<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 13, 2000
REGISTRATION NO. 333-35274
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE TITAN CORPORATION
TITAN CAPITAL TRUST
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 8711 95-2588754
DELAWARE 8711 33-090339
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3033 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121-1199
(858) 552-9500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
NICHOLAS J. COSTANZA
GENERAL COUNSEL
THE TITAN CORPORATION
3033 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121-1199
(858) 552-9500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
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BARBARA L. BORDEN, ESQ. GREG A. NOEL, ESQ.
MATTHEW T. BROWNE, ESQ. HOWARD LIBERSON, ESQ.
COOLEY GODWARD LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM
4365 EXECUTIVE DRIVE, SUITE 1100 300 S. GRAND AVENUE
SAN DIEGO, CA 92121 LOS ANGELES, CA 90071-3144
(858) 550-6000 (213) 687-5000
</TABLE>
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Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest 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 of 1933, 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. / /
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT 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.
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--------------------------------------------------------------------------------
<PAGE>
5,000,000 HIGH TIDES(SM)
TITAN CAPITAL TRUST
5 3/4% CONVERTIBLE PREFERRED SECURITIES
REMARKETABLE TERM INCOME DEFERRABLE EQUITY SECURITIES (HIGH TIDES)(SM)*
(LIQUIDATION AMOUNT $50 PER EACH OF THE HIGH TIDES)
GUARANTEED TO THE EXTENT DESCRIBED HEREIN BY,
AND CONVERTIBLE INTO COMMON STOCK OF,
[LOGO]
THE TITAN CORPORATION
----------------
The 5 3/4% Convertible Preferred Securities, Remarketable Term Income
Deferrable Equity Securities (HIGH TIDES(sm)) represent undivided preferred
beneficial ownership interests in the assets of Titan Capital Trust, a
subsidiary trust of The Titan Corporation. The Titan Corporation owns all the
common securities issued by the trust. The trust was formed for the sole purpose
of issuing the common securities and the HIGH TIDES and using the proceeds to
purchase the 5 3/4% Convertible Senior Subordinated Debentures Due 2030 from The
Titan Corporation.
Specific terms of the HIGH TIDES, including their payment, conversion,
redemption, remarketing and subordination features, are described in this
prospectus. This prospectus also describes specific terms of the debentures that
The Titan Corporation issued to Titan Capital Trust, the common stock of The
Titan Corporation that is issuable upon conversion of the HIGH TIDES, and the
guarantee by The Titan Corporation relating to the HIGH TIDES.
The HIGH TIDES, and the debentures, common stock and guarantee referred to
in the preceding sentence, may be offered and sold from time to time pursuant to
this prospectus by the holders of those securities or by their transferees,
pledgees, donees or successors, all of which we refer to as selling holders. The
securities may be sold by the selling holders directly to purchasers or through
agents, underwriters or dealers. If required, the names of any agents,
underwriters or dealers involved in the sale of the securities, and the agent's
commission, dealer's purchase price or underwriter's discount, if any, will be
provided in supplements to this prospectus. The selling holders will receive all
of the net proceeds from the sale of the securities and will pay all
underwriting discounts and selling commissions, if any, applicable to any sale.
We are responsible for the payment of all other expenses incident to the offer
and sale of the securities. The selling holders and any broker-dealers, agents
or underwriters that participate in the distribution of the securities may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
and any commission received by them and any profit on the resale of the
securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act of 1933.
The Titan Corporation's common stock is traded on The New York Stock
Exchange under the symbol "TTN." The common stock registered pursuant to the
registration statement of which this prospectus is a part has been listed on The
New York Stock Exchange.
------------------------
INVESTING IN THE HIGH TIDES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 14.
------------------------
*The terms Remarketable Term Income Deferrable Equity Securities (HIGH
TIDES)(sm) and HIGH TIDES are registered service marks of Credit Suisse First
Boston Corporation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June 13, 2000.
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information.... 3
Cautionary Statement About Forward-
Looking Statements................... 4
Summary................................ 5
Risk Factors........................... 14
Use of Proceeds........................ 18
Titan Capital Trust.................... 19
The Remarketing........................ 20
Description of HIGH TIDES.............. 27
Description of Convertible Senior
Subordinated Debentures.............. 47
Description of the Guarantee........... 56
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Relationship Among the HIGH TIDES, the
Convertible Senior Subordinated
Debentures and the Guarantee......... 58
Description of Capital Stock........... 60
Certain United States Federal Income
Tax Consequences..................... 66
Certain ERISA Considerations........... 71
Registration Rights.................... 73
Selling Holders........................ 75
Plan of Distribution................... 78
Legal Matters.......................... 79
Experts................................ 79
</TABLE>
------------------------
AS USED IN THIS PROSPECTUS, (a) THE "INDENTURE" MEANS THE INDENTURE, BETWEEN
THE TITAN CORPORATION AND WILMINGTON TRUST COMPANY, AS TRUSTEE (THE "DEBENTURE
TRUSTEE") RELATING TO THE DEBENTURES, (b) THE "DECLARATION" MEANS THE AMENDED
AND RESTATED DECLARATION OF TRUST RELATING TO THE TRUST AMONG THE TITAN
CORPORATION, AS DEPOSITOR (THE "DEPOSITOR"), WILMINGTON TRUST COMPANY, AS
PROPERTY TRUSTEE (THE "PROPERTY TRUSTEE") AND AS DELAWARE TRUSTEE (THE "DELAWARE
TRUSTEE"), THE INDIVIDUALS NAMED AS ADMINISTRATIVE TRUSTEES THEREIN (THE
"ADMINISTRATIVE TRUSTEES" AND, COLLECTIVELY WITH THE PROPERTY TRUSTEE AND THE
DELAWARE TRUSTEE, THE "TRUSTEES") AND THE HOLDERS FROM TIME TO TIME OF UNDIVIDED
BENEFICIAL INTERESTS IN THE ASSETS OF THE TRUST, (c) THE "GUARANTEE" MEANS THE
PREFERRED SECURITIES GUARANTEE AGREEMENT BETWEEN THE TITAN CORPORATION AND
WILMINGTON TRUST COMPANY, AS GUARANTEE TRUSTEE (THE "GUARANTEE TRUSTEE"),
(d) THE "COMMON SECURITIES" MEANS THE COMMON SECURITIES ISSUED BY THE TRUST,
(e) THE "TRUST SECURITIES" MEANS THE HIGH TIDES AND THE COMMON SECURITIES,
(f) THE "COMMON STOCK" MEANS THE COMMON STOCK OF THE TITAN CORPORATION, PAR
VALUE $.01 PER SHARE, (g) THE "DEBENTURES" MEANS THE CONVERTIBLE SENIOR
SUBORDINATED DEBENTURES DUE 2030 FROM THE TITAN CORPORATION, (h) THE "TRUST"
MEANS TITAN CAPITAL TRUST AND (i) EXCEPT AS OTHERWISE INDICATED HEREIN, "WE,"
"OUR," "OURS," "US" AND "TITAN" REFER TO THE TITAN CORPORATION AND ITS
SUBSIDIARIES, EXCLUDING THE TRUST.
------------------------
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission, or SEC. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the SEC located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may obtain information on the operation of the SEC's public
reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. We also
file information with The New York Stock Exchange. These reports, proxy
statements and other information may be read and copied at 30 Broad Street, New
York, New York 10005.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings we make with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934, or Exchange Act,
until the offering is completed:
- Titan's Form 10-K for the fiscal year ended December 31, 1999, which was
filed on March 30, 2000, including information incorporated by reference
in the Form 10-K from its definitive proxy statement for the 2000 annual
meeting of stockholders, which was filed on April 4, 2000;
- Titan's Form 10-K/A for the fiscal year ended December 31, 1999, which was
filed on May 23, 2000, including information incorporated by reference in
the Form 10-K/A from its definitive proxy statement for the 2000 annual
meeting of stockholders, which was filed on April 4, 2000;
- Titan's Form 10-Q for the fiscal quarter ended March 31, 2000, which was
filed on May 15, 2000;
- Titan's Current Reports on Form 8-K which were filed on January 6, 2000,
January 24, 2000, February 3, 2000, February 4, 2000, February 8, 2000,
March 9, 2000, March 20, 2000 and March 31, 2000; and
- Titan's amendments to its Current Reports on Form 8-K filed November 2,
1999 and December 22, 1999, which were filed on January 19, 2000 and
January 24, 2000, its amendment to its Current Report on Form 8-K filed
January 24, 2000, which was filed on January 28, 2000, and its amendment
to its Current Report on Form 8-K filed March 9, 2000, which was filed on
April 17, 2000.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
The Titan Corporation
3033 Science Park Road
San Diego, CA 92121-1199
(858) 552-9500
Attention: Cheryl L. Barr, Assistant General Counsel and Assistant
Secretary
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, or Securities Act, covering the securities described in
this prospectus. This prospectus does not contain all of the information
included in the registration statement, some of which is contained in exhibits
to the registration statement. The registration statement, including the
exhibits, can be read at the SEC web site or at the SEC offices referred to
above. Any statement made in this prospectus concerning the contents of any
contract, agreement or other document is only a summary of the actual contract,
agreement or other document. If we have filed any contract, agreement or other
document as an exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or matter
3
<PAGE>
involved. Each statement regarding a contract, agreement or other document is
qualified in its entirety by reference to the actual document.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus or incorporated by
reference into this prospectus are forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act and are
subject to the safe harbor created by the Securities Litigation Reform Act of
1995. These forward-looking statements can generally be identified as such
because the context of the statement will include words such as "may," "will,"
"intends," "plans," "believes," "anticipates," "expects," "estimates,"
"potential," "continue," or "opportunity," the negative of these words or words
of similar import. Similarly, statements that describe our future plans,
objectives or goals are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those anticipated as of the date of
this prospectus. The risks and uncertainties include:
- the trust's inability to make distributions on the HIGH TIDES if we are
unable to make interest payments on the debentures due to a default on our
indebtedness under our credit facility or any secured debt we have in
addition to that indebtedness, or otherwise;
- our structure as a holding company, which limits our ability to access the
cash flows and assets of our subsidiaries;
- the possibility that you may have to pay taxes on interest prior to your
receipt of distributions from the trust; and
- other risks identified from time to time in the documents that we file
with the SEC, including the risk factors identified in our Form 10-K/A for
the year ended December 31, 1999, which is incorporated by reference in
this prospectus.
The forward-looking statements included herein are only made as of the date
of this prospectus and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
4
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SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN
ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN THE HIGH
TIDES. YOU SHOULD CAREFULLY READ THIS ENTIRE PROSPECTUS, INCLUDING THE "RISK
FACTORS" SECTION, AND THE DOCUMENTS WE HAVE REFERRED YOU TO, INCLUDING THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE, BEFORE MAKING AN INVESTMENT IN THE
HIGH TIDES.
THE TITAN CORPORATION
Our principal executive offices are located at 3033 Science Park Road, San
Diego, California 92121-1199 and our telephone number is (858) 552 -9500. Our
Internet web site address on the world wide web is www.titan.com. The contents
of our web site are not part of this prospectus.
For a description of our business, please see our Form 10-K/A for the year
ended December 31, 1999, which is incorporated by reference in this prospectus.
The description of our business contained in our Form 10-K/A for the year ended
December 31, 1999 will be updated and superseded by later filings we make with
the SEC that are incorporated by reference in this prospectus. You should
carefully read this entire prospectus and the documents incorporated by
reference in this prospectus before making an investment decision in the HIGH
TIDES.
TITAN CAPITAL TRUST
Titan Capital Trust is a recently created Delaware business trust. We own
all of the common securities of the trust. The trust was formed solely to issue
the HIGH TIDES and common securities, the proceeds of which were used by the
trust to purchase the debentures. We have irrevocably, fully and unconditionally
guaranteed all of the trust's obligations under the HIGH TIDES on a subordinated
basis to the extent that the trust has funds available to meet such obligations.
The trust's principal executive offices and telephone number are the principal
executive offices and telephone number of Titan.
For financial reporting purposes, we treat the trust as one of our
subsidiaries. Accordingly, we include the accounts of the trust in our
consolidated financial statements. We present the HIGH TIDES as a separate line
item in our consolidated balance sheet entitled "Company obligated mandatorily
redeemable convertible preferred securities of a subsidiary trust whose sole
assets are senior subordinated debentures of Titan," and we include appropriate
disclosures about the HIGH TIDES in the notes to our consolidated financial
statements. For financial reporting purposes, we will record distributions
payable on the HIGH TIDES as a financing charge to earnings in our consolidated
statement of operations.
5
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SECURITIES TO BE REGISTERED
The HIGH TIDES were originally issued and sold to the initial purchasers,
Credit Suisse First Boston Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation. The initial purchasers simultaneously sold the HIGH
TIDES in transactions exempt from the registration requirements of the
Securities Act to persons reasonably believed by them to be qualified
institutional buyers as defined in Rule 144A under the Securities Act. The trust
used all of the proceeds of the issuance of the HIGH TIDES and of its concurrent
sale of common securities to us to purchase the debentures.
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ISSUER................................. Titan Capital Trust, a Delaware business trust and our
subsidiary. Substantially all the assets of the trust
consist of debentures issued by us. We own all of the
outstanding common securities of the trust.
SECURITIES............................. 5,000,000 HIGH TIDES, $257,732,000 in aggregate principal
amount of the debentures, 5,038,000 shares of common stock
issuable upon conversion of the HIGH TIDES (subject to
adjustment under certain circumstances described in this
prospectus) and the guarantee relating to the HIGH TIDES.
DISTRIBUTIONS.......................... Distributions accrue on the HIGH TIDES from the date of
original issuance (February 9, 2000) at the applicable
rate applied to the stated liquidation amount of $50 per
HIGH TIDES. The applicable rate is 5 3/4% per annum from
the date of original issuance to, but excluding the reset
date. The reset date is any date (a) not later than
February 15, 2005, or the final reset date, or, if the day
is not a business day, the next succeeding business day,
and (b) not earlier than 70 business days prior to
February 15, 2005, as may be determined by the remarketing
agent, in its sole discretion. On or after the reset date,
the applicable rate will be the term rate established by
the remarketing agent based on the outcome of the
remarketing. Subject to the distribution deferral
provisions described below, the trust will pay those
distributions quarterly in arrears on each February 15,
May 15, August 15 and November 15, commencing May 15,
2000. Because distributions on the HIGH TIDES constitute
interest for U.S. federal income tax purposes, corporate
holders of the HIGH TIDES will not be entitled to a
dividends-received deduction.
DISTRIBUTION DEFERRAL PROVISIONS....... The trust's ability to pay distributions on the HIGH TIDES
is solely dependent on its receipt of interest payments
from us on the debentures. We can, on one or more
occasions, defer the interest payments due on the
debentures for up to 20 consecutive quarters unless an
event of default under the debentures has occurred and is
continuing. However, we cannot defer interest payments
beyond the (a) maturity date of the debentures, which is
February 15, 2030, and (b) in the case of a deferral
period that begins prior to the reset date, the reset
date. If we defer interest payments on the debentures, the
trust will also defer distributions on the HIGH TIDES. The
trust will be able to pay distributions on the HIGH TIDES
only if and to the extent it receives interest payments
from us on the debentures.
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During any deferral period, distributions will continue to
accumulate quarterly at an annual rate of 5 3/4% of the
liquidation amount of $50 per HIGH TIDES. Also, the
deferred distributions will themselves accrue additional
distributions at an annual rate of 5 3/4% to the extent
permitted by law. The trust will send you written notice
of a deferral of distributions on the HIGH TIDES not later
than 10 days prior to the record date for the related HIGH
TIDES distribution. During any period in which we defer
interest payments on the debentures, in general we cannot:
- declare or pay any dividend or distribution on our
capital stock;
- redeem, purchase, acquire or make a liquidation payment
on any of our capital stock;
- make any interest, principal or premium payment on, or
repurchase or redeem any of our debt securities that
rank equally with or junior to the debentures; or
- make any payment on any guarantee by Titan of the debt
securities of any of our subsidiaries if the guarantee
ranks equally with or junior to the debentures.
If an interest payment deferral occurs, you will continue
to recognize interest income for U.S. federal income tax
purposes in advance of your receipt of any corresponding
cash distribution. If you convert your HIGH TIDES during
any interest payment deferral period, you will not receive
any cash payment for any deferred distributions.
CONVERSION INTO COMMON STOCK........... On or prior to the tender notification date, you may
convert each HIGH TIDES into shares of common stock of
Titan at the initial rate of 1.0076 shares of common stock
for each HIGH TIDES (equivalent to an initial conversion
price of $49.625 per share of common stock). The last
reported sale price of Titan's common stock on The New
York Stock Exchange on June 12, 2000 was $38.75 per share.
On and after the reset date, each HIGH TIDES may, at the
trust's option and subject to the results of remarketing,
become nonconvertible or convertible into a different
number of shares of common stock. The conversion price and
conversion ratio in effect at any time shall hereafter be
referred to as the applicable conversion price and the
applicable conversion ratio, each of which will be subject
to adjustment in certain circumstances.
In connection with any conversion of the HIGH TIDES, the
property trustee of the trust will exchange those HIGH
TIDES for debentures having a principal amount equal to
the stated liquidation amount of $50 per HIGH TIDES
exchanged. The conversion agent will then immediately
convert the debentures into Titan common stock. We will
not issue any fractional shares of common stock as a
result of the conversion. Instead, we will pay the
fractional interest in cash based on the then current
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market value of our common stock. Also we will not issue
any additional shares of our common stock upon conversion
of the HIGH TIDES to pay for any accrued but unpaid
distributions on the HIGH TIDES at the time of conversion.
MATURITY............................... The HIGH TIDES do not have a stated maturity. However, the
trust must redeem the HIGH TIDES upon the repayment or
redemption, in whole or in part, of the debentures. The
debentures will mature on February 15, 2030, unless
earlier redeemed. Upon redemption of the debentures on
February 15, 2030, the trust will redeem the HIGH TIDES
at their liquidation amounts plus accrued and unpaid
distributions.
REMARKETING............................ The remarketing agent has agreed to use its best efforts
to remarket all HIGH TIDES tendered for remarketing. The
remarketing agent will establish the following, all of
which will be effective as of the reset date:
- the term rate per annum at which distributions will
accrue on the HIGH TIDES;
- the number of shares of common stock, if any, into
which HIGH TIDES may be converted; and
- the price, manner and time, if any, at which the HIGH
TIDES may be redeemed at our option, prior to the
stated maturity date of the debentures.
The reset date is any date (a) not later than
February 15, 2005, or the final reset date, or, if the day
is not a business day, the next succeeding business day,
and (b) not earlier than 70 business days prior to
February 15, 2005, as may be determined by the remarketing
agent, in its sole discretion.
The remarketing agent will use its best efforts to
establish the term rate, term conversion price and ratio
and term call provisions most favorable to us consistent
with the remarketing of all HIGH TIDES tendered at a reset
price equal to 101% of the liquidation amount of the HIGH
TIDES.
At least 30 business days but not more than 90 business
days prior to the final reset date, the trust will send a
remarketing notice to you stating whether it intends to
remarket the HIGH TIDES as securities that either will be
convertible into common stock or nonconvertible. All HIGH
TIDES you own will be deemed tendered for remarketing
unless you deliver an irrevocable notice to the contrary
to the tender agent prior to the tender notification date.
The tender agent will promptly remit the irrevocable
notice to the remarketing agent prior to the tender
notification date. The tender notification date is a date
no earlier than 10 business days following the remarketing
notice date, or a shorter period as shall be agreed to by
the remarketing agent.
If no HIGH TIDES are tendered for remarketing, the
remarketing will not take place, and the remarketing agent
will set the term rate, term conversion price and ratio
and term call
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<S> <C>
provisions in a manner consistent with the remarketing
notice in the manner that it believes, in its sole
discretion, would result in a price per HIGH TIDES equal
to 101% of the liquidation amount of the HIGH TIDES were a
remarketing actually to occur.
If any HIGH TIDES are tendered for remarketing, the
remarketing agent will commence a convertible remarketing
or a nonconvertible remarketing. In either case, an
initial remarketing will proceed according to instructions
set forth in the remarketing notice. The initial
remarketing will fail if:
- despite using its best efforts, the remarketing agent
is unable to establish a term rate less than or equal to
the maximum rate, which is a rate equal to the treasury
rate plus 10%, during the initial remarketing period;
- the remarketing agent is excused from its obligations
because of the failure by us or the trust to satisfy
certain conditions or the occurrence of certain market
events specified in the remarketing agreement;
- there is no remarketing agent on the first day of the
initial remarketing period; or
- prior to the initial remarketing termination date, term
provisions are established by the remarketing agent,
but the remarketing agent is unable to sell one or more
HIGH TIDES tendered for remarketing because of the
occurrence of certain market events specified in the
remarketing agreement.
In the event of an initial failed remarketing, the
remarketing agent will commence a final remarketing. This
final remarketing will be a convertible remarketing if the
initial remarketing was a nonconvertible remarketing and
vice versa. If the remarketing agent is still not able to
establish a term rate less than or equal to the maximum
rate during the final remarketing period or upon the
failure by us or the trust to satisfy certain conditions
or the occurrence of certain market events specified in
the remarketing agreement, the final remarketing will
fail. In the event of a failed final remarketing, the HIGH
TIDES will remain outstanding as convertible securities at
a term rate equal to the treasury rate plus 10% per annum
and with a term conversion price equal to 105% of the
average closing price of our common stock for the five
consecutive trading days after the final failed
remarketing termination date. In the event of a failed
final remarketing, all outstanding HIGH TIDES will be
redeemable by us, in whole or in part, at any time on or
after the third anniversary of the reset date at a
redemption price equal to 100% of the aggregate
liquidation amount thereof, plus accrued and unpaid
distributions thereon.
If the remarketing agent is able to establish a term rate
less than or equal to the maximum rate during the initial
remarketing period or the final remarketing period, as the
case may be, new
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holders will deliver the reset price for the remarketed
HIGH TIDES, and the term provisions will become effective
on the reset date.
If for any reason term provisions are established by the
remarketing agent but the remarketing agent is unable to
sell one or more HIGH TIDES tendered for remarketing, the
remarketing agent will be obligated, subject to some
conditions, to purchase the HIGH TIDES for the reset
price.
REMARKETING AGENT...................... Credit Suisse First Boston Corporation has agreed to act
as the initial remarketing agent, but may resign or be
replaced by us prior to the remarketing in accordance with
the remarketing agreement. The remarketing will be done
without charge to the holders of HIGH TIDES, but we will
pay the remarketing agent a fee equal to 1% of the
aggregate liquidation amount of the HIGH TIDES outstanding
on the reset date upon settlement of the transactions
contemplated by the remarketing.
OPTIONAL REDEMPTION.................... We may redeem the debentures:
- in whole or in part, at any time on or after
February 20, 2003 until but excluding the tender
notification date, at a redemption price equal to
101.44% of the principal amount of the debentures,
declining to 100% of the principal amount of the
debentures on or after February 20, 2004, plus any
accrued and unpaid interest; and
- after the reset date, in accordance with the term call
protections, if any, established in the remarketing or,
upon a failed final remarketing, on or after the third
anniversary of the reset date at a redemption price
equal to 100% of the principal amount of the
debentures, plus any accrued and unpaid interest.
Upon the redemption in whole or in part of the debentures,
the proceeds of the redemption shall be concurrently
applied to redeem, at the applicable redemption price, the
related HIGH TIDES and the trust's common securities
having an aggregate liquidation amount equal to the
aggregate principal amount of debentures redeemed.
TAX EVENT OR INVESTMENT COMPANY EVENT
REDEMPTION OR DISTRIBUTION........... Upon the occurrence of specified tax changes affecting the
trust's taxable status or the deductibility of interest on
the debentures or changes in the law causing the trust to
be considered an investment company, we will cause the
trustees to dissolve and liquidate the trust and, after
satisfaction of liabilities of creditors of the trust,
distribute the debentures to you. In limited
circumstances, we may redeem the debentures in whole, but
not in part, at a price equal to the principal amount of
the debentures plus accrued and unpaid interest, in lieu
of distributing the debentures. Upon the occurrence of
certain changes in the tax laws, we may also cause the
HIGH TIDES to
</TABLE>
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<TABLE>
<S> <C>
remain outstanding and pay additional amounts due on the
debentures as a result of the change.
EFFECT OF REDEMPTION................... Each of the terms "stated maturity price," "initial
redemption price," "term redemption price," if applicable,
and "tax event redemption price" are referred to as a
redemption price. Upon the repayment or redemption of the
debentures, the trust will concurrently redeem, on a pro
rata basis, at the applicable redemption price, the HIGH
TIDES and common securities having a liquidation amount
equal to the principal amount of the repaid or redeemed
debentures. If an event of default exists under the
debentures or the declaration of trust that governs the
trust, the HIGH TIDES will receive a preference over the
trust's common securities.
LIQUIDATION AMOUNT..................... If the trust is liquidated and the debentures are not
distributed to you, you will generally be entitled to
receive, after satisfaction of liabilities to creditors of
the trust as required by applicable law, $50 per HIGH
TIDES plus accrued and unpaid distributions on each HIGH
TIDES you hold.
GUARANTEE.............................. We will irrevocably guarantee, on a subordinated basis and
to the extent set forth in this prospectus, the payment of
the following:
- distributions on the HIGH TIDES to the extent of
available trust funds;
- the amount payable upon redemption of the HIGH TIDES to
the extent of available trust funds; and
- generally, the liquidation amount of the HIGH TIDES to
the extent of trust funds available for distribution to
you.
The guarantee will be unsecured and subordinate only to
all of our indebtedness under our credit facility and any
secured debt we have in addition to that indebtedness. Our
guarantee is effectively junior to the debt and other
liabilities of our subsidiaries, and as a result, funds
may not be available for payment under the guarantee.
Effectively, we have, through the guarantee, the
debentures, the indenture governing the debentures and the
trust's declaration of trust, taken together, fully,
irrevocably and unconditionally guaranteed all of the
trust's obligations under the HIGH TIDES. No single
document standing alone or operating in conjunction with
fewer than all of the other documents constitutes a full
guarantee. It is only the combined operation of these
documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the trust's
obligations under the HIGH TIDES.
LIQUIDATION OF THE TRUST............... We, as holder of the trust's common securities, have the
right at any time to dissolve the trust, subject to
specified conditions. If we dissolve the trust, after
satisfaction of liabilities to creditors of the trust, we
will distribute to you debentures having a principal
amount equal to the liquidation amount of the HIGH TIDES
you hold or, in limited circumstances, an amount equal to
the
</TABLE>
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<TABLE>
<S> <C>
liquidation amount per HIGH TIDES plus accumulated and
unpaid distributions to the date of payment.
VOTING RIGHTS.......................... Except in limited circumstances or as required by law, you
do not have any voting rights, unless an event of default
with respect to the debentures occurs and is continuing or
we default under the guarantee with respect to the HIGH
TIDES, in which case, you will be entitled, by majority
vote, to appoint an additional trustee of the trust or
remove the Delaware trustee or the property trustee.
RANKING................................ Generally, the trust will make payment on the HIGH TIDES
on a pro rata basis with its common securities. The
debentures will be unsecured and subordinate and junior in
right of payment only to all of our indebtedness under our
credit facility and any secured debt we have in addition
to that indebtedness. At March 31, 2000, we had
approximately $100.0 million of indebtedness outstanding
under our credit facility and approximately $19.0 million
of additional secured debt. The debentures are effectively
junior to the debt and other liabilities of our
subsidiaries, and as a result, funds may not be available
for payments due under the debentures. Our subsidiaries
are separate legal entities and have no obligations to
pay, or make funds available for the payment of, any
amount due on the debentures, the HIGH TIDES or the
guarantee.
FORM OF HIGH TIDES..................... The HIGH TIDES are represented by a global certificate
registered in the name of Cede & Co., as nominee for The
Depository Trust Company, or DTC. Beneficial interests in
the HIGH TIDES are evidenced by records maintained by DTC
or the participants in DTC. Except under limited
circumstances, HIGH TIDES in certificated form will not be
issued in exchange for the global certificate.
USE OF PROCEEDS........................ The selling holders will receive all of the net proceeds
for the resale of the securities. Neither we nor the trust
will receive any proceeds.
REGISTRATION RIGHTS.................... Under a registration rights agreement entered into in
connection with the initial offering and sale of the HIGH
TIDES to the initial purchasers, we and the trust have
agreed to use our best efforts to keep the shelf
registration statement of which this prospectus is a part
effective and useable (subject to certain exceptions) for
two years or such other period as shall be required under
Rule 144(k) of the Securities Act or such shorter period
ending when all the securities covered by the registration
statement have been sold.
ABSENCE OF MARKET FOR THE HIGH TIDES... The HIGH TIDES are a privately placed security for which
there is currently no public trading market. Although the
initial purchasers informed us in connection with the
initial offering and sale of the HIGH TIDES that they
intended to make a market in the HIGH TIDES, the initial
purchasers are not obligated to do so, and any market
making may be discontinued at any time
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<S> <C>
without notice. Accordingly, we cannot assure you as to
the development or liquidity of any market for the HIGH
TIDES.
TRADING................................ Our common stock is listed on The New York Stock Exchange
under the symbol "TTN." The common stock issuable upon
conversion of the HIGH TIDES has been listed on The New
York Stock Exchange.
</TABLE>
FINANCIAL RATIOS
The following table sets forth our consolidated ratio of earnings to fixed
charges and the ratio of our combined fixed charges and preference dividends to
earnings for each of the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 THREE MONTHS ENDED
-------------------- MARCH 31, 2000
---------------------------------------------------------------- ----------------------
1995 1996 1997 1998 ACTUAL PRO FORMA ACTUAL PRO FORMA
-------- -------- -------- -------- -------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings
to fixed charges.............. 1.52 2.22 1.38 2.42 4.75 4.23 -- --
Deficiency of earnings to fixed
charges....................... -- -- -- -- -- -- $ 16,480 $ 15,784
Ratio of combined fixed charges
and preference dividends to
earnings...................... 0.76 0.52 0.83 0.45 0.22 0.25 -- --
Excess of combined fixed charges
and preference dividends over
earnings...................... -- -- -- -- -- -- $ 16,712 $ 16,016
</TABLE>
For purposes of computing the consolidated ratio of earnings to fixed
charges and the ratio of our combined fixed charges and preference dividends to
earnings, earnings consist of income before income taxes plus fixed charges less
capitalized interest and minority interest, and "fixed charges" consist of
interest expense (including amortization of debt discount and expense), plus
capitalized interest and the estimated interest factor attributable to rentals.
On February 25, 2000, we acquired Advanced Communication Systems, Inc., in a
transaction accounted for as a pooling of interests. The ratios above reflect
the combined results of Titan and Advanced Communication Systems. The pro forma
ratios above reflect our repayment of certain Titan and Advanced Communication
Systems indebtedness with some of the proceeds from the offering of the HIGH
TIDES as of the beginning of the periods presented. The figures above for the
three months ended March 31, 2000 reflect $18.1 million of acquisition-related
charges included in our statement of operations for the period then ended.
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RISK FACTORS
INVESTING IN THE HIGH TIDES INVOLVES RISK. IN ADDITION TO THE RISK FACTORS
DESCRIBED IN OUR FORM 10-K/A FOR THE YEAR ENDED DECEMBER 31, 1999, WHICH ARE
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, YOU SHOULD CONSIDER CAREFULLY THE
RISK FACTORS DESCRIBED BELOW, AS WELL AS THE OTHER INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE PURCHASING THE HIGH TIDES.
THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND INCORPORATED BY REFERENCE ARE
NOT THE ONLY RISKS WE FACE. ADDITIONAL RISKS AND UNCERTAINTIES NOT CURRENTLY
KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY IMPAIR OUR BUSINESS
OPERATIONS. IF ANY OF THE RISKS DESCRIBED BELOW OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS ACTUALLY OCCUR, OUR BUSINESS, RESULTS OF OPERATIONS AND
FINANCIAL CONDITION COULD BE MATERIALLY AND ADVERSELY AFFECTED, THE TRADING
PRICES OF THE HIGH TIDES AND OUR COMMON STOCK COULD DECLINE AND YOU MIGHT LOSE
ALL OR PART OF YOUR INVESTMENT.
RISKS RELATING TO OUR BUSINESS AND COMMON STOCK
Please see the risk factors described in our Form 10-K/A for the year ended
December 31, 1999, which is incorporated by reference in this prospectus, for
risks relating to our business and common stock. Those risk factors will be
updated and superseded by later filings we make with the SEC that are
incorporated by reference in this prospectus. You should carefully read this
entire prospectus and the documents incorporated by reference in this prospectus
before making an investment decision in the HIGH TIDES.
RISKS RELATING TO THE HIGH TIDES
THE TRUST MAY NOT BE ABLE TO MAKE DISTRIBUTIONS ON THE HIGH TIDES IF WE
DEFAULT ON OUR INDEBTEDNESS UNDER OUR CREDIT FACILITY OR ANY SECURED DEBT WE
HAVE IN ADDITION TO THAT INDEBTEDNESS BECAUSE OUR OBLIGATIONS TO PAY ON THE
DEBENTURES AND THE GUARANTEE ARE SUBORDINATED TO OUR PAYMENT OBLIGATIONS UNDER
THAT DEBT.
Because of the subordinated nature of the guarantee and the debentures, we:
- will not be permitted to make any payments of principal, including
redemption payments, or interest on the debentures if we default on our
indebtedness under our credit facility or any secured debt we have in
addition to that indebtedness;
- will not be permitted to make payments on the guarantee if we default on
any of our indebtedness under our credit facility or any secured debt we
have in addition to that indebtedness; and
- must pay all our indebtedness under our credit facility and any secured
debt we have in addition to that indebtedness before we make payments on
the guarantee or the debentures if we become bankrupt, liquidate or
dissolve.
The HIGH TIDES, the guarantee and the debentures do not limit our ability or
the ability of our subsidiaries to incur additional indebtedness, including
indebtedness that ranks senior to the debentures and the guarantee. As of March
31, 2000, we had approximately $100.0 million of indebtedness under our credit
facility and approximately $19.0 million of additional secured debt. Because the
trust will be able to pay amounts due on the HIGH TIDES only if we make payments
on the debentures, your ability to receive distributions may be affected by our
indebtedness. In addition, our credit facility prohibits payments of principal,
including redemption payments, on the debentures without the prior consent of
the lenders under that credit facility.
OUR ABILITY TO REPAY OUR DEBT DEPENDS ON THE PERFORMANCE OF OUR
SUBSIDIARIES.
We are a holding company and we conduct our operations primarily through our
subsidiaries. We have few assets of significance other than the capital stock of
our subsidiaries. Consequently, we are dependent upon dividends or other
intercompany transfers of funds from our direct and indirect subsidiaries to
meet our debt service obligations, including those related to the debentures,
the guarantee and the HIGH
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<PAGE>
TIDES. Our subsidiaries are separate legal entities that have no obligation to
pay any amounts due under the HIGH TIDES, the debentures or the guarantee. Our
subsidiaries do not guarantee the payment of the HIGH TIDES or the debentures.
Furthermore, our subsidiaries are not obligated to make funds available to us,
and creditors of our subsidiaries will have a superior claim to our
subsidiaries' assets. As a result, your right to receive payment on the
debentures and the HIGH TIDES is effectively junior to our subsidiaries'
existing indebtedness and possibly to all of their future borrowings. In
addition, our subsidiaries' ability to make any payments to us will depend on
their earnings, the terms of their indebtedness, business and tax considerations
and legal restrictions. We also may publicly offer the common stock of our
subsidiaries from time to time to finance their growth. Any such offerings would
reduce our interests in those subsidiaries and could reduce our ability to make
payments on the debentures.
We cannot assure you that any of our subsidiaries will be able to pay
dividends or otherwise distribute funds to us in an amount sufficient to pay the
principal of or interest on the debentures.
THE DEFERRAL OF INTEREST PAYMENTS MAY HAVE TAX CONSEQUENCES TO YOU AND AN
ADVERSE EFFECT ON THE TRADING PRICE OF THE HIGH TIDES.
If no event of default under the indenture has occurred and is continuing,
we may defer the payment of interest on the debentures for a period not
exceeding 20 consecutive quarters. If we defer interest payments on the
debentures, the trust will defer quarterly distributions on the HIGH TIDES.
However, distributions will still accumulate quarterly and the deferred
distributions will themselves accrue additional distributions at the annual rate
of 5 3/4%, to the extent permitted by law. There is no limitation on the number
of times that we may elect to defer interest payments.
We have no current intention of deferring interest payments on the
debentures. If we exercise our right to defer interest payments in the future,
however, you will be required to include your pro rata share of original issue
discount accrued on the debentures in gross income as interest income for U.S.
federal income tax purposes, prior to the receipt of cash distributions related
to such income. In addition, if we defer payment of interest on the debentures
in the future, the HIGH TIDES may trade at a price that does not fully reflect
the value of deferred interest on the debentures. Our right to defer interest
payments on the debentures may mean that the market price of the HIGH TIDES may
be more volatile and could decrease relative to the market prices of other
securities that do not have this right.
IF YOU DO NOT ELECT TO KEEP YOUR HIGH TIDES UPON A REMARKETING NOTICE, YOUR
HIGH TIDES WILL NO LONGER BE OUTSTANDING AFTER A SUCCESSFUL REMARKETING.
If you do not notify the remarketing agent, your HIGH TIDES will no longer
be outstanding after a successful remarketing, and you will have no further
rights thereunder except to receive an amount equal to:
- from the proceeds of the remarketing, 101% of the aggregate liquidation
amount of the HIGH TIDES; plus
- from us, accrued and unpaid distributions on the HIGH TIDES up until, but
excluding, the reset date.
The remarketing agent agrees to use its best efforts to remarket all HIGH
TIDES tendered for remarketing. All HIGH TIDES will be considered tendered
unless the holder of HIGH TIDES gives irrevocable notice to the contrary to the
tender agent, which the tender agent will promptly remit to the remarketing
agent, before the tender notification date.
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<PAGE>
THE REMARKETING OF THE HIGH TIDES MAY NOT BE SUCCESSFUL AND THE TERMS OF THE
HIGH TIDES AFTER ANY REMARKETING ARE SUBJECT TO CHANGE.
The remarketing will have failed if:
- despite using its best efforts, the remarketing agent cannot establish a
term rate less than or equal to the maximum rate;
- the remarketing agent is excused from remarketing the HIGH TIDES because
of the failure by us to satisfy a condition in the remarketing agreement
or the occurrence of certain market events specified in the remarketing
agreement;
- there is no remarketing agent on the first day of the initial remarketing
period; or
- prior to the initial remarketing termination date, term provisions are
established by the remarketing agent, but the remarketing agent is unable
to sell one or more HIGH TIDES tendered for remarketing because of the
occurrence of certain market events specified in the remarketing
agreement.
If the initial remarketing fails, the remarketing agent will commence a
final remarketing during the final remarketing period. If the final remarketing
fails, then the HIGH TIDES will remain outstanding at a term rate equal to the
treasury rate plus 10% per annum and with a term conversion price equal to 105%
of the average closing price of our common stock for the five consecutive
trading days after the final failed remarketing termination date. In the event
of a failed final remarketing, all outstanding HIGH TIDES will be redeemable by
us, in whole or in part, at any time on or after the third anniversary of the
reset date at a redemption price equal to 100% of the aggregate liquidation
amount thereof, plus accrued and unpaid distributions thereon. If no HIGH TIDES
are tendered for remarketing, the remarketing will not take place, although the
remarketing will not be deemed to have failed. In that case, the remarketing
agent will set the term provisions according to the instructions contained in
the remarketing notice in the manner that it believes, in its sole discretion,
would result in a price per HIGH TIDES equal to 101% of the liquidation amount
if a remarketing were actually to occur.
AFTER THE RESET DATE, THE HIGH TIDES MAY NO LONGER BE CONVERTIBLE OR MAY BE
CONVERTIBLE INTO A FEWER NUMBER OF SHARES OF OUR COMMON STOCK.
Each HIGH TIDES is initially convertible, at the option of the holder, into
1.0076 shares of common stock, which may be adjusted in some circumstances. We
may choose to remarket the HIGH TIDES so that after the reset date the HIGH
TIDES will not be convertible into shares of common stock, or, each HIGH TIDES
will be convertible into a different number of shares of common stock.
THE TRUST MAY REDEEM THE HIGH TIDES WITHOUT YOUR CONSENT IF SPECIFIED TAX
CHANGES OCCUR.
Upon the occurrence of specified tax changes affecting the trust's taxable
status or the deductibility of interest on the debentures, we may either
dissolve and liquidate the trust and distribute the debentures to you or we may
redeem all of the debentures. If we redeem the debentures, the trust will use
the cash it receives from that redemption to redeem the HIGH TIDES and the
trust's common securities.
WE MAY CAUSE THE HIGH TIDES TO BE REDEEMED ON OR AFTER FEBRUARY 20, 2003
WITHOUT YOUR CONSENT.
We may redeem all or some of the debentures at our option at any time on or
after February 20, 2003 until but excluding the tender notification date.
Following the remarketing, we may redeem the debentures in accordance with the
term call protections, if any, established in the remarketing or, upon a failed
final remarketing, on or after the third anniversary of the reset date. You
should assume that we will exercise our redemption option if we are able to
refinance the debentures at a lower interest rate or if we conclude it is
otherwise in our interest to redeem the debentures. The trust will use the cash
it receives from the redemption of the debentures to redeem an equivalent amount
of HIGH TIDES and its common securities on a pro rata basis.
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DISTRIBUTION OF THE DEBENTURES TO YOU MAY HAVE ADVERSE TAX CONSEQUENCES FOR
YOU.
We may dissolve and liquidate the trust at any time. If that happens, the
trust will redeem the HIGH TIDES and its common securities by distributing the
debentures to you and to us, as the holder of the trust's common securities, on
a pro rata basis.
Under current U.S. federal tax laws, a distribution of debentures on the
dissolution of the trust would not be a taxable event to you. However, if there
is a change in the law and, for example, the trust is characterized for U.S.
federal income tax purposes as an association taxable as a corporation at the
time of its dissolution, the distribution of debentures would likely constitute
a taxable event to you.
THE DISTRIBUTION OF DEBENTURES UPON LIQUIDATION OF THE TRUST MAY HAVE AN
ADVERSE EFFECT ON TRADING PRICES.
We have the right to dissolve and liquidate the trust at any time. Although
we have no current intention of doing so, we anticipate that we would consider
exercising this right if the expenses associated with maintaining the trust are
substantially greater than we expect or for other business reasons. If we
exercise our right to dissolve and liquidate the trust, the trust will redeem
the HIGH TIDES and its common securities by distributing the debentures to you
and to us on a pro rata basis, unless an event of default under the debentures
has occurred and is continuing, in which case you will have priority over us.
We cannot predict the market prices for the debentures that the trust may
distribute to you. Accordingly the debentures that you receive on a
distribution, or the HIGH TIDES you hold pending a distribution, may trade at a
discount to the price that you paid to purchase the HIGH TIDES.
Because you may receive debentures, you should make an investment decision
with regard to the debentures in addition to the HIGH TIDES. You should
carefully review all the information regarding the debentures contained in this
prospectus.
WE GUARANTEE PAYMENTS ON THE HIGH TIDES ONLY IF THE TRUST HAS CASH
AVAILABLE.
If we fail to make payments on the debentures, the trust will not be able to
pay distributions, the redemption price or the liquidation amount of each HIGH
TIDES. In those circumstances, you will not be able to rely upon the guarantee
for payment of these amounts. Instead, if we are in default for payments under
the debentures, you may:
- rely on the property trustee for the trust to enforce the trust's rights
under the debentures; or
- directly sue us or seek other remedies to collect your share of payments
owed.
YOU HAVE LIMITED VOTING RIGHTS.
You will have limited voting rights relating generally to:
- the modification of the HIGH TIDES and our guarantee of the HIGH TIDES;
and
- the exercise of the trust's rights as holder of debentures.
You are not entitled to appoint, remove or replace the property trustee of
the trust or the Delaware trustee of the trust except upon the occurrence of
certain events. The property trustee, and the holders of all of the trust's
common securities may, subject to certain conditions, amend the declaration of
trust without your consent to:
- cure any ambiguity;
- make provisions of the declaration of trust not inconsistent with other
provisions of the declaration of trust;
- ensure that the trust will not be classified for U.S. federal income tax
purposes as an association subject to taxation as a corporation; or
17
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- ensure that the trust will be classified as a grantor trust.
THE HIGH TIDES AND THE DEBENTURES DO NOT HAVE AN ESTABLISHED MARKET.
There is no existing public trading market for the HIGH TIDES. We do not
intend to list the HIGH TIDES on a national securities exchange or automated
interdealer quotation system. Although the initial purchasers informed us and
the trust at the time of the initial offering and sale of the HIGH TIDES that
they intended to make a secondary market for the HIGH TIDES, they are not
obligated to do so and may discontinue making a secondary market for the HIGH
TIDES at any time without notice and for any reason. Accordingly, we cannot
assure you that an active trading market for the HIGH TIDES will develop or be
sustained. If a market were to develop, the HIGH TIDES could trade at prices
that may be higher or lower than their offering price depending upon many
factors, including:
- prevailing interest rates;
- our stock price;
- our operating results; and
- the market for similar securities.
RISKS RELATING TO OUR PROPOSED ACQUISITION OF AVERSTAR, INC.
THE EXPECTED COSTS OF THE ACQUISITION WILL BE SUBSTANTIAL.
On March 24, 2000, we entered into an agreement to acquire AverStar, Inc. We
estimate that we will incur primarily direct transaction costs of approximately
$11.6 million associated with the acquisition. These costs will be charged to
operations as incurred. This amount is a preliminary estimate only. There can be
no assurance that we will not actually incur charges in excess of this estimate.
SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK IN THE OPEN MARKET BY
AVERSTAR STOCKHOLDERS COULD DEPRESS OUR STOCK PRICE.
In connection with our acquisition of AverStar, AverStar stockholders will
receive shares of our common stock. If AverStar stockholders sell substantial
amounts of our common stock in the public market following the acquisition,
including shares issued upon the exercise of outstanding options, the market
price of our common stock could fall. These sales might also make it more
difficult for us to sell equity or equity-related securities at a time and price
that we otherwise would deem appropriate. Based on the number of outstanding
shares of AverStar common stock as of May 19, 2000, we will issue approximately
3,862,281 shares of our common stock in the acquisition. In addition, we will
assume all outstanding options to purchase AverStar common stock, which will be
converted into options to acquire shares of our common stock using the same
exchange ratio which is applicable to AverStar common stock in the acquisition.
All of the shares of our common stock issued to stockholders of AverStar,
including those issued upon the exercise of options, will be freely tradable
without restrictions or further registration under the Securities Act of 1933,
unless they are issued to an "affiliate" of AverStar, as that term is defined
under the Securities Act, at the time the acquisition is submitted for approval
by AverStar stockholders. The term "affiliate" would generally include
directors, executive officers and some significant stockholders of AverStar.
USE OF PROCEEDS
The selling holders will receive all of the net proceeds of the resale of
the HIGH TIDES, the debentures, the common stock issuable upon conversion of the
HIGH TIDES and the guarantee. Neither we nor the trust will receive any of the
proceeds from the sale of any of those securities.
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TITAN CAPITAL TRUST
Titan Capital Trust is a statutory business trust created under Delaware law
on January 19, 2000 pursuant to a declaration of trust among the trustees and
Titan and a certificate of trust filed with the Delaware Secretary of State. The
declaration of trust was amended and restated in its entirety as of the date the
trust initially issued the HIGH TIDES. Unless the context requires otherwise,
"Titan," "we," "us," "our" or similar terms in this section refer solely to The
Titan Corporation and not the trust or any of our other consolidated
subsidiaries.
The trust's assets consist principally of the debentures, and payments under
the debentures are its sole revenue. The trust exists for the exclusive purposes
of:
- issuing the HIGH TIDES and the common securities representing undivided
beneficial ownership interests in the trust's assets;
- investing the gross proceeds of those securities in the debentures; and
- engaging in only those other activities necessary or incidental to those
purposes.
Titan directly acquired common securities of the trust in an aggregate
liquidation amount equal to 3% of the total capital of the trust. The trust will
generally make payments on the common securities on a pro rata basis with the
HIGH TIDES. However, if an event of default under the declaration of trust
occurs and is continuing, Titan's right to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
your rights.
Pursuant to the declaration of trust, the trust has four trustees, which we
refer to in this prospectus as declaration trustees:
- two of the trustees, referred to as administrative trustees, are officers
of Titan; and
- the third trustee is the property trustee and the fourth trustee is the
Delaware statutory trustee, each of which is Wilmington Trust Company.
In limited circumstances, the holders of a majority in aggregate stated
liquidation amount of the outstanding HIGH TIDES will be entitled to appoint one
additional trustee, referred to as the special trustee. The special trustee need
not be an officer or employee of or otherwise affiliated with Titan. Generally,
the special trustee will have the same rights, powers and privileges as the
administrative trustees.
The property trustee holds title to the debentures for your benefit and the
benefit of the holders of the trust's common securities. As the holder of the
debentures, the property trustee has the power to exercise all the rights,
powers and privileges granted to the holder of the debentures under the
indenture governing the debentures between Titan and Wilmington Trust Company,
as debenture trustee. In addition, the property trustee maintains exclusive
control of a segregated non-interest bearing bank account to hold all payments
made in respect of the debentures for your benefit and the benefit of the
holders of the trust's common securities.
Subject to your right to appoint a special trustee, we, as the direct or
indirect holder of all of the trust's common securities, have the right to
appoint, remove or replace any of the trustees and to increase or decrease the
number of trustees; provided, however, that during an event of default under the
indenture, the property trustee and the Delaware trustee may only be removed by
the holders of a majority in liquidation amount of the HIGH TIDES. However, the
number of trustees must always be at least two, one of which must be an
administrative trustee, and, unless otherwise required by applicable law, there
must always be a Delaware statutory trustee.
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THE REMARKETING
NOTICE OF REMARKETING; TENDER FOR SALE BY REMARKETING; RETENTION OF HIGH
TIDES
At least 30 business days but not more than 90 business days prior to the
final reset date, the trust will send to you a remarketing notice stating
whether it intends to remarket the HIGH TIDES as securities that either will be
convertible into common stock or nonconvertible. So that no holder of HIGH
TIDES, through inadvertence or otherwise, may fail to tender any HIGH TIDES for
sale in the remarketing, each outstanding HIGH TIDES you own will be deemed to
have been tendered for remarketing unless you have given irrevocable notice to
the contrary to the tender agent. The tender agent will promptly remit the
notice to the remarketing agent. The irrevocable notice, which may be telephonic
or written, must be delivered prior to 5:00 p.m., New York City time on the
tender notification date. The tender notification date is a business day no
earlier than 10 business days following the remarketing notice date, or a
shorter period as shall be agreed to by the remarketing agent. If you elect to
retain HIGH TIDES, your notice must state:
- the number of HIGH TIDES to be retained (which must be all of the HIGH
TIDES represented by the applicable certificate, unless such certificate
is a global HIGH TIDES certificate);
- the number of the certificate representing the HIGH TIDES not being
tendered (unless such certificate is a global HIGH TIDES certificate); and
- the number of HIGH TIDES represented by such certificate (unless such
certificate is a global HIGH TIDES certificate).
Any transferee of a HIGH TIDES is bound to the terms of any such notice
which has been given relating to the transferred HIGH TIDES.
Any failure by you to give timely notice of an election to retain all or any
part of your HIGH TIDES will constitute an irrevocable tender for sale in the
remarketing of all the HIGH TIDES you hold. On and after the reset date, the
terms of all HIGH TIDES, whether or not tendered for remarketing, will be
modified by the term provisions, as the same shall be established by the
remarketing agent.
If the HIGH TIDES are not held by DTC or its nominee in the form of one or
more global HIGH TIDES, certificates representing remarketed HIGH TIDES will be
issued to the purchasers thereof, irrespective of whether the certificates
formerly representing such HIGH TIDES have been delivered to the tender agent.
If you do not duly give notice that you will retain your HIGH TIDES, your rights
with respect to the HIGH TIDES will cease upon the successful remarketing of the
HIGH TIDES, except your right to receive an amount equal to:
- from the proceeds of the remarketing, 101% of the aggregate liquidation
amount of the HIGH TIDES; plus
- from us, any accrued and unpaid distributions on the HIGH TIDES to, but
excluding, the reset date (upon surrender of the certificate representing
the HIGH TIDES to the tender agent properly endorsed for transfer, in the
case of a holder other than DTC, which has taken physical delivery of a
HIGH TIDES certificate) but without any additional interest thereon (and
the certificate will cease to represent outstanding HIGH TIDES).
If no HIGH TIDES are tendered for remarketing, the remarketing will not take
place, although the remarketing will not be deemed to have failed. Under these
circumstances, the remarketing agent will set the term provisions in a manner
consistent with the remarketing notice that it believes, in its sole discretion,
would result in a price per HIGH TIDES equal to 101% of the liquidation amount
thereof were a remarketing actually to occur.
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THE REMARKETING PROCESS
The remarketing agent has agreed to use its best efforts to remarket all
HIGH TIDES tendered for remarketing in accordance with the remarketing
agreement. The remarketing agent will establish, effective beginning on the
reset date:
- the term rate per annum at which distributions will accrue on the HIGH
TIDES;
- the term conversion ratio and price, which determine the number of shares
of common stock, if any, into which each HIGH TIDES may be converted; and
- the term call protections, which are the price, manner and time, if any,
at which the HIGH TIDES may be redeemed.
In this prospectus, we refer to the term rate, the term conversion ratio and
price and the term call protections as the term provisions.
The remarketing agent will use its best efforts to establish the term
provisions most favorable to us consistent with the successful remarketing of
all HIGH TIDES tendered at a price equal to 101% of the aggregate liquidation
amount. The remarketing agent may purchase HIGH TIDES tendered for remarketing,
but it shall not be obligated to purchase any HIGH TIDES except to the extent
expressly provided under the remarketing agreement.
The remarketing will be done without charge to the holders of the HIGH
TIDES, but we shall be obligated to pay the remarketing agent fees for its
services. Neither we nor any of our affiliates will be permitted to submit
orders for or purchase tendered HIGH TIDES in the remarketing.
In establishing the term provisions during the remarketing, the remarketing
agent will take into account the following remarketing conditions:
- short-term and long-term market interest rates and indices of the
short-term and long-term interest rates;
- market supply and demand for short-term and long-term securities;
- yield curves for short-term and long-term securities comparable to the
HIGH TIDES;
- industry and financial conditions which may affect the HIGH TIDES;
- the number of HIGH TIDES to be remarketed;
- the number of potential purchasers;
- the number of shares of common stock, if any, into which the HIGH TIDES
will be convertible;
- the current ratings by nationally recognized statistical rating
organizations of our long-term subordinated debt and of other outstanding
capital securities of the trust, including the HIGH TIDES and the common
securities; and
- the length and type of call protections, if any.
We currently have no intention of causing the applicable conversion price on
the reset date to be less than 100% of the fair market value of the common stock
on the reset date.
If any HIGH TIDES are tendered for remarketing, on the business day
following the tender notification date, the remarketing agent will commence a
convertible remarketing or a nonconvertible remarketing, as the case may be, in
accordance with the remarketing agreement and pursuant to the instructions set
forth in the remarketing notice. The remarketing agent will determine, and upon
request make available to interested persons, non-binding indications of the
term provisions based upon
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then-current remarketing conditions. The remarketing agent will solicit and
receive orders from prospective investors to purchase tendered HIGH TIDES. The
remarketing agent will continue using its best efforts to remarket the HIGH
TIDES as described above, adjusting the non-binding indications of the term
provisions as necessary to establish the term conditions most favorable to us
consistent with remarketing all HIGH TIDES tendered at a price equal to 101% of
the aggregate liquidation amount until the remarketing is completed or is deemed
to have failed for any of the reasons set forth under "--Effect of a Failed
Remarketing."
If the remarketing agent determines that the remarketing has not failed, the
remarketing agent will promptly communicate the term provisions to the tender
agent. The initial remarketing termination date is the tenth business day
following the tender notification date, or a shorter period as shall be agreed
to by the remarketing agent. The tender agent will communicate the term
provisions to the declaration trustees, the debenture trustee, the trust, the
paying agent, us and each holder, if any, which timely elected not to tender all
of its HIGH TIDES for remarketing, by written notice or by telephone promptly
confirmed by telecopy or other writing. On the reset date, new holders will
tender the reset price for the tendered HIGH TIDES as set forth below under
"--Settlement" and the term provisions will become effective.
EFFECT OF A FAILED REMARKETING
The initial remarketing will fail if:
- despite using its best efforts the remarketing agent is unable to
establish, prior to the initial remarketing termination date, a term rate
that is less than or equal to the treasury rate plus 10% per annum, which
we refer to in this prospectus as the maximum rate;
- the remarketing agent is excused from remarketing the HIGH TIDES because
of the failure by us or the trust to satisfy a condition in the
remarketing agreement or the occurrence of certain market events specified
in the remarketing agreement;
- there is no remarketing agent on the first day of the initial remarketing
period; or
- prior to the initial remarketing termination date, term provisions are
established by the remarketing agent, but the remarketing agent is unable
to sell one or more HIGH TIDES tendered for remarketing because of the
occurrence of certain market events specified in the remarketing
agreement.
If the initial remarketing fails because the remarketing agent was not able
to establish a term rate less than or equal to the maximum rate, the remarketing
agent will commence a final remarketing during the period beginning on the
business day following the initial remarketing termination date and ending on
the date which is 10 business days later, or a shorter period as shall be agreed
to by the remarketing agent. The final remarketing will be a convertible
remarketing if the initial remarketing was a nonconvertible remarketing and vice
versa.
If the remarketing agent is able to establish a term rate less than or equal
to the maximum rate during the final remarketing period, it shall promptly
communicate the term provisions to the tender agent, who will communicate the
term provisions to the declaration trustees, the trust, the paying agent, us and
each holder, if any, which timely elected not to tender all of its HIGH TIDES
for remarketing, by written notice or by telephone promptly confirmed by
telecopy or other writing. On the reset date, new holders will tender the reset
price for the tendered HIGH TIDES as set forth below under "--Settlement" and
the term provisions will become effective.
If despite using its best efforts, the remarketing agent is still not able
to establish a term rate less than or equal to the maximum rate prior to the
expiration of the final remarketing period or the remarketing agent is excused
from remarketing the securities because of the failure by us or the trust to
satisfy a condition in the remarketing agreement or the occurrence of certain
market events, the final remarketing
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will fail. In addition, if term provisions are established by the remarketing
agent but the remarketing agent is unable to sell one or more HIGH TIDES
tendered for remarketing because of the occurrence of certain market events
specified in the remarketing agreement, then the final remarketing will fail. In
the event of a failed final remarketing, the term rate shall be a rate equal to
the treasury rate plus 10% per annum, and the term conversion price will be
equal to 105% of the average closing price of our common stock for the five
consecutive trading days after the final failed remarketing termination date. In
the event of a failed final remarketing, all outstanding HIGH TIDES will be
redeemable by us, in whole or in part, at any time on or after the third
anniversary of the reset date at a redemption price equal to 100% of the
aggregate liquidation amount thereof, plus accrued and unpaid distributions
thereon. There can be no assurance that all of the HIGH TIDES tendered will be
remarketed.
If for any reason term provisions are established by the remarketing agent
but the remarketing agent is unable to sell one or more HIGH TIDES tendered for
remarketing, the remarketing agent will be obligated, subject to some
conditions, to purchase the HIGH TIDES for the reset price.
The term "treasury rate" means (A) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15(519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the remaining
life (if no maturity is within three months before or after the remaining life,
yields for the two published maturities most closely corresponding to the
remaining life shall be determined and the treasury rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (B) if such release, or any successor release, is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the comparable treasury issue, calculated using a price for the
comparable treasury issue (expressed as a percentage of its principal amount)
equal to the comparable treasury price for the reset date. The treasury rate
shall be calculated on the third business day preceding the reset date.
The term "comparable treasury issue" means the United States Treasury
security selected by the quotation agent as having a maturity comparable to the
remaining life that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining life. If no United
States Treasury security has a maturity which is within a period from three
months before to three months after the reset date, the two most closely
corresponding United States Treasury securities shall be used as the comparable
treasury issue, and the rate being calculated shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
The term "comparable treasury price" means (A) the arithmetic mean of five
reference treasury dealer quotations for the reset date, after excluding the
highest and lowest such reference treasury dealer quotations, or (B) if the
quotation agent obtains fewer than five reference treasury dealer quotations,
the arithmetic mean of all the reference treasury dealer quotations.
The term "quotation agent" means Credit Suisse First Boston Corporation and
its successor provided, however, that if the foregoing shall cease to be a
primary United States Government securities dealer in The City of New York we
shall substitute therefor another primary treasury dealer.
The term "reference treasury dealer" means (A) the quotation agent and
(B) any other primary treasury dealer selected by the debenture trustee after
consultation with us.
The term "reference treasury dealer quotations" means, with respect to each
reference treasury dealer and the reset date, the arithmetic mean, as determined
by the debenture trustee, of the bid and asked prices for the comparable
treasury issue (expressed in each case as a percentage of its principal
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amount) quoted in writing to the debenture trustee by such reference treasury
dealer at 5:00 p.m., New York City time, on the third business day preceding the
reset date.
The term "remaining life" means the period beginning on the reset date and
ending at February 15, 2030.
SETTLEMENT
Settlement of transactions in connection with the remarketing will take
place on the reset date, or such date as the remarketing agent may, in its sole
discretion, determine, or as otherwise required by applicable law. Payments in
respect of the tendered HIGH TIDES in an amount equal to the proceeds of the
remarketing will be made by the tender agent (but only to the extent in fact
received by the tender agent) on the date in the manner described under
"Description of HIGH TIDES--Depositary Procedures," but, in the case of a holder
(other than DTC) which has taken physical delivery of a certificate representing
its HIGH TIDES, the payment shall be made only upon surrender to the tender
agent by 2:30 p.m. New York City time on the reset date (or any succeeding date)
of the certificate representing the HIGH TIDES, properly endorsed for transfer.
Neither we, the trust, the declaration trustees, the tender agent and
(except to the extent provided above) the remarketing agent will be obligated to
provide or advance funds to make payment to the holders of HIGH TIDES tendered
in the remarketing.
PURCHASES BY US AND OUR AFFILIATES
While we, or an affiliate, may from time to time purchase, hold, or sell
HIGH TIDES, neither we nor any of our affiliates may purchase any HIGH TIDES on
the reset date or submit orders in the remarketing, and the remarketing agent
has agreed that it will not knowingly remarket any HIGH TIDES to us or any of
our affiliates.
TENDER AGENT
Tenders of HIGH TIDES in the remarketing will be made to the tender agent,
and the tender agent will pay to the prior holders thereof the proceeds of the
remarketing, provided the tender agent receives the amount from the remarketing
agent. The tender agent will be the property trustee or, in the event of the
distribution of debentures to the holders of HIGH TIDES prior to the reset date,
the debenture trustee.
TERMINATION OF THE TRUST
If the trust is for any reason dissolved and liquidated prior to the reset
date and the debentures are distributed to the holders of HIGH TIDES and common
securities, the remarketing will proceed as described in this prospectus except
that the debentures rather than the HIGH TIDES will be remarketed by the
remarketing agent, the debenture trustee rather than the property trustee will
be the tender agent and the descriptions of the remarketing of the HIGH TIDES in
this prospectus will apply with such changes as are necessary to the remarketing
of debentures. Accordingly, in such an event, without limiting the generality of
the foregoing statements:
- the debentures instead of the HIGH TIDES will be deemed to have been
tendered for remarketing absent timely notice to the contrary, provided
that any notice duly and timely given in respect of the tender for
remarketing of any HIGH TIDES will apply to the debentures distributed in
respect thereof;
- the debentures instead of the HIGH TIDES will be remarketed by the
remarketing agent;
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- the remarketing agent will use its best efforts to establish the term
provisions most favorable to us consistent with the successful remarketing
of all debentures tendered at a price equal to 101% of the principal
amount of the debentures; and
- subject to the proviso in the first bullet point above, a holder of
debentures which has not duly given notice by the tender notification date
that it will retain its debentures will cease to have any further rights
with respect to the debentures upon the successful remarketing of the
debentures, except the right of the holder to receive an amount equal to
(1) from the proceeds of the remarketing, 101% of the principal amount of
the debentures, plus (2) from us, any accrued but unpaid interest on the
debentures to, but excluding, the reset date (upon surrender of the
certificate representing the debentures to the tender agent properly
endorsed for transfer, in the case of a holder other than DTC, which has
taken physical delivery of a debenture certificate) but without any
additional interest thereon (and any such certificate will cease to
represent outstanding debentures).
If the debentures are accelerated, redeemed or otherwise prepaid on or prior
to the reset date, the remarketing will not take place.
THE REMARKETING AGENT
We will use our best efforts to assure that, at all times prior to and
including the reset date, an investment bank, broker, dealer or other
organization which, in our judgment, is qualified to remarket HIGH TIDES and to
establish the term provisions is acting as remarketing agent, provided that if
we fail to appoint a successor upon the resignation or removal of the
remarketing agent reasonably promptly or if a successor fails to accept such
appointment, a successor having such qualifications may be appointed by the
holders of at least 25% in aggregate liquidation amount of the outstanding HIGH
TIDES. Credit Suisse First Boston Corporation has agreed to act as the initial
remarketing agent but may resign or be replaced by us, in accordance with the
terms of the remarketing agreement. The remarketing agent may authorize any
broker-dealer to assist in the remarketing.
The remarketing agreement among us, the trust, the tender agent and the
remarketing agent provides that the remarketing agent will receive fees from us
for the remarketing equal to 1% of the aggregate liquidation amount of
outstanding HIGH TIDES on the reset date upon settlement of the transactions
contemplated by the remarketing. In addition to these fees we will reimburse the
remarketing agent for all out-of-pocket expenses reasonably incurred in
connection with the performance of its duties. In the event that both the
initial remarketing and the final remarketing fail, we shall not be required to
pay any fees to, or reimburse any out-of-pocket expense of, the remarketing
agent. The remarketing will be done without charge to the holders of the HIGH
TIDES.
We have agreed in the remarketing agreement to indemnify the remarketing
agent against some liabilities arising out of or in connection with its duties,
or to contribute to payments which the remarketing agent may be required to make
in respect thereof.
The remarketing agent may resign and be relieved from its duties under the
remarketing agreement on a date specified in a notice in writing delivered to us
and to the trust. The remarketing agent's resignation will not become effective
until at least 30 days after delivery of the notice. The successor remarketing
agent must be an investment bank, broker, dealer or other organization which, in
our judgment, is qualified to remarket the HIGH TIDES and establish the term
provisions and which accepts its appointment by executing a written instrument
of acceptance to us and the tender agent. The holders of a majority in aggregate
liquidation amount of the outstanding HIGH TIDES may remove the remarketing
agent for cause. The tender agent will send notice to you of the resignation or
removal of the remarketing agent and the appointment of a successor remarketing
agent. If there is no remarketing agent on the first day of the initial
remarketing period, the remarketing will fail and the HIGH TIDES will remain
outstanding on the terms described in this prospectus under "--Effect of a
Failed Remarketing."
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The remarketing agreement provides that the remarketing agent will not be
obligated to remarket HIGH TIDES if:
- in the remarketing agent's judgment there is a material misstatement or
omission in any (a) disclosure document provided by us or the trust in
connection with the remarketing or (b) document publicly disclosed
(including in a filing pursuant to the Securities Exchange Act of 1934) by
or on behalf of us or the trust, unless in each case the remarketing agent
is satisfied that such misstatement or omission has been properly
corrected;
- we have failed to have a registration statement for the HIGH TIDES
declared effective on or prior to the tender notification date or such
registration statement does not remain effective through and including the
reset date, unless we have provided to the remarketing agent an opinion of
counsel, experienced in matters relating to securities law, (a) that
registration of the HIGH TIDES under the Securities Act is not necessary
for their sale or (b) that such registration statement need not become
effective until the date the initial remarketing period is required to
commence under the remarketing agreement and the remarketing agent
consents to such delay; or
- either we or the trust fails to satisfy conditions customary in an
offering.
Broker-dealers, if any, which obtain purchasers for the HIGH TIDES will be
paid a commission or fee by the remarketing agent based upon the remarketing fee
described above and the number of HIGH TIDES sold. Broker-dealers will enter
into broker-dealer agreements with the remarketing agent, which will provide for
their participation in the remarketing and will require them to follow certain
private placement procedures. The identity of the broker-dealers, if any, which
will participate in the remarketing has not yet been determined. The remarketing
agent will have the right to select broker-dealers at any time prior to the
reset date. No broker-dealer will be obligated to purchase the HIGH TIDES.
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DESCRIPTION OF HIGH TIDES
Pursuant to the terms of the declaration of trust, the administrative
trustees on behalf of the trust issued the HIGH TIDES and the common securities
in fully registered form without interest coupons. The HIGH TIDES represent
preferred undivided beneficial ownership interests in the assets of the trust,
and the holders of the HIGH TIDES are entitled to a preference over us, as the
holder of the trust's common securities, in limited circumstances with respect
to distributions and amounts payable on redemption of the HIGH TIDES and the
trust's common securities or dissolution and liquidation of the trust, as well
as other benefits as described in the declaration of trust. See "--Subordination
of Common Securities." The declaration of trust is qualified under and is
subject to and governed by the Trust Indenture Act. This summary of the
provisions of the HIGH TIDES, the trust's common securities and the declaration
of trust is subject to, and is qualified in its entirety by reference to, all
the provisions of the declaration of trust, including the definitions of certain
terms. Unless the context requires otherwise, "Titan," "we," "us," "our" or
similar terms in this section refer solely to The Titan Corporation and not the
trust or any of our other consolidated subsidiaries.
GENERAL
The trust will make payments on the HIGH TIDES on a pro rata basis with its
common securities except as described under "--Subordination of Common
Securities." The guarantee has been executed by us for your benefit and provides
for a guarantee on a subordinated basis with respect to the HIGH TIDES but does
not guarantee payment of distributions or amounts payable on redemption of the
HIGH TIDES or on dissolution and liquidation of the trust when the trust does
not have funds on hand available to make those payments. See "Description of the
Guarantee."
Credit Suisse First Boston Corporation has agreed to act as initial
remarketing agent with respect to the HIGH TIDES and is referred to herein as
the remarketing agent. The remarketing agent will be paid fees for its services
and may resign or be replaced by us under certain circumstances. The remarketing
agent may also be removed at any time for cause by the holders of a majority of
the aggregate liquidation amount of HIGH TIDES outstanding. See "The
Remarketing--The Remarketing Agent."
DISTRIBUTIONS
Distributions commenced to accrue on the HIGH TIDES from the date of their
original issuance (February 9, 2000) at the applicable rate of the stated
liquidation amount of $50 per HIGH TIDES. Subject to the deferral rights
described below, the trust will pay the distributions quarterly in arrears on
each February 15, May 15, August 15 and November 15, each referred to as a
distribution date, commencing May 15, 2000, to the person in whose name each
HIGH TIDES is registered at the close of business on the first day of the month
of the applicable distribution date. The first day of the month of any
distribution date shall be the record date for such distribution date.
The reset date is any date (1) not later than February 15, 2005, or, if the
day is not a business day, the next succeeding business day, and (2) not earlier
than 70 business days prior to February 15, 2005, as may be determined by the
remarketing agent, in its sole discretion. If the reset date is prior to the
record date for the immediately following distribution date, then distributions
and additional amounts, if any, accrued from and after the reset date to but
excluding the immediately following distribution date shall be paid on such
distribution date to the person in whose name each HIGH TIDES is registered on
the relevant record date, subject to our right to initiate a deferral period. If
the reset date is on or after the record date for the immediately following
distribution date, then (1) distributions and additional amounts, if any,
accrued from and after the record date to but excluding the reset date shall be
paid on the immediately following distribution date to the person in whose name
each HIGH TIDES is registered on the relevant record date and (2) distributions
and additional amounts, if any, accrued from and after the reset date to but
excluding the immediately following distribution date shall be paid on the
second distribution date immediately
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following the reset date to the person in whose name each HIGH TIDES is
registered on the relevant record date for such second distribution date,
subject in each case to our right to initiate a deferral period. The applicable
rate will be the initial rate of 5 3/4% per annum from the date of original
issuance of the HIGH TIDES to but excluding the reset date, subject to increase
in the case of a registration default. See "Registration Rights". From the reset
date, the applicable rate will be the term rate established by the remarketing
agent to be effective on the reset date. On the reset date, the remarketing
agent will notify the declaration trustees, the trust, the debenture trustee,
the paying agent, us and the holders, if any, which elected not to tender all
their HIGH TIDES for remarketing of the term provisions, including the term
rate. The notification must be made by written notice or by telephone promptly
confirmed by telecopy or other writing. See "The Remarketing."
The amount of distributions payable for any period will be computed based on
the number of days elapsed in a 360-day year of twelve 30-day months. If any
distribution date is not a business day, the trust will pay distributions
payable on that date on the next succeeding day that is a business day, except
if such business day is in the next succeeding calendar year, such distributions
will be made on the immediately preceding business day. No additional
distributions or other payments in respect of any such delay will accrue because
of this change in the distribution date. Distributions that the trust does not
pay on the applicable distribution date will accrue additional distributions on
the amount of the accrued distributions, to the extent permitted by law, at the
applicable rate compounded quarterly from the relevant distribution date. As
used in this prospectus, the term "distribution" includes quarterly
distributions, additional distributions on quarterly distributions not paid on
the applicable distribution date and special distributions upon certain tax
events, as applicable. See "Description of Convertible Senior Subordinated
Debentures--Additional Amounts." As used in this prospectus, a "business day"
means any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed, or a day on which the corporate trust office
of the property trustee or the debenture trustee is closed for business.
So long as no event of default under the debentures has occurred and is
continuing, we have the right to defer the payment of interest on the debentures
at any time or from time to time for a period not exceeding 20 consecutive
quarters. However, no deferral period may extend beyond (1) the maturity of the
debentures whether at the stated maturity or by declaration of acceleration,
call for redemption or otherwise and (2) in the case of a deferral period
beginning prior to the reset date, the reset date. We have agreed, among other
things, not to declare or pay any dividend on our capital stock, subject to
certain exceptions, during any deferral period. See "Description of Convertible
Senior Subordinated Debentures--Option to Extend Interest Payment Date." As a
consequence of any deferral election, the trust will defer quarterly
distributions on the HIGH TIDES during the deferral period. Deferred
distributions to which you are entitled will accumulate additional distributions
at the applicable rate, compounded quarterly from the relevant payment date for
distributions during any deferral period, to the extent permitted by applicable
law.
See "Description of Convertible Senior Subordinated Debentures--Option to
Extend Interest Payment Date" and "Certain United States Federal Income Tax
Consequences--Interest Income" for a more detailed discussion of the terms and
conditions affecting our right to defer the payment of interest on the
debentures.
We have no current intention of exercising our right to defer payments of
interest on the debentures.
The trust's revenues available for distribution to you will be limited to
payments under the debentures. See "Description of Convertible Senior
Subordinated Debentures--General." If we do not make interest payments on the
debentures, the property trustee will not have funds available to pay
distributions on the HIGH TIDES. We have guaranteed the payment of
distributions, if and to the extent the trust has funds legally available for
the payment of those distributions on a limited basis as set forth under
"Description of the Guarantee."
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CONVERSION RIGHTS
GENERAL. You may convert your HIGH TIDES at any time prior to 5:00 p.m.,
New York City time, on or prior to the tender notification date and, in the
event of a convertible remarketing or a failed final remarketing, from and after
the reset date to and including February 15, 2030 (except that you may convert
HIGH TIDES called for redemption by us at any time prior to 5:00 p.m., New York
City time, on the relevant redemption date), at your option and in the manner
described below, into shares of our common stock. On or prior to the tender
notification date, you may convert each HIGH TIDES, pursuant to the initial
conversion ratio, into 1.0076 shares of our common stock (equivalent to an
initial conversion price of $49.625 per share of common stock). On and after the
reset date, the trust has the option to make each HIGH TIDES, subject to the
results of the remarketing, become convertible into a different number of shares
of common stock or nonconvertible. See "The Remarketing." The conversion ratio
and the equivalent conversion price in effect at any given time are referred to
in this prospectus as the applicable conversion ratio and the applicable
conversion price, respectively, and will be subject to adjustment as described
under "--Conversion Price Adjustments" below. The trust has covenanted in the
declaration of trust not to convert debentures held by it except pursuant to a
notice of conversion delivered to the property trustee, as conversion agent, by
you.
If you wish to exercise your conversion right, you must deliver an
irrevocable conversion notice, together, if the HIGH TIDES are in certificated
form, with the certificated security, to the conversion agent who will, on your
behalf, exchange the HIGH TIDES for a like amount of debentures and immediately
convert the debentures into shares of our common stock. You may obtain copies of
the required form of the conversion notice from the conversion agent.
If you are the record holder of HIGH TIDES at the close of business on a
distribution record date, you will be entitled to receive the distribution
payable on your HIGH TIDES on the corresponding distribution date even if you
convert your HIGH TIDES after the distribution record date but prior to the
distribution date. Except as provided in the immediately preceding sentence,
neither we nor the trust will make, or be required to make, any payment,
allowance or adjustment for accrued and unpaid distributions, whether or not in
arrears, on converted HIGH TIDES, even if you convert your HIGH TIDES during a
deferral period. We will make no payment or allowance for distributions on our
shares of common stock issued upon conversion, except to the extent that those
shares of common stock are held of record on the record date for any
distributions. We will deem each conversion to have been effected immediately
prior to the close of business on the day on which the trust received the
related conversion notice.
We will not issue any fractional shares of our common stock as a result of
conversion. Instead, we will pay fractional interest in cash based on the
closing price of our common stock at the time of conversion.
CONVERSION PRICE ADJUSTMENTS--GENERAL. The applicable conversion price of
the HIGH TIDES will be adjusted, without duplication, upon the happening of the
following events:
- the payment of dividends and other distributions payable exclusively in
our common stock on our common stock;
- the issuance to all holders of our common stock of rights or warrants;
- subdivisions and combinations of our common stock;
- the payment of dividends and other distributions to all holders of our
common stock consisting of evidences of our indebtedness, securities or
capital stock, cash or assets, except for those rights or warrants
referred to in the second bullet clause above and dividend and
distributions paid exclusively in cash;
- the payment to holders of our common stock in respect of a tender or
exchange offer, other than an odd-lot offer, by us or any of our
subsidiaries for our common stock at a price in excess of 110% of
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the current market price of our common stock as of the trading day next
succeeding the last date tenders or exchanges may be made pursuant to the
tender or exchange offer; and
- the payment of dividends and other distributions on our common stock paid
exclusively in cash, excluding:
- cash dividends that do not exceed the per share amount of the smallest
of the immediately four preceding quarterly cash dividends, as adjusted
to reflect any of the events described above; and
- cash dividends the per share amount of which, together with the
aggregate per share amount of any other cash dividends paid within the
12 months preceding the date of payment of such cash dividends, does
not exceed 12 1/2% of the current market price of our common stock as
of the trading day immediately preceding the date of declaration of the
dividend.
We may, at our option, make reductions in the applicable conversion price as
our board of directors deems advisable to avoid or diminish any income tax to
our common stockholders or rights to purchase our common stock resulting from
any dividend or distribution of stock or rights to acquire stock or from any
event treated similarly for federal income tax purposes. See "Certain United
States Federal Income Tax Consequences--Adjustment of Conversion Price."
The applicable conversion price will not be adjusted:
- upon the issuance of any shares of our common stock pursuant to any
present or future plan providing for the reinvestment of dividends or
interest payable on securities of Titan and the investment of additional
optional amounts in shares of our common stock under any plan;
- upon the issuance of any shares of our common stock or options or rights
to purchase those shares pursuant to any present or future employee,
director or consultant benefit plan or program of Titan; or
- upon the issuance of any shares of our common stock pursuant to any
option, warrant, right, or exercisable, exchangeable or convertible
security outstanding as of the date the HIGH TIDES were first issued.
No adjustment in the applicable conversion price will be required unless the
adjustment would require an increase or decrease of at least 1% of the
applicable conversion price. If the adjustment is not made because the
adjustment does not change the applicable conversion price by more than 1%, then
the adjustment that is not made will be carried forward and taken into account
in any future adjustment. Except as specifically described above, the applicable
conversion price will not be subject to adjustment in the case of the issuance
of any of our common stock, or securities convertible into or exchangeable for
our common stock.
CONVERSION PRICE ADJUSTMENTS--MERGER, CONSOLIDATION OR SALE OF ASSETS OF
TITAN. If we are a party to a transaction which results in our common shares
being converted into the right to receive, or being exchanged for, securities,
cash or other property of a third party, the conversion price may be adjusted as
described below. The following are examples of company transactions which may
result in an adjustment to the conversion price:
- merger;
- consolidation;
- sale of all or substantially all of our assets;
- recapitalization or reclassification of our common shares; or
- any compulsory share exchange.
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If we are a party to any company transaction, in each case, as a result of
which shares of our common stock will be converted into the right to receive
other securities, cash or other property, we will ensure that lawful provision
is made as part of the terms of the company transaction so that the holder of
each HIGH TIDES then outstanding will have the right thereafter to convert the
HIGH TIDES only into:
- in the case of any company transaction other than a company transaction
involving a Common Stock Fundamental Change, the kind and amount of
securities, cash and other property receivable upon the consummation of
the company transaction by a holder of that number of shares of our common
stock into which a HIGH TIDES was convertible immediately prior to the
company transaction; or
- in the case of a company transaction involving a Common Stock Fundamental
Change, common stock of the kind received by holders of our common stock;
but in each case after giving effect to any adjustment discussed below relating
to a Fundamental Change if the company transaction constitutes a Fundamental
Change.
The holders of HIGH TIDES will have no voting rights with respect to any
company transaction.
In the case of any company transaction involving a Fundamental Change, the
applicable conversion price will be adjusted immediately before the Fundamental
Change as follows:
- in the case of a Non-Stock Fundamental Change, the applicable conversion
price of the HIGH TIDES will become the lower of:
- the applicable conversion price immediately prior to the Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments; and
- the result obtained by multiplying the greater of the relevant price or
the then applicable reference market price by the optional redemption
ratio (the product is referred to as the "adjusted relevant price" or
the "adjusted reference market price," as the case may be); and
- in the case of a Common Stock Fundamental Change, the applicable
conversion price of the HIGH TIDES immediately prior to the Common Stock
Fundamental Change, but after giving effect to any other prior
adjustments, will be adjusted by multiplying the applicable conversion
price by a fraction of which the numerator will be the Purchaser Stock
Price and the denominator will be the relevant price.
However, in the event of a Common Stock Fundamental Change in which:
- 100% of the value of the consideration received by a holder of our common
stock is common stock of the successor, acquirer or other third party (and
cash, if any, is paid only with respect to any fractional interests in the
common stock resulting from the Common Stock Fundamental Change); and
- all our common stock will have been exchanged for, converted into, or
acquired for common stock (and cash with respect to fractional interests)
of the successor, acquirer or other third party;
the applicable conversion price of the HIGH TIDES immediately prior to the
Common Stock Fundamental Change will be adjusted by multiplying the applicable
conversion price by a fraction of which the numerator will be one and the
denominator will be the number of shares of common stock of the successor,
acquirer or other third party received by a holder of one share of our common
stock as a result of the Common Stock Fundamental Change.
In the absence of the adjustments to the applicable conversion price in the
event of a company transaction involving a Fundamental Change, in the case of a
company transaction each HIGH TIDES would become convertible into the
securities, cash, or other property receivable by a holder of the number of
shares of our common stock into which each HIGH TIDES was convertible
immediately prior to the
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company transaction. Thus, in the absence of the Fundamental Change provisions,
a company transaction could substantially lessen or eliminate the value of the
conversion privilege associated with the HIGH TIDES. For example, if a company
were to acquire Titan in a cash merger, each HIGH TIDES would become convertible
solely into cash and would no longer be convertible into securities whose value
would vary depending on the future prospects of Titan and other factors.
In Non-Stock Fundamental Change transactions, the foregoing conversion price
adjustments are designed to increase the amount of securities, cash or other
property into which you may convert each HIGH TIDES. In a Non-Stock Fundamental
Change transaction in which the initial value received per share of our common
stock (measured as described in the definition of relevant price) is lower than
the then applicable conversion price of a HIGH TIDES but greater than or equal
to the reference market price, the applicable conversion price will be adjusted
with the effect that you will be able to convert each HIGH TIDES into
securities, cash or other property of the same type received by the holders of
our common stock in the transaction with the applicable conversion price
adjusted as though the initial value had been the adjusted relevant price. In a
Non-Stock Fundamental Change transaction in which the initial value received per
share of our common stock (measured as described in the definition of relevant
price) is lower than both the applicable conversion price of a HIGH TIDES and
the reference market price, the applicable conversion price will be adjusted as
described above but calculated as though the initial value had been the adjusted
reference market price.
In Common Stock Fundamental Change transactions, the foregoing adjustments
are designed to provide in effect that:
- where our common stock is converted partly into common stock and partly
into other securities, cash or property, you will be able to convert each
HIGH TIDES solely into a number of shares of common stock determined so
that the initial value of those shares (measured as described in the
definition of Purchaser Stock Price) equals the value of the shares of our
common stock into which each HIGH TIDES was convertible immediately before
the transaction (measured as aforesaid); and
- where our common stock is converted solely into common stock, you will be
able to convert each HIGH TIDES into the same number of shares of common
stock receivable by a holder of the number of shares of our common stock
into which each HIGH TIDES was convertible immediately before the
transaction.
The term "closing price" of any security on any day means the last reported
sale price of the security on that day, or in case no sale takes place on that
day, the average of the closing bid and asked prices in each case on the
principal national securities exchange on which the securities are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Market System of the National Association
of Securities Dealers, Inc. or any successor national automated interdealer
quotation system (the "NNM") or, if the securities are not listed or admitted to
trading on any national securities exchange or quoted on the NNM, the average of
the closing bid and asked prices of the security in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected by Titan for
that purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value, as determined in good faith by our board of
directors, of the consideration received by holders of our common stock consists
of common stock that for each of the ten consecutive trading days immediately
prior to and including the entitlement date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the NNM; provided, however, that a Fundamental Change will
not be a Common Stock Fundamental Change unless either:
- we continue to exist after the occurrence of the Fundamental Change and
the outstanding HIGH TIDES continue to exist as outstanding HIGH TIDES; or
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- not later than the occurrence of the Fundamental Change, the outstanding
debentures are converted into or exchanged for debentures of a corporation
succeeding to our business, which debentures have terms substantially
similar to those of our debentures.
The term "entitlement date" means the record date for determination of the
holders of our common stock entitled to receive securities, cash or other
property in connection with a Non-Stock Fundamental Change or a Common Stock
Fundamental Change or, if there is no record date, the date upon which holders
of our common stock will have the right to receive those securities, cash or
other property.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with a company transaction pursuant to which all or
substantially all of our common stock will be exchanged for, converted into,
acquired for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise). However, in the case of a company transaction involving more than
one transaction or event, for purposes of adjustment of the applicable
conversion price, the Fundamental Change will be deemed to have occurred when
substantially all of our common stock is exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash, or
other property, but the adjustment will be based upon the highest weighted
average per share consideration that a holder of our common stock could have
received in the transactions or events as a result of which more than 50% of all
outstanding shares of our common stock will have been exchanged for, converted
into, or acquired for or constitute solely the right to receive securities, cash
or other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "optional redemption ratio" means a fraction of which the numerator
will be $50 and the denominator will be the then current optional redemption
price or, on or prior to February 20, 2003 and at any time after the reset date
at which the HIGH TIDES are not redeemable at our option, an amount per HIGH
TIDES determined by us in our sole discretion, after consultation with a
nationally recognized investment banking firm, to be the equivalent of the
hypothetical redemption price that would have been applicable if the HIGH TIDES
had been redeemable during that period.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the closing prices for the common stock
received in the Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the entitlement date, as adjusted in good faith by
us to appropriately reflect any of the events referred to in the six bullet
clauses of the first paragraph under "--Conversion Price Adjustments--General."
The term "reference market price" will initially mean, on the date the trust
originally issues the HIGH TIDES, $26.875 (which is an amount equal to 66 2/3%
of the last reported sale price for our common stock on The New York Stock
Exchange on February 3, 2000). In the event of any adjustment to the applicable
conversion price from such date to, but excluding the reset date, other than as
a result of a Non-Stock Fundamental Change, the trust will also adjust the
reference market price so that the ratio of the reference market price to the
applicable conversion price after giving effect to any adjustment will be the
same as the ratio of $26.875 to the initial conversion price. If the HIGH TIDES
are convertible into common stock on and after the reset date, the reference
market price on the reset date will be an amount equal to 66 2/3% of the closing
price of the common stock on the reset date and, in the event of any adjustment
to the applicable conversion price from the reset date and thereafter, other
than as a result of a Non-Stock Fundamental Change, the reference market price
shall also be adjusted so that the ratio of the reference market price to the
applicable conversion price after giving effect to any such adjustment shall
always be the same as the ratio of the closing price of the common stock on the
reset date to the term conversion price.
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The term "relevant price" means:
- in the case of a Non-Stock Fundamental Change in which the holder of our
common stock receives only cash, the amount of cash received by the holder
of one share of our common stock; and
- in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily closing prices for our common
stock during the ten consecutive trading days prior to and including the
entitlement date, in each case as adjusted in good faith by us to
appropriately reflect any of the events referred to in the six bullet
clauses of the first paragraph under "--Conversion Price
Adjustments--General."
REDEMPTION
Upon the repayment in full of the debentures at their stated maturity or a
redemption in whole or in part of the debentures (other than following any
distribution of the debentures to you and the holders of the trust's common
securities), the property trustee will apply the proceeds from the repayment or
redemption to redeem, on a pro rata basis, a like amount of HIGH TIDES and the
trust's common securities, on the redemption date, in an amount per HIGH TIDES
or common security, as applicable, equal to the applicable redemption price. The
redemption price will be equal to:
- the liquidation amount of each HIGH TIDES plus any accrued and unpaid
distributions in the case of (A) the repayment of the debentures at their
stated maturity or (B) the redemption of the debentures in certain limited
circumstances upon the occurrence of a tax event;
- in the case of an optional redemption on or after February 20, 2003, but
prior to, and excluding, the tender notification date, the initial
redemption price as set forth under "Description of Convertible Senior
Subordinated Debentures--Redemption--Optional Redemption";
- in the case of an optional redemption after the reset date, in accordance
with the term call protections, if any, established in the remarketing;
and
- in the case of an optional redemption after a failed final remarketing,
100% of the liquidation amount of the HIGH TIDES being redeemed, plus
accrued and unpaid distributions.
REDEMPTION PROCEDURES
The trust will redeem its HIGH TIDES and common securities at the applicable
redemption price with the proceeds from the contemporaneous repayment or
redemption of the debentures. The trust will redeem its HIGH TIDES and common
securities and will pay the applicable redemption price on each redemption date
only to the extent that it has funds on hand available for the payment of the
redemption price. See also "--Subordination of Common Securities."
If the trust gives a notice of redemption in respect of the HIGH TIDES,
then, by 10:00 a.m., New York City time, on the redemption date, to the extent
funds are available, with respect to the HIGH TIDES held in global form, the
property trustee will deposit irrevocably with DTC funds sufficient to pay the
applicable redemption price and will give DTC irrevocable instructions and
authority to pay the applicable redemption price to you. See "--Depositary
Procedures."
If the HIGH TIDES are no longer in book-entry form, the property trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for the HIGH TIDES funds sufficient to pay the applicable redemption price and
will give the paying agent irrevocable instructions and authority to pay the
redemption price to the holders of the HIGH TIDES upon surrender of their
certificates evidencing the HIGH TIDES. See "--Payment and Paying Agency."
Distributions payable on or prior to the redemption date for any HIGH TIDES
called for redemption will be paid to holders of HIGH TIDES as of the relevant
record dates for the related distribution. If the
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trust has given notice of redemption and deposited funds as required, then upon
the date of the deposit, all of your rights will cease, except your right to
receive the applicable redemption price, but without interest on the redemption
price, and the HIGH TIDES will cease to be outstanding.
If any redemption date is not a business day, then payment of the applicable
redemption price payable on that date will be made on the next succeeding day
which is a business day, and without any interest or other payment in respect of
any delay. However, if that business day falls in the next calendar year, the
payment will be made on the immediately preceding business day. In the event
that the trust or, pursuant to the guarantee described in "Description of the
Guarantee," we improperly withhold or refuse to make payment of the applicable
redemption price, then distributions on HIGH TIDES will continue to accrue at
the then applicable rate, from the redemption date originally established by the
trust to the date the redemption price is actually paid. Under these
circumstances, the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.
Subject to applicable law, we or our subsidiaries may at any time and from
time to time purchase outstanding HIGH TIDES by tender, in the open market or by
private agreement except as provided under "The Remarketing--Purchases by Us and
Our Affiliates."
If we desire to consummate an optional redemption, we must send a notice to
each holder of HIGH TIDES and the trust's common securities at its registered
address in accordance with the notice procedures set forth under "Description of
Convertible Senior Subordinated Debentures--Redemption--Optional Redemption." We
must mail any notice of a tax event redemption at least 30 days but not more
than 60 days before the redemption date to you. We need not provide notice of
repayment at the stated maturity of the debentures.
TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION OR DISTRIBUTION
If a tax event occurs and is continuing, we will cause the trustees to
dissolve and liquidate the trust and, after satisfaction of liabilities of
creditors of the trust, cause debentures to be distributed to you and us, as
holder of the common securities, on a pro rata basis, in liquidation of the
trust within 90 days following the occurrence of the tax event. However, the
liquidation and distribution will be conditioned on:
- the trustees' receipt of an opinion of a nationally recognized independent
tax counsel, reasonably acceptable to the trustees, experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that you
will not recognize any income, gain or loss for United States federal
income tax purposes as a result of such liquidation and distribution of
debentures; and
- Titan being unable to avoid such tax event within such 90-day period by
taking some ministerial action or pursuing some other reasonable measure
that, in our sole judgment, will have no adverse effect on us, the trust
or you and will involve no material cost.
Furthermore, if (1) a nationally recognized independent tax counsel,
reasonably acceptable to the trustees, experienced in such matters provides an
opinion (the "Redemption Tax Opinion") to us that, as a result of a tax event,
there is more than an insubstantial risk that we would be precluded from
deducting the interest on the debentures for U.S. federal income tax purposes,
even after the debentures were distributed to you upon liquidation of the trust
as described above, or (2) such tax counsel informs the trustees that it cannot
deliver a No Recognition Opinion, we will have the right, upon not less than 30
nor more than 60 days' notice and within 90 days following the occurrence and
continuation of the tax event, to redeem the debentures, in whole, but not in
part, for cash, for the principal amount plus accrued and unpaid interest and,
following such redemption, the trust will redeem all the HIGH TIDES at the
aggregate liquidation amount of the HIGH TIDES plus accrued and unpaid
distributions. However, if at the time there is available to us or the trust the
opportunity to eliminate, within such 90-day period, the tax event by taking
some ministerial action or pursuing some other reasonable measure that, in our
sole
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judgment, will have no adverse effect on us, the trust or you and will involve
no material cost, we or the trust will pursue that measure in lieu of
redemption. See "--Mandatory Redemption." In addition to the foregoing options,
we will also have the option of causing the HIGH TIDES to remain outstanding and
pay additional amounts on the debentures. See "Description of Convertible Senior
Subordinated Debentures--Additional Amounts."
The term "tax event" means the receipt by the property trustee of an opinion
of a nationally recognized independent tax counsel to us, reasonably acceptable
to the trustees, experienced in such matters (a "Dissolution Tax Opinion") to
the effect that as a result of:
- any amendment to or change (including any announced prospective change
(which will not include a proposed change), provided that a tax event will
not occur more than 90 days before the effective date of any prospective
change) in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority of the United States or
any political subdivision;
- any judicial decision or official administrative pronouncement, ruling,
regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action"); or
- any amendment to or change in the administrative position or
interpretation of any Administrative Action or judicial decision that
differs from the theretofore generally accepted position, in each case, by
any legislative body, court, governmental agency or regulatory body,
irrespective of the manner in which such amendment or change is made
known, which amendment or change is effective or such Administrative
Action or decision is announced, in each case, on or after the date of
original issuance of the debentures or the issue date of the HIGH TIDES in
which there is more than an insubstantial risk that one of the following
will occur:
- if the debentures are held by the property trustee, (1) the trust is,
or will be within 90 days of the date of such opinion, subject to U.S.
federal income tax with respect to interest accrued or received on the
debentures or subject to more than a DE MINIMIS amount of other taxes,
duties or other governmental charges as determined by counsel, or
(2) any portion of interest payable by us to the trust (or original
issue discount accruing) on the debentures is not, or within 90 days of
the date of such opinion will not be, deductible by us in whole or in
part for U.S. federal income tax purposes; or
- with respect to debentures which are no longer held by the property
trustee, any portion of interest payable by us (or original issue
discount accruing) on the debentures is not, or within 90 days of the
date of such opinion will not be, deductible by us in whole or in part
for U.S. federal income tax purposes.
If an investment company event occurs and is continuing, we will cause the
trustees to dissolve and liquidate the trust and, after satisfaction of
liabilities of creditors of the trust, cause a like amount of the debentures to
be distributed to you in liquidation of the trust within 90 days following the
occurrence of the investment company event.
An investment company event occurs if there is a change in law or regulation
or a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority to the
effect that the trust is or will be considered an "investment company" required
to be registered under the Investment Company Act of 1940, as amended. In order
to be an investment company event, the change in law must be effective on or
after February 3, 2000.
The distribution by us of the debentures will effectively result in the
cancellation of the HIGH TIDES.
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LIQUIDATION OF THE TRUST AND DISTRIBUTION OF CONVERTIBLE SENIOR SUBORDINATED
DEBENTURES
We, as the holder of the trust's outstanding common securities, will have
the right at any time including, without limitation, upon the occurrence of a
tax event or an investment company event, to dissolve the trust and, after
satisfaction of liabilities of creditors of the trust as provided by applicable
law, cause a like amount of the debentures to be distributed to you and the
holders of the trust's common securities upon liquidation of the trust. However,
we may not dissolve the trust during the period beginning on the business day
following a tender notification date and ending on the reset date (other than
upon the occurrence of a tax event or an investment company event). In addition,
the declaration trustees shall have received a No Recognition Opinion prior to
the dissolution of the trust.
The trust will automatically dissolve upon the first to occur of:
(A) our bankruptcy, dissolution or liquidation;
(B) the distribution of a like amount of the debentures to the holders of
the HIGH TIDES and the trust's common securities if we, as depositor,
have given our written direction to the property trustee to dissolve the
trust (which direction is optional and, except as described above, wholly
within our discretion, as depositor);
(C) redemption of all the HIGH TIDES and the trust's common securities as
described under "--Mandatory Redemption" above;
(D) conversion of all outstanding HIGH TIDES and the trust's common
securities as described under "--Conversion Rights" above;
(E) expiration of the term of the trust; or
(F) entry of an order for the dissolution of the trust by a court of
competent jurisdiction.
If an early dissolution occurs as described in clause (A), (B), (E) or
(F) above, the declaration trustees will liquidate the trust as expeditiously as
they determine to be possible by distributing, after satisfaction of liabilities
to the creditors of the trust as provided by applicable law, to you and the
holders of the trust's common securities a like amount of the debentures, unless
the distribution would not be practical. In that event, you and the holders of
the trust's common securities will be entitled to receive out of the trust's
assets available for distribution to holders, after satisfaction of liabilities
to the trust's creditors as provided by applicable law, an amount equal to, in
the case of holders of HIGH TIDES, the aggregate liquidation amount of the HIGH
TIDES plus accrued and unpaid distributions, to the date of payment (that amount
being the "liquidation distribution"). If the liquidation distribution can be
paid only in part because the trust has insufficient assets available to pay in
full the aggregate liquidation distribution, then the trust will pay the amounts
directly payable by it on the HIGH TIDES on a pro rata basis. We, as the holder
of the trust's common securities, will be entitled to receive distributions upon
any liquidation on a pro rata basis with you, except that if an event of default
under the debentures has occurred and is continuing, the HIGH TIDES will have a
priority over the trust's common securities with respect to any of those
distributions. See "--Subordination of Common Securities."
If we do not redeem the debentures prior to maturity, the trust is not
dissolved and liquidated and the debentures are not distributed to you and the
holders of the trust's common securities, the HIGH TIDES will remain outstanding
until the repayment of the debentures at their final stated maturity and the
distribution of the liquidation distribution to you.
On and after the liquidation date fixed for any distribution of debentures
to you and the holders of the trust's common securities:
- the trust will no longer deem the HIGH TIDES to be outstanding;
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- DTC or its nominee, as the record holder of the HIGH TIDES, will receive a
registered global certificate or certificates representing the debentures
to be delivered upon the distribution with respect to HIGH TIDES held by
DTC or its nominee; and
- the trust will deem any certificates representing HIGH TIDES not held by
DTC or its nominee to represent debentures having a principal amount equal
to the liquidation amount of the HIGH TIDES and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on the
HIGH TIDES until those certificates are presented to us or our agent for
cancellation, whereupon we will issue to the holder, and the debenture
trustee will authenticate, a certificate representing the debentures.
We cannot assure you as to the market prices for the HIGH TIDES or the
debentures that you may receive in exchange for the HIGH TIDES and/or the
trust's common securities if a dissolution and liquidation of the trust were to
occur. Accordingly, the HIGH TIDES that you may purchase, or the debentures that
you may receive on dissolution and liquidation of the trust, may trade at a
discount to the price that you originally paid to purchase the HIGH TIDES.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the HIGH TIDES and
the trust's common securities generally shall be made on a pro rata basis to the
holders of HIGH TIDES and the trust's common securities. The trust will base
those payments on the liquidation amount of the HIGH TIDES and the trust's
common securities. If on any distribution date or redemption date any event of
default under the indenture has occurred and is continuing or an event of
default under the declaration of trust has occurred and is continuing, then the
trust will not pay any distribution on, or applicable redemption price of, any
of the trust's common securities, and the trust will not make any other payment
on account of the redemption, liquidation or other acquisition of the trust's
common securities, unless:
- all accrued and unpaid distributions on all of the outstanding HIGH TIDES
are paid in cash for all distribution periods ending on or prior to any
payment on the common securities, or
- in the case of payment of the applicable redemption price, the full amount
of the redemption price on all of the outstanding HIGH TIDES then called
for redemption shall have been paid or provided for, and all funds
available to the property trustee will first be applied to the payment in
full in cash of all distributions on, or the applicable redemption price
of, the HIGH TIDES then due and payable.
If an event of default occurs under the declaration of trust resulting from
an event of default under the indenture, the trust will deem us, as holder of
the trust's common securities, to have waived any right to act with respect to
any event of default under the declaration of trust until the effect of all
events of default with respect to the HIGH TIDES have been cured, waived or
otherwise eliminated. Until all events of default under the declaration of trust
with respect to the HIGH TIDES have been so cured, waived or otherwise
eliminated, the property trustee will act solely on your behalf and not on our
behalf as holder of the trust's common securities, and only you will have the
right to direct the property trustee to act on your behalf.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "event of default" under the
declaration of trust (whatever the reason for the event of default and whether
it is voluntary or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
- the occurrence of an event of default under the indenture (see
"Description of Convertible Senior Subordinated Debentures--Debenture
Events of Default");
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- the trust's default in the payment of any distribution when it becomes due
and payable, and continuation of the default for a period of 30 days
(subject to the deferral of any due date in the case of a deferral
period);
- the trust's default in the payment of any redemption price of any HIGH
TIDES or common security of the trust when it becomes due and payable;
- default in the performance, or breach, in any material respect, of any
covenant or warranty of the declaration trustees in the declaration of
trust (other than a covenant or warranty, a default in the performance of
which or the breach of which is addressed in the second or third bullet
points above), and continuation of the default or breach for a period of
60 days after the holders of at least 25% in aggregate liquidation amount
of the outstanding HIGH TIDES have given, by registered or certified mail,
to the defaulting trustee or trustees a written notice specifying the
default or breach and requiring it to be remedied and stating that the
notice is a "Notice of Default" under the declaration of trust; or
- the occurrence of a bankruptcy or insolvency with respect to the property
trustee and the failure by us to appoint a successor property trustee
within 60 days of those events.
Within ten business days after the occurrence of any payment event of
default actually known to the property trustee, the property trustee will
transmit notice of the payment event of default to you, the administrative
trustees and us, as depositor, unless the event of default has been cured or
waived. Titan, as depositor, and the administrative trustees are required to
file annually with the property trustee a certificate as to whether or not we
and they are in compliance with all the conditions and covenants applicable to
us and them under the declaration of trust.
If an event of default under the indenture or an event of default under the
declaration of trust has occurred and is continuing, the HIGH TIDES will have a
preference over the trust's common securities. See "--Liquidation of the Trust
and Distribution of Convertible Senior Subordinated Debentures" and
"--Subordination of Common Securities."
REMOVAL OF TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, we, as the holder of the trust's common securities, may remove any
declaration trustee, other than a special trustee, at any time. If an event of
default under the indenture has occurred and is continuing, the holders of a
majority in liquidation amount of the outstanding HIGH TIDES may remove the
property trustee and the Delaware statutory trustee. In no event will you have
the right to vote to appoint, remove or replace the administrative trustees,
which voting rights are vested exclusively in us as the holder of the trust's
common securities. No resignation or removal of the Delaware statutory trustee
or the property trustee and no appointment of a successor trustee will be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the declaration of trust.
MERGER OR CONSOLIDATION OF TRUSTEES
Any successor to the property trustee or the Delaware trustee by merger,
conversion or consolidation or which otherwise succeeds to that trustee's
corporate trust business will take the place of that trustee under the
declaration of trust if the successor otherwise is qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge with or into, consolidate, amalgamate or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other person, except as described below or as
otherwise set forth in the declaration of trust. The trust may, with the consent
of the administrative trustees but without your consent and the consent of the
property trustee or the Delaware
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statutory trustee, merge with or into, consolidate, amalgamate or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, a trust organized as such under the laws of any state if:
- the successor entity either (1) expressly assumes all of the trust's
obligations with respect to the HIGH TIDES or (2) substitutes for the HIGH
TIDES other successor securities having substantially the same terms as
the HIGH TIDES so long as the successor securities rank the same as the
HIGH TIDES rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise;
- we expressly appoint a trustee of the successor entity possessing the same
powers and duties as the property trustee as the holder of the debentures;
- the successor securities are listed or traded, or any successor securities
will be listed or traded upon notification of issuance, on any national
securities exchange, national automated quotation system or other
organization on which the HIGH TIDES are then listed or traded, if any;
- the transaction does not cause the HIGH TIDES, including any successor
securities, to be downgraded by any nationally recognized statistical
rating organization;
- the transaction does not adversely affect the rights, preferences and
privileges of the holders of the HIGH TIDES, including any successor
securities, in any material respect;
- the successor entity has a purpose substantially identical and limited to
the purpose of the trust;
- prior to the transaction, we receive an opinion from independent counsel
to the trust experienced in such matters to the effect that:
- the transaction does not adversely affect the limited liability of the
holders of the HIGH TIDES and common securities, including any
successor securities;
- following the transaction neither the trust nor the successor entity
will be required to register as an investment company under the
Investment Company Act; and
- following the transaction, the trust or the successor entity will
continue to be treated as a grantor trust for U.S. federal income tax
purposes.
- we or any permitted successor or assignee owns all of the common
securities of the successor entity and guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the guarantee relating to the HIGH TIDES; and
- the transaction is not a taxable event for you.
Notwithstanding the general provisions described above, the trust will not,
except with the consent of holders of 100% in aggregate liquidation amount of
the HIGH TIDES and the trust's common securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it, if the
transaction would cause the trust or the successor entity to be classified as
other than a grantor trust for U.S. federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
The holders of HIGH TIDES have only the voting rights described below and
under "Description of the Guarantee--Amendments and Assignment" plus any voting
rights required by law and the declaration of trust.
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In addition to your rights with respect to the enforcement of payments by us
to the trust of principal of or interest on the debentures as described under
"Description of Convertible Senior Subordinated Debentures--Debenture Events of
Default," if either of the following events occurs:
- an event of default under the indenture occurs and is continuing; or
- we default under the guarantee with respect to the HIGH TIDES;
then the holders of the HIGH TIDES, acting as a single class, will be
entitled by a vote of a majority in aggregate stated liquidation amount of the
outstanding HIGH TIDES to appoint a special trustee which shall be called an
appointment event. Any holder of HIGH TIDES, other than Titan or any of our
affiliates, will be entitled to nominate any person to be appointed as special
trustee. Not later than 30 days after the right to appoint a special trustee
arises, the declaration trustees will convene a meeting of the holders of HIGH
TIDES for the purpose of appointing a special trustee. If the declaration
trustees fail to convene that meeting within the 30-day period, the holders of
not less than 10% of the aggregate stated liquidation amount of the outstanding
HIGH TIDES will be entitled to convene the meeting. The provisions of the
declaration of trust relating to the convening and conduct of the meetings of
the holders will apply with respect to the meeting. Any special trustee so
appointed will cease to be a special trustee if the appointment event pursuant
to which the special trustee was appointed and all other appointment events
cease to be continuing. Notwithstanding the appointment of any special trustee,
we will retain all rights under the indenture, including the right to defer
payments of interest by extending the interest payment period as described under
"Description of Convertible Senior Subordinated Debentures--Option to Extend
Interest Payment Date." If such an extension occurs, there will be no event of
default under the indenture and, consequently, no event of default for failure
to make any scheduled interest payment during the deferral period on the date
originally scheduled.
We, along with the property trustee and the administrative trustees, may
amend the declaration of trust from time to time without your consent:
- to cure any ambiguity;
- to correct or supplement any provision in the declaration of trust that
may be inconsistent with any other provision;
- to make any other provisions with respect to ministerial matters or
questions arising under the declaration of trust, which will not be
inconsistent with the other provisions of the declaration of trust; or
- to modify, eliminate or add to any provisions of the declaration of trust
if necessary to ensure that the trust will not be taxable as a corporation
or will be classified for U.S. federal income tax purposes as a grantor
trust at all times that any HIGH TIDES or the trust's common securities
are outstanding or to ensure that the trust will not be required to
register as an investment company under the Investment Company Act.
However, no such action may be taken in connection with the first three
bullet clauses above unless the action will not adversely affect in any material
respect the interests of any holder of HIGH TIDES or the trust's common
securities. Any amendments of the declaration of trust will become effective
when notice of the amendment is given to you and the holders of the trust's
common securities.
We, along with the property trustee and the administrative trustees, may
amend the declaration of trust with:
- the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding HIGH TIDES; and
- receipt by the declaration trustees of an opinion of counsel to the effect
that the amendment or the exercise of any power granted to the trustees in
accordance with the amendment will not affect the
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trust's status as a grantor trust for U.S. federal income tax purposes or
the trust's exemption from status as an investment company under the
Investment Company Act.
In addition, without the consent of each holder of HIGH TIDES and the
trust's common securities, no amendment may:
- change the amount or timing of any distribution on the HIGH TIDES or the
trust's common securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the HIGH TIDES or the
trust's common securities as of a specified date; or
- restrict the right of a holder of HIGH TIDES or the trust's common
securities to institute suit for the enforcement of any payment on or
after such date.
So long as any debentures are held by the trust, the declaration trustees
will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture, or execute any trust
or power conferred on the property trustee with respect to the debentures;
- waive any past default that is waivable under the indenture governing the
debentures;
- exercise any right to rescind or annul a declaration that the principal of
all the debentures is due and payable; or
- give a required consent to any amendment, modification or termination of
the indenture or the debentures;
unless, in each case, they first obtain the approval of the holders of a
majority in aggregate liquidation amount of all outstanding HIGH TIDES. When the
indenture requires the consent of each holder of debentures, the property
trustee cannot give its consent without the prior consent of each holder of the
HIGH TIDES.
The declaration trustees will not revoke any action previously authorized or
approved by a vote of the holders of the HIGH TIDES except by subsequent vote of
those holders. The property trustee will notify each holder of HIGH TIDES of any
notice of default with respect to the debentures. In addition to obtaining the
foregoing approvals of the holders of the HIGH TIDES, prior to taking any of the
foregoing actions, the property trustee will obtain an opinion of counsel
experienced in those matters to the effect that the action will not affect the
trust's status as a grantor trust for U.S. federal income tax purposes on
account of the action.
Any required approval of holders of HIGH TIDES may be given either at a
properly convened meeting of those holders or by a written consent without prior
notice. The administrative trustees must notify holders of HIGH TIDES of any
meeting.
Neither your vote nor your consent is required for the trust to redeem and
cancel or remarket the HIGH TIDES in accordance with the declaration of trust or
to distribute the debentures in accordance with the declaration of trust and the
terms of the HIGH TIDES and the trust's common securities.
Notwithstanding that you are entitled to vote or consent under any of the
circumstances described above, any of the HIGH TIDES that are owned by us, the
declaration trustees or any affiliate of Titan or any declaration trustees,
will, for purposes of such vote or consent, be treated as if they were not
outstanding.
EXPENSES AND TAXES
We will pay all of the costs, expenses or liabilities of the trust, other
than obligations of the trust to pay to the holders of any HIGH TIDES or common
securities the amounts due to the holders under the terms of those securities.
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FORM, BOOK-ENTRY PROCEDURES AND TRANSFER
The HIGH TIDES were issued in the form of one fully registered global HIGH
TIDES certificate. The global HIGH TIDES certificate was deposited upon issuance
with the property trustee as custodian for DTC, and registered in the name of
DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below.
Except as set forth below, the global HIGH TIDES certificate may be
transferred, in whole but not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the global HIGH TIDES
certificate may not be exchanged for HIGH TIDES in certificated form except in
the limited circumstances described below. See "--Certificated HIGH TIDES." In
addition, a transfer of beneficial interests in the global HIGH TIDES
certificate will be subject to the applicable rules and procedures of DTC and
its direct or indirect participants which may change from time to time.
DEPOSITARY PROCEDURES
DTC has advised us that it is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participating
organizations and to facilitate the clearance and settlement of transactions in
those securities between its participants through electronic book-entry changes
to accounts of its participants, thereby eliminating the need for physical
movement of certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
indirect participants such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by or on behalf of DTC only through the participants or the
indirect participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the participants and indirect participants. DTC has
also advised us and the trust that, pursuant to procedures established by it:
- upon deposit of the global HIGH TIDES certificate, DTC credited the
accounts of participants designated by Credit Suisse First Boston with
portions of the principal amount of the global HIGH TIDES certificate; and
- ownership of such interests in the global HIGH TIDES certificate will be
shown on, and the transfer of such ownership interests will be effected
only through, records maintained by DTC, with respect to the participants,
or by the participants and the indirect participants, with respect to
other owners of beneficial interests in the global HIGH TIDES certificate.
Investors in the global HIGH TIDES certificate may hold their interests in
the global HIGH TIDES certificate directly through DTC, if they are participants
in DTC, or indirectly through organizations which are participants in DTC's
system. All interests in the global HIGH TIDES certificate will be subject to
the procedures and requirements of DTC. The laws of some states require that
certain persons take physical delivery in certificated form of certain
securities, such as the HIGH TIDES, that they own.
Consequently, the ability to transfer beneficial interests in the global
HIGH TIDES certificate to those persons will be limited to that extent. Because
DTC can act only on behalf of participants, which in turn act on behalf of
indirect participants and certain banks, the ability of a person having
beneficial interests in a global HIGH TIDES certificate to pledge those
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of those interests, may be affected by the
lack of a physical certificate evidencing those interests. For certain other
restrictions on the transferability of the HIGH TIDES, see "--Certificated HIGH
TIDES."
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Except as described below, owners of beneficial interests in the global HIGH
TIDES certificate will not be entitled to have HIGH TIDES registered in their
names, and they will not receive or be entitled to receive physical delivery of
HIGH TIDES in certificated form and will not be considered the registered owners
or holders thereof under the declaration of trust for any purpose.
Payments in respect of the global HIGH TIDES certificate registered in the
name of DTC or its nominee will be payable by the property trustee to DTC or its
nominee as the registered holder under the declaration of trust by wire transfer
in immediately available funds on each distribution date. Under the terms of the
declaration of trust, the property trustee will treat the persons in whose names
the HIGH TIDES, including the global HIGH TIDES certificate, are registered as
the owners of the global HIGH TIDES certificate for the purpose of receiving
payments and for any and all other purposes.
Consequently, neither the property trustee nor any agent of the property
trustee has or will have any responsibility or liability for:
- any aspect of DTC's records or any participant's or indirect participant's
records relating to, or payments made on account of, beneficial ownership
interests in the global HIGH TIDES certificate, or for maintaining,
supervising or reviewing any of DTC's records or any participant's or
indirect participant's records relating to the beneficial ownership
interests in the global HIGH TIDES certificate; or
- any other matter relating to the actions and practices of DTC or any of
its participants or indirect participants.
DTC has advised us and the trust that its current practice, upon receipt of
any payment in respect of securities such as the HIGH TIDES, is to credit the
accounts of the relevant participants with the payment on the payment date, in
amounts proportionate to their respective holdings in liquidation amount of
beneficial interests in the global HIGH TIDES certificate, as shown on the
records of DTC, unless DTC has reason to believe it will not receive payment on
the payment date. Payments by the participants and the indirect participants to
the beneficial owners of HIGH TIDES represented by a global HIGH TIDES
certificate held through the participants will be governed by standing
instructions and customary practices and will be the responsibility of the
participants or the indirect participants and will not be the responsibility of
DTC, the property trustee or the trust. Neither the trust nor the property
trustee will be liable for any delay by DTC or any of its participants in
identifying the beneficial owners of the HIGH TIDES, and the trust and the
property trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Interests in the global HIGH TIDES certificate will trade and settle
according to the rules and procedures of DTC and its participants. Transfers and
settlements between participants in DTC will be effected in accordance with
DTC's procedures.
DTC has advised us and the trust that it will take any action permitted to
be taken by you, including the presentation of HIGH TIDES for exchange as
described below, only at the direction of one or more participants to whose
account with DTC interests in the global HIGH TIDES certificate are credited and
only in respect of the portion of the aggregate liquidation amount of the HIGH
TIDES represented by the global HIGH TIDES certificate as to which the
participant or participants has or have given such direction. However, if there
is an event of default under the declaration of trust, DTC reserves the right to
exchange the global HIGH TIDES certificate for HIGH TIDES in certificated form
and to distribute those HIGH TIDES to its participants.
So long as DTC or its nominee is the registered owner of the global HIGH
TIDES certificate, DTC or the nominee, as the case may be, will be considered
the sole owner or holder of the HIGH TIDES represented by the global HIGH TIDES
certificate for all purposes under the declaration of trust.
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Neither DTC nor its nominee will consent or vote with respect to the HIGH
TIDES. Under its usual procedures, DTC would mail an omnibus proxy to the trust
as soon as possible after the record date. The omnibus proxy assigns the
consenting or voting rights of DTC or its nominee to those participants to whose
accounts the HIGH TIDES are credited on the record date (identified in a listing
attached to the omnibus proxy).
The information in this section concerning DTC and its book-entry system has
been obtained from sources that we and the trust believe to be reliable, but
neither we nor the trust takes responsibility for the accuracy of the
information.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the global HIGH TIDES certificate among participants in DTC, it
is under no obligation to perform or to continue to perform those procedures,
and those procedures may be discontinued at any time. Neither the trust nor the
property trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
CERTIFICATED HIGH TIDES
The HIGH TIDES represented by the global HIGH TIDES certificate will be
exchangeable for certificated HIGH TIDES in definitive form of like tenor as the
HIGH TIDES in denominations of U.S. $50 and integral multiples of $50 if:
- DTC notifies us or the trust that it is unwilling or unable to continue as
depositary for the global HIGH TIDES certificate, or if at any time DTC
ceases to be a clearing agency registered under the Exchange Act;
- we or the administrative trustees in our or their sole discretion at any
time determine that the global HIGH TIDES certificate shall be so
exchangeable; or
- an event of default under the declaration of trust has occurred and is
continuing.
Any of the HIGH TIDES that are exchangeable pursuant to the preceding
sentence are exchangeable for certificated HIGH TIDES issuable in authorized
denominations and registered in the names as DTC directs. Subject to the
foregoing, the global HIGH TIDES certificate is not exchangeable, except for a
global HIGH TIDES certificate of the same aggregate denomination to be
registered in the name of DTC or its nominee.
PAYMENT AND PAYING AGENCY
Payments in respect of the HIGH TIDES held in global form will be made to
DTC. DTC will make payments on the HIGH TIDES by crediting the relevant account
at DTC on the applicable distribution dates. If any HIGH TIDES are not held by
DTC, then the paying agent will mail checks to the registered holders at their
addresses as shown on its register. The paying agent will initially be the
property trustee. The paying agent may resign as paying agent upon 30 days'
written notice to the property trustee, the administrative trustees and us. If
the property trustee resigns as paying agent, the administrative trustees will
appoint another entity to act as paying agent.
The property trustee has informed the trust that so long as it serves as
paying agent for the HIGH TIDES, it anticipates that information regarding
distributions on the HIGH TIDES, including payment date, record date and
redemption information, will be made available through Wilmington Trust Company,
care of Corporate Trust Administration, 1100 North Market Street, Wilmington, DE
19890.
REGISTRAR AND CONVERSION AGENT
The property trustee will act as the initial paying agent, registrar and
conversion agent for the HIGH TIDES.
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The administrative trustees may designate additional or substitute paying
agents and registrars at any time. Registration of transfers of certificated
HIGH TIDES will be effected without charge by or on behalf of the trust, but
upon payment (with the giving of such indemnity as the administrative trustees
may require) in respect of any tax or other government charges that may be
imposed in connection with any transfer or exchange. The trust will not be
required to register the transfer or exchange of certificated HIGH TIDES during
the period beginning at the opening of business 15 days before any selection of
certificated HIGH TIDES to be redeemed and ending at the close of business on
the day of that selection or register the transfer or exchange of any
certificated HIGH TIDES, or portion thereof, called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of an
event of default, is required to perform only the duties that are specifically
set forth in the declaration of trust. During the existence of an event of
default, the property trustee is required to exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the property trustee has no obligation
to exercise any of its powers under the declaration of trust at the request of
any holder of HIGH TIDES or the trust's common securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that it might
incur by doing so.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
- the trust will not be deemed to be an investment company required to be
registered under the Investment Company Act or classified as an
association taxable as a corporation or partnership for U.S. federal
income tax purposes;
- would cause the trust to be classified for U.S. federal income tax
purposes as a grantor trust; and
- the debentures will be treated as Titan's indebtedness for United States
federal income tax purposes.
The administrative trustees are authorized to take any lawful action
consistent with the trust's certificate of trust and the declaration of trust,
that the administrative trustees determine in their discretion to be necessary
or desirable for those purposes, as long as their actions do not materially
adversely affect the interests of the holders of the HIGH TIDES or the trust's
common securities.
You and the holders of the trust's common securities have no preemptive or
similar rights.
The trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
GOVERNING LAW
The declaration of trust and the HIGH TIDES are governed by and construed in
accordance with the laws of the State of Delaware.
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DESCRIPTION OF CONVERTIBLE SENIOR SUBORDINATED DEBENTURES
We issued convertible senior subordinated debentures under an indenture
between us and Wilmington Trust Company, as debenture trustee. The indenture has
been qualified under and will be subject to and governed by the Trust Indenture
Act. This summary of certain terms and provisions of the debentures and the
indenture is not complete. For a complete description of the debentures, we
encourage you to read the indenture. Unless the context requires otherwise,
"Titan," "we," "us," "our" or similar terms in this section refer solely to The
Titan Corporation and not the trust or any of our other consolidated
subsidiaries.
GENERAL
Concurrently with the issuance of the HIGH TIDES and the trust's common
securities, the trust invested the proceeds from issuing those securities in our
5 3/4% Convertible Senior Subordinated Debentures due February 15, 2030.
Interest commenced to accrue on the debentures from the date of their original
issuance, at the applicable rate of the principal amount thereof. Subject to the
deferral rights described below and our right to set special record dates for
payment of defaulted interest, the trust will make those payments quarterly in
arrears on each February 15, May 15, August 15 and November 15, commencing
May 15, 2000 to the person in whose name each debenture is registered, at the
close of business on the first day of the month of the applicable interest
payment date. The first day of the month of any interest payment date shall be
the record date for such interest payment date.
If the reset date is prior to the record date for the immediately following
interest payment date, then interest and additional amounts, if any, accrued
from and after the reset date to but excluding the immediately following
interest payment date shall be paid on such interest payment date to the person
in whose name each debenture is registered on the relevant record date, subject
to our right to initiate a deferral period. If the reset date is on or after the
record date for the immediately following interest payment date, then
(1) interest and additional amounts, if any, accrued from and after the record
date to but excluding the reset date shall be paid on the immediately following
interest payment date to the person in whose name each debenture is registered
on the relevant record date and (2) interest and additional amounts, if any,
accrued from and after the reset date to but excluding the immediately following
interest payment date shall be paid on the second interest payment date
immediately following the reset date to the person in whose name each debenture
is registered on the relevant record date for such second interest payment date,
subject in each case to our right to initiate a deferral period. The applicable
rate will be 5 3/4% per annum from the date of original issuance of the HIGH
TIDES to, but excluding, the reset date. From the reset date, the applicable
rate will be the term rate established by the remarketing agent to be effective
on the reset date.
We anticipate that, until the dissolution and liquidation of the trust, each
debenture will be registered in the name of the property trustee and held by the
property trustee for the benefit of the holders of the HIGH TIDES and the
trust's common securities. The amount of interest payable for any period will be
computed on the basis of the number of days elapsed in a 360-day year of twelve
30-day months.
If any interest payment date is not a business day, then payment will be
made on the next succeeding business day, except if such business day is in the
next succeeding calendar year, such payment will be made on the immediately
preceding business day. No additional interest or other payment will accrue
because of this change in the payment date. Accrued interest that is not paid on
the applicable interest payment date will bear additional interest on the amount
of interest that is not paid (to the extent permitted by law), compounded
quarterly from the relevant interest payment date. The term "interest" as used
herein will include quarterly payments, interest on quarterly interest payments
not paid on the applicable interest payment date and additional amounts
described in "--Additional Amounts."
If the trust distributes the debentures to you, the description of the
remarketing of the HIGH TIDES and your conversion rights in this prospectus will
apply, with such changes as are necessary, to the
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remarketing or conversion of the debentures. See "The Remarketing" and
"Description of HIGH TIDES--Conversion Rights."
Unless we previously redeem or repurchase the debentures in accordance with
the indenture, they will mature on February 15, 2030. See
"--Redemption--Repayment at Maturity; Redemption of Convertible Senior
Subordinated Debentures."
The debentures will be unsecured and will rank junior and subordinate in
right of payment to all of our Secured Debt. Our right to participate in any
distribution of assets of any of our subsidiaries upon the subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the HIGH TIDES to benefit indirectly from the distribution) is subject to the
prior claims of creditors of the subsidiary, except to the extent that we may
ourselves be recognized as a creditor of the subsidiary. Accordingly, the
debentures will be subordinated to all of our Secured Debt and effectively
subordinated to all existing and future liabilities of our subsidiaries. Our
subsidiaries are separate legal entities and have no obligations to pay, or make
funds available for the payment of, any amounts due on the debentures, the HIGH
TIDES or the guarantee of the HIGH TIDES. Therefore, holders of debentures
should look only to our assets for payments on the debentures. The indenture
governing the debentures does not limit the incurrence or issuance of other
secured or unsecured debt of Titan, whether under the indenture, our existing
credit agreement, or any other existing agreement or other indenture or any
other debt instrument or agreement that we may enter into in the future or
otherwise. See "Risk Factors--Risks Relating to the HIGH TIDES" and
"--Subordination."
OPTION TO EXTEND INTEREST PAYMENT DATE
If we are not in default under the indenture governing the debentures, we
have the right to defer the payment of interest on the debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period. We may not, however, defer the payment of
interest beyond (1) the maturity of the debentures whether at the stated
maturity or by declaration of acceleration, call for redemption or otherwise and
(2) in the case of a deferral period beginning prior to the reset date, the
reset date. At the end of a deferral period, we must pay all interest then
accrued and unpaid on the debentures (together with interest thereon accrued at
an annual rate equal to the applicable rate compounded quarterly from the
relevant interest payment date, to the extent permitted by applicable law).
During a deferral period and for so long as the debentures remain outstanding,
interest will continue to accrue and holders of debentures, and holders of the
HIGH TIDES while HIGH TIDES are outstanding, will be required to accrue interest
income in the form of original issue discount for U.S. federal income tax
purposes. See "Certain United States Federal Income Tax Consequences--Interest
Income."
During any deferral period, we may not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock (which includes common and preferred stock) other than stock
dividends paid by us which consist of stock of the same class as that on
which the dividend is being paid;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities that rank PARI PASSU with
or junior in interest to the debentures; or
- make any guarantee payments with respect to any guarantee by us of the
debt securities of any of our subsidiaries if such guarantee expressly
ranks pari passu with or junior in interest to the debentures, other than,
in each case as applicable:
- dividends or distributions in our capital stock;
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- any declaration of a dividend in connection with the implementation of
a stockholders' rights plan, or the issuance of stock under a
stockholders' right plan in the future, or the redemption or repurchase
of any rights pursuant thereto;
- payments under the guarantee of the HIGH TIDES or the trust's common
securities;
- purchases or acquisitions of shares of our common stock in connection
with the satisfaction by us of our obligations under any employee
benefit plan or the exercise of any repurchase rights under any
employee benefit plan or any other contractual obligation, other than a
contractual obligation ranking expressly by its terms PARI PASSU with
or junior to the debentures;
- the purchase of fractional shares resulting from a reclassification of
our capital stock or the exchange or conversion of one class or series
of our capital stock for another class or series of our capital stock;
or
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital stock
or the security being converted or exchanged.
A deferral period will terminate upon the payment by us of all interest then
accrued and unpaid on the debentures, together with interest accrued thereon at
an annual rate equal to the applicable rate, compounded quarterly, to the extent
permitted by applicable law. Prior to the termination of any deferral period, we
may further extend the deferral period. However, the further deferral cannot
cause the deferral period to exceed 20 consecutive quarters or to extend beyond
(1) the maturity of the debentures whether at the stated maturity or by
declaration of acceleration, call for redemption or otherwise and (2) in the
case of a deferral period beginning prior to the reset date, the reset date.
Upon the termination of any deferral period, and subject to the foregoing
limitations, we may elect to begin a new deferral period. We need not pay any
interest during a deferral period, except at the end of the deferral period. We
must give the property trustee and the debenture trustee notice of our election
of any deferral period at least ten days prior to the record date for the
distributions on the HIGH TIDES that would have been payable except for the
election to begin or extend the deferral period. The debenture trustee will give
notice of our election to begin or extend a new deferral period to the holders
of the debentures. There is no limitation on the number of times that we may
elect to begin a deferral period.
We have no current intention of exercising our right to defer payments of
interest on the debentures.
REDEMPTION
REPAYMENT AT MATURITY; REDEMPTION OF CONVERTIBLE SENIOR SUBORDINATED
DEBENTURES.
We must repay the debentures at their stated maturity on February 15, 2030
unless earlier redeemed. The circumstances in which we may, or we are required
to, redeem the debentures prior to their stated maturity are described below.
Upon the repayment in full at maturity or redemption, in whole or in part, of
the debentures, other than following the distribution of the debentures to the
holders of the HIGH TIDES and the trust's common securities, the trust will
concurrently apply the proceeds from the repayment or redemption to redeem, at
the applicable redemption price, a like amount of HIGH TIDES and its common
securities. See "Description of HIGH TIDES--Mandatory Redemption."
OPTIONAL REDEMPTION
We will have the right to redeem the debentures (1) in whole or in part, at
any time on or after February 20, 2003 until, but excluding, the tender
notification date, upon not less than 20 nor more than 60 days' notice, at a
redemption price as set forth below, equal to the following prices per $50
principal
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amount of debentures plus any accrued but unpaid interest on the portion being
redeemed, if redeemed during the 12 month period up to but excluding
February 20:
<TABLE>
<CAPTION>
PRICE PER $50
PRINCIPAL
PERIOD AMOUNT
------ -------------
<S> <C>
2004...................... $50.72
2005...................... $50.00
</TABLE>
(2) after the reset date (except in the event of a failed final remarketing), in
accordance with the term call protections, if any, established in the
remarketing; and (3) in whole or in part, at any time on or after the third
anniversary of the reset date following a failed final remarketing at a
redemption price equal to 100% of the then outstanding aggregate principal
amount of the debentures to be redeemed, plus any accrued and unpaid interest on
the portion being redeemed. The term "term redemption price" means any
redemption price established in the remarketing. The initial redemption price
and the term redemption price are each referred to as an optional redemption
price. The remarketing agent will establish term call protections, if any, in
the remarketing that when taken together with the term rate and the term
conversion ratio and price, if any, result in a price per HIGH TIDES equal to
101% of the liquidation amount thereof. However, we may not, at any time, redeem
the debentures for a price less than the aggregate principal amount thereof plus
any accrued and unpaid interest thereon.
In the event of any redemption in part, we will not be required to:
- issue, register the transfer of or exchange any debenture during a period
beginning at the opening of business 15 days before the date of mailing of
a notice of redemption of debentures selected for redemption and ending at
the close of business on the day of such mailing; and
- register the transfer of or exchange any debentures so selected for
redemption, in whole or in part, except the unredeemed portion of any
debenture being redeemed in part.
In no event will we optionally redeem the debentures during a deferral
period. Accordingly, prior to optionally redeeming the debentures, all interest
accrued and unpaid (together, in the case of a deferral period, with interest
thereon, to the extent permitted by law) to the interest payment date
immediately preceding the optional redemption date will be paid in full.
TAX EVENT REDEMPTION
We may also, under limited circumstances within 90 days of the occurrence
and continuation of tax event, redeem the debentures in whole, but not in part,
at the aggregate principal amount of the debentures, plus any accrued and unpaid
interest. See "Description of HIGH TIDES--Tax Event or Investment Company Event
Redemption or Distribution."
If we are permitted to consummate a tax event redemption and we desire to do
so, we must cause a notice to be mailed to each holder of HIGH TIDES and each
holder of debentures at least 30 days but not more than 60 days before the
redemption date. In the event of a tax event redemption, you may convert your
HIGH TIDES, or debentures, if applicable, called for redemption into our common
stock at the applicable conversion ratio prior to 5:00 p.m., New York City time,
on the applicable redemption date.
ADDITIONAL AMOUNTS
If (A) the property trustee is the sole holder of all the debentures and
(B) the trust is required to pay additional sums equal to any additional taxes,
duties, assessments or other governmental charges as a result of a tax event, we
will pay as additional amounts on the debentures those amounts as required so
that the distributions payable by the trust in respect of the HIGH TIDES and its
common securities will not be reduced as a result of any of those additional
sums.
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RESTRICTIONS ON PAYMENTS
If (A) there has occurred and is continuing an event of default under the
indenture, (B) we are in default with respect to our payment of any obligations
under the guarantee of the HIGH TIDES or (C) we have given notice of our
election of a deferral period as provided in the indenture and have not
rescinded that notice, or the deferral period is continuing, we will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock (which includes common and preferred stock) other than stock
dividends paid by us which consist of stock of the same class as that on
which the dividend is being paid;
- make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any of our debt securities that rank PARI PASSU with
or junior in interest to the debentures; or
- make any guarantee payments with respect to any guarantee by us of the
debt of any of our subsidiaries if such guarantee expressly ranks PARI
PASSU with or junior in interest to the debentures in each case, other
than, in each case as applicable:
- dividends or distributions in our common stock;
- any declaration of a dividend in connection with the implementation of
a stockholders' rights plan, or the issuance of stock under a
stockholders' rights plan in the future, or the redemption or
repurchase of any rights pursuant thereto;
- payments under the guarantee of the HIGH TIDES;
- purchases or acquisitions of shares of our common stock in connection
with the satisfaction by us of our obligations under any employee
benefit plan or any other contractual obligation, other than a
contractual obligation ranking expressly by its terms PARI PASSU with
or junior in interest to the debentures;
- the purchase of fractional shares resulting from a reclassification of
our capital stock or the exchange or conversion of one class or series
of our capital stock for another class or series of our capital stock;
or
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital stock
or the security being converted or exchanged.
MODIFICATION OF INDENTURE
We and the debenture trustee may amend the indenture from time to time
without the consent of the holders of debentures for several reasons, including
(1) to cure ambiguities, defects or inconsistencies, if such action does not
materially adversely affect the interest of the holders of debentures or the
holders of the HIGH TIDES so long as they remain outstanding; or (2) to qualify
or maintain the qualification of, the indenture under the Trust Indenture Act.
We and the debenture trustee may amend the indenture in other respects with
the consent of the holders representing not less than a majority in principal
amount of debentures. However, without the consent of each holder of the
outstanding debentures as affected, no amendment may:
- change the reset date or any date specified in the indenture on which
interest on, or the principal, together with any accrued and unpaid
interest, of the debentures is due and payable or the stated maturity of
the debentures;
- reduce the principal amount of the debentures;
- reduce the rate or extend the time of payment of interest on the
debentures;
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- reduce the percentage of principal amount of outstanding debentures the
consent of whose holders is required to amend, waive or supplement the
indenture; or
- have certain other effects as set forth in the indenture.
DEBENTURE EVENTS OF DEFAULT
Each of the following is an event of default with respect to the debentures:
- failure for 30 days to pay any interest on the debentures when due, except
in the case of permitted deferrals during a deferral period;
- failure to pay any principal or premium, if any, on the debentures when
due, whether at maturity, upon redemption, by declaration of acceleration
or otherwise;
- our continued failure for 60 days to observe or perform, in any material
respect, certain other covenants contained in the indenture after written
notice to us from the debenture trustee or the holders of at least 25% in
aggregate outstanding principal amount of the debentures;
- failure to issue and deliver shares of our common stock upon an election
by a holder of debentures to convert its debentures;
- certain events of bankruptcy, insolvency or reorganization of Titan or any
of its significant subsidiaries; or
- the voluntary or involuntary dissolution, winding-up or termination of the
trust, except in connection with the distribution of the debentures to the
holders of HIGH TIDES and the trust's common securities in liquidation of
the trust, the redemption of all of the HIGH TIDES and the trust's common
securities or certain mergers, consolidations or amalgamations, each as
permitted by the declaration of trust.
The holders of a majority in aggregate outstanding principal amount of the
debentures have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the debenture trustee. The debenture
trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the debentures may declare the principal due and payable immediately
upon an event of default described above. If the debenture trustee or the
holders of debentures fail to make the declaration, the holders of at least 25%
in aggregate liquidation amount of the HIGH TIDES will have the right to make
the declaration. The holders of a majority in aggregate outstanding principal
amount of the debentures may annul the declaration and waive the default if the
default (other than the non-payment of the principal of the debentures which has
become due solely by the acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the debenture trustee. If the holders of
debentures fail to annul the declaration and waive the default, the holders of a
majority in aggregate liquidation amount of the HIGH TIDES will have the right
to make a declaration and waive the default.
The holders of a majority in aggregate outstanding principal amount of the
debentures affected may, on behalf of the holders of all the debentures, waive
any past default, except:
- a default in the payment of principal of or premium, if any, or interest
on the debentures unless we have cured the default and deposited with the
debenture trustee an amount sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration; or
- a default under a provision under the indenture that cannot be modified or
amended without the consent of the holder of each outstanding debenture.
We are required to file annually with the debenture trustee a certificate as
to whether or not we are in compliance with all the conditions and covenants
applicable to us under the indenture.
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If an event of default under the indenture exists and the property trustee
holds the debentures, then the property trustee has the right to declare the
principal of and the interest on the debentures, and any other amounts payable
under the indenture, to be immediately due and payable and to enforce its other
rights as a creditor with respect to the debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF HIGH TIDES
If an event of default under the indenture exists and the event is
attributable to our failure to pay interest or principal on the debentures on
the date the interest or principal is due, you may institute a direct action
against us for payment. We may not amend the indenture to remove the foregoing
right to bring a direct action against us unless we have received the prior
written consent of the holders of all of the HIGH TIDES. If the right to bring a
direct action against us is removed, the trust may become subject to the
reporting obligations under the Exchange Act. Our payment to a holder of HIGH
TIDES in connection with a direct action will not affect our obligation to pay
the principal of and interest on the debentures. We will be subrogated to the
rights of the holder of the HIGH TIDES with respect to payments on the HIGH
TIDES to the extent of any payments made by us to the holder in any direct
action.
You will not be able to exercise directly any remedies, other than those set
forth in the preceding paragraph, available to the holders of the debentures
unless there was an event of default under the declaration of trust. See
"Description of HIGH TIDES--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not merge, consolidate, transfer or lease our properties and assets
substantially as an entirety to any person other than a wholly owned subsidiary,
and no person may merge, consolidate, or transfer or lease its properties and
assets substantially as an entirety to us, unless:
- in case we consolidate with or merge with or into another person or
convey, transfer or lease our properties and assets substantially as an
entirety to any person other than a wholly owned subsidiary, the successor
person is organized and validly existing under the laws of the United
States or any state of the United States or the District of Columbia, and
the successor person expressly assumes our obligations on the debentures
issued under the indenture and provides for conversion rights in
accordance with the indenture;
- immediately after giving effect to the transaction, no event of default
under the debentures and no event which, after notice or lapse of time or
both, would become an event of default under the debentures, exists;
- if at the time any HIGH TIDES are outstanding, the transaction is
permitted under the declaration of trust and the guarantee relating to the
HIGH TIDES, and does not give rise to any breach or violation of the
declaration of trust or the guarantee; and
- certain other conditions as prescribed in the indenture are met.
The general provisions of the indenture do not afford holders of the
debentures protection in the event of a highly leveraged or other transaction
involving us that may adversely affect holders of the debentures.
SUBORDINATION
All debentures issued under the indenture will be subordinate and junior in
right of payment only to all of our Secured Debt. Upon any payment or
distribution of our assets to creditors upon any liquidation, dissolution,
winding-up, assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency or similar proceedings relating to Titan, the holders of
any of our Secured Debt will first be entitled to receive payment of that debt
in full before the holders of debentures, or the property trustee (or
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any other person or entity) on behalf of the holders, will be entitled to
receive or retain any payment or distribution in respect of the debentures.
If the maturity of the debentures is accelerated, the holders of any of our
Secured Debt outstanding at the time of the acceleration will first be entitled
to receive payment of that debt in full (including any amounts due upon
acceleration) before the holders of the debentures will be entitled to receive
or retain any payment or distribution in respect of the debentures.
In the event that:
- we default in the payment of any principal of, premium, if any, interest
on, or any other amount with respect to, any of our Secured Debt when the
same becomes due and payable (a "payment default"), whether at maturity or
at a date fixed for prepayment or by declaration of acceleration or
otherwise; and
- such payment default continues beyond the period of grace, if any,
specified in the instrument evidencing such debt;
then, unless and until the default is cured or waived or ceases to exist or any
of our Secured Debt is paid in full, no direct or indirect payment or
distribution (in cash, property, securities, by set-off or otherwise) will be
made or agreed to be made for or in respect of the debentures, or in respect of
any redemption, repayment, retirement, purchase or other acquisition of any of
the debentures. We will also not be permitted to make or agree to make any such
payment or distribution if the maturity of any such debt has been accelerated
because of a default.
The term "Credit Agreement" means the Senior Secured Credit Agreement dated
as of February 23, 2000, among us, as the borrower, the various financial
institutions from time to time that are parties thereto, as lenders, Credit
Suisse First Boston Corporation, as lead arranger and administrative agent,
First Union Securities, Inc., as co-arranger and syndication agent, and The Bank
of Nova Scotia, as documentation agent, as amended, and any other secured debt
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, working capital loans or letters of credit, in each
case, including any related notes, guarantees, collateral documents, swap
arrangements, instruments and agreements entered into in connection therewith,
and as such credit agreements and related documents may be amended, restated,
supplemented, renewed, replaced, refinanced or otherwise modified from time to
time whether or not with the same agent, lender or group of lenders and whether
with the same borrowers or guarantors.
The term "Secured Debt" means (1) Debt under the Credit Agreement and
(2) any other Debt that by its terms is secured by any lien, pledge, charge,
encumbrance, mortgage, deed of trust, hypothecation, assignment or security
interest with respect to assets having or intended to have a fair market value
at the time of the grant thereof (in the judgment of the board of directors, our
chief financial officer or other responsible agent or officer of Titan) equal to
not less than the amount of such Debt.
The term "Debt" means:
- the principal of, and premium and interest, if any, on indebtedness for
money borrowed;
- purchase money and similar obligations;
- obligations under capital leases;
- guarantees, assumptions or purchase commitments relating to, or other
transactions as a result of which we are responsible for the payment of
the indebtedness of others;
- renewals, extensions and refunding of any indebtedness;
- interest or obligations in respect of any indebtedness accruing after the
commencement of any insolvency or bankruptcy proceedings; and
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- obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity
contracts and similar arrangements.
The indenture places no limitation on the amount of debt, including Secured
Debt, that may be incurred by us. We expect from time to time to incur
additional indebtedness constituting Secured Debt. At March 31, 2000, we had
approximately $100.0 million of indebtedness under our Credit Agreement and
approximately $19.0 million of additional Secured Debt. The indenture also
places no limitation on the debt of our subsidiaries, which effectively ranks
senior in right of payment to the debentures.
REGISTRATION AND TRANSFER
The debentures will be represented by one or more global certificates
registered in the name of Cede & Co. as the nominee of DTC if, and only if,
distributed to the holders of the HIGH TIDES and the trust's common securities.
Until that time, the debentures will remain registered in the name of and held
by the property trustee. If the debentures are distributed to holders of the
HIGH TIDES and the trust's common securities, beneficial interests in the
debentures will be shown on, and transfers of debentures will be effected only
through, records maintained by participants in DTC. Except as described below,
debentures in certificated form will not be issued in exchange for the global
certificates.
A global security will be exchangeable for debentures in certificated form
registered in the names of persons other than Cede & Co. only if:
- DTC notifies us that it is unwilling or unable to continue as a depositary
for the global security and no successor depositary has been appointed, or
if at any time DTC ceases to be a "clearing agency" registered under the
Exchange Act, at a time when DTC is required to be so registered to act as
the depositary;
- we, in our sole discretion, determine that the global security will be so
exchangeable; or
- there has occurred and is continuing an event of default under the
indenture.
In the case of debentures issued in certificated form, the transfer of the
debentures will be registrable, and debentures will be exchangeable for
debentures of other denominations of a like aggregate principal amount, at the
corporate office of the debenture trustee in Wilmington, Delaware, or at the
offices of any paying agent or transfer agent appointed by us, provided that
payment of interest may be made at our option by check mailed to the address of
the persons entitled thereto or by wire transfer.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Description of HIGH TIDES--Depositary Procedures." If
the debentures are distributed to the holders of the HIGH TIDES and the trust's
common securities upon the trust's termination, the form, book-entry and
transfer procedures with respect to the HIGH TIDES as described under
"Description of HIGH TIDES--Depositary Procedures," will apply to the debentures
with such changes to the details of the procedures as are necessary.
PAYMENT AND PAYING AGENTS
Payments on debentures held in global form will be made to DTC as the
depositary for the debentures. In the case of debentures issued in certificated
form, principal and interest payments on the debentures will be made at the
office or agency we maintain for that purpose in New York, New York, in the coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. However, at our option, payment
of interest may be made, except in the case of debentures that are held in
global form, by check mailed to each registered holder or by wire transfer.
Subject to our right to defer interest payments on the debentures, payment of
any interest on the debentures will be made to the person in whose name the
debentures are registered at the close of business on the record date for that
interest payment date, except in the case of defaulted interest.
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GOVERNING LAW
The indenture and the debentures are governed by and construed in accordance
with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to those provisions, the debenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of debentures, unless offered reasonable indemnity by the holder against
the costs, expenses and liabilities that it might incur by doing so. The
debenture trustee is not required to expend or risk its own funds or otherwise
incur financial liability in the performance of its duties if the debenture
trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF THE GUARANTEE
When the HIGH TIDES were originally issued, we executed and delivered a
guarantee for the benefit of the holders of the HIGH TIDES. Wilmington Trust
Company acts as guarantee trustee under the guarantee. The guarantee is
qualified under the Trust Indenture Act. This summary of certain provisions of
the guarantee is not complete. For a complete description of the guarantee, we
encourage you to read the guarantee. The guarantee trustee holds the guarantee
for the benefit of the holders of the HIGH TIDES. Unless the context requires
otherwise, "Titan," "we," "us," "our" or similar terms in this section refer
solely to The Titan Corporation and not the trust or any of our other
consolidated subsidiaries.
GENERAL
Pursuant to the guarantee, we irrevocably agreed to make guarantee payments
to you, as and when due, regardless of any defense, right of set-off or
counterclaim that the trust may have or assert other than the defense of
payment. The guarantee covers the following payments with respect to the HIGH
TIDES, to the extent not paid by or on behalf of the trust:
- any accrued and unpaid distributions required to be paid on the HIGH
TIDES, to the extent that the trust has funds on hand available at that
time;
- the applicable redemption price of any HIGH TIDES called for redemption,
to the extent that the trust has funds on hand available at that time; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the trust unless the debentures are distributed to you or all the HIGH
TIDES are redeemed, the lesser of:
- the liquidation distribution, to the extent the trust has funds
available at that time; or
- the amount of assets of the trust remaining available for distribution
to you upon liquidation of the trust after satisfaction of liabilities
to the trust's creditors as required by applicable law.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to you or by causing the trust to pay
those amounts to you.
The guarantee is an irrevocable guarantee on a subordinated basis of the
trust's obligations under the HIGH TIDES, but applies only to the extent that
the trust has funds sufficient to make the required payments. If we do not make
interest payments on the debentures held by the trust, the trust will not be
able to pay distributions on the HIGH TIDES and will not have funds legally
available for the distributions.
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The guarantee ranks subordinate and junior only in right of payment to all
of our Secured Debt. In addition, our obligations under the guarantee are
effectively subordinated to all existing and future liabilities of our
subsidiaries. The guarantee does not limit the incurrence or issuance of other
secured or unsecured debt by us or by our subsidiaries.
STATUS OF THE GUARANTEE
The guarantee constitutes our unsecured obligation and ranks subordinate and
junior only in right of payment to all of our Secured Debt in the same manner as
the debentures.
The guarantee constitutes a guarantee of payment and not of collection
(i.e., you may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding against
any other person or entity). The guarantee is being held for your benefit. The
guarantee will not be discharged except in the circumstances described under
"--Termination of the Guarantee." The guarantee places no limitation on the
amount of debt, including Secured Debt, that may be incurred by us. We expect
from time to time to incur additional indebtedness constituting Secured Debt.
AMENDMENTS AND ASSIGNMENT
The guarantee may not be amended without the prior approval of the holders
of not less than a majority of the aggregate liquidation amount of the
outstanding HIGH TIDES, except that no approval is required for changes that do
not materially adversely affect your rights. The manner of obtaining such
approval will be as set forth under "Description of HIGH TIDES--Voting Rights;
Amendment of the Declaration." All guarantees and agreements contained in the
guarantee will bind our successors, assigns, receivers, trustees and
representatives and will inure to the benefit of the holders of the HIGH TIDES
then outstanding.
EVENTS OF DEFAULT
We will be in default under the guarantee if we do not make required
payments when due or if we fail to perform other obligations and we do not cure
our failure to perform within 60 days after we receive notice of our failure.
The holders of not less than a majority in aggregate liquidation amount of the
HIGH TIDES have the right:
- to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the guarantee; or
- to direct the exercise of any trust or power conferred upon the guarantee
trustee under the guarantee.
You may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding against
the trust, the guarantee trustee or any other person or entity.
As guarantor, we are required to file annually with the guarantee trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee undertakes to perform only those duties as are
specifically set forth in the guarantee, unless we are in default in performing
the guarantee. When we are in default under the guarantee, the guarantee trustee
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee is under no obligation to exercise any of the
powers vested in it by the guarantee at the request of any holder of the HIGH
TIDES unless it is offered reasonable indemnity against the costs, expenses and
liabilities that it might incur by doing so.
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TERMINATION OF THE GUARANTEE
The guarantee will terminate as to you upon:
- full payment of the redemption price of the HIGH TIDES held by you and any
accrued and unpaid distributions;
- distribution of the debentures held by the trust to you;
- full payment of amounts payable under the declaration of trust upon the
trust's liquidation; or
- distribution of our common stock to you in respect of the conversion of
your HIGH TIDES into common stock.
The guarantee will terminate completely upon full payment of the amounts
payable in accordance with the declaration of trust. The guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of the HIGH TIDES must restore payment of any sums paid under the HIGH
TIDES or the guarantee.
GOVERNING LAW
The guarantee is governed by and construed in accordance with the laws of
the State of New York.
RELATIONSHIP AMONG THE HIGH TIDES, THE CONVERTIBLE
SENIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We have irrevocably guaranteed payments of distributions and other amounts
due on the HIGH TIDES (to the extent the trust has funds available for the
payment of those distributions) as and to the extent set forth under
"Description of the Guarantee." Taken together, our obligations under the
debentures, the indenture, the declaration of trust and the guarantee, including
our obligation to pay the trust's costs, expenses and other liabilities (other
than the trust's obligations to the holders of the HIGH TIDES and its common
securities pursuant to the terms of those securities) provide in the aggregate,
a full, irrevocable and unconditional guarantee of all of the trust's
obligations under the HIGH TIDES. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes the full
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
trust's obligations under the HIGH TIDES and its common securities.
If and to the extent that we do not make payments on the debentures, the
trust will not pay distributions or other amounts due on the HIGH TIDES. The
guarantee does not cover payment of distributions when the trust does not have
sufficient funds to pay those distributions. In that event, your remedy is to
institute a direct action against us. Our obligations under the guarantee are
subordinate and junior only in right of payment to all of our Secured Debt.
Unless the context requires otherwise, "Titan," "we," "us," "our" or similar
terms in this section refer solely to The Titan Corporation and not the trust or
any of our other consolidated subsidiaries.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
debentures, the payments will be sufficient to cover distributions and other
payments due on the HIGH TIDES. This is primarily because:
- the aggregate principal amount or applicable redemption price of the
debentures will be equal to the sum of the aggregate liquidation amount or
applicable redemption price, as applicable, of the HIGH TIDES and the
trust's common securities;
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- the applicable rate and interest and other payment dates on the debentures
will match the distribution rate and distributions and other payment dates
for the HIGH TIDES;
- we will pay for all of the trust's costs, expenses and liabilities except
the trust's obligations to holders of HIGH TIDES and its common securities
pursuant to the terms of those securities; and
- the declaration of trust provides that the trust will not engage in any
activity that is not consistent with the limited purposes of the
declaration of trust.
We have the right to set off any payment we are otherwise required to make
under the indenture with and to the extent we have already made, or are
concurrently on the date of that payment making, any payment under the guarantee
used to satisfy the related payment of indebtedness under the indenture.
ENFORCEMENT RIGHTS OF HOLDERS OF HIGH TIDES
You may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding against
the guarantee trustee, the trust or any other person or entity.
A default or event of default under any Secured Debt would not constitute a
default or event of default under the declaration of trust. However, in the
event of payment and certain other defaults under, or acceleration of, Secured
Debt, the subordination provisions of the indenture provide that no payments may
be made in respect of the debentures until the Secured Debt has been paid in
full or the payment or other default under any Secured Debt has been cured or
waived. Failure to make required payments on debentures would constitute an
event of default under the declaration of trust.
LIMITED PURPOSE OF THE TRUST
The HIGH TIDES evidence an undivided beneficial ownership interest in the
assets of the trust, and the trust exists for the sole purpose of issuing the
HIGH TIDES and the trust's common securities and investing the proceeds of the
HIGH TIDES and the trust's common securities in the debentures and engaging in
only those other activities necessary, convenient or incidental to those
purposes.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the trust involving the liquidation of the debentures, after satisfaction of the
liabilities of the creditors of the trust as required by applicable law, you and
the holders of the trust's common securities will be entitled to receive, out of
the trust's assets held, the liquidation distribution in cash. See "Description
of HIGH TIDES--Liquidation of the Trust and Distribution of Convertible Senior
Subordinated Debentures." If we become subject to any voluntary or involuntary
liquidation or bankruptcy, the property trustee, as holder of the debentures,
would be one of our subordinated creditors. The property trustee would be
subordinated in right of payment to all of our Secured Debt as set forth in the
indenture, but entitled to receive payment in full of principal and interest,
before any of our stockholders receive payments or distributions. We are the
guarantor under the guarantee and have agreed to pay for all of the trust's
costs, expenses and liabilities other than the trust's obligations to the
holders of its HIGH TIDES and common securities. Accordingly, in the event of
our liquidation or bankruptcy, the positions of a holder of HIGH TIDES and a
holder of debentures are expected to be substantially the same relative to our
other creditors and to our stockholders.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock as of May 31, 2000 consisted of:
- 200,000,000 shares of common stock, par value $.01 per share, of which
50,771,803 shares are issued and outstanding; and
- 5,000,000 shares of preferred stock, par value $1.00 per share, of which
1,068,102 shares have been previously issued as $1.00 cumulative
convertible preferred stock, of which 692,200 are issued and outstanding,
and 1,000,000 shares have been designated as series A junior participating
preferred stock, none of which is issued and outstanding. The remaining
2,931,898 shares of preferred stock are available for future issuance.
We have reserved for issuance under our 1990, 1994 and 1997 Stock Option
Plans, our 1996 Directors' Stock Option and Equity Participation Plan, and our
2000 Employee and Director Stock Option and Incentive Plan a total of 7,125,000
shares of common stock of which 3,960,700 shares were covered by outstanding
options as of May 31, 2000. We also had approximately 510,000 shares of common
stock issued and outstanding as of May 31, 2000 under our Employee Stock
Purchase Plan and approximately 900,000 shares of common stock issued and
outstanding as of May 31, 2000 under our Employee Stock Ownership Plan. We also
have 1,500,000 shares of common stock reserved for issuance under our 2000
Employee Stock Ownership Plan.
On March 24, 2000, we entered into an agreement to acquire AverStar, Inc.
The aggregate number of shares of our common stock that we will issue in
exchange for shares of AverStar common stock will be determined at the time of
the acquisition according to a formula contained in the acquisition agreement.
Based on the number of shares of AverStar common stock outstanding as of
May 19, 2000, we will issue approximately 3,862,281 shares of our common stock
in the acquisition. In addition, we will assume all outstanding options to
purchase AverStar common stock, which will be converted into options to acquire
shares of our common stock using the same exchange ratio which is applicable to
AverStar common stock in the acquisition.
The following summary describes the material terms of our capital stock and
stockholder rights plan. The description of capital stock and stockholder rights
plan is qualified by reference to our certificate of incorporation, as amended,
bylaws and stockholder rights plan.
COMMON STOCK
DIVIDENDS. Subject to the right of the holders of any class of preferred
stock, holders of shares of our common stock are entitled to receive dividends
that may be declared by our board of directors out of legally available funds.
No dividend may be declared or paid in cash or property on any share of any
class of common stock unless simultaneously the same dividend is declared or
paid on each share of that and every other class of common stock; provided,
that, in the event of stock dividends, holders of a specific class of common
stock shall be entitled to receive only additional shares of that class.
VOTING RIGHTS. Holders of our common stock are entitled to one vote for
each share held. Holders do not have cumulative voting rights.
LIQUIDATION RIGHTS. Upon our liquidation, dissolution or winding-up, the
holders of our common stock are entitled to share ratably in all assets
available for distribution after payment in full to creditors and holders of our
preferred stock, if any.
OTHER PROVISIONS. The holders of our common stock are not entitled to
preemptive or similar rights.
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PREFERRED STOCK
We are currently authorized to issue 5,000,000 shares of preferred stock,
par value $1.00 per share. Our board of directors, in its sole discretion, may
designate and issue one or more series of preferred stock from our authorized
and unissued shares of preferred stock. Subject to limitations imposed by law or
our amended and restated articles of incorporation, the board of directors is
empowered to determine:
- the designation of and the number of shares constituting a series of
preferred stock;
- the dividend rate, if any, for the series;
- the terms and conditions of any voting and conversion rights for the
series, if any;
- the number of directors, if any, which the series shall be entitled to
elect;
- the amounts payable on the series upon our liquidation, dissolution or
winding-up;
- the redemption prices and terms applicable to the series, if any; and
- the preferences and relative rights among the series of preferred stock.
Theses rights, preferences, privileges and limitations of preferred stock could
adversely affect the rights of holders of our common stock.
CUMULATIVE CONVERTIBLE PREFERRED STOCK
DIVIDENDS. Each share of cumulative convertible preferred stock accrues
dividends at the rate of $1.00 per share per annum.
VOTING RIGHTS. Holders of our cumulative convertible preferred stock are
entitled to one-third of one vote for each share held. Holders do not have
cumulative voting rights.
LIQUIDATION RIGHTS. Upon our liquidation, dissolution or winding-up, the
holders of our cumulative convertible preferred stock are entitled to a
liquidation preference of $20 per share plus any unpaid cumulative dividends
before any distribution to holders of our common stock.
CONVERSION RIGHTS. Each outstanding share of cumulative convertible
preferred stock is convertible into our common stock, at the option of the
holder, at a rate of two-thirds shares of common stock for each share of
cumulative convertible preferred stock.
REDEMPTION. Each share of cumulative convertible preferred stock is
redeemable, but only at our option, at a redemption price of $20 per share plus
any accrued and unpaid dividends.
OTHER PROVISIONS. The holders of our cumulative convertible preferred stock
are not entitled to preemptive or similar rights.
PREFERRED SHARE PURCHASE RIGHTS
Each outstanding share of our common stock has or will have attached to it
one preferred share purchase right, which we refer to as a right. Each right
entitles the registered holder of common stock to purchase from us, upon the
occurrence of specified events, one one-hundredth of a share of our series A
junior participating preferred stock, which we refer to as the participating
preferred shares, at a price of $42 per one one-hundredth of a participating
preferred share, subject to adjustment. The terms of the rights are set forth in
a rights agreement dated as of August 21, 1995 between us and American Stock
Transfer and Trust Company, as rights agent.
Until the distribution date described below, we will not issue separate
certificates evidencing the rights. Until that date, the rights will be
evidenced, with respect to any common stock certificate, by that
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common stock certificate. The rights will detach from the common stock and a
distribution date will occur upon the earlier of the following dates:
- subject to the exceptions described below, the tenth day following a
public announcement that an "acquiring person," which, subject to the
exceptions listed in the following sentence, includes a person or "group"
of affiliated or associated persons, has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of our outstanding common
stock, or
- the tenth day following the commencement, or the first public announcement
by any person or group of an intention to commence, a tender offer or
exchange offer that would result in beneficial ownership by a person or
group of 15% or more of our outstanding common stock.
Our board of directors, with the concurrence of a majority of the continuing
directors, may postpone the distribution date by determining a later
distribution date before the time any person or group becomes an acquiring
person. Any board member who is not an acquiring person or an affiliate or
associate of an acquiring person, or an employee, director, representative,
nominee or designee of an acquiring person, or its affiliate or associate, but
who:
- was a member of our board of directors before any person becomes an
acquiring person, or
- became a member of our board of directors after any person becomes an
acquiring person if the member was nominated for election or elected to
our board of directors upon the recommendation or approval of a majority
of the continuing directors, is considered to be a continuing director of
Titan.
The term "acquiring person" does not include us, any of our subsidiaries,
any employee benefit plan of ours or of any of our subsidiaries or any entity
holding our common stock for or under an employee benefit plan of ours or any of
our subsidiaries. In addition, a person who would otherwise be an acquiring
person will not be considered an acquiring person if our board of directors
determines in good faith that such person inadvertently became the beneficial
owner of 15% or more of our common stock and such person divests itself, as
promptly as practicable, of beneficial ownership of a sufficient number of
shares of our common stock so that it would no longer otherwise qualify as an
acquiring person.
The rights agreement provides that, until the distribution date, or earlier
redemption or expiration of the rights, the rights will be transferred only with
our common stock. The rights will be evidenced, with respect to any common stock
certificate outstanding as of September 7, 1995, by that common stock
certificate with a summary of the rights attached to it. Until the distribution
date, or earlier redemption or expiration of the rights, new common stock
certificates issued after September 7, 1995 upon transfer or new issuances of
common stock will contain a notation incorporating the rights agreement by
reference. Until the distribution date, the surrender for transfer of any
certificates for common stock, even without a summary of the rights attached to
it, also will constitute the transfer of the rights associated with the common
stock represented by that certificate. As soon as practicable after the
distribution date, separate certificates evidencing the rights will be mailed to
holders of record of our common stock as of the close of business on the
distribution date, and the separate right certificates alone will evidence the
rights. Only our common stock issued before the distribution date will be issued
with rights.
The rights are not exercisable until the distribution date. The rights will
expire on August 17, 2005, unless the expiration date is extended or unless the
rights are earlier redeemed or exchanged by us, in each case as described below.
The purchase price payable for the participating preferred shares, and the
number of participating preferred shares or other securities or property
issuable, upon exercise of the rights, as well as the number
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of rights outstanding, are subject to adjustment from time to time to prevent
dilution in the following circumstances:
- in the event of a stock dividend on, or a subdivision, combination or
reclassification of the participating preferred shares,
- upon the grant to holders of the participating preferred shares of rights
or warrants to subscribe for or purchase participating preferred shares at
a price, or securities convertible into participating preferred shares
with a conversion price, less than the current market price of the
participating preferred shares, or
- upon the distribution to holders of the participating preferred shares of
evidences of indebtedness, securities or assets, excluding regular
periodic cash dividends at a rate not in excess of 125% of the last cash
dividend paid or, in the case that regular cash dividends have not been
paid, at a rate not in excess of 50% of the average net income per share
of the four quarters ended immediately before the payment of the dividend,
or dividends payable in participating preferred shares or of subscription
rights or warrants, other than those referred to above.
The number of outstanding rights and the number of one one-hundredths of a
participating preferred share issuable upon exercise of each right are also
subject to adjustment in the event of a dividend or other distribution on the
common stock payable in common stock or subdivisions, consolidations or
combinations of our common stock occurring, in any of those cases, before the
distribution date.
Participating preferred shares purchasable upon exercise of the rights will
not be redeemable. Each participating preferred share will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per share, but will be
entitled to an aggregate dividend of 100 times the dividend declared per share
of our common stock. If there is a liquidation, the holders of the participating
preferred shares will be entitled to a minimum preferential liquidation payment
of $100 per share, but will be entitled to an aggregate payment of 100 times the
payment made per share of our common stock. Each participating preferred share
will have 100 votes, voting together with our common stock. If there is a
merger, consolidation or other transaction in which our common stock is
exchanged, each participating preferred share will be entitled to receive 100
times the amount received per share of our common stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights of the
participating preferred shares, the value of the one one-hundredth interest in a
participating preferred share purchasable upon exercise of each right should
approximate the value of one share of our common stock.
If any person or group becomes an acquiring person, except pursuant to
specified cash offers for all outstanding shares of our common stock approved by
our board of directors, or if we are the surviving corporation in a merger with
an acquiring person or any affiliate or associate of an acquiring person and our
common stock is not changed or exchanged, proper provision will be made so that
each holder of a right, other than rights beneficially owned by the acquiring
person, which will become null and void, will have the right to receive upon
exercise of the right at the then-current market price, instead of participating
preferred shares, that number of shares of our common stock having a market
value of two times the exercise price of the right. If we do not have sufficient
common stock issued but not outstanding, or authorized but unissued, to permit
the exercise in full of the rights, we will be required to take all action
necessary to authorize additional common stock for issuance upon exercise of the
rights. If, after a good-faith effort, we are unable to take all necessary
action, we will substitute, for each share of common stock that would otherwise
be issuable upon exercise of a right, a number of participating preferred
shares, or fractional participating preferred shares, with the same market value
as that share of common stock.
If, after a person or group has become an acquiring person, we are acquired
in a merger or other business combination transaction or 50% or more of our
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a right, other than rights beneficially owned by the
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acquiring person, which will become null and void, will have the right to
receive, upon the exercise of the right at its then-current exercise price and
instead of participating preferred shares, that number of shares of common stock
of the acquiring company, or its parent, which at the time of the transaction
will have a market value of two times the exercise price of the right.
The exercise price of a right at any date will be equal to the purchase
price at that date multiplied by the number of one one-hundredths of a
participating preferred share for which a right is exercisable at that date.
At any time after any person or group becomes an acquiring person and before
the acquisition by that person or group of 50% or more of our outstanding common
stock, our board of directors may exchange the rights, in whole or in part, for
a number of shares of our common stock, per right, having an aggregate value
equal to the excess of the value of the shares of our common stock issuable upon
exercise of a right after a person or group becomes an acquiring person over the
purchase price, subject to adjustment. Our board of directors will not exchange
the rights owned by the acquiring person or group, which will have become null
and void.
With specified exceptions, no adjustments in the purchase price for the
preferred shares will be required until cumulative adjustments require an
adjustment of at least 1% of that purchase price. No fractional participating
preferred shares will be issued, other than fractions which are integral
multiples of one one-hundredth of a participating preferred share, which may, at
our election, be evidenced by depositary receipts. Instead of issuing fractional
participating preferred shares, we will make an adjustment in cash based on the
market price of the participating preferred shares on the last trading day
before the date of exercise.
Upon approval by our board of directors, we may redeem the rights, in whole,
but not in part, at a price of $.01 per right at any time until ten days
following the public announcement that a person or group has become an acquiring
person. Our board of directors, with the concurrence of a majority of the
continuing directors, may extend the period during which the rights are
redeemable beyond the ten days following the public announcement that a person
or group has become an acquiring person.
Under circumstances described in the rights agreement, the decision to
redeem will require the concurrence of a majority of the continuing directors.
Immediately upon the determination of our board of directors to redeem the
rights, we will make an announcement of the redemption. Upon the redemption, the
right to exercise the rights will terminate and the only right of right holders
will be to receive the redemption price.
Until a right is exercised, the holder of the right, in the capacity of a
holder, will have no rights as a stockholder of ours, including, without
limitation, the right to vote or to receive dividends. Although the distribution
of the rights will not be taxable to stockholders or to us, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
rights become exercisable for our common stock or other consideration, or for
common stock of the acquiring company or its parent as set forth above.
Any of the provisions of the rights agreement may be amended or supplemented
by our board of directors before the distribution date. From and after the
distribution date, we and the rights agent may amend or supplement the rights
agreement from time to time without the approval of any holders of rights:
- to cure any ambiguity, to correct or supplement any defective or
inconsistent provisions,
- to shorten or lengthen any time period under the rights agreement relating
to when the rights may be redeemed, so long as, under specified
circumstances, a majority of the continuing directors approve the
shortening or lengthening, or
- to make any other provisions with respect to the rights which we and the
rights agent may deem necessary or desirable.
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Notwithstanding this right to amend or supplement, from and after the
distribution date, the rights agreement may not be amended in any manner which
would adversely affect the interest of the holders of rights.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
We are subject to section 203 of the Delaware General Corporation Law,
which, with specified exceptions, prohibits a Delaware corporation from engaging
in any "business combination" with any "interested stockholder" for a period of
three years following the time that the stockholder became an interested
stockholder unless:
- before that time, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;
- upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned by persons who are
directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will he tendered in a tender or exchange
offer; or
- at or after that time, the business combination is approved by the board
of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
Section 203 defines "business combination" to include the following:
- any merger or consolidation of the corporation with the interested
stockholder;
- any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;
- subject to specified exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder;
- any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested stockholder; or
- any receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, section 203 defines an "interested stockholder" as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by that entity or person.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following, in the opinion of Cooley Godward LLP, counsel to Titan and
the trust, is a summary of the material United States federal income tax
consequences of the purchase, ownership, disposition, and conversion of HIGH
TIDES and our common stock. Unless otherwise stated, this summary deals only
with HIGH TIDES and Titan's common stock held as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, by
United States persons which, as defined in the Internal Revenue Code, include
any beneficial owners, that are, for United States federal income tax purposes:
- citizens or residents of the United States;
- corporations or partnerships created or organized in or under the law of
the United States, any state thereof or the District of Columbia (other
than partnerships that are not treated as a United States person under any
applicable Treasury regulations);
- estates, the income of which is subject to United States federal income
taxation regardless of its source;
- trusts if (A) a court within the United States is able to exercise primary
supervision over the administration of the trust and (B) one or more
United States persons have the authority to control all substantial
decisions of the trust; or
- otherwise subject to United States federal income taxation on a net income
basis in respect of the HIGH TIDES or common stock.
This summary does not deal with special classes of holders such as:
- banks, thrifts and other financial institutions;
- real estate investment trusts and regulated investment companies;
- insurance companies;
- dealers in securities or currencies;
- tax-exempt investors;
- foreign investors;
- persons holding HIGH TIDES as part of a straddle or as part of a hedging
or conversion transaction or other integrated investment;
- persons that have a functional currency other than the U.S. dollar; or
- persons who are subject to the United States federal alternative minimum
tax.
Nor does this summary discuss the tax consequences to shareholders, partners
or beneficiaries of a holder of HIGH TIDES or Titan's common stock. Further,
this summary does not include any description of the tax laws of any state or
local government or of any foreign government that may be applicable to the HIGH
TIDES or Titan's common stock.
This summary is based on the Internal Revenue Code, the Treasury regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all as of the date hereof, and all of which are subject to change, possibly on a
retroactive basis. The authorities on which this summary is based are subject to
various interpretations, and it is therefore possible that the federal income
tax treatment of the ownership and disposition of HIGH TIDES may differ from the
treatment described below. Neither the trust nor Titan has sought, nor will
either seek, a ruling from the Internal Revenue Service (the "IRS") on
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the U.S. federal tax consequences described in this summary, and it is possible
that the IRS could take a position contrary to the interpretations herein.
IN PART BECAUSE OF THE UNCERTAINTIES CONCERNING THE PROPER TAX TREATMENT OF
HIGH TIDES AS DISCUSSED BELOW, IT IS PARTICULARLY IMPORTANT THAT YOU CONSULT
WITH YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME,
AND OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, DISPOSITION AND
CONVERSION OF THE HIGH TIDES AND THE OWNERSHIP AND DISPOSITION OF TITAN'S COMMON
STOCK.
CLASSIFICATION OF THE TRUST AS A GRANTOR TRUST
In connection with the initial offering of the HIGH TIDES, Cooley Godward
LLP rendered its opinion that, under current law, assuming full compliance with
the terms of the declaration of trust, the indenture and certain other
documents, and based on certain facts and assumptions contained in such opinion,
the trust will be classified for United States federal income tax purposes as a
grantor trust and not as a partnership, an association or a publicly traded
partnership taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of HIGH TIDES generally will be considered the
owner of an undivided interest in the debentures issued by us to the trust, and
each holder will be required to include in its gross income all income or gain
with respect to its allocable share of those debentures, including original
issue discount (if any), whether or not cash is actually distributed to the
holder.
CLASSIFICATION OF THE DEBENTURES AS INDEBTEDNESS
Titan intends to take the position that the debentures will be classified
for United States federal income tax purposes as indebtedness of Titan. By
acceptance of the HIGH TIDES, each holder covenants to treat the debentures as
indebtedness and the HIGH TIDES as evidence of an indirect beneficial ownership
interest in the debentures. No assurance can be given, however, that the
classification of the debentures as indebtedness will not be challenged by the
IRS, or if challenged, that such a challenge will not be successful. The
remainder of this discussion assumes that the debentures will be classified as
indebtedness of Titan for United States federal income tax purposes.
TAX TREATMENT OF DEBENTURES AS RESET BONDS
Because no debt instrument closely comparable to the debentures has been the
subject of any Treasury regulation, revenue ruling or judicial decision, the
United States federal income tax treatment of debt obligations such as the
debentures is not certain. We intend to treat the debentures for United States
federal income tax purposes as "reset bonds" under Treasury regulations relating
to variable rate debt instruments. Assuming the debentures are reset bonds, they
will be treated, solely for purposes of the original issue discount rules of the
Internal Revenue Code, as maturing on the date immediately preceding the reset
date for the reset price and, if the remarketing agent remarkets the HIGH TIDES,
as being reissued on the reset date at the reset price.
There can be no assurance that the Internal Revenue Service will agree with,
or that a court would uphold, the treatment of the debentures as reset bonds. In
particular, the Internal Revenue Service could instead attempt to treat the
debentures as maturing at their stated maturity on February 15, 2030. If the
debentures were treated as maturing on such date, the debentures would be
treated as having contingent interest under the Treasury regulations governing
debt instruments that provide for contingent payments. In that event, we would
be required to construct a projected payment schedule for the debentures, based
on our current borrowing costs for comparable noncontingent debt instruments,
from which an estimated yield on the debentures would be calculated. A holder
would be required to include in income original issue discount in an amount
equal to the product of the "adjusted issue price" of the debentures at the
beginning of each interest accrual period and the estimated yield of the
debentures and to make certain adjustments to such income accruals for
differences between actual payments and projected payments. In general, the
"adjusted issue price" of a debenture would be equal to its "issue price" (the
first price at
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which a substantial amount of the HIGH TIDES are sold to the public, ignoring
sales to bond houses, brokers and similar persons acting as underwriters,
placement agents or wholesalers), increased by the original issue discount, if
any, previously accrued on the debenture, and reduced by any payments made on
the debenture. During the period prior to the reset date, the original issue
discount would accrue at a rate that is greater than the applicable rate, and
holders would have more taxable income than the cash payable on the HIGH TIDES.
In addition, under the Treasury regulations governing debt instruments that
provide for contingent payments, holders who sold or redeemed their HIGH TIDES
would recognize ordinary loss or reduced gain at that time to reflect any excess
of prior original issue discount accruals over actual interest payments
received. Holders who retain their HIGH TIDES following the reset date would
reduce their original issue discount accruals after that date to reflect any
such excess prior to the reset date. Furthermore, under the Treasury
regulations, any gain realized with respect to the HIGH TIDES would generally be
treated as ordinary income, any loss realized would generally be treated as
ordinary loss to the extent of the holder's prior ordinary income inclusions
with respect to the HIGH TIDES, and any additional loss would be capital loss.
The following discussion assumes the debentures are properly treated as
reset bonds rather than as contingent payment debt instruments.
INTEREST INCOME
Under the Treasury regulations, a "remote" contingency that stated interest
will not be timely paid will be ignored in determining whether a debt instrument
is issued with original issue discount. We believe that the likelihood of
interest payments being deferred is remote. Based on the foregoing, we believe
that the debentures will not be considered to be issued with original issue
discount at the time of their original issuance and, accordingly, a holder of
HIGH TIDES should include in gross income such holder's allocable share of
interest on the debentures in accordance with such holder's method of tax
accounting. If it is determined that the possible deferral of interest payments
should not be treated as a remote contingency, interest on the debentures would
not be treated as "qualified stated interest" and, thus, the debentures would be
treated as having been issued with original issue discount. In such case,
holders of HIGH TIDES would be required to include in income their allocable
share of the original issue discount accrued by the trust with respect to the
debentures on an economic accrual basis over the period of time the HIGH TIDES
(and the underlying allocable share of the debentures) are held, regardless of
their regular methods of accounting and regardless of whether interest has been
paid on the debentures or distributions are made on the HIGH TIDES. Actual
payments of interest on the debentures and corresponding distributions on the
HIGH TIDES would not result in additional income being recognized by the holders
of the HIGH TIDES. In such event, the interest income included by the holders of
the HIGH TIDES should not differ from the actual interest paid on the
debentures.
In addition, under the Treasury regulations, if at any time the payment of
interest on the debentures is deferred, the debentures would, solely for
purposes of determining the existence and amount of original issue discount with
respect to the debentures, at that time be treated as retired and reissued with
original issue discount, and all stated interest on the debentures would
thereafter be treated as original issue discount as long as the debentures
remained outstanding. In such event, holders of HIGH TIDES would be required to
include in income their allocable share of the original issue discount accrued
by the trust with respect to the debentures on an economic accrual basis over
the period of time that the HIGH TIDES (and the underlying allocable share of
the debentures) are held, regardless of their regular methods of tax accounting
and regardless of whether interest has been paid on the debentures or
distributions are made on the HIGH TIDES. Assuming that the debentures are
treated as reset bonds (as discussed above), the total original issue discount
that would accrue during the period up to the day before the reset date if we
were to exercise our option to defer payments of interest would be equal to the
excess of (1) the sum of (A) the reset price, plus (B) the total stated interest
payments called for under the debentures prior to the
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reset date after the date we exercise our option to defer interest payments on
the debentures, over (2) the adjusted issue price of the debentures as of the
date we exercised our option to defer payments of interest. Because the reset
price exceeds the principal amount of the debentures, during the period
following the date we exercise our option to defer interest payments on the
debentures through the reset date holders will accrue original issue discount at
a rate slightly in excess of the applicable initial rate.
The following discussion assumes that we will not defer payments of interest
on the debentures, and that the debentures will not be issued with original
issue discount.
Because the income underlying the HIGH TIDES will not be characterized as
dividends for United States federal income tax purposes, corporate holders of
the HIGH TIDES will not be entitled to a dividends received deduction for any
income recognized with respect to the HIGH TIDES.
RECEIPT OF DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
HIGH TIDES--Tax Event or Investment Company Event Redemption or Distribution,"
debentures may be distributed to holders in exchange for the HIGH TIDES and in
liquidation of the trust. Under current law, such a distribution to holders, for
United States federal income tax purposes, would be treated as a nontaxable
event to each holder, and each holder would receive an aggregate tax basis in
the debentures equal to such holder's aggregate tax basis in its HIGH TIDES. A
holder's holding period in the debentures so received in liquidation of the
trust would include the period during which the HIGH TIDES were held by such
holder. If, however, the exchange is caused by a tax event which results in the
trust being treated as an association taxable as a corporation, the distribution
would likely constitute a taxable event to holders of the HIGH TIDES.
Under certain circumstances described herein (see "Description of HIGH
TIDES"), the debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their HIGH TIDES. Under
current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed HIGH TIDES as to
holders, and a holder would recognize gain or loss as if it sold such redeemed
HIGH TIDES for cash. See "--Sale of HIGH TIDES."
SALE OF HIGH TIDES
A holder that sells its HIGH TIDES will recognize capital gain or loss equal
to the difference between the amount realized on the sale of the HIGH TIDES
(other than any amount attributable to accrued but unpaid interest) and the
holder's adjusted tax basis in such HIGH TIDES. Such capital gain or loss will
be long-term capital gain or loss if the HIGH TIDES have been held by the holder
for more than one year.
CONVERSION OF HIGH TIDES INTO COMMON STOCK
A holder of HIGH TIDES will not recognize income, gain or loss upon the
conversion, through the conversion agent, of debentures into common stock. The
holder will recognize gain upon the receipt of cash in lieu of a fractional
share of common stock equal to the amount of cash received less the holder's
adjusted tax basis in such fractional share. A holder's adjusted tax basis in
the common stock received upon conversion generally will be equal to the
holder's tax basis in the HIGH TIDES delivered to the conversion agent for
exchange less the tax basis allocated to any fractional share for which cash is
received, and a holder's holding period in the common stock received upon
conversion generally will include the period during which the HIGH TIDES were
held by such holder.
DIVIDENDS
The amount of any distribution we make in respect of our common stock will
be equal to the amount of cash and the fair market value, on the date of
distribution, of any property distributed. Generally,
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distributions will be treated as a dividend, subject to tax as ordinary income,
to the extent of our current or accumulated earnings and profits, as determined
for federal income tax purposes, then as a tax-free return of capital to the
extent of a holder's adjusted tax basis in the common stock and thereafter as
gain from the sale or exchange of such stock (as described below).
In general, a dividend distribution to a corporate holder will qualify for
the 70% dividends received deduction if the holder owns less than 20% of the
voting power and value of our stock (other than any non-voting, non-convertible,
non-participating preferred stock). A corporate holder that owns 20% or more of
the voting power and value of our stock (other than any non-voting,
non-convertible, non-participating preferred stock) generally will qualify for
an 80% dividends received deduction. The dividends received deduction is subject
to certain holding period, taxable income and other limitations.
SALE OF COMMON STOCK
Upon the sale or disposition of common stock, a holder generally will
recognize capital gain or loss equal to the difference between the amount
realized upon the sale or disposition and such holder's adjusted tax basis in
the common stock. Such capital gain or loss will generally be long-term capital
gain or loss if such holder's holding period for the common stock exceeds one
year. A holder's basis and holding period in common stock received upon
conversion of HIGH TIDES are determined as discussed above under "--Conversion
of HIGH TIDES into Common Stock."
ADJUSTMENT OF CONVERSION PRICE
Treasury regulations promulgated under Section 305 of the Internal Revenue
Code would treat holders of HIGH TIDES as having received a constructive
distribution from us in the event the applicable conversion ratio of the
debentures were adjusted if:
- as a result of such adjustment, the proportionate interest (measured by
the amount of common stock into which the debentures are convertible) of
the holders of the HIGH TIDES in the assets or earnings and profits of
Titan were increased; and
- the adjustment was not made pursuant to a bona fide, reasonable
antidilution formula. An adjustment in the applicable conversion ratio
would not be considered made pursuant to such a formula if the adjustment
was made to compensate for certain taxable distributions with respect to
the common stock.
Thus, under certain circumstances, a reduction in the conversion price for
the holders may result in deemed dividend income to holders to the extent of the
current or accumulated earnings and profits of Titan. Holders of the HIGH TIDES
would be required to include their allocable share of such deemed dividend
income in gross income but will not receive any cash related thereto.
We will take the position that the adjustment to the initial conversion
ratio in connection with the remarketing will constitute an "isolated"
recapitalization for United States federal income tax purposes and, therefore,
not be deemed a constructive dividend under Section 305. However, the Internal
Revenue Service might contend that any increase in such initial conversion ratio
on the reset date is a constructive dividend to holders of the HIGH TIDES who
hold the HIGH TIDES immediately before the reset date and that any decrease in
such initial conversion ratio on the reset date (or elimination of the
conversion feature on the reset date) is a constructive dividend to all holders
of common stock at that time. In each case, the amount of the constructive
dividend would be the fair market value on the reset date of the number of
shares of common stock which, if actually distributed to holders of HIGH TIDES
(in the case of an increase in the initial conversion ratio) or to holders of
the common stock (in the case of a decrease in
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the initial conversion ratio or elimination of convertibility of HIGH TIDES),
would produce the same increase in the proportionate interests of such holders
in the assets or earnings and profits of Titan as that produced by the
adjustment. The aggregate deemed dividend is limited to the current or
accumulated earnings and profits of Titan. Holders of HIGH TIDES would be
required to include any such constructive dividend to them in gross income but
would not receive any cash related thereto.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on HIGH TIDES, payments of dividends on
common stock, payments of the proceeds from the sale of HIGH TIDES and payments
of the proceeds from the sale of common stock. Such payments may be subject to
backup withholding at the rate of 31% unless the holder complies with certain
identification requirements or otherwise qualifies for an exemption from backup
withholding.
Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against such holder's United States federal
income tax and may entitle the holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
(ERISA) should consider the fiduciary standards of ERISA in the context of the
plan's particular circumstances before authorizing an investment in the HIGH
TIDES with assets of the plan. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA, whether the investment could result in a
delegation of fiduciary authority and whether the investment would be consistent
with the documents and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code, from engaging in certain transactions involving "plan assets" with persons
who are parties in interest under ERISA or disqualified persons under the Code
with respect to such plans. A violation of these prohibited transaction rules
may result in an excise tax or other liabilities under ERISA and/or
Section 4975 of the Code for such persons, unless exemptive relief is available
under an applicable statutory or administrative exemption. Employee benefit
plans that are governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of ERISA) and foreign plans
(as described in Section 4(b)(4) of ERISA) are not subject to the requirements
of ERISA or Section 4975 of the Code; however, such plans may be subject to
federal, state or local laws or regulations which affect their ability to invest
in the HIGH TIDES. Any fiduciary of such a governmental, church or foreign plan
considering an investment in the HIGH TIDES should determine the need for, and,
if necessary, the availability of, any exemption relief under such laws or
regulations.
Under a regulation issued by the United States Department of Labor (the
DOL), the assets of the trust would be deemed to be plan assets of a plan for
purposes of ERISA and Section 4975 of the Code if plan assets of the plan were
used to acquire an equity interest in the trust and no exception were applicable
under the plan assets regulation. An equity interest is defined under the plan
assets regulation as any interest in an entity other than an instrument that is
treated as indebtedness under applicable local law and that has no substantial
equity features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the plan assets regulation, the assets
of the trust would not be deemed to be plan assets of investing plans if,
immediately after the most recent acquisition of any equity interest in the
trust, less than 25% of the value of each class of equity interests in the trust
were held by plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be plan assets of any plan.
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No assurance can be given that the value of the HIGH TIDES held by benefit plan
investors was less than 25% of the total value of such HIGH TIDES at the
completion of the initial offering or will be otherwise.
Certain transactions involving the trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a plan if the HIGH TIDES were acquired with plan assets of
such plan and assets of the trust were deemed to be plan assets of plans
investing in the trust. For example, if we are a party in interest with respect
to an investing plan (either directly or by reason of our ownership of our
subsidiaries) or become a party in interest by reason of the operation of the
trust, extensions of credit between the trust and us (as represented by the
debentures and the guarantee) would likely be prohibited by
Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless
exemptive relief were available under an applicable administrative exemption
(see below). Because the assets of the trust may be considered plan assets for
ERISA purposes as a result of a plan's acquisition and holding of HIGH TIDES, a
plan fiduciary should consider (a) whether powers which potentially may be
exercised by any person or entity with respect to the trust or its assets would
result in such person or entity being potentially deemed to be a fiduciary and,
therefore, a party in interest with respect to a plan acquiring or holding HIGH
TIDES and (b) if so, whether such acquisition and holding could result in a
delegation of fiduciary authority which is impermissible under the plan's
governing instruments or any investment management agreement with the plan. In
making such determination, a plan fiduciary should note that prior to a default,
the trustees will have only limited custodial and ministerial authority with
respect to the assets of the trust.
The DOL has issued five prohibited transaction class exemptions that may
provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the HIGH TIDES, assuming that assets
of the trust were deemed to be plan assets of plans investing in the trust (as
described above). Those class exemptions are PTCE 96-23 (for certain
transactions effected on behalf of a plan by an in-house asset manager), PTCE
95-60 (for certain transactions involving insurance company general accounts),
PTCE 91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company separate
pooled accounts) and PTCE 84-14 (for certain transactions effected on behalf of
a plan by an independent qualified professional asset manager).
Because the HIGH TIDES may be deemed to be equity interests in the trust for
purposes of applying ERISA and Section 4975 of Code, the HIGH TIDES may not be
purchased or held by any plan, any entity whose underlying assets include plan
assets by reason of any plan's investment in an entity (a plan asset entity) or
any person investing plan assets of any plan, unless the purchaser or holder is
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14. Any purchaser or holder of the HIGH TIDES or any interest therein will
be deemed to have represented by its purchase and holding that it either (a) is
not a plan or a plan asset entity and is not purchasing such securities on
behalf of or with plan assets of any plan or (b) is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. In addition, if
we were considered to be a fiduciary with respect to the trust as a result of
certain powers we hold (such as the powers to remove and replace the property
trustee and the administrative trustees), certain operations of the trust,
including the optional redemption or acceleration of the debentures, could be
considered to be prohibited transactions under Section 406(b) of ERISA and
Section 4975(c)(1)(E) of the Code. In order to avoid such prohibited
transactions the fiduciaries of any plan or plan asset entity which may purchase
or hold HIGH TIDES will be deemed as a result of such acquisition or holding to
have (a) directed the trust to invest in the debentures, (b) authorized and
directed any of the actions taken or which may be taken with respect to the
trust, the debentures and the HIGH TIDES by any of the trustees, the debenture
trustee, the guarantee trustee, or us as contemplated by the indenture, the
debentures or the guarantee and (c) appointed each of the trustees.
Based on the reasoning of the United States Supreme Court in JOHN HANCOCK
LIFE INS. CO. V. HARRIS TRUST AND SAV. BANK, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of the plans investing
in the general account (e.g., through the purchase of an annuity contract), and
the insurance company might be treated as a party-in interest with respect to a
plan by virtue
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of such investment. Any purchaser of the HIGH TIDES that is an insurance company
using the assets of an insurance company general account should note that the
Small Business Job Protection Act of 1996 added new Section 401(c) of ERISA
relating to the status of the assets of insurance company general accounts under
ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the DOL issued
final regulations effective January 5, 2000 (the "General Account Regulations")
with respect to insurance policies issued on or before December 31, 1998 that
are supported by an insurer's general account. As a result of these regulations,
assets of an insurance company general account will not be treated as "plan
assets" for purposes of the fiduciary responsibility provisions of ERISA and
Section 4975 of the Code to the extent such assets relate to contracts issued to
employee benefit plans on or before December 31, 1998 and the insurer satisfies
various conditions. Section 401(c) also provides that, except in the case of
avoidance of the General Account Regulations and actions brought by the
Secretary of Labor relating to certain breaches of fiduciary duties that also
constitute breaches of state or federal criminal law, until the date that is
18 months after the General Account Regulations become final, no liability under
the fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code may result on the basis of a claim that the assets of
the general account of an insurance company constitute the "plan assets" of any
such plan. The plan asset status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets continue
to be treated as the plan assets of any such plan invested in a separate
account.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in nonexempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the HIGH
TIDES on behalf of or with plan assets of any plan consult with their counsel
regarding the potential consequences if the assets of the trust were deemed to
be plan assets and the availability of exemptive relief under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14.
REGISTRATION RIGHTS
In connection with the original offering of the HIGH TIDES, we and the trust
entered into a registration rights agreement with the initial purchasers of the
HIGH TIDES for the benefit of the holders of the HIGH TIDES wherein we and the
trust agreed, at our sole expense, to
- file, and use our best efforts to have declared effective, the shelf
registration statement of which this prospectus is a part covering resales
of the HIGH TIDES, the guarantee, the debentures and the related common
stock issuable upon conversion of the HIGH TIDES; and
- use our best efforts to keep effective the shelf registration statement
for two years or such other period as required under Rule 144(k) of the
Securities Act or any successor rule thereto or, if earlier, such time as
all of the applicable securities have been sold thereunder.
We will provide to each holder for whom the shelf registration statement was
filed copies of this prospectus, notify each such holder when the shelf
registration statement for the securities has become effective and take certain
other actions as are required to permit unrestricted resales of the securities.
A holder that sells securities pursuant to the shelf registration statement will
be required to be named as a selling holder in this prospectus or a prospectus
supplement and to deliver this prospectus or a prospectus supplement to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreement that are applicable to such a
holder (including certain indemnification rights and obligations).
Upon written notice to all the holders of the HIGH TIDES, we or the trust
will be permitted to suspend the use of this prospectus or any prospectus
supplement during prescribed periods of time if we or the trust possess material
non-public information. The periods during which we can suspend the use of this
prospectus or any prospectus supplement may not exceed 20 consecutive days or a
total of 60 days, whether or not consecutively, in any twelve month period and
neither we nor the trust are permitted to suspend the use of this prospectus or
any prospectus supplement within ten business days after our last suspension.
73
<PAGE>
Upon receipt of such notice, holders of the HIGH TIDES are required to cease
disposing of securities under the applicable prospectus or prospectus supplement
until the holders either receive copies of a new or additional prospectus
supplement or are advised in writing by us or the trust that offers and sales of
the securities and use of the applicable prospectus or prospectus supplement may
be resumed.
We and the trust may require each holder of the HIGH TIDES to furnish
information regarding the holder and the distribution of the securities as we or
the trust may reasonably require for inclusion in the shelf registration
statement.
A registration default will occur in the event that, after the shelf
registration statement is declared effective by the SEC, we or the trust fail to
keep the shelf registration statement continuously effective and usable (subject
to some exceptions) for the period required by the registration rights
agreement. If a registration default occurs, then additional interest, referred
to in this prospectus as special interest, will accrue on the debentures, and
corresponding special distributions will accrue on the HIGH TIDES and common
securities, in each case from and including the day following the registration
default to but excluding the day on which the registration default has been
cured or has been deemed to have been cured. Special interest and special
distributions will be paid in cash quarterly in arrears on each interest payment
date commencing with the first interest payment date following the applicable
registration default and will accrue at a rate so that the interest rate or
distribution rate, as the case may, will be increased 0.5% per annum of the
principal amount or liquidation amount, as applicable.
Following the cure of a registration default, special interest and special
distributions will cease to accrue with respect to the applicable registration
default.
Each security will contain a legend to the effect that the holder of the
security, by its acceptance of the security, will be deemed to have agreed to be
bound by the provisions of the registration rights agreement.
The registration rights agreement is governed by, and construed in
accordance with, the laws of the State of New York. This summary of the
registration rights agreement is not complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
registration rights agreement, which is available for review as described in
"Where You Can Find More Information."
74
<PAGE>
SELLING HOLDERS
The HIGH TIDES were originally issued and sold to the initial purchasers,
Credit Suisse First Boston Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation. The initial purchasers simultaneously sold the HIGH
TIDES in transactions exempt from the registration requirements of the
Securities Act to persons reasonably believed by them to be qualified
institutional buyers as defined in Rule 144A under the Securities Act. The trust
used all of the proceeds of the issuance of the HIGH TIDES and of its concurrent
sale of common securities to us to purchase the debentures.
The selling holders may from time to time offer and sell pursuant to this
prospectus any or all of the HIGH TIDES, the debentures, the common stock
issuable upon conversion of the HIGH TIDES and the guarantee. The term "selling
holder" includes the holders listed below and the beneficial owners of the HIGH
TIDES and their transferees, pledgees, donees or other successors.
The following table sets forth information with respect to the selling
holders of the HIGH TIDES and the respective number of HIGH TIDES beneficially
owned by each selling holder that may be offered for such selling holder's
account pursuant to this prospectus. Such information has been obtained from the
selling holders.
<TABLE>
<CAPTION>
NUMBER OF
SELLING HOLDER HIGH TIDES
-------------- ----------
<S> <C>
AAM/Zazove Institutional Income Fund, LP.................... 20,000
Aftra Health Fund........................................... 15,000
AIM America Growth Class.................................... 8,000
AIM Large Cap Opportunities Fund............................ 3,000
AIM Mid Cap Growth Fund..................................... 15,500
AIM Mid Cap Opportunities Fund.............................. 62,000
AIM Strategic Income Fund................................... 22,000
Allstate Insurance Company.................................. 30,000
Associated Electric & Gas Insurance Services Limited........ 8,000
Bank Austria Cayman Island, Ltd............................. 20,000
Bear Stearns & Co., Inc..................................... 10,000
BNP Arbitrage SNC........................................... 7,800
BNY Hamilton Equity Income Fund............................. 80,000
Boilermaker--Blacksmith Pension Trust....................... 14,000
Brown & Williamson Tobacco Master Retirement Trust.......... 4,000
Burroughs Wellcome Fund..................................... 12,750
CALAMOS Convertible Fund--CALAMOS Investment Trust.......... 17,200
CALAMOS Convertible Portfolio--CALAMOS Advisors Trust....... 650
CALAMOS Growth and Income Fund--CALAMOS Investment Trust.... 18,000
CALAMOS Global Growth and Income Fund--CALAMOS Investment
Trust..................................................... 1,150
CALAMOS Market Neutral Fund--CALAMOS Investment Trust....... 8,900
Canal Insurance Company..................................... 20,000
Champion International Corporation Master Retirement
Trust..................................................... 6,100
Chartwell Investment Partners............................... 600
Chrysler Corporation Employee #1 Pension Plan............... 144,500
Chrysler Corporation Master Retirement Trust................ 217,500
City of Albany Pension Plan................................. 1,200
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SELLING HOLDER HIGH TIDES
-------------- ----------
<S> <C>
City of Knoxville Pension System............................ 4,200
Clinton Riverside Convertible Portfolio Limited............. 10,000
Consulting Group Capital Markets Funds...................... 4,500
Credit Suisse First Boston Corporation...................... 222,160
Delphi Foundation, Inc...................................... 600
Delta Air Lines Master Trust (care of Oaktree Capital
Management, LLC).......................................... 82,200
Delta Air Lines Master Trust (care of CALAMOS Asset
Management, Inc.)......................................... 26,500
Deutsche Bank Securities Inc................................ 1,102,275
Franklin and Marshall College............................... 9,500
GE Pension Trust............................................ 70,000
General Motors Employees Global Group Pension Trust......... 113,250
General Motors Foundation, Inc.............................. 6,150
Golden Rule Financial Corporation........................... 20,000
GranGem 23 41 LLC........................................... 18,500
Greek Catholic Union II..................................... 175
Hamilton Family Trust....................................... 8,300
Hamilton Partners Limited................................... 75,000
HT Insight Convertible Securities Fund...................... 14,000
JMG Triton Offshore Fund, Ltd............................... 67,500
John M. Olin Foundation..................................... 18,600
JP Morgan Securities Inc.................................... 20,000
Kettering Medical Center Funded Depreciation Account........ 900
Knoxville Utilities Board Retirement System................. 2,500
Lipper Convertibles, L.P.................................... 80,000
Lipper Offshore Convertibles, L.P........................... 20,000
Mainstay Convertible Fund................................... 67,000
Mainstay Strategic Value Fund............................... 4,000
Mainstay VP Convertible Portfolio........................... 30,000
Mary Ann Hamilton Trust for Self............................ 8,600
Michigan Municipal Employees Retirement System.............. 46,700
Morgan Stanley Dean Witter Convertible Securities Trust..... 50,000
Motion Picture Industry Health Plan--Active Member Fund..... 25,300
Motion Picture Industry Health Plan--Retiree Member Fund.... 12,600
Motors Insurance Corporation................................ 30,000
Museum of Fine Arts, Boston................................. 600
New Hampshire Retirement System............................. 3,300
OCM Convertible Trust....................................... 96,200
Parker-Hannifin Corporation................................. 1,300
Partner Reinsurance Company Ltd............................. 38,500
Penn Treaty Network America Insurance Company............... 12,200
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SELLING HOLDER HIGH TIDES
-------------- ----------
<S> <C>
Port Authority of Allegheny County Retirement and Disability
Allowance Plan for the Employees Represented by Local 85
of the Amalgamated Transit Union.......................... 15,000
ProMutual................................................... 2,000
Putnam Asset Allocation Funds--Balanced Portfolio........... 3,000
Putnam Asset Allocation Funds--Conservative Portfolio....... 2,000
Putnam Balanced Retirement Fund............................. 1,100
Putnam Convertible Income--Growth Trust..................... 10,300
Putnam Convertible Opportunities and Income Trust........... 1,500
R.R. Donnelley & Sons....................................... 18,250
San Diego County Employees Retirement Association........... 20,000
SPT......................................................... 11,800
State Employees' Retirement Fund of the State of Delaware... 110,100
State of Connecticut Combined Investment Funds.............. 244,700
Susquehanna Capital Group................................... 54,800
Tennessee Consolidated Retirement System.................... 80,000
The Dow Chemical Company Employees' Retirement Plan......... 28,300
The Fondren Foundation...................................... 850
The Gabelli Global Convertible Securities Fund.............. 5,000
The Northwestern Mutual Life Insurance Company.............. 260,000
The TCW Group, Inc.......................................... 284,740
U.S. Olympic Foundation..................................... 11,800
Unifi, Inc. Profit Sharing Plan and Trust................... 1,400
United Food and Commercial Workers Local 1262 and Employers
Pension Fund.............................................. 6,800
University of Rochester..................................... 500
Value Line Convertible Fund, Inc............................ 20,000
Van Kampen Convertible Securities Fund...................... 21,900
Van Kampen Harbor Fund...................................... 118,100
Van Waters & Rogers, Inc. Retirement Plan (f.k.a. Univar
Corporation).............................................. 4,100
Vanguard Convertible Securities Fund, Inc................... 230,900
Washington University....................................... 22,300
White River Securities LLC.................................. 10,000
ZCM/HFR Index Management, L.L.C............................. 1,550
</TABLE>
None of the selling holders has, or within the past three years has had, any
position, office or other material relationship with Titan or the trust or any
of their predecessors or affiliates. Because the selling holders may, pursuant
to this prospectus, offer all or some portion of the HIGH TIDES, the debentures,
the common stock issuable upon conversion of the HIGH TIDES and the guarantee,
no estimate can be given as to the amount of those securities that will be held
by the selling holders upon termination of any such sales. In addition, the
selling holders identified above may have sold, transferred or otherwise
disposed of all or a portion of their HIGH TIDES since the date on which they
provided the information regarding their HIGH TIDES included herein in
transactions exempt from the registration requirements of the Securities Act.
77
<PAGE>
PLAN OF DISTRIBUTION
The HIGH TIDES, the debentures, the common stock issuable upon conversion of
the HIGH TIDES and the guarantee may be offered and sold from time to time to
purchasers directly by the selling holders. Alternatively, the selling holders
may from time to time offer those securities to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling holders or
the purchasers of the securities for whom they act as agents. The selling
holders and any underwriters, broker-dealers or agents that participate in the
distribution of the securities may be deemed to be "underwriters" within the
meaning of the Securities Act, and any profit on the sale of such securities and
any discounts, commissions, concessions or other compensation received by any
such underwriter, broker-dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.
The securities may be sold from time to time in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. The sale of the
securities may be effected in transactions, which may involve crosses or block
transactions:
- on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
- through the writing and exercise of options.
In connection with sales of the securities or otherwise, the selling holders may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the securities in the course of hedging the positions they
assume. The selling holders may also sell the securities short and deliver
securities to close out such short positions, or loan or pledge securities to
broker-dealers that in turn may sell such securities.
At the time a particular offering of the securities is made, a prospectus
supplement, if required in addition to this prospectus, will be distributed,
which will set forth the aggregate amount and type of securities being offered
and the terms of the offering, including the name or names of any underwriters,
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling holders and any discounts,
commissions or concessions allowed or reallowed to paid broker-dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the securities will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the securities may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.
The selling holders will be subject to applicable provisions of the Exchange
Act and rules and regulations under the Exchange Act, which provisions may limit
the timing of purchases and sales of any of the securities by the selling
holders. This may affect the marketability of those securities.
Pursuant to the registration rights agreement, we shall bear all fees and
expenses incurred in connection with the registration of the securities, except
that selling holders will pay all broker's commissions and, in connection with
any underwritten offering, all expenses customarily borne by selling holders in
an underwritten offering, including underwriting discounts and commissions. The
selling holders will be indemnified by us and the trust, jointly and severally,
against certain civil liabilities, including certain liabilities under the
Securities Act or the Exchange Act or otherwise, or alternatively will be
entitled to contribution in connection with those liabilities.
78
<PAGE>
LEGAL MATTERS
Richards, Layton & Finger, P.A., special Delaware counsel to the trust and
Titan, will pass on certain matters of Delaware law relating to the validity of
the HIGH TIDES. Morgan, Lewis & Bockius, New York, New York, will pass upon the
validity of the debentures and the guarantee. Cooley Godward LLP, San Diego,
California, will pass upon the validity of the common stock issuable upon
conversion of the HIGH TIDES.
EXPERTS
The consolidated financial statements of The Titan Corporation as of
December 31, 1998 and 1999 and for each of the three years in the period ended
December 31, 1999, the consolidated financial statements of Advanced
Communication Systems, Inc. as of September 30, 1998 and 1999 and for each of
the three years in the period ended September 30, 1999, the financial statements
of Transnational Partners II, LLC as of December 31, 1997 and 1998 and for the
period from February 9, 1997 (commencement of operations) through December 31,
1997 and for the year ended December 31, 1998 and the financial statements of JB
Systems, Inc. (d.b.a. Mainsaver) as of December 31, 1997 and 1998 and for each
of the three years in the period ended December 31, 1998 and for the ten month
period ended October 31, 1999, incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The financial statements of Assist Cornerstone Technologies, Inc. at
December 12, 1999, December 31, 1998 and December 31, 1997, and for the period
ended December 12, 1999 and the three years in the period ended December 31,
1998, incorporated by reference in this prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon and incorporated by reference herein, and are incorporated
by reference in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
The consolidated financial statements of SFG Technologies, Inc. as of
December 21, 1999 and December 31, 1998 and for the period from January 1, 1999
to December 21, 1999, eight months ended December 31, 1998 and for the years
ended April 30, 1997 and 1998 have been incorporated by reference in this
prospectus and in the registration statement in reliance upon the report of KPMG
LLP, independent auditors, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
79
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by Titan in
connection with resales of the securities being registered. All amounts are
estimates except the SEC registration statement filing fee. None of the costs
and expenses listed below will be paid by the selling security holders.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
SEC Registration Statement Filing Fee....................... $ 66,000
Legal Fees and Expenses..................................... 50,000
Accounting fees and expenses................................ 37,500
Trustee's fees and expenses (including counsel fees)........ 10,000
Printing Fees............................................... 150,000
Transfer Agent Fees......................................... 5,000
Miscellaneous............................................... 10,000
--------
Total..................................................... $328,500
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Titan Corporation's Bylaws provide for indemnification (to the fullest
extent permitted by law) of directors, officers and other agents of The Titan
Corporation against expenses, judgments, fines and amounts paid in settlements
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact that such person is, or was, an officer, director, or agent
of The Titan Corporation. The Titan Corporation also maintains directors and
officers liability insurance coverage and has entered into indemnification
agreements with its directors and officers.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
generally that a corporation shall have the power, and in some cases is
required, to indemnify an agent, including an officer or director, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, against certain expenses, judgments, fines,
settlements, and other amounts under certain circumstances.
The Amended and Restated Declaration of Trust ("Declaration") provides that
(to the fullest extent permitted by law) The Titan Corporation shall indemnify
and hold harmless any trustee named therein, any affiliate of any trustee named
therein, any directors, officers or other agents of any trustee named therein,
or any employee or agent of Titan Capital Trust or its affiliates, from and
against any loss, damage, liability, tax, penalty, cost, expense, action, suit
or claim of any kind incurred by such person by reason of the creation,
operation, or termination of Titan Capital Trust or any act or omission
performed or omitted by such person in good faith on behalf of Titan Capital
Trust and in a manner such person reasonably believed to be within the scope of
authority conferred on such person by the Declaration. However, no person shall
be indemnified with respect to any loss, damage or claim incurred by reason of
gross negligence (or in the case of the property trustee, negligence) or willful
misconduct with respect to such acts or omissions. Further, expenses incurred by
such persons in defending any claim, demand, action, suit or proceeding shall be
advanced (to the fullest extent permitted by law) by The Titan Corporation upon
receipt by The Titan Corporation of an undertaking by such person to repay such
amount if it turns out that such persons are not entitled to indemnification.
These indemnification provisions may be sufficiently broad to permit
indemnification of The Titan Corporation's officers and directors for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------- -----------
<C> <S>
4.1 Certificate of Trust of Titan Capital Trust, a Delaware
statutory trust, filed January 19, 2000.
4.2 Declaration of Trust of Titan Capital Trust, dated as of
January 19, 2000, among The Titan Corporation, as Depositor
and Debenture Issuer, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Property Trustee, and
the Administrative Trustees named therein.
4.3 Indenture, dated as of February 9, 2000, between The Titan
Corporation and Wilmington Trust Company, as Trustee,
including form of 5 3/4% Convertible Senior Subordinated
Debenture due 2030.
4.4 Remarketing Agreement, dated as of February 9, 2000, among
The Titan Corporation, Titan Capital Trust, Wilmington Trust
Company, as Tender Agent, and Credit Suisse First Boston
Corporation, as Remarketing Agent.
4.5 Registration Rights Agreement, dated February 9, 2000, among
The Titan Corporation, Titan Capital Trust, Credit Suisse
First Boston Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.6 Amended and Restated Declaration of Trust of Titan Capital
Trust, dated as of February 9, 2000, among The Titan
Corporation, as Depositor and Debenture Issuer, Wilmington
Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Property Trustee, and the Administrative
Trustees named therein, including form of 5 3/4% Convertible
Preferred Security and form of Common Security.
4.7 Preferred Securities Guarantee Agreement, dated as of
February 9, 2000, between The Titan Corporation and
Wilmington Trust Company, as Guarantee Trustee.
5.1 Opinion of Cooley Godward LLP, as to the validity of the
Common Stock of The Titan Corporation issuable upon
conversion of the Convertible Preferred Securities being
registered hereby.
5.2 Opinion of Morgan, Lewis & Bockius, as to the validity of
the Convertible Senior Subordinated Debentures and
Convertible Preferred Securities Guarantee of The Titan
Corporation being registered hereby.
5.3 Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Convertible Preferred Securities of Titan
Capital Trust being registered hereby.
8.1 Opinion of Cooley Godward LLP as to certain tax matters.
12.1 Statement Regarding Computation of Ratios.
*23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.2 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.3 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.4 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.5 Consent of Ernst & Young LLP, Independent Auditors.
*23.6 Consent of KPMG LLP, independent chartered accountants.
23.7 Consents of Cooley Godward LLP (included in Exhibits 5.1 and
8.1).
23.8 Consent of Morgan, Lewis & Bockius (included in Exhibit
5.2).
23.9 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.3).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------- -----------
<C> <S>
24.1 Power of Attorney of Officers and Directors of The Titan
Corporation.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Indenture filed as Exhibit 4.3 hereto.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Property Trustee under the Amended and Restated Declaration
of Trust filed as Exhibit 4.6 hereto.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Guarantee Trustee under the Preferred Securities Guarantee
Agreement filed as Exhibit 4.7 hereto.
</TABLE>
------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) (a) 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 this registration statement, and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material change to
such information in this registration statement; PROVIDED, HOWEVER, that clauses
(i) and (ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports filed
by the registrants pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this registration
statement;
(b) 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; and
(c) 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.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and therefore is unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment
II-3
<PAGE>
by the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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 registrants 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 them is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of a
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
To the extent either Registrant intends to rely on Section 305(b)(2) of the
Trust Indenture Act of 1939 (the "Trust Act") for determining the eligibility of
the Trustee under indentures for securities to be used, offered or sold on a
delayed basis by or on behalf of such registrants, each of the undersigned
Registrants hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of such Trust Act in accordance with the rules and regulations
prescribed by the Securities and Exchange Commission under Section 305(b)(2) of
such Trust Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
named below 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
Amendment No. 1 to 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 this 13th day of June, 2000.
<TABLE>
<S> <C> <C>
THE TITAN CORPORATION
By: /s/ GENE W. RAY
-----------------------------------------
Gene W. Ray
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of The Titan Corporation and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
-------------------------------------- President, Chief Executive Officer June 13, 2000
Gene W. Ray and Chairman of the Board
* Executive Vice President and Chief
-------------------------------------- Financial Officer (Principal June 13, 2000
Eric M. DeMarco Financial Officer)
*
-------------------------------------- Vice President, Corporate Controller June 13, 2000
Deanna Hom Petersen (Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NICHOLAS J. COSTANZA
-------------------------------------- Senior Vice President, June 13, 2000
Nicholas J. Costanza General Counsel and Secretary
*
-------------------------------------- Director June 13, 2000
Charles R. Allen
*
-------------------------------------- Director June 13, 2000
Joseph F. Caligiuri
*
-------------------------------------- Director June 13, 2000
Daniel J. Fink
*
-------------------------------------- Director June 13, 2000
Robert M. Hanisee
*
-------------------------------------- Director June 13, 2000
Robert E. La Blanc
*
-------------------------------------- Director June 13, 2000
Thomas G. Pownall
*
-------------------------------------- Director June 13, 2000
James Roth
*
-------------------------------------- Director June 13, 2000
George A. Robinson
/s/ NICHOLAS J. COSTANZA
-------------------------------------- Senior Vice President,
Nicholas J. Costanza General Counsel and Secretary June 13, 2000
* ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
named below 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
Amendment No. 1 to 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 this 13th day of June, 2000.
<TABLE>
<S> <C> <C>
TITAN CAPITAL TRUST
By: /s/ DEANNA HOM PETERSEN
-----------------------------------------
Deanna Hom Petersen,
AS ADMINISTRATIVE TRUSTEE
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of Titan Capital Trust and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DEANNA HOM PETERSEN
-------------------------------------- Administrative Trustee June 13, 2000
Deanna Hom Petersen
/s/ RAY GUILLAUME
-------------------------------------- Administrative Trustee June 13, 2000
Ray Guillaume
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.1 Certificate of Trust of Titan Capital Trust, a Delaware
statutory trust, filed January 19, 2000.
4.2 Declaration of Trust of Titan Capital Trust, dated as of
January 19, 2000, among The Titan Corporation, as Depositor
and Debenture Issuer, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Property Trustee, and
the Administrative Trustees named therein.
4.3 Indenture, dated as of February 9, 2000, between The Titan
Corporation and Wilmington Trust Company, as Trustee,
including form of 5 3/4% Convertible Senior Subordinated
Debenture due 2030.
4.4 Remarketing Agreement, dated as of February 9, 2000, among
The Titan Corporation, Titan Capital Trust, Wilmington Trust
Company, as Tender Agent, and Credit Suisse First Boston
Corporation, as Remarketing Agent.
4.5 Registration Rights Agreement, dated February 9, 2000, among
The Titan Corporation, Titan Capital Trust, Credit Suisse
First Boston Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.6 Amended and Restated Declaration of Trust of Titan Capital
Trust, dated as of February 9, 2000, among The Titan
Corporation, as Depositor and Debenture Issuer, Wilmington
Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Property Trustee, and the Administrative
Trustees named therein, including form of 5 3/4% Convertible
Preferred Security and form of Common Security.
4.7 Preferred Securities Guarantee Agreement, dated as of
February 9, 2000, between The Titan Corporation and
Wilmington Trust Company, as Guarantee Trustee.
5.1 Opinion of Cooley Godward LLP, as to the validity of the
Common Stock of The Titan Corporation issuable upon
conversion of the Convertible Preferred Securities being
registered hereby.
5.2 Opinion of Morgan, Lewis & Bockius, as to the validity of
the Convertible Senior Subordinated Debentures and
Convertible Preferred Securities Guarantee of The Titan
Corporation being registered hereby.
5.3 Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Convertible Preferred Securities of Titan
Capital Trust being registered hereby.
8.1 Opinion of Cooley Godward LLP as to certain tax matters.
12.1 Statement Regarding Computation of Ratios.
*23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.2 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.3 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.4 Consent of Arthur Andersen LLP, Independent Public
Accountants.
*23.5 Consent of Ernst & Young LLP, Independent Auditors.
*23.6 Consent of KPMG LLP, independent chartered accountants.
23.7 Consents of Cooley Godward LLP (included in Exhibits 5.1
and 8.1).
23.8 Consent of Morgan, Lewis & Bockius (included in
Exhibit 5.2).
23.9 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.3).
24.1 Power of Attorney of Officers and Directors of The Titan
Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Indenture filed as Exhibit 4.3 hereto.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Property Trustee under the Amended and Restated Declaration
of Trust filed as Exhibit 4.6 hereto.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Guarantee Trustee under the Preferred Securities Guarantee
Agreement filed as Exhibit 4.7 hereto.
</TABLE>
------------------------
* Filed herewith.
