-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MtGLt92dVcxvo+PJlt94OwfQOh3ySZJdJL2naqH5p+P4+BuCGeVs1/3Q+6me/1UJ 5ouuX+kxXFAJJxlQYW5IHQ== 0000912057-00-019017.txt : 20000421 0000912057-00-019017.hdr.sgml : 20000421 ACCESSION NUMBER: 0000912057-00-019017 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 20000420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TITAN CORP CENTRAL INDEX KEY: 0000032258 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 952588754 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-35274 FILM NUMBER: 605889 BUSINESS ADDRESS: STREET 1: 3033 SCIENCE PARK RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 8585529500 MAIL ADDRESS: STREET 1: 3033 SCIENCE PARK RD STREET 2: 3033 SCIENCE PARK RD CITY: SAN DIEGO STATE: CA ZIP: 92121-1199 FORMER COMPANY: FORMER CONFORMED NAME: ELECTRONIC MEMORIES & MAGNETICS CORP DATE OF NAME CHANGE: 19850610 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 2000 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ 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) 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.)
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: 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
------------------------------ 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. / / ------------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED MAXIMUM MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE 5 3/4% Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities ("HIGH TIDES") of Titan Capital Trust(2).......................................... 5,000,000 $50 $250,000,000 $66,000 5 3/4% Convertible Senior Subordinated Debentures due 2030 of The Titan Corporation................. (3) (3) (3) (3) Common Stock, par value $.01 per share, of The Titan Corporation................................. (4) (4) (4) (4) Guarantee of the HIGH TIDES by The Titan Corporation....................................... (5) (5) (5) (5)
(1) Estimated solely for the purpose of determining the registration fee in accordance with Rule 457(o) under the Securities Act and exclusive of accrued interest and dividends, if any. (FOOTNOTES CONTINUED ON FOLLOWING PAGE) ------------------------ 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (2) 4,000,000 HIGH TIDES were issued by Titan Capital Trust on February 9, 2000 and an additional 1,000,000 HIGH TIDES were issued by Titan Capital Trust on February 16, 2000, in offerings exempt from registration under Rule 144A of the Securities Act of 1933. Pursuant to a Registration Rights Agreement dated February 9, 2000 among The Titan Corporation, Titan Capital Trust and Credit Suisse First Boston Corporation, The Titan Corporation and Titan Capital Trust are obligated to file this Registration Statement to permit registered resales of the HIGH TIDES and related securities by holders thereof. (3) $257,732,000 in aggregate principal amount of The Titan Corporation's 5 3/4% Convertible Senior Subordinated Debentures due 2030 (the "Debentures") were issued and sold to Titan Capital Trust on February 9, 2000 and February 16, 2000 in connection with the issuance by Titan Capital Trust of the HIGH TIDES. The Debentures may be distributed by Titan Capital Trust, under certain circumstances, to holders of the HIGH TIDES for no additional consideration. Pursuant to Rule 457(i) of the Securities Act, no registration fee is attributable to the Debentures registered hereby. (4) The HIGH TIDES are exchangeable for the Debentures, which are convertible into The Titan Corporation's common stock, par value $.01 per share (the "Common Stock"), at an initial conversion rate of 1.0076 shares of Common Stock for each HIGH TIDES (or a total of 5,038,000 shares of Common Stock for all of the HIGH TIDES), subject to adjustment under certain circumstances. Pursuant to Rule 457(i) of the Securities Act, no registration fee is attributable to the Common Stock registered hereby. (5) No separate consideration was received for the Guarantee. Pursuant to Rule 457(n) under the Securities Act, no registration fee is payable with respect to the Guarantee. SUBJECT TO COMPLETION, DATED , 2000 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. 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 , 2000. TABLE OF CONTENTS
PAGE -------- 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
PAGE -------- 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
------------------------ 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. ------------------------ 2 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 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 involved. Each statement regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document. 3 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 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 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 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 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 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. 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.
6 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 April 19, 2000 was $40.00 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
7 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
8 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
9 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
10 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
11 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 not more than $14.4 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
12 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.
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:
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 1999 -------------------- 1995 1996 1997 1998 ACTUAL PRO FORMA -------- -------- -------- -------- -------- --------- Consolidated ratio of earnings to fixed charges.... 1.45 2.11 1.25 2.09 5.93 2.30 Ratio of combined fixed charges and preference dividends to earnings............................ 0.80 0.55 0.92 0.54 0.18 0.45
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 "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 connection with the acquisition, we used approximately $74 million of the proceeds from the initial offering of the HIGH TIDES to repay existing indebtedness of Advanced Communication Systems. The pro forma ratios above reflect our acquisition of Advanced Communication Systems as if that acquisition had occurred on January 1, 1999. 13 RISK FACTORS INVESTING IN THE HIGH TIDES INVOLVES RISK. IN ADDITION TO THE RISK FACTORS DESCRIBED IN OUR FORM 10-K 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 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 not more than $14.4 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 14 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. 15 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. 16 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 - 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 April 13, 2000, we will issue approximately 2,851,684 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. 18 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. 19 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. 20 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 21 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 22 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 23 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; 24 - 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." 25 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. 26 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 27 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." 28 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 29 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. 30 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 31 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 32 - 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. 33 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 34 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 35 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. 36 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; 37 - 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"); 38 - 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 39 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. 40 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 41 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. 42 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." 43 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. 44 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. 45 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. 46 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 47 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; 48 - 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 49 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:
PRICE PER $50 PRINCIPAL PERIOD AMOUNT - ------ ------------- 2004...................... $50.72 2005...................... $50.00
(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. 50 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; 51 - 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. 52 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 53 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 54 - 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 not more than $14.4 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. 55 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. 56 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. 57 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; 58 - 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. 59 DESCRIPTION OF CAPITAL STOCK Our authorized capital stock as of March 31, 2000 consisted of: - 100,000,000 shares of common stock, par value $.01 per share, of which 50,647,298 shares are issued and outstanding; and - 2,500,000 shares of preferred stock, par value $1.00 per share, of which 1,068,102 shares have been designated as $1.00 cumulative convertible preferred stock, of which 693,300 are issued and outstanding, and 250,000 shares have been designated as series A junior participating preferred stock, none of which is issued and outstanding. We have reserved for issuance under our 1990, 1994 and 1997 Stock Option Plans and our 1996 Directors' Stock Option and Equity Participation Plan a total of 3,125,000 shares of common stock of which 930,425 shares were covered by outstanding options as of March 31, 2000. We also had approximately 510,000 shares of common stock issued and outstanding as of March 31, 2000 under our Employee Stock Purchase Plan and approximately 900,000 shares of common stock issued and outstanding as of March 31, 2000 under our Employee Stock Ownership Plan. Our annual meeting of stockholders is scheduled for May 30, 2000. We are asking our stockholders to approve at that meeting an increase in our authorized number of shares of common stock from 100,000,000 shares to 200,000,000 shares and an increase in our authorized number of shares of preferred stock from 2,500,000 to 5,000,000 shares. If our stockholders approve the increase in our number of shares of preferred stock, we will increase the number of shares of our preferred stock that are designated as series A junior participating preferred stock from 250,000 to 1,000,000 shares. We are also asking our stockholders to approve at the annual meeting of stockholders our 2000 Employee and Director Stock Option and Incentive Plan and our 2000 Employee Stock Purchase Plan. We will reserve 4,000,000 shares of common stock under the 2000 Employee and Director Stock Option Plan and 1,500,000 shares of common stock under the 2000 Employee Stock Purchase Plan if those plans are approved. 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 April 13, 2000, we will issue approximately 2,851,684 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. 60 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. PREFERRED STOCK We are currently authorized to issue 2,500,000 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 61 $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 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. 62 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 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. 63 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 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, 64 - 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. 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. 65 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 66 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 67 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 68 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, 69 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 70 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. 71 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 72 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 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 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.
NUMBER OF SELLING HOLDER HIGH TIDES - -------------- ---------- 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..................................... 12,500 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 BNY Hamilton Equity Income Fund............................. 1,600 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 Global Growth and Income Fund--CALAMOS Investment Trust..................................................... 1,150 CALAMOS Market Neutral Fund--CALAMOS Investment Trust....... 5,700 Canal Insurance Company..................................... 20,000 Champion International Corporation Master Retirement Trust..................................................... 12,200 Chartwell Investment Partners............................... 600 Chrysler Corporation Employee #1 Pension Plan............... 144,500 Chrysler Corporation Master Retirement Trust................ 181,300 City of Albany Pension Plan................................. 1,200 City of Knoxville Pension System............................ 4,200
75
NUMBER OF SELLING HOLDER HIGH TIDES - -------------- ---------- Clinton Riverside Convertible Portfolio Limited............. 10,000 Consulting Group Capital Markets Funds...................... 3,000 Credit Suisse First Boston Corporation...................... 222,160 Delphi Foundation, Inc...................................... 600 Delta Air Lines Master Trust................................ 102,000 Deutsche Bank Securities Inc................................ 992,275 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 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..... 21,100 Motion Picture Industry Health Plan--Retiree Member Fund.... 10,600 Motors Insurance Corporation................................ 30,000 Museum of Fine Arts, Boston................................. 600 New Hampshire Retirement System............................. 3,300 OCM Convertible Trust....................................... 89,600 Parker-Hannifin Corporation................................. 1,300 Partner Reinsurance Company Ltd............................. 35,500 Penn Treaty Network America Insurance Company............... 12,200 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
76
NUMBER OF SELLING HOLDER HIGH TIDES - -------------- ---------- 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... 92,600 State of Connecticut Combined Investment Funds.............. 214,700 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...................... 118,100 Van Kampen Harbor Fund...................................... 21,900 Van Waters & Rogers, Inc. Retirement Plan (f.k.a. Univar Corporation).............................................. 4,100 Vanguard Convertible Securities Fund, Inc................... 207,100 Washington University....................................... 22,300 White River Securities LLC.................................. 10,000 ZCM/HFR Index Management, L.L.C............................. 1,300
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 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 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 [LOGO] 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.
AMOUNT TO BE PAID --------- 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 ========
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 ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION - --------------------- ----------- *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).
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EXHIBIT NO. DESCRIPTION - --------------------- ----------- *24.1 Power of Attorney of Officers and Directors of The Titan Corporation (set forth on the signature pages hereto). *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.
- ------------------------ * 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 II-3 unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment 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 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 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 20th day of April, 2000. THE TITAN CORPORATION By: /s/ GENE W. RAY ----------------------------------------- Gene W. Ray PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric M. DeMarco and Nicholas J. Costanza, Esq. and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite the name. 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.
SIGNATURE TITLE DATE --------- ----- ---- /s/ GENE W. RAY -------------------------------------- President, Chief Executive Officer April 20, 2000 Gene W. Ray and Chairman of the Board /s/ ERIC M. DEMARCO Executive Vice President and Chief -------------------------------------- Financial Officer (Principal April 20, 2000 Eric M. DeMarco Financial Officer)
II-5
SIGNATURE TITLE DATE --------- ----- ---- /s/ DEANNA HOM PETERSEN -------------------------------------- Vice President, Corporate Controller April 20, 2000 Deanna Hom Petersen (Principal Accounting Officer) /s/ CHARLES R. ALLEN -------------------------------------- Director April 20, 2000 Charles R. Allen /s/ JOSEPH F. CALIGIURI -------------------------------------- Director April 20, 2000 Joseph F. Caligiuri /s/ DANIEL J. FINK -------------------------------------- Director April 20, 2000 Daniel J. Fink /s/ ROBERT M. HANISEE -------------------------------------- Director April 20, 2000 Robert M. Hanisee /s/ ROBERT E. LA BLANC -------------------------------------- Director April 20, 2000 Robert E. La Blanc /s/ THOMAS G. POWNALL -------------------------------------- Director April 20, 2000 Thomas G. Pownall /s/ JAMES ROTH -------------------------------------- Director April 17, 2000 James Roth /s/ GEORGE A. ROBINSON -------------------------------------- Director April 14, 2000 George A. Robinson
II-6 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 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 20th day of April, 2000. TITAN CAPITAL TRUST By: /s/ DEANNA HOM PETERSEN ----------------------------------------- Deanna Hom Petersen, AS ADMINISTRATIVE TRUSTEE
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.
SIGNATURE TITLE DATE --------- ----- ---- /s/ DEANNA HOM PETERSEN -------------------------------------- Administrative Trustee April 20, 2000 Deanna Hom Petersen /s/ RAY GUILLAUME -------------------------------------- Administrative Trustee April 20, 2000 Ray Guillaume
II-7 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------- ----------- *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 (set forth on the signature pages hereto).
EXHIBIT NO. DESCRIPTION - ----------- ----------- *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.
- ------------------------ * Filed herewith. EX-4.1 2 EXHIBIT 4.1 CERTIFICATE OF TRUST OF TITAN CAPITAL TRUST THIS Certificate of Trust of Titan Capital Trust (the "Trust") is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 DEL. C. Section 3801 ET SEQ.) (the "Act"). 1. NAME. The name of the business trust formed hereby is Titan Capital Trust. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware is WILMINGTON TRUST COMPANY, RODNEY SQUARE NORTH, 1100 NORTH MARKET STREET, WILMINGTON, DELAWARE 19890-0001, ATTENTION: CORPORATE TRUST ADMINISTRATION. 3. EFFECTIVE DATE. This Certificate of Trust will be effective upon filing. IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act. WILMINGTON TRUST COMPANY, as Delaware Trustee By: ----------------------------------- Name: Title: WILMINGTON TRUST COMPANY, as Property Trustee By: ----------------------------------- Name: Title: ---------------------------------- Deanna Hom Petersen, as Administrative Trustee ---------------------------------- Ray Guillaume, as Administrative Trustee EX-4.2 3 EXHIBIT 4.2 DECLARATION OF TRUST OF TITAN CAPITAL TRUST THIS DECLARATION OF TRUST is made as of January 19, 2000 (this "Declaration of Trust"), by and among The Titan Corporation, a Delaware corporation, as depositor (the "Depositor"), Wilmington Trust Company, a Delaware banking corporation ("WTC"), as Delaware trustee (the "Delaware Trustee"), WTC, as property trustee (the "Property Trustee") and Deanna Hom Petersen and Ray Guillaume, each an individual, as administrative trustees (the "Administrative Trustees;" and, together with the Delaware Trustee and the Property Trustee, the "Trustees"). The Depositor and the Trustees hereby agree as follows: 1. The trust created hereby shall be known as "Titan Capital Trust" (the "Trust"), in which name the Trustees or the Depositor, to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Depositor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Depositor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C. Section 3801, ET SEQ. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in substantially the form attached hereto as Exhibit A. 3. The Depositor and the Trustees will enter into an amended and restated Declaration of Trust satisfactory to each such party and substantially in the form to be included as an exhibit to the Offering Document referred to below, or in such other form as the Trustees and the Depositor may approve, to provide for the contemplated operation of the Trust created hereby and the issuance of the trust preferred securities and common securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duties or obligations hereunder or with respect of the trust estate, except for the filing of the Certificate of Trust with the Delaware Secretary of State. Notwithstanding the foregoing, the Trustees may take all actions deemed proper as are necessary to effect the transactions contemplated herein. 4. The Depositor, as the Depositor of the Trust, is hereby authorized, in its discretion, (i) to prepare one or more offering memoranda or circular in preliminary and final form relating to the offering and sale of Preferred Securities of the Trust in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "1933 Act"), and such forms or filings as may be required by the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended, in each case relating to the Preferred Securities of the Trust; (ii) to file and execute on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents that shall be necessary or desirable to register or establish the exemption from registration of the Preferred Securities of the Trust under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable; (iii) to execute and file an application, and all other applications, statements, certificates, agreements and other instruments that shall be necessary or desirable, to the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market; (iv) to execute and deliver letters or documents to, or instruments for filing with, a depository relating to the Preferred or Capital Securities of the Trust; and (v) to execute, deliver and perform on behalf of the Trust one or more purchase agreements, dealer manager agreements, escrow agreements, remarketing agreements, registration rights agreements and other related agreements providing for or relating to the sale of the Preferred Securities of the Trust. In the event that any filing referred to in this Section 4 is required by the rules and regulations of the Securities and Exchange Commission (the "Commission"), PORTAL or state securities or "Blue Sky" laws to be executed on behalf of the Trust by the Trustees, the Trustees, in their capacity as trustees of the Trust, are hereby authorized to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that the Trustees, in their capacity as trustees of the Trust, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, PORTAL or state securities or "Blue Sky" laws. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees of the Trust initially shall be four and thereafter the number of trustees of the Trust shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of trustees of the Trust; provided, however, that to the extent required by the Business Trust Act, one trustee of the Trust shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any trustee of the Trust at any time. The Delaware Trustee may resign upon thirty days' prior notice to the Depositor. 7. This Declaration of Trust shall be governed by, and construed in accordance with, the laws of the State of Delaware (with regard to conflict of laws principles). IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. THE TITAN CORPORATION, as Depositor By: Name: Title: WILMINGTON TRUST COMPANY, as Delaware Trustee By: Name: Title: WILMINGTON TRUST COMPANY, as Property Trustee By: Name: Title: --------------------------------- Deanna Hom Petersen, as Administrative Trustee ---------------------------------- Ray Guillaume, as Administrative Trustee EXHIBIT A CERTIFICATE OF TRUST OF TITAN CAPITAL TRUST THIS Certificate of Trust of Titan Capital Trust (the "Trust") is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 DEL. C. Section 3801 ET SEQ.) (the "Act"). 1. NAME. The name of the business trust formed hereby is Titan Capital Trust. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware is WILMINGTON TRUST COMPANY, RODNEY SQUARE NORTH, 1100 NORTH MARKET STREET, WILMINGTON, DELAWARE 19890-0001, ATTENTION: CORPORATE TRUST ADMINISTRATION. 3. EFFECTIVE DATE. This Certificate of Trust will be effective upon filing. IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act. WILMINGTON TRUST COMPANY, as Delaware Trustee By: ----------------------------------- Name: Title: WILMINGTON TRUST COMPANY, as Property Trustee By: ----------------------------------- Name: Title: ---------------------------------- Deanna Hom Petersen, as Administrative Trustee ---------------------------------- Ray Guillaume, as Administrative Trustee EX-4.3 4 EXHIBIT 4.3 THE TITAN CORPORATION TO WILMINGTON TRUST COMPANY, as Trustee ----------------- Indenture Dated as of February 9, 2000 ----------------- $206,185,600 (subject to increase to up to $257,732,000 in the event and to the extent an over-allotment option is exercised) Convertible Senior Subordinated Debentures due 2030
TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01 Definitions.............................................................................3 SECTION 1.02 Compliance Certificates and Opinions...................................................15 SECTION 1.03 Form of Documents Delivered to Trustee.................................................15 SECTION 1.04 Acts of Holders; Record Dates..........................................................16 SECTION 1.05 Notices, Etc., to Trustee and the Company..............................................18 SECTION 1.06 Notice to Holders; Waiver..............................................................18 SECTION 1.07 Conflict with Trust Indenture Act......................................................18 SECTION 1.08 Effect of Headings and Table of Contents...............................................19 SECTION 1.09 Successors and Assigns.................................................................19 SECTION 1.10 Separability Clause....................................................................19 SECTION 1.11 Benefits of Indenture..................................................................19 SECTION 1.12 Governing Law..........................................................................19 SECTION 1.13 Legal Holidays.........................................................................19 ARTICLE II SECURITY FORMS SECTION 2.01 Forms Generally........................................................................20 SECTION 2.02 Initial Issuance to Property Trustee...................................................20 SECTION 2.03 Additional Provisions Required in Global Security......................................21 SECTION 2.04 Issuance of Global Securities to Holders...............................................21 ARTICLE III THE SECURITIES SECTION 3.01 Title and Terms........................................................................22 SECTION 3.02 Denominations..........................................................................24 SECTION 3.03 Execution, Authentication, Delivery and Dating.........................................24 SECTION 3.04 Temporary Securities...................................................................25 SECTION 3.05 Global Securities......................................................................25 SECTION 3.06 Registration, Transfer and Exchange Generally; Certain Transfers and Exchanges .....................................................26 SECTION 3.07 Mutilated, Destroyed, Lost and Stolen Securities.......................................29 2 SECTION 3.08 Payment of Interest; Interest Rights Preserved.........................................30 SECTION 3.09 Persons Deemed Owners..................................................................32 SECTION 3.10 Cancellation...........................................................................32 SECTION 3.11 Right of Set Off.......................................................................32 SECTION 3.12 CUSIP Numbers..........................................................................33 SECTION 3.13 Extension of Interest Payment Period; Notice of Extension..............................33 SECTION 3.14 Paying Agent, Security Registrar and Conversion Agent..................................34 ARTICLE IV SATISFACTION AND DISCHARGE SECTION 4.01 Satisfaction and Discharge of Indenture................................................34 SECTION 4.02 Application of Trust Money.............................................................36 ARTICLE V REMEDIES SECTION 5.01 Events of Default......................................................................36 SECTION 5.02 Acceleration of Maturity; Rescission and Annulment.....................................37 SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee...................................................................38 SECTION 5.04 Trustee May File Proofs of Claim.......................................................39 SECTION 5.05 Trustee May Enforce Claims Without Possession of Securities............................39 SECTION 5.06 Application of Money Collected.........................................................39 SECTION 5.07 Limitation on Suits....................................................................40 SECTION 5.08 Unconditional Right of Holders to Receive Principal and Interest and Convert.....................................................40 SECTION 5.09 Restoration of Rights and Remedies.....................................................41 SECTION 5.10 Rights and Remedies Cumulative.........................................................41 SECTION 5.11 Delay or Omission Not Waiver...........................................................41 SECTION 5.12 Control by Holders.....................................................................41 SECTION 5.13 Waiver of Past Defaults................................................................42 SECTION 5.14 Undertaking for Costs..................................................................42 SECTION 5.15 Waiver of Stay or Extension Laws.......................................................42 SECTION 5.16 Enforcement by Holders of Preferred Securities.........................................43 ARTICLE VI THE TRUSTEE SECTION 6.01 Certain Duties and Responsibilities....................................................43 SECTION 6.02 Notice of Defaults.....................................................................44 ii SECTION 6.03 Certain Rights of Trustee..............................................................44 SECTION 6.04 Not Responsible for Recitals or Issuance of Securities.................................45 SECTION 6.05 May Hold Securities....................................................................45 SECTION 6.06 Money Held in Trust....................................................................46 SECTION 6.07 Compensation and Reimbursement.........................................................46 SECTION 6.08 Disqualification; Conflicting Interests................................................46 SECTION 6.09 Corporate Trustee Required; Eligibility................................................47 SECTION 6.10 Resignation and Removal; Appointment of Successor......................................47 SECTION 6.11 Acceptance of Appointment by Successor.................................................48 SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business............................49 SECTION 6.13 Preferential Collection of Claims Against Company......................................49 ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 7.01 Company to Furnish Trustee Names and Addresses of Holders..............................49 SECTION 7.02 Preservation of Information; Communications to Holders.................................50 SECTION 7.03 Reports by Trustee.....................................................................50 SECTION 7.04 Reports by Company.....................................................................50 SECTION 7.05 Tax Reporting..........................................................................51 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.01 Company May Consolidate, Etc., Only on Certain Terms...................................51 SECTION 8.02 Successor Substituted..................................................................52 ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.01 Supplemental Indentures Without Consent of Holders.....................................52 SECTION 9.02 Supplemental Indentures with Consent of Holders........................................53 SECTION 9.03 Execution of Supplemental Indentures...................................................54 SECTION 9.04 Effect of Supplemental Indentures......................................................54 SECTION 9.05 Conformity with Trust Indenture Act....................................................54 SECTION 9.06 Reference in Securities to Supplemental Indentures.....................................54 ARTICLE X COVENANTS; REPRESENTATIONS AND WARRANTIES iii SECTION 10.01 Payment of Principal and Interest......................................................55 SECTION 10.02 Maintenance of Office or Agency........................................................55 SECTION 10.03 Money for Security Payments to Be Held in Trust........................................55 SECTION 10.04 Statement by Officers as to Default....................................................56 SECTION 10.05 Limitation on Dividends; Transactions with Affiliates; Covenants as to the Trust....................................................56 SECTION 10.06 Payment of Expenses of the Trust.......................................................58 SECTION 10.07 Registration Rights....................................................................58 SECTION 10.08 [Reserved].............................................................................59 SECTION 10.09 Repurchase of Securities Upon the Failure to Consummate the Acquisition................59 ARTICLE XI REDEMPTION OF SECURITIES SECTION 11.01 Optional Redemption....................................................................59 SECTION 11.02 [Reserved].............................................................................60 SECTION 11.03 Tax Event Redemption...................................................................60 SECTION 11.04 [Reserved].............................................................................61 SECTION 11.05 Selection by Trustee of Securities to Be Redeemed......................................61 SECTION 11.06 Notice of Redemption...................................................................62 SECTION 11.07 Deposit of Redemption Price............................................................62 SECTION 11.08 Securities Payable on Redemption Date..................................................63 SECTION 11.09 Securities Redeemed in Part............................................................63 ARTICLE XII SUBORDINATION OF SECURITIES SECTION 12.01 Agreement to Subordinate...............................................................64 SECTION 12.02 Default on Secured Debt................................................................64 SECTION 12.03 Liquidation; Dissolution; Bankruptcy...................................................65 SECTION 12.04 Subrogation............................................................................66 SECTION 12.05 Trustee to Effectuate Subordination....................................................67 SECTION 12.06 Notice by the Company..................................................................67 SECTION 12.07 Rights of the Trustee; Holders of Secured Debt.........................................68 SECTION 12.08 Subordination May Not Be Impaired......................................................68 ARTICLE XIII CONVERSION OF SECURITIES SECTION 13.01 Conversion Rights......................................................................69 SECTION 13.02 Conversion Procedures..................................................................70 iv SECTION 13.03 Conversion Price Adjustments...........................................................72 SECTION 13.04 Reclassification, Consolidation, Merger or Sale of Assets..............................77 SECTION 13.05 Notice of Adjustments of Conversion Price..............................................78 SECTION 13.06 Prior Notice of Certain Events.........................................................78 SECTION 13.07 Adjustments in Case of Fundamental Changes.............................................79 SECTION 13.08 Dividend or Interest Reinvestment Plans................................................82 SECTION 13.09 Certain Additional Rights..............................................................83 SECTION 13.10 Restrictions on Common Stock Issuable Upon Conversion..................................83 SECTION 13.11 Trustee Not Responsible for Determining Conversion Price or Adjustments................83
v INDENTURE, dated as of February 9, 2000, between The Titan Corporation, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company") having its principal office at 3033 Science Park Road, San Diego, California 92121-1199, and Wilmington Trust Company, a Delaware banking corporation, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY WHEREAS, Titan Capital Trust, a Delaware business trust (the "Trust"), governed by the Amended and Restated Declaration of Trust among the Company, as sponsor, Wilmington Trust Company, as property trustee (the "Property Trustee"), and Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), and Deanna Hom Petersen and Ray Guillaume, as trustees (together with the Property Trustee and the Delaware Trustee, the "Issuer Trustees"), and the holders from time to time of undivided beneficial interests in the assets of the Trust, dated as of February 9, 2000 (the "Declaration"), pursuant to the Purchase Agreement (the "Purchase Agreement"), dated February 3, 2000, among the Company, the Trust and the Initial Purchasers named therein, will issue and sell up to 4,000,000 of its Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)K (or 5,000,000 to the extent the over-allotment option is exercised in full) (the "Preferred Securities") with a liquidation preference of $50 per Preferred Security, having an aggregate liquidation amount with respect to the assets of the Trust of up to $200,000,000 (or up to $250,000,000 to the extent the over-allotment option is exercised in full); WHEREAS, the trustees of the Trust, on behalf of the Trust, will execute and deliver to the Company, Common Securities evidencing an ownership interest in the Trust, registered in the name of the Company, in an aggregate amount equal to at least three percent of the capitalization of the Trust, equivalent to up to 123,712 Common Securities (or up to 154,640 Common Securities to the extent the over-allotment option is exercised in full), with a liquidation preference of $50 per Common Security, having an aggregate liquidation amount with respect to the assets of the Trust of up to $6,185,600 (or $7,732,000 to the extent the over-allotment option is exercised in full) (the "Common Securities"); WHEREAS, the Trust will use the proceeds from the sale of the Preferred Securities and the Common Securities to purchase Securities (as defined below) from the Company in an aggregate principal amount of up to $206,185,600 (or $257,732,000 to the extent the over-allotment option is exercised in full); WHEREAS, the Company is guaranteeing the payment of distributions on the Preferred Securities, and payment of the Redemption Price (as defined herein) and payments on liquidation with respect to the Preferred Securities, to the extent provided in the Preferred Securities Guarantee Agreement (the "Guarantee") between the Company and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the Holders of the Preferred Securities from time to time; WHEREAS, the Company has duly authorized the creation of an issue of its Convertible Senior Subordinated Debentures Due 2030 (the "Securities"), of substantially the tenor and amount hereinafter set forth and to provide therefor the Company has duly authorized the execution and delivery of this Indenture; WHEREAS, so long as the Trust is a Holder of Securities, and any Preferred Securities are outstanding, the Declaration provides that the Holders of Preferred Securities may cause the Conversion Agent (as defined herein) to (i) exchange such Preferred Securities for Securities held by the Trust and (ii) immediately convert such Securities into Common Stock (as defined herein); WHEREAS, the Company, the Trust, the Remarketing Agent (as defined herein) and Wilmington Trust Company, as Tender Agent have entered into a Remarketing Agreement (as defined herein) dated as of the date hereof pursuant to which such Remarketing Agent has agreed to use its best efforts to (i) remarket all Preferred Securities tendered for remarketing (the "Remarketing") as set forth in the Remarketing Agreement and (ii) establish, beginning on the Reset Date (as defined herein), (a) the rate at which distributions will accrue on the Preferred Securities, (b) the number of shares of Common Stock, if any, into which each Preferred Security may be converted and (c) the price, manner and time, if any, at which the Preferred Securities may be redeemed; and WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: 1 ARTICLE Definitions and Other 2 PROVISIONS OF GENERAL APPLICATION 2.1 SECTION DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "ACS" means Advanced Communication Systems, Inc., a Delaware corporation. "Act," when used with respect to any Holder, has the meaning specified in Section 1.04. "Additional Amounts" has the meaning specified in Section 3.01(4). "Additional Payments" means Compounded Interest and Additional Amounts, if any. "Adjusted Reference Market Price" has the meaning specified in Section 13.07(1)(A). "Adjusted Relevant Price" has the meaning specified in Section 13.07(1)(A). "Administrative Action" has the meaning specified in the definition of "Tax Event" in this Section 1.01. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Security Registrar, co-registrar, Paying Agent, Conversion Agent or any other agent appointed by the Company pursuant to Section 3.14. "Agent Member" means any member of, or participant in, the Depositary. "Applicable Conversion Price" has the meaning specified in Section 13.01. "Applicable Conversion Ratio" has the meaning specified in Section 13.01. "Applicable Rate" means the rate at which the Securities accrue interest and the corresponding Trust Securities accrue distributions. From the date of original issuance of the Securities to (but excluding) the Reset Date and in the absence of a Registration Default, the Applicable Rate shall be 5.75% per annum (the "Initial Rate"). In the event of a Registration Default, the Applicable Rate shall be increased in accordance with the provisions of Section 10.07 hereof. Beginning with and after the Reset Date, the Applicable Rate shall be the Term Rate (as defined herein). "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "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 Trustee is closed for business. "Closing Price" has the meaning specified in Section 13.07(2). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" has the meaning specified in the Second Recital to this Indenture. "Common Securities Guarantee" has the meaning specified in the Common Securities Guarantee Agreement dated of even date herewith delivered by the Company for the benefit of the holders of the Common Securities from time to time. "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Article XIII, shares issuable on conversion of Securities shall include only shares of the class designated as the Common Stock, par value $.01 per share, of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; PROVIDED, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Common Stock Fundamental Change" has the meaning specified in Section 13.07(2). "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its chairman of the board, its vice chairman of the board, its president or a vice president, and by its treasurer, an assistant treasurer, controller, its secretary or an assistant secretary, and delivered to the Trustee. "Company Transaction" has the meaning specified in Section 13.04. "Compounded Interest" has the meaning specified in Section 3.13. "Conversion Agent" means any Person appointed to act on behalf of the Holders of Preferred Securities in effecting the conversion of Preferred Securities as and in the manner set forth in the Declaration and Section 13.02 hereof. "Conversion Date" has the meaning specified in Section 13.02. "Convertible Remarketing" means the remarketing of the Preferred Securities in the Remarketing as securities which will be convertible into Common Stock. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered and which at the date of this Indenture is Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "Credit Agreement" means the Amended and Restated Credit Agreement dated as of June 9, 1999, among the Company, as the borrower, the various financial institutions from time to time that are parties thereto, as lenders, The Bank of Nova Scotia, as lead manager and administrative agent, and Imperial Bank as the document agent, any credit agreement evidencing the credit facilities that are substantially described in the commitment letter dated January 27, 2000, from Credit Suisse First Boston, New York branch, and First Union National Bank to the Company, 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. "Declaration" has the meaning specified in the First Recital to this Indenture. "Debt" means (i) the principal of and premium and interest, if any, on indebtedness for money borrowed, (ii) purchase money and similar obligations, (iii) obligations under capital leases, (iv) guarantees, assumptions or purchase commitments relating to, or other transactions as a result of which the Company is responsible for the payment of such indebtedness of others, (v) renewals, extensions and refunding of any such indebtedness, (vi) interest or obligations in respect of any such indebtedness accruing after the commencement of any insolvency or bankruptcy proceedings and (vii) obligations associated with derivative products such as interest rate and currency exchange contracts, foreign exchange contracts, commodity contracts and similar arrangements. "Defaulted Interest" has the meaning specified in Section 3.08. "Deferral Notice" has the meaning specified in Section 3.13. "Deferral Period" has the meaning specified in Section 3.13. "Delaware Trustee" has the meaning given it in the First Recital to this Indenture. "Depositary" means the Depository Trust Company, or any successor thereto. "Direct Action" has the meaning specified in Section 5.16. "Entitlement Date" has the meaning specified in Section 13.07(2). "Event of Default" has the meaning specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "ex" date has the meaning specified in Section 13.03(7). "Expiration Date" has the meaning specified in Section 1.04(4). "Expiration Time" has the meaning specified in Section 13.03(6). "Failed Final Remarketing" has the meaning specified in Section 2(d) of the Remarketing Agreement. "Fundamental Change" has the meaning specified in Section 13.07(2). "Global Security" means a Security issued in the form prescribed in Section 2.01, issued to the Depositary or its nominee, and registered in the name of the Depositary or its nominee. "Guarantee" has the meaning specified in the Fourth Recital to this Indenture. "Holder" means a Person in whose name a Security is registered in the Security Register or a Person in whose name a Preferred Security is registered in the List of Holders, as the case may be. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Initial Conversion Price" has the meaning specified in Section 13.01. "Initial Conversion Ratio" has the meaning specified in Section 13.01. "Initial Rate" has the meaning specified in the definition of "Applicable Rate" in this Section 1.01. "Initial Redemption Price" has the meaning specified in Section 11.01. "Initial Purchasers," with respect to the Preferred Securities, means Credit Suisse First Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation. "Interest Payment Date" has the meaning specified in Section 3.01(2). "Investment Company Event" has the meaning specified in the Declaration. "Issuer Trustees" has the meaning specified in the First Recital to this Indenture. "List of Holders" has the meaning specified in the Declaration. "Maturity," when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "90 Day Period" has the meaning specified in Section 11.03. "NNM" means the National Market System of the National Association of Securities Dealers, Inc., or any successor national automated interdealer quotation system. "Non-Stock Fundamental Change" has the meaning specified in Section 13.07(2). "No Recognition Opinion" means an opinion delivered to the Issuer Trustees of a nationally recognized independent tax counsel (reasonably acceptable to the Issuer Trustees) experienced in such matters, which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that the Holders of the Preferred Securities will not recognize any income, gain or loss for United States federal income tax purposes as a result of the liquidation of the Trust and the distribution of the Securities to the Holders of the Preferred Securities. "Notice of Conversion" means the notice to be given by a Holder of Preferred Securities to the Conversion Agent directing the Conversion Agent to exchange such Preferred Securities for Securities and to convert such Securities into Common Stock on behalf of such Holder. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under, or with respect to, any Debt (including claims for rescission). "Officers' Certificate" means a certificate signed by the chairman of the board, the vice chairman of the board, the president or a vice president, and by the treasurer, an assistant treasurer, the controller, the secretary or an assistant secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 10.04 shall be the principal executive, financial or accounting officer of the Company. "OID" means original issue discount. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Optional Redemption" has the meaning specified in Section 11.01(1). "Optional Redemption Date" means the date which is not less than 20, nor more than 60, days following the date on which the Optional Redemption Notice is sent, as specified in the Optional Redemption Notice (or if such date is not a Business Day, the next succeeding Business Day). "Optional Redemption Notice" has the meaning specified in Section 11.01(2). "Optional Redemption Price" has the meaning specified in Section 11.01(1). "Optional Redemption Ratio" has the meaning specified in Section 13.07(1)(A). "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, EXCEPT: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; PROVIDED, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities that have been paid pursuant to Article XI, converted into Common Stock pursuant to Section 13.01, or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company. "Paying Agent" means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company. "Payment Resumption Date" has the meaning specified in Section 3.13(2). "Person" or "person" means any individual, corporation, limited liability company, company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.07 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Preferred Securities" has the meaning specified in the First Recital to this Indenture. "Primary Treasury Dealer" has the meaning specified in the Remarketing Agreement. "Property Trustee" has the meaning specified in the First Recital to this Indenture. "Purchase Agreement" has the meaning specified in the Recitals to this Indenture. "Purchased Shares" has the meaning specified in Section 13.03(6). "Purchaser Stock Price" has the meaning specified in Section 13.07(2). "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture, including without limitation, the Optional Redemption Date with respect to an Optional Redemption. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, including without limitation, the Optional Redemption Price with respect to an Optional Redemption. "Redemption Tax Opinion" means an opinion delivered to the Company of a nationally recognized independent tax counsel (reasonably acceptable to the Issuer Trustees) experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that the Company would be precluded from deducting the interest on the Securities for United States federal income tax purposes, even after the Trust was liquidated and the Securities were distributed to the Holders of the Preferred Securities. "Reference Date" has the meaning specified in Section 13.03(4). "Reference Market Price" has the meaning specified in Section 13.07(2). "Reference Treasury Dealer" has the meaning specified in the Remarketing Agreement. "Reference Treasury Dealer Quotations" has the meaning specified in the Remarketing Agreement. "Registrable Securities" has the meaning specified in section 10.07. "Registration Default" has the meaning specified in Section 10.07. "Registration Rights Agreement" has the meaning specified in Section 10.07. "Regular Record Date" has the meaning specified in Section 3.01. "Relevant Price" has the meaning specified in Section 13.07(2). "Remarketing" has the meaning specified in the Seventh Recital to this Indenture. "Remarketing Agent" means an investment bank, broker, dealer, or other organization which, in the judgment of the Company, is qualified to remarket the Preferred Securities substantially in accordance with the terms of the Remarketing Agreement. The initial Remarketing Agent shall be Credit Suisse First Boston Corporation. The term "Remarketing Agent" shall also include any successor Person appointed as such by the Company. "Remarketing Agreement" means the Remarketing Agreement with the Remarketing Agent dated the date hereof substantially in the form set forth in Exhibit B to this Indenture and any substantially similar agreement entered into by the Company with any successor Remarketing Agent. "Remarketing Notice" shall have the meaning specified in the Remarketing Agreement. "Repurchased Securities" has the meaning specified in Section 10.09. "Repurchased Securities Payment Date" has the meaning specified in Section 10.09. "Repurchased Securities Purchase Price" has the meaning specified in Section 10.09. "Reset Date" means any date that is (i) not later than February 15, 2005 (or, if such day is not a Business Day, the next succeeding Business Day), and (ii) not earlier than 70 Business Days prior to February 15, 2005, as may be determined by the Remarketing Agent, in its sole discretion. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, any assistant vice president, the treasurer, any assistant treasurer, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, and having direct responsibility for the administration of this Indenture, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Preferred Securities" means each Preferred Security required to bear the restricted securities legend required by Section 9.02(j) of the Declaration. "Restricted Securities" means each Security required to bear a Restricted Securities Legend pursuant to Section 2.02 hereof. "Restricted Securities Legend" has the meaning specified in Section 2.02. "Secured Debt" means Debt under the Credit Agreement and any 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 an aggregate fair market value at the time of the grant thereof (in the judgment of the board of directors, the chief financial officer or other responsible agent or officer of the Company) not less than the amount of such Debt. "Securities" has the meaning specified in the Fifth Recital to this Indenture. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Security Register" and "Security Registrar" have the respective meanings specified in Section 3.06(1). "Significant Subsidiary" of any Person means a Subsidiary of such Person meeting the requirements set forth in Rule 1-02(w) of Regulation S-X of the Securities Act. "Shelf Registration Statement" has the meaning specified in Section 10.07. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.08. "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest or Additional Payments thereon, means the date specified in such Security as the fixed date on which the principal, together with any accrued and unpaid interest (and Additional Payments, if any), of such Security or such installment of interest or Additional Payments is due and payable. "Subsidiary" of any Person means (i) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof. "Tax Event" means the receipt by the Property Trustee of an opinion of a nationally recognized independent tax counsel to the Company (reasonably acceptable to the Issuer Trustees) experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change (which shall not include a proposed change), provided that a Tax Event shall not occur more than 90 days before the effective date of any such prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) 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 (c) 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 the original issuance of the Securities or the issue date of the Preferred Securities issued by the Trust, there is more than an insubstantial risk that (x) if the Securities are held by the Property Trustee, (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to interest accrued or received on the Securities or subject to more than a DE MINIMIS amount of other taxes, duties or other governmental charges as determined by such counsel, or (ii) any portion of interest payable by the Company to the Trust (or OID accruing) on the Securities is not, or within 90 days of the date of such opinion will not be, deductible by the Company in whole or in part for United States federal income tax purposes or (y) with respect to Securities which are no longer held by the Property Trustee, any portion of interest payable by the Company (or OID accruing) on the Securities is not, or within 90 days of the date of such opinion will not be, deductible by the Company in whole or in part for United States federal income tax purposes. "Tender Agent" means the Property Trustee if any Preferred Securities are outstanding and the Trustee if the Securities have been distributed to the Holders of the Preferred Securities. "Tender Notification Date" means a Business Day no earlier than 10 Business Days following the date of the Remarketing Notice, or such shorter period as agreed to by the Remarketing Agent. "Term Call Protections" means the price, manner and time, if any, at which the Securities may be redeemed at the option of the Company after the Reset Date. The Term Call Protections, if any, will be established in connection with the Remarketing. "Term Provisions" shall have the meaning specified in the Remarketing Agreement. "Term Rate" means the rate established by the Remarketing Agent in connection with the Remarketing at which interest shall accrue on the Securities from and after the Reset Date. "Term Redemption Price" has the meaning specified in Section 11.01(1). "Trading Day" has the meaning specified in Section 13.07(2). "Trust" has the meaning specified in the First Recital to this Indenture. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was executed; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Securities" means Common Securities and Preferred Securities. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person means capital stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 2.2 SECTION COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act or reasonably requested by the Trustee in connection with such application or request. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the applicable requirements of the Trust Indenture Act and any other applicable requirement set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. 2.3 SECTION FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 2.4 SECTION ACTS OF HOLDERS; RECORD DATES. (1) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (2) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee or the Company, as the case may be, deems sufficient. (3) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.01) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (4) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any notice of default, (ii) any declaration of acceleration referred to in Section 5.02, (iii) any request to institute proceedings referred to in Section 5.07(2) or (iv) any direction referred to in Section 5.12. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; PROVIDED that no such action shall be effective hereunder unless taken on or prior to the date set by the Trustee by which any such determination shall be made (the "Expiration Date") by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities as of the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.06. (5) The ownership of Securities shall be proved by the Security Register. (6) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (7) Without limiting the foregoing, a Holder entitled hereunder to give or take any such action with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. 2.5 SECTION NOTICES, ETC., TO TRUSTEE AND THE COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company. 2.6 SECTION NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder whether or not actually received by such Holder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 2.7 SECTION CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. 2.8 SECTION EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 2.9 SECTION SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 2.10 SECTION SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 2.11 SECTION BENEFITS OF INDENTURE. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Secured Debt, the Holders of Preferred Securities (to the extent provided herein) and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. 2.12 SECTION GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 2.13 SECTION LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest (and Additional Payments, if any) or principal or conversion of the Securities need not be made on such date, but may be made on the next succeeding Business Day (except that, if such Business Day is in the next succeeding calendar year, such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, shall be the immediately preceding Business Day) with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity or on such last day for conversion, PROVIDED that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. 3 ARTICLE 4 SECURITY FORMS 4.1 SECTION FORMS GENERALLY. The Securities and the Trustee's certificates of authentication shall be substantially in the form of Exhibit A which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). The Company shall furnish any such legend not set forth in this Indenture and not contained in Exhibit A to the Trustee in writing. Each Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Exhibit A are part of the terms of this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The definitive Securities shall be typewritten or printed, lithographed or engraved or produced by any combination of these methods or in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. 4.2 SECTION INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Securities initially issued to the Property Trustee of the Trust shall be in the form of one or more individual certificates in definitive, fully registered form without distribution coupons and shall bear the following legend (the "Restricted Securities Legend") unless the Company determines otherwise in accordance with applicable law: THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. 4.3 SECTION ADDITIONAL PROVISIONS REQUIRED IN GLOBAL SECURITY. Any Global Security issued hereunder shall, in addition to the provisions contained in Section 2.02, bear a legend in substantially the following form: "THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK) TO THE TITAN CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." 4.4 SECTION ISSUANCE OF GLOBAL SECURITIES TO HOLDERS. The Securities will be represented by one or more Global Securities registered in the name of the Depositary or its nominee if, and only if, the Securities are distributed to the holders of the Trust Securities. Until such time, the Securities shall be registered in the name of and held by the Property Trustee. Securities distributed to holders of book-entry Trust Securities shall be distributed in the form of one or more Global Securities registered in the name of the Depositary or its nominee, and deposited with the Security Registrar, as custodian for such Depositary, or held by such Depositary for credit by the Depositary to the respective accounts of the beneficial owners of the Securities represented thereby (or such other accounts as they may direct). Securities distributed to holders of Trust Securities other than book-entry Trust Securities shall not be issued in the form of a Global Security or any other form intended to facilitate book-entry trading in beneficial interests in such Securities. 5 ARTICLE 6 THE SECURITIES 6.1 SECTION TITLE AND TERMS. (1) The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is limited to the sum of (i) $206,185,600 and (ii) such aggregate principal amount (which may not exceed $51,546,400 aggregate principal amount) of Securities, if any, as shall be purchased by the Trust pursuant to an over-allotment option in accordance with the terms and provisions of the Purchase Agreement, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 3.04, 3.05, 3.06, 3.07, 9.06, 11.09 or 13.01. (2) The Securities shall be known and designated as the "Convertible Senior Subordinated Debentures Due 2030" of the Company. Their Stated Maturity shall be February 15, 2030, and they shall bear interest at the Applicable Rate, from February 9, 2000, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, as the case may be, payable quarterly (subject to deferral as set forth herein), in arrears, on February 15, May 15, August 15 and November 15 (each an "Interest Payment Date") of each year, PLUS Additional Payments, if any, commencing May 15, 2000 until the principal thereof is paid or made available for payment, and they shall be paid, except as provided herein, to the Person in whose name the Security is registered at the close of business on the regular record date for such interest installment, which shall be the close of business on the 1st day of each February, May, August and November immediately preceding the applicable Interest Payment Date (the "Regular Record Date"). If the Reset Date is prior to the Regular 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 Security is registered on the relevant Regular Record Date, subject to the right of the Company to initiate a Deferral Period. If the Reset Date is on or after the Regular Record Date for the immediately following Interest Payment Date, then (1) interest and Additional Amounts, if any, accrued from and after the Regular 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 Security is registered on the relevant Regular 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 Security is registered on the relevant Regular Record Date for such second Interest Payment Date, subject in each case to the right of the Company to initiate a Deferral Period. Interest will compound quarterly and will accrue at the Applicable Rate on overdue installments of interest (without regard to any applicable grace period) or during an extension of an interest payment period as set forth in Section 3.13 hereof. (3) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed, will be computed on the basis of the actual number of days elapsed in such a 30-day month. In the event that any date on which interest is payable on the Securities is not a Business Day, then payment of interest payable on such 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 such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (4) If at any time (including upon the occurrence of a Tax Event) while the Property Trustee is the Holder of all the Securities, the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature with regard to the Securities (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company will pay as additional amounts on the Securities held by the Property Trustee, such additional amounts ("Additional Amounts") as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other governmental charges been imposed. (5) The principal of and interest (and Additional Payments, if any) on the Securities shall be payable at the office or agency of the Company in New York, New York maintained for such purpose and at any other office or agency maintained by the Company for such purpose by check or wire transfer in such 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; PROVIDED, HOWEVER, that at any time that the Property Trustee is not the sole holder of the Securities, payment of interest may, at the option of the Company, be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer. (6) The Securities shall be redeemable as provided in Article XI hereof. (7) The Securities shall be subordinated in right of payment only to Secured Debt as provided in Article XII hereof. (8) The Securities shall be convertible as provided in Article XIII hereof. 6.2 SECTION DENOMINATIONS. The Securities shall be issuable only in registered form without coupons and only in denominations of $50 and integral multiples thereof. 6.3 SECTION EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Securities shall be executed on behalf of the Company by its chairman of the board, its vice chairman of the board, its president or one of its vice presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall authenticate and make available for delivery such Securities as in this Indenture provided and not otherwise. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. 6.4 SECTION TEMPORARY SECURITIES. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 10.02, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. 6.5 SECTION GLOBAL SECURITIES. (1) Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee in writing that such Depositary is no longer willing or able to continue as a Depositary with respect to such Global Security, and no successor depositary shall have been appointed, or if at any time the Depositary ceases to be a "clearing agency" registered under the Exchange Act, at a time when the Depositary is required to be so registered to act as such depositary, (ii) the Company in its sole discretion determines that such Global Security shall be so exchangeable or (iii) there shall have occurred and be continuing an Event of Default. (3) If any Global Security is to be exchanged for other Securities or canceled in whole, it shall be surrendered by or on behalf of the Depositary or its nominee to the Security Registrar for exchange or cancellation as provided in this Article III. If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Trustee shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, and, to the extent required by Section 3.06, a Restricted Securities Certificate, the Trustee shall, subject to Section 3.05(2) and as otherwise provided in this Article III, authenticate and make available for delivery any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. (4) The Depositary or its nominee, as registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interest pursuant to the rules and procedures of the Depositary. Accordingly, any such owner's beneficial interests in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members. Neither the Trustee nor the Security Registrar shall have any liability in respect of any transfers effected by the Depositary. (5) The rights of the beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Agent Members. 6.6 SECTION REGISTRATION, TRANSFER AND EXCHANGE GENERALLY; CERTAIN TRANSFERS AND EXCHANGES. (1) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.02 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 10.02 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.04, 3.05, 9.06, 11.09 or 13.01 not involving any transfer. Neither the Company nor the Trustee shall be required (i) in the case of a partial redemption of the Securities, to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 11.05 and ending at the close of business on the day of such mailing or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (2) TRANSFER AND EXCHANGE PROCEDURES AND RESTRICTIONS. The Securities may not be transferred except in compliance with the Restricted Securities Legend unless otherwise determined by the Company in accordance with applicable law. Upon any distribution of the Securities to the holders of the Trust Securities in accordance with the Declaration, the Company and the Trustee shall enter into a supplemental indenture pursuant to Section 9.01(6) to provide for transfer procedures and restrictions with respect to the Securities substantially similar to those contained in the Declaration to the extent applicable in the circumstances existing at the time of such distribution. Notwithstanding any other provision of the Indenture, transfers and exchanges of Securities and beneficial interests in a Global Security of the kinds specified in this Section 3.06(2) shall be made only in accordance with this Section 3.06(2). (A) NON-GLOBAL SECURITY TO GLOBAL SECURITY. If the Holder of a Security (other than a Global Security) wishes at any time to transfer all or any portion of such Security to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Global Security, such transfer may be effected only in accordance with the provisions of this clause (2)(A) and subject to the rules and procedures of the Depositary. Upon receipt by the Security Registrar of (i) such Security as provided in Section 3.06(1) and instructions satisfactory to the Security Registrar directing that a beneficial interest in the Global Security in a specified principal amount not greater than the principal amount of such Security be credited to a specified Agent Member's account and (ii) a Securities Certificate duly executed by such Holder or such Holder's attorney duly authorized in writing, then the Security Registrar shall cancel such Security (and issue a new Security in respect of the untransferred portion thereof) as provided in Section 3.06(1) and increase the aggregate principal amount of the Global Security by the specified principal amount as provided in Section 3.05(3). (B) NON-GLOBAL SECURITY TO NON-GLOBAL SECURITY. A Security that is not a Global Security may be transferred, in whole or in part, to a Person who takes delivery in the form of another Security that is not a Global Security as provided in Section 3.06(1); provided, that if such Security to be transferred in whole or in part is a Restricted Security, the Security Registrar shall have received the assignment form attached to the Security duly executed by the transferor Holder or such Holder's attorney duly authorized in writing. (C) EXCHANGES BETWEEN GLOBAL SECURITY AND NON-GLOBAL SECURITY. A beneficial interest in a Global Security may be exchanged for a Security that is not a Global Security as provided in Section 3.05. (3) RESTRICTED SECURITIES LEGEND. (A) Except as set forth below, all Securities shall bear the Restricted Securities Legend set forth in Section 2.02. (B) Subject to Section 3.06(2) and to the following clauses of this Section 3.06(3), a Security (other than a Global Security) that does not bear a Restricted Securities Legend may be issued in exchange for or in lieu of a Restricted Security or any portion thereof that bears such legend if, in the Company's judgment, placing such a legend upon such new Security is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Company in the form of an Officers' Certificate, shall countersign and deliver such a new Security. (C) Notwithstanding the foregoing provisions of this Section 3.06(3), a successor Security of a Security that does not bear a Restricted Securities Legend shall not bear such form of legend unless the Company has reasonable cause to believe that such successor Security is a "restricted security" within the meaning of Rule 144 under the Securities Act, in which case the Trustee, at the written direction of the Company in the form of an Officers' Certificate, shall countersign and deliver a new Security bearing a Restricted Securities Legend in exchange for such successor Security. (D) Upon any sale or transfer of a Restricted Security (including any Restricted Security represented by a Global Security) pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 under the Securities Act after such registration ceases to be effective: (i) in the case of any Restricted Security that is a definitive Security, the Security Registrar shall permit the Holder thereof to exchange such Restricted Security for a definitive Security that does not bear the Restricted Securities Legend and shall rescind any restriction on the transfer of such Restricted Security; and (ii) in the case of any Restricted Security that is represented by a Global Security, the Security Registrar shall permit the Holder of such Global Security to exchange such Global Security for another Global Security that does not bear the Restricted Securities Legend. (E) If Restricted Securities are being presented or surrendered for transfer or exchange then there shall be (if so required by the Trustee), (i) if such Restricted Securities are being delivered to the Security Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or (ii) if such Restricted Securities are being transferred, a certification from the transferor as to the compliance with the restrictions set forth in the Restricted Securities Legend. 6.7 SECTION MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. 6.8 SECTION PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Subject to Section 3.01(2), interest (and Additional Payments, if any) on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date. Subject to Section 3.13, any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date (the "Special Record Date") for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and, if so listed, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee; PROVIDED that any such payment shall be made by check or wire transfer in coin or currency of the United States of America which at the time of payment is a legal tender for payment of public and private debt. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue (including in each such case Additional Payments), which were carried by such other Security. In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (and Additional Payments, if any) (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. Except as otherwise expressly provided in the immediately preceding sentence, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest (and Additional Payments, if any) on the Securities being converted, which shall be deemed to be paid in full. 6.9 SECTION PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.08) interest (and Additional Payments, if any) on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company or the Trustee from giving effect to any written certification, proxy, or other authorization furnished by a Depositary or impair, as between the Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security. 6.10 SECTION CANCELLATION. All Securities surrendered for payment, redemption, registration of transfer or exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order; PROVIDED, HOWEVER, that the Trustee shall not be required to destroy the certificates representing such canceled Securities. 6.11 SECTION RIGHT OF SET OFF. Notwithstanding anything to the contrary in this Indenture, the Company shall have the right to set off any payment it is otherwise required to make hereunder to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee. 6.12 SECTION CUSIP NUMBERS. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. 6.13 SECTION EXTENSION OF INTEREST PAYMENT PERIOD; NOTICE OF EXTENSION. (1) So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of this Security, and from time to time to defer payments of interest for successive periods not exceeding 20 consecutive quarters for each such period (a "Deferral Period"); PROVIDED that no Deferral Period may extend beyond (i) the Maturity (whether at February 15, 2030 or by declaration of acceleration, call for redemption or otherwise) or (ii) in the case of a Deferral Period that begins prior to the Reset Date, the Reset Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 3.13, will bear interest thereon at the Applicable Rate compounded quarterly for each quarter of the Deferral Period ("Compounded Interest"). On the applicable Payment Resumption Date, the Company shall pay all interest then accrued and unpaid on the Securities, including any Compounded Interest that shall be payable to the Holders of the Securities in whose names the Securities are registered in the Security Register on the Regular Record Date fixed for such Payment Resumption Date. A Deferral Period shall terminate upon the payment by the Company of all interest then accrued and unpaid on the Securities (together with Additional Payments), to the extent permitted by applicable law. Before the termination of any Deferral Period, the Company may further extend such period as provided in paragraph (2) of this Section 3.13, PROVIDED that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond (i) the Maturity (whether at February 15, 2030 or by declaration of acceleration, call for redemption or otherwise) or (ii) in the case of a Deferral Period that begins prior to the Reset Date, the Reset Date. Upon the termination of any Deferral Period, and subject to the foregoing requirements, the Company may elect to begin a new Deferral Period. No interest shall be due and payable during a Deferral Period except on the Payment Resumption Date as determined pursuant to paragraph (2) of this Section 3.13. There is no limitation on the number of times that the Company may elect to begin a Deferral Period. (2) The Company shall give the Holders of the Securities and the Trustee written notice (a "Deferral Notice") of its selection of a Deferral Period at least ten days prior to the record date for any distributions that would have been payable on the Trust Securities except for the decision to begin or extend a Deferral Period. On or prior to the Regular Record Date immediately preceding the Interest Payment Date on which the Company elects to pay all interest then accrued and unpaid on the Securities, including Compounded Interest (the "Payment Resumption Date"), the Company shall give the Holders of the Securities and the Trustee written notice that the Deferral Period will end on such Payment Resumption Date. Notwithstanding the provision of such notice, the Company may elect to further extend the Deferral Period, subject to the limitations set forth in Section 3.13(1), by providing the Holders of the Securities and the Trustee with a new Deferral Notice not less than three Business Days prior to the Regular Record Date immediately preceding the previously scheduled Payment Resumption Date. The Company may elect to pay all interest then accrued and unpaid on the Securities, including Compounded Interest, on an Interest Payment Date prior to its most recently established Payment Resumption Date; PROVIDED that the Company gives the Holders of the Securities and the Trustee a new Deferral Notice setting forth the revised Payment Resumption Date at least three Business Days prior to the Regular Record Date for such revised Payment Resumption Date. (3) The quarter in which any Deferral Notice is given pursuant to paragraph (2) hereof shall be counted as one of the 20 quarters permitted in the maximum Deferral Period permitted under paragraph (1) hereof. 6.14 SECTION PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT. The Trustee will initially act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company may appoint one or more co-registrars, one or more additional Paying Agents, one or more additional Conversion Agents, and one or more additional agents in addition to the Security Registrar to accept Securities for transfer or exchange, it being understood that the registration of all such transfers and exchanges will only be effected in the Security Register. The Company or any of its Affiliates may act in any such capacity. 7 ARTICLE 8 SATISFACTION AND DISCHARGE 8.1 SECTION SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.06 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest (and Additional Payments, if any) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for and relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.07 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall survive. 8.2 SECTION APPLICATION OF TRUST MONEY. Subject to the provisions of the last paragraph of Section 10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest (and Additional Payments, if any) for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 4.01 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. 9 ARTICLE 10 REMEDIES 10.1 SECTION EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events that has occurred and is continuing (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article XI or Article XII or be voluntary or involuntary or be 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): (1) default in the payment of any interest upon any Security, including any Additional Payments, when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any due date in the case of a Deferral Period); or (2) default in the payment of the principal or premium, if any, of any Security when due, whether at its Maturity, upon redemption, by declaration of acceleration or otherwise; or (3) default in the observation or performance in any material respect of any covenant of the Company in this Indenture (other than a covenant where a default in the performance of which or the breach of which is specifically dealt with elsewhere in this Section), and continuance of such default for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate outstanding principal amount of the Securities a written notice specifying such default and requiring it to be remedied; or (4) failure by the Company to issue and deliver Common Stock upon an election to convert the Securities into Common Stock; or (5) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company or any of its Significant Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any of its Significant Subsidiaries, as the case may be, under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any of its Significant Subsidiaries or of any substantial part of their respective property or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (6) the institution by the Company or any of its Significant Subsidiaries of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or any such Significant Subsidiary to the institution of bankruptcy or insolvency proceedings against the Company or any such Significant Subsidiary, or the filing by the Company or any such Significant Subsidiary of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by the Company or any such Significant Subsidiary to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any such Significant Subsidiary or of any substantial part of any their respective property, or the making by any of them of an assignment for the benefit of creditors, or the admission by any of them in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt, or the taking of corporate action by the Company or any of its Significant Subsidiaries in furtherance of any such action; or (7) the voluntary or involuntary dissolution, winding up or termination of the Trust, except in connection with (i) the distribution of Securities to Holders of Preferred Securities and Common Securities in liquidation or redemption of their interests in the Trust, (ii) the redemption of all of the outstanding Preferred Securities and Common Securities of the Trust or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration. 10.2 SECTION ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Outstanding Securities and any other amounts payable hereunder (including any Additional Payments) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders); PROVIDED that, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities fail to declare the principal of all the Securities to be immediately due and payable, the Holders of at least 25% in aggregate liquidation amount of Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee, and upon any such declaration, such principal and all accrued interest (and Additional Payments, if any) shall become immediately due and payable. The Holders of a majority in aggregate principal amount of the Outstanding Securities may annul such declaration and waive the default by written notice to the Company and the Trustee if the Event of Default (other than the nonpayment of the principal of these Securities which has become due solely by such acceleration) has been cured or waived as provided in Section 5.13 and a sum sufficient to pay all matured installments of interest (and Additional Payments, if any) and principal of any Securities (and Additional Payments, if any) due otherwise than by acceleration has been deposited with the Trustee. Should the Holders of the Securities fail to annul such declaration and waive such default, the Holders of a majority in aggregate liquidation amount of the outstanding Preferred Securities shall have such right. Upon the effectiveness of any such declaration, such principal amount (or specified amount) of and the accrued interest (including any Additional Payments) on all the Securities shall then become immediately due and payable; PROVIDED that the payment of principal and interest on, and all other Obligations relating to, such Securities (including Additional Payments) shall remain subordinated to the extent provided in Article XII. No such rescission shall affect any subsequent default or impair any right consequent thereon. 10.3 SECTION COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if (1) default is made in the payment of any interest or any Additional Payments on any Security when such interest or Additional Payments become due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest (including any Additional Payments) and, to the extent that payment thereof shall be legally enforceable, interest on any overdue principal and on any overdue interest accrued in accordance with the terms hereof (including any Additional Payments), at the rate borne by the Securities, and, in addition thereto, all amounts owing to the Trustee under Section 6.07. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 10.4 SECTION TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it, and any predecessor Trustee under Section 6.07. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 10.5 SECTION TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing to the Trustee and any predecessor Trustee under Section 6.07, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. 10.6 SECTION APPLICATION OF MONEY COLLECTED. Subject to Article XII, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest (including any Additional Payments), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 6.07; SECOND: To the payment of the amounts then due and unpaid for principal of and interest (including any Additional Payments) on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest (including any Additional Payments), respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. 10.7 SECTION LIMITATION ON SUITS. Subject to Sections 5.08 and 5.16, no Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default, in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. 10.8 SECTION UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST AND CONVERT. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and (subject to Section 3.08) interest (including any Additional Payments) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to convert such Security in accordance with Article XIII and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. If the Property Trustee is the sole Holder of the Securities, any Holder of the Preferred Securities shall have the right to institute suit on behalf of the Trust for the enforcement of any such payment and right to convert. 10.9 SECTION RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. 10.10 SECTION RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.07, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 10.11 SECTION DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 10.12 SECTION CONTROL BY HOLDERS. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; PROVIDED, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 10.13 SECTION WAIVER OF PAST DEFAULTS. Subject to Section 9.02 hereof, the Holders of not less than a majority in principal amount of the Outstanding Securities, or failing such action by the majority in principal amount of the Outstanding Securities, the majority in aggregate liquidation amount of the Preferred Securities, may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, premium, if any, or interest (including any Additional Payments) on any Security (unless such default has been cured and a sum sufficient to pay all matured installments of interest (and Additional Payments, if any) and principal due otherwise than by acceleration has been deposited with the Trustee); or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security affected; PROVIDED, HOWEVER, that if the Securities are held by the Trust or the Property Trustee, such waiver or modification of such waiver shall not be effective until the Holders of a majority in aggregate liquidation amount of the outstanding Preferred Securities shall have consented to such waiver or modification to such waiver; PROVIDED FURTHER, that if the consent of the Holder of each Outstanding Security is required, such waiver shall not be effective until each Holder of the Trust Securities shall have consented to such waiver. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 10.14 SECTION UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee or in any suit for the enforcement of the right to receive the principal of and interest (and Additional Payments, if any) on any Security or to convert any Security in accordance with Article XIII. 10.15 SECTION WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 10.16 SECTION ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES. Notwithstanding anything to the contrary contained herein, but subject to Article XII, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest, Additional Payments or principal on the Securities on the date such interest, Additional Payments or principal is otherwise payable, the Company acknowledges that, in such event, a Holder of Preferred Securities may institute a legal proceeding directly for enforcement of payment to such Holder of the principal of, interest or Additional Payments on the Securities having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder (a "Direct Action") on or after the due date specified in the Securities. The Company may not amend this Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of all the Holders of Preferred Securities. Notwithstanding any payment made to such Holder of Preferred Securities by the Company in connection with a Direct Action, the Company shall remain obligated to pay the principal of and interest (and Additional Payments, if any) on the Securities held by the Trust or the Property Trustee, and the Company shall be subrogated to the rights of the Holders of such Preferred Securities with respect to payments on the Preferred Securities to the extent of any payments made by the Company to such Holders in any Direct Action. The Holders of Preferred Securities will not be able to exercise directly any other remedy available to the Holders of the Securities. 11 ARTICLE 12 THE TRUSTEE 12.1 SECTION CERTAIN DUTIES AND RESPONSIBILITIES. (1) Except during the continuance of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. (2) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (3) At the written direction of the Remarketing Agent, the Trustee shall (i) select the Primary Treasury Dealer to be a Reference Treasury Dealer and (ii) determine the Reference Treasury Dealer Quotations, both in accordance with the terms of the Remarketing Agreement. In addition, if the Securities are no longer held by the Property Trustee, the Trustee shall act as Tender Agent in accordance with the provisions of the Remarketing Agreement. (4) Notwithstanding the foregoing, (i) the duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and (ii) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. 12.2 SECTION NOTICE OF DEFAULTS. The Trustee shall give the Holders notice of any default hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default of the character specified in Section 5.01(3), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. 12.3 SECTION CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 6.01: (1) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel of its choice and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to reasonable examination of the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (8) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence or willful misconduct, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. 12.4 SECTION NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. 12.5 SECTION MAY HOLD SECURITIES. The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar, or such other agent. 12.6 SECTION MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. 12.7 SECTION COMPENSATION AND REIMBURSEMENT. The Company agrees: (1) to pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, fees, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, liability, claim, action, suit, cost or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 6.07, except with respect to funds held in trust for the benefit of the Holders of any particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(5) or Section 5.01(6), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. 12.8 SECTION DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. 12.9 SECTION CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000 and has its Corporate Trust Office in the United States. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of the federal and state authorities, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 12.10 SECTION RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (1) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (2) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (3) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal or resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (4) If at any time: (A) the Trustee shall fail to comply with Section 6.08 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or (B) the Trustee shall cease to be eligible under Section 6.09 and shall fail to resign after written request therefor by the Company or by any such Holder; or (C) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (i) the Company may remove the Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (5) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (6) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders and the agent or representative for the holders of all Debt under the Credit Agreement in the manner provided in Section 1.06. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 12.11 SECTION ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; PROVIDED, that on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments required to more fully and certainly vest in and confirm to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 12.12 SECTION MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder; PROVIDED such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. 12.13 SECTION PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). 13 ARTICLE 14 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY 14.1 SECTION COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The Company will furnish or cause to be furnished to the Trustee (1) semiannually, not later than March 15 and October 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than 15 days prior to the delivery thereof; and (2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; EXCLUDING from any such list names and addresses received by the Trustee in its capacity as Security Registrar. 14.2 SECTION PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. (1) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished. (2) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (3) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. 14.3 SECTION REPORTS BY TRUSTEE. (1) Within 60 days after May 15 of each year, commencing May 15, 2000, the Trustee shall transmit by first-class mail to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act in the manner provided pursuant thereto. (2) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. 14.4 SECTION REPORTS BY COMPANY. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Trust Indenture Act; PROVIDED, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). 14.5 SECTION TAX REPORTING. The Company shall provide to the Trustee on a timely basis such information as the Trustee requires to enable the Trustee to prepare and file any form required to be submitted by the Company with the Internal Revenue Service and the Holders relating to original issue discount, including, without limitation, Form 1099-OID or any successor form. 15 ARTICLE 16 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 16.1 SECTION COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge with or into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person (other than a wholly owned Subsidiary of the Company), and no Person shall consolidate with or merge with or into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge with or into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease, such properties and assets substantially as an entirety shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest (including any Additional Payments) on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Article XIII; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (3) if at the time any Preferred Securities are outstanding, such consolidation or merger or conveyance, transfer or lease of assets of the Company is permitted under, and does not give rise to any breach or violation of, the Declaration or the Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 16.2 SECTION SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the properties and assets of the Company on a consolidated basis in accordance with Section 8.01, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease to another Person, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. 17 ARTICLE 18 SUPPLEMENTAL INDENTURES 18.1 SECTION SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture; PROVIDED, that such action pursuant to this clause (4) shall not materially adversely affect the interests of the Holders of the Securities or, so long as any of the Preferred Securities shall remain outstanding, the Holders of the Preferred Securities; or (4) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (5) to make provision for transfer procedures, certification, book-entry provisions, the form of restricted securities legends, if any, to be placed on Securities, and all other matters required pursuant to Section 3.06(2) or otherwise necessary, desirable or appropriate in connection with the issuance of Securities to Holders of Preferred Securities in the event of a distribution of Securities by the Trust if a Tax Event or Investment Company Event occurs and is continuing. 18.2 SECTION SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) extend the Stated Maturity of the principal of, or any installment of interest (including any Additional Payments) on, any Security, or reduce the principal amount thereof, or reduce the rate or extend the time for payment of interest thereon, or reduce any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Security or interest or any Additional Payments thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or adversely affect the right to convert any Security as provided in Article XIII, or modify the provisions of this Indenture with respect to the subordination of the Securities in a manner adverse to the Holders, (2) change the Reset Date, (3) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture, or (4) modify any of the provisions of this Section or Section 5.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. Notwithstanding anything to the contrary in this Indenture or the Declaration, if the Property Trustee is the sole holder of the Securities, so long as any of the Preferred Securities remains outstanding, no amendment shall be made that adversely affects the Holders of such Preferred Securities, and no termination of this Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the Holders of the percentage of the aggregate stated liquidation amount of such Preferred Securities then outstanding which is at least equal to the percentage of aggregate stated principal amount of Outstanding Securities as shall be required under this Indenture to effect any such amendment, termination or waiver. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 18.3 SECTION EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. 18.4 SECTION EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. No such supplemental indenture shall directly or indirectly modify the provisions of Article XII in any manner which might terminate or impair the rights of the Secured Debt pursuant to such subordination provisions. 18.5 SECTION CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. 18.6 SECTION REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. 19 ARTICLE 20 COVENANTS; REPRESENTATIONS AND WARRANTIES 20.1 SECTION PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay the principal of, interest and Additional Payments, if any, on the Securities in accordance with the terms of the Securities and this Indenture. 20.2 SECTION MAINTENANCE OF OFFICE OR AGENCY. (a) The Company will maintain in New York, New York an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for transfer, exchange or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in the United States) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in New York, New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Notwithstanding any other provision of this Indenture, payment with respect to the Securities shall only take place in the Borough of Manhattan, The City of New York, State of New York. 20.3 SECTION MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of, interest or Additional Payments, if any, on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, interest or Additional Payments, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of, interest or Additional Payments, if any, on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal, interest or Additional Payments, if any, so becoming due, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent as such. The Company may, at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, interest or Additional Payments, if any, on any Security and remaining unclaimed for two years after such principal, interest or Additional Payments, if any, has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of any such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. 20.4 SECTION STATEMENT BY OFFICERS AS TO DEFAULT. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the material terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 20.5 SECTION LIMITATION ON DIVIDENDS; TRANSACTIONS WITH AFFILIATES; COVENANTS AS TO THE TRUST. (1) If at such time (x) there shall have occurred and is continuing an Event of Default, (y) the Company shall be in default with respect to its payment of any obligations under the Guarantee or (z) the Company shall have given notice of its election to begin a Deferral Period as provided herein and shall not have rescinded such notice, or such Deferral Period, or any extension thereof, shall be continuing, the Company covenants that the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock (which includes common and preferred stock) other than stock dividends or distributions which consist of stock of the same class as that on which the dividend or distribution is being paid, (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities of the Company that rank PARI PASSU with or junior in interest to the Securities or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee expressly ranks PARI PASSU with or junior in interest to the Securities (in each case, other than (A) dividends or distributions in the Company's capital stock, (B) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (C) payments under the Guarantee or the Common Securities Guarantee, (D) purchases or acquisitions of shares of Common Stock in connection with the satisfaction by the Company of its obligations under any employee benefit plan, the exercise of any repurchase rights under any employee benefit plan or any other contractual obligation of the Company (other than a contractual obligation ranking PARI PASSU with or junior in interest to the Securities), (E) the purchase of fractional shares resulting from a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock or (F) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged). (2) The Company also covenants and agrees (i) that it shall directly or indirectly maintain 100% ownership of the Common Securities of the Trust; PROVIDED, HOWEVER, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities and (ii) that it shall use its reasonable efforts, consistent with the terms and provisions of the Declaration, to cause the Trust (x) to not be deemed an investment company, as defined under the Investment Company Act of 1940, as amended from time to time, or any successor legislation, required to be registered under such act, (y) to not be classified as an association taxable as a corporation for United States federal income tax purposes and (z) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes. 20.6 SECTION PAYMENT OF EXPENSES OF THE TRUST. In connection with the offering, sale and issuance of the Securities to the Property Trustee in connection with the sale of the Trust Securities by the Trust, the Company shall: (1) pay for all costs, fees and expenses relating to the offering, sale and issuance of the Securities, including commissions to the Initial Purchasers payable pursuant to the Purchase Agreement and compensation of the Trustee under the Indenture in accordance with the provisions of Section 6.07 of the Indenture; (2) be responsible for and pay for all debts and obligations (other than with respect to the Trust Securities) of the Trust, pay for all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization of the Trust, the offering, sale and issuance of the Trust Securities (including commissions to the Initial Purchasers in connection therewith), the fees and expenses of the Property Trustee and the Delaware Trustee, the costs and expenses relating to the operation of the Trust, including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); and (3) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. 20.7 SECTION REGISTRATION RIGHTS. The holders of the Preferred Securities, the Securities, the Guarantee and the shares of Common Stock of the Company issuable upon conversion of the Securities (collectively, the "Registrable Securities") are entitled to the benefits of a Registration Rights Agreement, dated as of February 9, 2000, among the Company, the Trust and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement the Company and the Trust have agreed for the benefit of the holders of the Registrable Securities that (i) they will, at the Company's sole expense, prior to April 24, 2000, file a shelf registration statement (the "Shelf Registration Statement") with the Commission with respect to resales of the Registrable Securities, (ii) they will use their best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act prior to July 8, 2000 and (iii) they will use their best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act (subject to certain exceptions under the Registration Rights Agreement) until the second anniversary of the effectiveness of the Shelf Registration Statement or such other period as shall be required under Rule 144(k) thereunder or any successor rule or regulation thereto or such earlier date as is provided in the Registration Rights Agreement. If the Company fails to comply with either of clauses (ii) or (iii) above, subject to certain exceptions provided in the Registration Rights Agreement, (a "Registration Default") then, at such time, the Applicable Rate will increase by 50 basis points (0.50%). Such increase will remain in effect from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured, on which date the interest rate on the Securities will decrease by 50 basis points (0.50%). 20.8 SECTION [Reserved] 20.9 SECTION REPURCHASE OF SECURITIES UPON THE FAILURE TO CONSUMMATE THE ACQUISITION. (1) In the event that the acquisition of Advanced Communication Systems, Inc., a Delaware corporation ("ACS") pursuant to the Agreement and Plan of Merger by and among the Company, ACS and A T Acquisition Corp., a Delaware corporation, dated as of December 9, 1999, is not consummated by March 31, 2000, the Company shall offer to purchase and, as set forth in Article XV of the Declaration, the Trust shall accept such offer and agree to sell the Securities (the "Repurchased Securities") held by it in an amount equal to the total price to be paid by the Trust for the Trust Securities tendered by the Holders thereof to the Trust pursuant to Article XV of the Declaration, in an amount not to exceed 50% of the aggregate liquidation amount of each of the Preferred Securities and the Common Securities, at a purchase price (the "Repurchased Securities Purchase Price") equal to 102.5% of the principal amount of the Securities to be repurchased, plus accrued and unpaid interest thereon, if any, to the date of the repurchase of the Securities (the "Repurchase Payment Date"); (2) On the Repurchase Payment Date, the Company shall pay to the Trust by wire transfer the Repurchased Securities Purchase Price in exchange for the Repurchased Securities and such Repurchased Securities shall cease to be outstanding on that date. 21 ARTICLE 22 REDEMPTION OF SECURITIES 22.1 SECTION OPTIONAL REDEMPTION. (1) The Company shall have the right to redeem the Securities (an "Optional Redemption") (i) in whole or in part, at any time or from time to time, prior to the Reset Date but on or after February 20, 2003 until (but excluding) the Tender Notification Date, at a Redemption Price (the "Initial Redemption Price") equal to the prices per $50 principal amount of Securities set forth in the following table, plus accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date, if redeemed during the 12-month period up to but excluding February 20:
Price Per $50 Principal Year Amount ---- ------ 2004 $50.7188 2005 $50.0000
(ii) 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 (iii) 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 Securities to be redeemed, plus accrued and unpaid interest thereon (any Redemption Price so established in the Remarketing or as a result of a Failed Final Remarketing, the "Term Redemption Price," and, together with the Initial Redemption Price, an "Optional Redemption Price"); PROVIDED, HOWEVER, that the Company shall not be permitted to redeem any Securities pursuant to this Section 11.01(1) during any Deferral Period. (2) If the Company desires to consummate an Optional Redemption, it must cause to be sent, at its own expense, notice of such intent (an "Optional Redemption Notice"), via first-class mail, postage prepaid, to each Holder of Securities (and, if the Preferred Securities are still outstanding, to each Holder of the corresponding Preferred Securities) to be redeemed, at such Holder's address appearing in the Security Register and the List of Holders, if applicable, which Optional Redemption Notice shall comply with Section 11.06 hereof. Holders receiving an Optional Redemption Notice have the right, upon notification of the Trustee and the Conversion Agent prior to 5:00 p.m. New York City time on the Optional Redemption Date, to convert their Securities called for redemption into Company Common Stock at the Applicable Conversion Ratio prior to 5:00 p.m. New York City time on the Optional Redemption Date in compliance with Article XIII hereof. (3) In the case of any Optional Redemption, the Company must notify the Trustee and the Property Trustee in writing of the Optional Redemption Date, the principal amount of Securities to be redeemed and provide a copy of the Optional Redemption Notice at least 20 days prior to sending the Optional Redemption Notice, or such shorter period as agreed to by the Trustee and Property Trustee in writing. 22.2 SECTION [Reserved] 22.3 SECTION TAX EVENT REDEMPTION. (1) If a Tax Event has occurred and is continuing and: (A) the Company has received a Redemption Tax Opinion; or (B) the Issuer Trustees shall have been informed by nationally recognized independent tax counsel (reasonably acceptable to the Issuer Trustees) experienced in such matters that a No Recognition Opinion cannot be delivered, then the Company shall have the right upon not less than 30 days nor more than 60 days notice to the Holders of the Securities and within 90 days following the occurrence and continuation of the applicable Tax Event (the "90 Day Period") to redeem the Securities in whole, but not in part, for cash at $50 per $50 principal amount of the Securities plus accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date; PROVIDED, HOWEVER, that if, at the time there is available to the Company or the Trust the opportunity to eliminate, within the 90 Day Period, the applicable Tax Event by taking some ministerial action, including, but not limited to, filing a form or making an election, or pursuing some other similar reasonable measure which, in the sole judgment of the Company, will have no adverse effect on the Company, the Trust or the Holders of the Preferred Securities and will involve no material cost, then the Company or the Trust shall pursue such ministerial action or other measure in lieu of redemption; and PROVIDED FURTHER that the Company shall have no right to redeem the Securities while the Trust is pursuing any ministerial action or other similar measure pursuant to its obligations under the Declaration. (2) In the event that the Company redeems the Securities pursuant to Section 11.03(1), Holders shall have the right upon notification of the Trustee and the Conversion Agent, to convert their Securities or Preferred Securities, if applicable, into Common Stock at the Applicable Conversion Ratio prior to 5:00 p.m., New York City time, on the applicable Redemption Date. (3) If the Company opts not to redeem the Securities pursuant to this Section 11.03, the Company shall be required to pay Additional Amounts in respect of the Securities pursuant to Section 3.01 for so long as (i) a Tax Event has occurred and is continuing and (ii) the Property Trustee is the sole Holder of the Securities. 22.4 SECTION [Reserved] 22.5 SECTION SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less than all the Securities are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee pro rata, from the Outstanding Securities not previously called for redemption. Such selection method may provide for the selection for redemption of portions (equal to $50 or any integral multiple thereof) of the principal amount of the Securities. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed. The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. 22.6 SECTION NOTICE OF REDEMPTION. Notice of redemption (other than with respect to a redemption which is an Optional Redemption) shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption (including, without limitation, Optional Redemption Notices) given pursuant to this Article XI shall identify the Securities to be redeemed (including, if relevant, "CUSIP" numbers) and shall state: (1) the Redemption Date, (2) the Redemption Price, (3) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after said date, (4) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and (5) the date on which the right to convert the Securities to be redeemed will terminate and the places where such Securities may be surrendered for conversion. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. 22.7 SECTION DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m. New York City time on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest (together with Additional Payments, if any) on, all the Securities which are to be redeemed on that date. If any Security called for redemption is converted, any money deposited with the Trustee or with any Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive interest as provided in the last paragraph of Section 3.08) be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust. 22.8 SECTION SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest (including Additional Payments, if any) to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to the terms and the provisions of Section 3.08. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate borne by the Security. 22.9 SECTION SECURITIES REDEEMED IN PART. (1) In the event of any redemption in part, the Company shall not be required to (i) issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the date of mailing of a notice of redemption of Securities selected for redemption and ending at the close of business on the day of such mailing and (ii) register the transfer of or exchange any Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Securities being redeemed in part. (2) If a partial redemption of the Securities would result in the delisting of the Preferred Securities issued by the Trust from any national securities exchange or other organization on which the Preferred Securities are listed other than the Private Offerings, Resale and Trading through Automated Linkages Market, the Company shall not be permitted to effect such partial redemption and may only redeem the Securities in whole. (3) Any Security which is to be redeemed only in part shall be surrendered at a place of payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Global Security is surrendered, such new Security will (subject to Section 3.06) also be a new Global Security. 23 ARTICLE 24 SUBORDINATION OF SECURITIES 24.1 SECTION AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each Holder of Securities by such Holder's acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article XII; and each Holder of a Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of, premium, if any, interest (including Additional Payments, if any) and other Obligations with respect to all Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full in cash of principal of (and premium, if any), interest and all other Obligations with respect only to all Secured Debt, whether outstanding at the date of this Indenture or thereafter incurred; PROVIDED, HOWEVER, that no provision of this Article XII shall prevent the occurrence of any default or Event of Default hereunder. 24.2 SECTION DEFAULT ON SECURED DEBT. In the event and during the continuation of any default by the Company in the payment of principal, premium, if any, interest on or any other Obligation relating to, any 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 default continues beyond the period of grace, if any, specified in the instrument evidencing such Secured Debt, then unless and until such default shall have been cured or waived or shall have ceased to exist or all Secured Debt and all Obligations relating thereto have been paid in full in cash, no direct or indirect payment or distribution (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made with respect to the principal of (including redemption payments), premium, if any, or interest on, or any other Obligation relating to, the Securities or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities. In addition, no such payment or distribution shall be made or agreed to be made if the maturity of any Secured Debt has been accelerated because of a default. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 12.02, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to the holders of Secured Debt, or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Secured Debt may have been issued, as their respective interests may appear. 24.3 SECTION LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any direct or indirect payment by or on behalf of the Company or direct or indirect distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to creditors upon any dissolution or winding up or liquidation or reorganization of the Company or assignment for the benefit of creditors or marshaling of assets, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts (including principal, premium, if any, and interest) due or to become due upon all Secured Debt shall first be paid in full in cash, or such payment thereof provided for in money in accordance with its terms, before any payment or distribution is made on account of the principal (and premium, if any), interest or any other Obligation relating to the Securities; and upon any such dissolution or winding up or liquidation or reorganization, any direct or indirect payment by the Company, or direct or indirect payment or distribution (in cash, property, securities, by set-off or otherwise) to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article XII, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Secured Debt (pro rata to such holders on the basis of the respective amounts of Secured Debt held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Secured Debt may have been issued, as their respective interests may appear, to the extent necessary to pay such Secured Debt in full, in cash, after giving effect to any concurrent payment or distribution to or for the holders of such Secured Debt, before any such payment or distribution is made to the Holders of Securities or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, prohibited by the foregoing, shall be received by the Trustee or the Holders of the Securities before all Secured Debt is paid in full in cash, or provision is made for such payment in cash in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Secured Debt or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Secured Debt may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Secured Debt remaining unpaid to the extent necessary to pay such Secured Debt in full in cash in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Secured Debt. For purposes of this Article XII, the words, "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XII with respect to the Securities only to the payment of all Secured Debt which may at the time be outstanding; PROVIDED, that (i) such Secured Debt is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Secured Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions provided for in Article VIII hereof shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 12.03 if such other Person shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions stated in Article VIII hereof. Nothing in Section 12.02 or in this Section 12.03 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.07 hereof. 24.4 SECTION SUBROGATION. Subject to the payment in full in cash of all Secured Debt, the rights of the Holders of the Securities shall be subrogated to the rights of the holders of such Secured Debt to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Secured Debt until the principal of (and premium, if any) and interest on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Secured Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payment over pursuant to the provisions of this Article XII, to or for the benefit of the holders of such Secured Debt by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Secured Debt, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of such Secured Debt. It is understood that the provisions of this Article XII are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of such Secured Debt on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Secured Debt, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including Additional Payments, if any) on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company, as the case may be, other than the holders of Secured Debt, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XII of the holders of such Secured Debt in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee, subject to the provisions of Section 6.03, and the Holders of the Securities, shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of the Secured Debt and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII; PROVIDED that such court, trustee, receiver, agent or other Person has been apprised of, or the order, decree or certificate makes reference to, the provisions of this Article. 24.5 SECTION TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Securities by such Holder's acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XII and appoints the Trustee as such Holder's attorney-in-fact for any and all such purposes. 24.6 SECTION NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article XII. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article XII, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office of the Trustee from the Company or a holder or holders of Secured Debt or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 6.03 hereof, shall be entitled in all respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice provided for in this Section 12.06 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. The Trustee, subject to the provisions of Section 6.03, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Secured Debt (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of such Secured Debt or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Secured Debt to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Secured Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the right of such Person under this Article XII, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 24.7 SECTION RIGHTS OF THE TRUSTEE; HOLDERS OF SECURED DEBT. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII in respect of any Secured Debt at any time held by it, to the same extent as any other holder of Secured Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Secured Debt of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are set forth in this Article XII, and no implied covenants or obligations with respect to the holders of such Secured Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Secured Debt and, subject to the provisions of Section 6.03, the Trustee shall not be liable to any holder of such Secured Debt if it shall pay over or deliver to Holders of Securities, the Company or any other Person money or assets to which any holder of such Secured Debt shall be entitled by virtue of this Article XII or otherwise. 24.8 SECTION SUBORDINATION MAY NOT BE IMPAIRED. (1) No right of any present or future holder of any Secured Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. (2) Without in any way limiting the generality of the foregoing paragraph, the holders of Secured Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of the Holders of the Securities to the holders of Secured Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Secured Debt, or otherwise amend or supplement in any manner such Secured Debt or any instrument evidencing the same or any agreement under which such Secured Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Secured Debt; (iii) release any Person liable in any manner for the collection of such Secured Debt; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. (3) The subordination provisions of this Article XII shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Debt is, pursuant to applicable law, avoided, recovered, or rescinded or must otherwise be restored or returned by any holder of Secured Debt, whether as a "voidable preference," "fraudulent conveyance," "fraudulent transfer," or otherwise, all as though such payment or performance had not been made. (4) If, upon any proceeding referred to in Section 12.03, the Trustee does not file a claim in such proceeding prior to fifteen Business Days before the expiration of the time to file such claim, any Holder of the Securities, any Holder of Secured Debt or their respective agents may file such claim on behalf of the Holders of the Securities. (5) The subordination provisions contained herein are solely for the benefit of the holders from time to time of Secured Debt and their representatives, assignees and beneficiaries and may not be rescinded, canceled, amended or modified in any way other than, as to any holder of Secured Debt, pursuant to an amendment or modification that is permitted by the documentation relating to the Secured Debt applicable to such holder. 25 ARTICLE 26 CONVERSION OF SECURITIES 26.1 SECTION CONVERSION RIGHTS. Subject to and upon compliance with the provisions of this Article, the Securities are convertible, at the option of the Holders, 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 either a Convertible Remarketing which does not fail or a Failed Final Remarketing, on and after the Reset Date through February 15, 2030 (except that Securities called for redemption by the Company shall be convertible at any time prior to 5:00 p.m., New York City time, on any Redemption Date), into fully paid and nonassessable shares of Common Stock of the Company. On or prior to the Tender Notification Date, each Security is initially convertible at the option of the Holder into 1.0076 shares of Common Stock for each $50 in aggregate principal amount of Securities (the "Initial Conversion Ratio") (equal to an initial conversion price of $49.625 principal amount of Securities per share of Common Stock (the "Initial Conversion Price")). On and after the Reset Date, the Securities may, at the option of the Trust and subject to the results of the Remarketing, become nonconvertible or convertible into a different number of shares of Common Stock, as determined by the Remarketing Agent in accordance with the terms of the Remarketing Agreement. The conversion ratio and the equivalent conversion price in effect at any given time are known as the "Applicable Conversion Ratio" and the "Applicable Conversion Price," respectively, and are subject to adjustment as described in this Article XIII. A Holder of Securities may convert any portion of the principal amount of the Securities into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the principal amount of the Securities to be converted by the Applicable Conversion Price. In case a Security or portion thereof is called for redemption, such conversion right in respect of the Security or portion so called shall expie at the close of business on the corresponding Redemption Date, unless the Company defaults in making the payment due upon redemption. 26.2 SECTION CONVERSION PROCEDURES. (1) In order to convert all or a portion of the Securities, the Holder thereof shall deliver to the Conversion Agent an irrevocable Notice of Conversion setting forth the principal amount of Securities to be converted, together with the name or names, if other than the Holder, in which the shares of Common Stock should be issued upon conversion and, if such Securities are definitive Securities, surrender to the Conversion Agent the Securities to be converted, duly endorsed or assigned to the Company or in blank. In addition, a Holder of Preferred Securities may exercise its right under the Declaration to convert such Preferred Securities into Common Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion setting forth the information called for by the preceding sentence and directing the Conversion Agent (i) to exchange such Preferred Security for a portion of the Securities held by the Trust (at an exchange rate of $50 principal amount of Securities for each Preferred Security) and (ii) to immediately convert such Securities, on behalf of such Holder, into Common Stock of the Company pursuant to this Article XIII and, if such Preferred Securities are in definitive form, surrendering such Preferred Securities, duly endorsed or assigned to the Company or in blank. So long as any Preferred Securities are outstanding, the Trust shall not convert any Securities except pursuant to a Notice of Conversion duly executed and delivered to the Conversion Agent by a Holder of Preferred Securities. If a Notice of Conversion is delivered on or after the Regular Record Date and prior to the subsequent Interest Payment Date, the Holder will be entitled to receive the interest payable on the subsequent Interest Payment Date on the portion of Securities to be converted notwithstanding the conversion thereof prior to such Interest Payment Date. Except as otherwise provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Securities being converted, which shall be deemed to be paid in full. Each conversion shall be deemed to have been effected immediately prior to the close of business on the day on which the Notice of Conversion was received (the "Conversion Date") by the Conversion Agent from the Holder or from a Holder of the Preferred Securities effecting a conversion thereof pursuant to its conversion rights under the Declaration, as the case may be. The Person or Persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock as of the Conversion Date. As promptly as practicable on or after the Conversion Date, the Company shall issue and deliver at the office of the Conversion Agent, unless otherwise directed by the Holder in the Notice of Conversion, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same. The Conversion Agent shall deliver such certificate or certificates to such Person or Persons. (2) Subject to the right of the Holder of such Security or any Predecessor Security to receive interest as provided in the last paragraph of Section 3.08 and the second paragraph of clause (1) of Section 13.02, the Company's delivery upon conversion of the whole number of shares of Common Stock into which the Securities are convertible (together with the cash payment, if any, in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at Maturity of the portion of Securities so converted and any unpaid interest (including Additional Payments) accrued on such Securities at the time of such conversion. (3) No fractional shares of Common Stock will be issued as a result of conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a cash adjustment in an amount equal to the same fraction of the Closing Price of such fractional interest on the date on which the Securities or Preferred Securities, as the case may be, were duly surrendered to the Conversion Agent for conversion, or, if such day is not a Trading Day, on the next Trading Day, and the Conversion Agent in turn will make such payment, if any, to the Holder of the Securities or the Holder of the Preferred Securities so converted. (4) In the event of the conversion of any Security in part only, a new Security or Securities for the unconverted portion thereof will be issued in the name of the Holder thereof upon the cancellation thereof in accordance with Section 3.06. (5) In effecting the conversion transactions described in this Section, the Conversion Agent is acting as agent of the Holders of Preferred Securities (in the exchange of Preferred Securities for Securities) and as agent of the Holders of Securities (in the conversion of Securities into Common Stock), as the case may be, directing it to effect such conversion transactions. The Conversion Agent is hereby authorized (x) if the Trust exists, (i) to exchange Securities held by or on behalf of the Trust from time to time for Preferred Securities in connection with the conversion of such Preferred Securities in accordance with this Article XIII and (ii) to convert all or a portion of the Securities into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Article XIII and to deliver to the Trust a new Security or Securities for any resulting unconverted principal amount and (y) if the Trust no longer exists (i) to exchange Securities held by the Holders in connection with the conversion of such Securities in accordance with this Article XIII and (ii) to convert all or a portion of the Securities into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Article XIII and to deliver to such Holders a new Security or Securities for any resulting unconverted principal amount. (6) All shares of Common Stock delivered upon any conversion of Restricted Securities shall bear a restrictive legend substantially in the form of the legend required to be set forth on such Securities and shall be subject to the restrictions on transfer provided in such legend and in Section 3.06(1) hereof. Neither the Trustee nor the Conversion Agent shall have any responsibility for the inclusion or content of any such restrictive legend on such Common Stock; provided, however, that the Trustee or the Conversion Agent shall have provided to the Company or to the Company's transfer agent for such Common Stock, prior to or concurrently with a request to the Company to deliver to such Conversion Agent certificates for such Common Stock, written notice that the Securities delivered for conversion are Restricted Securities. 26.3 SECTION CONVERSION PRICE ADJUSTMENTS. The Applicable Conversion Price shall be subject to adjustment (without duplication) from time to time as follows: (1) In case the Company shall pay a dividend or make a distribution on the Common Stock exclusively in Common Stock, the Applicable Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Applicable Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. In the event that such dividend or distribution is not so paid or made, the Applicable Conversion Price shall again be adjusted to be the Applicable Conversion Price which would then be in effect if such dividend or distribution had not occurred. (2) In case the Company shall pay or make a dividend or other distribution on its Common Stock consisting exclusively of, or shall otherwise issue to all holders of its Common Stock, rights or warrants, in each case entitling the holders thereof to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in subparagraph (7)) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights or warrants, the Applicable Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Applicable Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. To the extent that rights or warrants are not so issued or shares of Common Stock are not so delivered after the expiration of such rights or warrants, the Applicable Conversion Price shall be readjusted to the Applicable Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants that were not issued or expired without being exercised had not been fixed. For the purposes of this subparagraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. (3) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Applicable Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Applicable Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (4) Subject to the last sentence of this subparagraph (4), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class or series of capital stock, cash or assets (including securities, but excluding any rights or warrants referred to in subparagraph (2) of this Section 13.03, any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in subparagraph (1) of this Section 13.03), the Applicable Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Applicable Conversion Price in effect immediately prior to the effectiveness of the Applicable Conversion Price reduction contemplated by this subparagraph (4) by a fraction of which the numerator shall be the current market price per share (determined as provided in subparagraph (7) of this Section 13.03) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such distribution (the "Reference Date") less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors), on the Reference Date, of the portion of the evidences of indebtedness, securities, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the Reference Date. In the event that such dividend or distribution is not so paid or made, the Applicable Conversion Price shall again be adjusted to be the Applicable Conversion Price which would then be in effect if such dividend or distribution had not occurred. For purposes of this subparagraph (4), any dividend or distribution that includes shares of Common Stock or rights or warrants to subscribe for or purchase hares of Common Stock shall be deemed instead to be (A) a dividend or distribution of the evidences of indebtedness, securities, shares of capital stock, cash or assets other than such shares of Common Stock or such rights or warrants (making any Applicable Conversion Price reduction required by this subparagraph (4)) immediately followed by (B) a dividend or distribution of such shares of Common Stock or such rights or warrants (making any further Applicable Conversion Price reduction required by subparagraph (1) or (2) of this Section 13.03), except any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (1) of this Section 13.03. (5) In case the Company shall pay or make a dividend or other distribution on its Common Stock exclusively in cash (excluding (x) cash dividends that do not exceed the per share amount of the smallest of the immediately four preceding quarterly cash dividends (as adjusted to appropriately reflect any of the events referred to in subparagraphs (1), (2), (3), (4), (5) and (6)), and (y) 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 12.5% of the current market price per share (determined as provided in subparagraph (7) of this Section 13.03) of the Common Stock on the Trading Day next preceding the date of declaration of such dividend), the Applicable Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Applicable Conversion Price in effect immediately prior to the effectiveness of the Applicable Conversion Price reduction contemplated by this subparagraph (5) by a fraction of which the numerator shall be the current market price per share (determined as provided in subparagraph (7) of this Section 13.03) of the Common Stock on the date fixed for the payment of such distribution less the amount of cash so distributed (and not excluded as provided above) applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; PROVIDED, HOWEVER, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the current market price per share (as defined in subparagraph (7) of this Section 13.03) of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Securities shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each Security immediately prior to the record date for the distribution of the cash. In the event that such dividend or distribution is not so paid or made, the Applicable Conversion Price shall again be adjusted to be the Applicable Conversion Price which would then be in effect if such record date had not been fixed. (6) In case a tender or exchange offer (other than an odd-lot offer) made by the Company or any Subsidiary of the Company for all or any portion of the Company's Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors) at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds 110% of the current market price per share (determined as provided in subparagraph (7) of this Section 13.03) of the Common Stock on the Trading Day next succeeding the Expiration Time, the Applicable Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Applicable Conversion Price in effect immediately prior to the effectiveness of the Applicable Conversion Price reduction contemplated by this subparagraph (6) by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the current market price per share (determined as provided in subparagraph (7) of this Section 13.03) of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the current market price per share (determined as provided i subparagraph (7) of this Section 13.03) of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (7) For the purpose of any computation under subparagraphs (2), (4), (5) and (6) of this Section 13.03, the current market price per share of Common Stock on any date in question shall be deemed to be the average of the daily Closing Prices for the ten consecutive Trading Days prior to the earlier of the day in question and, if applicable, the day before the "ex" date (as hereinafter defined) with respect to the issuance or distribution requiring such computation; PROVIDED, HOWEVER, that if the day in question or the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Applicable Conversion Price pursuant to Section 13.03 (2), (4), (5) or (6) occurs during such 10 consecutive Trading Days, the Closing Price for each Trading Day prior to such date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the Applicable Conversion Price is so required to be adjusted as a result of such other event. For purposes of this subparagraph (7), the term "ex" date (I) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or distribution, (II) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective and (III) when used with respect to any tender or exchange offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Applicable Conversion Price are called for pursuant to this Section 13.03, such adjustments shall be made to the current market price as may be necessary or appropriate to effectuate the intent of this Section 13.03 and to avoid unjust or inequitable results, as determined in good faith by the Board of Directors. (8) The Company may make such reductions in the Applicable Conversion Price, in addition to those required by subparagraphs (1), (2), (3), (4), (5) and (6), as it considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. (9) No adjustment of the Applicable Conversion Price shall be made upon (a) the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under that plan, (b) the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any present or future employee, director or consultant benefit plan or program of the Company, (c) the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Securities were first issued or (d) the repurchase of the Securities if the acquisition of ACS is not consummated by March 31, 2000, pursuant to Section 10.09. There shall also be no adjustment of the Applicable Conversion Price in case of the issuance of any Common Stock (or securities convertible into or exchangeable for Common Stock), except as specifically described above. Furthermore, no adjustment in the Applicable Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Applicable Conversion Price; PROVIDED, HOWEVER, that any adjustments which by reason of this subparagraph (9) are not required to be made shall be carried forward and taken into account in determining whether any subsequent adjustment shall be required. 26.4 SECTION RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS. In the event that the Company shall be a party to any transaction (including without limitation (a) any recapitalization or reclassification of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the Common Stock), (b) any consolidation of the Company with, or merger of the Company into, any other Person, or any merger of another Person into the Company (other than a consolidation or merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company), (c) any sale or transfer of all or substantially all of the assets of the Company or (d) any compulsory share exchange) (each of the events in the preceding clauses (a) through (d) being referred to as a "Company Transaction"), in each case, as a result of which shares of Common Stock shall be converted into the right to receive other securities, cash or other property, then lawful provision shall be made as part of the terms of such Company Transaction whereby the Holder of each Security then outstanding shall have the right thereafter to convert such Security only into (i) in the case of any such transaction other than a Common Stock Fundamental Change, the kind and amount of securities, cash and other property receivable upon consummation of such Company Transaction by a holder of the number of shares of Common Stock of the Company into which such Security could have been converted immediately prior to such Company Transaction, after giving effect to any adjustment in the Applicable Conversion Price required by the provision of Sections 13.07(1)(A), and (B) in the case of a Company Transaction involving a Common Stock Fundamental Change, common stock of the kind received by holders of Common Stock as a result of such Common Stock Fundamental Change in an amount determined pursuant to the provisions of Section 13.07(1)(B). Holders of the Securities shall have no votingrights with respect to any Company Transaction described in this Section 13.04. The Company or the Person formed by such consolidation or resulting from such merger or which acquired such assets or which acquires the Company's shares, as the case may be, shall make provision in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article XIII. The above provisions shall similarly apply to successive transactions of the foregoing type. 26.5 SECTION NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Applicable Conversion Price is adjusted as herein provided: (1) the Company shall compute the adjusted Applicable Conversion Price and shall prepare a certificate signed by the Chief Financial Officer or the Treasurer of the Company setting forth the adjusted Applicable Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Trustee, the Conversion Agent and the transfer agent for the Preferred Securities and the Securities; and (2) a notice stating the Applicable Conversion Price has been adjusted and setting forth the adjusted Applicable Conversion Price shall as soon as practicable be mailed by the Company to all record Holders of Preferred Securities and the Securities at their last addresses as they appear upon the stock transfer books of the Company and the books and records of the Trust, respectively. 26.6 SECTION PRIOR NOTICE OF CERTAIN EVENTS. In case: (1) the Company shall (A) declare any dividend (or any other distribution) on its Common Stock, other than (i) a dividend payable in shares of Common Stock or (ii) a dividend payable in cash that would not require an adjustment pursuant to Section 13.03(4) or (5) or (B) authorize a tender or exchange offer that would require an adjustment pursuant to Section 13.03(6); (2) the Company shall authorize the granting to all holders of Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (3) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company shall be required, or of the sale or transfer of all or substantially all of the assets of the Company or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or other property; or (4) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; then the Company shall (a) if any Preferred Securities are outstanding, cause to be filed with the transfer agent for the Preferred Securities, and shall cause to be mailed to the Holders of record of the Preferred Securities, at their last addresses as they shall appear upon the books and records of the Trust or (b) if no Preferred Securities are outstanding, shall cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least fifteen days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). 26.7 SECTION ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. (1) Notwithstanding any other provision in this Article XIII to the contrary, in the case of any Company Transaction involving a Fundamental Change, then the Applicable Conversion Price will be adjusted immediately after such Fundamental Change as follows: (A) in the case of a Non-Stock Fundamental Change, the Applicable Conversion Price of the Securities shall thereupon become the lower of (i) the Applicable Conversion Price immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to this Article XIII, and (ii) the result obtained by multiplying the greater of the Relevant Price or the then applicable Reference Market Price by a fraction of which the numerator shall be $50 and the denominator shall 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 Securities are not redeemable at the option of the Company, an amount per Security determined by the Company in its 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 Securities had been redeemable during such period (such fraction shall hereinafter be referred to as the "Optional Redemption Ratio") (such product shall hereinafter be referred to as the "Adjusted Relevant Price" or the "Adjusted Reference Market Price," as the case may be); and (B) in the case of a Common Stock Fundamental Change, the Applicable Conversion Price of the Securities in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to this Article XIII, shall thereupon be adjusted by multiplying such Applicable Conversion Price by a fraction of which the numerator shall be the Purchaser Stock Price and the denominator shall be the Relevant Price; PROVIDED, HOWEVER, that in the event of a Common Stock Fundamental Change in which (i) 100% of the value of the consideration received by a holder of Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, is paid only with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (ii) all of the Common Stock shall have been exchanged for, converted into or acquired for common stock (and cash with respect to fractional interests) of the successor, acquiror or other third party, the Applicable Conversion Price of the Securities in effect immediately prior to such Common Stock Fundamental Change shall thereupon be adjusted by multiplying such Applicable Conversion Price by a fraction of which the numerator shall be one and the denominator shall be the number of shares of common stock of the successor, acquiror, or other third party received by a stockholder for one share of Common Stock as a result of such Common Stock Fundamental Change. (2) DEFINITIONS. The following definitions shall apply to terms used in this Article XIII: (A) "CLOSING PRICE" of any security on any day shall mean on any day the last reported sale price of such security on such day, or in case no sale takes place on such day, the average of the closing bid and asked prices in each case on the principal national securities exchange on which such securities are listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the NNM or, if such 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 in the over-the-counter market as furnished by any New York Stock Exchange member firm selected by the Company for such purpose. (B) "COMMON STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors) of the consideration received by holders of 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 shall not be a Common Stock Fundamental Change unless either: (i) the Company continues to exist after the occurrence of the Fundamental Change and the outstanding Preferred Securities continue to remain outstanding without having been converted into another security; or (ii) not later than the occurrence of the Fundamental Change, the Outstanding Securities are converted into or exchanged for debentures of a corporation succeeding to the business of the Company, which debentures have terms substantially similar to the Securities. (C) "ENTITLEMENT DATE" shall mean the record date for determination of the holders of 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 such record date, the date upon which holders of Common Stock shall have the right to receive such securities, cash or other property. (D) "FUNDAMENTAL CHANGE" shall mean the occurrence of any transaction or event in connection with a Company Transaction pursuant to which all or substantially all of the Common Stock shall 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); PROVIDED, HOWEVER, in the case of a Company Transaction involving more than one such transaction or event, for purposes of adjustment of the Applicable Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the Common Stock of the Company shall be exchanged for, converted into, or acquired for or constitute solely the right to receive securities, cash or other property, but the adjustment shall be based upon the highest weighted average of consideration per share that a holder of Common Stock could have received in such transactions or events as a result of which more than 50% of the Common Stock of the Company shall have been exchanged for, converted into, or acquired for or constitute solely the right to receive securities, cash or other property. (E) "NON-STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental Change other than a Common Stock Fundamental Change. (F) "PURCHASER STOCK PRICE" shall mean, with respect to any Common Stock Fundamental Change, the average of the daily Closing Prices of the common stock received in such Common Stock Fundamental Change for the ten (10) consecutive Trading Days prior to and including the Entitlement Date, as adjusted in good faith by the Board of Directors to appropriately reflect any of the events referred to in subparagraphs (1), (2), (3), (4), (5) and (6) of Section 13.03. (G) "REFERENCE MARKET PRICE" shall initially mean on the date of original issuance of the Securities, $26.875 (which is an amount equal to 66b% of the last reported sale price for the Common Stock on the New York Stock Exchange Composite Tape on February 3, 2000) and, 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 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 $26.875 to the Initial Conversion Price. If the Securities are convertible into Common Stock on and after the Reset Date, the Reference Market Price on such date will be an amount equal to 66b% 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. (H) "RELEVANT PRICE" shall mean (i) in the event of a Non-Stock Fundamental Change in which the holders of the Common Stock receive only cash, the amount of cash received by a stockholder for one share of Common Stock and (ii) in the event of any other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the average of the daily Closing Prices of the Common Stock for the ten consecutive Trading Days prior to and including the Entitlement Date, in each case, as adjusted in good faith by the Company to appropriately reflect any of the events referred to in subparagraphs (1), (2), (3), (4), (5) and (6) of Section 13.03. (I) "TRADING DAY" shall mean a day on which securities are traded on the national securities exchange or quotation system used to determine the Closing Price. 26.8 SECTION DIVIDEND OR INTEREST REINVESTMENT PLANS. (1) Notwithstanding the foregoing provisions, the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any such plan, and the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any present or future employee, director or consultant benefit plan or program of the Company or pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the Securities were first issued, shall not be deemed to constitute an issuance of Common Stock or exercisable, exchangeable or convertible securities by the Company to which any of the adjustment provisions described above applies. (2) There shall also be no adjustment of the Applicable Conversion Price in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of the Company except as specifically described in this Article XIII. 26.9 SECTION CERTAIN ADDITIONAL RIGHTS. Notwithstanding any other provision in Section 13.03 to the contrary, rights, warrants, evidences of indebtedness, other securities, cash or other assets (including, without limitation, any rights distributed pursuant to any stockholder rights plan) shall be deemed not to have been distributed for purposes of this Article XIII if the Company makes proper provision so that each Holder who converts a Security (or any portion thereof) after the date fixed for determination of stockholders entitled to receive such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the amount and kind of such distributions that such Holder would have been entitled to receive if such Holder had, immediately prior to such determination date, converted such Security into Common Stock. 26.10 SECTION RESTRICTIONS ON COMMON STOCK ISSUABLE UPON CONVERSION. If shares of Common Stock to be issued upon conversion of a Security in respect of Restricted Preferred Securities are to be registered in a name other than that of the Holder of such Preferred Security, then the Person in whose name such shares of Common Stock are to be registered must deliver to the Conversion Agent a certificate satisfactory to the Company and signed by such Person, as to compliance with the restrictions on transfer applicable to such Preferred Security. Neither the Trustee nor any Conversion Agent or Registrar shall be required to register in a name other than that of the Holder, shares of Common Stock issued upon conversion of any such Security in respect of such Preferred Securities not so accompanied by a properly completed certificate. 26.11 SECTION TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS. Neither the Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of any Security to determine whether any facts exist which may require any adjustment of the Applicable Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion, or, except as expressly herein provided, to comply with any of the covenants of the Company contained in Article X or this Article XIII. [Signature page follows.] This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, as of the day and year first above written. THE TITAN CORPORATION By: --------------------------------------- Name: Title: WILMINGTON TRUST COMPANY, as Trustee By: --------------------------------------- Name: Title: EXHIBIT A FORM OF SECURITY [FORM OF FACE OF SECURITY] [Include if a Global Security: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR A SECURITY REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK) TO THE TITAN CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [Include Restricted Securities Legend if required under Section 2.02: THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE 1 TRANSFERRED, ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.] THE TITAN CORPORATION Convertible Senior Subordinated Debenture Due 2030 No. $ [CUSIP No. ] THE TITAN CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called "the Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum [indicated on Schedule A hereof](1) [of Dollars](2) ($ ) on February 15, 2030. Interest Payment Dates: February 15, May 15, August 15 and November 15, commencing May 15, 2000 Regular Record Dates: The close of business on the 1st day of each February, May, August and November immediately preceding the applicable Interest Payment Date - --------------- (1) Applicable to Global Securities only. (2) Applicable to certificated Securities only. 2 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be signed manually or by facsimile by its duly authorized officers. Dated: , THE TITAN CORPORATION By: ------------------------------------ Name: Title: 3 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. Dated: , Wilmington Trust Company, as Trustee By: ----------------------------------- Authorized Signatory 4 [FORM OF REVERSE OF SECURITY] THE TITAN CORPORATION Convertible Senior Subordinated Debenture Due 2030(3) 1. INTEREST. THE TITAN CORPORATION, a Delaware corporation (the "Company"), is the issuer of this Convertible Senior Subordinated Debenture Due 2030 (the "Security") limited in aggregate principal amount to $206,185,600 (or up to $257,732,000 to the extent the over-allotment option is exercised in full), issued under the Indenture hereinafter referred to. The Company promises to pay interest on the Securities in cash from February 9, 2000 or from the most recent interest payment date to which interest has been paid or duly provided for, quarterly (subject to deferral for up to 20 consecutive quarters as described in Section 3 hereof) in arrears on February 15, May 15, August 15 and November 15 of each year (each such date, an "Interest Payment Date"), commencing May 15, 2000, at the Applicable Rate, PLUS Additional Payments, if any, until the principal hereof shall have become due and payable. If the Reset Date is prior to the Regular 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 Security is registered on the relevant Regular Record Date, subject to the right of the Company to initiate a Deferral Period. If the Reset Date is on or after the Regular Record Date for the immediately following Interest Payment Date, then (1) interest and Additional Amounts, if any, accrued from and after the Regular 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 Security is registered on the relevant Regular 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 Security is registered on the relevant Regular Record Date for such second Interest Payment Date, subject in each case to the right of the Company to initiate a Deferral Period. Prior to the Reset Date, the Applicable Rate shall be 5.75% per annum. On and after the Reset Date, the Applicable Rate shall be the rate established by the Remarketing Agent to be effective on the Reset Date. The amount of interest payable for any period will be computed on the basis of twelve 30-day months and a 360-day year. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed, will be computed on the basis of the actual number of days elapsed in such a 30-day - --------------- (3) All terms used in this Security which are defined in the Indenture or in the Declaration referred to herein shall have the meanings assigned to them in the Indenture or the Declaration, as the case may be. 5 month. In the event that any date on which interest is payable on the Securities is not a Business Day, then payment of interest payable on such 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 such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. To the extent lawful, the Company shall pay interest on overdue installments of interest (without regard to any applicable grace period) at the rate borne by the Securities, compounded quarterly. Any interest paid on this Security shall be increased to the extent necessary to pay Additional Amounts as set forth in this Security. 2. ADDITIONAL AMOUNTS. The Company shall pay to Titan Capital Trust (and its permitted successors or assigns under the Declaration) (the "Trust") such additional amounts as may be necessary in order that the amount of dividends or other distributions then due and payable by the Trust on the Preferred Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any additional taxes, duties and other governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority. 3. EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of this Security, from time to time to defer payments of interest by extending the interest payment period of such Security for up to 20 consecutive quarters (a "Deferral Period"); PROVIDED that no Deferral Period may extend beyond (i) the Maturity (whether at February 15, 2030 or by declaration of acceleration, call for redemption or otherwise) or (ii) in the case of a Deferral Period that begins prior to the Reset Date, the Reset Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to Section 3.13 of the Indenture, will bear interest thereon at the Applicable Rate compounded quarterly for each quarter of the Deferral Period ("Compounded Interest"). On the applicable Payment Resumption Date, the Company shall pay all interest then accrued and unpaid on the Securities, including any Compounded Interest that shall be payable to the Holders of the Securities in whose names the Securities are registered in the Security Register on the record date fixed for such Payment Resumption Date. Before the termination of any Deferral Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond (i) the Maturity (whether at February 15, 2030 or by declaration of acceleration, call for redemption or otherwise) or (ii) in the case of a Deferral Period that begins prior to the Reset Date, the Reset Date. Upon the termination of any Deferral Period and upon the payment of all Compounded Interest and Additional Amounts (together, "Additional Payments"), if any, then due, the Company may commence a new Deferral Period, subject to the foregoing requirements. No interest shall be due and payable during a Deferral Period except on the applicable Payment Resumption Date. The Company shall give the Holder of the Security and the Trustee written notice (a "Deferral Notice") of its selection of a Deferral Period at least ten days prior to the record date 6 for any distributions that would have been payable on the Trust Securities except for the decision to begin or extend such Deferral Period. The Company may elect to pay all interest then accrued and unpaid on the Securities, including Compounded Interest, on an Interest Payment Date prior to its most recently established Payment Resumption Date, PROVIDED that the Company gives the Holder of the Security and the Trustee a new Deferral Notice setting forth the revised Payment Resumption Date at least three Business Days prior to the Regular Record Date for such revised Payment Resumption Date. The quarter in which any Deferral Notice is given pursuant to the second paragraph of this Section 3 shall be counted as one of the 20 quarters permitted in the maximum Deferral Period permitted under the first paragraph of this Section 3. 4. METHOD OF PAYMENT. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, commencing on May 15, 2000, will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment, which shall be the close of business on the 1st day of February, May, August and November, as applicable, immediately preceding each Interest Payment Date, or such other Person as described herein or therein. If the Reset Date is prior to the Regular 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 Security is registered on the relevant Regular Record Date, subject to the right of the Company to initiate a Deferral Period. If the Reset Date is on or after the Regular Record Date for the immediately following Interest Payment Date, then (1) interest and Additional Amounts, if any, accrued from and after the Regular 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 Security is registered on the relevant Regular 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 Security is registered on the relevant Regular Record Date for such second Interest Payment Date, subject in each case to the right of the Company to initiate a Deferral Period. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture; PROVIDED that any such payment will be made by wire transfer or check in such coin or currency of the United States of America which at the time is a legal tender for payment of public and private debts. 7 Payment of the principal of and interest on this Security will be made at the office or agency of the Company maintained for that purpose in New York, New York, by wire transfer or check in such coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at any time that the Property Trustee is not the sole Holder of the Securities, payment of interest may, at the option of the Company, be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer. 5. PAYING AGENT AND SECURITY REGISTRAR. The Trustee will act as Paying Agent, Security Registrar and Conversion Agent. The Company may change any Paying Agent, Security Registrar, co-registrar or Conversion Agent without prior notice. The Company or any of its Affiliates may act in any such capacity. 6. INDENTURE. The Company issued the Securities under an indenture, dated as of February 9, 2000 (the "Indenture"), between the Company and Wilmington Trust Company, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "Trust Indenture Act") as in effect on the date of the Indenture. The Securities are subject to, and qualified by, all such terms, certain of which are summarized hereon, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms. The Securities are unsecured general obligations of the Company limited to $206,185,600 in aggregate principal amount (or up to $257,732,000 to the extent the over-allotment option is exercised in full) and subordinated in right of payment only to all existing and future Secured Debt of the Company. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture. 7. OPTIONAL REDEMPTION. The Securities are redeemable at the Company's option at any time and from time to time (an "Optional Redemption") (i) in whole or in part, at any time or from time to time, prior to the Reset Date but on or after February 20, 2003 until (but excluding) the Tender Notification Date, at a Redemption Price (the "Initial Redemption Price") equal to the prices per $50 principal amount of Securities set forth in the table below, plus any accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date, if redeemed during the 12-month period up to but excluding February 20: 8
Price Per $50 Principal Year Amount ---- ------------- 2004 ................... $50.7188 2005 ................... $50.0000
(ii) after the Reset Date (except in the event of a Failed Final Remarketing), in accordance with the Term Call protections, if any, established in connection with the Remarketing and (iii) 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 Securities to be redeemed, plus accrued and unpaid interest thereon; PROVIDED, HOWEVER, that the Company shall not be permitted to redeem any Securities pursuant to this Section during any Deferral Period. If the Company desires to consummate an Optional Redemption, it must cause to be sent, at its own expense, notice of such intent (an "Optional Redemption Notice"), via first-class mail, postage prepaid, to each Holder of Securities to be redeemed, at such Holder's address appearing in the Security Register. Holders receiving an Optional Redemption Notice have the right, upon notification of the Trustee and the Conversion Agent prior to 5:00 p.m. New York City time on the Optional Redemption Date, to convert their Securities called for redemption into common stock of the Company, par value $.01 per share ("Common Stock"), at the Applicable Conversion Ratio prior to 5:00 p.m. New York City time on the Optional Redemption Date in compliance with Article XIII of the Indenture. "Optional Redemption Date" means the date which is not less than 20, nor more than 60, days following the date on which the Optional Redemption Notice is sent, as specified in the Optional Redemption Notice (or if such date is not a Business Day, the next succeeding Business Day). Securities in denominations larger than $50 may be redeemed in part but only in integral multiples of $50. In the event of a redemption of less than all of the Securities, the Securities will be chosen for redemption by the Trustee pro rata in accordance with the Indenture. In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. On and after the Redemption Date, interest ceases to accrue on the Securities or portions of them called for redemption. 8. THE REMARKETING. At least 30 Business Days but not more than 90 Business Days prior to February 15, 2005, the Company will cause a notice to be sent to all Holders of Securities stating whether it intends to remarket the Securities as Securities which will be convertible into Common Stock or which will be nonconvertible. All Securities will be deemed tendered for remarketing unless the Holder thereof delivers irrevocable notice to the contrary to the Tender Agent prior to 5:00 p.m., New York City time on the Tender Notification Date (or, if such day is not a Business Day, the next succeeding Business Day) (the "Tender Notification Date"). The Remarketing Agent will establish, pursuant to the terms of the Remarketing 9 Agreement, the Term Provisions, including the Term Rate at which interest will accrue on the Securities, to be effective beginning on the Reset Date. A Holder of Securities that has not duly given notice that it will retain its Securities will cease to have any further rights with respect to such Securities upon the successful remarketing thereof, except the right of such Holder to receive an amount equal to (i) from the proceeds of the Remarketing, 101% of the aggregate principal amount of the Securities, plus (ii) from the Company, any accrued but unpaid interest (including Additional Payments, if any) to (but excluding) the Reset Date. In the event of a Failed Final Remarketing, the Remarketing Agent will set the Term Provisions in accordance with the Remarketing Agreement. 9. OPTIONAL REDEMPTION UPON TAX EVENT. Subject to the conditions set forth in the Indenture, the Securities are subject to redemption in whole, but not in part, if a Tax Event shall occur and be continuing, at any time within 90 days following the occurrence of such Tax Event, at a Redemption Price equal to $50 per $50 principal amount thereof, plus accrued but unpaid interest, including Additional Payments, if any, to the Redemption Date. In lieu of the foregoing, the Company shall also have the option of causing the Securities to remain outstanding and pay Additional Amounts on the Securities. 10. NOTICE OF REDEMPTION IN CONNECTION WITH A TAX EVENT. In case of a redemption in connection with a Tax Event, notice of redemption will be mailed by first-class mail, postage prepaid, at least 30 days but not more than 60 days before the Redemption Date to each Holder of the Securities to be redeemed at such Holder's address appearing in the Security Register. 11. MANDATORY REDEMPTION. The Securities will mature, and the Company must redeem the securities in whole and not in part, on February 15, 2030 at a price equal to the aggregate principal amount thereof, plus accrued and unpaid interest, including Additional Payments, if any, to the Redemption Date. The failure of the Company to redeem all Outstanding Securities on February 15, 2030 shall constitute an Event of Default. 12. NO SINKING FUND. There are no sinking fund payments with respect to the Securities. 13. PAYMENT TO REGISTERED HOLDERS; CESSATION OF INTEREST ACCRUAL UPON REDEMPTION. If this Security is redeemed subsequent to a Regular Record Date with respect to any Interest Payment Date specified above and on or prior to such Interest Payment Date, then any accrued interest (and Additional Payments, if any) will be paid to the person in whose name this Security is registered at the close of business on such record date. On or after the Redemption Date, interest will cease to accrue on the Securities, or portion thereof, called for redemption. 10 14. SUBORDINATION. The payment of the principal of, interest on or any other amounts due on the Securities is subordinated in right of payment only to all existing and future Secured Debt (as defined below) of the Company, as described in the Indenture. Each Holder, by accepting a Security, agrees to such subordination and authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and appoints the Trustee as its attorney-in-fact for such purpose. "Secured Debt" means Debt under the Credit Agreement and any 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 an aggregate fair market value at the time of the grant thereof (in the judgment of the board of directors, the chief financial officer or other responsible agent or officer of the Company) not less than the amount of such Debt. 15. CONVERSION. The Holder of any Security has the right, exercisable at any time prior to 5:00 p.m., New York City time, on or prior to the Tender Notification Date or, in the event of a Convertible Remarketing or a Failed Final Remarketing, from and after the Reset Date through February 15, 2030 (except that Securities called for redemption by the Company will be convertible at any time prior to 5:00 p.m., New York City time, on any Redemption Date) to convert the principal amount thereof (or any portion thereof that is an integral multiple of $50) into shares of Common Stock. On or prior to the Tender Notification Date, each Security is initially convertible, at the option of the Holder into 1.0076 shares of Common Stock for each $50 in aggregate principal amount of Securities (equivalent to an initial conversion price of $49.625 per share of Common Stock). On and after the Reset Date, the Securities may, at the option of the Company and subject to the results of the Remarketing, become nonconvertible or convertible into a different number of shares of Common Stock. The conversion ratio and equivalent conversion price in effect at any time are known as the "Applicable Conversion Price" and the "Applicable Conversion Ratio," respectively, and are subject to adjustment under certain circumstances. If a Security is called for redemption, the conversion right will terminate at 5:00 p.m., New York City time on the corresponding Redemption Date, unless the Company defaults in making the payment due upon redemption. To convert a Security, a Holder must (1) complete and sign a conversion notice substantially in the form attached hereto, (2) surrender the Security (other than a Global Security) to a Conversion Agent, (3) furnish appropriate endorsements or transfer documents if required by the Security Registrar or Conversion Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no adjustment or payment will be made for interest or dividends, but if any Holder surrenders a Security for conversion after the close of business on the Regular Record Date for the payment of an installment of interest and prior to the opening of business on the next Interest Payment Date, then, notwithstanding such conversion, the interest payable on such Interest Payment Date will be paid to the registered Holder of such Security on such Regular Record Date. In such event, such Security, when surrendered for conversion, need not be accompanied by payment of an amount equal to the interest payable on such Interest Payment 11 Date on the portion so converted. The number of shares issuable upon conversion of a Security is determined by dividing the principal amount of the Security converted by the Applicable Conversion Price in effect on the Conversion Date. No fractional shares will be issued upon conversion but a cash adjustment will be made for any fractional interest. The outstanding principal amount of any Security shall be reduced by the portion of the principal amount thereof converted into shares of Common Stock. 16. REGISTRATION RIGHTS. The holders of the Preferred Securities, the Securities, the Guarantee Agreement and the shares of Common Stock of the Company issuable upon conversion of the Securities (collectively, the "Registrable Securities") are entitled to the benefits of a Registration Rights Agreement, dated as of February 9, 2000 among the Company, the Trust and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement the Company and the Trust have agreed for the benefit of the holders of the Registrable Securities that (i) they will, at the Company's sole expense, prior to April 24, 2000, file a shelf registration statement (the "Shelf Registration Statement") with the Commission with respect to resales of the Registrable Securities, (ii) they will use their best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act prior to July 8, 2000, and (iii) they will use their best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act (subject to certain exceptions under the Registration Rights Agreement) until the second anniversary of the effectiveness of the Shelf Registration Statement or such other period as shall be required under Rule 144(k) thereunder or any successor rule or regulation thereto or such earlier date as is provided in the Registration Rights Agreement. If the Company fails to comply with either of clauses (i), (ii) or (iii) above, subject to certain exceptions provided in the Registration Rights Agreement, (a "Registration Default") then, at such time, the Applicable Rate will increase by 50 basis points (0.50%). Such increase will remain in effect from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured, on which date the interest rate on the Securities will revert to the interest rate originally borne by the Securities. 17. REGISTRATION, TRANSFER, EXCHANGE AND DENOMINATIONS. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in New York, New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $50 and integral multiples thereof. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any 12 agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. In the event of redemption or conversion of this Security in part only, a new Security or Securities for the unredeemed or unconverted portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 18. PERSONS DEEMED OWNERS. Except as provided in Section 3 hereof, the registered Holder of a Security may be treated as its owner for all purposes. 19. UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent shall pay the money back to the Company at its written request. After that, Holders of Securities entitled to the money must look to the Company for payment and all liability of the Trustee and such Paying Agent with respect to such money shall cease. 20. EVENTS OF DEFAULT AND REMEDIES. The Securities shall have the Events of Default as set forth in Section 5.01 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in aggregate principal amount of the Outstanding Securities by notice to the Company and the Trustee may declare all amounts payable on the Securities (including any Additional Payments) to be due and payable immediately; PROVIDED that, if upon an Event of Default, the Trustee or the Holders of not less than 25% in aggregate principal amount of the then Outstanding Securities fail to declare the principal of all the Securities to be immediately due and payable, the Holders of at least 25% in aggregate liquidation amount of Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee, and upon any such declaration such principal and all accrued interest (and Additional Payments, if any) shall become immediately due and payable. The Holders of a majority in aggregate principal amount of the Outstanding Securities may annul such declaration and waive the default by written notice to the Property Trustee, the Company and the Trustee if the default (other than the nonpayment of the principal of these Securities which has become due solely by such acceleration) has been cured and a sum sufficient to pay all matured installments of interest (and Additional Payments, if any) and principal due otherwise than by acceleration has been deposited with the Trustee. Should the Holders of the Securities fail to annul such declaration and waive such default, the Holders of a majority in aggregate liquidation amount of the outstanding Preferred Securities shall have such right. Upon the effectiveness of any such declaration such principal amount (or specified amount) of and the accrued interest (including any Additional Payments) on all the Securities shall then become immediately due and payable; and PROVIDED FURTHER that the payment of principal and interest on such Securities shall remain subordinated only to the extent provided in the Indenture. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the Outstanding Securities issued under the Indenture may direct the Trustee in its exercise of any 13 trust or power. The Company must furnish annually compliance certificates to the Trustee. The above description of Events of Default and remedies is qualified by reference to, and subject in its entirety by, the more complete description thereof contained in the Indenture. 21. AMENDMENTS, SUPPLEMENTS AND WAIVERS. The Indenture permits, subject to the rights of the Holders of Preferred Securities set forth therein and in the Declaration and with certain other exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, subject to the rights of the Holders of the Preferred Securities set forth therein and in the Declaration, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. Notwithstanding anything to the contrary in the Indenture or the Declaration, if the Property Trustee is the sole holder of the Securities, so long as any of the Preferred Securities remains outstanding, no amendment shall be made that adversely affects the Holders of such Preferred Securities, and no termination of the Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under the Indenture shall be effective, without the prior consent of the Holders of the percentage of the aggregate stated liquidation amount of such Preferred Securities then outstanding which is at least equal to the percentage of aggregate stated principal amount of Outstanding Securities as shall be required under the Indenture to effect any such amendment, termination or waiver. The above description of amendments, supplements and waivers is qualified by reference to, and subject in its entirety by the more complete description thereof contained in the Indenture. 22. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or any other capacity may become the owner or pledgee of the Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have, as if it were not a Trustee, subject to certain limitations provided for in the Indenture and in the Trust Indenture Act. Any Agent may do the same with like rights. 23. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder of the Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 14 24. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 25. AUTHENTICATION. The Securities shall not be valid until authenticated by the manual signature of an authorized officer of the Trustee or an authenticating agent. 26. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish to any Holder of the Securities upon written request and without charge a copy of the Indenture. Request may be made to: The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to - ------------------------------------------------------------------------------- (Insert assignee's social security or tax I.D. number) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------------------------------------------- agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Signature: ------------------------------------------- (Sign exactly as your name appears on the other side of this Security) 15 Date: --------------------- Signature Guarantee:(4) ---------------------------- - --------------- (4) (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition, to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) 16 [Include the following if the Security bears a Restricted Securities Legend In connection with any transfer of any of the Securities evidenced by this certificate, the undersigned confirms that such Securities are being: CHECK ONE BOX BELOW (1) / / exchanged for the undersigned's own account without transfer; or (2) / / transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (3) / / transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; or (4) / / transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; or (5) / / transferred pursuant to an effective registration statement under the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (3) or (4) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. 17 Your Signature: ------------------------------------------- (Sign exactly as your name appears on the other side of this Security) Date: --------------------- Signature Guarantee:(5) ---------------------------- - --------------- (5) (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition, to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) 18 [TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.] The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: -------------------------- ------------------------------------ NOTICE: To be executed by an executive officer 19 (TO BE ATTACHED TO GLOBAL SECURITIES) SCHEDULE A The initial principal amount of this Global Security shall be $ . The following increases or decreases in the principal amount of this Global Security have been made:
- ------------------------------------------------------------------------------------------------------------------- Amount of increase in Principal Amount of this Global Security including Amount of decrease in Principal Amount of this Signature of authorized upon exercise of over- Principal Amount of Global Security following officer of Trustee or Date Made allotment option this Global Security such decrease or increase Securities Custodian - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------
20 ELECTION TO CONVERT To: The Titan Corporation The undersigned owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion below designated, into Common Stock of The Titan Corporation in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any Holder, upon the exercise of its conversion rights in accordance with the terms of the Indenture and the Security, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Securities. Date: , in whole __ Portions of Security to be converted ($50 or integral multiples thereof): $_________________ Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number Signature Guarantee:(6) ---------------------------- - --------------- (6) (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) 21 OPTION OF HOLDER TO ELECT PURCHASE To: The Titan Corporation The undersigned owner of this Security hereby elects to have all or any part of this Security purchased by the Company in accordance with the Indenture referred to in this Security. Pursuant to Section 10.09 of the Indenture, the undersigned owner of this Security hereby states the amount he or she elects to have purchased: $ ----------------- Date: ---------------------- Signature: ------------------------------------- (Sign exactly as your name appears on the other side of this Preferred Security Certificate) Signature Guarantee:(7) - --------------- (7) (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition, to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) 22 EXHIBIT B REMARKETING AGREEMENT 1 EX-4.4 5 EXHIBIT 4.4 REMARKETING AGREEMENT, February 9, 2000 (this "AGREEMENT"), among (i) The Titan Corporation, a Delaware corporation (the "COMPANY"), (ii) Titan Capital Trust, a Delaware business trust (the "TRUST"), (iii) Wilmington Trust Company, as Tender Agent and (iv) Credit Suisse First Boston Corporation, a Massachusetts corporation (together with its successors and assigns, the "REMARKETING AGENT"). RECITALS WHEREAS the Trust is a statutory business trust that has been created under Delaware law and exists pursuant to the Trust Agreement (as defined below) and a certificate of trust filed with the Delaware Secretary of State; and WHEREAS the Trust is issuing on today's date or has heretofore issued $200,000,000 (or up to $250,000,000 to the extent the over-allotment option is exercised in full) aggregate Liquidation Amount (as defined below) of Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)K, liquidation amount $50 per security (the "HIGH TIDES") representing preferred undivided beneficial interests in the assets of the Trust and has used the proceeds of the HIGH TIDES, together with the proceeds of $6,185,600 (or up to $7,732,000 to the extent the over-allotment option is exercised in full) aggregate Liquidation Amount of its Common Securities (as defined in the Trust Agreement) of the Trust, to purchase $206,185,600 (or up to $257,732,000 to the extent the over-allotment option is exercised in full) aggregate principal amount of Convertible Senior Subordinated Debentures Due 2030 (the "DEBENTURES") issued by the Company pursuant to the Indenture (as defined below); NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. DEFINITIONS. (a) The following terms shall have the meanings indicated below: "ADDITIONAL AMOUNTS" has the meaning specified in the Indenture. "ADMINISTRATIVE TRUSTEES" has the meaning specified in the definition of Trust Agreement in this Section 1. "BROKER-DEALER" has the meaning assigned to such term in Section 5. "BROKER-DEALER AGREEMENT" means an agreement between the Remarketing Agent and a Broker-Dealer. "BUSINESS DAY" means a day other than (a) a Saturday or Sunday, (b) 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 (c) a day on which the Property Trustee's or Debenture Trustee's Corporate Trust Office (as defined in the Trust Agreement with respect to the Property Trustee and in the Indenture with respect to the Debenture Trustee) is closed for business. "CAUSE" means any one of the following events or circumstances shall have occurred and be continuing: (i) the bankruptcy or insolvency of the Remarketing Agent; or (ii) the Remarketing Agent shall cease to be registered as a broker-dealer under the Exchange Act. "CLOSING PRICE" means for any security on any day 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 "NMS") or, if the securities are not listed or admitted to trading on any national securities exchange or quoted on the NMS, 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 the Company for that purpose. "COMMISSION" means the Securities and Exchange Commission or any successor thereto. "COMMON STOCK" has the meaning assigned to such term in the Indenture. "COMPANY" has the meaning assigned to such term in the preamble to this Agreement. "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. "COMPARABLE TREASURY PRICE" means (A) the arithmetic mean of five Reference Treasury Dealer Quotations, after excluding the highest and lowest such Reference Treasury 2 Dealer Quotations, or (B) if the Quotation Agent obtains fewer than five such Reference Treasury Dealer Quotations, the arithmetic mean of all such Reference Treasury Dealer Quotations. "CONVERTIBLE REMARKETING" has the meaning specified in Section 2(d). "DEBENTURE TRUSTEE" means Wilmington Trust Company, as Trustee under the Indenture (including its successors as Debenture Trustee thereunder). "DEBENTURES" has the meaning assigned to such term in the recitals to this Agreement. "DECLARATION TRUSTEES" means collectively, the Property Trustee, the Delaware Trustee and the Administrative Trustees. "DISCLOSURE DOCUMENTS" means the Registration Statement, or if the Registration Statement is not required to be filed with the Commission pursuant to Section 2(b), the Nonregistered Offering Documents, including any preliminary offering document or Preliminary Prospectus, as applicable, and as each may be amended or supplemented. "EFFECTIVE TIME" means the date and time as of which the Registration Statement or its most recent post-effective amendment is declared effective by the Commission. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "FAILED FINAL REMARKETING" has the meaning specified in Section 2(d). "FINAL REMARKETING" has the meaning specified in Section 2(d). "FINAL REMARKETING PERIOD" means the period beginning on the Business Day immediately following the Initial Remarketing Termination Date and ending on the day which is ten (10) Business Days (or such shorter period as shall be agreed to by the Remarketing Agent) after the Initial Remarketing Termination Date. "FINAL RESET DATE" means February 15, 2005. "GLOBAL SECURITY CERTIFICATE" has the meaning assigned to (i) the term "Global Preferred Securities" in the Trust Agreement if the Subject Securities are HIGH TIDES or (ii) the term "Global Security" in the Indenture if the Subject Securities are Debentures. "HIGH TIDES" has the meaning assigned to such term in the recitals to this Agreement. 3 "INDENTURE" means the Indenture, dated as of February 9, 2000, between the Company and the Debenture Trustee, as such indenture may from time to time be amended, modified or supplemented. "INITIAL FAILED REMARKETING" has the meaning specified in Section 2(d). "INITIAL REMARKETING" has the meaning specified in Section 2(d). "INITIAL REMARKETING PERIOD" means the period beginning on the first Business Day immediately following the Tender Notification Date and ending on the day which is ten (10) Business Days (or such shorter period as shall be agreed to by the Remarketing Agent) after the Tender Notification Date. "INITIAL REMARKETING TERMINATION DATE" means the tenth (10) Business Day following the Tender Notification Date (or such shorter period as shall be agreed to by the Remarketing Agent). "INTEREST" means all quarterly payments, interest (to the extent permitted by applicable law) on quarterly payments not paid on the applicable Interest Payment Date and Additional Amounts, as applicable. "INTEREST PAYMENT DATE" has the meaning specified in the Indenture and the Trust Agreement. "LIQUIDATION AMOUNT" means, with respect to a HIGH TIDES or Common Security, its stated liquidation amount of $50. "MARKET EVENT" means the occurrence of (i) a change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the sole judgment of the Remarketing Agent, be likely to prejudice materially the success of the Remarketing, issue, sale or distribution of the Subject Securities, or (ii) (A) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company or its subsidiaries which, in the sole judgment of the Remarketing Agent, is material and adverse and makes it impractical or inadvisable to proceed with completion of the Remarketing or the sale of and payment for the Subject Securities; (B) any downgrading in the rating of the Subject Securities or any other debt securities of the Company by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of the Subject Securities or any other debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (C) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (D) any banking 4 moratorium declared by U.S. Federal or New York authorities; or (E) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the sole judgment of the Remarketing Agent, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the Remarketing or the sale of and payment for the Subject Securities. "MAXIMUM RATE" means a rate per annum equal to the Treasury Rate plus 10%. "NO REGISTRATION OPINION" means an opinion of Securities Counsel that the securities issuable in the Remarketing do not need to be registered under the Securities Act and that no other filing of any kind is required to be made with the Commission as a condition to the sale of such securities, which No Registration Opinion shall be reasonably satisfactory to the Remarketing Agent and its counsel. "NONCONVERTIBLE REMARKETING" has the meaning specified in Section 2(d). "NONREGISTERED OFFERING DOCUMENTS" has the meaning specified in Section 6(a). "NOTICE OF PURCHASERS" means a notice delivered by the Remarketing Agent on the Reset Date to (i) the Tender Agent if the Subject Securities are not evidenced by a Global Security Certificate on the Reset Date or (ii) The Depository Trust Company if the Subject Securities are evidenced by a Global Security Certificate on the Reset Date, in either case naming the parties who will purchase the Subject Securities from the Remarketing Agent. "OFFERING CIRCULAR" means the confidential offering circular, dated as of February 3, 2000, relating to the issuance by the Trust of the HIGH TIDES. "PAR AMOUNT" means $50 per Subject Security. "PAYING AGENT" has the meaning specified in the Trust Agreement. "PRELIMINARY PROSPECTUS" means each prospectus included in the Registration Statement, or amendment thereof, before it becomes effective under the Securities Act and any prospectus which may be filed by the Company with the Commission pursuant to Rule 424(a) (or any successor applicable rule) of the rules and regulations under the Securities Act (the "RULES AND REGULATIONS") in connection with the Registration Statement. "PRIMARY TREASURY DEALER" has the meaning specified in the definition of Quotation Agent in this Section 1. "PROPERTY TRUSTEE" has the meaning specified in the definition of Trust Agreement in this Section 1. 5 "PROSPECTUS" means the final prospectus which will be filed with the Commission pursuant to Rule 424(b) (or any successor applicable rule) of the Rules and Regulations and deemed to be a part of the Registration Statement at the time of its effectiveness under the Securities Act pursuant to paragraph (b) of Rule 430A (or any successor applicable rule) of the Rules and Regulations. "QUOTATION AGENT" means Credit Suisse First Boston Corporation and its successors; PROVIDED, HOWEVER, that if Credit Suisse First Boston Corporation or its successors shall cease to be a primary United States Government securities dealer in The City of New York (a "PRIMARY TREASURY DEALER"), the Company shall substitute therefor another Primary Treasury Dealer. "REFERENCE TREASURY DEALER" means (i) the Quotation Agent and (ii) any other Primary Treasury Dealer selected by the Debenture Trustee after consultation with the Company. "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Reference Treasury Dealer, 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 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. "REGISTRATION STATEMENT" means a registration statement covering the securities to be issued in the Remarketing filed with the Commission pursuant to the Securities Act, including any amendments thereto and any document or other information incorporated by reference therein. "REMAINING LIFE" means the period beginning on (and including) the Reset Date and ending on February 15, 2030. "REMARKETING" means the remarketing of all HIGH TIDES tendered as set forth herein. "REMARKETING AGENT" has the meaning assigned to such term in the preamble to this Agreement (including any successor Remarketing Agent). "REMARKETING CONDITIONS" means the following factors: (i) short-term and long-term market rates and indices of such short-term and long-term rates, (ii) market supply and demand for short-term and long-term securities, (iii) yield curves for short-term and long-term securities comparable to the Subject Securities, (iv) industry and financial conditions which may affect the Subject Securities, (v) the number of Subject Securities to be remarketed, (vi) the number of potential purchasers, (vii) the current ratings by nationally recognized statistical rating organizations of long-term subordinated debt of the Company and of other outstanding capital securities of the Company's trust subsidiaries, (viii) the number of shares of Common Stock, if 6 any, into which the Subject Securities will be convertible and (ix) the length and type of call protections, if any. "REMARKETING NOTICE" has the meaning specified in Section 2(d). "RESET DATE" means any date (1) not later than February 15, 2005 (the Final Reset Date) or, if such date 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. "RULES AND REGULATIONS" has the meaning specified in the definition of Preliminary Prospectus in this Section 1. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time. "SECURITIES COUNSEL" means counsel experienced in matters relating to securities law. "SUBJECT SECURITIES" means (i) the HIGH TIDES if, on the Reset Date, the Debentures have not been distributed to holders of HIGH TIDES in connection with a liquidation or dissolution of the Trust or (ii) otherwise, the Debentures. "TENDER AGENT" means (i) the Property Trustee if the Subject Securities are HIGH TIDES or (ii) the Debenture Trustee if the Subject Securities are Debentures. "TENDER NOTIFICATION DATE" means a Business Day no earlier than ten (10) Business Days following the date of the Remarketing Notice (or such shorter period as shall be agreed to by the Remarketing Agent). "TERM CALL PROTECTIONS" has the meaning assigned to such term in Section 2(c). "TERM CONVERSION PRICE" has the meaning assigned to such term in Section 2(c). "TERM CONVERSION RATIO" has the meaning assigned to such term in Section 2(c). "TERM PROVISIONS" has the meaning specified in Section 2(c). "TERM RATE" has the meaning assigned to such term in Section 2(c). "TREASURY RATE" means (i) 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 7 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 (ii) 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 semiannual 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 by the Remarketing Agent on the third Business Day preceding the Reset Date. "TRUST" has the meaning assigned to such term in the preamble to this Agreement. "TRUST AGREEMENT" means the Amended and Restated Declaration of Trust, dated as of February 15, 2000, among the Company, as Depositor, Wilmington Trust Company, as Property Trustee (the "PROPERTY TRUSTEE"), Wilmington Trust Company, as Delaware Trustee (the "DELAWARE TRUSTEE"), Deanna Hom Petersen and Ray Guillaume (the "ADMINISTRATIVE TRUSTEES") and the holders from time to time of undivided beneficial interests in the assets of the Trust, as such agreement may from time to time be amended, modified or supplemented. (b) Capitalized terms used herein and not otherwise defined but defined in the Trust Agreement or Indenture shall have the meanings assigned to such terms in the Trust Agreement or the Indenture, as applicable. SECTION 2. ACCEPTANCE AND PERFORMANCE OF DUTIES. The Remarketing Agent, the Company, the Trust and the Tender Agent agree as follows: (a) The Remarketing Agent will perform the duties and obligations of Remarketing Agent for the remarketed securities as specified in the Trust Agreement (if the tendered securities are the HIGH TIDES), the Indenture (if the tendered securities are the Debentures) and in this Agreement in good faith and in compliance with the provisions of applicable laws. (b) The Remarketing Agent will use its best efforts to remarket all Subject Securities tendered or deemed tendered for sale; PROVIDED, HOWEVER, that the Remarketing Agent will not be obligated to attempt to remarket such Subject Securities, or to determine the Term Rate pursuant to Section 2(c) below, if (A) in the Remarketing Agent's judgment any (i) Disclosure Document provided by the Trust or the Company in connection with the Remarketing or (ii) document publicly disclosed (including in a filing pursuant to the Exchange Act) by or on behalf of the Trust or the Company, includes any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless the Remarketing Agent is satisfied in its sole discretion that such statement or omission has been properly corrected, (B) unless the Company provides a No Registration Opinion to the Remarketing Agent prior to the Tender Notification Date, the Company and the Trust (if applicable) shall have failed to have the 8 Registration Statement declared effective by the Commission on or prior to the Tender Notification Date and remain effective at least through and including the Reset Date, PROVIDED that the Registration Statement may be declared effective later than the Tender Notification Date if the Company provides an opinion of Securities Counsel to the Remarketing Agent to the effect that such Registration Statement need not become effective until the date the Initial Remarketing Period is required to commence and the Remarketing Agent consents to such delay or (C) the Company fails to comply with the requirements set forth in Section 6(c) of this Agreement. The Remarketing Agent may, but except as provided in Section 11 shall not be obligated to, purchase tendered Subject Securities for its own account. (c) The Remarketing Agent has agreed to use its best efforts to remarket all Subject Securities tendered as set forth herein for Remarketing on the Tender Notification Date. The Remarketing Agent will establish, effective beginning on the Reset Date, (i) the rate (the "TERM RATE") per annum at which Interest will accrue on the Subject Securities, (ii) the term conversion ratio and price, which determine the number of shares of Common Stock, if any, into which each Subject Security may be converted (respectively, the "TERM CONVERSION RATIO" and the "TERM CONVERSION PRICE") and (iii) the price, manner and time, if any, at which the Subject Securities may be redeemed (the "TERM CALL PROTECTIONS" and together with the Term Rate, Term Conversion Ratio and Term Conversion Price, the "TERM PROVISIONS"). The Remarketing Agent will use its best efforts to establish the Term Provisions most favorable to the Company consistent with the successful remarketing of Subject Securities tendered as set forth herein therefor at a price equal to 101% of the aggregate Par Amount thereof; PROVIDED that each Subject Security will have the same Term Provisions; PROVIDED that the Term Provisions may not permit the Company to redeem the Subject Securities for a price less than the aggregate Par Amount thereof plus any accrued and unpaid Interest thereon; and, PROVIDED FURTHER, that if no Subject Security is tendered as set forth herein for remarketing on the Tender Notification Date, the Remarketing will not take place (although the Remarketing will not be deemed to have failed), and 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 Subject Security equal to 101% of its Par Amount were the Remarketing actually to occur. (d) The remarketing process will commence on the first Business Day following the Tender Notification Date and will be conducted on the following schedule and in the following manner: At Least 30 Business Days, But Not More Than 90 Business Days Prior to the Final Reset Date: The Trust shall cause a notice (the "REMARKETING NOTICE") to be sent to holders of the Subject Securities stating whether it intends to remarket the Subject Securities as securities which will be convertible into Common Stock of the Company (a "CONVERTIBLE REMARKETING") or which will be nonconvertible (a "NONCONVERTIBLE REMARKETING"). The date of the Remarketing Each outstanding Subject Security shall be Notice through the Tender deemed to have been tendered for Notification Date: remarketing unless the holder thereof has 9 10 given irrevocable notice to the contrary to the Tender Agent (which the Tender Agent will promptly remit to the Remarketing Agent). Such 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. A holder's notice of an election to retain Subject Securities must state the number of Subject Securities to be retained (which must be all of the Subject Securities represented by the applicable certificate, unless such certificate is a Global Security Certificate), the number of the certificate representing the Subject Securities not to be deemed to have been so tendered (unless such certificate is a Global Security Certificate) and the number of Subject Securities represented by such certificate (unless such certificate is a Global Security Certificate). Any transferee of a Subject Security for which such notice has been provided shall be bound thereby. The failure by a holder of Subject Securities to give timely notice of an election to retain all (or, in the case of a Global Security Certificate, any part) of such holder's Subject Securities will constitute the irrevocable tender for sale in the Remarketing of all the Subject Securities it holds. A holder of Subject Securities which has not duly given notice that it will not tender and retain its Subject Securities will cease to have any further rights with respect to such Subject Securities upon the successful remarketing thereof, except the right of such holder to receive an amount equal to (i) from the proceeds of the Remarketing, 101% of the aggregate Par Amount thereof, plus (ii) from the Company, any accrued and unpaid Interest thereon to (but excluding) the Reset Date. If any Subject Securities are 11 tendered for remarketing, the Remarketing Agent will commence a Convertible Remarketing or a Nonconvertible Remarketing, as the case may be (in either case, an "INITIAL REMARKETING"), in accordance with the terms of this 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, nonbinding indications of, the Term Provisions based upon then-current Remarketing Conditions. The Remarketing Agent will solicit and receive orders from prospective investors to purchase tendered Subject Securities. The Initial Remarketing shall be deemed to have failed (an "INITIAL FAILED REMARKETING") if (i) despite using its best efforts, the Remarketing Agent is unable to establish, prior to the Initial Remarketing Termination Date, a Term Rate which is less than or equal to the Maximum Rate, (ii) the Remarketing Agent is excused from Remarketing the Subject Securities because of (a) the failure by the Company or the Trust to satisfy a condition in this Agreement or (b) the occurrence of a Market Event, (iii) there is no Remarketing Agent on the first day of the Initial Remarketing Period or (iv) prior to the Initial Remarketing Termination Date, Term Provisions are established by the Remarketing Agent, but the Remarketing Agent, despite 12 using its best efforts, is unable to consummate the sale of one or more Subject Securities tendered for remarketing because of the occurrence of a Market Event. Remainder of the Initial Remarketing The Remarketing Agent will continue, Period: if necessary, using its best efforts to remarket the Subject Securities tendered for remarketing as described above, adjusting the non-binding indications of the Term Provisions necessary to establish the Term Provisions most favorable to the Company consistent with remarketing all Subject Securities tendered therefor at 101% of the Par Amount, until the Initial Remarketing is completed or is deemed to have failed. See the definition of an Initial Failed Remarketing above. Promptly upon determination of the Term Provisions, the Remarketing Agent will communicate such Term Provisions to the Tender Agent, which will communicate such Term Provisions to the Declaration Trustees (if the Trust has not dissolved), the Trust (if the Trust has not dissolved), the Debenture Trustee, the Paying Agent, the Company and each holder (if any) which timely elected not to tender all of its Subject Securities for remarketing, by delivery of a written notice or by telephone promptly confirmed by telecopy or writing. Beginning the First Business Day If, prior to the Initial Remarketing Following an Initial Failed Termination Date, the Initial Remarketing (if applicable): Remarketing fails because the Remarketing Agent was not able to establish a Term Rate less than or equal to the Maximum Rate or prior to such Initial Termination Date, Term Provisions are established by the Remarketing Agent but the Remarketing Agent, despite using its best efforts, is unable to consummate the sale of one or more Subject Securities tendered for 13 remarketing because of the occurrence of a Market Event, the Remarketing Agent will commence a second remarketing (the "FINAL REMARKETING"), which will be a Convertible Remarketing if the Initial Remarketing was a Nonconvertible Remarketing and a Nonconvertible Remarketing if the Initial Remarketing was a Convertible Remarketing. The Remarketing Agent will determine, and upon request make available to interested persons, nonbinding indications of, the Term Provisions based upon then-current Remarketing Conditions. The Remarketing Agent will solicit and receive orders from prospective investors to purchase tendered Subject Securities. The Final Remarketing will be deemed to have failed (a "FAILED FINAL REMARKETING") if (i) 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, (ii) the Remarketing Agent is excused from Remarketing the Subject Securities because of (a) the failure by the Company or the Trust to satisfy a condition in this Agreement or (b) the occurrence of a Market Event, or (iii) prior to the termination date for the Final Remarketing Period, Term Provisions are established by the Remarketing Agent but the Remarketing Agent, despite using its best efforts, is unable to consummate the sale of one or more Subject Securities tendered for remarketing because of the occurrence of a Market Event. The Remarketing Agent will Reset Date: continue, if necessary, to use its best efforts to remarket the Subject Securities, as described above, adjusting the non-binding indications of the Term 14 Provisions as necessary to establish the Term Provisions most favorable to the Company consistent with remarketing all Subject Securities tendered therefor at 101% of the Par Amount until the Final Remarketing is completed or is deemed to have failed. See the definition of a Failed Final Remarketing above. 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 will promptly communicate such Term Provisions to the Tender Agent, which will communicate such Term Provisions to the Declaration Trustees (if the Trust has not dissolved), the Trust (if the Trust has not dissolved), the Debenture Trustee, the Paying Agent, the Company and each holder (if any) which timely elected not to tender all of its Subject Securities for remarketing, by delivery of a written notice or by telephone promptly confirmed by telecopy or writing. New holders must deliver the purchase price for the remarketed securities in same-day funds to the Remarketing Agent and the Remarketing Agent will deliver such purchase price to the Tender Agent (in like funds). 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 15 sole discretion, determine, or, as otherwise required by applicable law. Payments to tendering holders who hold Subject Securities in the form of one or more Global Security Certificates will be made in the manner provided in the Offering Circular under "Description of HIGH TIDES-Depositary Procedures." Tendering holders who hold Subject Securities in certificated form (other than in the form of Global Security Certificates) must deliver their certificates properly endorsed for transfer to the Tender Agent by 2:30 p.m., New York City time on the Reset Date (or any succeeding date) to receive payment of the purchase price for their Subject Securities. Subject to compliance with the preceding two sentences, the Tender Agent will pay former holders the proceeds of the Remarketing of their Subject Securities by the Remarketing Agent. In the event of a Failed Final Remarketing, the Term Rate shall be a rate equal to the Treasury Rate plus 10% per annum. The Term Conversion Price will be equal to 105% of the average Closing Price of the Company's Common Stock for the five (5) consecutive trading days after the Final Remarketing Period. In the event of a Failed Final Remarketing, all outstanding Subject Securities will be redeemable by the Company, in whole or in part, at any time on or after the third anniversary of the Reset Date at a 16 redemption price equal to 100% of the aggregate Par Amount thereof, plus accrued and unpaid interest thereon. On and after the Reset Date, the terms of all Subject Securities, 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 Subject Securities are not held by The Depository Trust Company or its nominee in the form of one or more Global Security Certificates, certificates representing remarketed Subject Securities will be issued to the purchasers thereof, irrespective of whether the certificates formerly representing such Subject Securities have been delivered to the Tender Agent. SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY AND THE REMARKETING AGENT. (a) The Company represents, warrants, covenants and agrees with the Remarketing Agent as follows: (i) the Company has full power and authority to enter into this Agreement and will have full power and authority to enter into any agreements which it may enter into in connection with the Remarketing; this Agreement and the transactions contemplated hereby have been, and each other such agreement and the transactions contemplated thereby will be, duly authorized, executed and delivered by the Company; and this Agreement is, and each such other agreement will be at the Reset Date, a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles and except to the extent that the right to indemnity and contribution in the Remarketing Agreement may be limited by state or federal securities laws or the public policy underlying such laws; (ii) the consummation of the transactions contemplated herein do not now, and the consummation of the transactions contemplated in any other agreement entered into by the Company in connection with the Remarketing will not, at the Reset Date, conflict with or constitute a breach of, or a default under, or result in the creation or imposition of any lien, charge, other encumbrance, or violation upon any property or 17 assets of the Trust, the Company or any of the Company's subsidiaries pursuant to any contract, indenture, declaration of trust, deed of trust, mortgage, loan agreement, note, lease or other instrument or agreement to which the Trust, the Company or any of its subsidiaries is or will be a party or by which it or any of them may be bound, or to which any of the property or assets of any of them is or will be subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any statute (including the Securities Act, the Exchange Act and state securities laws) or any order, rule or regulation of any court or governmental agency or body (including the Commission) which has or will have jurisdiction over the Company or any of its subsidiaries or any of their material property or assets except for a conflict, breach, default, lien, charge, encumbrance or violation which could not reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated herein or therein; (iii) all required consents, rulings and approvals of governmental authorities (other than "Blue Sky" authorities) required in connection with the execution and delivery by the Company of this Agreement and any agreement entered into by the Company in connection with the transactions contemplated by any Disclosure Documents, and the performance by the Company of its obligations hereunder and thereunder, have been obtained and are in full force and effect and, at the Reset Date, will have been obtained and be in full force and effect; (iv) except as disclosed in the Disclosure Documents, neither the Company nor any of its subsidiaries is or, at the Reset Date, will be (A) in violation of its charters or by-laws, (B) in default in any respect, and no event has occurred or will have occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any contract, indenture, declaration of trust, deed of trust, mortgage, loan agreement, note, lease or other instrument or agreement to which it is or will be bound or to which any of its properties or assets is or will be subject or (C) in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject; (v) the Disclosure Documents, including as provided in Section 3(x), will not, at the Effective Time and thereafter through and including the Reset Date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; PROVIDED that no representation or warranty is made as to information contained in or omitted from the Disclosure Documents in reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent specifically for inclusion therein; (vi) the financial statements of the Company contained (or incorporated by reference) in the Disclosure Documents will present fairly the financial position of the entity set forth therein as of the dates indicated, and the results of operations and 18 changes in financial position of such entity for the periods covered, in conformity with generally accepted accounting principles applied on a consistent basis, except as otherwise set forth therein; (vii) after the date of the most recent financial statements of the Company contained (or incorporated by reference) in the Disclosure Documents, there will not have been any material adverse change in the condition (financial or other), stockholders' equity, results of operations or business of the Company and its subsidiaries, except as disclosed in the Disclosure Documents; (viii) except as disclosed in the Disclosure Documents, there will be no legal or governmental proceedings pending at the Reset Date to which the Company or any of its subsidiaries is a party or of which any material property or assets of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have a material adverse effect on the condition (financial or other), stockholders' equity, results of operations or business of the Company and its subsidiaries, taken as a whole; (ix) any description of a contract, indenture, declaration of trust, deed of trust, mortgage, loan agreement, note, lease or other instrument or agreement contained in the Disclosure Documents will be, at the Effective Time and thereafter through and including the Reset Date, true and complete in all material respects; and (x) If the Registration Statement is filed, the Registration Statement at the Effective Time will conform to the requirements of the Securities Act and the Rules and Regulations and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus, as of the Effective Time and thereafter through and including the Reset Date, will conform to the requirements of the Securities Act and the Rules and Regulations and will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that no representation or warranty is made as to information contained in or omitted from any Preliminary Prospectus, the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent specifically for inclusion therein. (b) The Remarketing Agent represents, warrants, covenants and agrees with the Company that if it shall not have received a No Registration Opinion and the Registration Statement shall not be effective on the Tender Notification Date (or such later date as may be provided in Section 2(b)), the Remarketing Agent will offer and sell the Subject Securities only in compliance with the federal and state securities laws applicable to unregistered sales of securities in effect at the time of the Remarketing. 19 SECTION 4. FEES AND EXPENSES. (a) The Company agrees to pay to the Remarketing Agent upon settlement of the transactions contemplated by the Remarketing (i) as compensation for its services hereunder, a fee equal to 1% of the aggregate Par Amount of outstanding Subject Securities on the Reset Date, plus (ii) all out-of-pocket expenses reasonably incurred by the Remarketing Agent in connection with the performance of its duties; PROVIDED that if both the Initial Remarketing and the Final Remarketing fail, the Company shall not be required to pay any fees to, or reimburse any out-of-pocket expenses of, the Remarketing Agent. (b) The Remarketing Agent acknowledges and agrees that the performance of its duties hereunder will be without charge to holders or purchasers of the Subject Securities other than the Company. SECTION 5. BROKER-DEALER PARTICIPATION. The Remarketing Agent shall enter into Broker-Dealer Agreements with all broker-dealers ("BROKER-DEALERS"), if any, which it selects to have participate in the remarketing process; PROVIDED that (i) such Broker-Dealers agree to comply with the terms of this Agreement, including the terms of Section 3(b) of this Agreement, (ii) any fees or commissions paid to the Broker-Dealers shall be paid by the Remarketing Agent out of the fees it is paid pursuant to Section 4(a), and (iii) the Remarketing Agent agrees to provide to the Company an executed copy of each Broker-Dealer Agreement. None of the Remarketing Agent, the Trust and the Company shall be responsible for the out-of-pocket expenses of such Broker-Dealers or for ensuring compliance by such Broker-Dealers with the terms of this Agreement (except, with respect to the Remarketing Agent, as specifically set forth in the Broker-Dealer Agreement). SECTION 6. DISCLOSURE DOCUMENTS AND OTHER INFORMATION. (a) If (i) the Registration Statement is not required to be filed with the Commission pursuant to the provisions of Section 2(b) of this Agreement and (ii) the Remarketing Agent determines that it is necessary or desirable to use a disclosure document in connection with the performance of its obligation to remarket the Subject Securities, the Remarketing Agent will notify the Company and the Company will provide to the Remarketing Agent prior to the Tender Notification Date at the Company's expense a disclosure document or documents reasonably satisfactory to the Remarketing Agent and its counsel in respect of the Subject Securities (collectively, and including any documents or other information incorporated by reference therein, the "NONREGISTERED OFFERING DOCUMENTS"). The Company will supply the Remarketing Agent at the Company's expense with such number of copies of the Disclosure Documents as the Remarketing Agent reasonably requests from time to time. The Company will supplement and amend the Disclosure Documents so that at all times they will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements in the Disclosure Documents, in light of the circumstances under which they were made, not misleading. (b) The Company and the Trust each agrees to furnish to the Remarketing Agent (i) as promptly as practicable after they are available, all regular and periodic reports, if 20 any, which the Company or the Trust files with the Commission under the Exchange Act and all reports which the Company or the Trust provides generally to holders of its publicly held securities and (ii) from time to time, such other information concerning the Company and the Trust as the Remarketing Agent may reasonably request. (c) The Company will provide the Remarketing Agent with such certificates, opinions of counsel, accountants' letters and other support for the information contained in any Disclosure Documents as the Remarketing Agent and its counsel may reasonably request. (d) If the Registration Statement is filed with the Commission, the Company agrees that it will: (i) prepare the Registration Statement in conformity with the requirements of the Securities Act and the Rules and Regulations; (ii) cause the Registration Statement to become effective prior to the Tender Notification Date (or such later date as may be permitted in accordance with the provisions of Section 2(b)); (iii) prepare the Prospectus in a form approved by the Remarketing Agent and file the Prospectus in accordance with Rule 424(b) (or any successor applicable rule) under the Securities Act and Rule 430A(a)(3) (or any successor applicable rule) under the Securities Act; make no further amendment or any supplement to the Registration Statement or to the Prospectus except as permitted herein or required hereby; advise the Remarketing Agent, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and furnish the Remarketing Agent with copies thereof; advise the Remarketing Agent, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the securities covered by such Registration Statement for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, promptly use its best efforts to obtain its withdrawal; (iv) furnish promptly to the Remarketing Agent and to counsel for the Remarketing Agent a signed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith; 21 (v) deliver promptly to the Remarketing Agent such number of the following documents as the Remarketing Agent shall reasonably request: (1) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits) and (2) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus; and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the securities covered by the Registration Statement and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus in order to comply with the Securities Act, notify the Remarketing Agent and, upon its request, prepare and furnish without charge to the Remarketing Agent as many copies as the Remarketing Agent may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance; (vi) file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Remarketing Agent, be required by the Securities Act or requested by the Commission; (vii) prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424 (or any applicable successor rule) of the Rules and Regulations, furnish a copy thereof to the Remarketing Agent and counsel for the Remarketing Agent; (viii) as soon as practicable after the Effective Time, make generally available to the Company's security holders and deliver to the Remarketing Agent an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) (or any applicable successor section) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158 (or any applicable successor rule)); (ix) promptly from time to time take such action as the Remarketing Agent may request to qualify the securities covered by the Registration Statement for offering and sale under the securities laws of such jurisdictions as the Remarketing Agent may request and to take all steps necessary to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Subject Securities; PROVIDED, HOWEVER, that in connection therewith the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not so qualified; and 22 (x) use its best effort to have the Subject Securities listed on any securities exchange or quoted in any automated inter-dealer quotation system reasonably requested by the Remarketing Agent. SECTION 7. INDEMNIFICATION. (a) The Company and the Trust will indemnify and hold harmless the Remarketing Agent against any losses, claims, damages or liabilities, joint or several, to which the Remarketing Agent may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Disclosure Document, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse the Remarketing Agent for any legal or other expenses reasonably incurred by the Remarketing Agent in connection with investigating or defending any such loss, claim, damage liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any Disclosure Document in reliance upon and in conformity with written information furnished to the Company by the Remarketing Agent specifically for use therein. (b) The Remarketing Agent will indemnify and hold harmless the Company and the Trust against any losses, claims, damages or liabilities to which the Company or the Trust may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Disclosure Documents, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or the Trust by the Remarketing Agent specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company or the Trust in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the 23 extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Remarketing Agent on the other from the Remarketing of the Subject Securities in accordance with this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Remarketing Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Remarketing Agent on the other shall be deemed to be in the same proportion as the aggregate outstanding Liquidation Amount (if the Subject Securities are HIGH TIDES) or principal amount (if the Subject Securities are Debentures) bear to the fees received by the Remarketing Agent from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Remarketing Agent and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to inclde any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), the Remarketing Agent shall not be required to contribute any amount in excess of the amount by which the aggregate outstanding Liquidation Amount (if the Subject Securities are HIGH TIDES) or principal amount (if the Subject Securities are Debentures) of the Subject Securities remarketed exceeds the amount of any damages which the Remarketing Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 24 (e) The obligations of the Company and the Trust under this Section shall be in addition to any liability which the Company and the Trust may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Remarketing Agent within the meaning of the Securities Act or the Exchange Act; and the obligations of the Remarketing Agent under this Section shall be in addition to any liability which the Remarketing Agent may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company and the Trust within the meaning of the Securities Act or the Exchange Act. SECTION 8. REMARKETING AGENT'S LIABILITIES. The Remarketing Agent shall incur no liability to the Company, the Debenture Trustee, the Property Trustee, the Administrative Trustees, the Delaware Trustee, the Tender Agent or any holder of Subject Securities for its actions as Remarketing Agent pursuant to the terms hereof and of the Trust Agreement or Indenture without gross negligence or in the absence of wilful misconduct. The undertaking of the Remarketing Agent to remarket any Subject Securities shall be on a "best efforts" basis. SECTION 9. TERMINATION. This Agreement will terminate upon the earliest to occur of the following: (i) the written agreement of all parties hereto; (ii) the date that no Debenture is outstanding; and (iii) the day immediately following the Reset Date. The provisions of Sections 7, 8, 11 and 12 hereof will continue in effect as to actions prior to the date of termination, and each party will pay to the others any amounts owing at the time of termination. SECTION 10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) The Remarketing Agent may resign at any time hereunder by giving at least 30 days' written notice thereof to the Company and the Tender Agent. No successor need have accepted its appointment for such resignation to be effective. (b) The Remarketing Agent may be removed at any time for Cause by the holders of a majority in aggregate Par Amount of the Subject Securities outstanding, by written notice to the Remarketing Agent, the Tender Agent and the Company. No successor need have accepted its appointment for such removal to be effective. (c) If the Remarketing Agent resigns or is removed in accordance with Section 10(b), the Company will use its best efforts to appoint as the successor Remarketing Agent hereunder an investment bank, broker, dealer or other organization which, in the judgment of the Company, is qualified to remarket the Subject Securities and to establish the Term Provisions. If the Company fails to so appoint a successor Remarketing Agent reasonably promptly, in light of the proximity of the Tender Notification Date, or if such successor fails to accept such appointment, the holders of not less than 25% in aggregate Par Amount of the Subject Securities outstanding, by written notice to the Tender Agent and the Company, may appoint a successor Remarketing Agent which is an investment bank, broker, dealer or other organization qualified to remarket the Subject Securities and to establish the Term Provisions; PROVIDED that for purposes of determining the holders of not less than 25% in aggregate Par Amount of the Subject 25 Securities outstanding, Subject Securities owned by the Company, the Trust or any trustee or administrator of the Trust or any affiliate of any of the foregoing shall be disregarded and deemed not to be outstanding. (d) A successor Remarketing Agent shall accept its appointment by executing and delivering a written instrument of acceptance to the Tender Agent and the Company. (e) The provisions of Sections 7, 8, 11 and 12 hereof will continue in effect as to actions of the Remarketing Agent prior to the date of resignation or removal, and the Remarketing Agent will pay to and have the right to receive from the other parties hereto any amounts owing at the time of such event. (f) The Tender Agent shall provide written notice of each resignation and each removal of the Remarketing Agent and each appointment of a successor Remarketing Agent and such successor's acceptance thereof by first-class mail, postage prepaid, to the holders of the Subject Securities as their names and addresses appear in the applicable register. (g) Any corporation or other entity into which the Remarketing Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Remarketing Agent may be a party, or any corporation succeeding to all or substantially all of the business of the Remarketing Agent, shall be the successor of the Remarketing Agent hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. SECTION 11. DEALING IN SUBJECT SECURITIES BY REMARKETING AGENT. The Remarketing Agent, either as principal or agent, may buy, sell, own, hold and deal in Subject Securities, and may join in any action which any owner of the Subject Securities may be entitled to take with like effect as if it did not act in any capacity hereunder. Except as provided in the next succeeding sentence, the Remarketing Agent is under no obligation at any time to purchase Subject Securities. If the Term Provisions are established by the Remarketing Agent but on the Reset Date the Remarketing Agent is unable to consummate the sale of one or more Subject Securities tendered for remarketing, the Remarketing Agent shall purchase such Subject Securities on the Reset Date for 101% of their aggregate Par Amount; PROVIDED, HOWEVER, that if, prior to the Initial Remarketing Termination Date or prior to the expiration of the Final Remarketing Period, Term Provisions are established by the Remarketing Agent but the Remarketing Agent is unable to consummate the sale of one or more Subject Securities tendered for remarketing due to the occurrence of a Market Event, then the Initial Remarketing or Final Remarketing, as the case may be, shall be deemed to have failed, and the provisions of this Agreement relating to an Initial Failed Remarketing or a Failed Final Remarketing, as applicable, shall apply. The Remarketing Agent agrees that the purchase of Subject Securities for its own account or the account of its affiliates will be upon terms no more favorable to it than those pertaining to the purchase of Subject Securities in the market (which shall be determined by the Remarketing Agent in its sole discretion) in general at the time of such purchase and that neither it nor its affiliates will elect to retain Subject Securities on the Reset Date if the Subject 26 Securities could be remarketed pursuant to this Agreement on terms more favorable to the Trust or the Company than the terms upon which the Remarketing Agent or such affiliates would continue to hold it. The Remarketing Agent, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Trust or the Company and may act as depository, trustee or agent for any committee or body of owners of Subject Securities or other obligations of the Trust or the Company as freely as if it had no obligations hereunder or under the Trust Agreement or Indenture. SECTION 12. RECORDS. The Remarketing Agent agrees to keep books and records relating to its activities as Remarketing Agent in accordance with standard industry practice. SECTION 13. PURCHASE AND SALES BY COMPANY. While the Company and its affiliates may from time to time purchase, hold and sell Subject Securities, the Company and the Remarketing Agent acknowledge that neither the Company nor any affiliate of the Company may acquire or bid to acquire Subject Securities on the Reset Date or submit orders in the Remarketing. The Remarketing Agent agrees that it will not knowingly remarket any Subject Securities to the Company or any of its affiliates. SECTION 14. COMMUNICATION OF REMARKETING CONDITIONS. The Remarketing Agent agrees, upon request from time to time by any holder of Subject Securities and to the extent the Remarketing Agent deems advisable, to advise such holder of current Remarketing Conditions. SECTION 15. NOTICES. Unless otherwise provided herein, all notices, requests, demands and formal actions hereunder shall be in writing and mailed or sent by facsimile transmission or delivered, as follows: If to the Company: The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 Attention: General Counsel Telephone: (858) 552-9500 Telecopy: (858) 552-9759 If to the Tender Agent: Wilmington Trust Company, as Tender Agent Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 Telephone: (302) 651-1000 Telecopy: (302) 651-8882 27 If to the Trust: c/o The Titan Corporation Attention: General Counsel 3033 Science Park Road San Diego, California 92121-1199 Telephone: (858) 552-9500 Telecopy: (858) 552-9759 If to the Remarketing Agent: Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Attention: Transactions Advisory Group - Joseph D. Fashano Telephone: (212) 325-2107 Telecopy: (212) 325-4296 Each of the above parties may, by written notice given hereunder to the others, designate any further or different addresses or telecopier numbers to which subsequent notices, certificates, requests or other communications shall be sent. In addition, the parties hereto may agree to any other means by which subsequent notices, certificates, requests or other communications may be sent. SECTION 16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, inure to the benefit of and be enforceable by, the respective successors and assigns of the Company, the Trust, the Tender Agent, the Remarketing Agent and the holders of the Subject Securities. SECTION 17. THE TENDER AGENT. In serving as the Tender Agent hereunder, the Debenture Trustee shall be entitled to the protections and benefits of Sections 6.01(d), 6.03, 6.06 and 12.07 of the Indenture and the Property Trustee shall be entitled to the protections and benefits of Sections 3.09, 3.10 and 10.04 of the Trust Agreement. SECTION 18. ENTIRE AGREEMENT. Except as otherwise provided herein, this Agreement contains the entire agreement between the parties relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or inferred, among the parties. SECTION 19. DESCRIPTIVE HEADINGS. The descriptive headings of the several sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 28 SECTION 20. AMENDMENT; WAIVER. (a) This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of each of the Company, the Tender Agent, the Administrative Trustees on behalf of the Trust and the Remarketing Agent. (b) Failure of any party to exercise any right or remedy under this Agreement in the event of a breach hereof by the other party shall not constitute a waiver of any such right or remedy with respect to any subsequent breach. SECTION 21. SEVERABILITY. If any clause, provision or section of this Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections hereof. SECTION 22. EXECUTION IN COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart signed by the party against which enforcement of this Agreement is sought. SECTION 23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. THE TITAN CORPORATION By: Name: Title: TITAN CAPITAL TRUST By: Name: Deanna Hom Petersen Title: Administrative Trustee By: Name: Ray Guillaume Title: Administrative Trustee WILMINGTON TRUST COMPANY, as Tender Agent By: Name: Title: CREDIT SUISSE FIRST BOSTON CORPORATION By: Name: Title: EX-4.5 6 EXHIBIT 4.5 4,000,000 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 SET FORTH IN THE GUARANTEE AGREEMENT BY, AND CONVERTIBLE INTO COMMON STOCK OF, THE TITAN CORPORATION REGISTRATION RIGHTS AGREEMENT February 9, 2000 Credit Suisse First Boston Corporation Donaldson, Lufkin & Jenrette Securities Corporation c/o Credit Suisse First Boston Corporation As Representative of Donaldson, Lufkin & Jenrette Securities Corporation Eleven Madison Avenue New York, NY 10010-3629 Dear Sirs: Titan Capital Trust, a statutory business trust formed under the laws of the State of Delaware (the "Trust") by The Titan Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to Credit Suisse First Boston Corporation and the other initial purchasers (collectively, the "Purchasers") named in Schedule A to the Purchase Agreement dated February 3, 2000 (the "Purchase Agreement"), among the Purchasers, the Company and the Trust, upon the terms set forth in the Purchase Agreement, up to 4,000,000 (or up to 5,000,000 to the extent the over-allotment option is exercised in full) of its Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)K, liquidation amount $50 per security (the "Preferred Securities") (the "Initial Placement"). The proceeds of the sale by the Trust of the Preferred Securities and the Common Securities of the Trust, liquidation amount $50 per Common Security (the "Common Securities"), are to be invested in the Convertible Senior Subordinated Debentures due 2030 of the Company issued pursuant to the Indenture dated February 9, 2000 between the Company and Wilmington Trust Company, as Trustee (the "Debentures") having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities and the Common Securities. As an inducement to you to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Trust and the Company agree with you, (i) for the benefit of the Purchasers and (ii) for the benefit of the registered holders from time to time of the Preferred Securities, the Debentures and the Common Stock of The Titan Corporation, par value $.01 per share (such Common Stock and any other shares issuable in place of or in addition to such shares pursuant to the antidilution provisions of the Debentures, being referred to as the "Common Stock"), of the Company issuable upon conversion of the Preferred Securities or the Debentures (collectively, together with the Guarantee by the Company of the Preferred Securities, the "Securities"), including the Purchasers (each of the foregoing a "Holder" and together the "Holders"), as follows: 1. DEFINITIONS. Capitalized terms used herein without definition shall have their respective meanings set forth in or pursuant to the Purchase Agreement or, if not defined therein, in the Offering Circular dated February 3, 2000, in respect of the Preferred Securities or, if not defined therein, in the Amended and Restated Declaration of Trust dated as of February 9, 2000 (the "Declaration") relating to the Trust. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "ACT" or "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "AFFILIATE" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing. "APPLICABLE RATE" means the rate at which the Preferred Securities accrue distributions and the Debentures accrue interest. The Applicable Rate shall be 5 3/4% per annum from the date of original issuance of the Preferred Securities 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. The Applicable Rate will be increased upon the occurrence of a Registration Default, as set forth in Section 7(a) hereof. "BUSINESS DAY" means any day other than (i) a Saturday or Sunday, (ii) 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 (iii) a day on which the corporate trust office of the Debenture Trustee or the Property Trustee is closed for business. "CLOSING DATE" has the meaning given such term in the Purchase Agreement. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" has the meaning set forth in the first paragraph to this Agreement. "COMPANY" has the meaning set forth in the first paragraph to this Agreement. "DEBENTURES" has the meaning set forth in the first paragraph to this Agreement. "DEBENTURE TRUSTEE," "GUARANTEE TRUSTEE" and "PROPERTY TRUSTEE" each means Wilmington Trust Company. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GUARANTEE" means the guarantee by the Company of the Preferred Securities pursuant to a Guarantee Agreement dated as of February 9, 2000 between the Company and the Guarantee Trustee. "HOLDER" and "HOLDERS" each has the meaning set forth in the first paragraph to this Agreement. "INDEMNIFIED PARTIES" has the meaning set forth in Section 5(a) hereof. "INITIAL PLACEMENT" has the meaning set forth in the first paragraph to this Agreement. "MANAGING UNDERWRITERS" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, as set forth in Section 6 hereof. "PARTICIPATING BROKER-DEALER" means any broker-dealer that is the beneficial owner (as defined in Rule13d-3 under the Exchange Act) of Securities received by such broker-dealer. "PREFERRED SECURITIES" has the meaning set forth in the first paragraph to this Agreement. "PROSPECTUS" means the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), with respect to the terms of the offering of any portion of the Securities covered by such Shelf Registration Statement, as amended or supplemented by all amendments (including post-effective amendments) and supplements to the Prospectus. "PURCHASE AGREEMENT" has the meaning set forth in the first paragraph to this Agreement. "PURCHASERS" has the meaning set forth in the first paragraph to this Agreement. "REGISTRABLE SECURITIES" has the meaning specified in the Indenture. "REGISTRATION DEFAULT" has the meaning given to such term in Section 7(a) hereof. "REMARKETING AGENT" has the meaning specified in the Indenture. "RESET DATE" means any date that is (i) not later than February 15, 2005 (or, if such day is not a Business Day, the next succeeding Business Day), and (ii) not earlier than 70 Business Days prior to February 15, 2005, as may be determined by the Remarketing Agent, in its sole discretion. "SECURITIES" means the Preferred Securities, the Debentures, the Common Stock and the Guarantee, individually and collectively. "SHELF REGISTRATION" means a registration effected pursuant to Section 2 hereof. "SHELF REGISTRATION PERIOD" has the meaning set forth in Section 2(b) hereof. "SHELF REGISTRATION STATEMENT" means a "shelf" registration statement of the Trust and the Company pursuant to the provisions of Section 2 hereof filed with the Commission which covers some or all of the Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "SUSPENSION PERIOD" has the meaning set forth in Section 7(b) hereof. "TERM RATE" means the rate established by the Remarketing Agent (as defined in the Indenture) in connection with the Remarketing (as defined in the Indenture) at which interest will accrue on the Debentures and distributions will accrue on the Preferred Securities on and after the Reset Date. "TRUST" has the meaning set forth in the first paragraph to this Agreement. "TRUSTEE" means the Guarantee Trustee, the Debenture Trustee or the Property Trustee, as applicable. "UNDERWRITER" means any underwriter of Securities in connection with an offering thereof under a Shelf Registration Statement. (a) SHELF REGISTRATION. The Trust and the Company shall as promptly as practicable prepare and, not later than the 75th day following the Closing Date, shall file with the Commission and thereafter shall each use their best efforts to cause to be declared effective under the Act as soon as practicable, but in no event later than the 150th day following the Closing Date, a Shelf Registration Statement relating to the offer and sale of the Securities by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement. (b) The Trust and the Company shall each use its best efforts (i) to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders until resale of the Securities is permitted pursuant to Rule 144(k) under the Securities Act or any successor rule or regulation thereto after the date the Shelf Registration Statement is declared effective or such shorter period that will terminate upon the earlier of the following: (1) when all the Preferred Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement; (2) when all Debentures issued to Holders in respect of Preferred Securities that had not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement; or (3) when all shares of Common Stock issued upon conversion of any such Preferred Securities or any such Debentures that had not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"); and (ii) after the effectiveness of the Shelf Registration Statement, promptly upon the request of any Holder to take any action reasonably necessary to register the sale of any Securities of such Holder and to identify such Holder as a selling securityholder. 2. REGISTRATION PROCEDURES. In connection with any Shelf Registration Statement, the following provisions shall apply: (a) The Trust and the Company shall furnish to the Purchasers and any other Holders who so request, and their respective counsel and accountants, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall each use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the Purchasers and such other Holders reasonably may propose. (b) The Trust and the Company shall take such action as may be necessary so that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not, during the Shelf Registration Period, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (i) The Company shall advise the Purchasers and the Holders and, if requested by the Purchasers or any such Holder, confirm such advice in writing: (1) when a Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and (2) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information. (ii) The Trust and the Company shall advise the Purchasers and the Holders and, if requested by the Purchasers or any such Holder, confirm such advice in writing: (1) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; (2) of the receipt by the Trust or the Company of any notification with respect to the suspension of the qualification of the Securities included therein for sale in any state or the initiation or threatening of any proceeding for such purpose; and (3) of the happening, during the Shelf Registration Period, of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, the Registration Statement and the Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (c) Each of the Trust and the Company shall use its best efforts to prevent the issuance, and if issued to obtain the withdrawal, of any order suspending the effectiveness of any Shelf Registration Statement at the earliest possible time. (d) The Trust and the Company shall furnish to each Holder of Securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto (including any reports or other documents incorporated therein by reference), including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those incorporated by reference). (e) The Trust and the Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and each of the Trust and the Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Securities in connection with the offering and sale of the Securities covered by the Prospectus or any amendment or supplement thereto during the Shelf Registration Period. (f) Prior to any offering of Securities pursuant to any Shelf Registration Statement, the Trust and the Company shall register or qualify or cooperate with the Holders of Securities included therein and their respective counsel in connection with the registration or qualification of such Securities for offer and sale under the securities or blue sky laws of such states as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such states of the Securities covered by such Shelf Registration Statement; provided, however, that neither the Trust nor the Company will be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (g) Unless the applicable Securities shall be in book-entry only form, the Trust and the Company shall cooperate with the Holders of Securities to facilitate the timely preparation and delivery of certificates representing Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such permitted denominations and registered in such names as Holders may request in connection with the sale of Securities pursuant to such Shelf Registration Statement. (h) Upon the occurrence of any event contemplated by Section 3(c)(i)(2) or 3(c)(ii)(3) above, the Trust and the Company shall promptly prepare a post-effective amendment to any Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Trust or the Company notifies the Holders of the occurrence of any event contemplated by Section 3(c)(ii)(3) above, the Holders shall suspend the use of the Prospectus until the requisite changes to the Prospectus have been made. (i) Not later than the effective date of any Shelf Registration Statement hereunder, the Trust and the Company shall provide a CUSIP number for the Preferred Securities and, in the event of and at the time of any distribution thereof to Holders, the Debentures, registered under such Shelf Registration Statement, and provide the applicable Trustee with certificates for such Securities, in a form eligible for deposit with The Depository Trust Company. (j) The Trust and the Company shall use their best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to their securityholders or otherwise in accordance with Section 11(a) of the Securities Act as soon as practicable after the effective date of the applicable Shelf Registration Statement an earning statement satisfying the provisions of Section 11(a) of the Securities Act. (k) The Trust and the Company shall cause the Indenture, the Declaration and the Guarantee to be qualified under the Trust Indenture Act in a timely manner. (l) The Trust and the Company may require each Holder of Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Trust and the Company such information regarding the Holder and the distribution of such Securities as the Trust and the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement. (m) The Trust and the Company shall, if requested, promptly incorporate in a Prospectus supplement or post-effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters reasonably agree should be included therein and to which the Trust and the Company do not reasonably object and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after they are notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. (n) The Trust and the Company shall enter into such customary agreements (including underwriting agreements in customary form) to take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 5 hereof (or such other customary provisions and procedures acceptable to the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 5 hereof. (o) The Trust and the Company shall (i) make reasonably available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by such Holders or any such underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Trust and the Company and its subsidiaries as shall be requested in connection with the discharge of their due diligence obligations; (ii) cause the Company's officers, directors, employees and independent public accountants and any relevant Trustees to supply at the Company's expense all relevant information reasonably requested by such Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Trust and the Company in good faith as confidential at the time of delivery of such information shall be kept confidential by such Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of the Holders and the other parties entitled thereto by one counsel designated by and on behalf of such Holders and other parties; (iii) to the extent requested, make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by the issuers to underwriters in primary underwritten offerings and covering matters as are customarily covered in representation and warranties requested in primary underwritten offerings including, but not limited to, those set forth in the Purchase Agreement; (iv) to the extent requested, obtain opinions of counsel to the Trust and the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters and with such exceptions as are customarily covered or taken in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters (it being agreed that the matters to be covered by such opinion shall include, without limitation, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, a statement by such counsel regarding the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, including the documents incorporated by reference therein, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading); (v) to the extent requested, obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each such Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by any such Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Trust and the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 3(p), to the extent requested, shall be performed at (A) the effectiveness of such Shelf Registration Statement and each post-effective amendment thereto and (B) each closing under any underwritten offering to the extent required under any related underwriting or similar agreement. (p) Each of the Trust and the Company will use its best efforts to cause the Common Stock relating to such Shelf Registration Statement to be listed on each securities exchange, over-the-counter market, or respective counterpart if any, on which any shares of Common Stock are then listed. (q) The Trust and the Company shall, in the event that any broker- dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such broker-dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by (A) if such Rules or By-Laws, including Schedule E thereto, shall so require, engaging a "qualified independent underwriter" (as defined in such Schedule) to participate in the preparation of the Shelf Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (C) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules of Fair Practice of the NASD. (r) The Trust and the Company shall use their best efforts to take all other steps necessary to effect the registration, offering and sale of the Securities covered by the Shelf Registration Statement contemplated hereby. 3. REGISTRATION EXPENSES. Except as otherwise provided in Section 6, the Company shall bear all fees and expenses incurred in connection with the performance of the obligations of the Company and the Trust under Sections 2 and 3 hereof and shall bear, or reimburse the Purchasers or the Holders for, the reasonable fees and disbursements of one counsel designated in connection with the filing of the Shelf Registration Statement. Notwithstanding anything to the contrary herein contained, each Holder of Securities shall pay all registration expenses to the extent required by applicable law. 4. INDEMNIFICATION. (a) The Trust and the Company, jointly and severally agree, to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement as originally filed or in an amendment thereof, or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; PROVIDED, HOWEVER, that (i) the Trust and the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Shelf Registration Statement as originally filed or in an amendment thereof, or in any preliminary prospectus relating to a Shelf Registration Statement in reliance upon and in conformity with written information pertaining to any Holder and furnished to the Trust or the Company by or on behalf of any Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this paragraph (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Trust or the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be in addition to any liability which the Trust or the Company may otherwise have to such Indemnified Party. The Trust and the Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders. (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Trust, the Trustee, the Company, each of the directors of the Company, each of the officers of the Company who signs such Shelf Registration Statement and each person, if any, who controls the Trust or the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company, the Trust, the Trustee, each of the directors of the Company, each of the officers of the Company who signs such Shelf Registration Statement or any person who controls the Trust or the Company may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement as originally filed or in an amendment thereof, or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Trust or the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Trust, the Trustee, the Company, each of the directors of the Company, each of the officers of the Company who signs such Shelf Registration Statement or any person who controls the Trust or the Company for any legal or other expenses reasonably incurred by the Trust, the Trustees, the Company, each of the directors of the Company, each of the officers of the Compay who signs such Shelf Registration Statement or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company, the Trust, the Trustees, each of the directors of the Company, each of the officers of the Company who signs such Shelf Registration Statement or any person who controls the Trust or the Company. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnifid party. (d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under paragraphs (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in paragraph (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the Initial Placement and the Shelf Registration Statement, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Trust, on the one hand, or such Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this paragraph (d). Notwitstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to the Shelf Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each of the directors of the Company, each of the officers of the Company who signs such Shelf Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company and each person, if any, who controls the Trust within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Trust. (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 5. UNDERWRITTEN OFFERING. If, pursuant to written notice delivered to the Company by the Holders of a majority in aggregate liquidation amount of the Preferred Securities, a majority in aggregate principal amount of the Debentures or a majority of Holders of the Common Stock, as the case may be, registered pursuant to a Shelf Registration, such Holders so elect, the offer and sale of any such Preferred Securities, Debentures and/or Common Stock may be effected in the form of an underwritten offering. In any such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Company; provided, however, that such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the Holders of a majority of the Securities to be included in such offering. The Company shall not, in any event, be obligated to arrange for more than one underwritten offering during the Shelf Registration Period. No Holder may participate in any underwritten offering contemplated hereby unless (i) such Holder (a) agrees to sell such Holder's Securities in accordance with any approved underwriting arrangements, (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements and (ii) at least 20% of the outstanding Securities are included in such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to the selling securityholders and shall reimburse the Trust and the Company for the fees and disbursements of their counsel, their independent public accountants and any printing expenses incurred in connection with such underwritten offering. Notwithstanding the foregoing or the provisions of Section 3(n) hereof, upon receipt of a request from the Managing Underwriter or a representative of Holders of a majority of the Securities outstanding to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 90 days if the Company in good faith has a valid business reason for such delay. (a) CHANGES TO THE APPLICABLE RATE UNDER CERTAIN CIRCUMSTANCES. The Applicable Rate at which interest is paid on the Debentures (including in respect of amounts accruing during any Deferral Period), and distributions are paid on the Preferred Securities shall be adjusted as follows, if any of the following events occur (each such event in clauses (i) through (iii) below, a "Registration Default"): (i) if a Shelf Registration Statement is not filed with the Commission on or prior to the 75th day following the Closing Date; (ii) if the Shelf Registration Statement is not declared effective on or prior to the 150th day following the Closing Date; (iii) if (1) after the Shelf Registration Statement is declared effective, such Shelf Registration Statement ceases to be effective prior to the end of the Shelf Registration Period (except as permitted in paragraph (b) of this Section 7) or (2) such Shelf Registration Statement or the related Prospectus ceases to be usable in connection with resales of Securities covered by such Shelf Registration Statement prior to the end of the Shelf Registration Period (except as permitted in paragraph (b) of this Section 7) because either (A) any event occurs as a result of which the related Prospectus forming part of such Shelf Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in light of the circumstances in which they were made not misleading or (B) it shall be necessary to amend such Shelf Registration Statement, or supplement the related Prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder. The Applicable Rate will increase following the occurrence of each Registration Default set forth in clauses (i), (ii) and (iii) above from and including the next day following each such Registration Default, in each case by .50% per annum of the principal amount or liquidation amount, as applicable, of the Securities without prejudice to any other claim that any Holder may have for any failure by the Company to obtain or maintain continuous effectiveness of a Shelf Registration Statement in accordance with the terms of this Registration Agreement. The increase in the Applicable Rate attributable to each Registration Default shall cease to be effective from the date such Registration Default is cured, and the Applicable Rate shall be reduced at such time to the Applicable Rate in effect immediately prior to such Registration Default; provided, however, in the event a Registration Default occurs prior to the Reset Date and is cured on or after the Reset Date, the Applicable Rate shall be the Term Rate from the date such Registration Default is cured. (b) Notwithstanding anything in Section 7(a) to the contrary, the Company may prohibit offers and sales of Registrable Securities at any time if (i) (1) it is in possession of material non-public information, (2)(A) the Board of Directors of the Company or (B) the Chief Financial Officer and the General Counsel of the Company, determine in good faith that disclosure of such material non-public information at such time would not be in the best interests of the Company, and (3)(A) the Chief Executive Officer of the Company or (B) the Chief Financial Officer and the General Counsel of the Company, determine that such prohibition is necessary in order to avoid a requirement to disclose such material non-public information; or (ii) the Company has made a public announcement relating to an acquisition or business combination transaction including the Company and/or one or more of its subsidiaries (1) that is material to the Company and its subsidiaries taken as a whole (and for such purpose no transaction shall be deemed material unless, on a pro forma basis and after giving effect thereto, consolidated assets or consolidated revenues of the Company and its subsidiaries as of the end of or for the most recently completed fiscal year would be increased by at least 20%) and (2) the Board of Directors of the Company or the Chief Executive Officer or the Chief Financial Officer of the Company determines in good faith that offers and sales of Registrable Securities prior to the consummation of such transaction (or such earlier date as the Board of Directors or the Chief Executive Officer or the Chief Financial Officer of the Company shall determine) is not in the best interests of the Company; provided that during any period of prohibition neither the Company nor any other Person to whom the Company shall have given registration rights with respect to shares of Common Stock shall be entitled to make offers and sales of Common Stock pursuant to a registration statement filed under the Securities Act, other than pursuant to an employee stock purchase plan, stock option or other employee benefit plan or a dividend re-investment plan of the Company (each period during which any prohibition of offers and sales of Registrable Securities is in effect pursuant to clause (i) or (ii) of this Section 7(b) is referred to herein as a "Suspension Period"). A Suspension Period shall commence on and include the date on which the Company provides written notice to Holders of Registrable Securities that offers and sales of Registrable Securities cannot be made in accordance with this Section 7(b) and shall end on the date on which each such Holder of Registrable Securities either receives copies of a prospectus supplement, or is advised in writing by the Company that offers and sales of Registrable Securities and use of the Prospectus may be resumed; provided, however, that all Suspension Periods pursuant to clause (i) of this Section 7(b) in the aggregate shall not exceed 60 days during any period of twelve consecutive calendar months (nor more than 20 consecutive days for any one Suspension Period) and each Suspension Period shall be followed by at least ten Business Days during which no Suspension Period is in effect. (c) A Registration Default referred to in Section 7(a)(iii) shall be deemed not to have occurred and be continuing in relation to the Shelf Registration Statement or the related Prospectus if (i) such Registration Default has occurred solely as a result of (1) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related Prospectus or (2) the occurrence of other material events or developments with respect to the Trust or the Company that would need to be described in such Registration Statement or the related Prospectus and (ii) in the case of clause (2), the Trust and the Company are proceeding promptly and in good faith to amend or supplement such Registration Statement and related Prospectus to describe such events; provided, however, that in any case, if such Registration Default occurs for a continuous period in excess of 45 days, the Applicable Rate shall increase by .50% per annum of the principal amount or the liquidation amount, as applicable, in accordance with paragraph (a) above from the first day of such 45-day period until the date on which such Registration Default is cured. 6. MISCELLANEOUS. (a) No Inconsistent Agreements. The Trust and the Company have not, as of the date hereof, entered into, nor shall they on or after the date hereof, enter into, any agreement with respect to their securities or otherwise that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Trust and the Company have obtained the written consent of the Purchasers. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 8(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with respect to the Debentures, or the Declaration, with respect to the Preferred Securities, with a copy in a like manner to Credit Suisse First Boston Corporation; (ii) if to the Purchasers, initially at the address set forth in the Purchase Agreement; and (iii) if to the Trust or the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. The Purchaser or the Trust and the Company by notice to the other may designate additional or different addresses for subsequent notices or communications. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and the Holders, including, without the need for an express assignment or any consent by the Trust or the Company thereto, subsequent Holders of Securities. The Trust and the Company hereby agree to extend the benefits of this Agreement to any Holder of Securities and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. (h) Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. Please confirm that the foregoing correctly sets forth the agreement between the Company, the Trust and you. Very truly yours, TITAN CAPITAL TRUST By: _______________________________ Name: Title: Administrative Trustee, solely in a capacity as trustee and not in an individual capacity THE TITAN CORPORATION By: _______________________________ Name: Title: The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: CREDIT SUISSE FIRST BOSTON CORPORATION Acting on behalf of itself and as the representative of Donaldson, Lufkin & Jenrette Securities Corporation By: _________________________ Name: Title: EX-4.6 7 EXHIBIT 4.6 AMENDED AND RESTATED DECLARATION OF TRUST OF TITAN CAPITAL TRUST FEBRUARY 9, 2000 AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and effective as of February 9, 2000, by the undersigned trustees (together with all other Persons from time to time duly appointed and serving as trustees in accordance with the provisions of this Declaration, the "Trustees"), The Titan Corporation, a Delaware corporation, as trust Depositor (the "Depositor"), and by the holders, from time to time, of undivided beneficial interests in the assets of the Trust (as defined below) issued pursuant to this Declaration; WHEREAS, the Trustees and the Depositor established Titan Capital Trust (the "Trust") under the Business Trust Act (as hereinafter defined) pursuant to a Declaration of Trust dated as of January 19, 2000 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on January 19, 2000, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain Debentures of the Debenture Issuer (as hereinafter defined); WHEREAS, as of the date hereof, no interests of the Trust have been issued; WHEREAS, all of the Trustees and the Depositor, by this Declaration, amend and restate each and every term and provision of the Original Declaration; and NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a business trust under the Business Trust Act and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I INTERPRETATION AND DEFINITIONS Section 1.01 DEFINITIONS. Unless the context otherwise requires: (a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Declaration, and any capitalized term not defined in this Declaration shall have the meaning assigned thereto in the Indenture; (b) a term defined anywhere in this Declaration or the Indenture has the same meaning throughout; (c) all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time; (d) all references in this Declaration to Articles, Sections, Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified; (e) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (f) a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and (g) a reference to the singular includes the plural and vice versa. "ACS" means Advanced Communication Systems, Inc., a Delaware corporation. "ADDITIONAL AMOUNTS" has the meaning specified in the Indenture. "ADMINISTRATIVE ACTION" has the meaning set forth in the definition of "Tax Event" in this Section 1.01. "ADMINISTRATIVE TRUSTEE" means any Trustee other than the Property Trustee and the Delaware Trustee. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AGENT" means any Registrar, Paying Agent, Conversion Agent or co-registrar. 2 "APPOINTMENT EVENT" means an event defined in the terms of the Preferred Securities, as set forth in Annex I, which entitles the Holders of a Majority in liquidation amount of the Preferred Securities to appoint a Special Trustee. "AUTHORIZED OFFICER" of a Person means any Person that is authorized to bind such Person. "BENEFICIARIES" has the meaning set forth in Section 4.03(a). "BOOK ENTRY INTEREST" means a beneficial interest in a Global Preferred Securities Certificate, ownership and transfers of which shall be maintained and made through book entries by a Depositary as described in Section 9.02. "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. "BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 eT Seq., as it may be amended from time to time, or any successor legislation. "CERTIFICATE" means a certificate in global or definitive form representing a Common Security or a Preferred Security. "CHANGE IN 1940 ACT LAW" has the meaning specified in paragraph 4(d) of Annex I. "CLOSING DATE" means February 9, 2000. "CODE" means the Internal Revenue Code of 1986, as amended, or any successor legislation. "COMMISSION" means the Securities and Exchange Commission. "COMMON SECURITIES" has the meaning specified in Section 7.01(a). "COMMON SECURITIES GUARANTEE" means the guarantee agreement to be dated as of February 9, 2000 of the Depositor in respect of the Common Securities. "COMMON STOCK" has the meaning specified in the Indenture. "COMPOUNDED INTEREST" has the meaning specified in the Indenture. 3 "CONVERSION AGENT" has the meaning set forth in Section 7.04. "CONVERSION DATE" has the meaning specified in paragraph 5(b) of Annex I. "CONVERSION REQUEST" has the meaning specified in paragraph 5(b) of Annex I. "COVERED PERSON" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities. "DEBENTURE EVENT OF DEFAULT" in respect of the Securities means an Event of Default (as defined in the Indenture) has occurred and is continuing in respect of the Debentures. "DEBENTURE ISSUER" means the Depositor in its capacity as issuer of the Debentures. "DEBENTURES" means the Convertible Senior Subordinated Debentures Due 2030 of the Debenture Issuer. "DEBENTURE TRUSTEE" means Wilmington Trust Company, a Delaware banking corporation, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "DECLARATION" means this Amended and Restated Declaration of Trust as originally executed or as it may from time to time be supplemented or amended. "DECLARATION TRUSTEES" means collectively, the Administrative Trustees, the Property Trustee and the Delaware Trustee. "DEFERRAL PERIOD" has the meaning specified in paragraph 2(b) of Annex I. "DEFINITIVE PREFERRED SECURITIES" means any Preferred Securities in definitive form issued by the Trust. "DELAWARE TRUSTEE" has the meaning set forth in Section 5.02. "DEPOSITARY" means The Depository Trust Company, the initial clearing agency, until a successor shall be appointed pursuant to Section 9.05, and thereafter means such successor Depositary. "DEPOSITOR" means The Titan Corporation, a Delaware corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as Depositor of the Trust. 4 "DIRECT ACTION" has the meaning specified in Section 3.08(e). "DISCLOSURE DOCUMENTS" has the meaning specified in the Remarketing Agreement. "DISSOLUTION TAX OPINION" has the meaning specified in the definition of Tax Event in this Section 1.01. "DISTRIBUTION" means a distribution payable to Holders of Securities in accordance with Section 6.01. "DISTRIBUTION DATE" has the meaning specified in paragraph 2(b) of Annex I. "EVENT OF DEFAULT" means: (i) a Debenture Event of Default; or (ii) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days (subject to the deferral of any due date in the case of a Deferral Period); or (iii) default by the Trust in the payment of any Redemption Price of any Security when it becomes due and payable; or (iv) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in the Declaration (other than a covenant or warranty, a default in the performance of which or the breach of which is addressed in clause (ii) or (iii) above), and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Declaration Trustee or Declaration Trustees by the holders of at least 25% in aggregate liquidation amount of the outstanding Preferred Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the Declaration; or (v) the occurrence of a bankruptcy or insolvency with respect to the Property Trustee and the failure of the Depositor to appoint a successor Property Trustee in the manner required by Section 5.06(c). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. 5 "FAILED FINAL REMARKETING" has the meaning specified in the Remarketing Agreement. "FISCAL YEAR" shall have the meaning specified in Section 11.01. "GLOBAL PREFERRED SECURITY" shall have the meaning specified in Section 7.03(a). "HOLDER" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "INDEMNIFIED PERSON" means (a) any Trustee; (b) any Affiliate of any Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Trustee; or (d) any employee or agent of the Trust or its Affiliates. "INDENTURE" means the Indenture, dated as of February 9, 2000, between the Debenture Issuer and the Debenture Trustee, as it may be amended from time to time. "INITIAL CONVERSION PRICE" has the meaning specified in paragraph 5(a) of Annex I. "INITIAL RATE" has the meaning specified in paragraph 2(a) of Annex I. "INITIAL REDEMPTION PRICE" has the meaning specified in the Indenture. "INVESTMENT COMPANY" means an investment company as defined in the Investment Company Act. "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "INVESTMENT COMPANY EVENT" has the meaning specified in paragraph 4(d) of Annex I. "LEGAL ACTION" has the meaning set forth in Section 3.06(g). "LIKE AMOUNT" means (i) with respect to a redemption of Securities, Securities having an aggregate liquidation amount equal to that portion of the principal amount of Debentures to be contemporaneously redeemed in accordance with the Indenture, allocated to such Securities based upon the relative liquidation amounts of such Securities and the proceeds of which will be used to pay the applicable Redemption Price of such Securities and (ii) with respect to a distribution of Debentures to Holders of the Securities in connection with a dissolution and liquidation of the Trust, Debentures having a principal amount equal to the aggregate liquidation amount of the Securities of the Holder to whom such Debentures are distributed. 6 "LIQUIDATION DISTRIBUTION" has the meaning specified in paragraph 3 of Annex I. "LIST OF HOLDERS" has the meaning set forth in Section 2.02(a). "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided in the terms of the Securities and by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class, representing more than 50% of the aggregate liquidation amount (i.e., the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "MINISTERIAL ACTION" has the meaning set forth in paragraph 4(d) in Annex I. "NO RECOGNITION OPINION" has the meaning specified in paragraph 4(d) of Annex I. "NOTICE" has the meaning set forth in Section 15.01(c). "OBLIGATIONS" means any costs, expenses or liabilities of the Trust, other than obligations of the Trust to pay to Holders of any Securities or other similar interests in the Trust the amounts due such Holders pursuant to the terms of the Securities or such other similar interests, as the case may be. "OFFER TO REPURCHASE" has the meaning set forth in Section 15.01(a). "OFFERING CIRCULAR" means the confidential offering circular, dated as of February 3, 2000, relating to the issuance by the Trust of Preferred Securities. "OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (i) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (ii) brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (iii) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such 7 officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (a) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "OID" means original issue discount. "OPTIONAL CLOSING DATE" has the meaning assigned to such term in the Purchase Agreement. "OPTIONAL REDEMPTION" has the meaning specified in the Indenture. "PARTICIPANTS" has the meaning set forth in Section 7.03(b). "PAYING AGENT" has the meaning specified in Section 7.04. "PAYMENT AMOUNT" has the meaning specified in Section 6.01. "PERSON" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "PREFERRED SECURITIES" has the meaning specified in Section 7.01(a). "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement to be dated as of February 9, 2000, between the Depositor and Wilmington Trust Company, as Guarantee Trustee, in respect of the Preferred Securities. "PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Depositary, or on the books of a Person maintaining an account with such Depositary (directly as a Participant or as an indirect participant, in each case in accordance with the rules of such Depositary). "PROPERTY TRUSTEE" means the Trustee meeting the eligibility requirements set forth in Section 5.03. "PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section 3.08(c). "PRO RATA" has the meaning specified in paragraph 9 of Annex I. "QIBS" has the meaning set forth in Section 3.06(b)(i). 8 "PURCHASE AGREEMENT" has the meaning set forth in Section 7.03. "QUORUM" means a majority of the Administrative Trustees or, if there are only two Administrative Trustees, both of them. "REDEMPTION PRICE" has the meaning specified in the Indenture. "REDEMPTION TAX OPINION" has the meaning specified in paragraph 4 (d) of Annex I. "REGISTRAR" has the meaning set forth in Section 7.04. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated February 9, 2000, among the Depositor, the Trust, and the Purchasers named in the Purchase Agreement. "REGULAR RECORD DATE" has the meaning specified in the Indenture. "RELATED PARTY" means, with respect to the Depositor, any direct or indirect wholly owned subsidiary of the Depositor or any other Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Depositor. "REMARKETING" has the meaning specified in the Remarketing Agreement. "REMARKETING AGENT" has the meaning specified in the Indenture. "REMARKETING AGREEMENT" means the Remarketing Agreement, dated February 9, 2000 among the Depositor, the Trust, the Tender Agent and the Remarketing Agent. "REPURCHASE PAYMENT" has the meaning set forth in Section 15.01(a). "REPURCHASE PAYMENT DATE" has the meaning set forth in Section 15.01(c)(ii). "RESET DATE" means any date that is (i) not later than February 15, 2005 (or, if such day is not a Business Day, the next succeeding Business Day), and (ii) not earlier than 70 Business Days prior to February 15, 2005, as may be determined by the Remarketing Agent, in its sole discretion. "RESPONSIBLE OFFICER" means, with respect to the Property Trustee, any vice-president, any assistant vice-president, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer in the corporate trust department of the Property Trustee customarily performing functions similar to those performed by any of the above designated 9 officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "RESTRICTED PREFERRED SECURITIES" has the meaning specified in Section 9.01(j). "RESTRICTED SECURITIES LEGEND" shall mean the legend specified in Section 9.02(j)(i). "SECURITIES" means the Common Securities and the Preferred Securities. "SECURITIES ACT" means the Securities Act of 1933 or any successor legislation. "SECURITIES CUSTODIAN" means the custodian with respect to any Preferred Security in global form. "SECURITIES GUARANTEE" means the Common Securities Guarantee and the Preferred Securities Guarantee. "SPECIAL TRUSTEE" means a trustee appointed by the Holders of a Majority in liquidation amount of the Preferred Securities in accordance with Section 5.06(a)(ii)(B). "SUCCESSOR DELAWARE TRUSTEE" has the meaning set forth in Section 5.06(d). "SUCCESSOR ENTITY" has the meaning specified in Section 3.15(b). "SUCCESSOR PROPERTY TRUSTEE" has the meaning set forth in Section 5.06(b). "SUCCESSOR SECURITIES" has the meaning specified in Section 3.15(b). "SUPER MAJORITY" has the meaning set forth in Section 2.06(a)(ii). "TAX EVENT" means the receipt by the Property Trustee of an opinion of a nationally recognized independent tax counsel to the Depositor (reasonably acceptable to the Trustees) experienced in such matters (a "DISSOLUTION TAX OPINION") to the effect that, as a result of (i) any amendment to or change (including any announced prospective change (which shall not include a proposed change), PROVIDED that a Tax Event shall not occur more than 90 days before the effective date of any such prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (ii) 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 (iii) any amendment to or change in the administrative position or interpretation of any Administrative Action or judicial decision that 10 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 the original issuance of the Debentures or the issue date of the Preferred Securities issued by the Trust, there is more than an insubstantial risk that (a) if the Debentures are held by the Property Trustee, (x) the Trust is, or will be within 90 days of the date of such opinion, subject to United States 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 such counsel, or (y) any portion of interest payable by the Depositor to the Trust (or OID accruing) on the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the Depositor in whole or in part for United States federal income tax purposes or (b) with respect to Debentures which are no longer held by the Property Trustee, any portion of interest payable by the Depositor (or OID accruing) on the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the Depositor in whole or in part for United States federal income tax purposes. "TENDER AGENT" means the Property Trustee if any Preferred Securities are outstanding and the Debenture Trustee if the Debentures have been distributed to the Holders of the Preferred Securities. "TENDER NOTIFICATION DATE" has the meaning specified in the Indenture. "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided in the terms of the Securities or by the Trust Indenture Act, Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities, voting separately as a class, representing 10% or more of the aggregate liquidation amount (i.e., the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "TERM PROVISIONS" has the meaning specified in the Remarketing Agreement. "TERM CALL PROTECTIONS" has the meaning specified in the Remarketing Agreement. "TREASURY REGULATIONS" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeed ing regulations). "TRUST" has the meaning specified in the first recital of this Agreement. 11 "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "TRUSTEE" or "TRUSTEES" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "UNRESTRICTED GLOBAL PREFERRED SECURITY" has the meaning set forth in Section 9.02(b). ARTICLE II TRUST INDENTURE ACT Section 2.01 TRUST INDENTURE ACT; APPLICATION. (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration, which are incorporated by reference in and made part of this Declaration and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act. (c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. (d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities as equity securities representing undivided beneficial interests in the assets of the Trust. Section 2.02 LISTS OF HOLDERS OF SECURITIES. (a) Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide the Property Trustee (i) within 14 days after each record date for payment of Distributions, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders of the Securities ("LIST OF HOLDERS") as of such record date, PROVIDED that neither the Depositor nor the Adminis trative Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Depositor and the Administrative Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all 12 information contained in Lists of Holders given to it or which it receives in its capacity as Paying Agent (if acting in such capacity), PROVIDED that the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Property Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. Section 2.03 REPORTS BY THE PROPERTY TRUSTEE. Within 60 days after May 15 of each year, commencing May 15, 2000, the Property Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. Section 2.04 PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of thE Trust Indenture Act (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act, such compliance certificate to be delivered annually on or before 120 days after the end of each fiscal year of the Depositor. Section 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.06 EVENTS OF DEFAULT; WAIVER. (a) The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences, PROVIDED that, if the Event of Default: (i) is caused by a Debenture Event of Default that is not waivable under the Indenture, the Event of Default under the Declaration shall also not be waivable; (ii) is caused by a Debenture Event of Default that requires the consent or vote of greater than a majority in principal amount of the holders of the Debentures (a "SUPER MAJORITY") to be waived under the Indenture, the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Preferred Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding; 13 (iii) is the result of a default by the Trust in the payment of any Distribution when it becomes due and payable, which default has continued for 30 days (subject to the deferral of any due date in the case of a Deferral Period), the Event of Default shall not be waivable; or (iv) is the result of a default by the Trust in the payment of any Redemption Price of any Preferred Security when it becomes due and payable, the Event of Default shall not be waivable. The foregoing provisions of this Section 2.06(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or an Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. (b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences, PROVIDED that, if the Event of Default is caused by a Debenture Event of Default that: (i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.06(b), the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.06(b), the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Common Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding; 14 PROVIDED FURTHER, each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and its consequences until the effects of all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.06(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.06(b), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (c) A waiver of an Event of Default under the Indenture by the Property Trustee at the direction of the Holders of the Preferred Securities, constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 2.06(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Section 2.07 EVENT OF DEFAULT; NOTICE. (a) The Property Trustee shall, within ten Business Days after the occurrence of an Event of Default actually known to the Property Trustee, (i) transmit by mail, first-class postage prepaid, to the Holders of the Securities, and (ii) transmit by any means provided for in this Declaration to the Administrative Trustees and the Depositor, notices of all defaults actually known to the Property Trustee, unless such defaults have been cured or waived before the giving of such notice (the term "defaults" for the purposes of this Section 2.07(a) being hereby defined to be an Event of Default, not including any periods of grace and irrespective of the giving of any notice); PROVIDED that, except for a default in the payment of principal of (or premium, if any) or interest on any of the Debentures, the Property Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. (b) The Property Trustee shall not be deemed to have knowledge of any default except: (i) a default under Sections 5.01(1) and 5.01(2) of the Indenture; or 15 (ii) any default as to which the Property Trustee shall have received written notice. ARTICLE III ORGANIZATION Section 3.01 NAME. The Trust is named "Titan Capital Trust," as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrative Trustees. Section 3.02 OFFICE. The address of the principal office of the Trust is c/o The Titan Corporation, 3033 Science Park Road, San Diego, California 92121-1199, Attention: General Counsel. On ten Business Days' written notice to the Holders of Securities, the Administrative Trustees may designate another principal office. Section 3.03 PURPOSE. The exclusive purposes and functions of the Trust are (a) to issue and sell the Securities and use the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States Federal income tax purposes as a grantor trust. Section 3.04 AUTHORITY. (a) Subject to the limitations provided in this Declaration and to the specific duties of the Property Trustee, the Administrative Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Administrative Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. (b) Except as expressly set forth in this Declaration and except if a meeting of the Administrative Trustees is called with respect to any matter over which the Administrative Trustees have power to act, any power of the Administrative Trustees may be exercised by, or with the consent of, any one such Administrative Trustee. (c) An Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the 16 purposes of signing any documents which the Administrative Trustees have power and authority to cause the Trust to execute pursuant to Section 3.06. Section 3.05 TITLE TO PROPERTY OF THE TRUST. Except as provided in Section 3.08 with respect to the Debentures and the Property Trustee Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust. Section 3.06 POWERS AND DUTIES OF THE ADMINISTRATIVE TRUSTEES. The Administrative Trustees shall have, together (except in the case of paragraphs (a), (b) and (c) of this Section 3.06) with any Special Trustee holding office pursuant to Section 5.06, if any, the exclusive power, duty and authority to cause the Trust to engage in the following activities: (a) to issue and sell the Preferred Securities and the Common Securities in accordance with this Declaration; PROVIDED, HOWEVER, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities, and, PROVIDED FURTHER, that there shall be no interests in the Trust other than the Securities, and the issuance of Securities shall be limited to simultaneous issuances of both Preferred Securities and Common Securities on the Closing Date and any Optional Closing Date; (b) in connection with the issue and sale of the Preferred Securities, at the direction of the Depositor, to: (i) assist in the preparation of the Offering Circular and preliminary offering circular, in each case prepared by the Depositor, in relation to the offering and sale of the Preferred Securities to qualified institutional buyers ("QIBs") in reliance on Rule 144A under the Securities Act and to execute and file with the Commission, at such time as determined by the Depositor, a registration statement filed on Form S-3 prepared by the Depositor, including any amendments thereto, in relation to the Preferred Securities; (ii) execute and file any documents prepared by the Depositor, or take any acts as determined by the Depositor to be necessary in order to qualify or register all or part of the Preferred Securities in any state or foreign jurisdiction in which the Depositor has determined to qualify or register such Preferred Securities for sale; (iii) execute and file an application, prepared by the Depositor, to the Private Offerings, Resale and Trading through Automated Linkages ("PORTAL") Market and, at such time, if any, as determined by the Depositor to the New York Stock Exchange, Inc. or any other national stock exchange or the NASDAQ National Market for listing or quotation upon notice of issuance of any 17 Preferred Securities (including at the time of the Remarketing), but if and only if the Depositor has so instructed the Administrative Trustees to make such filing; (iv) execute and deliver letters, documents, or instruments with The Depository Trust Company relating the Preferred Securities; (v) execute and file with the Commission a registration statement on Form 8-A, including any amendments thereto, prepared by the Depositor relating to the registration of the Preferred Securities under Section 12 of the Exchange Act, but if and only if the Depositor has so instructed the Administrative Trustees to make such filing; and (vi) execute and enter into the Remarketing Agreement, the Purchase Agreement, the Registration Rights Agreement, and other related agreements providing for the sale of the Preferred Securities; and (vii) and to execute and file any agreement, certificate or other document which such Administrative Trustee deems necessary or appropriate in connection with the issuance and sale of the Preferred Securities; (c) to acquire the Debentures with the proceeds of the sale of the Preferred Securities and the Common Securities; PROVIDED, HOWEVER, that the Administrative Trustees shall cause legal title to the Debentures to be held of record in the name of the Property Trustee for the benefit of the Holders of the Preferred Securities and the Holders of Common Securities; (d) to give the Depositor and the Property Trustee prompt written notice of the occurrence of a Tax Event or an Investment Company Event; PROVIDED that the Administrative Trustees (and Special Trustee, if any) shall consult with the Depositor and the Property Trustee before taking or refraining from taking any Ministerial Action in relation to a Tax Event or Investment Company Event; (e) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of Section 316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Preferred Securities and Holders of Common Securities as to such actions and applicable record dates; (f) to take all actions and perform such duties as may be required of the Administrative Trustees pursuant to the terms of the Securities; (g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("LEGAL ACTION"), unless 18 pursuant to Section 3.08(e), the Property Trustee has the exclusive power to bring such Legal Action; (h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) to give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Administrative Trustee; (k) to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; (l) to act as, or appoint another Person to act as, Registrar, Conversion Agent, Paying Agent, Tender Agent and transfer agent for the Securities; (m) to give prompt written notice to the Holders of the Securities of any notice received from the Debenture Issuer of its election to defer payments of interest on the Debentures by extending the interest payment period under the Indenture; (n) to cause the Trust to comply with the Trust's obligations under Article XV of the Declaration in the event that the acquisition of ACS is not consummated by March 31, 2000; (o) as set forth in the Remarketing Agreement, to assist in the preparation of any Disclosure Documents in relation to the offering and sale of the securities to be issued in the Remarketing; (p) to execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing; (q) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; 19 (r) to take any action, not inconsistent with this Declaration or with applicable law, that the Administrative Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.06, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; (ii) causing the Trust to be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation or partnership; and (iii) cooperating with the Debenture Issuer to ensure that the Debentures will be treated as indebtedness of the Debenture Issuer for United States federal income tax purposes, PROVIDED that such action does not adversely affect the interests of Holders; and (s) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Administrative Trustees, on behalf of the Trust. The Administrative Trustees must exercise the powers set forth in this Section 3.06 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.03, and the Administrative Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.03. Subject to this Section 3.06, the Administrative Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.08. Any expenses incurred by the Administrative Trustee (or the Special Trustee, if any) pursuant to this Section 3.06 shall be reimbursed by the Debenture Issuer. The Administrative Trustees shall take all action on behalf of the Trust that are not specifically required by this Declaration to be taken by any other Trustee. Section 3.07 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES. The Trust shall not, and the Trustees (including the Property Trustee) on behalf of the Trust shall not, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not and the Trustees (including the Property Trustee) shall cause the Trust not to: (i) invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of Securities pursuant to the terms of this Declaration and of the Securities; 20 (ii) acquire any assets other than as expressly provided herein; (iii) possess Trust property for other than a Trust purpose; (iv) make any loans or incur any indebtedness other than loans represented by the Debentures; (v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever, except as provided in the Remarketing Agreement; (vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or (vii) other than as provided in the Declaration or Annex I hereto, (A) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under Section 5.13 of the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless, in the case of each action described in clause (A), (B), (C) or (D), the Trust shall have received an opinion of a nationally recognized independent counsel experienced in such matters to the effect that such modification will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust. Section 3.08 POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a) The legal title to the Debentures shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Holders of the Securities. The right, title and interest of the Property Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 5.06. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Debentures to the Administrative Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). 21 (c) The Property Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "PROPERTY TRUSTEE ACCOUNT") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debentures held by the Property Trustee, deposit such funds into the Property Trustee Account and make payments to the Holders of the Preferred Securities and Holders of the Common Securities from the Property Trustee Account in accordance with Section 6.01. Funds in the Property Trustee Account shall be held uninvested until disbursed in accordance with this Declaration. (ii) engage in such ministerial activities as so directed and as shall be necessary or appropriate to effect the redemption of the Preferred Securities and the Common Securities to the extent the Debentures are redeemed or mature; and (iii) upon written notice of distribution issued by the Administrative Trustees in accordance with the terms of the Securities, engage in such ministerial activities as so directed as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of certain special events (as may be defined in the terms of the Securities) arising from a change in law or a change in legal interpretation or other specified circumstances pursuant to the terms of the Securities. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of the Securities. (e) The Property Trustee shall take any Legal Action which arises out of or in connection with an Event of Default or the Property Trustee's duties and obligations under this Declaration or the Trust Indenture Act; PROVIDED, HOWEVER, that if a Debenture Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the Redemption Date), then a Holder of Preferred Securities may institute a legal proceeding directly, subject to the terms of the Indenture (including the subordination provisions set forth in Article XII thereof), for enforcement of payment to such Holder of the principal of or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder (a "DIRECT ACTION") on or after the respective due date specified in the Securities. In connection with such Direct Action, the Holders of the Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Depositor to such Holder of Preferred Securities in such Direct Action. In addition, if the Property Trustee fails to enforce its rights under the Debentures (other than rights arising from an Event of Default 22 described in the immediately preceding sentence) after any Holder of Preferred Securities shall have made a written request to the Property Trustee to enforce such rights, such Holder of Preferred Securities may, to the fullest extent permitted by law, institute a Direct Action to enforce the rights of the Property Trustee or any other Person. Except as provided in this paragraph, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Debentures. (f) The Property Trustee shall not resign as a Trustee unless either: (i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Securities pursuant to the terms of the Securities; or (ii) a Successor Property Trustee has been appointed and has accepted that appointment in accordance with Section 5.06. (g) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Debentures under the Indenture and, if an Event of Default occurs and is continuing, the Property Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to the terms of such Securities. (h) The Property Trustee shall act as the initial Paying Agent and Registrar to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to the Preferred Securities and any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. The Property Trustee shall also act as the initial Conversion Agent. Any Paying Agent or Conversion Agent may be removed by the Administrative Trustees at any time and a successor Paying Agent or Conversion Agent or additional Paying Agents or Conversion Agents may be appointed at any time by the Administrative Trustees. The Administrative Trustees may also appoint one or more agents in addition to the Registrar to accept Preferred Securities for transfer or exchange, it being understood that the registration of all such transfers and exchanges will be effected in the register maintained for such purpose by the Registrar. The Paying Agent, the Conversion Agent and any additional agents appointed by the Administrative Trustees pursuant to the immediately preceding sentence may resign upon 30 days' written notice to the Property Trustee, the Administrative Trustees and the Depositor. (i) Subject to this Section 3.08, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 3.06. The Property Trustee must exercise the powers set forth in this Section 3.08 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.03, and the Property Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.03. 23 Section 3.09 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE. (a) The Property Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Declaration and in the Securities and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration and in the Securities, and no implied covenants or obligations shall be read into this Declaration or the Securities against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Property Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein); (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; 24 (iii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration; (iv) no provision of this Declaration shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers; (v) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Property Trustee Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration and the Trust Indenture Act; (vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Debentures or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Depositor. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Trustee Account maintained by the Property Trustee pursuant to Section 3.08(c)(i) and except to the extent otherwise required by law; and (viii) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Declaration, nor shall the Property Trustee be liable for the default or misconduct of the Administrative Trustees or the Depositor. Section 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE. (a) Subject to the provisions of Section 3.09: (i) the Property Trustee may rely conclusively and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document 25 believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (ii) any direction or act of the Depositor or the Administrative Trustees contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (iv) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or registration thereof; (v) the Property Trustee may consult with counsel of its choice or other experts and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion, such counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; (vi) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee security satisfactory to the Property Trustee, against the costs, expenses (including its attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested in writing by the Property Trustee, PROVIDED, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Declaration; (vii) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, 26 instrument, opinion, report, notice, request, direction, consent, order, security, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (viii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (x) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder the Property Trustee (i) may request instructions from the Holders of the Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions, subject to the express terms of this Declaration; (xi) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and (xii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration. (b) No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to 27 perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. Section 3.11 DELAWARE TRUSTEE. Notwithstanding any other provision of this Declaration other than Section 5.02, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Administrative Trustees or the Property Trustee described in this Declaration. Except as set forth in Section 5.02, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of ss. 3807 of the Business Trust Act. Section 3.12 EXECUTION OF DOCUMENTS. Except as otherwise required by applicable law, any Administrative Trustee is authorized to execute on behalf of the Trust any documents that the Administrative Trustees have the power and authority to execute pursuant to Section 3.06; PROVIDED that, the registration statement referred to in Section 3.06(b)(i), including any amendments thereto, shall be signed by a majority of the Administrative Trustees (or, if there are only two Administrative Trustees, by both Administrative Trustees). Section 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Depositor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration, the Debentures or the Securities. Section 3.14 DURATION OF TRUST. The Trust, unless dissolved pursuant to the provisions of Article VIII hereof, shall exist until February 9, 2035. Section 3.15 MERGERS. (a) The Trust may not 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 Person, except as described in Section 3.15(b) and (c) of this Declaration or paragraph 3 of Annex I. (b) The Trust may, with the consent of a majority of the Administrative Trustees (or, if there are only two Administrative Trustees, both Administrative Trustees) and without the consent of the Holders of the Securities, the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state or the District of Columbia; PROVIDED that: (i) if the Trust is not the surviving entity, the successor entity (the "SUCCESSOR ENTITY") either: (A) expressly assumes all of the obligations of the Trust under the Securities; or 28 (B) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "SUCCESSOR SECURITIES") as long as the Successor Securities rank, with respect to participation in the profits and distributions and in the assets of the Successor Entity, at least as high as the Preferred Securities rank with respect to participation in the profits and distributions or in the assets of the Trust; (ii) the Debenture Issuer expressly appoints a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the Holder of the Debentures; (iii) to the extent the Preferred Securities are listed on any national securities exchange or with another organization for listing or quotation, the Preferred Securities or any Successor Securities shall be so listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or with any other organization on which the Preferred Securities are then listed or quoted; (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization; (v) such merger, consolidation, amalgamation or replacement does not adversely affect the powers, preferences and other special rights of the Holders of the Preferred Securities (including any Successor Securities) in any material respect; (vi) such Successor Entity has a purpose substantially identical and limited to that of the Trust; (vii) prior to such merger, consolidation, amalgamation or replacement, the Depositor has received an opinion of a nationally recognized independent counsel (reasonably acceptable to the Property Trustee) to the Trust experienced in such matters to the effect that: (A) following such merger, consolidation, amalgamation or replacement, the Trust or the Successor Entity will continue to be treated as a grantor trust for United States federal income tax purposes; 29 (B) following such merger, consolidation, amalgamation or replacement, none of the Depositor, the Trust or the Successor Entity will be required to register as an Investment Company; (C) such merger, consolidation, amalgamation or replacement will not adversely affect the limited liability of the Holders of the Securities (including any Successor Securities); (viii) the Depositor or any permitted successor or assignee directly or indirectly owns all the Common Securities and provides a guarantee to the Holders of the Successor Securities with respect to the Successor Entity having substantially the same terms as the Preferred Securities Guarantee; and (ix) such merger, consolidation, amalgamation, replacement or lease is not a taxable event for the Holders of the Preferred Securities. (c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the 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 such consolidation, amalgamation, merger or replacement would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes. ARTICLE IV DEPOSITOR Section 4.01 DEPOSITOR'S PURCHASE OF COMMON SECURITIES. On the Closing Date and any Optional Closing Date the Depositor will purchase an amount of Common Securities issued by the Trust such that the aggregate liquidation amount of such Common Securities purchased by the Depositor shall at such date equal at least 3% of the total capital of the Trust. Section 4.02 RESPONSIBILITIES OF THE DEPOSITOR. In connection with the issue and sale of the Preferred Securities, the Depositor shall have the exclusive right and responsibility to engage in the following activities: (a) to prepare the Offering Circular and to prepare for filing by the Trust with the Commission the Shelf Registration Statement, including any amendments thereto; (b) to determine the states and foreign jurisdictions in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts (including at the time of the Remarketing), other than actions which must be taken by 30 the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states and foreign jurisdictions; (c) if so determined by the Depositor, to prepare for filing by the Trust an application to PORTAL, to the New York Stock Exchange or any other national stock exchange or the NASDAQ National Market for listing or quotation upon notice of issuance of any Preferred Securities (including at the time of the Remarketing); (d) to prepare for filing by the Trust with the Commission a registration statement on Form 8-A relating to the registration of the Preferred Securities (both at the time of their original issuance and at the time of the Remarketing, if required) under Section 12 of the Exchange Act, including any amendments thereto, if the Depositor in its sole discretion determines such a filing is necessary or appropriate; (e) to negotiate the terms of the Purchase Agreement, the Registration Rights Agreement, the Remarketing Agreement and other related agreements providing for the sale of the Preferred Securities (both at the time of their original issuance and at the time of the Remarketing); (f) to cause the Trust to comply with the Trust's obligations under Article XV of the Declaration and Section 10.09 of the Indenture in the event that the acquisition of ACS is not consummated by March 31, 2000; (g) as set forth in the Remarketing Agreement, to prepare Disclosure Documents in relation to the offering and sale of the securities to be issued in the Remarketing. Section 4.03 GUARANTEE OF PAYMENT OF TRUST OBLIGATIONS. (a) Subject to the terms and conditions of this Section 4.03, the Depositor hereby irrevocably and unconditionally guarantees, to the extent set forth in the Securities Guarantees and subject to the terms of the Indenture (including the subordination provisions set forth in Article XII thereof), to each Person to whom the Trust is now or hereafter becomes indebted or liable (the "BENEFICIARIES") the full payment, when and as due, of any and all Obligations to such Beneficiaries. (b) The agreement of the Depositor in Section 4.03(a) is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. (c) The agreement of the Depositor set forth in Section 4.03(a) shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all Holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise) and (b) the date on which there are no Beneficiaries remaining; PROVIDED, HOWEVER, that such agreement shall continue to be effective or shall be 31 reinstated, as the case may be, if at any time any Holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Preferred Securities Guarantee or under this Agreement for any reason whatsoever. Such agreement is continuing, irrevocable, unconditional and absolute. ARTICLE V TRUSTEES Section 5.01 NUMBER OF TRUSTEES. The number of Trustees shall initially be four (4), consisting of two (2) Administrative Trustees, the Delaware Trustee and the Property Trustee, and: (a) at any time before the issuance of any Securities, the Depositor may, by written instrument, increase or decrease the number of Trustees; and (b) after the issuance of any Securities: (i) the number of Trustees may be increased or decreased, except as provided in Sections 5.01(b)(ii) and 5.06(a)(ii)(B) with respect to the Special Trustee and except as provided in Section 5.06(a)(ii)(A) with respect to the removal of the Property Trustee and the Delaware Trustee upon a Debenture Event of Default, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities; PROVIDED, HOWEVER, that, the number of Trustees shall in no event be less than two (2); PROVIDED, FURTHER, that (1) one Trustee, in the case of a natural person, shall be a person who is a resident of the State of Delaware or that, if not a natural person, is an entity which has its principal place of business in the State of Delaware; (2) there shall be at least one Trustee who is an employee or officer of, or is affiliated with the Depositor (an "Administrative Trustee"); and (3) one Trustee shall be the Property Trustee for so long as this Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it meets the applicable requirements. (ii) the number of Trustees shall be increased automatically by one (1) if an Appointment Event has occurred and is continuing and the Holders of a Majority in liquidation amount of the Preferred Securities appoint a Special Trustee in accordance with Section 5.06(a)(ii). Section 5.02 DELAWARE TRUSTEE. If required by the Business Trust Act, one Trustee (the "DELAWARE TRUSTEE") shall be (a) a natural person who is a resident of the State of Delaware; or (b) if not a natural person, an entity which has its principal place of business in the 32 State of Delaware, and otherwise meets the requirements of applicable law, PROVIDED that, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall have no application. The initial Delaware Trustee shall be Wilmington Trust Company. Section 5.03 PROPERTY TRUSTEE; ELIGIBILITY. (a) There shall at all times be one Trustee which shall act as Property Trustee which shall: (i) not be an Affiliate of the Depositor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least fifty million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 5.03(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Property Trustee shall cease to be eligible to so act under Section 5.03(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 5.06(e). (c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. (d) The Preferred Securities Guarantee shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the Trust Indenture Act. (e) The initial Property Trustee shall be Wilmington Trust Company. Section 5.04 QUALIFICATIONS OF ADMINISTRATIVE TRUSTEES AND DELAWARE TRUSTEE GENERALLY. Each Administrative Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers. 33 Section 5.05 INITIAL TRUSTEES. The initial Administrative Trustees shall be: Deanna Hom Petersen c/o The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 Ray Guillaume c/o The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 The initial Delaware Trustee shall be: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 ATTENTION: Corporate Trust Administration The initial Property Trustee shall be: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 ATTENTION: Corporate Trust Administration Section 5.06 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a) Except as provided otherwise in this Section 5.06, Trustees may be appointed or removed without cause at any time: (i) until the issuance of any Securities, by written instrument executed by the Depositor; and (ii) after the issuance of any Securities: (A) other than in respect to a Special Trustee, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities, unless a Debenture Event of Default shall have occurred and be continuing, in which event the Property Trustee and the Delaware Trustee may 34 only be removed by the Holders of a Majority in liquidation amount of the Preferred Securities, voting as a class at a meeting of the Holders of the Preferred Securities; and (B) if an Appointment Event has occurred and is continuing, one (1) additional trustee (the "SPECIAL TRUSTEE"), who shall have the same rights, powers and privileges as an Administrative Trustee except as provided in Section 3.06, may be appointed by vote of the Holders of a Majority in liquidation amount of the Preferred Securities, voting as a class at a meeting of the Holders of the Preferred Securities, and such Special Trustee may only be removed (otherwise than by the operation of Section 5.06(e)), by vote of the Holders of a Majority in liquidation amount of the Preferred Securities voting as a class at a meeting of the Holders of the Preferred Securities. (b) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.06 until a successor Property Trustee meeting the requirements of Section 5.03 (a "SUCCESSOR PROPERTY TRUSTEE") has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Administrative Trustees and the Depositor. (c) The Depositor shall remove the Property Trustee by written instrument upon: (i) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Property Trustee as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Property Trustee under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Property Trustee or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (ii) the institution by the Property Trustee of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Property Trustee or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to 35 pay its debts generally as they become due and its willingness to be adjudicated a bankrupt, or the taking of corporate action by the Property Trustee in furtherance of any such action. The Depositor shall appoint a Successor Property Trustee within 60 days of such an event. (d) The Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.06(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (a "SUCCESSOR DELAWARE TRUSTEE") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Trustees and the Depositor. (e) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation, PROVIDED that a Special Trustee shall only hold office while an Appointment Event is continuing and shall cease to hold office immediately after the Appointment Event pursuant to which the Special Trustee was appointed and all other Appointment Events cease to be continuing. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Depositor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; PROVIDED, HOWEVER, that: (i) No such resignation of the Trustee that acts as the Property Trustee shall be effective: (A) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Depositor and the resigning Property Trustee; or (B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Depositor and the resigning Delaware Trustee; and (iii) no such resignation of a Special Trustee shall be effective until the 60th day following delivery of the instrument of resignation of the Special Trustee to the Depositor and the Trust or such later date specified in such 36 instrument during which period the Holders of the Preferred Securities shall have the right to appoint a successor Special Trustee as provided in this Section 5.06. (f) The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.06. (g) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.06 within 60 days after delivery to the Depositor and the Trust of an instrument of resignation or removal, the resigning Property Trustee or Delaware Trustee, resigning or being removed as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (h) No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be. Section 5.07 VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.01, or if the number of Trustees is increased pursuant to Section 5.01, a vacancy shall occur. A resolution certifying the existence of such vacancy by a majority of the Administrative Trustees (or, if there are only two Administrative Trustees, by both Administrative Trustees) shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.06. Section 5.08 EFFECT OF VACANCIES. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 5.06, the Administrative Trustees in office, regardless of their number, shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Declaration. Section 5.09 MEETINGS. Meetings of the Administrative Trustees shall be held from time to time upon the call of any Administrative Trustee. Regular meetings of the Administrative Trustees may be held at a time and place fixed by resolution of the Administrative Trustees. Notice of any meetings of the Administrative Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile or overnight courier) not less than 24 hours before such meeting. Notices shall contain a brief statement of the time, place and anticipated 37 purposes of the meeting. The presence (whether in person or by telephone) of an Administrative Trustee at a meeting shall constitute a waiver of notice of such meeting except where an Administrative Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Administrative Trustees may be taken at a meeting by a vote of a majority of the Administrative Trustees (or if there are only two Administrative Trustees, by a vote by both of them) present (whether in person or by telephone) and eligible to vote with respect to such matter, PROVIDED that a Quorum is present, or without a meeting and without prior notice by the unanimous written consent of the Administrative Trustees. In the event there is only one Administrative Trustee, any and all action of such Administrative Trustee shall be evidenced by a written consent of such Administrative Trustee. In the event a Special Trustee is holding office pursuant to Section 5.06, such Special Trustee shall have the same rights as an Administrative Trustee with respect to notice and participation in a meeting of the Administrative Trustees. Section 5.10 DELEGATION OF POWER. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 3.06, including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and (b) the Administrative Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which the Property Trustee or the Delaware Trustee, as the case may be, may be merged or converted or with which either may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Property Trustee or the Delaware Trustee, as the case may be, shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder, PROVIDED such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto other than as required by applicable law. 38 ARTICLE VI DISTRIBUTIONS Section 6.01 DISTRIBUTIONS. Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Preferred Securities and the Common Securities in accordance with the preferences set forth in the terms attached as Annex I hereto. If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded Interest (as defined in the Indenture) and Additional Amounts (as defined in the Indenture)), premium and/or principal on the Debentures held by the Property Trustee (the amount of any such payment being a "PAYMENT AMOUNT"), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "DISTRIBUTION") of the Payment Amount to Holders. ARTICLE VII ISSUANCE OF SECURITIES Section 7.01 GENERAL PROVISIONS REGARDING SECURITIES. (a) The Administrative Trustees shall on behalf of the Trust issue one class of convertible preferred securities, designated as Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)-SM-, representing undivided beneficial interests in the assets of the Trust (the "PREFERRED SECURITIES"), having such terms as are set forth in Annex I (including as such terms may be modified in accordance with the provisions of the Remarketing Agreement) and one class of convertible common securities, liquidation amount $50, representing undivided beneficial interests in the assets of the Trust (the "COMMON SECURITIES"), having such terms as are set forth in Annex I. On the Reset Date and as contemplated by the Remarketing Agreement, the Trust may also issue securities having Term Provisions to be set by the Remarketing Agent in accordance with the terms of the Remarketing Agreement. The Trust shall have no securities or other interests in the assets of the Trust other than the Preferred Securities and the Common Securities. The Trust shall issue no Securities in bearer form. (b) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (c) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable, subject to Section 10.01 with respect to the Common Securities, and shall not be subject to preemptive or other similar rights. (d) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration. 39 (e) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have covenanted to treat the Debentures as indebtedness and the Securities as evidence of an indirect beneficial ownership interest in the Debentures. Section 7.02 EXECUTION AND AUTHENTICATION. (a) The Securities shall be signed on behalf of the Trust by one Administrative Trustee. In case any Administrative Trustee who shall have signed any of the Securities shall cease to be such Administrative Trustee before the Securities so signed shall be delivered by the Trust, such Securities nevertheless may be delivered as though the person who signed such Securities had not ceased to be such Administrative Trustee; and any Securities may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be the Administrative Trustees, although at the date of the execution and delivery of the Declaration any such person was not such an Administrative Trustee. (b) One Administrative Trustee shall sign the Preferred Securities for the Trust by manual or facsimile signature. Unless otherwise determined by the Trust, such signature shall, in the case of Common Securities, be a manual signature. A Preferred Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee. The signature shall be conclusive evidence that the Preferred Security has been authenticated under this Declaration. Upon a written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate the Preferred Securities for original issue by executing the Property Trustee's certificate of authentication contained in the form of Preferred Securities attached hereto as Exhibit A-1. The aggregate number of Preferred Securities outstanding at any time shall not exceed the number set forth in the terms in Annex I hereto except as provided in Sections 7.06 and 7.07. The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Preferred Securities. An authenticating agent may authenticate Preferred Securities whenever the Property Trustee may do so. Each reference in this Declaration to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Depositor or an Affiliate. Section 7.03 FORM AND DATING. The Preferred Securities and the Property Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be printed, typewritten, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by their execution thereof. The 40 Securities may have letters, numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject, if any, or usage (PROVIDED that any such notation, legend or endorsement is in a form acceptable to the Trust). The Trust at the direction of the Depositor shall furnish any such legend not contained in Exhibit A-1 to the Property Trustee in writing. Each Preferred Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent applicable, the Property Trustee and the Depositor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. The Preferred Securities are being offered and sold by the Trust pursuant to a Purchase Agreement relating to the Preferred Securities, dated February 9, 2000, among the Trust, the Depositor and the Purchasers named therein (the "PURCHASE AGREEMENT"). (a) GLOBAL SECURITIES. Preferred Securities offered and sold as provided in the Purchase Agreement, shall be initially issued in the form of one or more permanent global Securities in definitive, fully registered form without distribution coupons with the appropriate global legends and Restricted Securities Legend set forth in Exhibit A-1 hereto (each a "Global Preferred Security"), which shall be deposited on behalf of the purchasers of the Preferred Securities represented thereby with the Property Trustee, at its Corporate Trust Office, as custodian for the Depositary, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Trust and authenticated by the Property Trustee as provided herein. The number of Preferred Securities represented by the Global Preferred Security may from time to time be increased or decreased by adjustments made on the records of the Property Trustee and the Depositary or its nominee as hereinafter provided. (b) BOOK-ENTRY PROVISIONS. The Preferred Securities, on original issuance, will be issued in the form of one or more, fully registered Global Preferred Securities, to be delivered to the Depositary, or the Securities Custodian by, or on behalf of, the Trust. An Administrative Trustee on behalf of the Trust shall execute and the Property Trustee shall, in accordance with this Section 7.03, authenticate and deliver initially one or more Global Preferred Securities that (i) shall be registered in the name of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by the Property Trustee to such Depositary or pursuant to such Depositary's written instructions or held by the Property Trustee as custodian for the Depositary. Unless and until definitive, fully registered certificated Preferred Securities have been issued to the Preferred Security Beneficial Owners pursuant to Section 7.03: (i) the provisions of this Section 7.03 shall be in full force and effect; 41 (ii) the Trust, the Trustees, the Registrar and the Paying Agent shall be entitled to deal with the Depositary for all purposes of this Declaration (including the payment of Distributions on the Global Preferred Security and receiving approvals, votes or consents hereunder) as the Holder of the Preferred Securities and the sole holder of the Global Preferred Security and shall have no obligation to the Preferred Security Beneficial Owners; (iii) to the extent that the provisions of this Section 7.03 conflict with any other provisions of this Declaration, the provisions of this Section 7.03 shall control; and (iv) the rights of the Preferred Security Beneficial Owners shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Depositary and/or the Participants and the Depositary shall receive and transmit payments of Distributions on the Global Preferred Securities to such Participants. The Depositary will make book-entry transfers among the Participants and receive and transmit payments of Distributions on the Global Preferred Securities to such Participants; PROVIDED, that solely for the purposes of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Declaration, so long as Definitive Preferred Security Certificates have not been issued, the Trustees may conclusively rely on, and shall be protected in relying on, any written instrument (including a proxy) delivered to the Trustees by the Depositary setting forth the Preferred Security Beneficial Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. Members of, or participants in, the Depositary ("PARTICIPANTS") shall have no rights under this Declaration with respect to any Global Preferred Security held on their behalf by the Depositary or by the Property Trustee as the custodian of the Depositary or under such Global Preferred Security, and the Depositary may be treated by the Trust, the Property Trustee and any agent of the Trust or the Property Trustee as the absolute owner of such Global Preferred Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trust, the Property Trustee or any agent of the Trust or the Property Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Preferred Security. (c) CERTIFICATED SECURITIES. Except as provided in Section 7.03(d), owners of beneficial interests in the Global Preferred Security will not be entitled to receive physical delivery of certificated Preferred Securities. 42 (d) Subject to Section 9.05, a Global Preferred Security deposited with the Depositary or with the Property Trustee as custodian for the Depositary pursuant to this Section 7.03 shall be transferred to the beneficial owners thereof in the form of certificated Preferred Securities only if such transfer complies with Section 9.02 and (i) the Depositary notifies the Depositor or the Trust that it is unwilling or unable to continue as Depositary for such Global Preferred Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act, at a time when the Depositary is required to be so registered to act as such depositary, (ii) the Depositor or Administrative Trustees in its or their sole discretion determines that such Global Preferred Security shall be so exchangeable, or (iii) an Event of Default has occurred and is continuing. (e) Any Global Preferred Security that is transferable to the beneficial owners thereof in the form of certificated Preferred Securities pursuant to this Section 7.03 shall be surrendered by the Depositary to the Property Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Property Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Preferred Security, an equal aggregate liquidation amount of Preferred Securities of authorized denominations in the form of certificated Preferred Securities. Any portion of a Global Preferred Security transferred pursuant to this Section shall be registered in such names and such amounts as the Depositary shall direct. Any Preferred Security in the form of certificated Preferred Securities delivered in exchange for an interest in the Global Preferred Security shall, except as otherwise provided by Section 9.02, bear the Restricted Securities Legend. (f) Subject to the provisions of Section 7.03(e), the registered holder of a Global Preferred Security may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Declaration or the Securities. (g) In the event of the occurrence of any of the events specified in Section 7.03(d), the Trust will promptly make available to the Property Trustee a reasonable supply of certificated Securities in definitive, fully registered form without distribution coupons. Section 7.04 REGISTRAR, PAYING AGENT, CONVERSION AGENT AND TENDER AGENT. (a) The Administrative Trustees shall maintain (i) an office or agency where Preferred Securities may be presented for registration of transfer or for exchange ("REGISTRAR"), (ii) an office or agency where Preferred Securities may be presented for payment ("PAYING AGENT") and (iii) an office or agency where Preferred Securities may be presented for conversion ("CONVERSION AGENT"). The Registrar shall keep a register of the Preferred Securities and of their transfer and exchange. The Administrative Trustees may appoint the Registrar, the Paying Agent and the Conversion Agent and may appoint one or more co-registrars, one or more additional paying agents and one or more additional conversion agents in such other locations as it shall determine. The term "Paying Agent" includes any additional paying agent and the term "Conversion Agent" 43 includes any additional conversion agent. The Administrative Trustees may change any Paying Agent, Registrar, co-registrar or Conversion Agent without prior notice to any Holder; PROVIDED that the Administrative Trustees shall provide notice of such change to all Holders promptly thereafter. The Administrative Trustees shall notify the Property Trustee of the name and address of any Agent not a party to this Declaration. If the Administrative Trustees fail to appoint or maintain another entity as Registrar or Conversion Agent, the Property Trustee shall act as such; PROVIDED, HOWEVER, that the Trust shall always maintain an office or agency in the Borough of Manhattan, The City of New York, State of New York, where Preferred Securities may be presented for payment. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or Conversion Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and Conversion Agent for the Common Securities. The Trust initially appoints the Property Trustee as Registrar, Paying Agent, Conversion Agent for the Preferred Securities. The Property Trustee shall also serve as Tender Agent and shall have the responsibilities of such described in the Remarketing Agreement for so long as the Debentures are held by the Property Trustee. (b) Notwithstanding any other provision of this Declaration, payment with respect to the Preferred Securities shall only take place at the office or agency maintained by the Trust for such purpose in the Borough of Manhattan, The City of New York, State of New York. Section 7.05 PAYING AGENT TO HOLD MONEY IN TRUST. The Trust shall require each Paying Agent other than the Property Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Property Trustee all money held by the Paying Agent for the payment of principal or distributions on the Securities, and will notify the Property Trustee if there are insufficient funds. While any such insufficiency continues, the Property Trustee may require a Paying Agent to pay all money held by it to the Property Trustee. The Administrative Trustees at any time may require a Paying Agent to pay all money held by it to the Property Trustee and to account for any money disbursed by it. Upon payment over to the Property Trustee, the Paying Agent (if other than the Trust or the Depositor or an Affiliate of the Trust or Depositor) shall have no further liability for the money. If the Trust or the Depositor or an Affiliate of the Trust or the Depositor acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Section 7.06 REPLACEMENT SECURITIES. If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken or if such Security is mutilated and is surrendered to the Trust or in the case of the Preferred Securities to the Property Trustee, an Administrative Trustee on behalf of the Trust shall issue and the Property Trustee shall authenticate a replacement Security if the Property Trustee's and such Administrative Trustee's requirements, as the case may be, are met. If required by the Property Trustee or such Administrative Trustee, an indemnity bond must be sufficient in the judgment of both to protect the Trustees, the 44 Depositor or any authenticating agent from any loss which any of them may suffer if a Security is replaced. The Depositor may charge for its expenses in replacing a Security. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Depositor pursuant to Article III hereof, the Depositor in its discretion may, instead of the Trust's issuing a new Security, pay or purchase such Security, as the case may be. Every replacement Security is an additional obligation of the Trust. Section 7.07 OUTSTANDING PREFERRED SECURITIES. The Preferred Securities outstanding at any time are all the Preferred Securities authenticated by the Property Trustee except for those canceled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. If a Preferred Security is replaced, paid or purchased pursuant to Section 7.06 hereof, it ceases to be outstanding unless the Property Trustee receives proof satisfactory to it that the replaced, paid or purchased Preferred Security is held by a protected purchaser (as such term is used in Section 8-405 of the Delaware Uniform Commercial Code). If Preferred Securities are considered paid in full in accordance with the terms of this Declaration, they cease to be outstanding and Distributions on them cease to accumulate. A Preferred Security does not cease to be outstanding because one of the Trust, the Depositor or an Affiliate of the Depositor holds the Security. Section 7.08 PREFERRED SECURITIES IN TREASURY. In determining whether the Holders of the required amount of Securities have concurred in any direction, waiver or consent, Preferred Securities owned by the Trust, the Depositor or an Affiliate of the Depositor, as the case may be, shall be disregarded and deemed not to be outstanding, except that for the purposes of determining whether the Property Trustee shall be fully protected in relying on any such direction, waiver or consent, only Securities which the Property Trustee knows are so owned shall be so disregarded. Section 7.09 TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Trust may prepare and, in the case of the Preferred Securities, the Property Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Trust considers appropriate for temporary Securities. Without unreasonable delay, the Trust shall prepare and deliver to the Property Trustee Preferred Securities in certificated form (other than in the case of Preferred Securities in global form) and thereupon any or all temporary Preferred Securities (other than any such Preferred Securities in global form) may be surrendered in exchange therefor, at the office of the Registrar, and the Property Trustee shall authenticate and deliver an equal aggregate liquidation 45 amount of definitive Preferred Securities in certificated form in exchange for temporary Preferred Securities (other than any such Preferred Securities in global form). Section 7.10 CANCELLATION. Any Administrative Trustee on behalf of the Trust at any time may deliver Preferred Securities to the Property Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to the Property Trustee any Preferred Securities surrendered to them for registration of transfer, redemption, conversion, exchange or payment. The Property Trustee shall promptly cancel all Preferred Securities, surrendered for registration of transfer, redemption, conversion, exchange, payment, replacement or cancellation and shall return such canceled Preferred Securities to the Administrative Trustees. The Trust may not issue new Preferred Securities to replace Preferred Securities that it has paid or that have been delivered to the Property Trustee for cancellation or that any Holder has converted. ARTICLE VIII TERMINATION OF TRUST Section 8.01 DISSOLUTION OF TRUST. (a) The Trust shall dissolve upon the earliest to occur of the following: (i) the bankruptcy, dissolution or liquidation of the Holder of the Common Securities or the Depositor; (ii) the filing of a certificate of dissolution or its equivalent with respect to the Holder of the Common Securities or the Depositor, or the revocation of the charter of the Holder of the Common Securities or the Depositor and the expiration of 90 days after the date of revocation without a reinstatement thereof; (iii) a written direction of the Depositor to dissolve the Trust and distribute a Like Amount of Debentures to Holders of the Securities in accordance with the terms of the Securities; (iv) all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; (v) the expiration of the term of the Trust as set forth in Section 3.14 hereof; 46 (vi) the entry of a decree of judicial dissolution of the Holder of the Common Securities, the Depositor or the Trust by a court of competent jurisdiction; (vii) upon distribution of the Common Stock of the Depositor to Holders of all outstanding Securities upon conversion of all such Securities; or (viii) before the issuance of any Securities, with the consent of all the Administrative Trustees and the Depositor. (b) As soon as is practicable after the occurrence of an event referred to in Section 8.01(a), and after the completion of the winding up of the affairs of the Trust, the Trustees shall file a certificate of cancellation with the Secretary of State of the State of Delaware. (c) The provisions of Section 3.09 and Article X shall survive the termination of the Trust. ARTICLE IX TRANSFER AND EXCHANGE Section 9.01 GENERAL. (a) When Preferred Securities are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal number of Preferred Securities represented by different certificates, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Administrative Trustees shall prepare and one Administrative Trustee shall execute and the Property Trustee shall authenticate Preferred Securities at the Registrar's request. (b) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Securities. To the fullest extent permitted by law, any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void. Subject to this Article IX, the Depositor and any Related Party may only transfer Common Securities (i) in accordance with Article VIII of the Indenture, or (ii) to the Depositor or a Related Party of the Depositor; PROVIDED that, any such transfer is subject to the condition precedent that the transferor obtain the written opinion of nationally recognized independent counsel experienced in such matters that such transfer would not cause more than an insubstantial risk that: 47 (i) the Trust would not be classified for United States federal income tax purposes as a grantor trust; and (ii) the Trust would be an Investment Company or the transferee would become an Investment Company. (c) The Administrative Trustees shall provide for the registration of Securities and of transfers of Securities, which will be effected without charge but only upon payment (with such indemnity as the Administrative Trustees may require) in respect of any tax or other governmental charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Securities, the Administrative Trustees shall cause one or more new Securities to be issued and authenticated by the Property Trustee in the name of the designated transferee or transferees. Every Security surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Administrative Trustees duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Security surrendered for registration of transfer shall be cancelled in accordance with Section 7.10. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Declaration. (d) The Trust shall not be required (i) to issue, register the transfer of, or exchange, Preferred Securities during a period beginning at the opening of business 15 days before the day of any selection of Preferred Securities for redemption set forth in the terms of the Securities as set forth in Annex I hereto and ending at the close of business on the day of selection, or (ii) to register the transfer or exchange of any Preferred Security so selected for redemption in whole or in part, except the unredeemed portion of any Preferred Security being redeemed in part. (e) All Preferred Securities issued upon any transfer or exchange pursuant to the terms of this Declaration shall evidence the same security and shall be entitled to the same benefits under this Declaration as the Preferred Securities surrendered upon such transfer or exchange. Section 9.02 TRANSFER PROCEDURES AND RESTRICTIONS. (a) GENERAL. Subject to Sections 9.02(b) and 9.02(j)(ii), if Preferred Securities are issued upon the transfer, exchange or replacement of Preferred Securities bearing the Restricted Securities Legend, or if a request is made to remove such Restricted Securities Legend on Preferred Securities, the Preferred Securities so issued shall bear the Restricted Securities Legend, or the Restricted Securities Legend shall not be removed, as the case may be, unless there is delivered to the Trust and the Property Trustee such satisfactory evidence, which may include an opinion of counsel, as may be reasonably required by the Depositor, that (i) neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 48 144A or Rule 144 under the Securities Act or (ii) that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon provision of such satisfactory evidence, the Property Trustee, at the written direction of an Administrative Trustee on behalf of the Trust, shall authenticate and deliver Preferred Securities that do not bear the Restricted Securities Legend. (b) TRANSFERS AFTER EFFECTIVENESS OF SHELF REGISTRATION STATEMENT. After a transfer of Preferred Securities pursuant to an effective Shelf Registration Statement, all requirements pertaining to Restricted Securities Legends on any Preferred Security included within such Shelf Registration Statement will cease to apply, and beneficial interests in a Preferred Security in global form without Restricted Securities Legends will be available to transferees of such Preferred Securities, upon directions to transfer such Holder's beneficial interest in the Global Preferred Security. After the effectiveness of the Shelf Registration Statement, the Administrative Trustees shall execute and deliver and the Property Trustee shall authenticate a Preferred Security in global form without the Restricted Securities Legend (the "Unrestricted Global Preferred Security") to deposit with the Depositary to evidence transfers of beneficial interests from the Global Preferred Security. (c) [Reserved] (d) TRANSFER AND EXCHANGE OF DEFINITIVE PREFERRED SECURITIES. When Definitive Preferred Securities are presented to the Registrar or co-Registrar (x) to register the transfer of such Definitive Preferred Securities; or (y) to exchange such Definitive Preferred Securities for an equal number of Definitive Preferred Securities of another denomination; the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER, that the Definitive Preferred Securities surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Administrative Trustees and the Registrar or co-registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (ii) in the case of Definitive Preferred Securities that are Restricted Preferred Securities, and are being transferred or exchanged, such transfer or exchange shall be (x) pursuant to an effective registration statement 49 under the Securities Act or (y) pursuant to, and in compliance with, clause (A) or (B) below: (A) if such Restricted Preferred Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, such Holder shall deliver a certification to that effect (in the form set forth on the reverse of the Preferred Security); or (B) if such Restricted Preferred Securities are being transferred pursuant to an exemption from registration in accordance with Rule 144A or Rule 144 under the Securities Act such Holder shall deliver: (i) a certification to that effect (in the form set forth on the reverse of the Preferred Security) and (ii) if the Trust or Registrar so requests, evidence reasonably satisfactory to them as to the compliance with the restrictions set forth in the Restricted Securities Legend. For definitive Preferred Securities that are transferred to QIBs in accordance with Rule 144A under the Securities Act, QIBs must take delivery of their interests in the Preferred Securities in the form of a beneficial interest in the Global Preferred Security in accordance with Section 9.02(e). (e) RESTRICTIONS ON TRANSFER OF A DEFINITIVE PREFERRED SECURITY FOR A BENEFICIAL INTEREST IN A GLOBAL PREFERRED SECURITY. A Definitive Preferred Security may not be exchanged for a beneficial interest in a Global Preferred Security except upon satisfaction of the requirements set forth below. Upon receipt by the Property Trustee of a Definitive Preferred Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Property Trustee, together with written instructions directing the Property Trustee to make, or to direct the Depositary to make, an adjustment on its books and records with respect to such Global Preferred Security to reflect an increase in the number of the Preferred Securities represented by the Global Preferred Security, then the Property Trustee shall cancel such Definitive Preferred Security and cause, or direct the Depositary to cause, the aggregate number of Preferred Securities represented by the Global Preferred Security to be increased accordingly. If no Global Preferred Securities are then outstanding, the Administrative Trustee shall execute and deliver and the Property Trustee shall authenticate, upon written order of any Administrative Trustee, an appropriate number of Preferred Securities in global form. (f) TRANSFER AND EXCHANGE OF GLOBAL PREFERRED SECURITIES. The transfer and exchange of Global Preferred Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Declaration (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. (g) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL PREFERRED SECURITY FOR A DEFINITIVE PREFERRED SECURITY. 50 (i) The transfer of a beneficial interest in a Global Preferred Security in exchange for a Definitive Preferred Security will require the delivery by the transferee of a transfer certificate in the form set forth in Exhibit A-1. (ii) Definitive Preferred Securities issued in exchange for a beneficial interest in a Global Preferred Security pursuant to this Section 9.02(g) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its Participants or indirect participants or otherwise, shall instruct the Property Trustee. The Property Trustee shall deliver such Preferred Securities to the Persons in whose names such Preferred Securities are so registered in accordance with the instructions of the Depositary. (h) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL PREFERRED SECURITIES. Notwithstanding any other provisions of this Declaration (other than the provisions set forth in Section 7.03), a Global Preferred Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (i) [Reserved] (j) LEGEND. (i) Except as permitted by the following paragraph (ii), each Preferred Security certificate evidencing the Global Preferred Securities and the Definitive Preferred Securities (and all Preferred Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form (the "Restricted Preferred Security"): "THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY CONVERTIBLE SENIOR SUBORDINATED DEBENTURES ISSUED UPON EXCHANGE FOR THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION 51 FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) THIS SECURITY AND ANY CONVERTIBLE SENIOR SUBORDINATED DEBENTURES ISSUABLE UPON EXCHANGE THEREFOR AND COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE." (ii) Upon any sale or transfer of a Restricted Preferred Security (including any Restricted Preferred Security represented by a Global Preferred Security) pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act the Registrar shall permit the Holder thereof to exchange such Restricted Preferred Security for an interest in the Unrestricted Global Preferred Security. (k) CANCELLATION OR ADJUSTMENT OF GLOBAL PREFERRED SECURITY. At such time as all beneficial interests in a Global Preferred Security have either been exchanged for Definitive Preferred Securities to the extent permitted by the Declaration or redeemed, repurchased or cancelled in accordance with the terms of this Declaration, such Global Preferred Security shall be returned to the Depositary for cancellation or retained and cancelled by the Property Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Preferred Security is exchanged for Definitive Preferred Securities, Preferred Securities represented by such Global Preferred Security shall be reduced and an adjustment shall be made on the books and records of the Property Trustee (if it is then the Securities Custodian for such Global Preferred Security) 52 with respect to such Global Preferred Security, or by the Securities Custodian, to reflect such reduction. (l) NO OBLIGATION OF THE PROPERTY TRUSTEE. (i) The Property Trustee shall have no responsibility or obligation to any Preferred Security Beneficial Owner, a Participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Participant thereof, with respect to any ownership interest in the Preferred Securities or with respect to the delivery to any Participant, Preferred Security Beneficial Owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Preferred Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Preferred Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Preferred Security). The rights of Preferred Security Beneficial Owners in any Global Preferred Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Property Trustee may conclusively rely and shall be fully protected in relying upon information furnished by the Depositary or agent thereof with respect to its Participants and any Preferred Security Beneficial Owners. (ii) The Property Trustee and Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Declaration or under applicable law with respect to any transfer of any interest in any Preferred Security (including any transfers between or among Depositary Participants or Preferred Security Beneficial Owners in any Global Preferred Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Declaration, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 9.03 DEEMED SECURITY HOLDERS. The Trustees may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust, the Property Trustee, the Registrar or a co-registrar shall have actual or other notice thereof. 53 Section 9.04 NOTICES TO DEPOSITARY. Whenever a notice or other communication to the Preferred Security Holders is required under this Declaration, the Administrative Trustees shall, in the case of any Global Preferred Security, give all such notices and communications specified herein to be given to the Preferred Security Holders to the Depositary and shall have no notice obligations to the Preferred Security Beneficial Owners. Section 9.05 APPOINTMENT OF SUCCESSOR DEPOSITARY. If the Depositary elects to discontinue its services as securities depositary with respect to the Preferred Securities, the Administrative Trustees may, in their sole discretion, appoint a successor Depositary with respect to such Preferred Securities. ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS Section 10.01 LIABILITY. (a) Except as expressly set forth in this Declaration, the Securities Guarantee and the terms of the Securities, the Depositor shall not be: (i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or (ii) required to pay to the Trust or to any Holder of Securities any deficit upon dissolution of the Trust or otherwise. (b) The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets. (c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Preferred Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Section 10.02 EXCULPATION. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence (or, in the 54 case of the Property Trustee, negligence) or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid. Section 10.03 FIDUCIARY DUTY. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between an Indemnified Person and any Covered Person; or (ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision 55 (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. Section 10.04 INDEMNIFICATION. (a) To the fullest extent permitted by applicable law, the Debenture Issuer shall indemnify and hold harmless each Indemnified Person from and against any loss, damage, liability, tax, penalty, cost, expense, action, suit or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason of the creation, operation or termination of the Trust or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of gross negligence (or, in the case of the Property Trustee, negligence) or willful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees and expenses) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Debenture Issuer prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Debenture Issuer of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 10.4(a). The indemnification shall survive the termination of this Declaration. Section 10.05 OUTSIDE BUSINESSES. Any Covered Person, the Depositor, the Delaware Trustee and the Property Trustee (subject to Section 5.03(c)) may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. None of the Depositor, any Covered Person, the Delaware Trustee, the Administrative Trustees or the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Depositor, the Delaware Trustee and the Property Trustee shall have the 56 right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Depositor or any Affiliate of the Depositor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Depositor or its Affiliates. ARTICLE XI ACCOUNTING Section 11.01 FISCAL YEAR. The fiscal year ("FISCAL YEAR") of the Trust shall be the calendar year, or such other year as is required by the Code. Section 11.02 CERTAIN ACCOUNTING MATTERS. (a) At all times during the existence of the Trust, the Administrative Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied. The Trust shall use the accrual method of accounting for United States federal income tax purposes. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year by a firm of independent certified public accountants selected by the Administrative Trustees. (b) The Depositor shall cause to be prepared and delivered to each of the Holders of Securities, within 90 days after the end of each Fiscal Year of the Depositor, annual financial statements of the Depositor, including a balance sheet of the Depositor as of the end of such Fiscal Year, and the related statements of income or loss; (c) The Administrative Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, any annual United States federal income tax information statement, required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Administrative Trustees shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. (d) The Administrative Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States federal income tax return, on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Administrative Trustees on behalf of the Trust with any state or local taxing authority. 57 Section 11.03 BANKING. The Administrative Trustees on behalf of the Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds in respect of the Debentures held by the Property Trustee shall be made directly to the Property Trustee Account and no other funds of the Trust shall be deposited in the Property Trustee Account. The sole signatories for such accounts shall be designated by the Administrative Trustees; PROVIDED, HOWEVER, that the Property Trustee shall designate the signatories for the Property Trustee Account. Section 11.04 WITHHOLDING. The Trust and the Administrative Trustees on behalf of the Trust shall comply with all withholding requirements under United States federal, state and local law. The Administrative Trustees on behalf of the Trust shall request, and the Holders shall provide to the Administrative Trustees, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Administrative Trustees on behalf of the Trust to assist it in determining the extent of, and in fulfilling the Trust's withholding obligations. The Administrative Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Administrative Trustees on behalf of the Trust may reduce subsequent Distributions by the amount of such withholding. ARTICLE XII AMENDMENTS AND MEETINGS Section 12.01 AMENDMENTS. (a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may be amended from time to time by the Depositor, the Property Trustee and the Administrative Trustees, without the consent of the Holders of the Securities, (i) to cure any ambiguity, correct or supplement any provision in the Declaration that may be inconsistent with any other provision, or to make any other provisions with respect to ministerial matters or questions arising under the Declaration, which shall not be inconsistent with the other provisions of the Declaration, or (ii) to modify, eliminate or add to any provisions of the Declaration to such extent as shall be necessary to ensure that the Trust will not be taxable as a corporation or will be classified for United States federal income tax purposes as a grantor trust at all times that any Securities are outstanding or to ensure that the Trust will not be required to register as an "investment company" under the Investment Company Act; PROVIDED, HOWEVER, that in the case of clause (i), such action shall not adversely affect in any 58 material respect the interests of any Holder of Securities, and any such amendments of the Declaration shall become effective when notice thereof is given to the Holders of the Securities. (b) Except as provided in (c) below, and the terms of the Securities, this Declaration may be amended by the Trustees and the Depositor with (i) the consent of Holders representing not less than a Majority in liquidation amount of the outstanding Preferred Securities, and (ii) receipt by the Trustees of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status as an "investment company" under the Investment Company Act. (c) Without the consent of each Holder of Securities, the Declaration may not be amended to (i) change the amount or timing of any Distribution on the Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Securities as of a specified date or (ii) restrict the right of a Holder of Securities to institute suit for the enforcement of any such payment on or after such date. Section 12.02 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN CONSENT. (a) Meetings of the Holders of any class of Securities may be called at any time by the Administrative Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading. Except as otherwise set forth in the terms of the Securities, the Administrative Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 25% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Administrative Trustees one or more requests in a writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Securities calling a meeting shall specify in writing the Certificates held by the Holders of Securities exercising the right to call a meeting and only those Securities represented by the Certificates so specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities: (i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the 59 Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum aggregate liquidation amount of Securities that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Administrative Trustees may specify that any written ballot submitted to the Holders for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Administrative Trustees; (ii) each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation; (iii) each meeting of the Holders of the Securities shall be conducted by the Administrative Trustees or by such other Person that the Administrative Trustees may designate; and (iv) unless the Business Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Preferred Securities are then listed or trading, provide otherwise, the Administrative Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE 60 Section 13.01 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE. The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Depositor at the date of this Declaration, at the Closing Date and at each Optional Closing Date, if any, and each Successor Property Trustee represents and warrants to the Trust and the Depositor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: (a) The Property Trustee is a banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with corporate power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration. (b) The execution, delivery and performance by the Property Trustee of the Declaration have been duly authorized by all necessary corporate action on the part of the Property Trustee. The Declaration has been duly executed and delivered by the Property Trustee, and constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law). (c) The execution, delivery and performance of the Declaration by the Property Trustee do not conflict with or constitute a breach of the certificate of incorporation or by-laws of the Property Trustee. (d) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for the execution, delivery or performance by the Property Trustee, of the Declaration. (e) The Property Trustee satisfies the qualifications set forth in Section 5.03 and shall not create, incur or assume or suffer to exist any mortgage, pledge, hypothecation, encumbrance, lien or other change or security interest upon the Debentures. Section 13.02 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE. The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Depositor at the date of this Declaration, at the Closing Date and at each Optional Closing Date, if any, and each Successor Delaware Trustee represents and warrants to the Trust and the Depositor at the time of the Successor Property Trustee's acceptance of its appointment as Delaware Trustee that: (a) The Delaware Trustee is a banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with corporate power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration. 61 (b) The execution, delivery and performance by the Delaware Trustee of the Declaration has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. The Declaration has been duly executed and delivered by the Delaware Trustee, and constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law). (c) The execution, delivery and performance of the Declaration by the Delaware Trustee does not conflict with or constitute a breach of the certificate of incorporation or by-laws of the Delaware Trustee. (d) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for the execution, delivery or performance by the Delaware Trustee, of the Declaration. (e) The Delaware Trustee is an entity which has its principal place of business in the State of Delaware. (f) The Delaware Trustee has been authorized to perform its obligations under the Certificate of Trust and the Declaration. ARTICLE XIV REGISTRATION RIGHTS Section 14.01 REGISTRATION RIGHTS. The Holders of the Preferred Securities, the Debentures, the Preferred Securities Guarantee and the shares of Common Stock of the Depositor issuable upon conversion of the Securities are entitled to the benefits of a Registration Rights Agreement as set forth in the Purchase Agreement and the Indenture. ARTICLE XV REPURCHASE OF SECURITIES UPON THE FAILURE TO CONSUMMATE THE ACQUISITION Section 15.01 REPURCHASE OF SECURITIES. (a) In the event that the acquisition of ACS pursuant to the Agreement and Plan of Merger by and among Depositor, ACS and A T Acquisition Corp., a Delaware corporation, dated as of December 9, 1999, is not consummated by March 31, 2000, the Property Trustee on behalf of the Trust shall offer to purchase 62 up to 50% of the aggregate liquidation amount of each of the issued and outstanding Securities (the "OFFER TO REPURCHASE") at a purchase price equal to 102.5% of the liquidation amount of each class of the Securities, plus accrued and unpaid Distributions thereon, if any, to the date of repurchase (the "REPURCHASE PAYMENT"). (b) The Offer to Repurchase shall be made in compliance with all applicable laws, including, without limitation, Regulation 14E under the Exchange Act and the rules thereunder and all other applicable Federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Article XV, the Trust shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Article XV by virtue thereof. (c) Within 30 days following March 31, 2000, the Property Trustee on behalf of the Trust shall commence the Offer to Repurchase by mailing to each Holder of Securities a notice (the "Notice"), which shall govern the terms of the Offer to Repurchase, and shall state: (i) that the Offer to Repurchase is being made pursuant to this Article XV and that up to 50% of the aggregate liquidation amount of each of the Securities will be accepted for payment, each at a purchase price equal to 102.5% of the liquidation amount of the Securities; (ii) the purchase date, which shall be a Business Day no earlier than 30 days nor later than 45 days from the date the Notice is mailed (the "REPURCHASE PAYMENT DATE"); (iii) that any Preferred Security or Common Securities not tendered for payment pursuant to the Offer to Repurchase shall continue to be outstanding and accrue distributions in accordance with the terms thereof; (iv) that, unless the Trust defaults in the payment of the Repurchase Payment, all Securities tendered and accepted for payment pursuant to the Offer to Repurchase shall cease to be outstanding on the Repurchase Payment Date; (v) that any Holder electing to have Securities purchased pursuant to an Offer to Repurchase shall be required to surrender such Preferred Securities and Common Securities, as the case may be, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Preferred Securities and Common Securities completed, to the Paying Agent at the address specified in the Notice; (vi) that a Holder whose Preferred Securities or Common Securities are being purchased only in part shall be issued new Preferred Securities or Common Securities equal in liquidation amount to the unpurchased portion of the Preferred 63 Securities or Common Securities surrendered, which unpurchased portion must be equal to $50 in liquidation amount or an integral multiple thereof; (vii) that if more than 50% of the aggregate liquidation amount of either the Preferred Securities or Common Securities are tendered, the Property Trustee shall repurchase the Preferred Securities or Common Securities, as the case may be, from each tendering Holder on a proportionate basis according to the number of Preferred Securities or Common Securities tendered by each Holder; (viii) the instructions that Holders must follow in order to tender their Preferred Securities and Common Securities; and (ix) the circumstances and relevant facts regarding the failure to consummate the acquisition of ACS. (d) On the Repurchase Payment Date, the Trust shall, to the extent lawful, (i) accept for payment the Securities or portions thereof tendered pursuant to the Offer to Repurchase and not withdrawn, (ii) deposit with the Paying Agent an amount equal to the aggregate Repurchase Payment in respect of all Securities or portions thereof so tendered and not withdrawn, which amount shall have been delivered to the Trust by the Depositor pursuant to Section 10.09 of the Indenture and (iii) deliver or cause to be delivered to the Property Trustee the Securities so accepted, together with a certificate stating that the Securities or the portions thereof tendered to the Trust and not withdrawn are accepted for payment. The Paying Agent shall promptly mail to each Holder of Preferred Securities and Common Securities so accepted payment in an amount equal to the purchase price for such Preferred Securities and Common Securities, and the Property Trustee on behalf of the Trust shall authenticate and mail (or cause to be transferred by book entry) to each Holder a new Preferred Security or Common Security, as the case may be, equal in liquidation amount to any unpurchased portion of the Preferred Securities or Common Securities surrendered, if any, PROVIDED, that each such new Preferred Security or Common Security will be in the liquidation amount of $50 or an integral multiple thereof. (e) The Property Trustee on behalf of the Trust shall make a public announcement of the results of the Offer to Repurchase on or as soon as practicable after the Repurchase Payment Date. For the purposes of this Article XV, the Property Trustee shall act as the Paying Agent. Section 15.02 AGREEMENT TO SELL DEBENTURES. The Trust shall accept the Depositor's offer, as described in Section 10.09 of the Indenture, to purchase the Debentures held by the Trust in an amount equal to the total price to be paid by the Trust for the Securities tendered by the Holders of the Securities to the Trust pursuant to Article XV of this Declaration. Said amount shall not exceed 50% of the 64 aggregate liquidation amount of the Securities and the purchase price for the Debentures will equal 102.5% of the principal amount of the Debentures, plus accrued and unpaid interest thereon, if any, to the date of the repurchase of the Debentures. ARTICLE XVI MISCELLANEOUS Section 16.01 NOTICES. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) if given to the Trust, in care of the Administrative Trustees at the Trust's mailing address set forth below (or such other address as the Administrative Trustees may give notice of to the Holders of the Securities): Titan Capital Trust c/o The Titan Corporation 3033 Science Road San Diego, California 92121-1199 Attention: General Counsel Telecopy: (858) 552-9759 (b) if given to the Property Trustee, at the mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders of the Securities): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 Attention: Corporate Trust Administration Telecopy: (302) 651-8882 (c) if given to the Delaware Trustee, at the mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the Holders of the Securities): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 Attention: Corporate Trust Administration 65 Telecopy: (302) 651-8882 (d) if given to the Holder of the Common Securities, at the mailing address of the Depositor set forth below (or such other address as the Holder of the Common Securities may give notice to the Trust): The Titan Corporation 3033 Science Road San Diego, California 92121-1199 Attention: General Counsel Telecopy: (858) 552-9759 (e) if given to any other Holder, at the address set forth on the books and records of the Trust or the Registrar, as applicable. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. Section 16.02 GOVERNING LAW. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. Sections 3540 and 3561 of Title 12 of the Delaware Code shall not apply to the Trust. To the fullest extent permitted by law, there shall not be applicable to the parties hereunder or this Declaration any provision of the laws (statutory or common) of the State of Delaware pertaining to trusts that relate to or regulate, in a manner inconsistent with the terms hereof (A) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (B) affirmative requirements to post bonds for trustees, officers, agents or employees of a trust, (C) the necessity for obtaining court or other governmental approval concerning the acquisition, holding or disposition of real or personal property, (D) fees or other sums payable to trustees, officers, agents, or employees of a trust, (E) the allocation of receipts and expenditures to income or principal, (F) restrictions or limitations on the permissible nature, amount or concentration of trust investments or requirements relating to the titling, storage or other manner of holding or investing trust assets or (G) the establishment of fiduciary or other standards of responsibility or limitations on the acts or powers of trustees that are inconsistent with the limitations or liabilities or authorities and powers of the trustees hereunder as set forth or referenced in this Declaration. Section 16.03 INTENTION OF THE PARTIES. It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties. 66 Section 16.04 HEADINGS. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. Section 16.05 SUCCESSORS AND ASSIGNS. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Depositor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. Section 16.06 PARTIAL ENFORCEABILITY. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby. Section 16.07 COUNTERPARTS. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 67 IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the day and year first above written. Deanna Hom Petersen, as Administrative Trustee ------------------------------------------ Ray Guillaume, as Administrative Trustee ------------------------------------------ The Titan Corporation, as Depositor and Debenture Issuer By: -------------------------------------- Name: Title: Wilmington Trust Company, as Delaware Trustee By: -------------------------------------- Name: Title: Wilmington Trust Company, as Property Trustee By: -------------------------------------- Name: Title: 68 ANNEX I TERMS OF Remarketable Term Income Deferrable Equity Securities (HIGH TIDES-SM-) and HIGH TIDES Common Securities Pursuant to Section 7.01 of the Amended and Restated Declaration of Trust, dated as of February 9, 2000 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration, the Indenture or Remarketing Agreement (as defined in the Declaration) or, if not defined in the Declaration, Indenture or Remarketing Agreement, as defined in the Offering Circular (as defined in the Declaration): 1. DESIGNATION AND NUMBER. (a) "Preferred Securities." 5,000,000 (including 1,000,000 relating to the exercise of the full amount of the over-allotment option) Preferred Securities of the Trust with an aggregate liquidation preference with respect to the assets of the Trust of TWO HUNDRED FIFTY MILLION Dollars ($250,000,000) (including FIFTY MILLION Dollars ($50,000,000) relating to the exercise of the full amount of the over-allotment option), and a liquidation amount with respect to the assets of the Trust of $50 per Preferred Security, are hereby designated for the purposes of identification only as "Remarketable Term Income Deferrable Equity Securities (HIGH TIDES-SM-)" (the "Preferred Securities"). The Preferred Security Certificates evidencing the Preferred Securities shall be substantially in the form attached hereto as Exhibit A-1, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange or other organization on which the Preferred Securities are listed, if any. (b) "Common Securities." 154,640 (including 30,928 relating to the exercise of the full amount of the over-allotment option) Common Securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of SEVEN MILLION SEVEN HUNDRED THIRTY TWO THOUSAND Dollars ($7,732,000) (including ONE MILLION FIVE HUNDRED FORTY FIX THOUSAND FOUR HUNDRED Dollars ($1,546,400) relating to the exercise of the full amount of the over-allotment option) and a liquidation amount with respect to the assets of the Trust of $50 per Common Security, are hereby designated for the purposes of identification only as "HIGH TIDES Common Securities" (the "Common Securities"). The Common Security Certificates evidencing the Common Securities shall be substantially in the form attached hereto as Exhibit A-2, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. I-0 2. DISTRIBUTIONS. (a) Distributions payable on each Security will accrue at the Applicable Rate (as defined in the Indenture) applied to the stated liquidation amount of $50 per Security, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. The Applicable Rate will be 5.75% per annum (the "Initial Rate") from the date of original issuance of the Securities 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. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Applicable Rate (to the extent permitted by applicable law). The Applicable Rate shall be subject to adjustment in the event of a Registration Default, as described in the Indenture. The term "Distributions" as used herein includes such quarterly distributions, additional distributions on quarterly distributions not paid on the applicable Distribution Date and Additional Amounts, as applicable. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of Distributions payable for any period shorter than a full quarterly Distribution period will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which Distributions are payable on the Securities is not a Business Day, then payment of Distributions payable on such date will be made on the next succeeding day which is a Business Day (and without any additional Distributions or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (b) Distributions on the Securities will be cumulative, will accrue from the date of their original issuance and will be payable quarterly in arrears, on the following dates (each a "Distribution Date"), which dates correspond to the interest payment dates on the Debentures: February 15, May 15, August 15 and November 15 of each year, commencing on May 15, 2000, except as otherwise described below. The 1st day of the month immediately preceding each Distribution Date is the record date for determining which holders of Securities shall be paid the Distributions and Additional Amounts, if any, payable on such Distribution Date. 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 Security is registered on the relevant record date, subject to the Depositor's 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 Security is registered on the relevant record date and (2) Distributions and Additional I-1 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 following the Reset Date to the person in whose name each Security is registered on the relevant record date for such second Distribution Date, subject in each case to the Depositor's right to initiate a Deferral Period. So long as no Debenture Event of Default has occurred and is continuing, the Depositor has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the Applicable Rate compounded quarterly during any such Deferral Period. Prior to three Business Days before a Regular Record Date fixed for a Payment Resumption Date (as defined in the Indenture), the Depositor may further extend such Deferral Period; PROVIDED that such Deferral Period together with all such previous and further deferrals thereof may not exceed 20 consecutive quarters or extend beyond (i) the maturity (whether at the stated maturity or by declaration of acceleration, call for redemption or otherwise) of the Debentures under the Indenture and (ii) in the case of a Deferral Period which begins prior to the Reset Date, the Reset Date. Payments of accrued Distributions will be payable to Holders by the Depositor as they appear on the books and records of the Trust on the Regular Record Date for the relevant Payment Resumption Date. Upon the termination of any Deferral Period and the payment of all amounts then due, the Depositor may commence a new Deferral Period, subject to the above requirements. (c) Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Trust at the close of business on the relevant record dates. The relevant record dates shall be on the 1st day of the month immediately preceding each relevant payment date, except as otherwise described in this Annex I to the Declaration. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment in respect of Preferred Securities being held in book-entry form through The Depository Trust Company (the "Depositary"), or any successor Depositary appointed pursuant to the Declaration, will be made as described under the heading "Description of HIGH TIDES-Depositary Procedures" in the Offering Circular. The relevant record dates for the Common Securities shall be the same record dates as for the Preferred Securities. Distributions payable on any Securities that are not punctually paid on any Distribution payment date, as a result of the Depositor having failed to make a payment under the Debentures, will cease to be payable to the Person in whose name such Securities are registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any additional Distributions or other payment in respect of any such delay) except that if such Business Day I-2 is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (d) In the event of an election by the Holder to convert its Securities through the Conversion Agent into Common Stock pursuant to the terms of the Securities as forth in this Annex I to the Declaration, no payment, allowance or adjustment shall be made with respect to accumulated and unpaid Distributions on such Securities, or be required to be made; PROVIDED that Holders of Securities at the close of business on any record date who convert their Securities after such record date and on or prior to the corresponding payment date will be entitled to receive the Distributions payable on such Securities on the corresponding payment date notwithstanding the conversion of such Securities into Common Stock following such record date. (e) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among the Holders of the Securities. 3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any voluntary or involuntary dissolution of the Trust, the Trust shall be liquidated by the Trustees as expeditiously as the Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to the Holders of the Securities a Like Amount of Debentures, unless such Distribution would not be practical, in which event such Holders will be entitled to receive out of the assets of the Trust available for Distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the aggregate liquidation amount thereof plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If such 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 amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis in accordance with paragraph 9. The Holder of the Common Securities will be entitled to receive Distributions upon any such liquidation Pro Rata with the Holders of the Preferred Securities, except as provided in paragraph 10. 4. REDEMPTION AND DISTRIBUTION. (a) Upon the repayment or payment of the Debentures in whole or in part, whether at maturity or upon redemption or otherwise (other than following any distribution of the Debentures to the Holders), the proceeds from such repayment or redemption shall be simultaneously applied to redeem, on a Pro Rata basis, a Like Amount of Securities, on the Redemption Date, in an amount per Security equal to the applicable Redemption Price, payable in cash, which Redemption Price will be equal to (i) the liquidation amount of each of the Securities plus any accrued and unpaid Distributions thereon (A) in the case of the I-3 repayment of the Debentures at stated maturity, or (B) in the case of a redemption of the Debentures in certain limited circumstances set forth in the Indenture upon the occurrence of a Tax Event, or (ii) (A) in the case of an Optional Redemption after February 20, 2003 until but excluding the Tender Notification Date, the Initial Redemption Price; (B) in the case of an Optional Redemption on or after the Reset Date (except in the event of a Failed Final Remarketing), in accordance with the Term Call Protections or (C) in the case of an Optional Redemption after a Failed Final Remarketing, 100% of the then outstanding aggregate principal amount of the Securities being redeemed, plus accrued and unpaid interest thereon. (b) If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Preferred Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed will be as described in Paragraph 4(f)(ii) below. (c) The Depositor, as the Holder of the outstanding Common Securities, shall have the right at any time (including, without limitation, upon the occurrence of a Tax Event or Investment Company Act Event) to dissolve the Trust and, after satisfaction of the creditors of the Trust, cause a Like Amount of the Debentures to be distributed to the Holders of the Securities in liquidation of the Trust, PROVIDED that neither the Depositor nor the Administrative Trustees may cause the dissolution of the Trust during the period beginning on the Business Day following the Tender Notification Date and ending on the Reset Date (other than upon the occurrence of a Tax Event or an Investment Company Event), and provided further that the Administrative Trustees shall have received a No Recognition Opinion (as defined below) prior to the dissolution of the Trust. (d) If, at any time, a Tax Event shall occur and be continuing the Depositor shall cause the Trustees to dissolve the Trust and, after satisfaction of the creditors of the Trust, cause a Like Amount of Debentures to be distributed to the Holders of the Securities in liquidation of the Trust within 90 days following the occurrence of such Tax Event; PROVIDED, HOWEVER, that such dissolution, liquidation and distribution shall be conditioned on (i) 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 the Holders of the Preferred Securities will not recognize any income, gain or loss for United States federal income tax purposes as a result of such dissolution and distribution of Debentures, and (ii) the Depositor 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 the sole judgment of the Depositor, will have no adverse effect on the Trust, the Depositor or the Holders of the Preferred Securities and will involve no material cost ("Ministerial Action"). If (i) the Depositor has received an opinion (a "Redemption Tax Opinion") of a nationally recognized independent tax counsel (reasonably acceptable to the Trustees) experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial I-4 risk that the Depositor would be precluded from deducting the interest on the Debentures for United States federal income tax purposes, even after the Debentures were distributed to the Holders of Securities upon liquidation of the Trust as described in this paragraph 4(d), or (ii) the Trustees shall have been informed by such tax counsel that it cannot deliver a No Recognition Opinion, the Depositor shall have the right, upon not less than 30 nor more than 60 days' notice, and within 90 days following the occurrence and continuation of such Tax Event, to redeem the Debentures in whole, but not in part, for cash, for the principal amount plus accrued and unpaid interest thereon and, following such redemption, all the Securities will be redeemed by the Trust at the liquidation amount of $50 per Security plus accrued and unpaid Distributions thereon; PROVIDED, HOWEVER, that, if at the time there is available to the Depositor or the Trust the opportunity to eliminate, within such 90-day period, the Tax Event by taking some Ministerial Action, the Trust or the Depositor will pursue such Ministerial Action in lieu of redemption. In lieu of the foregoing options, the Depositor shall also have the option of causing the Securities to remain outstanding and pay Additional Amounts on the Debentures. "Tax Event" means that the Property Trustee shall have received an opinion of a nationally recognized independent tax counsel to the Depositor (reasonably acceptable to the Trustees) experienced in such matters (a "Dissolution Tax Opinion") to the effect that, as a result of (i) any amendment to, or change (including any announced prospective change (which shall not include a proposed change), PROVIDED that a Tax Event shall not occur more than 90 days before the effective date of any such prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority therefor or therein, (ii) 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 (iii) 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 Preferred Securities issued by the Trust, there is more than an insubstantial risk that (a) if the Debentures are held by the Property Trustee, (x) the Trust is, or will be within 90 days of the date of such opinion, subject to United States 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 such counsel, or (y) any portion of interest payable by the Depositor to the Trust (or OID accruing) on the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the Depositor in whole or in part for United States federal income tax purposes or (b) with respect to Debentures which are no longer held by the Property Trustee, any portion of interest payable by the Depositor (or OID accruing) on I-5 the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the Depositor in whole or in part for United States federal income tax purposes. If an Investment Company Event (as hereinafter defined) shall occur and be continuing, the Depositor shall cause the Trustees to dissolve the Trust and, after satisfaction to creditors of the Trust, cause a Like Amount of the Debentures to be distributed to the Holders of the Securities in liquidation of the Trust within 90 days following the occurrence of such Investment Company Event. "Investment Company Event" means the occurrence of 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 (a "Change in 1940 Act Law"), to the effect that the Trust is or will be considered an Investment Company which is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of the Offering Circular. After the date fixed for any distribution of Debentures: (i) the Securities will no longer be deemed to be outstanding, (ii) the Depositary or its nominee (or any successor Depositary or its nominee), as record Holder of Preferred Securities represented by global certificates, will receive a registered global certificate or certificates representing the Debentures to be delivered upon such distribution and (iii) any certificates representing Securities, except for certificates representing Preferred Securities held by the Depositary or its nominee (or any successor Depositary or its nominee), will be deemed to represent Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of such Securities, with accrued and unpaid interest equal to accrued and unpaid Distributions on such Securities until such certificates are presented to the Depositor or its agent for cancellation, whereupon the Depositor or its agent will issue to the Holder of such Securities, and the Debenture Trustee will authenticate, a certificate representing such Debentures. (e) The Securities will not be redeemed unless all accrued and unpaid Distributions have been paid on all Securities for all quarterly Distribution periods terminating on or before the date of redemption. (f) Redemption, Distribution and Remarketing Procedures. (i) Holders will be given not less than 20 nor more than 60 days notice of an Optional Redemption. Holders will be given at least 30 days but not more than 60 days notice of a redemption pursuant to paragraph 4(d). Notice of distribution of Debentures in exchange for the Securities will be given by the Administrative Trustees on behalf of the Trust by mail to each Holder of Securities to be exchanged not fewer than 30 nor more than 60 days before the date fixed for exchange thereof. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given I-6 pursuant to this paragraph 4(f)(i) (other than notices in connection with a Remarketing, the terms of which shall be governed by the Remarketing Agreement), a redemption or distribution notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of Securities. Each redemption or distribution notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the redemption or distribution notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (ii) In the event that fewer than all the outstanding Securities are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Securities, it being understood that, in respect of Preferred Securities registered in the name of and held of record by the Depositary (or any successor Depositary) or any nominee, the distribution of the proceeds of such redemption will be made to each Participant (or Person on whose behalf such nominee holds such securities) in accordance with the procedures applied by such agency or nominee. (iii) If Securities are to be redeemed and the Administrative Trustees on behalf of the Trust gives a redemption or distribution notice, which notice may only be issued if the Debentures are redeemed as set out in this paragraph 4 (which notice will be irrevocable), then (A) with respect to Preferred Securities held in book-entry form, by 10:00 a.m., New York City time, on the Redemption Date, to the extent funds are available, with respect to Preferred Securities held in global form, the Property Trustee will deposit irrevocably with the Depositary (or successor Depositary) funds sufficient to pay the amount payable on redemption with respect to such Preferred Securities and will give the Depositary irrevocable instructions and authority to pay the amount payable on redemption to the Holders of such Preferred Securities, and (B) with respect to Preferred Securities issued in certificated form and Common Securities, to the extent funds are available, the Property Trustee will irrevocably deposit with the Paying Agent funds sufficient to pay the amount payable on redemption to the Holders of such Securities and will give the Paying Agent irrevocable instructions and authority to pay the amount payable on redemption to the Holders thereof upon surrender of their certificates. If a redemption or distribution notice shall have been given and funds deposited as required, then on the date of such deposit, all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Securities will cease to be outstanding. Neither the Administrative Trustees nor the Trust shall be required to register or cause I-7 to be registered the transfer of any Securities that have been so called for redemption. If any date fixed for redemption of Securities is not a Business Day, then payment of the amount payable on such date will be made on the next succeeding day that is a Business Day (without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Trust or by the Depositor as guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities will continue to accrue at the then Applicable Rate, from the original Redemption Date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the amount payable upon redemption (other than for purposes of calculating any premium). (iv) Redemption and/or distribution notices, as applicable, shall be sent by the Administrative Trustees on behalf of the Trust to (A) in the case of Preferred Securities held in book-entry form, the Depositary and, in the case of Preferred Securities held in certificated form, the Holders of such certificates and (B) in respect of the Common Securities, the Holder thereof. (v) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Depositor or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement; PROVIDED that neither the Depositor nor any of its Affiliates may purchase Preferred Securities on the Reset Date or submit orders in the Remarketing. 5. CONVERSION RIGHTS. The Holders of Securities shall have the right at any time prior to 5:00 p.m., New York City time, on 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 Securities called for redemption by the Depositor will be convertible at any time prior to 5:00 p.m., New York City time on any Redemption Date), at their option, to cause the Conversion Agent to convert Securities, on behalf of the converting Holders, into shares of Common Stock (as defined in the Indenture) in the manner described herein on and subject to the following terms and conditions: (a) The Securities will be convertible at the office of the Conversion Agent into fully paid and nonassessable shares of Common Stock pursuant to the Holder's direction to the Conversion Agent to exchange such Securities for a portion of the Debentures theretofore held I-8 by the Trust on the basis of one Security per $50 principal amount of Debentures, and immediately convert such amount of Debentures into fully paid and nonassessable shares of Common Stock on or prior to the Tender Notification Date, into 1.0076 shares of Common Stock per $50 principal amount of Debentures (which is equivalent to a conversion price of $49.625 per share of Common Stock, subject to certain adjustments set forth in the Indenture (as so adjusted, "Initial Conversion Price")). On and after the Reset Date, the Securities may, at the option of the Trust and subject to the results of the Remarketing, become nonconvertible or convertible into a different number of shares of Common Stock. (b) In order to convert Securities into Common Stock the Holder shall submit to the Conversion Agent at the office referred to above an irrevocable request to convert Securities on behalf of such Holder (the "Conversion Request"), together, if the Securities are in certificated form, with such certificates. The Holder must furnish appropriate endorsements or transfer documents, if required by the Conversion Agent, and pay any transfer or similar tax, if required. The Trust shall not cause the conversion of any Debentures except pursuant to such a Conversion Request. The Conversion Request shall (i) set forth the number of Securities to be converted and the name or names, if other than the Holder, in which the shares of Common Stock should be issued and (ii) direct the Conversion Agent (a) to exchange such Securities for a portion of the Debentures held by the Trust (at the rate of exchange specified in the preceding paragraph) and (b) to immediately convert such Debentures on behalf of such Holder, into Common Stock (at the conversion rate specified in the preceding paragraph). The Conversion Agent shall notify the Property Trustee of the Holder's election to exchange Securities for a portion of the Debentures held by the Trust and the Property Trustee shall, upon receipt of such notice, deliver to the Conversion Agent the appropriate principal amount of Debentures for exchange in accordance with this Section 5. The Conversion Agent shall thereupon notify the Depositor of the Holder's election to convert such Debentures into shares of Common Stock. Holders of Securities at the close of business on a Distribution record date will be entitled to receive the Distribution payable on such Securities on the corresponding Distribution payment date notwithstanding the conversion of such Securities following such record date but prior to such distribution payment date. Except as provided above, neither the Trust nor the Depositor will make, or be required to make, any payment, allowance or adjustment upon any conversion on account of any accumulated and unpaid Distributions accrued on the Securities, whether or not in arrears, (including any Additional Amounts accrued thereon) surrendered for conversion, or on account of any accumulated and unpaid dividends on the shares of Common Stock issued upon such conversion, except to the extent that such shares are held of record on the record date for any such distributions. Securities shall be deemed to have been converted immediately prior to the close of business on the day on which a Notice of Conversion relating to such Securities is received by the Trust in accordance with the foregoing provision (the "Conversion Date"). The Person or Persons entitled to receive the Common Stock issuable upon conversion of the Debentures shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the Conversion Date, the Depositor shall issue and deliver at the office of the Conversion Agent a certificate or certificates for the number of full I-9 shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same, unless otherwise directed by the Holder in the Conversion Request and the Conversion Agent shall distribute such certificate or certificates to such Person or Persons. (c) In effecting the conversion and transactions described in this Section 5, the Conversion Agent shall be acting as agent of the Holders of Securities directing it to effect such conversion transactions. The Conversion Agent is hereby authorized (i) to exchange Securities from time to time for Debentures held by the Trust in connection with the conversion of such Securities in accordance with this Section 5 and (ii) to convert all or a portion of the Debentures into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Section and to deliver to the Trust a new Debenture or Debentures for any resulting unconverted principal amount. (d) No fractional shares of Common Stock will be issued as a result of conversion, but in lieu thereof, such fractional interest will be paid in cash by the Depositor to the Trust, which in turn will make such payment to the Holder or Holders of Securities so converted. (e) The Depositor shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Debentures, free from any preemptive or other similar rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the Debentures then outstanding. Notwithstanding the foregoing, the Depositor shall be entitled to deliver upon conversion of Debentures, shares of Common Stock reacquired and held in the treasury of the Depositor (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances. Any shares of Common Stock issued upon conversion of the Debentures shall be duly authorized, validly issued and fully paid and nonassessable. The Property Trustee shall deliver the shares of Common Stock received upon conversion of the Debentures to the converting Holder free and clear of all liens, charges, security interests and encumbrances, except for United States withholding taxes. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall prepare and shall use its best efforts to obtain and keep in force such governmental or regulatory permits or other authorizations as may be required by law, and shall comply with all applicable requirements as to registration or qualification of the Common Stock (and all requirements to list the Common Stock issuable upon conversion of Debentures that are at the time applicable), in order to enable the Depositor to lawfully issue Common Stock to the Trust upon conversion of the Debentures and the Trust to lawfully deliver the Common Stock to each Holder upon conversion of the Securities. (f) The Depositor will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Debentures and the delivery of the shares of Common Stock by the Trust upon conversion of the Securities. The Depositor shall not, however, be required to pay any tax which may be payable in respect of any transfer I-10 involved in the issue and delivery of shares of Common Stock in a name other than that in which the Securities so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Trust the amount of any such tax, or has established to the satisfaction of the Trust that such tax has been paid. (g) Nothing in the preceding Paragraph (f) shall limit the requirement of the Trust to withhold taxes pursuant to the terms of the Securities set forth in this Annex I to the Declaration or in the Declaration itself or otherwise require the Property Trustee or the Trust to pay any amounts on account of such withholdings. 6. VOTING RIGHTS - PREFERRED SECURITIES. (a) Except as provided under paragraphs 6(b) and 8, as otherwise required by law, the Declaration and the Indenture, the Holders of the Preferred Securities will have no voting rights. (b) In addition to the rights of the Holders of the Preferred Securities with respect to the enforcement of payment of principal and interest on the Debentures set forth herein, in the Declaration or in the Indenture, if (i) a Debenture Event of Default occurs and is continuing or (ii) the Depositor defaults under the Preferred Securities Guarantee (each of (i) and (ii) being an "Appointment Event"), then the Holders of the Preferred Securities, acting as a single class, will be entitled by the vote of a Majority in liquidation amount of the Preferred Securities to appoint a Special Trustee in accordance with Section 5.06(a)(ii)(B) of the Declaration. Any Holder of Preferred Securities (other than the Depositor or any of its Affiliates) will be entitled to nominate any Person to be appointed as Special Trustee. Not later than 30 days after such right to appoint a Special Trustee arises, the Trustees will convene a meeting for the purpose of appointing a Special Trustee. If the Trustees fail to convene such meeting within such 30-day period, the Holders of not less than 10% in aggregate liquidation amount of the Preferred Securities will be entitled to convene such meeting in accordance with Section 12.02 of the Declaration. The record date for such meeting will be the close of business on the Business Day that is one Business Day before the day on which notice of the meeting is sent to the Holders. The provisions of the Declaration relating to the convening and conduct of the meetings of the Holders will apply with respect to any such meeting. Any Special Trustee so appointed shall 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. A Special Trustee may be removed without cause at any time by vote of the Holders of a Majority in liquidation amount of the Preferred Securities at a meeting of the Holders of the Preferred Securities in accordance with Section 5.06(ii)(B) of the Declaration. The Holders of 10% in liquidation amount of the Preferred Securities will be entitled to convene such a meeting in accordance with Section 12.02 of the Declaration. The record date for such meeting will be the close of business on the Business Day which is one I-11 Business Day before the day on which the notice of meeting is sent to Holders. Notwithstanding the appointment of a Special Trustee, the Depositor shall retain all rights under the Indenture, including the right to defer payments of interest by extending the interest payment period on the Debentures. Subject to the requirements set forth in this paragraph and as long as the Debentures are held by the Trust, the Holders of a majority in liquidation amount of the outstanding Preferred Securities, voting separately as a class may, and the Trustees shall not, without obtaining the prior approval of the Holders of a Majority in aggregate liquidation amount of all Preferred Securities (i) direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee under the Indenture, or executing any trust or power conferred upon the Property Trustee with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under Section 5.13 of the Indenture or otherwise, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, PROVIDED, HOWEVER, that, where a consent under the Indenture would require the consent or act of the Holders of greater than a majority in principal amount of Debentures affected thereby (a "Super Majority"), the Property Trustee may only give such consent or take such action at the direction of the Holders of at least the proportion in liquidation preference of the Preferred Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. The Property Trustee shall not, and none of the other Trustees shall in any event, revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities, except by a subsequent vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Preferred Securities under this paragraph unless the Property Trustee has obtained an opinion of tax counsel experienced in such matters to the effect that, as a result of such action, the Trust will not fail to be classified as a grantor trust for United States federal income tax purposes. If a Debenture Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption on the Redemption Date), then a Holder of Preferred Securities may directly institute a proceeding, subject to the terms of the Indenture (including the subordination provisions set forth in Article XII thereof), for enforcement of payment to such Holder (a "Direct Action") of the principal of or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder on or after the respective due date specified in the Debentures. In connection with such Direct Action, the Holders of the Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Depositor to such Holder of Preferred Securities in such Direct Action. In addition, if the Property Trustee fails to enforce its rights under the I-12 Debentures (other than rights arising from an Event of Default described in the immediately preceding sentence) after any Holder of Preferred Securities shall have made a written request to the Property Trustee to enforce such rights, such Holder of Preferred Securities may, to the fullest extent permitted by law, institute a Direct Action to enforce the rights of the Property Trustee or any other Person. Except as provided in this paragraph, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Debentures. Any approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent without prior notice. The Administrative Trustees will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Preferred Securities. Each such notice will include a statement setting forth the following information (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Preferred Securities will be required for the Trust to redeem and cancel or remarket the Preferred Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Depositor, the Trustees or any Affiliate of the Depositor or the Trustees shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding, except that for the purposes of determining whether the Property Trustee shall be fully protected in relying on any such direction, waiver or consent, only Securities which the Property Trustee knows are so owned shall be so disregarded. 7. VOTING RIGHTS - COMMON SECURITIES. (a) Except as provided under paragraphs 7(b), (c) and 8, in the Business Trust Act and as otherwise required by law and the Declaration, the Holders of the Common Securities will have no voting rights. (b) The Holders of the Common Securities are entitled, in accordance with Article V of the Declaration, to vote to appoint, remove or replace any Trustee, subject to the exclusive right of the Holders of the Preferred Securities to appoint, remove or replace a Special Trustee and unless a Debenture Event of Default shall have occurred and be continuing, in which event the Property Trustee and the Delaware Trustee may only be removed by I-13 the Holders of a Majority in liquidation amount of the Preferred Securities, voting as a class at a meeting of the Holders of the Preferred Securities; and (c) Subject to Section 2.06 of the Declaration and only after the Event of Default with respect to the Preferred Securities has been cured, waived, or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Debenture Trustee or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under Section 5.13 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable, PROVIDED that, where a consent or action under the Indenture would require the consent or act of the Holders of greater than a majority in principal amount of Debentures affected thereby (a "Super Majority"), the Property Trustee may only give such consent or take such action at the direction of the Holders of at least the proportion in liquidation amount of the Common Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. Pursuant to this paragraph 7(c), the Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities, except by a subsequent vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee or the Debenture Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Common Securities under this paragraph unless the Property Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action the Trust will not fail to be classified as a grantor trust for United States federal income tax purposes. If the Property Trustee fails to enforce its rights, as holder of the Debentures, under the Indenture, any Holder of Common Securities may, after a period of 30 days has elapsed from such Holder's written request to the Property Trustee to enforce such rights and to the fullest extent permitted by law, institute a legal proceeding directly against the Depositor, to enforce the Property Trustee's rights, as holder of the Debentures, under the Indenture, without first instituting any legal proceeding against the Property Trustee or any other Person. Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent without prior notice. The Administrative Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote to be mailed to each Holder of record of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote and (iii) instructions for the delivery of proxies. I-14 No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities. 8. AMENDMENTS TO DECLARATION AND INDENTURE. (a) In addition to any requirements under Section 12.01 of the Declaration, if any proposed amendment to the Declaration provides for, or the Administrative Trustees other wise propose to effect, (i) any action that would adversely affect the powers, preferences or rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than as described in Section 8.01 of the Declaration, then the Holders of outstanding Securities will be entitled to vote on such amendment or proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in liquidation amount of the Securities, voting together as a single class, PROVIDED, HOWEVER, that, the rights of Holders of Preferred Securities under Article V of the Declaration to appoint, remove or replace a Special Trustee shall not be amended without the consent of each Holder of Preferred Securities; and PROVIDED FURTHER that if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or only the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least a Majority in liquidation amount of such class of Securities. (b) In the event the consent of the Property Trustee as the holder of the Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Property Trustee shall request the direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by at least the same proportion in aggregate stated liquidation preference of the Securities; PROVIDED, HOWEVER, that the Property Trustee shall not take any action in accordance with the directions of the Holders of the Securities under this paragraph 8(b) unless the Property Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. 9. PRO RATA. A reference in these terms of the Securities to any payment, Distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, on any Distribution Date or Redemption Date an Event of Default under the Declaration has occurred and is continuing, in which case no payment of any Distribution on, or amount payable upon redemption of, any Common Security, and no other payment on account of the redemption, liquidation or other I-15 acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the amount payable upon redemption of the Preferred Securities, the full amount of such amount in respect of all outstanding Preferred Securities then called for redemption shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, or the amount payable upon redemption of Preferred Securities then due and payable. 10. RANKING. The Preferred Securities rank PARI PASSU and payment thereon shall be made Pro Rata with the Common Securities except that, where a Debenture Event of Default occurs and is continuing in respect of the Debentures held by the Property Trustee, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Preferred Securities. 11. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE. Each Holder of Preferred Securities and Common Securities, by the acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee and the Common Securities Guarantee, respectively, including the subordination provisions therein, and to the provisions of the Indenture including the subordination provisions therein, which are each incorporated by reference herein and which include, among other things, provisions relating to certain rights of the Holders of the Preferred Securities all as set forth therein. 12. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have no preemptive or similar rights to subscribe for any additional securities. 13. MISCELLANEOUS. These terms constitute a part of the Declaration. The Depositor will provide a copy of the Declaration, the Preferred Securities Guarantee or the Common Securities Guarantee, as may be appropriate, and the Indenture to a Holder without charge on written request to the Depositor at its principal place of business. I-16 EXHIBIT A-1 FORM OF PREFERRED SECURITY [FORM OF FACE OF SECURITY] [Include the following Restricted Securities Legend on all Restricted Preferred Securities, including Global Preferred Securities, unless otherwise determined by the Depositor in accordance with applicable law -- THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY CONVERTIBLE SENIOR SUBORDINATED DEBENTURES ISSUED UPON EXCHANGE FOR THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) THIS SECURITY AND ANY CONVERTIBLE SENIOR SUBORDINATED DEBENTURES ISSUABLE UPON EXCHANGE THEREFOR AND COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.] A-1-1 [Include if Preferred Security is in global form and The Depository Trust Company is the Depositary -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [Include if Preferred Security is in global form -- TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.] A-1-2 Certificate Number Number of Preferred Securities Aggregate Liquidation Value $ CUSIP NO. ---------- Preferred Securities of Titan Capital Trust Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)-SM-* (liquidation amount $50 per HIGH TIDE) Titan Capital Trust, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that ______________________ (the "Holder") is the registered owner of preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)-SM-*(liquidation amount $50 per HIGH TIDE) (the "Preferred Securities"). Subject to the restrictions set forth in the Declaration (as defined below), the Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust, dated as of February 9, 2000, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Preferred Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Preferred Securities Guarantee to the extent provided therein. The Depositor will provide a copy of the Declaration, the Preferred Securities Guarantee and the Indenture to a Holder without charge upon written request to the Trust at its principal place of business. Reference is hereby made to select provisions of the Preferred Securities set forth on the reverse hereof, which select provisions shall for all purposes have the same effect as if set forth at this place. - --------------------- * The terms Remarketable Term Income Deferrable Equity Securities (HIGH TIDES)-SM- and HIGH TIDES-SM- are registered servicemarks of Credit Suisse First Boston Corporation. A-1-3 Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Debentures. Unless the Property Trustee's Certificate of Authentication hereon has been properly executed, these Preferred Securities shall not be entitled to any benefit under the Declaration or be valid or obligatory for any purpose. A-1-4 IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of February, 2000. Titan Capital Trust By: ------------------------ Name: Title: Administrative Trustee [CONTINUED ON NEXT PAGE] A-1-5 PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: February 9, 2000 Wilmington Trust Company, as Property Trustee By: ----------------------- Authorized Signatory A-1-6 [FORM OF REVERSE OF SECURITY] Distributions payable on each Preferred Security will accrue at the Applicable Rate applied to the stated liquidation amount of $50 per Preferred Security, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. The Applicable Rate will be 5.75% per annum (the "Initial Rate") from the date of original issuance of the Securities to but excluding the Reset Date, and the Term Rate from the Reset Date and thereafter. The Term Rate will be the rate established by the Remarketing Agent to be effective on the Reset Date. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Applicable Rate (to the extent permitted by applicable law). The Applicable Rate shall be subject to adjustment in the event of a Registration Default, as described in the Indenture. The term "Distributions" as used herein includes quarterly distributions, additional distributions on quarterly distributions not paid on the applicable Distribution Date and Additional Amounts, as applicable. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. Except as otherwise described below, Distributions on the Preferred Securities will be cumulative, will accrue from the date of their original issuance and will be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (except as provided below), commencing on May 15, 2000, to Holders of record at the close of business on the 1st day of the month immediately preceding the applicable payment date, which payment dates shall correspond to the interest payment dates on the Debentures. The Reset Date is any date (1) not later than February 15, 2005 (or, if such 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. The 1st day of the month immediately preceding each Distribution Date is the record date for determining which holders of Preferred Securities shall be paid the Distributions and Additional Amounts, if any, payable on such Distribution Date. 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 Preferred Security is registered on the relevant record date, subject to the Depositor's right to initiate a Deferral Period (as defined below). 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 Preferred Security is registered on the relevant record date and (2) Distributions A-1-7 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 following the Reset Date to the person in whose name each Preferred Security is registered on the relevant record date for such second Distribution Date, subject in each case to the Depositor's right to initiate a Deferral Period. So long as no Debenture Event of Default has occurred and is continuing, the Depositor has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the Applicable Rate compounded quarterly during any such Deferral Period. Prior to three Business Days before a Regular Record Date fixed for a Payment Resumption Date, the Depositor may further extend such Deferral Period; PROVIDED that such Deferral Period together with all such previous and further deferrals thereof may not exceed 20 consecutive quarters or extend beyond (i) the maturity (whether at the stated maturity or by declaration of acceleration, call for redemption or otherwise) of the Debentures under the Indenture and (ii) in the case of a Deferral Period which begins prior to the Reset Date, the Reset Date. Payments of accrued Distributions will be payable to Holders by the Depositor as they appear on the books and records of the Trust on the Regular Record Date for the relevant Payment Resumption Date. Upon the termination of any Deferral Period and the payment of all amounts then due, the Depositor may commence a new Deferral Period, subject to the above requirements. The Preferred Securities shall be redeemable as provided in the Declaration. The Preferred Securities shall be convertible into shares of Common Stock, through (i) the exchange of Preferred Securities for a portion of the Debentures and (ii) the immediate conversion of such Debentures into Common Stock, in the manner and according to the terms set forth in the Declaration. A-1-8 CONVERSION REQUEST To: Wilmington Trust Company, as Property Trustee of Titan Capital Trust The undersigned owner of these Preferred Securities hereby irrevocably exercises the option to convert these Preferred Securities, or the portion below designated, into Common Stock (as such term is defined in the Indenture, dated February 9, 2000, between The Titan Corporation and Wilmington Trust Company, as Debenture Trustee) of The Titan Corporation in accordance with the terms of the Amended and Restated Declaration of Trust (as amended from time to time, the "Declaration"), dated as of February 9, 2000, by Deanna Hom Petersen and Ray Guillaume, as Administrative Trustees, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, The Titan Corporation, as Depositor, and by the Holders, from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to the Declaration. Pursuant to the aforementioned exercise of the option to convert these Preferred Securities, the undersigned hereby directs the Conversion Agent (as that term is defined in the Declaration) to (i) exchange such Preferred Securities for a portion of the Debentures (as that term is defined in the Declaration) held by the Trust (at the rate of exchange specified in the terms of the Securities set forth as Annex I to the Declaration) and (ii) immediately convert such Debentures on behalf of the undersigned, into Common Stock (at the conversion rate specified in the terms of the Securities set forth as Annex I to the Declaration). The undersigned does also hereby direct the Conversion Agent that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any holder, upon the exercise of its conversion rights in accordance with the terms of the Declaration and the Preferred Securities, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Preferred Securities and agrees to appoint the Conversion Agent for the purpose of effecting the conversion of the Preferred Securities into shares of Common Stock. A-1-9 Date: , ------------ ---- in whole in part --- -- Number of Preferred Securities to be converted: ------------------------ If a name or names other than the undersigned, please indicate in the spaces below the name or names in which the shares of Common Stock are to be issued, along with the address or addresses of such person or persons -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number -------------------------------------------- -------------------------------------------- -------------------------------------------- Signature Guarantee:** ---------------------- - ------------------------ ** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-1-10 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security Certificate to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ----------------------- Signature: ------------------ (Sign exactly as your name appears on the other side of this Preferred Security Certificate) Signature Guarantee:*** - -------------------------- *** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-1-11 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF RESTRICTED PREFERRED SECURITIES This certificate relates to _____________ Preferred Securities held in (check applicable space) ____ book-entry or ____ definitive form by the undersigned. (A) The undersigned (check one box below): (1) / / has requested the Property Trustee by written order to deliver in exchange for its beneficial interest in the Global Preferred Security held by the Depositary a Preferred Security or Preferred Securities in definitive, registered form in such number equal to its beneficial interest in such Global Preferred Security (or the number thereof indicated above); or (2) / / has requested the Property Trustee by written order to exchange its Preferred Security in definitive registered form for an interest in the Global Preferred Security held by the Depositary in such number equal to number of Preferred Securities in definitive registered form so held; or (3) / / has requested the Property Trustee by written order to exchange or register the transfer of a Preferred Security or Preferred Securities. (B) The undersigned confirms that such Securities are being (check one box below): (1) / / acquired for the undersigned's own account, without transfer (in satisfaction of Section 9.02(d)(ii)(A) of the Declaration); or (2) / / transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (3) / / transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; or (4) / / transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; or (5) / / transferred pursuant to an effective registration statement under the Securities Act. Unless one of the boxes in (B) above is checked, the Property Trustee will refuse to register any of the Preferred Securities evidenced by this certificate in the name of any person other A-1-12 than the registered Holder thereof; provided, however, that if box (3) or (4) is checked, the Property Trustee may require, prior to registering any such transfer of the Preferred Securities such legal opinions, certifications and other information as the Trust has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. ----------------------------------------- Signature Signature Guarantee:**** ----------------------------------------- Signature must be guaranteed Signature ----------------------------------------- Signature - ----------------------- **** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-1-13 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing these Preferred Securities for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Trust as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------------- NOTICE: To be executed by an executive officer A-1-14 OPTION OF HOLDER TO ELECT PURCHASE To: Wilmington Trust Company, as Property Trustee of Titan Capital Trust The undersigned owner of these Securities hereby elects to have all or any part of these Securities purchased by the Trust pursuant to Article XV of the Amended and Restated Declaration of Trust (as amended from time to time, the "Declaration"), dated as of February 9, 2000, by Deanna Hom Petersen and Ray Guillaume, as Administrative Trustees, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, The Titan Corporation, as Depositor, and by the Holders, from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to the Declaration. Pursuant to Article XV of the Declaration, the undersigned owner of these Securities hereby states the amount he or she elects to have purchased: $ ------------------- Date: -------------- Signature: ------------------ (Sign exactly as your name appears on the other side of this Preferred Security Certificate) Signature Guarantee:***** - -------------------------- ***** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-1-15 EXHIBIT A-2 FORM OF COMMON SECURITY [FORM OF FACE OF SECURITY] [THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE REGISTRATION STATEMENT.] [OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A RELATED PARTY (AS DEFINED IN THE DECLARATION) OF THE TITAN CORPORATION] Certificate Number Number of Common Securities Common Securities of Titan Capital Trust HIGH TIDES Common Securities (liquidation amount $50 per HIGH TIDES Common Security) Titan Capital Trust, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that ____________________________________________ (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the HIGH TIDES Common Securities (liquidation amount $50 per Remarketable Common Security) (the "Common Securities"). Subject to the restrictions set forth in the Declaration (as defined below), the Common Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust, dated as of February 9, 2000, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Common Securities Guarantee to the extent provided therein. The Depositor will provide a copy of the Declaration, the A-2-1 Common Securities Guarantee and the Indenture to a Holder without charge upon written request to the Trust at its principal place of business. Reference is hereby made to select provisions of the Common Securities set forth on the reverse hereof, which select provisions shall for all purposes have the same effect as if set forth at this place. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Debentures. A-2-2 IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day of February, 2000. Titan Capital Trust By: ---------------------------- Name: Title: Administrative Trustee A-2-3 [FORM OF REVERSE OF SECURITY] Distributions payable on each Common Security will accrue at the Applicable Rate applied to the stated liquidation amount of $50 per Common Security, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. The Applicable Rate will be 5.75% per annum (the "Initial Rate") from the date of original issuance of the Securities to but excluding the Reset Date, and the Term Rate from the Reset Date and thereafter. The Term Rate will be the rate established by the Remarketing Agent to be effective on the Reset Date. Distributions in arrears for more than one quarter will bear interest thereon compounded quarterly at the Applicable Rate (to the extent permitted by applicable law). The Applicable Rate shall be subject to adjustment in the event of a Registration Default, as described in the Indenture. The term "Distributions" as used herein includes quarterly distributions, additional distributions on quarterly distributions not paid on the applicable Distribution Date and Additional Amounts, as applicable. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 30-day month. Except as otherwise described below, Distributions on the Common Securities will be cumulative, will accrue from the date of their original issuance and will be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (except as provided below), commencing on May 15, 2000, to Holders of record at the close of business on the 1st day of the month immediately preceding the applicable payment date, which payment dates shall correspond to the interest payment dates on the Debentures. The Reset Date is any date (1) not later than February 15, 2005 (or, if such 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. The 1st day of the month immediately preceding each Distribution Date is the record date for determining which holders of Common Securities shall be paid the Distributions and Additional Amounts, if any, payable on such Distribution Date. 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 Common Security is registered on the relevant record date, subject to the Depositor's right to initiate a Deferral Period (as defined below). 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 Common Security is registered on the relevant record date and (2) Distributions A-2-4 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 following the Reset Date to the person in whose name each Common Security is registered on the relevant record date for such second Distribution Date, subject in each case to the Depositor's right to initiate a Deferral Period. So long as no Debenture Event of Default has occurred and is continuing, the Depositor has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period not exceeding 20 consecutive quarters (each a "Deferral Period") and, as a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the Applicable Rate compounded quarterly during any such Deferral Period. Prior to three Business Days before a Regular Record Date fixed for a Payment Resumption Date, the Depositor may further extend such Deferral Period; PROVIDED that such Deferral Period together with all such previous and further deferrals thereof may not exceed 20 consecutive quarters or extend beyond (i) the maturity (whether at the stated maturity or by declaration of acceleration, call for redemption or otherwise) of the Debentures under the Indenture and (ii) in the case of a Deferral Period which begins prior to the Reset Date, the Reset Date. Payments of accrued Distributions will be payable to Holders by the Depositor as they appear on the books and records of the Trust on the Regular Record Date for the relevant Payment Resumption Date. Upon the termination of any Deferral Period and the payment of all amounts then due, the Depositor may commence a new Deferral Period, subject to the above requirements. The Common Securities shall be redeemable as provided in the Declaration. The Common Securities shall be convertible into shares of Common Stock, through (i) the exchange of Common Securities for a portion of the Debentures and (ii) the immediate conversion of such Debentures into Common Stock, in the manner and according to the terms set forth in the Declaration. A-2-5 CONVERSION REQUEST To: Wilmington Trust Company, as Property Trustee of Titan Capital Trust The undersigned owner of these Common Securities hereby irrevocably exercises the option to convert these Common Securities, or the portion below designated, into Common Stock (as such term is defined in the Indenture, dated February 9, 2000, between The Titan Corporation and Wilmington Trust Company, as Debenture Trustee) of The Titan Corporation in accordance with the terms of the Amended and Restated Declaration of Trust (as amended from time to time, the "Declaration"), dated as of February 9, 2000, by Deanna Hom Petersen and Ray Guillaume, as Administrative Trustees, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, The Titan Corporation, as Depositor, and by the Holders, from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to the Declaration. Pursuant to the aforementioned exercise of the option to convert these Common Securities, the undersigned hereby directs the Conversion Agent (as that term is defined in the Declaration) to (i) exchange such Common Securities for a portion of the Debentures (as that term is defined in the Declaration) held by the Trust (at the rate of exchange specified in the terms of the Securities set forth as Annex I to the Declaration) and (ii) immediately convert such Debentures on behalf of the undersigned, into Common Stock (at the conversion rate specified in the terms of the Securities set forth as Annex I to the Declaration). The undersigned does also hereby direct the Conversion Agent that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any holder, upon the exercise of its conversion rights in accordance with the terms of the Declaration and the Common Securities, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Common Securities and agrees to appoint the Conversion Agent for the purpose of effecting the conversion of the Common Securities into shares of Common Stock. A-2-6 Date: , ------------ ---- in whole in part ---- -- Number of Common Securities to be converted: ---------------------- If a name or names other than the undersigned, please indicate in the spaces below the name or names in which the shares of Common Stock are to be issued, along with the address or addresses of such person or persons -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number -------------------------------------------- -------------------------------------------- -------------------------------------------- Signature Guarantee:****** ----------------- - ---------------------------- ****** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-2-7 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints_______________________________________________________ _______________________________________________________________________________ ____________________________________ agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ----------------------- Signature: ------------------ (Sign exactly as your name appears on the other side of this Common Security Certificate) Signature Guarantee*******: ----------------------------------------------------- - --------------------------- ******* (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-2-8 OPTION OF HOLDER TO ELECT PURCHASE To: Wilmington Trust Company, as Property Trustee of Titan Capital Trust The undersigned owner of these Securities hereby elects to have all or any part of these Securities purchased by the Trust pursuant to Article XV of the Amended and Restated Declaration of Trust (as amended from time to time, the "Declaration"), dated as of February 9, 2000, by Deanna Hom Petersen and Ray Guillaume, as Administrative Trustees, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, The Titan Corporation, as Depositor, and by the Holders, from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to the Declaration. Pursuant to Article XV of the Declaration, the undersigned owner of these Securities hereby states the amount he or she elects to have purchased: $ ------------------- Date: -------------- Signature: ------------------ (Sign exactly as your name appears on the other side of this Preferred Security Certificate) Signature Guarantee:******** - --------------------------- ******** (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A-2-9 TABLE OF CONTENTS ARTICLE I INTERPRETATION AND DEFINITIONS Section 1.01 Definitions..........................................................2 ARTICLE II TRUST INDENTURE ACT Section 2.01 Trust Indenture Act; Application....................................12 Section 2.02 Lists of Holders of Securities......................................12 Section 2.03 Reports by the Property Trustee.....................................13 Section 2.04 Periodic Reports to Property Trustee................................13 Section 2.05 Evidence of Compliance with Conditions Precedent....................13 Section 2.06 Events of Default; Waiver...........................................13 Section 2.07 Event of Default; Notice............................................15 ARTICLE III ORGANIZATION Section 3.01 Name................................................................16 Section 3.02 Office..............................................................16 Section 3.03 Purpose.............................................................16 Section 3.04 Authority...........................................................16 Section 3.05 Title to Property of the Trust......................................17 Section 3.06 Powers and Duties of the Administrative Trustees....................17 Section 3.07 Prohibition of Actions by the Trust and the Trustees................21 Section 3.08 Powers and Duties of the Property Trustee...........................21 Section 3.09 Certain Duties and Responsibilities of the Property Trustee.........24 Section 3.10 Certain Rights of Property Trustee..................................25 Section 3.11 Delaware Trustee....................................................28 Section 3.12 Execution of Documents..............................................28 Section 3.13 Not Responsible for Recitals or Issuance of Securities..............28 Section 3.14 Duration of Trust...................................................28 Section 3.15 Mergers.............................................................28 ARTICLE IV DEPOSITOR Section 4.01 Depositor's Purchase of Common Securities...........................30 Section 4.02 Responsibilities of the Depositor...................................30 Section 4.03 Guarantee of Payment of Trust Obligations...........................31 ARTICLE V TRUSTEES Section 5.01 Number of Trustees..................................................32 Section 5.02 Delaware Trustee....................................................33 Section 5.03 Property Trustee; Eligibility.......................................33 Section 5.04 Qualifications of Administrative Trustees and Delaware Trustee Generally...........................................................34 Section 5.05 Initial Trustees....................................................34 Section 5.06 Appointment, Removal and Resignation of Trustees....................34 Section 5.07 Vacancies among Trustees............................................37 Section 5.08 Effect of Vacancies.................................................37 Section 5.09 Meetings............................................................38 Section 5.10 Delegation of Power.................................................38 Section 5.11 Merger, Conversion, Consolidation or Succession to Business.........38 ARTICLE VI DISTRIBUTIONS Section 6.01 Distributions.......................................................39 ARTICLE VII ISSUANCE OF SECURITIES Section 7.01 General Provisions Regarding Securities.............................39 Section 7.02 Execution and Authentication........................................40 Section 7.03 Form and Dating.....................................................41 Section 7.04 Registrar, Paying Agent, Conversion Agent and Tender Agent..........43 Section 7.05 Paying Agent to Hold Money in Trust.................................44 Section 7.06 Replacement Securities..............................................45 Section 7.07 Outstanding Preferred Securities....................................45 Section 7.08 Preferred Securities in Treasury....................................45 Section 7.09 Temporary Securities................................................46 Section 7.10 Cancellation........................................................46 ARTICLE VIII TERMINATION OF TRUST Section 8.01 Dissolution of Trust................................................46 ARTICLE IX TRANSFER AND EXCHANGE Section 9.01 General.............................................................47 Section 9.02 Transfer Procedures and Restrictions................................48 Section 9.03 Deemed Security Holders.............................................54 i Section 9.04 Notices to Depositary...............................................54 Section 9.05 Appointment of Successor Depositary.................................54 ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS Section 10.01 Liability...........................................................54 Section 10.02 Exculpation.........................................................55 Section 10.03 Fiduciary Duty......................................................55 Section 10.04 Indemnification.....................................................56 Section 10.05 Outside Businesses..................................................56 ARTICLE XI ACCOUNTING Section 11.01 Fiscal Year.........................................................57 Section 11.02 Certain Accounting Matters..........................................57 Section 11.03 Banking.............................................................58 Section 11.04 Withholding.........................................................58 ARTICLE XII AMENDMENTS AND MEETINGS Section 12.01 Amendments..........................................................58 Section 12.02 Meetings of the Holders of Securities; Action by Written Consent....59 ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section 13.01 Representations and Warranties of Property Trustee..................61 Section 13.02 Representations and Warranties of Delaware Trustee..................61 ARTICLE XIV REGISTRATION RIGHTS Section 14.01 Registration Rights.................................................62 ARTICLE XV REPURCHASE OF SECURITIES UPON THE FAILURE TO CONSUMMATE THE ACQUISITION Section 15.01 Repurchase of Securities............................................63 Section 15.02 Agreement to Sell Debentures........................................65 ARTICLE XVI MISCELLANEOUS ii Section 16.01 Notices.............................................................65 Section 16.02 Governing Law.......................................................66 Section 16.03 Intention of the Parties............................................67 Section 16.04 Headings............................................................67 Section 16.05 Successors and Assigns..............................................67 Section 16.06 Partial Enforceability..............................................67 Section 16.07 Counterparts........................................................67
ANNEX I EXHIBIT A-1 EXHIBIT A-2 iii EX-4.7 8 EXHIBIT 4.7 PREFERRED SECURITIES GUARANTEE AGREEMENT BETWEEN THE TITAN CORPORATION AND WILMINGTON TRUST COMPANY THIS PREFERRED SECURITIES GUARANTEE AGREEMENT, dated as of February 9, 2000, executed and delivered by The Titan Corporation, a Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the HIGH TIDES (as defined herein) of Titan Capital Trust, a Delaware statutory business trust (the "Trust"). WHEREAS pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of February 9, 2000, executed by the Guarantor, as Depositor, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, and the Administrative Trustees named therein, the Trust is issuing $200 million ($250 million including the over-allotment option) aggregate liquidation amount of its 5 3/4% Convertible Preferred Securities, Remarketable Term Income Deferred Equity Securities (HIGH TIDES)K, liquidation amount $50 per security (the "HIGH TIDES") and $6,185,600 ($7,732,000 including the over-allotment option) aggregate liquidation amount of its Common Securities, liquidation amount $50 per security (the "Common Securities" and collectively with the HIGH TIDES, the "Trust Securities") representing undivided beneficial interests in the assets of the Trust and having the terms set forth in the Declaration; WHEREAS the Trust Securities will be issued by the Trust and the proceeds thereof will be used to purchase the Convertible Senior Subordinated Debentures Due 2030 (the "Debentures") of the Guarantor which will be deposited with Wilmington Trust Company as Property Trustee under the Declaration, as trust assets; and WHEREAS as incentive for the Holders to purchase HIGH TIDES, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the HIGH TIDES the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by each Holder of HIGH TIDES, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the HIGH TIDES. ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Declaration as in effect on the date hereof. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; PROVIDED, HOWEVER, that the Trust shall be deemed not to be an Affiliate of the Guarantor. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Common Securities" shall have the meaning specified in the first recital of this Guarantee Agreement. "Credit Agreement" means the Amended and Restated Credit Agreement dated as of June 9, 1999, among the Guarantor, as the borrower, the various financial institutions from time to time that are parties thereto, as lenders, The Bank of Nova Scotia, as lead manager and administrative agent, and Imperial Bank as the document agent, any credit agreement evidencing the credit facilities that are substantially described in the commitment letter dated January 27, 2000, from Credit Suisse First Boston, New York branch, and First Union National Bank to the Guarantor, 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. "Debentures" shall have the meaning specified in the second recital of this Guarantee Agreement. "Debt" means (i) the principal of and premium, if any, and unpaid interest on indebtedness for money borrowed, (ii) purchase money and similar obligations, (iii) obligations under capital leases, (iv) guarantees, assumptions or purchase commitments relating to, or other transactions as a result of which the Guarantor is responsible for the payment of such indebtedness of others, (v) renewals, extensions and refunding of any such indebtedness, (vi) interest or obligations in respect of any such indebtedness accruing after the commencement of any insolvency or bankruptcy proceedings and (vii) obligations associated with derivative products such as interest rate and currency exchange contracts, foreign exchange contracts, commodity contracts and similar arrangements. "Declaration" shall have the meaning specified in the first recital to this Guarantee Agreement. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; PROVIDED, HOWEVER, that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured such default within 60 days after receipt of such notice. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the HIGH TIDES, to the extent not paid or made by or on behalf of the Trust: (i) any accrued and unpaid Distributions required to be paid on the HIGH TIDES, to the extent the Trust shall have funds on hand available therefor at such time, (ii) the applicable Redemption Price, with respect to the HIGH TIDES called for redemption by the Trust to the extent the Trust shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of the Trust, unless Debentures are distributed to the Holders of the HIGH TIDES or all the HIGH TIDES are redeemed, the lesser of (a) the aggregate of the liquidation amount of $50 per HIGH TIDES plus accrued and unpaid Distributions on the HIGH TIDES to the date of payment (the "Liquidation Distribution") to the extent the Trust shall have funds on hand available to make such payment at such time and (b) the amount of assets of the Trust remaining available for distribution to Holders of the HIGH TIDES upon liquidation of the Trust after satisfaction of liabilities to creditors of the Trust as required by applicable law. "Guarantee Trustee" means Wilmington Trust Company, a Delaware banking corporation, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. "Guarantor" shall have the meaning specified in the first paragraph of this Guarantee Agreement. "HIGH TIDES" shall have the meaning specified in the first recital of this Guarantee Agreement. "Holder" means any holder, as registered on the books and records of the Trust, of any HIGH TIDES; PROVIDED, HOWEVER, that in determining whether the holders of the requisite percentage of HIGH TIDES have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indenture" means the Indenture dated as of February 9, 2000, as amended or supplemented, between the Guarantor and Wilmington Trust Company, as trustee, relating to the issuance of Debentures. "Trust" shall have the meaning specified in the first paragraph of this Guarantee Agreement. "List of Holders" has the meaning specified in Section 2.02(a). "Majority in liquidation amount of the HIGH TIDES" means, except as provided in the terms of the HIGH TIDES or by the Trust Indenture Act, a vote by the Holder(s), voting separately as a class, of more than 50% of the aggregate liquidation amount (i.e., the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid distributions to the date upon which the voting percentages are determined) of all then outstanding HIGH TIDES. "Officers' Certificate" means, with respect to any Person, a certificate signed by the chief executive officer, president or a vice president, and by the treasurer, an associate treasurer, an assistant treasurer, the secretary or an assistant secretary of such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each officer, such condition or covenant has been complied with. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" when used with respect to the Guarantee Trustee means any officer assigned to the Corporate Trust Office, including any vice president, assistant vice president, assistant treasurer, the controller, assistant secretary or any other officer of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers, and having direct responsibility for the administration of this Guarantee Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Secured Debt" means Debt under the Credit Agreement and any 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 an aggregate fair market value at the time of the grant thereof (in the judgment of the board of directors, the chief financial officer or other responsible agent or officer of the Guarantor) not less than the amount of such Debt. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended. "Trust Securities" shall have the meaning specified in the first recital of this Guarantee Agreement. ARTICLE II TRUST INDENTURE ACT SECTION 2.01. TRUST INDENTURE ACT; APPLICATION. This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions. If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.02. LISTS OF HOLDERS OF SECURITIES. (a) The Guarantor shall provide the Guarantee Trustee (i) within 14 days after each record date for payment of Distributions, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the HIGH TIDES ("LIST OF HOLDERS") as of such record date, PROVIDED that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Guarantee Trustee by the Guarantor on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Guarantee Trustee. (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), 311(b) and 312(b) of the Trust Indenture Act. SECTION 2.03. REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after May 15 of each year, commencing May 15, 2000, the Guarantee Trustee shall provide to the Holders of the HIGH TIDES such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.04. PERIODIC REPORTS TO THE GUARANTEE TRUSTEE. The Guarantor shall provide to the Guarantee Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by any officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.06. EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in liquidation amount of the HIGH TIDES may, by vote, on behalf of all the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. SECTION 2.07. EVENT OF DEFAULT; NOTICE. (a) The Guarantee Trustee shall, within 10 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default known to the Guarantee Trustee, unless such Events of Default have been cured before the giving of such notice; PROVIDED, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determine that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice thereof, or a Responsible Officer of the Guarantee Trustee charged with the administration of this Guarantee Agreement shall have obtained actual knowledge thereof. SECTION 2.08. CONFLICTING INTERESTS. The Declaration shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE SECTION 3.01. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.04(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the HIGH TIDES relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. SECTION 3.02. CERTAIN RIGHTS OF GUARANTEE TRUSTEE. (a) Subject to the provisions of Section 3.01: (i) The Guarantee Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate unless otherwise prescribed herein. (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter relating to compliance by the Guarantor with any of its obligations contained in this Guarantee Agreement be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate (with respect to the Guarantor) which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor. (iv) The Guarantee Trustee may consult with legal counsel of its selection, and the advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor, the Trust or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity reasonably satisfactory to it, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; PROVIDED, that nothing contained in this Section 3.02(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. (vi) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be fully protected in acting in accordance with such instructions. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. SECTION 3.03. INDEMNITY. The Guarantor agrees to indemnify the Guarantee Trustee and its directors, officers, agents and employees for, and to hold them harmless against, any and all loss, liability, claim, action, suit, cost or expense incurred without negligence or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any Guarantee Payments as a result of any amount due to it under this Guarantee Agreement. This indemnity shall survive the termination of this Guarantee Agreement or the resignation or removal of the Guarantee Trustee. SECTION 3.04. EXPENSES. The Guarantor shall from time to time reimburse the Guarantee Trustee for its expenses and costs incurred in connection with the performance of its duties hereunder. This reimbursement obligation shall survive the termination of this Guarantee Agreement or the resignation or removal of the Guarantee Trustee. ARTICLE IV GUARANTEE TRUSTEE SECTION 4.01. GUARANTEE TRUSTEE; ELIGIBILITY. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(c) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.01(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE. (a) Subject to Section 4.02(b), in the absence of the existence of an Event of Default, the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 30 days after delivery to the Guarantor of an instrument of resignation or notice of removal by the Guarantor, the retiring Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. ARTICLE V GUARANTEE SECTION 5.01. GUARANTEE. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Trust may have or assert, other than the defense of payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders. The Guarantor shall give written notice to the Guarantee Trustee as promptly as practicable in the event it makes any direct payment hereunder. SECTION 5.02. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and, with respect to its obligations under Section 5.01, hereby waives presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the HIGH TIDES to be performed or observed by the Trust; (b) the extension of time for the payment by the Trust of all or any portion of the Distributions (other than any deferral of time for payment of Distributions that results from the deferral of any interest payment period on the Debentures as so provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the HIGH TIDES or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the HIGH TIDES; (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the HIGH TIDES, or any action on the part of the Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust; (e) any invalidity of, or defect or deficiency in, the HIGH TIDES; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred (without duplication of amounts paid by the Trust in connection with any such settlement or compromise); or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.04. RIGHTS OF HOLDERS. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount of the HIGH TIDES have the right among themselves, the other Holders, if any, and the Guarantee Trustee to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Trust or any other Person. SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except in the event of its termination in accordance with Section 7.01 hereof. SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the right to waive payment by the Trust pursuant to Section 5.01; PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. SECTION 5.07. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the HIGH TIDES and that the Guarantor shall (without duplication of amounts paid by or on behalf of the Trust) be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof, but subject to Section 6.01 hereof. ARTICLE VI COVENANTS AND SUBORDINATION SECTION 6.01. SUBORDINATION. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment only to all Secured Debt of the Guarantor in accordance with the terms of Article XII of the Indenture, which terms (including the definitions of all defined terms used therein) are incorporated herein, MUTATIS MUTANDIS, by this reference. SECTION 6.02. PARI PASSU GUARANTEES. This Guarantee Agreement shall rank PARI PASSU with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guaranty now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor. ARTICLE VII TERMINATION SECTION 7.01. TERMINATION. This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all HIGH TIDES, (ii) the distribution of Debentures to the Holders in exchange for all of the HIGH TIDES, (iii) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Trust or (iv) distribution of the Guarantor's common stock to the Holders in respect of the conversion of all of the HIGH TIDES. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must repay any sums paid with respect to HIGH TIDES or this Guarantee Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the HIGH TIDES then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor's obligations hereunder, the Guarantor shall not assign its obligations hereunder. SECTION 8.02. AMENDMENTS. Except with respect to any changes which do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in liquidation amount of the HIGH TIDES. The provisions of Article XII of the Declaration concerning meetings of the Holders shall apply to the giving of such approval. SECTION 8.03. NOTICES. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied (confirmed by delivery of the original) or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantor may give notice to the Holders: The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 Telephone: (858) 552-9500 Facsimile No.: (858) 552-9759 Attention: General Counsel (b) if given to the Trust, in care of the Guarantor, at the Trust's (and the Guarantee Trustee's) address set forth below or such other address as the Trust may, at the Trust's direction, give notice to the Holders: Titan Capital Trust c/o The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 Telephone: (858) 552-9500 Facsimile No.: (858) 552-9759 Attention: General Counsel with a copy to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 Facsimile No.: (302) 651-8882 Attention: Corporate Trust Administration (c) if given to the Guarantee Trustee: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 Facsimile No.: (302) 651-8882 Attention: Corporate Trust Administration (d) if given to any Holder, at the address set forth on the books and records of the Trust. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 8.04. BENEFIT. This Guarantee Agreement is solely for the benefit of the Holders (subject to the benefits inuring to the holders of Secured Debt pursuant to the subordination provisions hereof) and is not separately transferable from the HIGH TIDES. SECTION 8.05. INTERPRETATION. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.01; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. SECTION 8.06 GOVERNING LAW. This Guarantee Agreement shall be governed by and construed in accordance with the laws of the State of New York including, without limitation, Section 5-1401 of the New York General Obligations Law. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. The Titan Corporation by -------------------------------------- Name: Title: Wilmington Trust Company, as Guarantee Trustee, by -------------------------------------- Name: Title: EX-5.1 9 EXHIBIT 5.1 Exhibit 5.1 [LETTERHEAD] April 20, 2000 The Titan Corporation Titan Capital Trust c/o The Titan Corporation 3033 Science Park Road San Diego, CA 92121 Ladies and Gentlemen: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), pursuant to the Registration Statement on Form S-3 (the "Registration Statement") to be filed with the Securities and Exchange Commission, of (a) 5,000,000 shares of 5-3/4% Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities (the "HIGH TIDES") of Titan Capital Trust, a Delaware business trust, (b) $257,732,000 in aggregate principal amount of the 5-3/4% Convertible Subordinated Debentures due 2030 (the "Debentures") of The Titan Corporation, a Delaware corporation (the "Company"), (c) 5,038,000 shares of Common Stock, par value $.001 per share (the "Shares"), of the Company, and (d) the Preferred Securities Guarantee, dated as of February 9, 2000, of the HIGH TIDES (the "Guarantee") by the Company, we have reviewed such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. In connection with this opinion, we have examined and relied upon the Registration Statement and related Prospectus, the Company's Amended and Restated Certificate of Incorporation and Bylaws and the originals or copies certified to our satisfaction of such records, documents, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares have been duly authorized and reserved for issuance upon conversion of the Debentures, and when issued in accordance with the terms of the Debentures, will be validly issued, fully paid and nonassessable. We consent to the reference to our firm under the caption "Legal Matters" in the Prospectus included in the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, COOLEY GODWARD LLP /s/ Barbara L. Borden Barbara L. Borden EX-5.2 10 EXHIBIT 5.2 April 20, 2000 The Titan Corporation 3033 Science Road San Diego, CA 92121-1199 Titan Capital Trust 3033 Science Road San Diego, CA 92121-1199 Re: REGISTRATION STATEMENT ON FORM S-3 OF THE TITAN CORPORATION AND TITAN CAPITAL TRUST Ladies and Gentlemen: We have acted as special New York counsel to The Titan Corporation, a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-3 of the Company and Titan Capital Trust, a statutory business trust formed under the laws of the State of Delaware (the "Trust") (the "Registration Statement") to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), relating to (i) 5,000,000 of the 5 3/4% Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities (HIGH TIDES(sm)) of the Trust; (ii) $257,732,000 aggregate principal amount of the 5 3/4% Convertible Senior Subordinated Debentures due 2030 of the Company (the "Debentures") issued pursuant to the Indenture (the "Indenture") dated February 9, 2000, between the Company and Wilmington Trust Company (the "Debenture Trustee"); (iii) the shares of common stock, par value $.01 per share, of the Company (the "Common Stock") issuable upon the conversion of the Debentures and (iv) the Preferred Securities Guarantee Agreement dated Februay 9, 2000, between the Company and Wilmington Trust Company pursuant to which the Company has guaranteed the Trust's obligations under the High Tides on a subordinated basis (the "Guarantee"), all as more fully described in the Registration Statement and the prospectus included as part of the Registration Statement. This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Registration Statement. The Titan Corporation Titan Capital Trust April 20, 2000 Page 2 In connection with the rendering of this opinion, we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of all such documents as we have deemed necessary or appropriate as a basis for the opinions set forth herein, including without limitation (i) the Registration Statement (including the prospectus included as part of the Registration Statement); (ii) the Indenture; (iii) the Debentures; (iv) the Guarantee; and (v) such other certificates, instruments and documents as we considered necessary or appropriate for the purposes of this opinion. In our examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such copies. In giving this opinion, we have assumed that each of the Company, the Trust and the Debenture Trustee is and was at all relevant times duly and validly organized under the laws of the jurisdiction of its formation and has and had at all relevant times the power, corporate and other, to enter into and perform all obligations under such of the Indenture, the Debenture and the Guarantee (the "Documents") to which it was a party and we also have assumed the due authorization by all requisite action, corporate and other, and execution and delivery by such parties of such Documents and the validity and binding effect thereof on such parties. As to any facts material to the opinion expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others and of public officials. We express no opinion as to the legality, validity, binding effect and enforceability of any provision of the Documents waiving rights granted by law, to the extent a court or other tribunal of competent jurisdiction determines that such waivers are against public policy or prohibited by law. Based upon and subject to the foregoing, we are of the opinion that: 1. The Debentures, assuming they have been authenticated by the Debenture Trustee in accordance with the terms of the Indenture and delivered to, and paid for by, the Trust, constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. 2. The Guarantee, assuming the due execution, authentication and delivery of, and payment for, the Debentures, constitutes a valid and binding obligation of the Company enforceable against the Company with respect to the Debentures in accordance with its terms. The Titan Corporation Titan Capital Trust April 20, 2000 Page 3 The opinions set forth above with respect to enforceability are subject to the effect of (a) any applicable bankruptcy, insolvency, reorganization, fraudulent transfer, rehabilitation, liquidation, conservatorship, receivership, moratorium and other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) public policy and (c) general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity). We are members of the Bar of the State of New York and we do not express any opinion herein concerning any law other than the law of the State of New York. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Legal Matters" in the prospectus that is part of such Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations promulgated thereunder. Very truly yours, /s/ Morgan, Lewis & Backius EX-5.3 11 EXHIBIT 5.3 Exhibit 5.3 Titan Capital Trust c/o The Titan Corporation 3033 Science Park Road San Diego, California 92121-1199 Re: TITAN CAPITAL TRUST Ladies and Gentlemen: We have acted as special Delaware counsel for The Titan Corporation, a Delaware corporation (the "Company"), and Titan Capital Trust, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated January 19, 2000 (the "Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on January 19, 2000; (b) The Declaration of Trust of the Trust, dated as of January 19, 2000, among the Company and the trustees of the Trust named therein; (c) A form of Amended and Restated Declaration of Trust of the Trust (including Annex I and Exhibits A-1 and A-2 thereto) (the "Declaration"), to be entered into among the Company, as depositor, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust, attached as an exhibit to the Registration Statement (as defined below); (d) The Registration Statement on Form S-3 (the "Registration Statement"), including a prospectus (the "Prospectus"), relating to the Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities (HIGH TIDES) (liquidation amount $50 per HIGH TIDES) of the Trust representing undivided beneficial interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as proposed to be filed by the Company and the Trust with the Securities and Exchange Commission on or about April 20, 2000; and (e) A Certificate of Good Standing for the Trust, dated April 18, 2000, obtained from the Secretary of State. Capitalized terms used herein and not otherwise defined are used as defined in the Declaration. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not Titan Capital Trust April 20, 2000 Page 2 reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Declaration and the Certificate are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, that each of the parties to the documents examined by us has been duly created, organized or formed, as the case may be, and is validly existing in good standing under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) that each of the parties to the documents examined by us has duly authorized, executed and delivered such documents, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a preferred security certificate (substantially in the form of Exhibit A-1 to the Declaration) for such Preferred Security and the payment for the Preferred Security acquired by it, in accordance with the Declaration and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Declaration and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder that are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act. Titan Capital Trust April 20, 2000 Page 2 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Declaration. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above,without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, /s/ Richards, Layton & Finger, P.A. EX-8.1 12 EXHIBIT 8.1 Exhibit 8.1 [LETTERHEAD] April 20, 2000 Credit Suisse First Boston Donaldson, Lufkin & Jenrette Securities Corporation c/o Credit Suisse First Boston Corporation 11 Madison Avenue New York, NY 10010-3629 Ladies and Gentlemen: We have acted as counsel to The Titan Corporation (the "Company") and Titan Capital Trust (the "Trust") in connection with the filing of a Registration Statement on Form S-3 (Registration No. 333-_____) with the Securities and Exchange Commission (the "Registration Statement") covering the resale of (i) up to 5,000,000 Remarketable Term Income Deferrable Equity Securities (the "HIGH TIDES") of the Trust, (ii) up to $257,732,000 in aggregate principal amount of 5-3/4% Convertible Senior Subordinated Debentures due 2030 (the "Subordinated Debentures"), (iii) up to 5,038,000 shares of the Company's Common Stock issuable upon conversion of the Subordinated Debentures (the "Shares"), and (iv) the guarantee of the Company pursuant to the Guarantee Agreement, executed and delivered by the Company and the Wilmington Trust Company for the benefit of the holders of the HIGH TIDES (the "Preferred Securities Guarantee Agreement"). Capitalized terms used herein that are not otherwise defined herein have the meaning assigned to such terms in the Indenture. In rendering the opinion set forth below, we have examined copies, certified or otherwise identified to our satisfaction, of the following executed documents and are relying upon the truth and accuracy of the statements, covenants, representations and warranties set forth therein: 1. The Registration Statement; 2. The Indenture; 3. The Subordinated Debentures; 4. The Amended and Restated Declaration of Trust among the Trust, the Company and Wilmington Trust Company as Delaware Trustee and Property Trustee (the "Declaration"); 5. The HIGH TIDES; 6. The Remarketing Agreement among the Company, the Trust, Wilmington Trust Company as Tender Agent and Credit Suisse First Boston Corporation (the "Remarketing Agreement"); Credit Suisse First Boston Corporation April 20, 2000 Page Two 7. The Preferred Securities Guarantee Agreement; 8. The Common Securities Guarantee Agreement, executed and delivered by the Company for the benefit of the holders of the Common Securities (the "Common Securities Guarantee Agreement"); 9. Certain statements and representations contained in the Company's Representation Certificate attached hereto; and 10. Such other agreements and documents as we have considered necessary or appropriate for the purpose of rendering the opinion set forth below. In addition, we have assumed that (i) each of the Indenture, the Subordinated Debentures, the Declaration, the HIGH TIDES, the Remarketing Agreement, the Preferred Securities Guarantee Agreement and the Common Securities Guarantee Agreement will not be amended in any material respect; and (ii) the Trust will at all times be operated in accordance with the terms of the Declaration. Based on and subject to the foregoing, we are of the opinion that: (a). The Trust will not be classified as a partnership, or as an association or publicly traded partnership taxable as a corporation for United States federal income tax purposes and, instead, under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended (the "Code"), will be treated as a grantor trust, and the beneficial owners of the HIGH TIDES will be treated as owning undivided pro rata interests in the income and corpus of the Trust; and (b). Subject to the qualifications and limitations contained therein, the discussion set forth in the Registration Statement under the caption "Certain United States Federal Income Tax Consequences" fairly presents the current United States federal income tax law applicable to the Trust and the material United States federal tax consequences to a United States person of the purchase, ownership and disposition of the HIGH TIDES, and insofar as it relates to statements of law or legal conclusions is correct in all material respects. We express no opinion as to other tax issues affecting the holders of the HIGH TIDES or the other parties to the transactions described in the Registration Statement. Nor does our opinion address state, local or foreign tax consequences that may result from such transactions. Our opinion represents only our best judgment regarding the application of United States federal income tax laws under the Code, existing judicial decisions, administrative regulations and published rulings and procedures. Our opinion is not binding upon the Internal Revenue Service or the courts, and there is no assurance that the Internal Revenue Service will not successfully assert contrary positions. Furthermore, no assurance can be given that future legislation, judicial Credit Suisse First Boston Corporation April 20, 2000 Page Three decisions or administrative changes, applicable either on a prospective or retroactive basis, might not materially alter our opinion. We consent to the reference to our firm under the caption "Certain United States Federal Income Tax Consequences" and to the filing of this opinion as an exhibit to the Registration Statement. This opinion is given as of the date hereof solely for your benefit and may not be relied upon, circulated, quoted or otherwise referred to for any purpose without our prior written consent. Very truly yours, COOLEY GODWARD LLP /s/ Susan Cooper Philpot - ------------------------ Susan Cooper Philpot EX-12.1 13 EXHIBIT 12.1 Exhibit 12.1 THE TITAN CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------------- 1999 ----------------------------- 1995 1996 1997 1998 ACTUAL PROFORMA ------------- ------------ ------------ ------------- ------------ --------------- Earnings: Income before income taxes $2,551 $7,945 $2,802 $11,368 $59,183 $48,511 Fixed charges 5,718 7,168 9,225 9,964 11,955 37,224 Capitalized interest 0 0 (509) (550) (275) (275) ------------- ------------ ------------ ------------- ------------ --------------- Earnings $8,269 $15,113 $11,518 $20,782 $70,863 $85,460 ============= ============ ============ ============= ============ =============== Fixed charges: Interest expense $2,817 $4,764 $6,643 $7,377 $9,633 $33,635 Capitalized interest 0 0 509 550 275 275 Interest factor included in rents 2,901 2,404 2,073 2,037 2,047 3,314 ------------- ------------ ------------ ------------- ------------ --------------- Fixed charges $5,718 $7,168 $9,225 $9,964 $11,955 $37,224 ============= ============ ============ ============= ============ =============== Ratio of earnings to fixed charges 1.45 2.11 1.25 2.09 5.93 2.30
COMPUTATION OF RATIO OF COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS TO EARNINGS (AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------------- 1999 ----------------------------- 1995 1996 1997 1998 ACTUAL PROFORMA ------------- ------------ ------------ ------------- ------------ --------------- Total fixed charges $5,718 $7,168 $9,225 $9,964 $11,955 $37,224 Pre-tax earnings required for preference dividends 914 1,217 1,389 1,235 1,103 1,103 ------------- ------------ ------------ ------------- ------------ --------------- Total fixed charges and preference dividend requirements $6,632 $8,385 $10,614 $11,199 $13,058 $38,327 ============= ============ ============ ============= ============ =============== Earnings $8,269 $15,113 $11,518 $20,782 $70,853 $85,450 ============= ============ ============ ============= ============ =============== Ratio of combined fixed charges and preference dividends to earnings 0.80 0.55 0.92 0.54 0.18 0.45
EX-23.1 14 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated January 31, 2000 (except with respect to the matters discussed in Note 16, as to which the date is March 24, 2000) included in The Titan Corporation's Form 10-K for the year ended December 31, 1999 and to all references to our Firm included in this Registration Statement. /s/ Arthur Andersen San Diego, California April 20, 2000 EX-23.2 15 EXHIBIT 23.2 Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated December 28, 1999 on the financial statements of Transnational Partners II, LLC included in The Titan Corporation's Form 8-K/A dated January 24, 2000 and to all references to our Firm included in this Registration Statement. /s/ Arthur Andersen San Diego, California April 20, 2000 EX-23.3 16 EXHIBIT 23.3 Exhibit 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our reports dated February 4, 2000 and December 28, 1999 on the financial statements of JB Systems, Inc. (d.b.a. Mainsaver), included in The Titan Corporation's Form 8-K/A dated April 17, 2000 and The Titan Corporation's Form 8-K/A dated January 24, 2000, respectively, and to all references to our Firm included in this Registration Statement. /s/ Arthur Andersen San Diego, California April 20, 2000 EX-23.4 17 EXHIBIT 23.4 Exhibit 23.4 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated November 12, 1999 related to the financial statements of Advanced Communication Systems, Inc. for the fiscal year ended September 30, 1999 included in the Titan Corporation's Form 8-K/A dated April 17, 2000 and to all references to our Firm included in this Registration Statement. /s/ Arthur Andersen LLP Vienna, Virginia April 17, 2000 EX-23.5 18 EXHIBIT 23.5 Exhibit 23.5 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of The Titan Corporation and Titan Capital Trust for the registration of 5,000,000 5 3/4% Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities ("HIGH TIDES") of Titan Capital Trust and the other securities being registered therein and to the incorporation by reference therein of our report dated May 28, 1999 (except Note 9, as to which the date is September 22, 1999), with respect to the financial statements of Assist Cornerstone Technologies, Inc. at December 31, 1998 and 1997 and for each of the three years in the period ended December 31, 1998, included in the Form 8-K/A of The Titan Corporation dated January 24, 2000 and our report dated February 11, 2000, with respect to the financial statements of Assist Cornerstone Technologies, Inc. at December 12, 1999 and December 31, 1998 and for the period ended December 12, 1999 and each of the two years in the period ended December 31, 1998, included in the Form 8-K/A of The Titan Corporation dated April 17, 2000 filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Salt Lake City, Utah April 18, 2000 EX-23.6 19 EXHIBIT 23.6 EXHIBIT 23.6 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS The Board of Directors SFG Technologies Inc. We consent to the use of our report dated January 31, 2000 with respect to the consolidated balance sheets of SFG Technologies Inc. as at December 21, 1999 and December 31, 1998 and the consolidated statements of operations, deficit, and cash flows for the period from January 1, 1999 to December 21, 1999, eight months ended December 31, 1998 and the years ended April 30, 1998 and 1997 included in the form 8-K/A of The Titan Corporation dated April 17, 2000 and of our report dated June 22, 1999 except as to note 13 which is as of November 26, 1999, with respect to the consolidated balance sheets of SFG Technologies Inc. as at December 31, 1998 and April 30, 1998 and the consolidated statements of operations, deficit, and cash flows for the eight months period ended December 31, 1998 and for each of the years in the three year period ended April 30, 1998 included in The Titan Corporation 8-K/A filed on January 24, 2000, both incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG LLP Chartered Accountants Vancouver, Canada April 17, 2000 EX-25.1 20 EXHIBIT 25.1 Registration No.: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) THE TITAN CORPORATION (Exact name of obligor as specified in its charter) Delaware 95-2588754 (State of incorporation) (I.R.S. employer identification no.) 3033 Science Park Road San Diego, California 92121-1199 (Address of principal executive offices) (Zip Code) 5 3/4% Convertible Senior Subordinated Debentures (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 10th day of January, 2000. WILMINGTON TRUST COMPANY [SEAL] Attest: /s/ Patricia A. Evans By: /s/ ----------------------------------- -------- Name: Donald G. MacKelcan Title: Vice President NOTE: REMOVE CONFORMED SIGNATURES BEFORE SENDING AS DRAFT. 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 AMENDED CHARTER OR ACT OF INCORPORATION OF WILMINGTON TRUST COMPANY Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. 1 Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer 2 elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. 3 ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business 4 of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 5 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. 6 Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 7 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. 8 Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to 9 receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors 10 and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. 11 (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 12 EXHIBIT C SECTION 321(b) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: By: /s/ --------------------------------- -------- Name: Donald G. MacKelcan Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - --------------------------------------------- -------------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins 213,700 Interest-bearing balances 0 Held-to-maturity securities 30,232 Available-for-sale securities 1,628,889 Federal funds sold and securities purchased under agreements to resell 390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve 4,303,409 Assets held in trading accounts 0 Premises and fixed assets (including capitalized leases) 122,273 Other real estate owned 576 Investments in unconsolidated subsidiaries and associated companies 1,511 Customers' liability to this bank on acceptances outstanding 0 Intangible assets 5,100 Other assets 133,449 Total assets 6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices 5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase 269,343 Demand notes issued to the U.S. Treasury 95,000 Trading liabilities (from Schedule RC-D) 0 Other borrowed money: /////// With original maturity of one year or less 670,000 With original maturity of more than one year 43,000 Bank's liability on acceptances executed and outstanding 0 Subordinated notes and debentures 0 Other liabilities (from Schedule RC-G) 151,436 Total liabilities 6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common Stock 500 Surplus (exclude all surplus related to preferred stock) 62,118 Undivided profits and capital reserves 386,485 Net unrealized holding gains (losses) on available-for-sale securities (34,172) Total equity capital 414,931 Total liabilities, limited-life preferred stock, and equity capital 6,829,789
EX-25.2 21 EXHIBIT 25.2 Registration No.: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) TITAN CAPITAL TRUST (Exact name of obligor as specified in its charter) Delaware applied for (State of incorporation) (I.R.S. employer identification no.) 3033 Science Park Road San Diego, California 92121-1199 (Address of principal executive offices) (Zip Code) 5 3/4% Convertible Preferred Securities, Remarketable Term Income Deferrable Equity Securities (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 10th day of January, 2000. WILMINGTON TRUST COMPANY [SEAL] Attest: /s/ Patricia A. Evans By: /s/ ------------------------------------ ------- Name: Donald G. MacKelcan Title: Vice President NOTE: REMOVE CONFORMED SIGNATURES BEFORE SENDING AS DRAFT. EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 AMENDED CHARTER OR ACT OF INCORPORATION OF WILMINGTON TRUST COMPANY Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. 1 Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer 2 elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. 3 ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business 4 of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 5 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. 6 Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 7 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. 8 Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to 9 receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors 10 and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. 11 (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 12 EXHIBIT C SECTION 321(b) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: By: /s/ -------------------------- ------- Name: Donald G. MacKelcan Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - ---------------------------------------------- -------------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins 213,700 Interest-bearing balances 0 Held-to-maturity securities 30,232 Available-for-sale securities 1,628,889 Federal funds sold and securities purchased under agreements to resell 390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve 4,303,409 Assets held in trading accounts 0 Premises and fixed assets (including capitalized leases) 122,273 Other real estate owned 576 Investments in unconsolidated subsidiaries and associated companies 1,511 Customers' liability to this bank on acceptances outstanding 0 Intangible assets 5,100 Other assets 133,449 Total assets 6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices 5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase 269,343 Demand notes issued to the U.S. Treasury 95,000 Trading liabilities (from Schedule RC-D) 0 Other borrowed money: /////// With original maturity of one year or less 670,000 With original maturity of more than one year 43,000 Bank's liability on acceptances executed and outstanding 0 Subordinated notes and debentures 0 Other liabilities (from Schedule RC-G) 151,436 Total liabilities 6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common Stock 500 Surplus (exclude all surplus related to preferred stock) 62,118 Undivided profits and capital reserves 386,485 Net unrealized holding gains (losses) on available-for-sale securities (34,172) Total equity capital 414,931 Total liabilities, limited-life preferred stock, and equity capital 6,829,789
EX-25.3 22 EXHIBIT 25.3 Registration No.: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) THE TITAN CORPORATION (Exact name of obligor as specified in its charter) Delaware 95-2588754 (State of incorporation) (I.R.S. employer identification no.) 3033 Science Park Road San Diego, California 92121-1199 (Address of principal executive offices) (Zip Code) Guarantee of the High Tides (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 10th day of January, 2000. WILMINGTON TRUST COMPANY [SEAL] Attest: /s/ Patricia A. Evans By: /s/ --------------------------------- ------- Name: Donald G. MacKelcan Title: Vice President NOTE: REMOVE CONFORMED SIGNATURES BEFORE SENDING AS DRAFT. 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 AMENDED CHARTER OR ACT OF INCORPORATION OF WILMINGTON TRUST COMPANY Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. 1 Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer 2 elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. 3 ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business 4 of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 5 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. 6 Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 7 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. 8 Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to 9 receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors 10 and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. 11 (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 12 EXHIBIT C SECTION 321(b) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: By: /s/ ---------------------------------- ------- Name: Donald G. MacKelcan Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - -------------------------------------------- --------------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins 213,700 Interest-bearing balances 0 Held-to-maturity securities 30,232 Available-for-sale securities 1,628,889 Federal funds sold and securities purchased under agreements to resell 390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve 4,303,409 Assets held in trading accounts 0 Premises and fixed assets (including capitalized leases) 122,273 Other real estate owned 576 Investments in unconsolidated subsidiaries and associated companies 1,511 Customers' liability to this bank on acceptances outstanding 0 Intangible assets 5,100 Other assets 133,449 Total assets 6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices 5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase 269,343 Demand notes issued to the U.S. Treasury 95,000 Trading liabilities (from Schedule RC-D) 0 Other borrowed money: /////// With original maturity of one year or less 670,000 With original maturity of more than one year 43,000 Bank's liability on acceptances executed and outstanding 0 Subordinated notes and debentures 0 Other liabilities (from Schedule RC-G) 151,436 Total liabilities 6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common Stock 500 Surplus (exclude all surplus related to preferred stock) 62,118 Undivided profits and capital reserves 386,485 Net unrealized holding gains (losses) on available-for-sale securities (34,172) Total equity capital 414,931 Total liabilities, limited-life preferred stock, and equity capital 6,829,789
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