares, and all dividends, cash,
securities and other property at any time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all
of such additional shares to the extent necessary to cause Pledgee to
hold at least 51% of each class of issued and outstanding voting
shares on a fully diluted basis, and 46% of each class of issued and
outstanding nonvoting shares, on a fully diluted basis, of Unidyne
Corporation; and
c. All securities delivered to Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments, representing or evidencing such
securities, and all interest, dividends, cash, securities and other
property at any time received, receivable or otherwise distributed in
respect of or in exchange for any or all such Pledged Shares,
additional shares, certificates, interest, cash, securities and other
property to the extent necessary to cause Pledgee to hold at least
51% of each class of issued and outstanding voting shares on a fully
diluted basis, and 46% of each class of issued and outstanding
nonvoting shares, on a fully diluted basis, of Unidyne Corporation)
(collectively called the "Pledged Collateral").
4. Possession of the Pledged Collateral. To
perfect the Pledgee's security interest in the Pledged Collateral,
Pledgor will deliver possession of the certificate ("Certificate")
evidencing the Pledged Shares, a copy of which is attached as
Exhibit A and made a part hereof by this reference, and an
irrevocable stock power ("Stock Power") for the Pledged Shares, a
copy of which is attached as Exhibit B and is made a part hereof by
this reference, to Pledgee.
5. Representations and Warranties. Pledgor and
Unidyne Corporation represent and warrant that:
a. The Pledged Shares are fully paid and
non-assessable;
b. Pledgor has placed no restrictions on
the transfer or pledge of the Pledged Shares which have not been
waived;
c. Pledgor has the right to transfer and
pledge the Pledged Shares;
d. The Pledged Shares are free of all
liens and encumbrances other than the security interest created by
this Pledge Agreement;
e. No consent or approval of any court,
governmental or regulatory authority, or any other person or entity
is necessary for Pledgor or Unidyne Corporation to validly sign,
deliver and perform under this Pledge Agreement;
f. The Pledged Collateral constitutes and
at all times until payment of the Note in full will constitute at
least 51% of the issued and outstanding voting shares, on a fully
diluted basis, and at least 46% of the issued and outstanding
nonvoting shares, on a fully diluted basis, of capital stock of
Unidyne Corporation;
g. Neither Pledgor nor Unidyne
Corporation have: (i) issued or will issue any other stock or rights
to acquire stock of any class or character or instruments or
documents that are convertible into capital stock of any class or
character, or (ii) entered into or will enter into or caused or will
cause Unidyne Corporation to enter into any agreements, rights,
options, warrants, subscriptions or other arrangements entitling any
person or entity to acquire or hold stock of any class or character
or instruments or documents that are convertible into capital stock
of any class or character; until all the Obligations are irrevocably
paid and discharged in full unless Pledgor delivers additional
Pledged Collateral to Pledgee in amounts and quantities necessary to
cause Pledgee to hold at least 51% of each class of issued and
outstanding voting shares on a fully diluted basis, and at least 46%
of the issued and outstanding nonvoting shares, on a fully diluted
basis, of Unidyne Corporation); and
h. While there are any Obligations
outstanding, the Pledgor shall not vote the Pledged Shares in any
manner which would result in the termination of the corporate
existence of Unidyne Corporation, the merger of Unidyne Corporation
with any other entity or the exchange of Pledged Shares for any other
shares or instruments or documents without the prior written consent
of the Pledgee which may be withheld for any reason.
6. Voting Rights; Dividends, Etc.
a. So long as no event of default under
this Pledge Agreement or the Note has occurred:
(1) The Pledgor shall be entitled
to exercise any and all voting and/or consensual rights and powers
relating or pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Pledge
Agreement or the SPA;
(2) The Pledgor shall be entitled
to receive, retain and use for Pledgor's own purposes any and all
distributions of cash dividends and interest payable on the Pledged
Collateral, but any and all stock and/or liquidating dividends,
distributions in property, returns of capital or distributions other
than those described above made on or in respect of the Pledged
Collateral, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of any issuer of
Pledged Collateral or received in exchange for Pledged Collateral or
any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets to which any such issuer may
be a party or otherwise, and any and all cash and other property
received in payment of the principal of or in redemption of or in
exchange for any Pledged Collateral (either at maturity, upon call
for redemption or otherwise), shall be immediately and become part of
the collateral pledged in accordance with this Pledge Agreement and,
if received by the Pledgor, shall be immediately delivered to the
Pledgee or its designated agent (accompanied by proper instruments of
assignment and/or stock powers executed by the Pledgor to be held
subject to the terms of this Pledge Agreement); and
(3) The Pledgee shall execute and
deliver (or cause to be executed and delivered) to the Pledgor all
such proxies, powers of attorney, dividend orders and other
instruments as the Pledgor may request for the purpose of enabling
the Pledgor to exercise the voting and/or consensual rights and
powers which the Pledgor is entitled to exercise pursuant to
subsection (1) above and/or to receive the dividends and/or interest
payments which the Pledgor is authorized to receive and retain
pursuant to subsection (2) above.
b. On the occurrence and during the
continuance of any event of default under this Pledge Agreement or
the Note, all rights of the Pledgor to exercise the voting and/or
consensual rights and powers which the Pledgor is entitled to
exercise pursuant to subsection a.(1) above and/or to receive the
dividends and interest payments which the Pledgor is authorized to
receive, retain and use pursuant to subsection a.(2) above shall
cease, and all such rights shall thereupon become vested in the
Pledgee which shall have the sole and exclusive right and authority
to exercise such voting and/or consensual rights and powers and/or to
receive and retain such dividends and/or interest payments in
accordance with the terms of this Pledge Agreement. Any and all
money and other property paid over to or received by the Pledgee
pursuant to the provision of this subsection shall be retained by the
Pledgee as additional collateral hereunder and be applied in
accordance with the provisions of Section 8.
7. Default; Remedies Upon Default. Any breach of
the terms of this Pledge Agreement other than minor technical
defaults that are cured within twenty (20) business days of notice
from Pledgee or discovery by Pledgor and any event of default under
the terms of the Note will be a default under this Pledge Agreement.
On the occurrence and during the continuance of any event of default,
the Pledgee may, without being required to give any notice to the
Pledgor other than as provided in subsection c. below, and in
addition to the exercise of its rights and remedies any other
provision of this Pledge Agreement and the Note or otherwise
available to it at law or in equity:
a. Apply any cash distributed to the
payment of any Obligations secured whether or not then due and in any
order selected;
b. Complete each Stock Power and transfer
the Pledged Shares to Pledgee and thereafter, when and as Pledgee
determines appropriate in its sole discretion, sell (in compliance
with applicable securities laws) the Pledged Collateral, at public or
private sale, at any broker's board, upon any securities exchange, at
the offices of the Pledgee or elsewhere, for cash, upon credit or for
future delivery as appropriate and commercially reasonable in
accordance with the circumstances. In that connection, the Pledgee
shall have the right to impose such limitations and restrictions on
the sale of the Pledged Collateral as deemed to be necessary or
appropriate to comply with any law, rule or regulation (federal,
state or local) applicable to the sale. On consummation of any such
sale, the Pledgee shall have the right to assign, transfer and
deliver to the purchaser or purchasers the Pledged Collateral sold.
Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the Pledgor,
and the Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which the Pledgor now has
or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. To the extent that notice
of the sale is required to be given by law, the Pledgee shall give
the Pledgor at least five (5) days prior written notice of its
intention to make any such public or private sale, which shall be
deemed to constitute reasonable notice. Such notice shall state the
time and place fixed for sale. Any such sale shall be held at such
time or times within ordinary business hours and at such place or
places as the Pledgee may fix in the notice of such sale. At any
such sale, the Pledged Collateral, or any portion to be sold, may be
sold in one lot as an entirety or in separate parcels, and Pledgee
may bid (which bids may be in whole or in part in the form of
cancellation of the respective indebtedness) for and purchase the
whole or any part of the Pledged Collateral. The Pledgee shall not
be obligated to make any sale of Pledged Collateral if it determines
not to do so regardless of the fact that notice of sale of Pledged
Collateral may have been given. In case sale of all or any part of
the Pledged Collateral is made on credit or for future delivery, the
Pledged Collateral may be retained by the Pledgee until the sale
price is paid by the purchaser or purchasers, but the Pledgee shall
not incur any liability in case any purchaser or purchasers fail to
take up and pay for the Pledged Collateral sold and, in case of any
such failure, the Pledged Collateral may be sold again on like
notice. As an alternative to exercising the power of sale, the
Pledgee may proceed by a suit or suits at law or in equity to
foreclose this Pledge Agreement and to sell the Pledged Collateral,
or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction.
c. Pledgor acknowledges and understands
that if Pledgee seeks to sell or otherwise dispose of the Pledged
Shares after a default, Pledgee may only be able to approach a
limited number of potential purchasers in offering the Pledged Shares
for sale and that sale under such circumstances may yield a lower
price for the Pledged Shares than if it were registered and able to
be sole in a public sale. Accordingly, Pledgor agrees (i) if
Pledgee, under the terms of this Pledge Agreement, sells or causes
the Pledged Shares or any portion of the Pledged Shares to be sold at
private sale, Pledgee will have the right in its sole discretion to
rely on the advice and opinion of any brokerage or investment firm
with a seat on the New York Stock Exchange concerning the best manner
to offer the Pledged Shares for sale and the best price reasonably
obtainable for the Pledged Shares at a private sale; and (ii)
reliance by Pledgee on the advice and opinion of such brokerage or
investment firm may be conclusive evidence that Pledgee has disposed
of the Pledged Shares involved in any such sale in a commercially
reasonable manner.
8. Application of Proceeds of Sale. The proceeds
of sale of any portion of the Pledged Collateral sold pursuant to
Section 7 shall be applied as follows:
First: The payment of the costs and expenses of such
sale, including the out-of-pocket expenses of the Pledgee and the
reasonable fees and out-of-pocket expenses of counsel employed in
connection with such sale, and the payment of all costs, expenses and
attorneys' fees incurred in connection with the administration and
enforcement of this Pledge Agreement, as well as any indemnities
payable by the Pledgor, to the extent that such costs, expenses and
indemnities shall not have been previously reimbursed or paid to the
Pledgee;
Second: The remaining proceeds to Pledgee to be
applied to the payment or prepayment in full of the Obligations
secured by this Pledge Agreement, whether or not then due and in any
order selected by Pledgee; and
Third: The balance (if any) of such proceeds to the
Pledgor or as a court of competent jurisdiction may direct.
9. Further assurances. The Pledgor agrees that
at any time and from time to time, at his expense, he will promptly
execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that the
Pledgee may request, to perfect and protect any security interest
granted or purported to be granted by this Pledge Agreement or to
enable the Pledgee to exercise and enforce its rights and remedies
with respect to any Pledged Collateral.
10. Amendments to Documents, Etc. Pledgor agrees
and consents that, at any time and from time to time:
a. The time, manner, place and/or terms
of payment or performance of the Obligations may be extended or
changed in whole or in part and/or may be renewed in whole or in part
or such performance may be waived, or any failure of or departure
from such performance may be consented to but only in writing signed
by all parties;
b. Any other collateral for, or any
guarantees of, the Obligations may be obtained, exchanged, released,
surrendered, modified and/or otherwise disposed of by consent, but
only in writing signed by all parties;
c. Any action may be taken under or in
respect of this Pledge Agreement, the SPA or any document delivered
in connection with the SPA in the exercise of any right, remedy,
power or privilege under those documents (including, without
limitation, acceleration of the maturity of any Obligation or the
settlement or compromise of any Obligation), or such right, remedy,
power or privilege may be waived, modified or not enforced;
d. This Pledge Agreement may be amended
or modified in any respect for any purpose by consent, but only in a
writing signed by all parties;
e. Any obligation to pay or perform all
or any part of the Obligations may be settled or compromised by
consent, but only in writing signed by all parties; and
f. All or any part of the items set forth
in this Section 10 may occur without affecting this Pledge Agreement,
the pledge and security interest hereby granted or the obligations of
the Pledgor, all of which shall continue in full force and effect
until all Obligations shall have been irrevocably paid and performed
in full, and without notice to or the assent of the Pledgor.
11. Pledgee Appointed Attorney-in-Fact. The
Pledgor appoints each Pledgee the Pledgor's attorney-in-fact, with
full power of substitution, for the purpose of carrying out the
provisions of this Pledge Agreement and taking any action and
executing any instrument which is necessary or advisable to
accomplish the purposes of this Pledge Agreement, which appointment
is coupled with an interest and is irrevocable. The powers of the
attorney-in-fact shall only be exercised on the occurrence and
continuance of a default. Specifically, in carrying out its duties
under this Agreement following an event of default, the Pledgee shall
have the right and power to complete the Stock Power and to receive,
endorse and collect all documents and instruments made payable to the
Pledgor representing any distribution (including any dividend,
principal or interest payment or other distribution in cash or in
kind) payable or distributable in respect of the Pledged Collateral
or any part thereof, and to give full discharge for the same.
12. Responsibility of Pledgee; Care of Collateral.
The Pledgee or its designee shall not be liable for any action or
failure to act by it relative to this Pledge Agreement or any of the
Pledged Collateral except for its gross negligence or willful
misconduct, and the Pledgee shall not be liable for any action or
omission to act on the part of any agent appointed to act under this
Pledge Agreement or with respect to the Pledged Collateral (or any
part thereof) selected by the Pledgee with reasonable care.
Notwithstanding the provisions of Section 6.b., the Pledgee shall
have no duty to exercise any voting and/or other consensual rights
and powers with respect to the Pledged Collateral or any part
thereof, to exercise any right to redeem, convert or exchange any
securities included in the Pledged Collateral, to enforce or see to
the payment of any dividend, principal or interest payment or other
distribution payable or distributable on or with respect to the
Pledged Collateral or any part thereof, or otherwise to preserve any
rights in respect of the Pledged Collateral against any third
parties, and Pledgee shall not be liable or accountable to the
Pledgor in respect of any of the foregoing. The Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral if it takes such action for
such purpose as the Pledgor may request in writing, but any failure
to take any action requested by the Pledgor shall not, in and of
itself, be deemed to constitute a failure on the part of the Pledgee
to exercise reasonable care in respect of the custody and
preservation of the Pledged Collateral or any part thereof.
13. Expenses. The Pledgor agrees to pay to
Pledgee, on its demand, all reasonable out-of-pocket expenses
(including its reasonable attorneys' fees) incurred in connection
with the enforcement of this Pledge Agreement, the care and custody
of the Pledged Collateral (or any part thereof), and the sale or
collection of the Pledged Collateral (or any part thereof). Should
any representation or warranty on the part of the Pledgor be
breached, the Pledgee may (but shall not be obligated to) do the same
or cause it to be done, or remedy any such breach, and there shall be
added to the liabilities of the Pledgor, the reasonable cost or
expense of so doing, and any and all reasonable amounts expended in
taking any such action shall be repayable to the Pledgee by the
Pledgor upon demand. All such amounts or expenses shall bear
interest at NationsBank (or its successors) prime rate for one year
commercial loans as announced and in effect from time to time, plus
four percent (4%) per annum until paid in full.
14. No Waiver; Cumulative Remedies. No failure on
the part of the Pledgee to exercise, and no delay in exercising, any
right, power or remedy under this Pledge Agreement shall operate as a
waiver, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise or the
exercise of any other right, power or remedy. All remedies of the
Pledgee under this Pledge Agreement are cumulative and are not
exclusive of any other remedies available under the SPA and any
document delivered in connection with the SPA, at law or in equity.
15. Termination. This Pledge Agreement shall
terminate when all Obligations have been irrevocably paid and
satisfied in full, at which time the Pledgee shall reassign and
redeliver (or cause to be reassigned or redelivered) to the Pledgor,
or to such person or persons as the Pledgor shall designate, against
receipt, such of the Pledged Collateral (if any) and Stock Powers
which have not been sold or otherwise applied pursuant to the terms
of this Pledge Agreement and as shall still be held by it, together
with appropriate instruments of assignment and release. Any such
reassignment shall be without recourse to or warranty by the Pledgee
and at the expense of the Pledgor.
16. Binding Agreement; Assignment. This Pledge
Agreement and its terms, covenants and conditions shall be binding on
and inure to the benefit of all parties, their successors and
assigns, except that the Pledgor shall not be permitted to assign
this Pledge Agreement or any interest in the Pledged Collateral, or
any part thereof, or otherwise pledge, encumber or grant any lien or
option with respect to the Pledged Collateral, or any part thereof,
or any cash or property held as collateral under this Pledge
Agreement, without the prior written consent of the Pledgee.
17. Written Changes, Headings. Neither this
Pledge Agreement nor any of its provisions may be amended, modified,
waived, discharged or terminated, nor may any of the Pledged
Collateral be released or the pledge or the security interest created
extended, except by an instrument, in writing, signed by all the
parties. The Section headings used in this Pledge Agreement are for
convenience of reference only and shall not define or limit the
provisions of this Pledge Agreement.
18. Severability. In case any lien or other right
of the Pledgee under this Pledge Agreement is held to be invalid,
illegal or unenforceable, such invalidity, illegality and/or
unenforceability shall not affect any other lien or right of the
Pledgee under this Pledge Agreement, the SPA and any document
delivered in connection with the SPA.
19. GOVERNING LAW. THIS PLEDGE AGREEMENT
(INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE), THE
RIGHTS, REMEDIES AND OBLIGATIONS OF THE PARTIES WITH RESPECT TO THE
PLEDGED COLLATERAL, AND ALL MATTERS CONCERNING THE VALIDITY,
PERFECTION AND EFFECT OF NON-PERFECTION OF THE PLEDGE, SHALL BE
GOVERNED BY AND PERFORMED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE COMMONWEALTH OF VIRGINIA.
20. Notices. Any notice or communication which
must be given or may be given by the Pledgor or the Pledgee under
this Pledge Agreement must be in writing and shall be deemed given by
the sending party and received by the receiving party when such
notice or request is hand delivered to the persons designated below
for the receiving party or three (3) days after such notice or
request is posted in the certified mail of the United States, postage
pre-paid, return receipt requested and addressed to the person
designated for the receiving party at the address designated below.
The Pledgor and the Pledgee designate the following persons at the
following addresses to receive any notice or communication which may
be given under this Pledge Agreement:
a. For Pledgor:
Jack D. Witt
Glenna J. Witt
c/o Eldyne, Inc.
9775 Clairemont Mesa Boulevard
San Diego, CA 93124-1324
With a copy to:
Joseph Yenouskas, Esq.
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
b. Unidyne Corporation:
Unidyne Corporation
3835 Princess Anne Road
Norfolk, VA 23502
c. For Pledgee:
Joretta Watts
1472 Five Hill Trail
Virginia Beach, VA 23452
With a copy to:
Thomas R. Frantz, Esq.
CLARK & STANT, P.C.
900 One Columbus Center
Virginia Beach, Virginia 23462
IN WITNESS WHEREOF, the parties hereto have executed
this Pledge Agreement as of the date first above written.
Unidyne
Corporation,
a Virginia
corporation
By:
/s/ Jack D. Witt
Its:
President
/s/
Jack D. Witt
/s/
Glenna J. Witt
/s/
Joretta Watts
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