ASSET PURCHASE AGREEMENT
DATED AS OF JANUARY 1, 1999,
BY AND AMONG
TRANSNATIONAL PARTNERS II, LLC,
TITAN SOFTWARE SYSTEMS CORPORATION
AND
THE TITAN CORPORATION
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is effective as
of January 1, 1999, by and among Transnational Partners II, LLC, a California
limited liability company ("Seller"), the members of Seller (collectively,
"Members"), Titan Software Systems Corporation, a Delaware corporation
("Buyer"), and The Titan Corporation, a Delaware corporation ("Titan").
A. Seller is engaged in the business of large scale systems
integration and the provision of strategic information and management
consulting services (the "Business"), with its principal place of business at
00000 Xxxxxxx Xxxxx, Xxxxx X 000, Xxx Xxxxx, Xxxxxxxxxx 00000.
B. Buyer is a wholly owned subsidiary of The Titan Corporation,
a publicly traded company, conducting operations in several states and
engaged, among other things, in the provision of systems integration
services, with a place of business at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000.
C. Seller wishes to sell and assign to Buyer, and Buyer wishes
to purchase and assume from Seller, certain specified assets of Seller, on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
AGREEMENT
NOW, THEREFORE, in consideration of the representations,
warranties and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller, Buyer and the Members (collectively, the "Parties") agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing hereunder (as defined in
Section 2.1), Seller shall grant, sell, convey, assign, transfer and deliver
to Buyer, upon and subject to the terms and conditions of this Agreement, and
in reliance on the representations, warranties and covenants of Buyer
contained herein, all right, title and interest of Seller in and to the
specific assets set forth on Schedule 1.1 attached hereto (the "Assets").
1.2 AGREEMENT TO PURCHASE. At the Closing hereunder, Buyer
shall purchase the Assets from Seller, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations,
warranties and covenants of Seller contained herein, in exchange
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for the Purchase Price (as defined in Section 1.3). Except as specifically
provided in Section 1.4 hereof, Buyer shall not assume or be responsible for
any liabilities or obligations of Seller.
1.3 THE PURCHASE PRICE.
(a) PURCHASE PRICE. The purchase price for the Business
(the "Purchase Price"), shall be comprised of the following:
(i) cash payments of an aggregate of $9,800,000; and
(ii) 2,345,000 shares of the Preferred Stock of Titan
Software Systems Corporation, valued at $.36 per share (the " Preferred
Shares").
(b) PAYMENT OF PURCHASE PRICE.
(i) The cash portion of the Purchase Price will be
payable as follows:
a) On the Closing Date $7,000,000 will be payable
by Buyer in cash provided that all of the following conditions are met:
A. Transnational Partners II, LLC has
entered into one or more technical service contracts with Sempra Energy with
contract values totaling approximately $25,000,000 over a two year period, in
the aggregate, of which $12,500,000 is budgeted; and
B. Sempra Energy has given written
consent to Seller for the assignment of such contracts by Seller to Buyer; and
C. Buyer has entered into employment
agreements with Xxxxx Xxxxxxx, Xxxxxxx Xxxxx, and any other individuals that
Buyer, in its sole discretion, deems appropriate.
b) $2,800,000 will be payable by Buyer's execution
and delivery of a promissory note in the form attached hereto as Exhibit A
(the "Note") payable to the order of Seller after the expiration of one year
from the Closing provided ALL of the conditions set forth below are met. The
Note shall carry interest at the rate of seven percent (7%) per year. The
Titan Corporation hereby guarantees full payment of the obligation of Buyer
owed to Seller arising under the Note.
A. The Transnational Partners II business
unit being acquired hereunder, exclusive of any performance of the now
existing Titan Software Systems subsidiary, must generate at least
$10,000,000 in revenues which are directly attributed to the contracts with
Sempra Energy as described in 1.3(b)(i)a)A. above or to new contracts
generated by the Transnational Partners II business unit being acquired
hereunder and for which such acquired business unit is responsible for
project management; and
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B. The income derived from contracts with
Sempra Energy or from new contracts generated by the Transnational Partners
II business unit being acquired hereunder, and for which such acquired
business unit is responsible for project management, exclusive of any
performance of the now existing Titan Software Systems subsidiary, must
generate an EBIT ( computed in accordance with GAAP and The Titan
Corporation's corporate accounting policies) of $3,000,000 prior to Titan
corporate office allocations during the initial 12 month period. Should the
Transnational Partners II business unit not generate the $3,000,000 EBIT,
then the amount due under the $2,800,000 Note will be reduced accordingly on
a pro rata basis. For example, if the actual EBIT generated is $1,800,000,
then the Note will be reduced by [($1,800,000 divided by $3,000,000) x
$2,800,000] and the amount due under the Note will then be $1,680,000. For
purposes of this section, Buyer will follow The Titan Corporation's direct
allocation policy to allocate the time and expenses of Xxxxx Xxxxxxx and
Xxxxxxx Xxxxx.
(ii) The Preferred Shares, and any applicable
documentation in the form attached hereto as Exhibit B, shall be issued in
definitive form to Seller at the Closing or as soon thereafter as practicable.
(c) THE PREFERRED SHARES
(i) Except as provided below in 1.3(c)(iii), Seller may
not sell or transfer any of the Preferred Shares being acquired hereunder
unless and until such time as Buyer conducts an initial public offering
("IPO") of the Common Stock of Titan Software Systems, or sells substantially
all of the assets of Titan Software Systems ("Sale"). In the event of an IPO
or Sale, Seller may convert its Preferred Shares into the Common Stock of
Titan Software Systems immediately before the occurrence of such IPO or Sale.
The Preferred Shares shall be convertible to a total of 2,345,000 shares of
Common Stock of Titan Software Systems. All shares of Common Stock shall be
subject to equal dilution..
(ii) Notwithstanding anything else in this Agreement
to the contrary, the respective ownership interests of Buyer and Seller in Titan
Software Systems are subject to equal dilution in the event of the issuance of
any stock options or warrants or the sale of any other equity interests in Titan
Software Systems.
(iii) Should Seller desire to sell all or some of its
Preferred Shares prior to the occurrence of an IPO or Sale either to Buyer or to
a third party, it may do so in accordance with the following:
a) In the case of a contemplated sale to a third
party, Seller must give Buyer a Right of First Refusal to purchase all such
Preferred Shares at the price offered by such third party. If Buyer chooses
not to exercise its Right of First Refusal, then Seller may sell to such
third party PROVIDED, HOWEVER, that Seller first obtains the prior written
consent from Buyer, which consent shall not be unreasonably withheld.
b) While there is no contemplation of a sale to a
third party, if Seller wishes to sell to Buyer and Buyer wishes to purchase
all or some of Seller's
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Preferred Shares, then Seller and Buyer shall first attempt to determine the
price of the Preferred Shares through good faith negotiation with each other.
If Seller and Buyer fail to determine a share price through negotiation, the
share price will be determined by a third party valuation using a "Big Five"
accounting firm (not including Titan's principal accounting firm at such
time) in accordance with general standards and principles for valuing
companies of similar nature. The cost of such third party valuation shall be
born by the parties equally.
1.4 ASSUMPTION OF LIABILITIES. Seller shall not convey nor
assign to Buyer, and Buyer shall not accept nor assume any liabilities of
Seller except as set forth on Schedule 1.4 hereto (the "Liabilities"). Seller
shall remain fully responsible and liable for all obligations and liabilities
of Seller not specifically set forth on Schedule 1.4. Buyer does not in any
way or manner assume or agree to become obligated to satisfy any liability of
Seller other than the Liabilities.
1.5 SET-OFF. For the purpose of securing the indemnification
obligations of Seller set forth in Article VI of this Agreement, the amount
payable under the Note may be set off against as satisfaction of Buyer's
Indemnified Losses (as defined in Section 6.2). Buyer may withhold an amount
equal to up to fifty percent (50%) of the amount due under the Note in
satisfaction of such Indemnified Losses.
ARTICLE II
CLOSING
2.1 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices The Titan
Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 commencing
at 9:00 a.m., local time, on January 12, 1999 or on such later date as the
parties mutually agree orally or in writing (the "Closing Date").
2.2 ACTIONS AT THE CLOSING.
(a) At the Closing or as soon as practicable thereafter, but
in no event more than thirty (30) days after the Closing, Buyer shall deliver to
Seller:
(i) One or more certificates representing the Preferred
Shares registered in the name of Seller, or such other person(s) and in such
amounts identified pursuant to Section 1.3(b)(ii), and bearing the legend set
forth in Section 3.8(b);
(ii) Cash in the amount of $7,000,000; provided,
however, that all of the conditions set forth in Sections 1.3(b)(i)a)A and
1.3(b)(i)a)B and 1.3(b)(i)a)C have been met.
(iii) The Note in the amount of $2,800,000 subject to
all of the conditions set forth in Sections 1.3(b)(i)b)A and 1.3(b)(i)b)B.
(b) At the Closing, Seller shall deliver to Buyer:
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(i) Such bills of sale with covenants of warranty,
assignments, endorsements, and other good and sufficient instruments and
documents of conveyance and transfer, in form reasonably satisfactory to
Buyer and its counsel as shall be necessary and effective to transfer and
assign to, and vest in, Buyer all of Seller's right, title and interest in
and to the Assets without liens or other encumbrances, including without
limitation all of Seller's rights under all agreements, contracts,
commitments, leases, plans, bids, quotations, proposals, instruments and
other documents included in the Assets to which Seller is a party or by which
it has rights on the Closing Date;
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
In this Agreement, any reference to a "Material Adverse Effect"
with respect to any entity or group of entities means a material adverse
effect on the Business or Assets taken as a whole which is individually in
excess of $25,000, or, in the aggregate with other individual items, in
excess of $250,000.
In this Agreement, any reference to a Party's "knowledge,"
unless otherwise qualified, means such Party's actual knowledge after
reasonable inquiry of its directors, officers, and other management level
employees reasonably believed to have knowledge of such matters.
3.1 ORGANIZATION, STANDING AND POWER. Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation, has all requisite power to
own, lease and operate its properties and to carry on its business as
currently being conducted and as currently proposed to be conducted, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the nature of its operations requires such
qualification, except where the failure to so qualify has not and will not
have a Material Adverse Effect on Seller. Seller has delivered to Buyer true
and correct copies of the articles of organization and operating agreement of
Seller and the charter documents of each Subsidiary, all as amended to date.
Seller is not in violation of any of the provisions of its charter documents
3.2 AUTHORITY; REQUIRED FILINGS AND CONSENTS.
(a) Seller has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Seller and its managing members. This Agreement and all
other documents expressly required to be executed and delivered by Seller
hereunder (collectively, the "Transaction Documents") have been or will be
duly executed and delivered by Seller and constitute or will constitute the
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to creditors' rights generally, and general principles of equity.
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(b) The execution and delivery by Seller of this Agreement
and the other Transaction Documents to which it is or will be a party do not,
and the consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with, or result in any violation or breach of any provision
of, the charter documents of Seller , (ii) result in any violation or breach
of or constitute (with or without notice or lapse of time, or both) a default
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under, any note, mortgage,
indenture, lease, contract or other agreement or obligation to which Seller
is a party or by which Seller or any of the Assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Seller or any of the Assets.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Seller or the Assets in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for such consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would
not prevent or materially alter or delay any of the transactions contemplated
by this Agreement or have a Material Adverse Effect on Seller or the Assets.
3.3 INTELLECTUAL PROPERTY.
(a) Subject to limitations which may be set forth in
existing contracts between Seller and Sempra, Seller owns, or is licensed or
otherwise possesses legally enforceable rights to use, and the Assets include
all patents, trademarks, trade names, service marks and copyrights, and any
applications for and registrations of such patents, trademarks, trade names,
service marks, and copyrights and all processes, formulas, methods,
schematics, technology, know-how, computer software programs, data or
applications and tangible or intangible proprietary information or material
that are used in the Business as currently conducted, or as currently
proposed to be conducted, free and clear of all liens, claims or encumbrances
(all of which are referred to as the "Seller Intellectual Property Rights").
(b) Seller is not nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in material breach of any license,
sublicense or other agreement relating to the Assets, or the Seller
Intellectual Property Rights.
3.4 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or known investigation pending before any agency, court or
tribunal or, to the knowledge of Seller threatened against Seller or any of
its officers or members (in their capacities as such). There is no judgment,
decree or order against Seller or, to the knowledge of Seller any of the
members or officers (in their capacities as such) that could prevent, enjoin
or materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Seller or the Assets.
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3.5 INVESTMENT REPRESENTATIONS; ACCREDITED INVESTOR.
(a) Seller has been advised that the issuance of the Shares
in connection with this Agreement is expected to be effected pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"Act"), and the resale of such shares will be subject to the restrictions set
forth in Rule 144 promulgated under the Act unless otherwise transferred
pursuant to an effective registration statement under the Act or an
appropriate exemption from registration. Seller accordingly agrees not to
sell, pledge, transfer or otherwise dispose of any Shares issued to Seller
pursuant to this Agreement unless (i) such sale, transfer or other
disposition is made in conformity with the requirements of Rule 144, (ii)
such sale, pledge, transfer or other disposition is made pursuant to an
effective registration statement under the Act or an appropriate exemption
from registration or (iii) Seller delivers to Buyer a written opinion of
counsel, reasonably acceptable to Buyer in form and substance, that such
sale, pledge, transfer or other disposition is otherwise exempt from
registration under the Act.
(b) Seller has been advised that Buyer will issue stop
transfer instructions to its transfer agent with respect to any Shares
received by Seller pursuant to this Agreement, and that there will be placed
on the certificates representing such Shares, or any substitutions therefor,
a legend stating in substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE
ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE
144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL, THAT SUCH REGISTRATION
OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend), and Buyer shall so instruct its transfer
agent, (i) if a registration statement respecting the sale of shares has been
declared effective under the Act and the shares of Buyer Common Stock have
been sold pursuant to such registration statement or (ii) if Seller delivers
to Buyer (A) satisfactory written evidence that the shares have been sold in
compliance with Rule 144 (in which case, the substitute certificate will be
issued in the name of the transferee), or (B) an opinion of counsel, in form
and substance reasonably satisfactory to Buyer, to the effect that public
sale of the shares by the holder thereof is no longer subject to Rule 144.
(c) Seller will hold the Preferred Shares for investment
for Seller's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the Act.
Buyer and Seller acknowledge that any future transfer of the Preferred Shares
must be made in compliance with the registration requirements of the
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Securities Act of 1933, as amended, or pursuant to an exemption from such
registration requirements.
(d) Seller understands that the Shares have not been
registered under the Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Seller's
investment intent as expressed herein.
(e) Seller is an "accredited investor" under Rule 501
promulgated by the Securities and Exchange Commission ("SEC").
3.6 WORKING CAPITAL. As of the Closing Date, the balance sheet
of Transnational Partners II, LLC has no negative Working Capital, as defined
by GAAP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, has all requisite corporate power to own, lease and
operate its property and to carry on its business as now being conducted and
as proposed to be conducted, and is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect on Buyer.
Buyer is not in violation of any of the provisions of its Certificate of
Incorporation, as amended, Bylaws or other charter documents.
4.2 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Buyer has all requisite corporate power and authority
to enter into this Agreement and the other Transaction Documents to which it
is or will be a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which Buyer is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement and the other Transaction Documents to which Buyer is a party have
been or will be duly executed and delivered by Buyer and constitute or will
constitute the valid and binding obligations of Buyer, enforceable in
accordance with their terms, except as such enforceability may be limited by
bankruptcy laws and other similar laws affecting creditors' rights generally
and general principles of equity.
(b) The execution and delivery by Buyer of this Agreement,
the other Transaction Documents and the Promissory Notes to which it is or
will be a party do not, and the consummation of the transactions contemplated
hereby and thereby will not, (i) conflict with, or result in any violation or
breach of any provision of the Certificate of Incorporation or Bylaws of
Buyer, (ii) result in any violation or breach of, or constitute (with or
without notice or lapse of
9
time, or both) a default under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or loss of any
material benefit under, any note, mortgage, indenture, lease, contract or
other agreement, instrument or obligation to which Buyer is a party or by
which it or any of its properties or assets may be bound, or (iii) conflict
with or violate any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or
any of its properties or assets, except in the case of (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on Buyer.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Buyer or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would
not prevent or materially alter or delay any of the transactions contemplated
by this Agreement or would not have a Material Adverse Effect on Buyer.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 REGISTRATION RIGHTS.
(a) If at any time after the date of this Agreement and
prior to the first anniversary of this Agreement, Buyer shall determine to
register any of its securities, either for its own account or the account of
a security holder or holders other than (i) a registration relating solely to
employee benefit plans, or (ii) a registration relating solely to a SEC Rule
145 transaction, Buyer will:
(i) promptly give to Seller and each other person to
whom the shares (for purposes of this Section 5.1, "Registrable Securities")
have been transferred without registration under the Act (each a "Holder")
written notice thereof; provided, however, that the term Registrable
Securities shall not include any shares held by a holder who could sell all
such shares so held under Rule 144 or any successor rule in any three month
period without registration under the Act; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests made by any Holder within twenty (20) days after
the mailing of such written notice by Buyer.
(b) If the registration of which Buyer gives notice is for
a registered public offering involving an underwriting, Buyer shall so advise
the Holders as a part of the written notice given pursuant to Section
5.1((a))((i)). In such event, the right of any Holder to registration
pursuant to Section 5.1 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of Registrable Securities in the
underwriting to the extent
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provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with Buyer and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by Buyer. Notwithstanding any other provision
of this Section 5.1, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Registrable Securities to be
included in the registration and underwriting, on a PRO RATA basis based on
the total number of securities (including, without limitation, Registrable
Securities) entitled to registration pursuant to registration rights granted
to the participating Holders by Buyer. To facilitate the allocation of shares
in accordance with the above provisions, Buyer or the underwriters may round
the number of shares allocated to any Holder or other holder to the nearest
100 shares. If any Holder or other holder disapproves of the terms of any
such underwriting, he or she may elect to withdraw therefrom by written
notice to Buyer and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration,
and shall not be transferred in a public distribution prior to ninety (90)
days after the effective date of the registration statement relating thereto.
(c) Buyer shall have the right to terminate or withdraw any
registration initiated by it under this Section 1 prior to the effectiveness
of such registration, whether or not any Holder has elected to include
securities in such registration.
(d) Buyer will indemnify each Holder, each of its officers
and directors and members, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act against all expenses (including
but not limited to reasonable attorney's fees), claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus,
preliminary prospectus, offering circular or other document, or any amendment
or supplement thereto, incident to any registration, qualification or
compliance effected pursuant to this Section 5.1, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation or
any alleged violation in each instance by Buyer of any rule or regulation
promulgated under the Securities Act or the Exchange Act in connection with
any such registration, qualification or compliance, and Buyer will reimburse
each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that Buyer will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission or alleged untrue statement or omission,
made in reliance upon and in conformity with written information furnished to
Buyer by such Holder or controlling person and specifically for use therein.
(e) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration is
being effected, indemnify Buyer, each
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of its directors and officers, each person who controls Buyer within the
meaning of Section 15 of the Securities Act, and each other Holder with
securities included in such registration, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of
the Securities Act, against all expenses (including but not limited to
reasonable attorney's fees), claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any 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 will reimburse Buyer, such other Holders, directors,
officers, persons or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as such expenses are incurred, in
each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in
such registration statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furnished to
Buyer by the indemnifying Holder specifically for use therein.
(f) Each party entitled to indemnification under Section
5.1((d)) or 5.1((e)) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense; PROVIDED, HOWEVER, that
an Indemnified Party (together with all other Indemnified Parties which may
be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
Indemnifying Party, if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to
differing or potentially differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under Section 5.1((d)) or
5.1((e)) unless the failure to give such notice is materially prejudicial to
an Indemnifying Party's ability to defend such action. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
(g) Buyer shall pay all of the out-of-pocket expenses
(other than underwriting discounts and commissions, if any, allocable to any
Holder's Registrable Securities and, except as contemplated by Section
5.1(f), the fees and expenses of any counsel to the Holders) incurred in
connection with any registration of Registrable Securities pursuant to this
Section 5.1, including, without limitation, all registration and filing fees,
printing expenses, transfer agents' and registrars' fees, and the reasonable
fees and disbursements of Buyer's outside counsel and independent accountants.
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(h) In connection with any registration pursuant to this
Section 5.1, Buyer will:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and use its best efforts
to cause such registration statement to become effective; provided, however,
that Buyer may discontinue any registration at any time prior to the
effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of three months after the effective
date of the registration statement or such time as all of such securities
have been disposed of in accordance with the intended methods of disposition
by the Holder or Holders thereof set forth in such registration statement;
(iii) furnish to each Holder of Registrable Securities
covered by such registration statement such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such Holder
may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions
in the United States as each Holder thereof shall reasonably request, to keep
such registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the securities owned by such Holder;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holder or Holders thereof to consummate the
disposition of such Registrable Securities;
(vi) notify each Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request of
any such Holder promptly prepare and furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be
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necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include 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 in the light of
the circumstances under which they were made;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first full calendar month after the effective date
of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(viii) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not later than
the effective date of such registration statement; and
(ix) use its best efforts to list all Common Stock
covered by such registration statement on any securities exchange on which
any of the Common Stock is then listed.
Buyer may require each Holder of Registrable Securities as
to which any registration is being effected to furnish Buyer such information
regarding such Holder and the distribution of such securities as Buyer may
from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities that upon receipt of any notice from Buyer of
the happening of any event of the kind described in subsection (h)(vi) of
this Section 5.1, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus and, if so directed by
Buyer, will deliver to Buyer (at Buyer's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of
such notice.
(i) If for any reason the indemnification provided for in
subsection 5.1(d) or 5.1(e) is unavailable to an Indemnified Party as
contemplated therein, then the Indemnifying Party, in lieu of
indemnification, shall contribute to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage, expense or
liability (or action in respect hereof) in such proportion as is appropriate
to reflect not only the relative benefits received by the Indemnified Party
and the Indemnifying Party, but also the relative fault of the Indemnified
Party and the Indemnifying Party, as well as any other relevant equitable
considerations, provided that no holder of Registrable Securities shall be
required to contribute in an amount greater than the difference between the
net proceeds received by such holder with respect to the sale of any
Registrable Securities and all amounts already contributed by such Holder
with respect to such claims, including amounts paid for any legal or other
fees or expenses incurred by such Holder. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any
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person who was not guilty of any such fraudulent misrepresentation. The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action.
5.2 BROKERS OR FINDERS. Each of Buyer and Seller represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement; and each of Buyer and Seller agrees to indemnify and hold the
other harmless from and against any and all claims, liabilities or
obligations with respect to any fees, commissions or expenses asserted by any
person on the basis of any act or statement alleged to have been made by such
party or its affiliate.
5.3 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including cooperating fully with the other
party and providing any information reasonably required by the other party.
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Buyer
with full title to all of the Assets, Seller or Buyer shall take all such
necessary action. In case at any time after the Closing any further action is
necessary or desirable to provide for the assumption by Buyer of the
Liabilities, Buyer shall take all such necessary action.
5.4 EXPENSES. Subject to Section 5.1 the parties shall each pay
their own legal, accounting and financial advisory fees and other
out-of-pocket expenses related to the negotiation, preparation and carrying
out of this Agreement and the transactions herein contemplated.
5.5 FUTURE INVESTMENTS AND TRANSACTIONS. Buyer agrees to
present to the Board of Directors of The Titan Corporation for approval any
investment opportunity that pertains to the core business of the
Transnational Partners II, LLC business unit being acquired hereunder.
Transactions involving Component Arts, Business Information Systems or any
other entity where Xxxxxxx has a material ownership interest will be an arms
length transaction subject to approval by the Board of Directors.
5.6 MANAGEMENT OF SEMPRA AND OTHER CONTRACTS. The Transnational
Partners II, LLC business unit being acquired hereunder will manage the
Sempra Contracts, and other new contracts generated by such acquired business
unit, independent of the other business units of Titan Software Systems until
such time as it is deemed feasible by Buyer to transition such management
elsewhere.
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5.7 BOARD APPOINTMENT. Buyer agrees that Xxxx X. Xxx, Xxxx X.
XxXxxxx and Xxxxx Xxxxxxx shall be members of the Board of Directors of Titan
Software Systems Corporation, at their option. Four additional outside
directors will be added, as soon as practicable, to the Board of Directors of
Titan Software Systems Corporation, subject to Board approval.
ARTICLE VI
INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Upon the
Closing, all of the representations and warranties contained in Section 3
and 4 of this Agreement shall survive until full and final payment of the
Note or until such time that there are no amounts due and payable under the
Note either through Seller's failure to satisfy the Note payment conditions
or through set-off.
6.2 INDEMNIFICATION.
(a) Subject to the terms and conditions contained herein,
Seller shall indemnify, defend and hold harmless Buyer, its officers,
directors, and employees , all affiliates of Buyer, including the Parent
Company, and the respective officers, directors, and employees of such
entities (all such persons and entities being collectively referred to as the
"Buyer Group") from, against, for and in respect of any and all losses,
damages, costs and expenses (including reasonable legal fees and expenses)
("Indemnified Loss") which any member of the Buyer Group may sustain or incur
which are caused by or arise out of any inaccuracy in or breach of any of the
representations, warranties or covenants made by Seller in this Agreement.
Until the Promissory Note has been paid in full, the amount of any
Indemnified loss of the Buyer Group may be set off against any payments of
principal or interest owed to Seller under such Promissory Note pursuant to
the provisions contained therein and as described in Section 1.5 hereof. For
purposes of determining the amount of Indemnified Losses, no effect will be
given to the resulting tax benefit to any Indemnitee.
(b) Subject to the terms and conditions contained herein,
Buyer shall indemnify, defend and hold harmless Seller, its members, and
their respective officers, directors, employees, affiliates and shareholders
(the "Seller Group") from, against, for and in respect of any and all
Indemnified Losses which Seller may sustain or incur which are caused by or
arise out of any inaccuracy in or breach of any other representations,
warranties or covenants made by Buyer in this Agreement. For purposes of
determining the amount of Indemnified Losses, no effect will be given to the
resulting tax benefit to any Indemnitee.
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ARTICLE IX
GENERAL PROVISIONS
7.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or within seventy-two (72) hours after being
mailed by registered or certified mail (return receipt requested) or sent via
facsimile (with confirmation of receipt) to the parties at their respective
addresses first set forth above (or at such other address for a party as
shall be specified by like notice). Any Notices to Seller shall include a
copy to Xxx Xxxxxxxx, Esq., at The Offices of Xxxxxxxx & Xxxxxxxx, A.P.C.,
0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000.
7.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as against any party
whose signature appears on such counterpart and all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the Parties and delivered to
the other Parties, it being understood that all Parties need not sign the
same counterpart. This Agreement may be executed by facsimile signature as
long as the Party so executing commits to deliver an original signature
within 10 days.
7.3 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The Parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
7.4 ENTIRE AGREEMENT. This Agreement (including the schedules
and exhibits hereto and the other documents delivered pursuant hereto)
constitutes the entire agreement among the Parties concerning the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Parties with respect to the subject matter
hereof, other than the Confidentiality Agreement.
7.5 GOVERNING LAW; VENUE AND JURISDICTION. This Agreement shall
be governed and construed in accordance with the laws of the State of
California without regard to any applicable conflicts of law principles. Any
legal action not subject to the jurisdiction of an arbitrator shall be
resolved in the courts located in San Diego County, in the State of
California.
7.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the Parties
hereto (whether by operation of law (other than death) or otherwise) without
the prior written consent of the other Party, which consent will not be
unreasonably withheld. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
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7.7 THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to confer upon any person other than the parties hereto
and their respective successors and permitted assigns, any rights, remedies
or obligations under, or by reason of this Agreement.
7.8 ATTORNEY'S FEES. If any Party shall commence any action or
proceeding against another party in order to enforce the provision hereof, or
to recover damages as the result of the alleged breach of any of the
provisions hereof, the prevailing party therein shall be entitled to recover
all reasonable costs incurred in connection therewith, including, but not
limited to, reasonable attorneys' fees.
7.9 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.
7.10 ARBITRATION. Disputes subject to the jurisdiction of the
arbitrator that may arise in connection with this Agreement and that are not
resolved by the parties themselves shall be submitted to arbitration in San
Diego County, California under the then current rules and regulations of the
American Arbitration Association ("AAA") relating to voluntary arbitrations.
The dispute shall be heard by a single arbitrator selected from a panel of
arbitrators provided by AAA mutually acceptable to Seller and Buyer. In the
event the parties cannot agree on an arbitrator, Seller and Buyer shall each
pick an arbitrator and the individuals so selected shall then select the
single arbitrator from another panel supplied by the AAA. All arbitration
fees paid or payable to the AAA shall be divided equally between or among the
parties, as the case may be. Each party shall be responsible for its own
legal fees. The award shall be binding and conclusive on each of the parties,
and it may be issued on or enforced by the party in whose favor it runs in
any court of competent jurisdiction at the option of the successful party.
All parties waive any right to trial by jury or to have any dispute
adjudicated in a court of law except for those disputes not subject to the
jurisdiction of the arbitrator
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IN WITNESS WHEREOF, Buyer and Seller, and The Titan Corporation
have caused this Agreement to be signed by their duly authorized
representatives on this ___ day of January, 1999.
BUYER: TITAN SOFTWARE SYSTEMS CORPORATION
By:
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Its:
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SELLER: TRANSNATIONAL PARTNERS II, LLC
By:
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Its:
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THE TITAN CORPORATION:
By:
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Its:
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