Document:

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                      AGREEMENT AND PLAN OF REORGANIZATION

                                  BY AND AMONG

                             THE TITAN CORPORATION,

                             M T ACQUISITION CORP.,

                            WILLIAM C. LINDSEY, INC.
                           (D/B/A LINCOM CORPORATION)

                                       AND

              THE PRINCIPAL SHAREHOLDER OF WILLIAM C. LINDSEY, INC.

                          DATED AS OF JANUARY 28, 2000

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                                TABLE OF CONTENTS

                                    ARTICLES

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ARTICLE I  THE MERGER................................................................................1

      SECTION 1.01  The Merger.......................................................................1
      SECTION 1.02  Effective Time; Closing Date.....................................................2
      SECTION 1.03  Effect of the Merger.............................................................2
      SECTION 1.04  Articles of Incorporation; Bylaws................................................2
      SECTION 1.05  Directors and Officers...........................................................2

ARTICLE II  CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.......................................3

      SECTION 2.01  The Merger.......................................................................3
      SECTION 2.02  Conversion of Company Common Stock...............................................3
      SECTION 2.03  Acquiror to Deliver Cash.........................................................5
      SECTION 2.04  [Intentionally Omitted]..........................................................5
      SECTION 2.05  Holdback Consideration; Determination of Closing Adjustment......................5
      SECTION 2.06  Conversion of Acquiror Sub Shares................................................7
      SECTION 2.07  Closing..........................................................................7

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF COMPANY...............................................8

      SECTION 3.01  Organization and Qualification...................................................8
      SECTION 3.02  Subsidiaries.....................................................................8
      SECTION 3.03  Articles of Incorporation and Bylaws.............................................9
      SECTION 3.04  Capitalization...................................................................9
      SECTION 3.05  Authority; Binding Obligation....................................................9
      SECTION 3.06  No Conflict; Required Filings and Consents.......................................10
      SECTION 3.07  Intellectual Property............................................................11
      SECTION 3.08  Financial Statements and Condition...............................................12
      SECTION 3.09  Absence of Certain Developments..................................................13
      SECTION 3.10  Absence of Undisclosed Liabilities...............................................14
      SECTION 3.11  Litigation; Disputes.............................................................15
      SECTION 3.12  Real Property Leases.............................................................15
      SECTION 3.13  Other Agreements; No Default.....................................................16
      SECTION 3.14  Labor Relations..................................................................16
      SECTION 3.15  Pension and Benefit Plans........................................................17
      SECTION 3.16  Taxes and Tax Matters............................................................18
      SECTION 3.17  Insurance........................................................................20
      SECTION 3.18  Arrangements With Related Parties................................................20
      SECTION 3.19  Books and Records................................................................20
      SECTION 3.20  Assets...........................................................................20

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      SECTION 3.21  Board Recommendation.............................................................21
      SECTION 3.22  Directors and Officers...........................................................21
      SECTION 3.23  State Takeover Statutes; Certain Charter Provisions..............................21
      SECTION 3.24  Environmental Matters............................................................21
      SECTION 3.25  Y2K Compliance...................................................................22
      SECTION 3.26  Government Contracts and Other Commitments.......................................22
      SECTION 3.27  Relations with Governments.......................................................24
      SECTION 3.28  Broker's Fees....................................................................24

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR SUB..............................24

      SECTION 4.01  Organization and Qualification...................................................25
      SECTION 4.02  Reliance on Financial Information................................................25
      SECTION 4.03  Authority; Binding Obligation....................................................25
      SECTION 4.04  No Conflict; Required Filings and Consents.......................................25
      SECTION 4.05  No Prior Activities of Acquiror Sub..............................................26

ARTICLE V  PRE-CLOSING COVENANTS.....................................................................27

      SECTION 5.01  Conduct of Business of Company Until Effective Time..............................27
      SECTION 5.02  Best Efforts to Satisfy Conditions...............................................29
      SECTION 5.03  Other Actions....................................................................29
      SECTION 5.04  Certain Tax Matters..............................................................29
      SECTION 5.05  Access and Information...........................................................30
      SECTION 5.06  Notification Filing Required under HSR Act.......................................30
      SECTION 5.07  Access to Company and Company Subsidiary Information.............................30
      SECTION 5.08  Exon-Florio Notice; Mitigation of FOCI...........................................30

ARTICLE VI  ADDITIONAL AGREEMENTS....................................................................31

      SECTION 6.01  Shareholder Approval.............................................................31
      SECTION 6.02  Appropriate Action; Consents; Filings............................................31
      SECTION 6.03  Disclosure.......................................................................33
      SECTION 6.04  Public Announcements.............................................................33
      SECTION 6.05  Obligations of Acquiror Sub......................................................33
      SECTION 6.06  Transaction Expenses.............................................................33
      SECTION 6.07  Key Employees....................................................................34

ARTICLE VII  CONDITIONS PRECEDENT....................................................................34

      SECTION  7.01  Conditions to Obligations of Each Party Under This Reorganization
                          Agreement..................................................................34
      SECTION 7.02  Additional Conditions to Obligations of Acquiror and Acquiror Sub................35
      SECTION 7.03  Additional Conditions to Obligations of Company..................................36

ARTICLE VIII  TERMINATION, AMENDMENT AND WAIVER......................................................37

      SECTION 8.01  Termination......................................................................37

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      SECTION 8.02  Effect of Termination............................................................38
      SECTION 8.03  [Intentionally Omitted]..........................................................38
      SECTION 8.04  Amendment........................................................................38
      SECTION 8.05  Extension; Waiver................................................................38

ARTICLE IX  SURVIVAL OF REPRESENTATIONS; REMEDIES....................................................38

      SECTION 9.01  Survival of Representations......................................................38
      SECTION 9.02  Indemnification by Principal Shareholder; Right to Offset........................39
      SECTION 9.03  Third Party Claims...............................................................41
      SECTION 9.04  No Recourse Against the Company..................................................42
      SECTION 9.05  Remedies Cumulative..............................................................42

ARTICLE X  GENERAL PROVISIONS........................................................................43

      SECTION 10.01  Notices.........................................................................43
      SECTION 10.02  Headings........................................................................44
      SECTION 10.03  Severability....................................................................44
      SECTION 10.04  Entire Agreement................................................................44
      SECTION 10.05  Assignment......................................................................44
      SECTION 10.06  Parties in Interest.............................................................45
      SECTION 10.07  Mutual Drafting.................................................................45
      SECTION 10.08  Governing Law...................................................................45
      SECTION 10.09  Counterparts....................................................................45
      SECTION 10.10  Singular and Plural.............................................................45

ARTICLE XI  DEFINITIONS..............................................................................46
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                                           EXHIBITS

EXHIBIT A               [Intentionally Omitted]
EXHIBIT B               Shareholders of Company
EXHIBIT C               Form of Indemnification Promissory Note

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                      AGREEMENT AND PLAN OF REORGANIZATION

         This AGREEMENT AND PLAN OF REORGANIZATION, dated as of January 28, 2000
(this "Reorganization Agreement"), is entered into by and among The Titan
Corporation, a corporation organized under the laws of the State of Delaware
("Acquiror"), M T Acquisition Corp., a corporation organized under the laws of
the State of California ("Acquiror Sub"), William C. Lindsey, Inc. (d/b/a LinCom
Corporation), a corporation organized under the laws of the State of California
("Company"), and William C. Lindsey, an individual (the "Principal Shareholder")
("Acquiror," "Acquiror Sub," "Principal Shareholder" and "Company" individually
hereinafter referred to as "Party" and collectively hereinafter referred to as
the "Parties");

         WHEREAS, Acquiror Sub, upon the terms and subject to the conditions of
this Reorganization Agreement and in accordance with the California General
Corporation Law ("California Law"), will merge with and into Company (the
"Merger");

         WHEREAS, the Board of Directors of Company has (i) determined that the
Merger is advisable and fair to the holders of Company Common Stock (as defined
in Section 3.04 of this Reorganization Agreement) and is in the best interests
of such Shareholders, (ii) advised, authorized, approved and adopted this
Reorganization Agreement and the Agreement of Merger and the transactions
contemplated hereby and the thereby and (iii) recommended approval and adoption
of this Reorganization Agreement and the Agreement of Merger by the Shareholders
of Company (the "Company Shareholders");

         WHEREAS, the Board of Directors of Acquiror has determined that the
Merger is advisable and in the best interests of Acquiror and its stockholders
and the Boards of Directors of Acquiror and Acquiror Sub and the sole
shareholder of Acquiror Sub have advised, authorized, approved and adopted this
Reorganization Agreement and the transactions contemplated hereby;

         NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Reorganization Agreement, and intending to be legally bound hereby, the Parties
agree as follows.

                                    ARTICLE I

                                   THE MERGER

SECTION 1.01  THE MERGER

Upon the terms and subject to the conditions set forth in this Reorganization
Agreement, and in accordance with California Law, at the Effective Time (as
defined in Section 1.02 of this Reorganization Agreement) Acquiror Sub shall be
merged with and into Company, with

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Company being the surviving corporation (hereinafter sometimes called
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
separate corporate existence of Acquiror Sub shall cease, and Surviving
Corporation shall continue to exist as a California corporation.

SECTION 1.02  EFFECTIVE TIME; CLOSING DATE

Subject to the provisions of Section 2.07 of this Reorganization Agreement, as
promptly as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article VII of this Reorganization Agreement, the
Parties shall cause the Merger to be consummated by filing the Agreement of
Merger consistent with applicable California Law (the "Agreement of Merger"),
and any other appropriate documents with the Secretary of State, in such form as
required by, and executed in accordance with the relevant provisions of,
California Law (the date and time of such filing being the "Effective Time").
The day on which the Effective Time shall occur shall hereinafter be referred to
as the "Closing Date."

SECTION 1.03  EFFECT OF THE MERGER

At the Effective Time, the effect of the Merger shall be as provided in Section
1107 and other applicable provisions of California Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Company and Acquiror Sub
shall vest in Surviving Corporation, and all debts, liabilities and duties of
Company and Acquiror Sub shall become the debts, liabilities and duties of
Surviving Corporation.

SECTION 1.04  ARTICLES OF INCORPORATION; BYLAWS

         (a) Unless otherwise determined by Acquiror prior to the Effective
Time, at the Effective Time, the articles of incorporation of Acquiror Sub shall
continue unchanged and shall be the articles of incorporation of Surviving
Corporation until thereafter amended as provided by Law and such articles of
incorporation, except that Acquiror Sub's articles of incorporation shall be
amended as necessary at the Effective Time to indicate that the name of the
Surviving Corporation is LinCom Corporation.

         (b) Unless otherwise determined by Acquiror prior to the Effective
Time, at the Effective Time, the bylaws of Acquiror Sub shall continue unchanged
and shall be the bylaws of Surviving Corporation until thereafter amended as
provided by Law, the articles of incorporation of Surviving Corporation and such
bylaws.

SECTION 1.05  DIRECTORS AND OFFICERS

At the Effective Time, the initial officers and directors of Surviving
Corporation shall be the officers and directors of Acquiror Sub, each to hold
office in accordance with the articles of incorporation and bylaws of Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.

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                                   ARTICLE II

               CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

SECTION 2.01  THE MERGER

Subject to the terms and conditions of this Reorganization Agreement, in
accordance with California Law, at the Effective Time, Acquiror Sub shall merge
into Company, with Company being the Surviving Corporation in the Merger. Upon
consummation of the Merger, the corporate existence of Acquiror Sub shall cease
and Company shall continue to exist as a California corporation.

SECTION 2.02  CONVERSION OF COMPANY COMMON STOCK

At the Effective Time, by virtue of the Merger and without any action on the
part of the Parties hereto or the holders of the Company Common Stock (as
defined in Section 3.04 of this Reorganization Agreement):

         (a) OUTSTANDING COMMON STOCK. Subject to the provisions of this
Reorganization Agreement, each share of Company Common Stock, issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares (as defined in Section 2.02(e) of this Reorganization Agreement) and any
shares described in Section 2.02(d) of this Reorganization Agreement) shall be
converted into the right to receive:

                  (i) An amount equal to (x) the Adjusted Merger Consideration
($23,000,000 as adjusted by the Cash Adjustment, less the amounts set forth in
Section 2.02(a)(ii) and (iii) and as further described in the definitions in
Article XI), DIVIDED BY (y) the number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time (the "Outstanding Common
Stock") (the aggregate cash amount payable with respect to such shares of
Company Common Stock pursuant to this Section 2.02(a)(i), the "Cash
Consideration");

                  (ii) An amount equal to (x) One Million Dollars ($1,000,000)
(or such lesser amount as may be payable to the former holders of the Company
Common Stock pursuant to Section 2.05), DIVIDED BY (y) the Outstanding Common
Stock, which amount shall secure the payment of the Closing Adjustment (as
defined in Section 2.05(b) of this Reorganization Agreement) (such amount the
"Holdback Consideration"); and

                  (iii) The right to receive a portion of the proceeds pursuant
to the Indemnification Promissory Note $2,000,000 (as defined in Section 7.02(f)
of this Reorganization Agreement) equal to (x) the total proceeds payable
pursuant to the Indemnification Promissory Note (subject to set off pursuant to
Section 9.02 of this Reorganization Agreement), DIVIDED BY, (y) the Outstanding
Common Stock (the principal amount of the Indemnification Promissory Note
together with the Cash Consideration and the Holdback Consideration, the "Merger
Consideration").

         (b) At the Effective Time, all shares of Company Common Stock shall (i)
be converted into the right to receive the cash or a portion of the
Indemnification Promissory Note as determined in accordance with this Article
II, (ii) no longer be outstanding, (iii) automatically be canceled and

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(iv) cease to exist, and each certificate previously representing any such
shares of Company Common Stock (each a "Certificate") shall thereafter represent
the right to receive the Merger Consideration determined in accordance with
Sections 2.02(a) of this Reorganization Agreement.

         (c) At the Effective Time, all shares of Company Common Stock that are
owned by Company as treasury stock and all shares of Company Common Stock that
are owned directly or indirectly by Acquiror, any of its Subsidiaries, Company,
or any Company Subsidiary, other than (i) any shares of Company Common Stock
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by Persons
other than Acquiror, any of its Subsidiaries, Company, or any Company
Subsidiary, and (ii) any shares of Company Common Stock held by Acquiror, any of
its Subsidiaries, Company, or any Company Subsidiary, in respect of a debt
previously contracted, shall be canceled and shall cease to exist and no
consideration shall be delivered in exchange therefor.

         (d) Notwithstanding anything in this Reorganization Agreement to the
contrary and unless otherwise provided by applicable law, shares of Company
Common Stock that are issued and outstanding immediately prior to the Effective
Time and that are owned by Company Shareholders who have properly demanded
payment of the fair market value of their stock (the "Dissenting Shares") within
the meaning of Section 1301 of California Law shall not be converted into the
right to receive the Merger Consideration unless and until such Company
Shareholders shall have failed to perfect or shall have effectively withdrawn
their demand, or lost their right of payment under applicable law. If any such
Company Shareholder shall have failed to perfect or shall have effectively
withdrawn or lost such right of payment, each share of Company Common Stock held
by such Company Shareholder shall thereupon be deemed converted into the right
to receive and exchangeable for, at the Effective Time, the Merger Consideration
pursuant to Sections 2.02 of this Reorganization Agreement. Subject to the terms
and conditions of this Reorganization Agreement, at and after the Effective
Time, any holder of shares of Company Common Stock who complies with Section
1301 of California Law (a "Company Dissenting Shareholder") shall be entitled to
obtain payment from Surviving Corporation of the fair market value of such
Company Dissenting Shareholder's shares of Company Common Stock as determined
pursuant to Article 13 of California Law; PROVIDED, HOWEVER, that, to the extent
permissible under California Law, no such payment shall be made unless and until
such Company Dissenting Shareholder has surrendered to the Exchange Agent the
Certificate representing the shares of Company Common Stock for which payment is
being made.

         (e) Company shall give Acquiror (i) prompt notice of any written notice
of intent to demand payment for shares filed pursuant to Section 1301 of
California Law received by Company, withdrawals of such notices, and any other
instruments served in connection with such notices pursuant to the relevant
provisions of California Law and received by Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to such notices under
California Law consistent with the obligations of Company thereunder. Company
shall not, except with the prior written consent of Acquiror (which shall not be
unreasonably withheld), (A) make any payment with respect to any such notice,
(B) offer to settle or settle any such notices or (C) waive any failure to
timely deliver a written notice in accordance with the California Law.

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SECTION 2.03  ACQUIROR TO DELIVER CASH

Immediately after the Effective Time, Acquiror shall deliver to the Company
Shareholders (other than the Dissenting Shareholders) the Cash Consideration by
wire transfer of immediately available funds payable to each Company Shareholder
(other than the Dissenting Shareholders) in the proportion of each Company
Shareholder's ownership of the Company Common Stock identified in EXHIBIT B and
to such accounts that are identified by such Company Shareholders not less than
two (2) business day s prior to the Closing Date in exchange for the
Certificates.

SECTION 2.04  [INTENTIONALLY OMITTED]

SECTION 2.05  HOLDBACK CONSIDERATION; DETERMINATION OF CLOSING ADJUSTMENT

         (a) HOLDBACK CONSIDERATION. Within ten (10) business days of the final
determination of the Closing Adjustment pursuant to Section 2.05(b), Acquiror
shall pay to the former holders of Company Common Stock, the Holdback
consideration LESS the Closing Adjustment, if any.

         (b) DETERMINATION OF CLOSING ADJUSTMENT. The "Closing Adjustment" shall
equal (i) the amount by which (A) the cash, PLUS (B) the fair market value of
the marketable securities, PLUS (C) the account receivable payable by NASA (or
by the University of Houston based upon its contract with NASA) to the Company
in an amount equal to approximately $870,000 (provided such account receivable
has not been paid prior to Closing), and MINUS (D) the Transaction Expenses
(provided such Transaction Expenses have not been paid) of the Company and the
Company Subsidiary on the Closing Date is greater than or less than Four Million
Dollars ($4,000,000) (after taking into consideration the adjustments made in
computing the Adjusted Merger Consideration based on the estimate of the Closing
Adjustment required to be delivered to Acquiror pursuant to Section 7.02(g) of
this Reorganization Agreement), PLUS (ii) an amount equal to the amount by which
the "accounts receivable" on the Company's balance sheet dated January 22, 2000
is less than the amount determined to be the "accounts receivable" of the
Company as a result of the audit of the consolidated financial statements of the
Company as of the Closing Date by Arthur Andersen LLP, the Acquiror's
independent public accountants, (determined using the same accounting method as
used by the Company prior to December 31, 1999), PLUS (iii) an amount by which
the "current liabilities" on the Company's balance sheet dated as of January 22,
2000 is less than the "current liabilities" of the Company as determined by
Arthur Andersen LLP, if any (determined in accordance with GAAP) as hereinafter
provided; PROVIDED, HOWEVER, no adjustment shall be made to the Closing
Adjustment as a result of the operation of clauses (ii) and (iii) if the
difference between the Company's determination of the amounts identified by the
Company in clauses (ii) and (iii) and Arthur Anderson LLP's audit of such
amounts does not exceed $100,000. The Company will use its best efforts to close
its books and records for the period ending on the Closing Date within twenty
(20) days after the Closing Date and shall deliver to the Acquiror or, at the
request of the Acquiror, to Acquiror and Arthur Andersen LLP, such books and
records as shall be requested by Acquiror or Arthur Andersen LLP to enable
Arthur Andersen LLP to perform an audit of the items identified in clause (i) of
the preceding sentence as of the Closing Date and of the items identified in
clauses (ii) and (iii)

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of the preceding sentences as of January 22, 2000 and to determine the amount
of the Closing Adjustment based thereon. Upon receipt of such books and
records, the Acquiror shall use its best efforts to cause Arthur Andersen LLP to
complete an audit of such items and to calculate the amount of the Closing
Adjustment within thirty (30) days following receipt of the books and records of
the Company. Acquiror shall deliver to the Shareholders' Representative a copy
of such audits and the amount of the Closing Adjustment promptly upon receipt of
such items from Arthur Andersen LLP. The Shareholders' Representative shall have
the right to review and copy the computations and workpapers used in connection
with the preparation of the such audits and the computation of the Closing
Adjustment. If the Shareholders' Representative disagrees with the Closing
Adjustment, the Shareholders' Representative shall so notify the Acquiror in
writing within ten (10) days after the date of receipt of the such audits and
the computation of the Closing Adjustment, specifying in detail any point of
disagreement; PROVIDED, HOWEVER, if the Shareholders' Representative fails to
notify the Acquiror in writing of the Shareholders' Representative's
disagreement within such ten (10) day period, the determination of the Closing
Adjustment shall be final, conclusive and binding on the Parties for purposes of
determining the amount of the Holdback Consideration to be released to the
former holders of Company Common Stock pursuant to Section 2.05(a), but shall
not limit Acquiror's other rights pursuant to this Reorganization Agreement or
any other document delivered in connection with this Reorganization Agreement.
The Acquiror and the Shareholders' Representative shall negotiate in good faith
to resolve any such disagreement. If any such disagreement cannot be resolved by
the Acquiror and the Shareholders' Representative within fifteen (15) days after
the Shareholders' Representative has received notice from the Acquiror in
accordance with the preceding sentence of the existence of such disagreement,
the Acquiror and the Shareholders' Representative shall jointly select a
nationally recognized independent public accounting firm (which has not
performed any service since January 1, 1996 for either the Company or the
Acquiror or any of their respective Affiliates (the "Accounting Firm")), to act
as an arbitrator to resolve as expeditiously as possible all points of
disagreement with respect to the Closing Adjustment (or, in the event they are
unable to agree, either may request the Los Angeles, CA office of the American
Arbitration Association to make such selection, which shall be final and binding
on the Parties). All determinations made by the Accounting Firm with respect to
the Closing Adjustment shall be final, conclusive and binding on the Parties
hereto for purposes of determining the amount of the Holdback Consideration to
be paid to the former holders of Company Common Stock, but shall not limit
Acquiror's other rights pursuant to this Reorganization Agreement or any other
document delivered in connection with this Reorganization Agreement. The fees
and expenses of the Accounting Firm shall be borne by the non-prevailing Party.

         (c) APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE. The Principal
Shareholder shall, by virtue of the Merger, be appointed attorney-in-fact and
authorized and empowered to act, for and on behalf of any or all of the Company
Shareholders (with full power of substitution in the premises), in connection
with the provisions of this Section 2.05 as they relate to the Company and the
Company Shareholders generally, and such other matters as are reasonably
necessary for the consummation of the transactions contemplated hereby
including, without limitation, (i) to review all determinations of the Closing
Adjustment and, to the extent deemed appropriate, dispute, question the accuracy
of, compromise, settle or otherwise resolve any and all such determinations,
(ii) to compromise on their behalf with Acquiror any claims asserted thereunder,

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(iii) to authorize payments to be made with respect to the Closing Adjustment,
(iv) to execute and deliver on behalf of the Company Shareholders any documents
or agreement contemplated by or necessary or desirable in connection with this
Reorganization Agreement and (v) to take such further actions including
coordinating and administering post-closing matters related to the rights and
obligations of the Company Shareholders as are authorized in this Reorganization
Agreement (the above named representative, as well as any subsequent
representative of the Company Shareholders appointed by the Company Shareholders
being referred to herein as the "Shareholders' Representative"). The
Shareholders' Representative shall not be liable to any Company Shareholder,
Acquiror, the Surviving Corporation or their respective Affiliates or any other
Person with respect to any action taken or omitted to be taken by the
Shareholders' Representative in his role as Shareholders' Representative under
or in connection with this Reorganization Agreement unless such action or
omission results from or arises out of fraud, gross negligence, willful
misconduct or bad faith on the part of the Shareholders' Representative.
Acquiror, Acquiror Sub and the Surviving Corporation shall be entitled to rely
on such appointment and treat such Shareholders' Representative as the duly
appointed attorney-in-fact of each Company Shareholder. Each Company Shareholder
who votes in favor of the Merger pursuant to the terms hereof, by such vote and
without any further action, and each Company Shareholder who receives Merger
Consideration in connection with the Merger, by acceptance thereof and without
any further action, confirms such appointment and authority.

         (d) RECORD RETENTION. Acquiror, the Company and the Shareholder
Representative agree that following the Closing through the date of the final
determination of the Closing Adjustment that they will not destroy any records
pertaining to the final determination of the Closing Adjustment.

SECTION 2.06  CONVERSION OF ACQUIROR SUB SHARES

Each share of capital stock of Acquiror Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one fully
paid and nonassessable share of common stock of Surviving Corporation.

SECTION 2.07  CLOSING

Subject to the terms and conditions of this Reorganization Agreement, the
closing of the Merger (the "Closing") will take place after the satisfaction of
the latest to occur or, if permissible, waiver of the conditions set forth in
Article VII of this Reorganization Agreement. The scheduled closing date will
take place as soon as practicable (but, in any event, no later than the first
business day following the tenth (10th) day) after the satisfaction of the
latest to occur or, if permissible, waiver, of the conditions set forth in
Article VII of this Reorganization Agreement; PROVIDED, HOWEVER, the Closing
shall not occur prior to March 3, 2000; PROVIDED, FURTHER, HOWEVER, if the
conditions set forth in Article VII of this Reorganization Agreement are
satisfied or waived in the month of March, 2000, the Closing shall occur on the
first Friday in the first three full weeks of March 2000 following the payment
of the accounts receivable payable by 3COM Corp. to the Company in an amount of
approximately $375,000 (the "Scheduled Closing Date"), at the offices of Hogan &
Hartson L.L.P., Biltmore Tower, 500 South Grand Avenue,

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Suite 1900, Los Angeles, California 90071, unless another date or place is
agreed to in writing by the Parties.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as specifically set forth in the Disclosure Letter delivered by Company
to Acquiror prior to the execution and delivery of this Reorganization Agreement
(the "Company Disclosure Letter") and referenced in the Company Disclosure
Letter to the Section(s) of this Article III to which such disclosure applies,
Company hereby represents, warrants to and agrees with Acquiror and Acquiror Sub
as follows, in each case as of the date of this Reorganization Agreement and as
of the Closing Date:

SECTION 3.01  ORGANIZATION AND QUALIFICATION

Company is a corporation duly organized, validly existing and in good standing
under California Law, and has the full and unrestricted corporate power and
authority to own, operate and lease its Assets, to carry on its business as
currently conducted, to execute and deliver this Reorganization Agreement and to
carry out the transactions contemplated hereby. Company is duly qualified to
conduct business as a foreign corporation and is in good standing in the states,
countries and territories listed in the Company Disclosure Letter and in each
jurisdiction where the nature of its business or the ownership, operation or
leasing of its Assets makes such qualification necessary.

SECTION 3.02  SUBSIDIARIES

Section 3.02 of the Company Disclosure Letter lists each Company Subsidiary.
Neither Company nor any Company Subsidiary has any equity investment or other
interest in, nor has Company or any Company Subsidiary made advances or loans to
any Person (other than intra-company transactions between or among Company and a
Company Subsidiary). Section 3.02 of the Company Disclosure Letter sets forth
(a) the authorized capital stock or other equity interests of each Company
Subsidiary and (b) the percentage of the issued and outstanding capital stock or
other equity interests of each Company Subsidiary owned by Company. All of such
shares of capital stock or other equity interests of each Company Subsidiary
have been duly authorized and validly issued and are outstanding, fully paid and
nonassessable and are owned by Company free and clear of all Encumbrances other
than Encumbrances arising under applicable securities Laws. Each Company
Subsidiary is a corporation duly organized, validly existing and in good
standing under the Laws of its state or jurisdiction of organization (as listed
in Section 3.02 of the Company Disclosure Letter), and has the requisite
corporate or limited liability company power and authority to own, operate and
lease its Assets and to carry on its business as currently conducted. Each
Company Subsidiary is duly qualified to conduct business as a foreign Person and
is in good standing in each jurisdiction where the nature of its business or the
ownership, operation or the leasing of its Assets makes such qualification
necessary.

                                       8
<PAGE>

SECTION 3.03  ARTICLES OF INCORPORATION AND BYLAWS

Company has furnished to Acquiror a true and complete copy of the articles of
incorporation of Company and each Company Subsidiary, as currently in effect on
the date of this Reorganization Agreement, and a true and correct copy of
Company's bylaws and the bylaws of each Company Subsidiary, as currently in
effect on the date of this Reorganization Agreement, and in each case certified
by the corporate secretary of the Company and each such Company Subsidiary, as
appropriate. Neither the Company nor any Company Subsidiary is in violation of
any of the provisions of its respective articles of organization or bylaws.

SECTION 3.04  CAPITALIZATION

The authorized capital stock of Company consists of 5,000,000 shares of common
stock, no par value per share, of which 910,000 shares of common stock (the
"Company Common Stock") are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable. Section 3.04 of the
Company Disclosure Letter sets forth the names and addresses of all holders of
record of Company Common Stock and the number and class of shares held by each
such Shareholder. No other shares of Company Common Stock have been reserved for
any purpose. There are no outstanding securities convertible into or
exchangeable for Company Common Stock, any other securities of any Company, or
any capital stock or other securities of any Company Subsidiary and no
outstanding options, rights (preemptive or otherwise), or warrants to purchase
or to subscribe for any shares of such stock or other securities of Company or
any Company Subsidiary. There are no outstanding Agreements affecting or
relating to the voting, issuance, purchase, redemption, registration, repurchase
or transfer of Company Common Stock, any other securities of Company, or any
capital stock or other securities of any Company Subsidiary, except as
contemplated hereunder. Each of the outstanding shares of Company Common Stock
and of capital stock of, or other equity interests in, each Company Subsidiary
was issued in compliance with all applicable federal and state Laws concerning
the issuance of securities. There are no obligations, contingent or otherwise,
of Company or any Company Subsidiary to provide funds to, make any investment
(in the form of a loan, capital contribution or otherwise) in, or provide any
guarantee with respect to, any Person other than Company or any Company
Subsidiary. There are no Agreements pursuant to which any Person (other than
Company or any Company Subsidiary) is or may be entitled to receive any of the
revenues or earnings, or any payment based thereon or calculated in accordance
therewith, of Company or any Company Subsidiary.

SECTION 3.05  AUTHORITY; BINDING OBLIGATION

The execution and delivery by Company of this Reorganization Agreement, the
execution and delivery by Company of all other Agreements, documents,
certificates or other instruments contemplated hereby, and the consummation by
Company of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Company are necessary to authorize this Reorganization Agreement
and the other Agreements, documents, certificates or other instruments
contemplated hereby, or to consummate the transactions contemplated hereby and
thereby, other than the approval and adoption of this Reorganization Agreement
by Company in accordance with

                                       9
<PAGE>

California Law and Company's articles of incorporation and bylaws. This
Reorganization Agreement has been duly executed and delivered by Company and
constitutes a legal, valid and binding obligation of Company, enforceable in
accordance with its terms, except as such enforceability may be subject to the
effects of any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws affecting creditors' rights generally
and subject to the effects of general equitable principles (whether considered
in a proceeding in equity or at law).

SECTION 3.06  NO CONFLICT; REQUIRED FILINGS AND CONSENTS

         (a) The execution, delivery and performance by Company of this
Reorganization Agreement and all other Agreements, documents, certificates or
other instruments contemplated hereby, the fulfillment of and compliance with
the respective terms and provisions hereof and thereof, and the consummation by
Company of the transactions contemplated hereby and thereby, do not and will
not: (i) conflict with, or violate any provision of, the articles of
incorporation or bylaws of Company; (ii) subject to (A) obtaining the requisite
approval and adoption of this Reorganization Agreement by the Company
Shareholders in accordance with California Law and Company's articles of
incorporation and bylaws and (B) obtaining the consents, approvals,
authorizations and permits of, and making filings with or notifications to, the
applicable Governmental Entity pursuant to the applicable requirements, if any,
of the HSR Act, and the filing and recordation of the Agreement of Merger and
the articles of merger as required by California Law, conflict with or violate
any Law applicable to Company or any Company Subsidiary, or any of their Assets;
(iii) conflict with, result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) or
result in the termination or acceleration, or create in another Person, a put
right, purchase obligation or similar right under any Agreement to which Company
or any Company Subsidiary is a party or by which Company or any Company
Subsidiary, or any of their Assets, may be bound; or (iv) result in or require
the creation or imposition of, or result in the acceleration of, any
indebtedness or any Encumbrance of any nature upon, or with respect to, Company
or any Company Subsidiary or any of the Assets now owned or hereafter acquired
by Company; except for any such conflict or violation described in clause (ii)
above, any such conflict, breach or default described in clause (iii) above, or
any such creation, imposition or acceleration described in clause (iv) above
that would not have a Company Material Adverse Effect and that would not prevent
Company from consummating the Merger on a timely basis.

         (b) The execution, delivery and performance by Company and each Company
Subsidiary of this Reorganization Agreement and all other Agreements, documents,
certificates or other instruments contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by Company and each Company Subsidiary of the transactions
contemplated hereby and thereby, do not and will not: (i) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Person not party to this Reorganization Agreement, except (A) pursuant to the
applicable requirements, if any, of the HSR Act and Laws of other Governmental
Entities, (B) the filing and recordation of the Agreement of Merger and the
articles of merger as required by California Law and (C) where the failure to
obtain any consent, approval, authorization or permit or to make any filing or
notification otherwise required to be disclosed hereunder would not have a
Company Material

                                       10
<PAGE>

Adverse Effect; or (ii) result in or give rise to any penalty, forfeiture,
Agreement termination, right of termination, amendment or cancellation, or
restriction on business operations of Company or any Company Subsidiary that
would have a Company Material Adverse Effect.

         (c) Except as set forth in Section 3.06 of the Company Disclosure
Letter, all returns, reports, statements and other documents required to be
filed by the Company or any Company Subsidiary with any Governmental Entity have
been filed in a timely manner and complied with and are true, correct and
complete in all material respects (and any related fees required to be paid have
been paid in full). All material records of every type and nature relating to
the business, operations or Assets of the Company and each Company Subsidiary
have been maintained in all material respects in accordance with good business
practices and the rules of any Governmental Entity and are maintained at the
Company or Company Subsidiary.

         (d) No Governmental Entity or any other Person has notified Company or
any Company Subsidiary that such Governmental Entity or other Person intends to
object to the transactions contemplated hereunder which shall include for this
purpose any objection to the operations of the business of Company or any
Company Subsidiary as part of Acquiror. The Company is not aware of any fact or
circumstance related to it or to any Company Subsidiary that would reasonably be
expected to (i) cause the filing of any objection to any application for any
Governmental consent required hereunder, (ii) lead to any delay in processing
such application or (iii) require any waiver of any Governmental rule, policy or
other applicable law.

SECTION 3.07  INTELLECTUAL PROPERTY

         (a) Section 3.07 of the Company Disclosure Letter identifies each
registered item of Intellectual Property (i) owned by Company or any Company
Subsidiary, (ii) owned by any third party and used by Company or any Company
Subsidiary pursuant to license, sublicense or other Agreement or (iii) otherwise
used by Company or any Company Subsidiary and not otherwise generally used by
Persons similarly situated (including, in each case, specification of whether
each such item is owned, licensed or used by Company or any Company Subsidiary).
In addition, neither Company nor any Company Subsidiary has licensed (as
licensor), sublicensed (as sublicensor) or entered into any other agreement with
respect to the use of any Intellectual Property except: (A) in the course of
distributing software products of Company and any Company Subsidiary; or (B) to
the U.S. Government pursuant to a government contract or to a subcontract under
a government contract.

         (b) The Company and each Company Subsidiary either owns or has adequate
rights to use all of the Intellectual Property that is necessary to, and
currently used for, its business as now conducted or currently proposed to be
conducted, and such Intellectual Property is free and clear of Encumbrances. The
Company has previously furnished to Acquiror evidence of either ownership by the
Company or a Company Subsidiary of or license rights to use its Intellectual
Property.

         (c) There are no pending or, to Company's knowledge, threatened claims
against Company or any Company Subsidiary alleging that the conduct of its
business infringes any Intellectual Property rights of others that would have a
Company Material Adverse Effect. Neither the Intellectual Property of Company
nor any Company Subsidiary is subject to any

                                       11
<PAGE>

mortgage, lien, pledge, encumbrance, security interest, deed of trust, option,
order, decree or judgment. The business of Company and each Company Subsidiary
as now conducted or proposed to be conducted does not infringe any third-party
Intellectual Property rights.

         (d) To the Company's knowledge, no third party is infringing upon any
of the Company's or any Company Subsidiary's Intellectual Property, and neither
the Company nor any Company Subsidiary has notified any third party that it
believes such third party is interfering with, infringing, or misappropriating
any of the Company's or any Company Subsidiary's Intellectual Property or
engaging in any act of unfair competition. The Company and each Company
Subsidiary have the right to bring an action for the infringement of all of its
Intellectual Property that is owned by the Company or any Company Subsidiary.

         (e) Company and each Company Subsidiary has taken all steps that are
required to protect Company and each Company Subsidiary's rights in confidential
information and trade secrets of Company and each Company Subsidiary or provided
by any other Person to Company or any Company Subsidiary. Without limiting the
foregoing, Company and each Company Subsidiary has and enforces a policy
requiring each employee, director, consultant and contractor to execute a
confidentiality and non-disclosure agreement substantially in the form
previously provided to Acquiror, and each present and former employee, director,
consultant and contractor has executed such an agreement.

         (f) The operation of the business of the Company and each Company
Subsidiary as it currently is conducted or currently proposed to be conducted as
of and limited to the period prior to the Closing Date by the Company and each
Company Subsidiary does not and will not and will not when conducted by the
Acquiror or the Surviving Corporation in substantially the same manner following
the Closing, infringe or misappropriate any Intellectual Property right of any
person, violate any right of any person (including any right to privacy or
publicity), or constitute unfair competition or trade practices under the laws
of any jurisdiction.

         (g) Neither this Reorganization Agreement nor the transactions
contemplated by this Reorganization Agreement, will result in (i) either
Acquiror or the Surviving Corporation granting to any third party any right to
or with respect to any Intellectual Property right owned by, or licensed to,
either of them, (ii) either Acquiror's or the Surviving Corporation's being
bound by, or subject to, any non-compete or other restriction on the operation
or scope of their respective businesses, or (iii) either Acquiror's or the
Surviving Corporation's being obligated to pay any royalties or other amounts to
any third party in excess of those payable by Acquiror's or the Surviving
Corporation's, respectively, prior to the Closing.

SECTION 3.08  FINANCIAL STATEMENTS AND CONDITION

         (a) Company has prepared the consolidated balance sheets of Company and
the Company Subsidiaries as of the end of the fiscal year ending in each of
1997, 1998, and 1999 (collectively, the "Company Balance Sheet") and the
consolidated statements of income, Seller's equity and changes in financial
position for each of such fiscal years (The Company Balance Sheet and such
consolidated statements of income, Company's equity and changes in financial
position are hereinafter referred to collectively as the "Company Financial
Statement"). A true

                                       12
<PAGE>

and complete copy of the Company Financial Statement has been delivered to
Acquiror and is attached as an exhibit to, and constitutes an integral part of,
the Company Disclosure Letter.

         (b) The Company Financial Statement, including, without limitation, the
notes thereto, (i) has been prepared in accordance with the books and records of
Company and its Subsidiaries and (ii) presents fairly the consolidated financial
position of Company and its Subsidiaries and their consolidated results of
operations and cash flows applied on a basis consistent with prior accounting
periods.

         (c) Company does not expect any year-end audit adjustments for the
current fiscal year ending June 30, 2000. To the knowledge of Company, there are
no anticipated material charges or write-offs of a non-recurring nature for the
fiscal year ending June 30, 2000.

SECTION 3.09  ABSENCE OF CERTAIN DEVELOPMENTS

Since June 30, 1999:

         (a) the business of Company and each Company Subsidiary has been
conducted in all material respects only in the Ordinary Course of Business;

         (b) neither Company nor any Company Subsidiary has become liable in
respect of any guarantee or has incurred or otherwise become liable in respect
of any debt, except for borrowings, letters of credit and bankers' acceptances
in the Ordinary Course of Business under credit facilities in existence on June
30, 1999;

         (c) neither Company nor any Company Subsidiary has mortgaged, pledged
or subjected to any lien any of their respective property, business or assets,
except for purchase money or similar security interests granted in connection
with the purchase of equipment or supplies in the Ordinary Course of Business in
an amount not exceeding $10,000 in the aggregate;

         (d) neither Company nor any Company Subsidiary has made any
declaration, setting aside or payment of any dividend or other distribution with
respect to, or repurchase of, any of their respective capital stock or other
equity interests, other than a cash dividend of $0.065 per share or an aggregate
amount of $59,150 paid on December 21, 1999;

         (e) neither Company nor any Company Subsidiary has (i) acquired or
leased from any other Person any material assets, or sold or leased to any other
Person or otherwise disposed of any material assets (in each case except for
assets acquired or sold in the Ordinary Course of Business in connection with
goods and services provided to customers), other than the sale to certain
officer's of the Company of the vehicles at their current Blue Book Value as
further identified on Section 3.09 to the Company Disclosure Letter; (ii)
entered into any contractual obligation relating to (A) the purchase or sale of
any capital stock, partnership interest or other equity interest in any Person,
(B) the purchase of assets constituting a business or (C) any merger,
consolidation or other business combination; (iii) entered into or amended any
lease of real property or material personal property (whether as lessor or
lessee); (iv) canceled or compromised any debt or claim other than accounts
receivable in the Ordinary Course of

                                       13
<PAGE>

Business; (v) sold, transferred, licensed or otherwise disposed of any
material intangible assets other than in the Ordinary Course of Business; (vi)
waived or released any right of substantial value; (vii) instituted, settled or
agreed to settle any material action; or (viii) entered into or consummated any
transaction with any Affiliate;

         (f) there has been no loss, destruction or damage to any material item
of property of Company or any Company Subsidiary, whether or not insured, which
has had or could reasonably be expected to have a Company Material Adverse
Effect;

         (g) other than in the Ordinary Course of Business and consistent with
past practices, neither Company nor any Company Subsidiary has made any changes
in the rate of compensation payable or paid, or agreed or orally promised to
pay, conditionally or otherwise, any extra compensation, or severance or
vacation pay, to any director, officer, employee, consultant or agent of Company
or any Company Subsidiary;

         (h) there has been no material labor trouble (including any work
slowdown, stoppage or strike) involving Company or any Company Subsidiary or any
material change in any of their respective personnel or the terms and conditions
of the employment of such personnel;

         (i) neither Company nor any Company Subsidiary has made any change in
(x) its methods of accounting or accounting practices, or (y) its pricing
policies or payment or credit practices or failed to pay any creditor any amount
owed to such creditor when due or granted any extensions or credit other than in
the Ordinary Course of Business;

         (j) neither Company nor any Company Subsidiary has terminated or closed
any material facility, business or operation;

         (k) neither Company nor any Company Subsidiary has made any material
loan, advance or capital contributions to, or any other investment in, any
Person other than travel advances previously disclosed to Acquiror;

         (l) neither Company nor any Company Subsidiary has adopted or increased
any benefits under any Plan in any material manner;

         (m) neither Company nor any Company Subsidiary has written up or
written down any of its respective material assets;

         (n) neither Company nor any Company Subsidiary has terminated or
amended, or failed in any material respect to perform obligations or suffered
the occurrence of any default under any material contractual obligation; and

         (o) neither Company nor any Company Subsidiary has entered into any
contractual obligation to do any of the things referred to elsewhere in this
Section 3.09.

SECTION 3.10  ABSENCE OF UNDISCLOSED LIABILITIES

To the knowledge of Company, there are no material liabilities or obligations
(whether absolute or contingent, matured or unmatured, known or unknown) of
Company or any Company

                                       14
<PAGE>

Subsidiary, including but not limited to liabilities for Taxes and that are
not reflected, or reserved against, in the Company Financial Statement, except
for those that may have been incurred after June 30, 1999 in the Ordinary Course
of Business or that are not material in amount either individually or
collectively. Since June 30, 1999, neither Company nor any Company Subsidiary
has incurred any material liabilities or obligations (whether absolute or
contingent, matured or unmatured, known or unknown) other than in the Ordinary
Course of Business. Additionally, all bonuses and incentive compensation
(including, without limitation, all compensation-related expenses) have been
accrued on the Company Financial Statement based on GAAP and consistent with
past practices.

SECTION 3.11  LITIGATION; DISPUTES

         (a) Company has not received notice of, and there is no pending, or, to
the knowledge of Company, threatened, any action, suit, claim, arbitration,
proceeding or investigation against, affecting or involving Company or any
Company Subsidiary or their respective businesses or Assets, or the transactions
contemplated by this Reorganization Agreement, at law or in equity, or before or
by any domestic or foreign court, arbitrator or Governmental Entity that, alone
or in the aggregate, would have a Company Material Adverse Effect. Neither
Company nor any Company Subsidiary is (i) operating under or subject to any
order, award, writ, injunction, decree or judgment of any court, arbitrator or
Governmental Entity or (ii) in default with respect to any order, award, writ,
injunction, decree or judgment of any court, arbitrator or Governmental Entity.

         (b) Company and each Company Subsidiary have complied and are in
compliance in all material respects with all laws, ordinances, regulations,
awards, orders, judgments, decrees and injunctions applicable to Company and
each Company Subsidiary and their respective businesses or Assets, including all
federal, state and local laws, ordinances, regulations and orders pertaining to
employment or labor, safety, health, zoning and other matters. Company and each
Company Subsidiary have obtained and hold all permits, licenses and approvals
(none of which has been materially modified or rescinded and all of which are in
full force and effect) from all government authorities necessary in order to
own, use and maintain their respective Assets and to conduct their respective
businesses as presently conducted.

SECTION 3.12  REAL PROPERTY LEASES

Section 3.12 of the Company Disclosure Letter lists each real property lease
under which Company or any Company Subsidiary is the lessee or lessor. Company
and each Company Subsidiary are the owners and holders of the leasehold estates
purported to be granted to them by the leases listed in Section 3.12 of the
Company Disclosure Letter. Each such lease is in full force and effect and, to
the knowledge of Company, constitutes a legal, valid and binding obligation of,
and is legally enforceable in all material respects against, the respective
parties thereto. Company and each Company Subsidiary have in all material
respects performed all material obligations thereunder required to be performed
by any of them to date. To the knowledge of Company, no party is in default in
any material respect under any of the foregoing, and there has not occurred any
event which (whether with or without notice, lapse of time or the

                                       15
<PAGE>

happening or occurrence of any other event) would constitute such a material
default. Neither Company nor any Company Subsidiary owns or holds interests in
any Real Property.

SECTION 3.13  OTHER AGREEMENTS; NO DEFAULT

Sections 3.12 and 3.13 of the Company Disclosure Letter list each Agreement
(other than Agreements solely between Company and any Company Subsidiary) to
which Company or any Company Subsidiary is a party or by which Company or any
Company Subsidiary, or any of their respective Assets, is bound, and which (i)
involves expenditures or receipts by Company or any Company Subsidiary (other
than contracts, commitments or Agreements which do not require payments or yield
receipts of more than $25,000) in any twelve (12) month period or more than
$50,000 in the aggregate); or (ii) contain covenants that limit the freedom of
Company or any Company Subsidiary to engage in a line of business or to compete
with any third party (Agreements listed pursuant to clauses (i) and (ii) above,
collectively the "Company Contracts"). Each Company Contract is in full force
and effect, constitutes a valid and binding obligation of and is legally
enforceable in accordance with its terms against Company and, to the knowledge
of Company, the Company Contracts are valid, binding and enforceable obligations
of the other parties thereto, except as such enforceability may be subject to
the effects of any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws affecting creditors' rights generally
or subject to the effects of general equitable principles (whether considered in
a proceeding in equity or at law). Company has complied with all of the
provisions of such Company Contracts and is not in default thereunder, and there
has not occurred any event which (whether with or without notice, lapse of time,
or the happening or occurrence of any other event) would constitute such a
default, and the execution of this Reorganization Agreement by Company and its
performance hereunder will not cause, or result in, a breach or default under
any Company Contract. There has not been (A) any failure by Company or, to the
knowledge of Company, any other party to any such Company Contract to comply
with all material provisions thereof, (B) any default by Company or, to the
knowledge of Company, any other party thereunder, or (C) to the knowledge of
Company (X) any threatened cancellation thereof or (Y) any outstanding dispute
thereunder. Neither Company nor any Company Subsidiary is a guarantor or
otherwise liable for any liability or obligation (including indebtedness) of any
other Person other than any Company Subsidiary.

SECTION 3.14  LABOR RELATIONS

There are no collective bargaining or other labor union Agreements to which
Company or any Company Subsidiary is a party. There are, and for the past two
(2) years have been, no strikes, work stoppages, union organization efforts or
lawsuits (other than grievance proceedings) pending or, to the knowledge of
Company, threatened or reasonably anticipated between Company or any Company
Subsidiary and (a) any current or former employees of Company or any Company
Subsidiary or (b) any union or other collective bargaining unit representing
such employees. Company and any Company Subsidiary have complied and are in
compliance with all Laws relating to employment or the workplace, including,
without limitation, Laws relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration,
withholding, unemployment compensation, worker's compensation,

                                       16
<PAGE>

employee privacy and right to know, except where the failure so to comply
would not have a Company Material Adverse Effect.

SECTION 3.15  PENSION AND BENEFIT PLANS

         (a) Company has delivered to Acquiror prior to the execution of this
Reorganization Agreement true and complete copies (or written descriptions,
where no written plan exists) (and, where applicable, the most recent actuarial,
valuation or annual (Form 5500 with attachments) reports with respect thereto)
of all pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plans, employment or change in control agreements, medical, vision, dental or
other health plans, life insurance plans and other employee benefit plans or
fringe benefit plans, programs, arrangements or Agreements, including, without
limitation, all Company Benefit Plans. No Company Benefit Plan is or has been a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA or could
subject Company or any Company Subsidiary to liability under Sections 4063 or
4064 of ERISA. Company has set forth in the Company Disclosure Letter (i) a list
of all of the Company Benefit Plans, (ii) a list of the Company Benefit Plans
that are Company Pension Plans, (iii) a list of the Company Benefit Plans that
are Company Stock Plans, and (iv) a list of the number of shares covered by,
exercise prices for, and holders of, all stock options granted and available for
grant under the Company Stock Plans.

         (b) From their inception, all Company Benefit Plans have been and are
in compliance (in form and in operation) with the applicable terms of ERISA and
the Code and any other applicable Laws, including the terms of such plans.

         (c) All liabilities (contingent or otherwise) under any Company Benefit
Plan are fully accrued or reserved against in the Company Financial Statement in
accordance with GAAP. Each Company Pension Plan that is subject to Title IV of
ERISA or Section 412 of the Code satisfies the minimum funding standards
(without regard to any waiver) provided for in Section 412 of the Code.

         (d) Neither Company nor any Company Subsidiary has any obligations for
retiree health or other welfare benefits under any Company Benefit Plan or
otherwise, and there are no restrictions on the rights of Company or any Company
Subsidiary to unilaterally amend or terminate any such Company Benefit Plan at
any time without incurring any material liability thereunder.

         (e) Neither the execution and delivery of this Reorganization Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, severance, golden parachute or
otherwise) becoming due to any person under any Company Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Company
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.

         (f) Each Company Benefit Plan which is intended to be qualified under
Section 401(a) or 401(k) of the Code or qualified as a voluntary employees'
beneficiary association under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the

                                       17
<PAGE>

IRS that it is so qualified and so exempt, and no fact or event has occurred
that could adversely affect such qualified or exempt status.

         (g) Company and each Company Subsidiary have not incurred any liability
under, and have complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder and do not
reasonably expect to incur any such liability as a result of actions taken or
not taken prior to the consummation of the Merger.

         (h) With respect to each Company Benefit Plan that is a Multiemployer
Plan, (i) neither Company nor any Company Subsidiary has incurred any Withdrawal
Liability that has not been satisfied in full; (ii) if Company or any Company
Subsidiary were to experience a withdrawal or partial withdrawal from such plan,
no material Withdrawal Liability would be incurred; (iii) neither Company nor
any Company Subsidiary has received any notification, nor has any reason to
believe, that any such plan is in reorganization, has been terminated, or may
reasonably be expected to be in reorganization or to be terminated, and (iv)
neither Company nor any Company Subsidiary is liable or has been advised that it
is liable for any funding Taxes under sections 413(b)(6) or 4971 of the Code on
account of any accumulated funding deficiency of any Multiemployer Plan to which
Company or any Company Subsidiary has contributed or is required to contribute.

         (i) Neither Company nor any Company Subsidiary is now or has ever been
a "substantial employer" as defined in Section 4001(a)(2) of ERISA.

SECTION 3.16  TAXES AND TAX MATTERS

         (a) The Company and each Company Subsidiary have paid all Taxes due and
payable by any of them for or with respect to all periods up to and including
the date hereof (without regard to whether or not such Taxes are or were
disputed), whether or not shown on any Tax Return.

         (b) The Company and each Company Subsidiary has filed on a timely basis
all Company Tax Returns that it was required to file. All such Company Tax
Returns were accurate and complete in all material respects. Except as described
in Section 3.16 of the Company Disclosure Letter, none of Company or any Company
Subsidiary is the beneficiary of any extension of time within which to file any
Tax Return. No claim has ever been made by an authority in a jurisdiction where
Company or any Company Subsidiary does not file Company Tax Returns that any one
of them is or may be subject to taxation by that jurisdiction. None of Company
or any Company Subsidiary has given any currently effective waiver of any
statute of limitations in respect of Taxes or agreed to any currently effective
extension of time with respect to a Tax assessment or deficiency. There are no
security interests on any of the assets of Company or any Company Subsidiary
that arose in connection with any failure (or alleged failure) to pay any Tax.

         (c) Company and each Company Subsidiary has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or other third
party.

                                       18
<PAGE>

         (d) None of Company nor any Company Subsidiary has knowledge of any
facts or circumstances which could give rise to a reasonable expectation that
any authority may assess any additional Taxes for any period for which Company
Tax Returns have been filed. There is no dispute or claim concerning any
liability for taxes of Company or any Company Subsidiary either (i) claimed or
raised by any authority in writing or (ii) as to which Company has knowledge
based upon personal contact with any agent of such authority. Company and each
Company Subsidiary has delivered to the Acquiror copies of, and Section 3.16 of
the Company Disclosure Letter sets forth a complete and accurate list of,
Company Tax Returns filed with respect to the taxable periods of Company and any
Company Subsidiary ended on or after December 31, 1995; indicates those Company
Tax Returns that have been audited; and indicates those Company Tax Returns that
currently are the subject of an audit.

         (e) The unpaid Taxes of Company and any Company Subsidiary (i) did not,
as of the date of any financial statements of Company and the Company
Subsidiaries furnished to Acquiror pursuant to Section 3.08 of this
Reorganization Agreement, exceed the reserve for any Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the such financial statements
(rather than in any notes thereto) and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Company or any Company Subsidiary in filing their
Company Tax Returns.

         (f) None of Company or any Company Subsidiary has filed a consent under
Section 341(f) of the Code, concerning collapsible corporations. None of Company
or any Company Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The Company
and each Company Subsidiary has disclosed on its federal income Company Tax
Returns all positions taken therein that could reasonably be expected to give
rise to a substantial understatement of federal income Tax within the meaning of
Section 6662 of the Code. None of Company or any Company Subsidiary is a party
to any Tax allocation or sharing agreement. None of Company or any Company
Subsidiary (A) has been a member of an "affiliated group," as defined in Section
1504(a) of the Code, filing a consolidated federal income Tax Return (other than
a group the common parent of which was Company) and (B) has any Liability for
the Taxes of any Person (other than any of Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.

         (g) Section 3.16 of the Company Disclosure Letter sets forth the
following information with respect to each of Company and each Company
Subsidiary (or, in the case of clause (ii) below, with respect to each of the
Company Subsidiary) as of the date hereof: (i) the tax basis of Company and each
Company Subsidiary in its assets; (ii) the basis of the shareholders of each
Company Subsidiary in such Company Subsidiary's stock (or the amount of any
excess loss account); and (iii) the amount of any net operating loss, net
capital loss, unused investment, foreign tax or other credit, or excess
charitable contribution allocable to Company or a Company Subsidiary; and (iv)
the amount of any deferred gain or loss allocable to Company or a Company
Subsidiary arising out of any "deferred intercompany transaction" as defined in
Treas. Reg. Section 1.1502-13(a)(2).

                                       19
<PAGE>

SECTION 3.17  INSURANCE

Section 3.17 of the Company Disclosure Letter lists all policies of title,
asset, fire, hazard, casualty, liability, life, worker's compensation and other
forms of insurance of any kind owned or held by Company or any Company
Subsidiary. All such policies: (a) are with insurance companies reasonably
believed by Company to be financially sound and reputable; (b) are in full force
and effect; (c) are sufficient for compliance by Company and by each Company
Subsidiary with all requirements of Law and of all Agreements to which Company
or any Company Subsidiary is a party; (d) are valid and outstanding policies
enforceable against the insurer; (e) insure against risks of the kind
customarily insured against and in amounts customarily carried by companies
similarly situated and by companies engaged in similar businesses and owning
similar Assets; and (f) have the policy expiration dates set forth in Section
3.17 of the Company Disclosure Letter.

SECTION 3.18  ARRANGEMENTS WITH RELATED PARTIES

No present or former officer, director, Shareholder or Person known by the
Company to be an Affiliate of the Company or the any Company Subsidiary, nor any
Person known by the Company to be an Affiliate of such Person, is currently a
party to any transaction or agreement with the Company or the any Company
Subsidiary, including any agreement providing for any loans, advances, the
employment of, furnishing of services by, rental of its Assets from or to, or
otherwise requiring payments to, any such officer, director, Shareholder or
affiliate.

SECTION 3.19  BOOKS AND RECORDS

The books of account, stock records, minute books and other corporate and
financial records of Company and each Company Subsidiary are complete and
correct and have been maintained in accordance with reasonable business
practices for companies similar to Company and each Company Subsidiary, and
Company and each Company Subsidiary will have prior to Closing prepared and made
available to Acquiror the minutes for all meetings of the Board of Directors
and/or Shareholders of the Company and each Company Subsidiary held as of the
date hereof (or written consents in lieu of such meetings).

SECTION 3.20  ASSETS

Company and each Company Subsidiary have good, valid and marketable title to all
Assets respectively owned by them, including, without limitation, all material
Assets reflected in the Company Financial Statement and all Assets acquired by
Company or by any Company Subsidiary since June 30, 1999 (except for Assets
reflected in the Company Financial Statement or acquired since such date which
have been sold or otherwise disposed of in the Ordinary Course of Business),
free and clear of all Encumbrances other than Permitted Encumbrances. All
personal property of Company and each Company Subsidiary is in good operating
condition and repair and is suitable and adequate for the uses for which it is
intended or is being used. All Inventory of Company and each Company Subsidiary
(i) consists of items which are good and merchantable and of a quality and
quantity presently usable and salable in the Ordinary Course of

                                       20
<PAGE>

Business and (ii) have been reflected in the Company Financial Statement in
accordance with the Company's historic accounting past practices.

SECTION 3.21  BOARD RECOMMENDATION

The Board of Directors of Company has unanimously adopted, in compliance with
California Law, a resolution advising, authorizing, approving and adopting this
Reorganization Agreement and the transactions contemplated hereby, and
recommending approval and adoption of this Reorganization Agreement and the
transactions contemplated hereby by the Company Shareholders. Company
Shareholders representing 96.7% of the Company Common Stock have adopted in
compliance with California Law a resolution authorizing, approving, and adopting
the Reorganization Agreement and the transactions contemplated hereby.

SECTION 3.22  DIRECTORS AND OFFICERS

Section 3.22 of the Company Disclosure Letter lists all current directors and
officers of Company and each Company Subsidiary, showing each such person's
name, positions, and annual remuneration, bonuses and fringe benefits paid by
Company or any Company Subsidiary for the current fiscal year and the most
recently completed fiscal year.

SECTION 3.23  STATE TAKEOVER STATUTES; CERTAIN CHARTER PROVISIONS

The Board of Directors of Company has, to the extent such statutes are
applicable, taken all action (including appropriate approvals of the Board of
Directors of Company) necessary to exempt Company, each Company Subsidiary and
Affiliates, the Merger, this Reorganization Agreement and the transactions
contemplated hereby and thereby from the takeover provisions of California Law,
if any. To the knowledge of Company, no other state takeover statutes or Company
charter or bylaw provisions are applicable to the Merger or this Reorganization
Agreement and the transactions contemplated hereby or thereby.

SECTION 3.24  ENVIRONMENTAL MATTERS

Each of the Company and each Company Subsidiary is in material compliance with
all Environmental Laws. Neither the Company nor any Company Subsidiary has any
material liability under any Environmental Law, nor is any of the Company or any
Company Subsidiary responsible for any liability of any other person under any
Environmental Law. There are no pending or, to the knowledge of the Company,
threatened actions, suits, claims, legal proceedings or other proceedings based
on, and neither the Company nor any Company Subsidiary directly or indirectly
received any notice of any complaint, order, directive, citation, notice of
responsibility, notice of potential responsibility, or information request from
any Government Entity or any other person arising out of or attributable to: (i)
the current or past presence at any part of the real property owned or leased by
the Company or any Company Subsidiary (the "Real Property") of Hazardous
Materials (as defined below) or any substances that pose a hazard to human
health or an impediment to working conditions; (ii) the current or past release
or threatened release into the environment from the Real Property (including,
without limitation, into any storm drain, sewer, septic system or publicly owned
treatment works) of any Hazardous Materials or any

                                       21
<PAGE>

substances that pose a hazard to human health or an impediment to working
conditions; (iii) the off-site disposal of Hazardous Materials originating on or
from the Real Property; or (iv) any violation of Environmental Laws at any part
of the Real Property or otherwise arising from the Company's or any Company
Subsidiary's activities involving Hazardous Materials.

SECTION 3.25  Y2K COMPLIANCE

         (a) Each of the Company's and each Company Subsidiary's products
(including products currently under development): (i) will record, store,
process, calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance, as the products record,
store, process, calculate and present calendar dates on or before December 31,
1999, or calculate any information dependent on or relating to such dates
(collectively, "Year 2000 Compliant"); (ii) will lose no functionality with
respect to the introduction of records containing dates falling on or after
January 1, 2000; and (iii) will be interoperable with other products used and
distributed by Company or each Company Subsidiary, as applicable, that may
reasonably deliver records to, receive records from, or interact with the
Company's or Company Subsidiary's products, including but not limited to back-up
and archived data.

         (b) All of the Company's and each Company's Subsidiary's Information
Technology (as defined below) is Year 2000 Compliant, and will not cause an
interruption in the ongoing operations of the Company's or any Company
Subsidiary's business on or after January 1, 2000. For purposes of the
foregoing, the term "Information Technology" shall mean and include all
software, hardware, firmware, telecommunications systems, network systems,
embedded systems and other systems, components and/or services (other than
general utility services including gas, electric, telephone and postal) that are
owned or used by the Company or any Company Subsidiary in the conduct of its
business, or purchased by the Company or any Company Subsidiary from third party
suppliers.

SECTION 3.26  GOVERNMENT CONTRACTS AND OTHER COMMITMENTS

         (a) With respect to any contracts with Governmental Entities and
subcontracts (at any tier) under prime contracts with Governmental Entities to
which Company or any Company Subsidiary is a party (collectively, "Government
Contracts"): (A) such Government Contracts constitute valid and binding
obligations of Company or a Company Subsidiary, and the other party or parties
thereto, enforceable in accordance with their terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws or
equitable principles relating to creditors' rights generally; (B) Company and
each Company Subsidiary is in compliance in all material respects with the terms
of all Government Contracts to which it is a party and all laws, regulations and
contract provisions applicable to the obtaining, formation, pricing,
performance, billing, administration and other aspects of its Government
Contracts, including without limitation the False Claims Act, False Statements
Act, and Truth in Negotiations Act, except for such non-compliance that does not
have a Company Material Adverse Effect; (C) none of Company, any Company
Subsidiary, or to the knowledge of Company, any other party has terminated,
canceled or waived any material term or condition of

                                       22
<PAGE>

any such Government Contract; (D) the cost accounting, pricing, estimating,
property and procurement systems relating to Company's and any Company
Subsidiary's Government Contracts are in compliance in all material respects
with applicable laws regulations and contract provisions, including without
limitation procurement integrity laws and regulations, cost principles and cost
accounting standards; and (E) Company and each Company Subsidiary is in
compliance in all material respects with all national security obligations,
including, without limitation, those specified in the National Industrial
Security Program.

         (b) With respect to the Government Contracts to which Company or any
Company Subsidiary is a party, except as is reserved for on the Company
Financial Statement: (A) each billed account receivable represents a bona fide
claim against the government for sales, services performed or other charges
arising on or prior to the date hereof, and all the products delivered and
services performed which gave rise to such accounts were delivered or performed
in accordance with the applicable Government Contracts; (B) to the best of
Company's knowledge, each such billed account receivable is subject to no
defense, counterclaim or right to setoff and is fully collectable in the
Ordinary Course of Business consistent with past practices without cost in
collection efforts therefor; and (C) all unbilled or unreserved amounts included
in accounts receivable will, in the Ordinary Course of Business as currently
conducted consistent with past practices, mature into and become billed accounts
receivable in the same or greater amount and such receivables, when billed, will
be fully collectable in the Ordinary Course of Business consistent with past
practices.

         (c) With respect to the Government Contracts to which Company or any
Company Subsidiary is a party, none of such Government Contracts has incurred or
currently projects cost overruns in an amount exceeding $50,000.

         (d) With respect to the Government Contracts to which Company or any
Company Subsidiary is a party, neither Company nor any Company Subsidiary has
assigned or otherwise conveyed or transferred, or agreed to assign, to any
Person, any Government Contracts to which it is a party, or any account
receivable relating thereto, whether as a security interest or otherwise.

         (e) With respect to any Government Property provided to or acquired by
the Company or any Company Subsidiary pursuant to the Government Contracts: (A)
the approximate value of such Government Property as of the date hereof is
$934,272; and (B) there exists no material deviation between the Government
Property as provided to or acquired by the Company or any Company Subsidiary and
the Government Property as currently possessed by the Company and any Company
Subsidiary

         (f) Neither Company nor any Company Subsidiary has received any formal
notice or other written communication from the federal government within the
last three (3) years regarding its actual or threatened disqualification,
suspension or debarment from contracting with the federal government and, to the
knowledge of Company, no action for which Company or any Company Subsidiary has
received such notice prior to the last three (3) years is pending.

         (g) To the knowledge of Company, there is no: (A) pending or threatened
investigation for fraud or other misconduct relating to Government Contracts to
which Company or any Company Subsidiary is a party; (B) existing or threatened
claim, cost disallowance,

                                       23
<PAGE>

pricing adjustment, or adverse audit finding relating to any Government
Contract to which Company or any Company Subsidiary is a party; or (C)
termination for default or cure notice or show cause notice currently in effect,
relating to any Government Contract to which Company or any Company Subsidiary
is a party.

SECTION 3.27  RELATIONS WITH GOVERNMENTS

Neither the Company, any Company Subsidiary nor, to the knowledge of the
Company, any of the Company's or any Company Subsidiary's officers, directors,
employees or agents (or Shareholders, distributors, representatives or other
persons acting on the express, implied or apparent authority of the Company or
any Company Subsidiary) have paid, given or received or have offered or promised
to pay, give or receive, any bribe or other unlawful payment of money or other
thing of value, any unlawful discount, or any other unlawful inducement, to or
from any person or Government Entity in the United States or elsewhere in
connection with or in furtherance of the business of the Company or any Company
Subsidiary (including, without limitation, any offer, payment or promise to pay
money or other thing of value (a) to any foreign official, political party (or
official thereof) or candidate for political office for the purposes of
influencing any act, decision or omission in order to assist the Company or any
Company Subsidiary in obtaining business for or with, or directing business to,
any person, or (b) to any person, while knowing that all or a portion of such
money or other thing of value will be offered, given or promised to any such
official or party for such purposes). Neither the business of the Company nor
any Company Subsidiary is in any manner dependent upon the making or receipt of
such payments, discounts or other inducements. Neither the Company nor any
Company Subsidiary has otherwise taken any action that would cause the Company
or any Company Subsidiary to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any applicable Laws of similar effect.

SECTION 3.28  BROKER'S FEES

Except as set forth in the Company Disclosure Letter, neither the Company nor
any Company Subsidiary has any liability or obligation to pay any fees or
commissions to any broker, finder, or similar agent with respect to the
transactions contemplated by this Reorganization Agreement.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                          OF ACQUIROR AND ACQUIROR SUB

Except as specifically set forth in the Disclosure Letter delivered by Acquiror
and Acquiror Sub to Company prior to the execution and delivery of this
Reorganization Agreement (the "Acquiror Disclosure Letter") and referenced in
the Acquiror Disclosure Letter to the Section(s) of this Article IV to which
such disclosure applies, Acquiror and Acquiror Sub hereby jointly and severally
represent, warrant to and agrees with Company as follows, in each case as of the
date of this Reorganization Agreement and as of the Closing Date:

                                       24
<PAGE>

SECTION 4.01  ORGANIZATION AND QUALIFICATION

Acquiror is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has the full and unrestricted
corporate power and authority to own, operate and lease its Assets, to carry on
its business as currently conducted, to execute and deliver this Reorganization
Agreement and to carry out the transactions contemplated hereby. Acquiror Sub is
a corporation duly organized, validly existing and in good standing under
California Law, and has full and unrestricted corporate power and authority to
own, operate and lease its Assets, to carry on its business as currently
conducted, to execute and deliver this Reorganization Agreement and to carry out
the transactions contemplated hereby. Each of Acquiror and Acquiror Sub is duly
qualified to conduct business as a foreign corporation and is in good standing
in the states, countries and territories in which the nature of the business
conducted by it or the character of the Assets owned, leased or otherwise held
by it makes such qualification necessary, except where the failure to be so
qualified would not have an Acquiror Material Adverse Effect.

SECTION 4.02  RELIANCE ON FINANCIAL INFORMATION

Acquiror has relied on the financial statements of the Company for periods prior
to the Closing Date. Acquiror has made its own evaluation of the backlog of
revenues due under any contract of the Company. No reliance has been placed on
any financial projections or forward looking statements made by Company or
Company Shareholders.

SECTION 4.03  AUTHORITY; BINDING OBLIGATION

Each of Acquiror and Acquiror Sub has the full and unrestricted corporate power
and authority to execute and deliver this Reorganization Agreement and to carry
out the transactions contemplated hereby. The execution and delivery by Acquiror
and Acquiror Sub of this Reorganization Agreement and all other Agreements,
documents, certificates or other instruments contemplated hereby, and the
consummation by Acquiror and Acquiror Sub of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action,
and no other corporate proceedings on the part of Acquiror or Acquiror Sub are
necessary to authorize this Reorganization Agreement and the other Agreements,
documents, certificates or other instruments contemplated hereby, or to
consummate the transactions contemplated hereby and thereby. This Reorganization
Agreement has been duly executed and delivered by Acquiror and Acquiror Sub and
constitutes a legal, valid and binding obligation of Acquiror and Acquiror Sub,
enforceable in accordance with its terms, except as such enforceability may be
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally and subject to the effect of general equitable principles
(whether considered in a proceeding in equity or at law).

SECTION 4.04  NO CONFLICT; REQUIRED FILINGS AND CONSENTS

         (a) The execution, delivery and performance by Acquiror and Acquiror
Sub of this Reorganization Agreement and all other Agreements, documents,
certificates or other

                                       25
<PAGE>

instruments contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by Acquiror and Acquiror Sub of the transactions contemplated
hereby and thereby, do not and will not: (i) conflict with, or violate any
provision of, the certificate of incorporation or the bylaws of Acquiror, or the
articles of incorporation or the bylaws of Acquiror Sub; (ii) subject to
obtaining the consents, approvals, authorizations and permits of, and making
filings with or notifications to, the applicable Governmental Entity pursuant to
the applicable requirements, if any, of the HSR Act and the filing and
recordation of the Agreement of Merger and the articles of merger as required by
California Law, conflict with or violate any Law applicable to Acquiror or
Acquiror Sub or any of their respective Assets; (iii) conflict with, result in
any breach of, constitute a default (or an event that with notice or lapse of
time or both would become a default) under any Agreement to which Acquiror or
Acquiror Sub is a party or by which Acquiror or Acquiror Sub or any of their
respective Assets may be bound; or (iv) result in or require the creation or
imposition of, or result in the acceleration of, any indebtedness or any
Encumbrance of any nature upon, or with respect to, Acquiror or Acquiror Sub;
except for any such conflict or violation described in clause (ii) above, any
such conflict, breach or default described in clause (iii) above, or any such
creation, imposition or acceleration described in clause (iv) above that would
not have an Acquiror Material Adverse Effect and that would not prevent Acquiror
or Acquiror Sub from consummating the Merger on a timely basis.

         (b) The execution, delivery and performance by Acquiror and Acquiror
Sub of this Reorganization Agreement and all other Agreements, documents,
certificates or other instruments contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by Acquiror and Acquiror Sub of the transactions contemplated
hereby and thereby, do not and will not: (i) require any consent, approval,
authorization or permit of, or filing with or notification to, any Person not
party to this Reorganization Agreement, except (A) pursuant to the applicable
requirements, if any, of the HSR Act, (B) the filing and recordation of the
Agreement of Merger and the articles of merger as required by California Law and
(C) where the failure to obtain any consent, approval, authorization or permit
or to make any filing or notification otherwise required to be disclosed
hereunder would not have an Acquiror Material Adverse Effect; or (ii) result in
or give rise to any penalty, forfeiture, Agreement termination, right of
termination, amendment or cancellation, or restriction on business operations of
Acquiror or Surviving Corporation that would have an Acquiror Material Adverse
Effect.

SECTION 4.05  NO PRIOR ACTIVITIES OF ACQUIROR SUB

Acquiror Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Reorganization Agreement and has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.

                                       26
<PAGE>

                                    ARTICLE V

                              PRE-CLOSING COVENANTS

SECTION 5.01  CONDUCT OF BUSINESS OF COMPANY UNTIL EFFECTIVE TIME

The Company hereby covenants and agrees that, from the date of this
Reorganization Agreement until the Effective Time, Company, unless otherwise
expressly contemplated by this Reorganization Agreement or consented to in
writing by Acquiror, will, and will cause each Company Subsidiary to, carry on
their respective businesses only in the Ordinary Course of Business, use their
respective best efforts to preserve intact their business organizations and
Assets, maintain their rights and franchises, retain the services of their
officers and employees and maintain their relationships with customers,
suppliers, licensors, licensees and others having business dealings with them,
and use their respective best efforts to keep in full force and effect liability
insurance and bonds comparable in amount and scope of coverage to that currently
maintained. Without limiting the generality of the foregoing, neither Company
nor any Company Subsidiary will:

         (a) (i) increase in any manner the compensation or fringe benefits of,
or pay any bonus to, any director, officer or employee; (ii) grant any severance
or termination pay (other than pursuant to the normal severance practices or
existing agreements of the Company in effect on the date of this Reorganization
Agreement) to, or enter into any severance agreement with, any director, officer
or employee, or enter into any employment agreement with any director, officer
or employee or otherwise without the prior written consent of Acquiror; (iii)
establish, adopt, enter into or amend any Company Benefit Plan or other
arrangement, except as may be required to comply with applicable Law; (iv) pay
any benefit not provided for under any Company Benefit Plan or other
arrangement; (v) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Company Benefit Plan or other
arrangement (including the grant of stock options, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock, or
the removal of existing restrictions in any Company Benefit Plan or other
arrangement or agreement or awards made thereunder), (vi) take any action to
fund or in any other way secure the payment of compensation or benefits under
any agreement or (vii) promote or fire any director, officer or employee;

         (b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;

         (c) (i) redeem, purchase or otherwise acquire any shares of capital
stock of the Company or any Company Subsidiary or any securities or obligations
convertible into or exchangeable for any shares of capital stock of the Company
or any Company Subsidiary, or any options, warrants or conversion or other
rights to acquire any shares of capital stock of the Company or any Company
Subsidiary or any such securities or obligations, or any other securities
thereof; (ii) effect any reorganization, recapitalization, merger or share
exchange; or (iii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;

                                       27
<PAGE>

         (d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any limitations in voting
rights or other Encumbrances) of, any shares of any class of its capital stock
(including shares held in treasury but excluding shares issuable upon the
exercise of options outstanding on the date hereof in accordance with their
terms as of the date hereof), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares, or amend or otherwise modify the terms of any such rights,
warrants or options the effect of which shall be to make such terms more
favorable to the holders thereof;

         (e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any Assets of any other person (other than the purchase of assets from
suppliers or vendors in the Ordinary Course of Business);

         (f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
subject to any Encumbrance or dispose of, or agree to sell, lease, exchange,
mortgage, pledge, transfer or otherwise subject to any Encumbrance or dispose
of, any of its Assets, except for sales, dispositions or transfers in the
Ordinary Course of Business;

         (g) propose or adopt any amendments to its articles of incorporation,
bylaws or other comparable charter or organizational documents;

         (h) make or rescind any express or deemed election relating to Taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes which would
reasonably be expected to result in a Company Material Adverse Effect, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns;

         (i) make or agree to make any new capital expenditures which are not
included in the Company's 2000 capital budget, a copy of which was furnished to
Acquiror, to the extent that such new capital expenditures exceed in the
aggregate $100,000;

         (j) (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any Company
Subsidiary, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any agreement having the economic effect of any of
the foregoing, except for borrowings incurred in the Ordinary Course of
Business, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person other than travel and payroll advances made to
employees in the Ordinary Course of Business;

         (k) pay, discharge, settle or satisfy any claims, liabilities or
obligations (whether absolute or contingent, matured or unmatured, known or
unknown), other than the payments, discharges or satisfactions, in the Ordinary
Course of Business which are materially in

                                       28
<PAGE>

accordance with their terms, of liabilities reflected or reserved against in,
or contemplated by, the Company Financial Statement or waive any material
benefits of, or agree to modify in any material respect, any confidentiality,
standstill or similar agreements to which the Company or any Company Subsidiary
is a party;

         (l) waive, release or assign any rights or claims, or modify, amend or
terminate any agreement to which the Company or any Company Subsidiary is a
party;

         (m) make any change in any method of accounting or accounting practice
or policy other than those required by generally accepted accounting principles
or a Government Entity;

         (n) take any action or fail to take any action that would have a
Company Material Adverse Effect prior to or after the Effective Time or a
material adverse effect after the Effective Time, or that would adversely affect
the ability of the Company or any Company Subsidiary prior to the Effective
Time, or Acquiror or any of its Subsidiaries after the Effective Time, to obtain
consents of third parties or approvals of Government Entities required to
consummate the transactions contemplated in this Agreement; or

         (o)      authorize, or commit or agree to do any of the foregoing.

SECTION 5.02  BEST EFFORTS TO SATISFY CONDITIONS

Acquiror and Company shall use their respective best efforts to cause all
conditions to the obligations of Acquiror and Company set forth in Article VII
of this Reorganization Agreement to be satisfied on or before the Closing Date.

SECTION 5.03  OTHER ACTIONS

Acquiror and Company shall not, and shall not permit any of their respective
Affiliates to, take any action that would, or that could reasonably be expected
to, result in (a) any of the representations and warranties of such Party set
forth in this Reorganization Agreement becoming untrue, or (b) any of the
conditions to the Merger set forth in Article VII of this Reorganization
Agreement not being satisfied.

SECTION 5.04  CERTAIN TAX MATTERS

From the date hereof until the Effective Time, Company and Company Subsidiary
(a) will prepare and timely file with the relevant Taxing authority all Company
Tax Returns required to be filed during such period ("Post-Signing Returns"),
which Post-Signing Returns shall be accurate in all material respects, or
permitted extensions with respect thereto, (b) will timely pay all Taxes due and
payable with respect to such Post-Signing Returns, (c) will pay or otherwise
make adequate provision for all Taxes payable by Company and Company Subsidiary
for which no Post-Signing Return is due prior to the Effective Time, and (d)
will promptly notify Acquiror of any action, suit, proceeding, claim or audit
pending against or with respect to Company or any Company Subsidiary in respect
of any Taxes.

                                       29
<PAGE>

SECTION 5.05  ACCESS AND INFORMATION

For so long as this Reorganization Agreement is in effect, and subject to
applicable Laws, Company shall, and shall cause each Company Subsidiary to, (a)
afford to Acquiror and its officers, employees, accountants, consultants, legal
counsel and other representatives reasonable access during normal business
hours, subject to reasonable advance notice, to all of their respective
properties, Agreements, books, records and personnel and (b) furnish promptly to
Acquiror (i) a copy of each Agreement, document, certificate or other instrument
filed with, or received from any Governmental Entity and (ii) all other
information concerning their respective businesses, operations, prospects,
conditions (financial or otherwise), Assets, liabilities and personnel as
Acquiror may reasonably request.

SECTION 5.06  NOTIFICATION FILING REQUIRED UNDER HSR ACT

If required, the Parties shall make good faith efforts to complete and file
without delay, and in any event within thirty (30) days after the date of this
Reorganization Agreement, any notification filing required under the HSR Act
with respect to the transactions contemplated by this Reorganization Agreement.
The Parties shall in good faith take (or fully cooperate in the taking of) all
actions, and provide any additional information that may be, required or
reasonably requested in order to comply with the requirements of the HSR Act. If
a notification filing is required under the HSR Act, Acquiror and the Company
shall each pay half of all filings fees in connection therewith.

SECTION 5.07  ACCESS TO COMPANY AND COMPANY SUBSIDIARY INFORMATION

From the date hereof and through the Closing Date, Company shall, and shall
cause each Company Subsidiary and its accountants, counsel, investment bankers,
financial advisors, consultants and other representatives, to provide Acquiror
and Acquiror's accountants, counsel, investment bankers, financial advisors,
consultants and other representatives, upon reasonable notice, access to, and
make available, all books, contracts, records, reports, properties and
commitments of Company and each Company Subsidiary, including, without
limitation, Company's and each Company Subsidiary's tax returns and financial
statements, for Acquiror's use in connection with Acquiror's financing.

SECTION 5.08  EXON-FLORIO NOTICE; MITIGATION OF FOCI

         (a) Acquiror promptly shall use reasonable, best efforts to obtain
confirmation from the staff of the Committee on Foreign Investment in the United
States ("CFIUS") that the Merger does not fall within the scope of transactions
for review under the "Exon-Florio" Amendment to the Defense Production Act, and,
if such confirmation is not obtained in a timely manner, Acquiror shall use its
reasonable, best efforts to prepare and file with CFIUS a notice under such
Amendment with respect to the Merger (the "Exon-Florio Notice") by February 15,
2000.

         (b) If requested by any Governmental Entity in connection with its
consideration of the transactions contemplated by this Reorganization Agreement,
Acquiror shall agree to, and

                                       30
<PAGE>

shall cause to be executed and delivered, reasonable Agreements or restrictions
designed to mitigate FOCI on Acquiror.

         (c) Acquiror and Company shall use their respective reasonable, best
efforts, to obtain as soon as possible, and in any event prior to February 15,
2000, confirmation from the "Cognizant Agencies" (as such term is defined
herein) that they will not recommend that the Company's security clearances be
revoked, suspended or downgraded as a result of the Merger.

         (d) For purposes of this Reorganization Agreement, the "Cognizant
Agencies" are: (i) the Defense Security Service of the Department of Defense;
(ii) the Chief, Counter Intelligence Acquisition Board of the Central
Intelligence Agency; (iii) the Chief, Security Policy Branch of the National
Reconnaissance Office; (iv) the Industrial Management Branch of the Federal
Bureau of Investigation; (v) the office in the National Security Agency
responsible for supervision of NISPOM compliance by contractors and
subcontractors of that Agency; and (vi) the office in the Drug Enforcement
Administration responsible for supervision of NISPOM compliance by contractors
and subcontractors of that Administration.

                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

SECTION 6.01  SHAREHOLDER APPROVAL

Promptly after the date of this Reorganization Agreement, Company shall take all
additional action, if any, necessary in accordance with California Law and its
articles of incorporation and bylaws to secure the vote or consent of Company
Shareholders required by California Law to approve this Reorganization Agreement
and the transactions contemplated hereby. In all events, this Reorganization
Agreement shall be submitted to the Company Shareholders whether or not the
board of directors of the Company determines that this Reorganization Agreement
is no longer advisable and recommends that the Company Shareholders reject it.

SECTION 6.02  APPROPRIATE ACTION; CONSENTS; FILINGS

         (a) Upon the terms and subject to the conditions set forth in this
Reorganization Agreement, the Parties shall use their reasonable best efforts to
take, or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this
Reorganization Agreement as promptly as practicable, including without
limitation (i) executing and delivering any additional instruments necessary,
proper or advisable to consummate the transactions contemplated by, and to carry
out fully the purposes of, this Reorganization Agreement, (ii) obtaining from
any Governmental Entities any material Licenses required to be obtained or made
by Acquiror, or any of its Subsidiaries, or Company, or any Company Subsidiary,
in connection with the authorization, execution and delivery of this
Reorganization Agreement and the consummation of the transactions contemplated
herein, including, without limitation, the Merger, and (iii) making all
necessary filings, and thereafter making any other required submissions, with
respect to this Reorganization Agreement and the

                                       31
<PAGE>

Merger required under (A) the HSR Act, (B) the Exon-Florio Amendment to the
Defense Production Act (if this transaction is determined by Acquiror to be
subject thereto) and the FOCI regulations of the Defense Security Service and
(C) any other applicable Law; PROVIDED that Acquiror and Company shall cooperate
with each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing Party and its advisors
prior to filing and discussing all reasonable additions, deletions or changes
suggested in connection therewith. Company and Acquiror shall furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Reorganization Agreement.

         (b) (i) Except as the Parties may otherwise agree, Company, each
Company Shareholder and Acquiror shall give (and, in the case of Company, shall
cause each Company Subsidiary to give, and, in the case of Acquiror, shall cause
its Subsidiaries to give) any notices to third parties, and use (and, in the
case of Company, shall cause each Company Subsidiary to use, and, in the case of
Acquiror, shall cause its Subsidiaries to use) their reasonable best efforts to
obtain any third-party consents, approvals or waivers (A) necessary, proper or
advisable to consummate the transactions contemplated in this Reorganization
Agreement, (B) disclosed or required to be disclosed in the Company Disclosure
Letter or the Acquiror Disclosure Letter, as the case may be, or (C) required to
prevent a Company Material Adverse Effect or an Acquiror Material Adverse
Effect.

                  (ii) In the event that either Company, any Company Shareholder
or Acquiror shall fail to obtain any third-party consent, approval or waiver
described in Section 6.02(b)(i) of this Reorganization Agreement, such Party
shall use its reasonable best efforts, and shall take any such actions
reasonably requested by the other Parties, to minimize any adverse effect upon
Company or any Company Subsidiary and Acquiror or its Subsidiaries and their
respective businesses resulting, or which could reasonably be expected to result
after the Effective Time, from the failure to obtain such consent, approval or
waiver.

         (c) From the date of this Reorganization Agreement until the Effective
Time, Company, each Company Shareholder and Acquiror shall promptly notify each
other in writing of any pending or, to the knowledge of Company or any Company
Subsidiary or Acquiror or any one of its Subsidiaries, threatened action,
proceeding or investigation by any Governmental Entity or any other Person (i)
challenging or seeking damages in connection with the Merger or the conversion
of Company Common Stock into the Merger Consideration pursuant to the Merger or
the transactions contemplated hereunder or (ii) seeking to restrain or prohibit
the consummation of the Merger or the transaction contemplated hereunder or
otherwise limit the right of Acquiror or its Subsidiaries to own or operate all
or any portion of the businesses or Assets of Company or any Company Subsidiary.
Company and Acquiror shall cooperate with each other in defending any such
action, proceeding or investigation, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed.

                                       32
<PAGE>

SECTION 6.03 DISCLOSURE

         Prior to the Effective Time, each Party shall notify the other Parties
by written update to its respective Disclosure Letter of (i) any representation
or warranty made by it in connection with this Reorganization Agreement becoming
untrue or inaccurate, (ii) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which would be likely to cause any condition to
the obligations of any Party to effect the Merger and the other transactions
contemplated by this Reorganization Agreement not to be satisfied or (iii) the
failure of Company, any Company Subsidiary, Acquiror or Acquiror Sub, as the
case may be, to comply with or satisfy any covenant, condition or Agreement to
be complied with or satisfied by it pursuant to this Reorganization Agreement
which would be likely to result in any condition to the obligations of any Party
to effect the Merger and the other transactions contemplated by this
Reorganization Agreement not to be satisfied; PROVIDED, HOWEVER, the delivery of
any notice pursuant to this Section 6.03(a) shall not cure any breach of any
representation or warranty requiring disclosure of such matter as of the date of
this Reorganization Agreement or otherwise limit or affect the rights and
remedies available hereunder to the Party receiving such notice.

SECTION 6.04  PUBLIC ANNOUNCEMENTS

Acquiror, Acquiror Sub and Company shall consult with each other before issuing
or making, and shall give each other the opportunity to review and comment upon,
any press release or other public statement with respect to the Merger and the
other transactions contemplated in this Reorganization Agreement, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or any applicable listing
agreements.

SECTION 6.05  OBLIGATIONS OF ACQUIROR SUB

Acquiror shall take all action necessary to cause Acquiror Sub to perform its
obligations under this Reorganization Agreement and to consummate the Merger on
the terms and conditions set forth in this Reorganization Agreement.

SECTION 6.06  TRANSACTION EXPENSES

Except as set forth in Section 5.06 of this Reorganization Agreement (relating
to the payment of filing fees in connection with any notification filings under
the HSR Act), each Party to this Reorganization Agreement shall bear their own
expenses in connection herewith, including, without limitation, the fees of each
Party's respective legal counsel, financial advisors, accountants, brokers,
finders or investment bankers, but in no event shall such fees and expenses
(including, without limitation, the fees and expenses described in Section 3.28
of the Company Disclosure Letter) incurred by or on behalf of the Company exceed
$190,000 (the "Transaction Expenses"). In the event Acquiror or Acquiror Sub
shall pay any such expenses of Company or any Company Subsidiary following the
Closing, Acquiror or Acquiror Sub shall be entitled to offset any such expenses
an offset against the outstanding amount of principal and accrued but unpaid
interest under the Indemnification Promissory Note in the same manner as set
forth in

                                       33
<PAGE>

Article IX of this Reorganization Agreement. In the event that the Transaction
Expenses are not paid prior to Closing, Acquiror agrees to promptly pay such
Transaction Expenses after Closing.

SECTION 6.07  KEY EMPLOYEES

Key Employees of the Company and any Company Subsidiary who continue to be
employed with the Surviving Corporation following the Merger, shall, during the
term of their employment, (i) be eligible to participate in Acquiror's incentive
compensation program, and will have the opportunity to participate in the
Acquiror's stock option plan, on terms consistent with similarly situated
employees of the Acquiror and its Affiliates and (ii) be entitled to receive a
portion of a $1,000,000 retention bonus pool which shall be payable upon terms
and conditions agreed upon by Acquiror and the Principal Stockholder, prior to
Closing.

                                   ARTICLE VII

                              CONDITIONS PRECEDENT

SECTION 7.01  CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
              REORGANIZATION AGREEMENT

The respective obligations of each Party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived by agreement of Acquiror and Company, in whole or in part, to the
extent permitted by applicable Law:

         (a) SHAREHOLDER APPROVAL. This Reorganization Agreement and the Merger
shall have been approved and adopted by the requisite vote or consent of Company
Shareholders.

         (b) NO ORDER. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
Merger; PROVIDED, HOWEVER, that the Parties shall use their reasonable best
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted; PROVIDED, FURTHER, that the failure to obtain a required
consent or approval of a Governmental Entity (other than that specified in
Section 7.01(c)) of this Reorganization Agreement shall not form the basis for
an assertion that this condition is not satisfied.

         (c) HSR ACT. The applicable waiting period with respect to the Merger
and the other transactions contemplated hereby, together with any extensions
thereof, under the HSR Act shall have expired or been terminated.

         (d) COMPANY SECURITIES. Except as set forth in the Company Disclosure
Letter, there shall be no other securities of Company outstanding that are
securities convertible into or exchangeable for Company Common Stock or any
other equity securities of Company and no

                                       34
<PAGE>

outstanding options, rights (preemptive or otherwise), or warrants to purchase
or to subscribe for any shares of such stock or other equity securities of
Company.

         (e) EXON-FLORIO; COGNIZANT AGENCY CONFIRMATION. (i) If an Exon-Florio
Notice shall have been filed as provided in Section 5.10(a), the thirty (30) day
notice period shall have expired or been earlier terminated without a
recommendation by CFIUS that a formal investigation of the Merger be commenced;
or (ii) if an Exon-Florio Notice shall not have been filed as provided in
Section 5.10(a), confirmation shall have been obtained from the Cognizant
Agencies that they will not recommend that the Company's security clearances be
revoked, suspended or downgraded as a result of the Merger, PROVIDED that if all
such confirmations are not obtained by February 15, 2000, Acquiror shall
consider, in good faith, whether to waive this condition with respect to
agencies with which the Company has contracts or subcontracts that Acquiror does
not consider to be material to the business of the Company.

SECTION 7.02  Additional Conditions to Obligations of Acquiror and Acquiror Sub

The obligations of Acquiror and Acquiror Sub to effect the Merger and the other
transactions contemplated in this Reorganization Agreement are also subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by Acquiror, in whole or in part, to the
extent permitted by applicable Law:

         (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Company contained in this Reorganization Agreement shall be true
and correct as of the date of this Reorganization Agreement and shall be true
and correct (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) as of the Effective Time
as though made as of the Effective Time, except for (i) representations and
warranties which address matters only as of a particular date, which
representations and warranties shall be true and correct in all material
respects (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) as of such date and (ii)
changes permitted by or consistent with this Reorganization Agreement. Acquiror
shall have received a certificate of the chief executive officer or chief
financial officer of Company to the foregoing effect.

         (b) AGREEMENTS AND COVENANTS. Company shall have performed or complied
in all respects with all Agreements and covenants required by this
Reorganization Agreement to be performed or complied with by Company on or prior
to the Effective Time. Acquiror shall have received a certificate of the chief
executive officer or chief financial officer of Company (as to Company) to that
effect.

         (c) OPINION OF COUNSEL. Acquiror shall have received from Rosenberg,
Herfel, Stethem & Bender, LLP, counsel to Company, an opinion dated the Closing
Date, which is reasonable and customary for transactions of the type
contemplated by this Reorganization Agreement.

         (d) NO CHALLENGE. There shall not be pending any enforcement action or
similar proceeding by any state or federal Governmental Entity that is likely to
have a Company Material

                                       35
<PAGE>

Adverse Effect or, if such action arises in connection with the transactions
contemplated hereby, an Acquiror Material Adverse Effect. Acquiror shall have
received a certificate of the chief executive officer or chief financial officer
of Company to the foregoing effect.

         (e) COMPANY MATERIAL ADVERSE EFFECT. Since June 30, 1999, there shall
not have occurred a Company Material Adverse Effect (or any development that,
insofar as reasonably can be foreseen, is reasonably likely to result in any
Company Material Adverse Effect) not disclosed in the Company Disclosure Letter
as of the date hereof. Acquiror shall have received a certificate of the chief
executive officer or chief financial officer of Company to the foregoing effect.

         (f) CONSENTS: Company and Company Subsidiary shall have procured all
consents of third-parties and Governmental Entities specified in Section 3.06 of
the Company Disclosure Letter. Acquiror shall have received a certificate of the
chief executive officer or chief financial officer of Company to the foregoing
effect.

         (g) ESTIMATE OF CASH ADJUSTMENT AS OF CLOSING DATE. Acquiror shall have
received from Company five (5) days prior to the Closing Date an estimate of the
Cash Adjustment of the Company estimated as of the Closing Date and prepared on
a good faith basis. The Parties acknowledge and agree that the amounts set forth
on such estimate shall be used in computing the Adjusted Merger Amount.

         (h) INDEMNIFICATION PROMISSORY NOTE. Acquiror shall have delivered to
the Company Shareholders a promissory note in substantially the form attached
hereto as EXHIBIT C (the "Indemnification Promissory Note").

SECTION 7.03  ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY

The obligations of Company to effect the Merger and the other transactions
contemplated by this Reorganization Agreement are also subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived by Company, in whole or in part, to the extent
permitted by applicable Law:

         (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Acquiror and Acquiror Sub contained in this Reorganization
Agreement shall be true and correct as of the date of this Reorganization
Agreement and shall be true and correct (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) as of the Effective Time as though made as of the Effective Time,
except for (i) representations and warranties which address matters only as of a
particular date, which representations and warranties shall be true and correct
in all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of such date
and (ii) changes permitted by or consistent with this Reorganization Agreement.
Company shall have received a certificate of the chief executive officer or
chief financial officer of Acquiror to the foregoing effect.

                                       36
<PAGE>

         (b) AGREEMENTS AND COVENANTS. Acquiror and Acquiror Sub shall have
performed or complied in all respects with all Agreements and covenants required
by this Reorganization Agreement to be performed or complied with by them on or
prior to the Effective Time except for such noncompliance that does not have an
Acquiror Material Adverse Effect. Company shall have received a certificate of
the chief executive officer or chief financial officer of Acquiror and Acquiror
Sub to that effect.

                                  ARTICLE VIII

                        TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01  TERMINATION

This Reorganization Agreement may be terminated at any time (except where
otherwise indicated) prior to the Effective Time, whether before or after
approval of this Reorganization Agreement and the Merger by Company
Shareholders:

         (a)      by mutual written consent of Acquiror and Company;

         (b) (i) by Acquiror, if any of the conditions provided in Section 7.02
have not been met and such failure has not been cured within twenty (20)
business days following receipt by Company of written notice of such failure
describing the extent and nature thereof in reasonable detail, or to the extent
permitted by applicable law, such conditions have not been waived in writing by
Acquiror;

             (ii) by Company and the Company Shareholder, if any of the
conditions provided in Section 7.03 have not been met and such failure has
not been cured within twenty (20) business days following receipt by Acquiror
of written notice of such failure describing the extent and nature thereof in
reasonable detail, or, to the extent permitted by applicable law, such
conditions have not been waived in writing by Company and the Company
Shareholder.

         (c) by either Acquiror or Company and the Company Shareholder if any
decree, permanent injunction, judgment, order or other action by any court of
competent jurisdiction or any other federal or state (but not county or
municipal) Governmental Entity preventing or prohibiting consummation of the
Merger shall have been filed or in effect;

         (d) by either Acquiror or Company if the Merger shall not have been
consummated by the earlier to occur of the Scheduled Closing Date or April 15,
2000; PROVIDED HOWEVER, that the right to terminate this Reorganization
Agreement under this Section 8.01(d) shall not be available to (i) Acquiror,
where Acquiror's failure to fulfill any obligation under this Reorganization
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date, or (ii) Company, where Company's or any
Company Shareholder's failure to fulfill any obligation under this
Reorganization Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date;

                                       37
<PAGE>

         (e) by either Acquiror, or Company and the Company Shareholders, if any
of the conditions provided in Section 7.01 have not been met, or to the extent
permitted by applicable law, have not been waived by both Parties.

SECTION 8.02  EFFECT OF TERMINATION

In the event of termination of this Reorganization Agreement by either Acquiror
or Company as provided in Section 8.01 of this Reorganization Agreement, this
Reorganization Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Company Shareholder, Acquiror,
Acquiror Sub or Company or any of their respective directors or officers except
(i) nothing herein shall relieve any Party from liability for any breach hereof,
(ii) each Party shall be entitled to any remedies at law or in equity for such
breach and (iii) Sections 6.08 and 8.02 and Article IX of this Reorganization
Agreement shall remain in full force and effect and survive any termination of
this Reorganization Agreement.

SECTION 8.03  [INTENTIONALLY OMITTED]

SECTION 8.04  AMENDMENT

Subject to applicable Law, this Reorganization Agreement may be amended by the
Parties at any time prior to the Effective Time. This Reorganization Agreement
may not be amended except by an instrument in writing signed by the Parties.

SECTION 8.05  EXTENSION; WAIVER

At any time prior to the Effective Time, the Parties may (a) extend the time for
the performance of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any Agreements, documents, certificates or other instruments
delivered pursuant hereto and (c) waive compliance with any of the Agreements or
conditions contained in this Reorganization Agreement. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
Party or Parties to be bound thereby. The failure of any Party to assert any of
its rights under this Reorganization Agreement or otherwise shall not constitute
a waiver of such rights.

                                   ARTICLE IX

                      SURVIVAL OF REPRESENTATIONS; REMEDIES

SECTION 9.01  SURVIVAL OF REPRESENTATIONS

All representations, warranties, covenants, indemnities and other agreements
made by any party to this Reorganization Agreement herein, shall be deemed made
on and as of the Effective Time as though such representations, warranties,
covenants, indemnities and other agreements were

                                       38
<PAGE>

made on and as of such date, and all such representations, warranties,
covenants, indemnities and other agreements shall survive for a period of
twelve (12) months after the Effective Time; PROVIDED, HOWEVER, that the
representations set forth in Section 3.05 (Authority; Binding Obligation),
Section 3.15 (Pension and Benefit Plans), Section 3.16 (Taxes and Tax Matters)
and Section 3.24 (Environmental Matters) shall survive until the expiration of
the applicable statute of limitations. Notwithstanding anything herein to the
contrary, any representation, warranty, covenant, agreement or indemnity which
is the subject of a claim which is asserted in writing prior to the expiration
of the applicable period set forth above shall survive solely with respect to
such claim until the final resolution thereof.

SECTION 9.02  INDEMNIFICATION BY PRINCIPAL SHAREHOLDER; RIGHT TO OFFSET

         (a) The Principal Shareholder (and the other Company Shareholders only
to the extent of their interest in the Indemnification Promissory Note) hereby
agrees indemnify, defend and hold Acquiror, the Surviving Corporation and their
respective officers and directors, and each person, if any, who controls or may
control Acquiror or the Surviving Corporation within the meaning of the
Securities Act (all such persons hereinafter are referred to individually as an
"Acquiror Indemnified Person" and collectively as "Acquiror Indemnified
Persons," but in no event shall any Shareholder of the Company prior to the
Effective Time be such an Acquiror Indemnified Person) harmless against all
Losses resulting from, imposed upon or incurred by any Acquiror Indemnified
Person, directly or indirectly, as a result of any of the following, anything in
this Reorganization Agreement to the contrary notwithstanding:

                  (i) any inaccuracy or breach of a representation or warranty
of the Company given or made by the Company in this Reorganization Agreement, in
the Agreement of Merger or in the Company Disclosure Letter or in any
certificate, document or agreement delivered by or on behalf of the Company
pursuant hereto; and

                  (ii) any failure by the Company to perform or comply with any
covenant or agreement contained in this Reorganization Agreement, in the
Agreement of Merger or in the Company Disclosure Letter or in any certificate,
document or agreement delivered by or on behalf of the Company pursuant hereto.

         (b) Notwithstanding anything in this Reorganization Agreement to the
contrary, the Principal Shareholder shall not be responsible for any Loss
pursuant to this Section 9.02 unless and until the aggregate amount of all of
such Losses shall exceed $100,000, in which case the Principal Shareholder shall
be liable for the entire Loss including the $100,000. In the event, from time to
time, any Acquiror Indemnified Person determines that it has suffered a Loss for
which indemnification is available pursuant to this Article IX, the following
procedure shall be followed:

                  (i) Acquiror Indemnified Person shall give written notice of
any such claim (a "Loss Notice") to the Shareholder Representative specifying in
reasonable detail the amount of the claimed Loss (the "Loss Amount") and the
basis for such Loss and that the Acquiror intends to offset against the
aggregate outstanding amount of principal and accrued but unpaid interest under
the Indemnification Promissory Note the amount of any such Loss.

                                       39
<PAGE>

                  (ii) Within twenty (20) days after delivery of a Loss Notice,
the Shareholder Representative shall provide to Acquiror and the Acquiror
Indemnified Person (if not the same Person), a written response (a "Response
Notice") in which the Shareholder Representative will (i) agree that an offset
in the full Loss Amount may be made against the Indemnification Promissory Note,
(ii) agree that an offset in an amount equal to part, but not all, of the Loss
Amount (the "Agreed Amount") may be made against the Indemnification Promissory
Note or (iii) contest making any offset against the Indemnification Promissory
Note. The Shareholder Representative may contest an offset against the
Indemnification Promissory Note upon a good faith belief that all or such
portion of such offset does not constitute a Loss for which the Acquiror
Indemnified Person is entitled to indemnification under this Article IX. If no
Response Notice is delivered by the Shareholder Representative within such
twenty (20) day period, the Principal Shareholder shall be deemed to have agreed
that an offset in the full Loss Amount may be made against the Indemnification
Promissory Note.

                  (iii) If the Shareholder Representative in the Response Notice
agrees (or is deemed to have agreed) that an offset may be made against the
Indemnification Promissory Note in an amount equal to the Loss Amount, the
Acquiror may, promptly following the earlier of the required delivery date of
the Response Notice or the delivery of the Response Notice, cause an offset in
the amount of the Loss Amount to be made to the Indemnification Promissory Note.

                  (iv) If the Shareholder Representative in the Response Notice
agrees that an offset in an amount equal to part, but not all, of the Loss
Amount (the "Agreed Amount") may be made against the Indemnification Promissory
Note, the Acquiror may, promptly following the earlier of the required delivery
date of the Response Notice or the delivery of the Response Notice, cause an
offset in the amount of the Agreed Amount to be made to the Indemnification
Promissory Note.

                  (v) If the Shareholder Representative in the Response Notice
contests an offset against the Indemnification Promissory Note equal to all or
any part of the Loss Amount (the "Contested Amount"), the Acquiror Indemnified
Person and the Shareholder Representative shall negotiate in good faith to
resolve any such dispute. If any such dispute cannot be resolved within fifteen
(15) days after the receipt by the Acquiror of the Response Notice, the Acquiror
Indemnified Person and the Shareholder Representative shall submit the matter to
the Los Angeles, CA office of the American Arbitration Association ("AAA") for
binding arbitration to be conducted in accordance with the AAA commercial
arbitration rules in effect at the time such matter is submitted. If any such
matter is submitted to the AAA as provided herein, (A) each of the Acquiror
Indemnified Person and the Shareholder Representative will furnish to AAA such
workpapers and other documents and information as AAA may request and will be
afforded the opportunity to present to AAA any material relevant to the matter,
(B) the determination by AAA, as set forth in a notice delivered to the Acquiror
Indemnified Person and the Shareholder Representative by AAA, will be binding
and conclusive on such parties and (iii) the Acquiror Indemnified Person and the
Principal Shareholder will each bear fifty percent (50%) of the fees of the AAA
for such determination.

         (c) The indemnity obligations of the Principal Shareholder (and the
other Company Shareholders) under this Article IX shall first be satisfied
through the exercise by the Acquiror of the right of offset against the
aggregate outstanding amount of principal and accrued but unpaid

                                       40
<PAGE>

interest under the Indemnification Promissory Note. The principal amount and
accrued but unpaid interest under the Indemnification Promissory Note shall
in no way be deemed to be a limitation on the recourse available to any Acquiror
Indemnified Person for the indemnification obligations of the Principal
Shareholder hereunder. Following its exhaustion of its offset rights as set
forth above, Acquiror shall have the right to enforce the indemnity obligations
of the Principal Shareholder under this Article IX through an action in a court
of competent jurisdiction.

         (d) The exercise of such right of offset by Acquiror in good faith,
whether or not ultimately determined to be justified, will not constitute a
breach of this Reorganization Agreement. Neither the exercise of nor the failure
to exercise such right of offset will constitute an election of remedies or
limit Acquiror in any manner in the enforcement of any other remedies available
to Acquiror.

         (e) No Acquiror Indemnified Person shall be entitled to recover any
special, consequential or exemplary damages under this Section 9.02 or any
damages based on an adverse effect on Acquirer's stock price. The amount of any
Loss shall be reduced to the extent that the Acquiror Indemnified Person
receives any insurance proceeds with respect to a Loss.

SECTION 9.03  THIRD PARTY CLAIMS.

The obligations and liabilities of the Principal Shareholders with respect to
their respective indemnities pursuant to this Article IX, resulting from any
Third Party Claim shall be subject to the following terms and conditions:

         (a) The party seeking indemnification (the "Indemnified Party") must
give the party obligated to indemnify (the "Indemnifying Party"), notice of any
Third Party Claim which is asserted against, resulting to, imposed upon or
incurred by the Indemnified Party and which may give rise to liability of the
Indemnifying Party pursuant to this Article IX, stating (to the extent known or
reasonably anticipated) the nature and basis of such Third Party Claim and the
amount thereof; PROVIDED that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent (i) that the
Indemnifying Party shall have suffered actual damage by reason of such failure,
or (ii) such failure or delay materially adversely affects the ability of the
Indemnifying Party to defend, settle or compromise such Third Party Claim.

         (b) Subject to Section 9.03(c) below, if the Indemnifying Party assumes
responsibility for Losses arising out of such Third Party Claim, then the
Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense of such Third Party Claim at
the Indemnifying Party's risk and expense.

         (c) In the event that (i) the Indemnifying Party shall elect not to
undertake such defense, (ii) within a reasonable time after notice from the
Indemnified Party of any such Third Party Claim, the Indemnifying Party shall
fail to undertake to defend such Third Party Claim, or (iii) there is a
reasonable probability that such Third Party Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, then the Indemnified Party (upon further written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the

                                       41
<PAGE>

Indemnifying Party. In the event that the Indemnified Party undertakes the
defense of a Third Party Claim under this Section 9.03, the Indemnifying Party
shall pay to the Indemnified Party, in addition to the other sums required to be
paid hereunder, the reasonable costs and expenses incurred by the Indemnified
Party in connection with such defense, compromise or settlement as and when such
costs and expenses are so incurred.

         (d) Anything in this Section 9.03 to the contrary notwithstanding, (i)
neither the Indemnified Party nor the Indemnifying Party shall, without the
other party's written consent (which consent shall not be unreasonably withheld
or delayed), settle or compromise such Third Party Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Third Party Claim in form and substance
satisfactory to the Indemnified Party; (ii) in the event that a party hereto
undertakes defense of such Third Party Claim in accordance with this Section
9.03, the other parties, by counsel or other representative of their own
choosing and at their sole cost and expense, shall have the right to participate
in the defense, compromise or settlement thereof and each party and its counsel
and other representatives shall cooperate with the other party and its counsel
and representatives in connection therewith; and (iii) the party that undertakes
the defense of such Third Party Claim in accordance with this Section 9.03 shall
have an obligation to keep the other parties informed of the status of the
defense of such Third Party Claim and furnish the other parties with all
documents, instruments and information that the other parties shall reasonably
request in connection therewith.

SECTION 9.04  NO RECOURSE AGAINST THE COMPANY

The Company Shareholders including, without limitation, the Principal
Shareholders, each hereby irrevocably waives any and all right to recourse
against the Company and the Surviving Corporation with respect to any
misrepresentation or breach of any representation, warranty or indemnity, or
noncompliance with any conditions or covenants, given or made by the Company in
this Reorganization Agreement or any other agreements and documents executed or
to be executed by the Parties hereto in order to consummate the transactions
contemplated by this Reorganization Agreement. No Company Shareholder,
including, without limitation, the Principal Shareholder, shall be entitled to
contribution from, subrogation to or recovery against the Company or the
Surviving Corporation with respect to any liability of any Company Shareholder,
including, without limitation, the Principal Shareholder, that may arise under
or pursuant to this Reorganization Agreement or any of the other agreements and
documents executed or to be executed by the Parties hereto in order to
consummate the transactions contemplated by this Reorganization Agreement or
such other agreements and documents contemplated hereby.

SECTION 9.05  REMEDIES CUMULATIVE

Subject to the limitations and qualifications set forth in this Article IX, the
remedies provided herein shall be cumulative and shall not preclude the
assertion by the parties hereto of any other rights or the seeking of any other
remedies against the other parties, or their respective successors or assigns.

                                       42
<PAGE>

                                    ARTICLE X

                               GENERAL PROVISIONS

SECTION 10.01  NOTICES

All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted if delivered personally, mailed by registered
or certified mail (postage prepaid, return receipt requested) or sent by
overnight courier (providing proof of delivery) to the Parties at the following
addresses or sent by electronic transmission to the following facsimile numbers
(or at such other address or facsimile number for a Party as shall be specified
by like notice):

                  (a)      If to Acquiror or Acquiror Sub:

                           The Titan Corporation
                           3033 Science Park Road
                           San Diego, California 92121
                           Facsimile:   (619) 552-9759
                           Attention:   Nicholas J. Costanza, Esq.,

                           With a copy (which shall not constitute notice) to:

                           Hogan & Hartson L.L.P.
                           8300 Greensboro Drive, Suite 1100
                           McLean, Virginia  22102
                           Facsimile:   (703) 610-6200
                           Attention:   Richard K.A. Becker, Esq.

                  (b)      If to Company or the Principal Shareholder:

                           William C. Lindsey, Inc.
                           5110 Goldleaf Circle, Ste. 250
                           Los Angeles, California 90056
                           Facsimile:   (323) 293-3063
                           Attention:   Dr. William C. Lindsey

                           With a copy (which shall not constitute notice) to:

                           Rosenberg, Herfel, Stethem & Bender, LLP
                           600 Vine Street, Suite 1800
                           Cinncinatti, Ohio 45202
                           Facsimile:   (513) 763-7694
                           Attention:   James H. Stethem, Esq.

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<PAGE>

                           With a copy (which shall not constitute notice) to:

                           Law Office of Morton C. Devor
                           12400 Wilshire Blvd., Ste 1455
                           Los Angeles, CA 90025
                           Facsimile:   (310) 207-8339
                           Attention:   Morton C. Devor, Esq.

                  (c)      If to Shareholders' Representative:

                           Dr. William C. Lindsey
                           1430 Mariana Drive
                           Pasadena, CA 91105

SECTION 10.02  HEADINGS

The headings contained in this Reorganization Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Reorganization Agreement.

SECTION 10.03  SEVERABILITY

If any term or other provision of this Reorganization Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all
other conditions and provisions of this Reorganization Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Reorganization Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.

SECTION 10.04  ENTIRE AGREEMENT

This Reorganization Agreement (together with the Exhibits, Schedules, the
Company Disclosure Letter and the Acquiror Disclosure Letter and the other
documents delivered pursuant hereto) constitute the entire agreement of the
Parties and supersede all prior agreements and undertakings, both written and
oral, among the Parties, or any of them, with respect to the subject matter
hereof and, except as otherwise expressly provided herein, are not intended to
confer upon any other Person any rights or remedies hereunder.

SECTION 10.05  ASSIGNMENT

Neither this Reorganization Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the Parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
Parties; PROVIDED, HOWEVER, that Acquiror and Acquiror Sub shall have the right
to assign this Reorganization Agreement without the prior written consent of

                                       44
<PAGE>

the Company to a direct or indirect Subsidiary of the Acquiror, but no such
assignment shall relieve Acquiror or Acquiror Sub, as the case may be, of its
obligations hereunder. Subject to the preceding sentence, this Reorganization
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns.

SECTION 10.06  PARTIES IN INTEREST

This Reorganization Agreement shall be binding upon and inure solely to the
benefit of each Party, and nothing in this Reorganization Agreement, express or
implied, other than the right to receive the Merger Consideration pursuant to
Article II of this Reorganization Agreement and the rights of the Acquiror
Indemnified Person pursuant to Article IX, is intended to or shall confer upon
any other Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Reorganization Agreement.

SECTION 10.07  MUTUAL DRAFTING

Each Party has participated in the drafting of this Reorganization Agreement,
which each Party acknowledges is the result of extensive negotiations between
the Parties. Consequently, this Reorganization Agreement shall be interpreted
without reference to any rule or precept of law that states that any ambiguity
in a document be construed against the drafter.

SECTION 10.08  GOVERNING LAW

This Reorganization Agreement shall be governed by, and construed in accordance
with, the Laws of the State of Delaware, regardless of the Laws that might
otherwise govern under applicable principles of conflicts of law; PROVIDED,
HOWEVER, the provisions of this Reorganization Agreement relating to the Merger
shall be governed by California Law.

SECTION 10.09  COUNTERPARTS

This Reorganization Agreement may be executed and delivered in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed and delivered shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.

SECTION 10.10  SINGULAR AND PLURAL

Any reference in this Reorganization Agreement to the singular includes a
reference to the plural and VICE VERSA.

                                       45
<PAGE>

                                   ARTICLE XI

                                   DEFINITIONS

         For purposes of this Reorganization Agreement, the following terms, and
the singular and plural thereof, shall have the meanings set forth below:

         "Acquiror" is defined in the Preamble to this Reorganization Agreement.

         "Acquiror Audited Balance Sheet" is defined in Section 4.07(a) of this
Reorganization Agreement.

         "Acquiror Financial Statement" is defined in Section 4.07(a) of this
Reorganization Agreement.

         "Acquiror Disclosure Letter" is defined in Article IV of this
Reorganization Agreement.

         "Acquiror Material Adverse Effect" means any event, change or effect
that, individually or when taken together with any related events, is or is
reasonably likely to be materially adverse to the business, operations,
condition (financial or otherwise), Assets or liabilities of Acquiror and its
Subsidiaries, taken as a whole.

         "Acquiror Sub" is defined in the Preamble to this Reorganization
Agreement.

         "Adjusted Merger Consideration" means an amount equal to (a) the
Adjusted Merger Amount, MINUS (b) the Holdback Consideration, MINUS (c) the
principal amount of the Indemnification Promissory Note.

         "Adjusted Merger Amount" means an amount equal to (a) Twenty Three
Million Dollars ($23,000,000), MINUS (or, PLUS) (b) the Cash Adjustment. For
purposes of computing the Adjusted Merger Amount, the Cash Adjustment, shall be
determined by reference to the estimate to be delivered to the Acquiror pursuant
to Section 7.02(g) of this Reorganization Agreement.

         "Affiliate" means: (a) with respect to an individual, any member of
such individual's family; (b) with respect to an entity, any officer, director,
Shareholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a Person, any Person which directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with such Person or entity.

         "Agreement" means any agreement between or among two or more Persons
with respect to their relative rights and/or obligations or with respect to a
thing done or to be done, including, without limitation, agreements denominated
as contracts, leases, promissory notes, covenants, easements, rights of way,
commitments, arrangements and understandings.

         "Agreement of Merger" is defined in Section 1.02 of this Reorganization
Agreement.

         "Assets" means assets of every kind and everything that is or may be
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.

                                       46
<PAGE>

         "business day" means a day other than a Saturday, a Sunday or any other
day on which commercial banks in the Commonwealth of Virginia are authorized or
obligated to be closed.

         "California Law" is defined in the Preamble to this Reorganization
Agreement.

         "Cash Consideration" is defined in Section 2.02(a)(i) of this
Reorganization Agreement.

         "Certificate" is defined in Section 2.02(b) of this Reorganization
Agreement.

         "Closing Adjustment" is defined in Section 2.05(b) of this
Reorganization Agreement.

         "Closing Date" is defined in Section 1.02 of this Reorganization
Agreement.

         "Code" means the United States Internal Revenue Code of 1986, as
amended.

         "Cognizant Agencies" is defined in Section 5.10(d) of this
Reorganization Agreement.

         "Company" is defined in the Preamble to this Reorganization Agreement.

         "Company Balance Sheet" is defined in Section 3.08(a) of this
Reorganization Agreement.

         "Company Benefit Plans" means all "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, whether or not terminated, and trust
agreements and insurance contracts under or with respect to which Company or
Company Subsidiary has or could have any liability, contingent, secondary or
otherwise.

         "Company Common Stock" is defined in Section 3.04 of this
Reorganization Agreement.

         "Company Contracts" is defined in Section 3.12 of this Reorganization
Agreement.

         "Company Disclosure Letter" is defined in Article III of this
Reorganization Agreement.

         "Company Dissenting Shareholder" is defined in Section 2.02(d) of this
Reorganization Agreement.

         "Company Financial Statement" is defined in Section 3.08(a) of this
Reorganization Agreement.

         "Company Material Adverse Effect" means any event, change or effect
that, individually or when taken together with any related events, is or is
reasonably likely to be materially adverse to the business, operations,
condition (financial or otherwise), Assets or liabilities of the Company and any
Company Subsidiaries, taken as a whole.

         "Company Pension Plan" means any Company Benefit Plans that is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA.

         "Company Shareholders" is defined in the Preamble to this
Reorganization Agreement.

         "Company Stock Plan" means any Company Benefit Plan pursuant to which
Company is or may become obligated to, or obligated to cause Company Subsidiary
or any other Person to, issue, deliver or sell shares of capital stock of
Company or Company Subsidiary, or grant, extend

                                       47
<PAGE>

or enter into any option, warrant, call, right, commitment or agreement to
issue, deliver or sell shares, or any other interest in respect of capital
stock of Company or Company Subsidiary.

         "Company Subsidiary" means any Subsidiary of Company.

         "Company Tax Returns" means all Tax Returns required to be filed by
Company or any of Company Subsidiary (without regard to extensions of time
permitted by law or otherwise).

         "Competing Transactions" is defined in Section 6.07(d) of this
Reorganization Agreement.

         "Control" (including the terms "Controlled by" and "under common
Control with") means, as used with respect to any Person, possession of power
(directly or indirectly or as a trustee or executor) to direct or cause the
direction of management or policies of such Person (whether through ownership of
voting securities, as trustee or executor, by Agreement or otherwise).

         "Effective Time" is defined in Section 1.02 of this Reorganization
Agreement.

         "Encumbrance" means any mortgage, lien, pledge, encumbrance, security
interest, deed of trust, option, encroachment, reservation, order, decree,
judgment, condition, restriction, charge, Agreement, claim or equity of any
kind.

         "Environmental Laws" means any federal, state or local Law relating to
public health or safety, worker health or safety, or pollution, damage to or
protection of the environment including, without limitation, Laws relating to
emissions, discharges, releases or threatened release of Hazardous Materials
into the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.

         "Exon-Florio Notice" is defined in Section 5.10(a) of this
Reorganization Agreement.

         "GAAP" means United States generally accepted accounting principles.

         "Government Property" means property or equipment in the possession of
or directly acquired by a Governmental Entity and subsequently made available to
the Company or any Company Subsidiary or any other property or equipment
otherwise acquired by the Company or any Company Subsidiary to which a
Governmental Entity has title.

         "Governmental Entities" (including the term "Governmental") means any
governmental, quasi-governmental or regulatory authority, whether domestic or
foreign.

         "Hazardous Material" means (i) any "hazardous substance" as now
defined pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601(14); (ii) any "pollutant or
contaminant" as defined in 42 U.S.C. Section 9601(33); (iii) any material now
defined as "hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any
petroleum,

                                       48
<PAGE>

including crude oil and any fraction thereof; (v) natural synthetic gas usable
for fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part
1910; and (vii) any asbestos, polychlorinated biphenyl ("PCB"), radium, or
isomer of dioxin, or any material or thing containing or composed of such
substance or substances.

         "Holdback Consideration" is defined in Section 2.02(a)(ii) of this
Reorganization Agreement.

         "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.

         "Indemnification Promissory Note" is defined in Section 7.01(f) of this
Reorganization Agreement.

         "Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
all patent disclosures, industrial designs, utility models and all patents and
patent applications, together with all reissuances, continuations,
continuations-in-part, divisions, revisions, extensions, renewals and
reexaminations thereof, (b) all trademarks, service marks, trade dress, domain
names, web site addresses, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all registered and
unregistered copyrights, all rights to database information, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, software, databases, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all rights,
including rights of privacy and publicity, to use the names, likenesses and
other personal characteristics of any individual, and (g) other proprietary
rights and (h) all copies and tangible embodiments thereof (in whatever form or
medium) existing in any part of the world (including all computer software and
related data and documentation).

         "Inventory" means all new materials, work in progress, finished goods
and inventorable supplies.

         "Key Employees" means the employees identified by the Company and
agreed in writing by Acquiror prior to Closing..

         "knowledge" will be deemed to be present with respect to Company and
each Company Subsidiary when the matter in question is known, or upon reasonable
investigation, should have been known, to the Company or any Company Subsidiary.

         "Laws" means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, tariffs, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified Person and to the
businesses and Assets thereof (including, without limitation, Laws relating to
the protection of classified information; the sale, leasing, ownership or
management of real property;

                                       49
<PAGE>

employment practices, terms and conditions, and wages and hours; building
standards, land use and zoning; safety, health and fire prevention; and
environmental protection, including Environmental Laws).

         "License" means any franchise, grant, authorization, license, tariff,
permit, easement, variance, exemption, consent, certificate, approval or order
of any Governmental Entity.

         "Losses" means all demands, losses, claims, actions or causes of
action, assessments, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and
disbursements.

         "Merger" is defined in the Preamble to this Reorganization Agreement.

         "Merger Consideration" is defined in Section 2.02(b)(ii) of this
Reorganization Agreement.

         "Multiemployer Plan" means any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which Company or Company Subsidiary
contribute, have an obligation to contribute, or have at any time since
September 2, 1974, contributed or been obligated to contribute.

         "Ordinary Course of Business" means ordinary course of business
consistent with past practices and reasonable business operations.

         "Party" and "Parties" are defined in the Preamble to this
Reorganization Agreement.

         "Permitted Encumbrance" means (i) easements, rights of way, minor
irregularities of title, and liens for taxes not yet due and payable, (ii)
landlord, warehouse and materialmen's liens and (ii) other Encumbrances similar
to clauses (i) and (ii); provided, however, that any or all of the foregoing do
not materially affect the utility or value of the Assets or other matters to
which they relate.

         "Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or other
entity, or a Governmental Entity.

         "Plan" means any plan, program or arrangement, whether or not written,
that is or was an "employee benefit plan" as such term is defined in Section
3(3) of ERISA and (a) which was or is established or maintained by Company or
Company Subsidiary; (b) to which Company or Company Subsidiary contributed or
was obligated to contribute or to fund or provide benefits; or (c) which
provides or promises benefits to any person who performs or who has performed
services for Company or Company Subsidiary and because of those services is or
has been (i) a participant therein or (ii) entitled to benefits thereunder.

         "Post-Signing Returns" is defined in Section 5.04 of this
Reorganization Agreement.

         "Principal Shareholder" as defined in the Preamble to this
Reorganization Agreement.

         "Scheduled Closing Date" is defined in Section 2.07 of this
Reorganization Agreement.

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<PAGE>

         "Shareholders' Representative" is defined in Section 2.05(c) of this
Reorganization Agreement.

         "Subsidiary" means a corporation, partnership, joint venture or other
entity of which any Person owns, directly or indirectly, at least fifty percent
(50%) of the outstanding securities or other interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body or otherwise exercise control of such entity.

         "Surviving Corporation" is defined in Section 1.01 of this
Reorganization Agreement.

         "Taxes" (including the terms "Tax" and "Taxing") means all federal,
state, local and foreign taxes (including, without limitation, income, profit,
franchise, sales, use, real property, personal property, AD VALOREM, excise,
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties, license
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Entity, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.

         "Tax Liabilities" means any action, suit, proceeding, audit,
investigation or claim pending or threatened in respect of any Taxes for which
Company or any Company Subsidiary is or may become liable, or any deficiency or
claim for any such Taxes that has been to Company's knowledge proposed, asserted
or threatened.

         "Tax Returns" means all federal, state, local, foreign and other
applicable returns, declarations, reports and information statements with
respect to Taxes required to be filed with the United States Internal Revenue
Service, and its successors, or any other Governmental Entity or Tax authority
or agency, including, without limitation, consolidated, combined and unitary tax
returns.

         "Third Party Claim" means any claim or other assertion of liability by
any third party.

         "Transaction Expenses" is defined in Section 6.08 of this
Reorganization Agreement.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.

         "Year 2000 Compliant" means that the Information Technology will
accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
20th and 21st centuries, including the years 1999 and 2000, and leap-year
calculations.

      [Remainder of Page Intentionally Left Blank; Signature Page Follows.]

                                       51
<PAGE>

IN WITNESS WHEREOF, the Parties have executed and delivered, or have caused this
Reorganization Agreement to be duly executed and delivered, as of the date first
set forth hereinabove.

                                     THE TITAN CORPORATION

                                     By:
                                         --------------------------------
                                              Mellon C. Baird
                                              Senior Vice President

                                     M T ACQUISITION CORP.

                                     By:
                                         --------------------------------
                                              Mellon C. Baird
                                              Senior Vice President

                                     WILLIAM C. LINDSEY, INC.

                                     By:
                                         --------------------------------
                                              Dr. William C. Lindsey
                                              Chairman of the Board and
                                              Chief Executive Officer

                                     PRINCIPAL SHAREHOLDER:

                                     ------------------------------------
                                     Dr. William C. Lindsey

The undersigned hereby acknowledges his appointment as the Shareholders'
Representative hereunder and his willingness to fulfill the duties of the
Shareholders' Representative as contemplated by this Reorganization Agreement.

                                     ------------------------------------
                                     Dr. William C. Lindsey

                                       52
<PAGE>

                                    EXHIBIT A

                                    [OMITTED]

<PAGE>

                                    EXHIBIT B

                             SHAREHOLDERS OF COMPANY

                                 (SEE ATTACHED)

<PAGE>

                                    EXHIBIT C

                                     FORM OF
                         INDEMNIFICATION PROMISSORY NOTE

         THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
         UNDER ANY STATE SECURITIES LAWS (THE "STATE ACTS") AND CANNOT BE
         OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
         REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
         UNDER THE ACT, THE STATE ACTS AND REGULATIONS PROMULGATED THEREUNDER

$______________                                              ___________, 2000

         FOR VALUE RECEIVED, THE TITAN CORPORATION, a Delaware corporation (the
"Maker"), agrees and promises to pay to __________ (individually and
collectively, the "Holder"), at _________________, or at such other place as the
Holder of this Note may from time to time designate, the amount of TWO MILLION
DOLLARS ($2,000,000), together with interest at a rate per annum equal to seven
percent (7%), with the entire unpaid principal amount (together with accrued
interest thereon) to be due and payable in a single payment on ____________,
2001 [12 months following execution]; PROVIDED, HOWEVER, that no Contested
Amount as defined in that certain Agreement of Reorganization by and among the
Maker, M T Acquisition Corp., a California corporation, William C. Lindsey,
Inc., a California corporation, and William C. Lindsey, an individual, dated as
of January 28, 2000 (the "Reorganization Agreement") shall be due and payable
until the amount thereof is resolved pursuant to Article IX of the
Reorganization Agreement. All payments hereunder shall be made in lawful money
of the United States of America, and shall be subject to the offset provisions
described herein.

         Maker shall have the right to offset, from time to time, the amounts
payable under this Note against all Losses (as defined in the Reorganization
Agreement) suffered by the Acquiror indemnified Persons (as defined in the
Reorganization Agreement) to the extent provided in Article IX of the
Reorganization Agreement.

         This Note has been executed under and pursuant to the Reorganization
Agreement to which reference is hereby made for the terms and conditions upon
which this Note has been delivered.

         The occurrence of any one or more of the following shall constitute a
default ("default") hereunder:

<PAGE>

         (1) Failure to pay, when due, the principal, any interest, or any other
sum payable hereunder;

         (2) The making by Maker of any general assignment for the benefit of
creditors;

         (3) The commencement by the Maker of any case, proceeding, or other
action seeking reorganization, arrangement, adjustment, liquidation,
dissolution, or composition of it or its debts under any law relating to
bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking
appointment of a receiver, trustee, custodian, or other similar official for it
or for all or any substantial part of its property;

         (4) The commencement of any case, proceeding, or other action against
the Maker seeking to have any order for relief entered against the Maker as
debtor, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, or composition of the Maker or its debts under any law relating to
bankruptcy, insolvency, reorganization, or relief of debtors, or seeking
appointment of a receiver, trustee, custodian, or other similar official for the
Maker or for all or any substantial part of the property of the Maker, and (i)
the Maker shall, by any act or omission, indicate its consent to, approval of,
or acquiescence in such case, proceeding, or action, or (ii) such case,
proceeding, or action results in the entry of an order for relief which is not
fully stayed within sixty (60) days after the entry thereof, or (iii) such case,
proceeding, or action remains undismissed for a period of sixty (60) days or
more.

         Upon the occurrence of a default hereunder and Maker's failure to cure
the same within five (5) days after receipt of written notice thereof, the
entire principal amount hereof, and all accrued and unpaid interest thereon,
shall be accelerated, and shall be immediately due and payable, at the option of
the Holder, without demand or notice. Failure to exercise said option or to
pursue such other remedies shall not constitute a waiver of such option or such
other remedies or of the right to exercise any of the same in the event of any
subsequent default hereunder which remains uncured beyond any applicable grace
or cure periods.

         Maker hereby waives presentment, protest, demand, notice of dishonor,
and all other notices, and all defenses and pleas on the grounds of any
extension or extensions of the time of payments or the due dates of this Note,
in whole or in part, before or after maturity, with or without notice. No
renewal or extension of this Note, no release or surrender of any collateral
given as security for this Note, no release of Maker, and no delay in
enforcement of this Note or in exercising any right or power hereunder, shall
affect the liability of Maker.

         No single or partial exercise by the Holder of any right hereunder, or
under any other agreement pertaining hereto, shall preclude any other or further
exercise thereof or the exercise of any other rights. No delay or omission on
the part of the Holder in exercising any right hereunder shall operate as a
waiver of such right or of any other right under this Note.

         This Note is hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration or otherwise, shall the
amount paid or agreed to be paid to the Holder for the use, forbearance or
detention of money hereunder exceed the maximum amount permissible under
applicable law. If from any circumstance whatsoever fulfillment of any

                                       2
<PAGE>

provision hereof, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then IPSO FACTO,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstance the Holder shall ever receive interest, or
anything which might be deemed interest under applicable law, which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal amount owing on account of
this Note and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of this Note, such excess shall be
refunded to the Maker. The terms and provisions of this paragraph shall control
and supersede every other provision of this Note and all other agreements
between the Maker and the Holder.

         Any payment on this Note coming due on a Saturday, a Sunday, or a day
which is a legal holiday in the place at which a payment is to be made hereunder
shall be made on the next succeeding day which is a business day in such place.

         The unpaid principal amount of this Note may be prepaid in whole or in
part at any time and from time to time without prepayment penalty.

         Whenever used herein, the words "Maker" and "Holder" shall be deemed to
include their respective successors and assigns.

         This Note shall be governed by and construed under and in accordance
with the laws of the State of Delaware (but not including the choice of law
rules thereof.)

         If this Note is placed in the hands of an attorney for collection after
default, or if all or any party of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief or other court proceedings, Maker agrees to pay
reasonable attorneys' fees and collection costs to the Holder in addition to the
principal, interest or other amounts payable hereunder.

         This Note shall not be transferable (whether by operation of law or
otherwise) by the Holder hereof without the prior consent of the Maker, which
may be granted or withheld in the Maker's sole discretion.

                                       3
<PAGE>

         IN WITNESS WHEREOF, the undersigned has duly executed this Note, or has
caused this Note to be duly executed on its behalf, as of the day and year first
written hereinabove set forth.

[SEAL]                                      THE TITAN CORPORATION

ATTEST:

---------------------------------      -------------------------------------
                                                   Secretary<PAGE>
                            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 described herein by,
                     and convertible into common stock of,

                                  [TITAN LOGO]

                             The Titan Corporation
                                   ---------

    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. Subject to the
deferral provisions described in this offering circular, the trust will pay
distributions on the HIGH TIDES on each February 15, May 15, August 15 and
November 15. Subject to the deferral provisions described in this offering
circular, the trust will make the first distribution on May 15, 2000. The Titan
Corporation may redeem the HIGH TIDES at any time on or after February 20, 2003
until but excluding the tender notification date established for the
remarketing. Following the remarketing, The Titan Corporation may redeem the
HIGH TIDES in accordance with the redemption provisions established in the
remarketing, if any, or, upon a failed final remarketing, on or after the third
anniversary of the reset date.

    The Titan Corporation will own all the common securities issued by the
trust. The trust exists 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.

    The initial purchasers have an option to purchase a maximum of 1,000,000
additional HIGH TIDES to cover over-allotments.

    It is expected that the HIGH TIDES will be eligible for trading in The
Portal-SM- Market ("PORTAL"), a subsidiary of The Nasdaq Stock Market, Inc.

    Each HIGH TIDES is initially convertible into shares of The Titan
Corporation's common stock at the rate of 1.0076 shares of common stock for each
of the HIGH TIDES (equivalent to an initial conversion price of $49.625  per
share of common stock). Your HIGH TIDES may be remarketed no earlier than
80 business days prior to February 15, 2005 and no later than 20 business days
prior to February 15, 2005. At our option and subject to the results of
remarketing, the HIGH TIDES may become nonconvertible or convertible into a
different number of shares of common stock. The remarketing agent will attempt
to obtain a price of 101% of the liquidation amount of the HIGH TIDES. The Titan
Corporation's common stock is traded under the symbol "TTN" on The New York
Stock Exchange. On February 3, 2000, the last reported price of the common stock
was $40.3125 per share.

    We and the trust have agreed, pursuant to a registration rights agreement,
to file a shelf registration statement to register resales of the HIGH TIDES and
the common stock into which the HIGH TIDES may be converted. In the event we and
the trust fail to comply with our obligations under the registration rights
agreement, the trust will pay additional special distributions on the HIGH
TIDES.

    Investing in the HIGH TIDES involves risks. See "Risk Factors" on page 18.

                           Price: $50 per HIGH TIDES
           plus accrued distributions, if any, from February 9, 2000.

    Delivery of the HIGH TIDES, in book-entry form, will be made on or about
February 9, 2000.

    None of the HIGH TIDES, the guarantee, the debentures or The Titan
Corporation common stock issuable upon conversion thereof has been registered
under the Securities Act. The foregoing securities may be offered or sold only
to qualified institutional buyers in reliance on the exemption from registration
provided by Rule 144A. You are hereby notified that sellers of the securities
may be relying on the exemption from the provisions of Section 5 of the
Securities Act provided by Rule 144A.

    * The terms Remarketable Term Income Deferrable Equity Securities (HIGH
TIDES)-SM- and HIGH TIDES-SM- are registered service marks of Credit Suisse
First Boston Corporation.

Credit Suisse First Boston                          Donaldson, Lufkin & Jenrette

      The date of this confidential offering circular is February 3, 2000.
<PAGE>
                                 --------------

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                           PAGE
                                           ----
<S>                                      <C>
NOTICE TO NEW HAMPSHIRE RESIDENTS......      ii
AVAILABLE INFORMATION..................     iii
ABOUT THIS OFFERING CIRCULAR...........     iii
WHERE YOU CAN FIND MORE INFORMATION....     iii
CAUTIONARY STATEMENT ABOUT
  FORWARD-LOOKING STATEMENTS...........      iv
TRADEMARKS AND TRADENAMES..............       v
SEC REVIEW.............................       v
INDUSTRY DATA..........................       v
OFFERING CIRCULAR SUMMARY..............       1
RISK FACTORS...........................      18
USE OF PROCEEDS........................      31
PRICE RANGE OF OUR COMMON STOCK........      32
DIVIDEND POLICY........................      32
CAPITALIZATION.........................      33
ACCOUNTING TREATMENT...................      34
PENDING AND COMPLETED ACQUISITIONS.....      35
UNAUDITED PRO FORMA FINANCIAL DATA.....      38
SELECTED HISTORICAL FINANCIAL DATA.....      51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS........................      53
</TABLE>

<TABLE>

BUSINESS...............................      70
<CAPTION>
                                           PAGE
                                           ----
<S>                                      <C>
MANAGEMENT.............................      95
PRINCIPAL STOCKHOLDERS.................      99
TITAN CAPITAL TRUST....................     101
THE REMARKETING........................     102
DESCRIPTION OF HIGH TIDES..............     109
DESCRIPTION OF CONVERTIBLE SENIOR
  SUBORDINATED DEBENTURES..............     131
DESCRIPTION OF THE GUARANTEE...........     140
RELATIONSHIP AMONG THE HIGH TIDES, THE
  CONVERTIBLE SENIOR SUBORDINATED
  DEBENTURES AND THE GUARANTEE.........     143
DESCRIPTION OF CAPITAL STOCK...........     144
CERTAIN UNITED STATES FEDERAL INCOME
  TAX CONSEQUENCES.....................     151
CERTAIN ERISA CONSIDERATIONS...........     156
REGISTRATION RIGHTS....................     159
PLAN OF DISTRIBUTION...................     161
NOTICE TO CANADIAN RESIDENTS...........     163
TRANSFER RESTRICTIONS..................     164
LEGAL MATTERS..........................     166
INDEPENDENT PUBLIC ACCOUNTANTS.........     167
INDEX TO FINANCIAL STATEMENTS..........     F-1
</TABLE>

                                 --------------

    YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.

                                       i
<PAGE>
                       NOTICE TO NEW HAMPSHIRE RESIDENTS

    NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

    This offering circular is being furnished on a confidential basis in
connection with an offering exempt from registration under the Securities Act
solely for the purpose of enabling a prospective investor to consider the
purchase of the HIGH TIDES. Delivery of this offering circular to any other
person or any reproduction of this offering circular, in whole or in part,
without the prior consent of Titan Capital Trust, or the trust, The Titan
Corporation or the initial purchasers is prohibited. The information contained
in this offering circular has been provided by The Titan Corporation and other
sources identified in this offering circular. No representation or warranty,
express or implied, is made by the initial purchasers as to the accuracy or
completeness of information contained in this offering circular, and nothing
contained in this offering circular is, or should be relied upon as, a promise
or representation by the initial purchasers of the HIGH TIDES.

    Each prospective purchaser of the HIGH TIDES must comply with all applicable
laws and regulations in force in any jurisdiction in connection with the
distribution of this offering circular and the offer or sale of the HIGH TIDES.
Please read the "Transfer Restrictions" section of this offering circular. In
making any investment decision, prospective investors should rely on their own
examination of the trust and Titan and the terms of the offering, including the
merits and risks involved. The contents of this offering circular are not to be
construed as legal, business or tax advice. Each prospective investor should
consult his or her own attorney, business advisor and tax advisor as to legal,
business or tax advice.

    The HIGH TIDES offered by this offering circular have not been recommended
by any United States federal or state securities commission or any foreign
securities commission or any regulatory authority. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy of this
offering circular. Any representation to the contrary is a criminal offense.

    The HIGH TIDES have not been and will not be qualified for sale under the
securities laws of any province or territory of Canada. The HIGH TIDES are not
being offered and may not be offered or sold, directly or indirectly, in Canada
or to or for the account of any resident of Canada in contravention of the
securities laws of any province or territory thereof.

    AS USED IN THIS OFFERING CIRCULAR, (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

                                       ii
<PAGE>
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 AND (G) THE "DEBENTURES" MEANS THE
CONVERTIBLE SENIOR SUBORDINATED DEBENTURES DUE 2030 FROM THE TITAN CORPORATION.

                             AVAILABLE INFORMATION

    As a purchaser of HIGH TIDES, you will be furnished with a copy of this
offering circular and any related amendments or supplements to this offering
circular. By receiving this offering circular, you acknowledge that:

    - you have been afforded an opportunity to request from us, and have
      received from us, all additional information you considered to be
      necessary to verify the accuracy or completeness of the information
      included or incorporated in this offering circular by reference;

    - you have not relied on the initial purchasers or any person affiliated
      with the initial purchasers in connection with your investigation of the
      accuracy of such information or your investment decision; and

    - except as pursuant to the first bullet point above, no person has been
      authorized to give any information or to make any representation
      concerning the HIGH TIDES offered pursuant to this offering circular other
      than those contained in this offering circular, and if given or made, you
      should not rely upon such information as having been authorized by us or
      the initial purchasers.

                          ABOUT THIS OFFERING CIRCULAR

    This offering circular contains summaries, believed to be accurate in all
material respects, of terms of certain agreements. These summaries are qualified
in their entirety by reference to the actual agreements, copies of which will be
made available to you upon request to us or the initial purchasers. While any
HIGH TIDES, debentures or common stock issued upon conversion of such securities
remain outstanding, we will make available, upon request, to any holder and any
prospective purchaser of such securities the information required pursuant to
Rule 144A(d)(4) under the Securities Act during any period in which we are not
subject to Section 13 or 15(d) of the Exchange Act.

    No separate financial statements of the trust have been included herein. We
do not consider such financial statements material to the holders of HIGH TIDES
because:

    - we will own, directly or indirectly, all of the voting securities of the
      trust, and we are subject to the reporting requirements under the Exchange
      Act;

    - the trust has no independent operations but exists for the sole purpose of
      issuing securities representing undivided beneficial interests in the
      assets of the trust and investing the proceeds thereof in debentures
      issued by us; and

    - the obligations of the trust under the trust securities are fully and
      unconditionally guaranteed by us to the extent that the trust has funds
      available to meet such obligations.

                      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

                                      iii
<PAGE>
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.

    In this offering circular we have incorporated by reference certain reports
and other information we have filed, or will file, with the SEC. The information
incorporated by reference is an important part of this offering circular, 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 further filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act until we sell all of the securities or we terminate
this offering:

    - Titan's Annual Report on Form 10-K for the fiscal year ended December 31,
      1998, which was filed on March 31, 1999, as amended by Form 10-K/A which
      was filed on January 24, 2000, including information incorporated by
      reference in the Form 10-K from its definitive proxy statement for the
      1999 annual meeting of stockholders, which was filed on April 1, 1999;

    - Titan's Quarterly Report on Form 10-Q for the fiscal quarter ended
      March 31, 1999, which was filed on May 17, 1999, its Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 30, 1999, which was filed on
      August 16, 1999, and its Quarterly Report on Form 10-Q for the fiscal
      quarter ended September 30, 1999, which was filed on November 12, 1999;

    - Titan's Current Reports on Form 8-K which were filed on January 20, 1999,
      June 24, 1999, November 17, 1999, December 16, 1999, January 6, 2000,
      January 24, 2000, and February 3, 2000; and

    - Titan's amendment to its Current Report on Form 8-K filed June 24, 1999,
      which was filed on August 23, 1999, its amendments to its Current Reports
      on Form 8-K filed November 17, 1999 and January 6, 2000, which were filed
      on January 19, 2000 and January 24, 2000, and its amendment to its Current
      Report on Form 8-K filed January 24, 2000, which was filed on January 28,
      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

             CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

    Certain matters discussed in this offering circular are "forward-looking
statements" intended to qualify for the safe harbors from liability established
by the Private 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 offering circular. The
risks and uncertainties include:

    - the possibility that our acquisition of Advanced Communication
      Systems, Inc. will not be consummated;

                                       iv
<PAGE>
    - the risks associated with our acquisition strategy generally;

    - 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

    - the other factors described in "Risk Factors."

    The forward-looking statements included herein are only made as of the date
of this offering circular and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

                           TRADEMARKS AND TRADENAMES

    SureBeam-Registered Trademark-, ImagClear-Registered Trademark-, Xpress
Connection and DAMALink are trademarks of The Titan Corporation or its
subsidiaries. All other tradenames and trademarks appearing in this offering
circular are the property of their holders.

                                   SEC REVIEW

    In the course of the review by the SEC of the shelf registration statement
we are obligated to file covering resales of the HIGH TIDES and our common stock
issuable upon conversion of the HIGH TIDES, it is likely that we will make
changes to the description of our business and other data included in this
offering circular. However, we do not believe any such modification or
reformulation will be significant.

                                 INDUSTRY DATA

    In this offering circular, we refer to market information regarding our
industry segments, which we have obtained from published industry sources.
Although we believe this information to be reliable, we cannot guarantee the
accuracy and completeness of the information and have not independently verified
it.

                                       v
<PAGE>
                           OFFERING CIRCULAR SUMMARY

    EXCEPT AS OTHERWISE INDICATED HEREIN, IN THIS OFFERING CIRCULAR THE WORDS
"WE," "OUR," "OURS," "US" AND "TITAN" REFER ONLY TO THE TITAN CORPORATION AND
ITS SUBSIDIARIES (EXCLUDING TITAN CAPITAL TRUST) AND NOT TO THE INITIAL
PURCHASERS OR ANY OTHER PERSON. THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION
ABOUT THIS OFFERING. IT LIKELY DOES NOT CONTAIN ALL THE INFORMATION THAT IS
IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THIS OFFERING, WE
ENCOURAGE YOU TO READ THIS ENTIRE DOCUMENT, 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 OVERVIEW

    We are a leading diversified technology company that provides information
technology, communications and electron beam food pasteurization and medical
product sterilization systems and services. Through extensive government-funded
research and development activities since 1981 under contracts totaling in
excess of $2 billion, we have accumulated a broad portfolio of technologies,
intellectual property and expertise from which we have developed many of our
commercial businesses. The core technologies supporting our Titan Scan and Titan
Wireless segments were derived from technologies originally developed for
government applications. We believe that our government contracts business
enhances our technical expertise with sophisticated technologies and facilitates
our ability to develop commercial applications. We fund the development of
commercial technologies from our technology base both internally as well as in
conjunction with partners. We plan to continue building our technology
portfolio, identifying commercial applications and entering into strategic
relationships to further our growth.

    We have organized our business into five segments that reflect the specific
markets and industries in which we operate:

<TABLE>
<CAPTION>
           SEGMENT                                 SEGMENT DESCRIPTION
           -------                                 -------------------
<S>                            <C>
    Titan Systems............  Information technology and communications solutions for
                               defense, intelligence, and other U.S. and allied government
                               agencies

    Cayenta..................  Total services provider of comprehensive information
                               technology solutions for its customers' business functions,
                               including e-business, finance, accounting, customer billing
                               and collection, contract management, supply chain
                               integration and enterprise asset management

    Titan Scan...............  Electron beam food pasteurization and medical product
                               sterilization systems and services

    Titan Wireless...........  Satellite communication systems and services which support
                               telephony in developing countries

    Emerging Technologies....  Development of commercial applications for technologies
                               created by our other business segments through
                               government-sponsored research and development programs
</TABLE>

    Each of our segments has a management team with significant relevant
experience in the segment's particular business and market area. Consistent with
our strategy of aligning management motivation with stockholder interests, each
of our segments (except Emerging Technologies which is not a separate
subsidiary) has its own key employee stock option plan to foster an
entrepreneurial environment.

    On a pro forma basis for the acquisitions we completed during 1999 as well
as our proposed acquisition of Advanced Communication Systems, our revenues were
approximately $593 million and our earnings before non-recurring special
acquisition related charges and other interest, taxes,

                                       1
<PAGE>
depreciation and amortization, or EBITDA, were approximately $61.6 million for
the twelve months ended September 30, 1999.

MARKET OPPORTUNITIES

    We believe that the markets in which we operate are large and growing:

    TITAN SYSTEMS.  The U.S. government is among the largest buyers of
information technology systems and services in the world. According to the
Government Electronic Industries Alliance, an industry trade group, the U.S.
government's information technology budget for its fiscal year 2000 is expected
to be approximately $34 billion. In a statement to the House Committee on
National Security, Secretary of Defense William S. Cohen stated that the defense
budget will emphasize advanced information technologies related to Command,
Control, Communications, Computers, Intelligence, Surveillance and
Reconnaissance, or C4ISR. Titan Systems provides a full range of C4ISR
capabilities.

    CAYENTA.  Forrester Research projects that the market for business to
business e-business will grow from $43 billion in 1998 to $1.3 trillion in 2003.
In addition, International Data Corporation estimates that the worldwide market
for consulting, design, systems integration, support, management and outsourcing
services associated with the development, deployment and management of Internet
sites will grow at a five year compounded annual growth rate of 59% from $7.8
billion in 1998 to $78.5 billion in 2003.

    TITAN SCAN.  With 75.4 billion pounds of meat, including beef, pork and
poultry, produced in the United States in 1999, Titan Scan estimates that the
market for food pasteurization systems and services could develop to be in
excess of $3.0 billion annually if irradiated foods gain consumer acceptance. If
such consumer acceptance occurs, Titan Scan believes that meat producers will
initially elect to pasteurize a portion of their ground beef and poultry
production. According to a market research report, the global market for
sterilization services for medical products was approximately $368 million in
1999.

    TITAN WIRELESS.  In our targeted markets, telephone availability is
relatively low. In 1998, according to the International Telecommunication Union,
countries in our targeted markets, which represent approximately one-third of
the world's population, had fewer than two subscriber lines per 100 inhabitants
compared to 66.13 in the United States.

COMPETITIVE STRENGTHS

    We attribute our growth and performance to several factors within each of
our business segments:

TITAN SYSTEMS

    LONG STANDING CUSTOMER RELATIONSHIPS.  Founded in 1981, Titan Systems has an
extensive history of providing information systems and communications solutions
to defense, intelligence and other U.S. and allied government agencies.
Collectively, Titan Systems' senior management has on average 20 years of
industry experience and has developed long-standing, key customer relationships
across all of the U.S. military services and several NATO countries, which have
contributed to Titan Systems' success in securing new contracts.

    BROAD SOLUTION CAPABILITIES.  Titan Systems has extensive knowledge of the
operations and information systems and communications requirements of the
defense industry and provides a full range of systems engineering and technical
support for the C4ISR initiatives of the Department of Defense, or DoD. Titan
Systems designs, builds, tests, installs and maintains systems that collect,
digitize, compress, transmit, receive, decompress and display information and
permit their users to analyze data in a secured environment. This ability to
provide full-service solutions, coupled with our

                                       2
<PAGE>
employee base of over 1,500 "Secret" and above-cleared personnel, enables us to
bid on larger, more comprehensive C4ISR defense contracts. Advanced
Communication Systems' employee base includes more than 1,300 "Secret" and
above-cleared personnel.

    PROVEN ACQUISITION STRATEGY.  In anticipation of changes in U.S. government
procurement policies toward awarding more comprehensive contracts to meet its
defense-related requirements, we initiated an acquisition strategy in 1997.
Since January 1, 1998, we have acquired and integrated seven defense information
technology companies into Titan Systems. If acquired, Advanced Communication
Systems will also be integrated into Titan Systems. We believe the enhanced
technology and personnel resources provided by our acquisitions enable Titan
Systems to serve its customers with comprehensive solutions for their
information systems needs.

CAYENTA

    TOTAL SERVICES PROVIDER.  As a total services provider, or TSP, Cayenta
delivers comprehensive, tailored solutions to its customers that combine its
customers' information technology strategy, application development and
configuration, systems integration, hosting and support. We believe Cayenta's
TSP offering provides its customers with a number of benefits over internally
developed and hosted systems, including lower and more predictable capital and
operating costs, timely deployment, adaptable solutions, and scalable and
reliable hosted applications.

    COMPLETE E-BUSINESS SOLUTION.  Cayenta integrates customers' web sites and
other e-business portals with business support systems and provides its
customers with a single point of contact for managing and monitoring their
e-business transactions. Cayenta integrates a customer's web site and other
business support systems with its proprietary solutions for order processing,
catalog management, customer service, inventory management, order fulfillment,
billing, collections, and account settlement.

    REVENUE CYCLE SERVICES OFFERING.  Cayenta offers solutions that enable its
customers to address their complex pricing, billing, settlement and supply-chain
requirements and improve their e-business capabilities. Cayenta's software also
provides audit and compliance functions that accommodate the complex contract
terms prevalent in e-business and permit Cayenta's customers to more effectively
monitor their receivables and manage the fulfillment process.

    INTEROPERABLE AND ADAPTABLE SOLUTIONS.  Cayenta's solutions are
interoperable, permitting its customers to integrate different systems within
their organizations and between their organizations and those of their trading
partners. Cayenta's solutions also are adaptable, accommodating customer
technology preferences while facilitating easy access across the Internet.
Cayenta offers solutions that reduce its customers' manual and redundant
business processes and permit them to add or change software applications as
their businesses evolve.

    TAILORED SOLUTIONS FOR CUSTOMERS' BUSINESS PROCESSES.  Cayenta has expertise
in its target industries that helps it to define and deliver timely solutions
tailored to its customers' market dynamics and business opportunities. All of
Cayenta's solutions allow customers to supplement standard software applications
with additional functionality tailored to their business needs. To achieve this
additional functionality, Cayenta uses software components that extend the
capabilities of standard software applications.

TITAN SCAN

    SUPERIOR ELECTRON BEAM PASTEURIZATION AND STERILIZATION TECHNOLOGY.  Titan
Scan provides patented and proprietary systems and services which pasteurize
food and sterilize medical products in an efficient, safe and environmentally
friendly manner. The market for pasteurization and sterilization systems has
historically been served by two technologies--Gamma and etholene oxide, or EtO.
We

                                       3
<PAGE>
believe Titan Scan's proprietary electron beam process, or SureBeam system,
which uses commercial electricity as its source of power, is superior to Gamma
and EtO technology because it requires significantly less processing time, poses
no known environmental risks, may result in reduced product degradation, can be
introduced directly into a food processor's or manufacturer's production line
and is scalable to meet customer processing requirements.

    REGULATORY CLEARANCE FOR SUREBEAM TECHNOLOGY.  In December 1997, the Food
and Drug Administration, or FDA, approved irradiation of meat, finding that
irradiation of meat, at its recommended doses, does not diminish the food's
nutritional value in any detectable way. In December 1999, the U.S. Department
of Agriculture, or USDA, issued regulations setting forth guidelines for the
irradiation of meat.

    EXCLUSIVE CUSTOMER ARRANGEMENTS.  Titan Scan has executed multiyear
arrangements with many of the major poultry and meat providers and producers in
the United States, including Cargill, IBP, Tyson Foods, Emmpak and Huisken
Meats, among others. These companies produced approximately 75% of the
25.8 billion pounds of beef and approximately 43% of the 75.4 billion pounds of
meat, including beef, pork and poultry, produced in the United States in 1999.
Titan Scan believes that if irradiated foods gain market acceptance, these
producers will initially elect to pasteurize a portion of their ground beef and
poultry production. Titan Scan's multiyear arrangements with its customers
generally provide that it will be the exclusive provider of electronic
pasteurization services whenever any of these companies elect to use
pasteurization technology. In addition, at Cloverleaf Cold Storage's facility in
Sioux City, Iowa, Titan Scan has built the first electron beam pasteurization
facility in the United States, and also has arrangements with Zero Mountain Cold
Storage, Mitsubishi and Hawaii Pride to build similar facilities.

TITAN WIRELESS

    SOLUTIONS ARE WELL-SUITED TO TARGET MARKETS.  Telephone service for remote
areas of many developing countries has not been practical for a number of
economic and technical reasons. In our targeted markets, telephone availability
is relatively low. Titan Wireless has designed a network of fixed-site satellite
terminals that provide cost-effective telephone, facsimile and data
communications services to areas not previously served by developing countries'
national public switched telephone networks, or PSTNs.

    STRONGLY POSITIONED THROUGH STRATEGIC ALLIANCES.  Titan Wireless develops
and markets its telephony products through strategic alliances in developing
countries in Africa, Latin America and Asia. Through its Sakon joint venture,
Titan Wireless is currently providing long distance telecommunications services
in eight developing countries, and expects to provide long distance
telecommunications in at least six additional developing countries.

EMERGING TECHNOLOGIES AND BUSINESSES

    PROVEN ABILITY TO TRANSITION OUR TECHNOLOGY TO COMMERCIAL BUSINESSES.
Emerging Technologies introduces new commercial applications from our rich
technology portfolio, superior research and development capabilities and stream
of government-funded projects. The core technologies supporting Titan Scan and
Titan Wireless were created from technologies originally developed for
government use. In addition, in 1996, we contributed the core technology to form
Servnow! Nettechnologies, Inc., which is now known as IPivot, Inc. IPivot
develops software products that improve the performance of server farms, web
sites and software applications. We raised the capital required to fund IPivot
from venture capital sources. In November 1999, we received approximately $42
million in cash for our 8.1% equity interest when IPivot was acquired by Intel
Corporation.

                                       4
<PAGE>
BUSINESS STRATEGY

    We believe a key element of our success is our innovative use of technology
that provides comprehensive, efficient solutions to our government and
commercial customers. We believe that our sophisticated technical abilities will
allow us to expand our customer base, improve our operating results and continue
to grow.

    Our objectives are to enhance our leading position in providing information
technology and communication solutions to defense, intelligence and other U.S.
and allied government agencies and to further our strong track record of
commercializing proprietary technologies designed to serve global markets. To
achieve these objectives, we intend to pursue the following strategies:

    MAINTAIN TECHNOLOGY LEADERSHIP.  Since inception, we have received
substantial government funding to conduct research and development and create
advanced information technology solutions and communications systems for
government uses. Based largely on activities that have been supported by
government funding, we have created a diversified portfolio of technology and
developed many of our commercial businesses, like Titan Scan and Titan Wireless.
We will continue to bid for government-funded research and development work and
government contracts that we believe will expose our technical personnel to
sophisticated technologies, challenge their skills, and increase their abilities
to transition systems and solutions developed for the government to commercial
applications. We will also continue to actively seek acquisition candidates
whose technology portfolio and personnel resources complement and supplement our
own. We believe that these efforts, combined with our extensive expertise and
capabilities, will allow us to further our government relationships and position
us to win new government contracts, while also strengthening our ability to
provide systems and solutions to commercial customers in a variety of markets.

    PURSUE STRATEGIC TRANSACTIONS.  Our acquisition program is a key component
to our overall business strategy. We believe the enhanced technology and
personnel resources which our acquisitions have provided enable us to complete
larger, more comprehensive government contracts and to market our services to
new customers. To further our growth and enter new markets, we intend to pursue
strategic acquisitions of complementary businesses, technologies and products.
We plan to achieve operating efficiencies and cost savings following our
acquisitions through centralization of strategic planning, corporate
development, administrative, financial and other services. We also intend to
pursue strategic alliances, primarily to access new customers and establish
additional channels of distribution for our core businesses and technologies.

    GROW PROFITABLY.  We are dedicated to growing our business and enhancing our
profitability. We have instituted successful cost reduction programs for each of
our acquired companies and continually seek opportunities to improve our
operating margins. In early 1997, we implemented a streamlining process for our
administrative functions. This process focused on eliminating redundancies and
resulted in increased efficiencies and reduced infrastructures and costs. We
plan to continue implementing similar initiatives and to improve cash flow
through enhanced receivables management.

    PURSUE INITIAL PUBLIC OFFERINGS FOR CORE SUBSIDIARIES.  We intend to finance
the growth of Cayenta, Titan Scan and Titan Wireless by obtaining public or
private financing, including through initial public offerings of common stock of
these segments. To the extent possible, we intend to structure these initial
public offerings in order to preserve the ability to later distribute the stock
we retain in these segments to our stockholders on a tax-free basis. Under
existing law, we must own at least 80% of the total voting power and 80% of any
class of nonvoting capital stock of a subsidiary to be able to effect a tax-
free distribution of a subsidiary's stock. In addition, both Titan and the
subsidiary must meet numerous other requirements under the Internal Revenue
Code, including requirements relating to the subsidiary's operating history and
the subsidiary must have a business purpose for the spin-off distribution. To
date, our subsidiary Cayenta has filed a registration statement for an initial
public

                                       5
<PAGE>
offering of its stock. If the offering is completed, we have no present
intention of distributing our Cayenta shares to the Titan stockholders. Our
existing credit facility does not permit us to distribute the stock of our
subsidiaries to Titan stockholders without consent of the lenders. It also
requires that if we complete an offering of securities of a subsidiary, we must
pay down the credit facility by the amount of the net proceeds of the offering.
We expect our new credit facility will contain similar restrictions except that
we will not have to pay down the credit facility if Cayenta completes its
initial public offering and Cayenta will no longer be a guarantor of the new
credit facility. As a result of the foregoing factors and other factors, we may
not be able to distribute interests in these segments to our stockholders.

    We expect to enter into a $250 million senior secured credit facility
shortly after this offering, which is further described in the "Liquidity and
Capital Resources" section of "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We intend to use borrowings under that
credit facility to repay indebtedness of Advanced Communication Systems upon the
closing of the acquisition and also to pay certain acquisition-related fees and
expenses. We anticipate replacing our existing credit facility with that new
credit facility. We cannot guarantee that we will be able to enter into
satisfactory definitive documentation for, and ultimately access, the new credit
facility.

    We are a publicly traded company listed on the New York Stock Exchange under
the symbol "TTN." Our executive offices are located at 3033 Science Park Road,
San Diego, California 92121-1199 and our telephone number is (858) 552-9500. Our
Internet website address on the world wide web is www.titan.com. The contents of
our website are not part of this offering circular.

    The trust's place of business and telephone number are the principal
executive offices and telephone number of Titan.

                                  THE OFFERING

<TABLE>
<CAPTION>

<S>                            <C>
    ISSUER...................  Titan Capital Trust is a Delaware business trust and our
                               subsidiary. Substantially all the assets of the trust will
                               consist of debentures issued by us. We will own all of the
                               outstanding common securities of the trust. The address of
                               the trust's principal office is c/o The Titan Corporation,
                               3033 Science Park Road, San Diego, California, 92121-1199,
                               and its telephone number is (858) 552-9500.

    SECURITIES OFFERED.......  4,000,000 HIGH TIDES.  Additionally, we and the trust have
                               granted the initial purchasers an option for 30 days to
                               purchase up to an additional 1,000,000 HIGH TIDES at the
                               initial offering price, plus accrued distributions.

    DEBENTURES...............  The trust will use the proceeds from the sale of the HIGH
                               TIDES to purchase from us 5 3/4% Convertible Senior
                               Subordinated Debentures, due February 15, 2030. The
                               debentures will have the same financial terms as the HIGH
                               TIDES.

    DISTRIBUTIONS............  Distributions will accrue on the HIGH TIDES from the date of
                               original issuance at the applicable rate applied to the
                               stated liquidation amount of $50 per HIGH TIDES. The
                               applicable rate will be 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
</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               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. 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.
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
    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
                               February 3, 2000 was $40.3125 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 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
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               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 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
</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               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 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.
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               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.

    USE OF PROCEEDS AND OFFER
    TO REPURCHASE THE HIGH
    TIDES....................  The trust will use the gross proceeds from this offering and
                               from the issuance of the trust's common securities to
                               purchase the debentures. We will be required to make a
                               repurchase offer for up to 50% of the aggregate liquidation
                               amount of each of the HIGH TIDES and the trust's common
                               securities if our acquisition of Advanced Communication
                               Systems does not close on or prior to March 31, 2000. We
                               will dedicate 50% of the proceeds from the sale of
                               debentures to the trust, plus an amount equal to 2.5% of
                               that portion of those proceeds, to fund the repurchase
                               offer, and use the remaining net proceeds to repay
                               indebtedness outstanding under our existing credit facility.
                               If our acquisition of Advanced Communication Systems closes
                               on or prior to March 31, 2000, we will use the proceeds from
                               the sale of debentures to the trust that otherwise would
                               have been used to fund the repurchase offer for general
                               corporate purposes, including funding of our working capital
                               requirements. In addition, a portion of these proceeds also
                               may be used to acquire or invest in complementary
                               businesses, technologies and products.

    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 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
</TABLE>

                                       11
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               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 offering circular, 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
                               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
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>

<S>                            <C>
                               all of our indebtedness under our credit facility and any
                               secured debt we have in addition to that indebtedness. At
                               January 21, 2000, we had $141 million of indebtedness
                               outstanding under our existing credit facility, and we have
                               received a commitment for a new $250 million senior secured
                               credit facility. 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 initially sold to qualified institutional
                               buyers in reliance on Rule 144A under the Securities Act
                               will be represented by a global certificate registered in
                               the name of Cede & Co., as nominee for The Depository Trust
                               Company, or DTC. Beneficial interests in these HIGH TIDES
                               will be 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 or certificates.

    TRANSFER RESTRICTIONS....  The HIGH TIDES, the debentures, and the common stock
                               issuable upon conversion of the HIGH TIDES may not be
                               offered, sold, pledged or otherwise transferred except as
                               described in the "Transfer Restrictions" section of this
                               offering circular.

    REGISTRATION RIGHTS......  Under a registration rights agreement, we and the trust have
                               agreed (a) within 75 days after the HIGH TIDES are issued to
                               file a shelf registration statement with respect to the
                               resale of the HIGH TIDES (the shelf registration statement
                               will also cover the guarantee, the debentures and the common
                               stock issuable upon conversion of the HIGH TIDES) and
                               (b) to use our best efforts to cause the shelf registration
                               statement to be declared effective within 150 days of the
                               issue date and to keep the shelf registration statement
                               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 registrable securities have been sold
                               thereunder. Special interest and special distributions will
                               accrue on the debentures and the HIGH TIDES if we or the
                               trust fail to meet our obligations under the registration
                               rights agreement.

    ABSENCE OF MARKET FOR THE
    HIGH TIDES...............  The HIGH TIDES will be a new issue of securities for which
                               there is currently no market. The HIGH TIDES are expected to
                               be made eligible for trading in PORTAL. Although the initial
                               purchasers have informed us that they currently intend 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 without notice. Accordingly, we
                               cannot assure you as to the development of liquidity of any
                               market for the HIGH TIDES.
</TABLE>

                                       13
<PAGE>
                   SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
                (IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
                                  (UNAUDITED)

    THE FOLLOWING UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND BALANCE SHEET
DATA HAVE BEEN DERIVED FROM, AND SHOULD BE READ IN CONJUNCTION WITH OUR
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE RELATED NOTES, AND
THOSE OF ADVANCED COMMUNICATION SYSTEMS, INC., TRANSNATIONAL PARTNERS II, LLC,
J.B. SYSTEMS, INC. (ALSO KNOWN AS MAINSAVER), ASSIST CORNERSTONE
TECHNOLOGIES, INC. AND SFG TECHNOLOGIES, INC. CONTAINED ELSEWHERE IN THIS
OFFERING CIRCULAR OR INCORPORATED BY REFERENCE HEREIN. THE UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS AND BALANCE SHEET DATA SHOULD ALSO BE READ IN
CONJUNCTION WITH "UNAUDITED PRO FORMA FINANCIAL DATA" AND THE RELATED NOTES IN
THIS OFFERING CIRCULAR. THE PRO FORMA STATEMENT OF OPERATIONS DATA FOR THE YEARS
ENDED DECEMBER 31, 1996 AND 1997 ASSUMES THAT WE COMPLETED THE ACQUISITION OF
ADVANCED COMMUNICATION SYSTEMS AS OF THE BEGINNING OF EACH SUCH PERIOD. THE PRO
FORMA STATEMENT OF OPERATIONS DATA FOR THE YEAR ENDED DECEMBER 31, 1998, FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 AND FOR THE TWELVE MONTHS ENDED
SEPTEMBER 30, 1999 ASSUMES THAT WE COMPLETED THE ACQUISITIONS OF ADVANCED
COMMUNICATION SYSTEMS, TRANSNATIONAL PARTNERS, MAINSAVER, ASSIST AND SFG
TECHNOLOGIES AS OF THE BEGINNING OF EACH SUCH PERIOD. THE PRO FORMA BALANCE
SHEET DATA AS OF SEPTEMBER 30, 1999 ASSUMES THAT WE COMPLETED THESE ACQUISITIONS
AS OF SUCH DATE. OUR ACQUISITION OF ADVANCED COMMUNICATION SYSTEMS IS EXPECTED
TO CLOSE IN THE FIRST QUARTER OF 2000. THE PRO FORMA STATEMENT OF OPERATIONS AND
BALANCE SHEET DATA IS NOT NECESSARILY INDICATIVE OF OUR OPERATING RESULTS OR
FINANCIAL CONDITION THAT WOULD HAVE OCCURRED HAD THESE ACQUISITIONS OCCURRED AS
OF THE DATES INDICATED OR OF ANY EXPECTED FUTURE RESULTS.

<TABLE>
<CAPTION>
                                                                                                            TWELVE
                                                                                                            MONTHS
                                                                                   NINE MONTHS ENDED        ENDED
                                                    YEAR ENDED DECEMBER 31,          SEPTEMBER 30,      SEPTEMBER 30,
                                                 ------------------------------   -------------------   --------------
                                                   1996       1997       1998       1998       1999          1999
                                                 --------   --------   --------   --------   --------   --------------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>
PRO FORMA STATEMENT OF OPERATIONS DATA:
Revenue........................................  $277,641   $328,117   $440,433   $298,724   $451,274      $592,983

Costs and expenses:
  Cost of revenues.............................   211,964    254,240    315,465    216,375    324,771       423,861
  Selling, general and administrative
    expense....................................    46,479     47,859     82,426     54,144     86,438       114,720
  Research and development expense.............     5,023      7,466      8,786      6,133      8,128        10,781
  Special acquisition related charges and
    other......................................        --      8,510      9,891      4,553         --         5,338
                                                 --------   --------   --------   --------   --------      --------
    Total costs and expenses...................   263,466    318,075    416,568    281,205    419,337       554,700
                                                 --------   --------   --------   --------   --------      --------

Operating profit (loss)........................    14,175     10,042     23,865     17,519     31,937        38,283
Interest expense...............................    (5,021)    (6,779)   (12,783)    (8,964)   (12,392)      (16,211)
Interest income................................       696      1,025        512        302        585           795
                                                 --------   --------   --------   --------   --------      --------
Income (loss) from continuing operations before
  income taxes.................................     9,850      4,288     11,594      8,857     20,130        22,866
Income tax provision...........................     2,603      3,934      5,784      3,730      7,901         9,955
                                                 --------   --------   --------   --------   --------      --------
Income (loss) from continuing operations before
  cumulative effect of change in accounting
  principle, net...............................  $  7,247   $    354   $  5,810   $  5,127   $ 12,229      $ 12,911
                                                 ========   ========   ========   ========   ========      ========
Basic earnings per share
  Income from continuing operations............  $   0.16   $  (0.01)  $   0.12   $   0.11   $   0.25      $   0.28
                                                 ========   ========   ========   ========   ========      ========
    Weighted average shares....................    39,459     40,485     42,802     42,521     45,983        43,769
                                                 ========   ========   ========   ========   ========      ========
Diluted earnings per share
  Income from continuing operations............  $   0.16   $  (0.01)  $   0.11   $   0.10   $   0.22      $   0.26
                                                 ========   ========   ========   ========   ========      ========
    Weighted average shares....................    39,836     40,485     43,936     43,627     53,396        46,987
                                                 ========   ========   ========   ========   ========      ========
</TABLE>

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                                                            TWELVE
                                                                                                            MONTHS
                                                                                   NINE MONTHS ENDED        ENDED
                                                    YEAR ENDED DECEMBER 31,          SEPTEMBER 30,      SEPTEMBER 30,
                                                 ------------------------------   -------------------   --------------
                                                   1996       1997       1998       1998       1999          1999
                                                 --------   --------   --------   --------   --------   --------------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>
PRO FORMA OTHER DATA:
  Non-recurring charges........................  $     --   $ 11,756   $ 11,469   $  4,758   $    237      $  6,948
  EBITDA (1)...................................    22,621     31,482     48,739     31,409     44,236        61,566
  Adjusted EBITDA (2)..........................    22,621     31,482     56,503     40,020     54,502        70,985
  Depreciation and Amortization................     8,446      9,684     13,405      9,132     12,062        16,335
  Capital Expenditures.........................     7,008      7,325      7,057      4,630      7,332         9,759
  Ratio of Earnings to Fixed Charges (3).......      2.2x       1.4x       1.7x       1.8x       2.3x          2.2x
</TABLE>

<TABLE>
<CAPTION>
                                                                  AS OF
                                                              SEPTEMBER 30,
                                                                   1999
                                                              --------------
<S>                                                           <C>
PRO FORMA BALANCE SHEET DATA:
Cash and cash equivalents...................................     $  6,235
Working capital.............................................      114,632
Property and equipment, net.................................       38,175
Total assets................................................      505,669
Total debt..................................................      232,165
Stockholders' equity........................................      131,450
</TABLE>

------------------------------

(1) EBITDA for any relevant period represents earnings before non-recurring
    special acquisition related charges and other interest, taxes, depreciation
    and amortization, assuming that we completed the acquisitions described in
    the introductory paragraph to this financial data as of the dates stated
    therein. We have included EBITDA because we understand that it is one
    measure used by some investors to determine our operating cash flow and
    historical ability to service our indebtedness. However, other companies in
    our business may present EBITDA differently than we do. EBITDA is not a
    measurement of financial performance under generally accepted accounting
    principles and should not be considered by an investor as an alternative to
    net income or operating income as an indicator of our operating performance
    or cash flow from operations, or as an alternative to cash flows as a
    measure of liquidity.

(2) Adjusted EBITDA for any relevant period (for the twelve months ended
    September 30, 1999 and December 31, 1998 and the nine months ended
    September 30, 1998 and 1999) represents EBITDA as adjusted, giving effect to
    the acquisitions of System Resources Corporation and Atlantic Aerospace
    Electronics Corporation, stated on a pro forma basis before non-recurring
    charges as if they had occurred at the beginning of each such period.
    Adjusted EBITDA also includes the effect of conforming Advanced
    Communication Systems' fiscal year end in 1998 and 1999 of September 30th to
    our fiscal year end. Also, Adjusted EBITDA includes certain anticipated cost
    savings, net of certain incremental expenses, of $4.9 million (for the
    acquisition of Advanced Communication Systems and for our software
    acquisitions). Cost savings associated with the Advanced Communication
    Systems acquisition include the retirement of the chief executive officer,
    costs of operating as a public company and consolidation of legal and audit
    services, among others. Cost savings associated with the acquisitions of
    Mainsaver, Assist and SFG Technologies include consolidation of accounting
    functions and employee benefits, consolidation of professional services, and
    reduction in personnel. Actual results and cost savings may differ
    materially from those reflected in Adjusted EBITDA due to higher than
    expected integration costs, higher than expected costs associated with
    expanding our business segments' operations or an increase in our other
    costs. Such estimated cost savings do not qualify as pro forma adjustments
    under Regulation S-X promulgated under the Securities Act and constitute
    forward-looking statements within the meaning of the Private Securities
    Litigation Reform Act of 1995. Accordingly, such cost savings have been
    excluded from the pro forma adjustments in our unaudited pro forma
    historical financial information. Arthur Andersen LLP does not express any
    opinion or other form of assurance with respect to Adjusted EBITDA or any
    components thereof. See "Cautionary Statement About Forward-Looking
    Statements."

(3) For purposes of computing the pro forma ratio of earnings to fixed charges,
    earnings consist of income before income taxes plus fixed charges and "fixed
    charges" consist of interest expense (including amortization of debt
    discount and expense), leasing expense and the estimated interest factor
    attributable to rentals. The pro forma ratio of earnings to combined fixed
    charges and preferred dividends was 2.1x during 1996, 1.4x during 1997, 1.7x
    during 1998, 1.8x during the nine months ended September 30, 1998, and 2.3x
    during the nine months ended September 30, 1999.

                                       15
<PAGE>
                       SUMMARY HISTORICAL FINANCIAL DATA
                (IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)

    TITAN DERIVED THE FOLLOWING INFORMATION FROM ITS AUDITED CONSOLIDATED
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1996 THROUGH
1998 AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1998 AND 1999. THE FOLLOWING INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF
TITAN AND RELATED NOTES CONTAINED ELSEWHERE IN THIS OFFERING CIRCULAR.

    THE SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS DATA FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND 1999 AND THE CONSOLIDATED BALANCE SHEET DATA AS OF
SEPTEMBER 30, 1999 ARE UNAUDITED BUT INCLUDE, IN THE OPINION OF MANAGEMENT, ALL
ADJUSTMENTS, CONSISTING OF ONLY NORMAL RECURRING ADJUSTMENTS, NECESSARY FOR A
FAIR PRESENTATION OF SUCH DATA. RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS WHICH MAY BE EXPECTED FOR ANY
OTHER INTERIM PERIODS OR FOR THE YEAR AS A WHOLE.

<TABLE>
<CAPTION>
                                                                                                NINE MONTHS ENDED
                                                                 YEAR ENDED DECEMBER 31,          SEPTEMBER 30,
                                                              ------------------------------   -------------------
                                                                1996       1997       1998       1998       1999
                                                              --------   --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................................................  $245,976   $275,923   $303,428   $218,678   $274,059
Cost and expenses:
  Cost of revenues..........................................   192,657    216,553    232,041    168,816    211,147
  Selling, general and administrative expense...............    36,226     36,731     37,553     26,936     32,957
  Research and development expense..........................     5,023      7,466      5,590      4,025      5,317
  Special acquisition related charges and other.............        --      6,600      9,891      4,553         --
                                                              --------   --------   --------   --------   --------
    Total costs and expenses................................   233,906    267,350    285,075    204,330    249,421
                                                              --------   --------   --------   --------   --------
Operating Profit............................................    12,070      8,573     18,353     14,348     24,638

Interest expense............................................    (4,764)    (6,643)    (7,377)    (5,399)    (6,712)
Interest income.............................................       639        872        392        262        585
                                                              --------   --------   --------   --------   --------
Income from continuing operations before income taxes.......     7,945      2,802     11,368      9,211     18,511
Income tax provision (benefit)..............................     2,603      4,184      4,155      3,336      5,553
                                                              --------   --------   --------   --------   --------
Income from continuing operations before cumulative effect
  of change in accounting principle.........................     5,342     (1,382)     7,213      5,875     12,958
Cumulative effect of change in accounting principle, net....        --         --    (19,474)   (19,474)        --
Loss from discontinued operations, net of taxes.............    (6,326)   (17,930)    (7,444)    (5,617)        --
                                                              --------   --------   --------   --------   --------
  Net income (loss).........................................      (984)   (19,312)   (19,705)   (19,216)    12,958
Dividend requirements on preferred stock....................      (803)      (875)      (778)      (605)      (521)
                                                              --------   --------   --------   --------   --------
  Net income (loss) applicable to common stock..............  $ (1,787)  $(20,187)  $(20,483)  $(19,821)  $ 12,437
                                                              ========   ========   ========   ========   ========
Basic earnings per share:
    Income from continuing operations.......................  $   0.14   $  (0.07)  $   0.18   $   0.15   $   0.33
    Cumulative effect of change in accounting principle.....        --         --      (0.56)     (0.56)        --
    Loss from discontinued operations.......................     (0.20)     (0.54)     (0.21)     (0.16)        --
                                                              --------   --------   --------   --------   --------
  Net income (loss).........................................  $  (0.06)  $  (0.61)  $  (0.59)  $  (0.57)  $   0.33
                                                              ========   ========   ========   ========   ========
    Weighted average shares.................................    32,068     33,094     34,895     34,614     38,076
                                                              ========   ========   ========   ========   ========
Diluted earnings per share:
    Income from continuing operations.......................  $   0.14   $  (0.07)  $   0.18   $   0.15   $   0.29
    Cumulative effect of change in accounting principle.....        --         --      (0.54)     (0.54)        --
    Loss from discontinued operations.......................     (0.20)     (0.54)     (0.21)     (0.16)        --
                                                              --------   --------   --------   --------   --------
  Net income (loss).........................................  $  (0.06)  $  (0.61)  $  (0.57)  $  (0.55)  $   0.29
                                                              ========   ========   ========   ========   ========
    Weighted average shares.................................    32,445     33,094     36,177     36,013     45,732
                                                              ========   ========   ========   ========   ========
OTHER DATA:
  Special acquisition related charges and other (1).........  $     --   $  9,846   $  9,891   $  4,553   $     --
  EBITDA (2)................................................    20,114     27,632     35,370     24,279     31,435
  Depreciation and Amortization.............................     8,044      9,213      7,126      5,378      6,797
  Capital Expenditures......................................     6,638      6,647      4,038      2,284      5,672
  Ratio of Earnings to Fixed Charges (3)....................      2.1x       1.3x       2.1x       2.3x       3.1x
</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   AS OF
                                                                    AS OF DECEMBER 31,         SEPTEMBER 30,
                                                              ------------------------------   --------------
                                                                1996       1997       1998          1999
                                                              --------   --------   --------   --------------
<S>                                                           <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
  Cash and equivalents......................................  $  5,719   $ 11,383   $ 11,079      $  4,207
  Investments...............................................     9,888         --         --            --
  Working capital...........................................    62,634    115,779     64,450        91,391
  Property and equipment, net...............................    29,391     27,666     25,702        28,476
  Total assets..............................................   193,288    183,703    192,567       293,108
  Total debt................................................    54,242     62,200     75,240       130,854
  Stockholders' equity......................................    82,279     65,447     50,711        86,837
</TABLE>

------------------------------

(1) Special acquisition charges primarily relate to direct merger transaction
    costs and integration costs in 1998 and 1999, and charges related to asset
    write downs to net realizable value and an accrual for certain environmental
    liabilities in 1997.

(2) EBITDA for any relevant period represents earnings before non-recurring
    special acquisition related charges and other interest, taxes, depreciation
    and amortization. We have included EBITDA because we understand that it is
    one measure used by some investors to determine our operating cash flow and
    historical ability to service our indebtedness. However, other companies in
    our business may present EBITDA differently than we do. EBITDA is not a
    measurement of financial performance under generally accepted accounting
    principles and should not be considered by an investor as an alternative to
    net income or operating income as an indicator of our operating performance
    or cash flow from operations, or as an alternative to cash flows as a
    measure of liquidity.

(3) For purposes of computing the ratio of earnings to fixed charges, earnings
    consist of income before income taxes plus fixed charges and "fixed charges"
    consist of interest expense (including amortization of debt discount and
    expense), leasing expense and the estimated interest factor attributable to
    rentals. The ratio of earnings to combined fixed charges and preferred
    dividends was 1.9x during 1996, 1.2x during 1997, 2.0x during 1998, 2.1x
    during the nine months ended September 30, 1998, and 2.9x during the nine
    months ended September 30, 1999.

                                       17
<PAGE>
                                  RISK FACTORS

    INVESTING IN THE HIGH TIDES INVOLVES RISK. YOU SHOULD CONSIDER CAREFULLY THE
FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
OFFERING CIRCULAR, BEFORE PURCHASING THE HIGH TIDES IN THIS OFFERING. THE RISKS
AND UNCERTAINTIES DESCRIBED BELOW 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 THESE RISKS 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

    OUR CAYENTA, TITAN SCAN AND TITAN WIRELESS BUSINESSES OPERATE IN EMERGING
MARKETS AND WE WILL BE UNABLE TO EXPAND THESE BUSINESSES AS WE EXPECT IF THE
PRINCIPAL PRODUCTS AND SERVICES OF THOSE BUSINESSES DO NOT MEET WITH MARKET
ACCEPTANCE.

    If any of the primary markets targeted by Cayenta, Titan Scan or Titan
Wireless fails to develop as we anticipate, our revenues will be less than we
expected, our business will suffer and we may be unable to recoup the
investments we have made to develop and market the principal products and
services of those businesses.

    To grow as currently contemplated, we will need to derive an increasing
portion of our revenues from our Cayenta, Titan Scan and Titan Wireless
businesses.

    To date, none of Cayenta's revenues have been derived from direct sales by
it of its total services provider, or TSP, offering. Cayenta's only TSP-related
revenues have resulted from providing TSP services to the customers of a joint
venture in which it holds a 10% equity interest. The market for TSP offerings
has only recently begun to develop, and Cayenta cannot be certain that the
market for TSP offerings will develop.

    The use of our Titan Scan electron beam technology for food irradiation has
only recently been approved by the applicable regulatory authorities in the
United States. Accordingly, a market for pasteurized foods has only recently
begun to develop, and its continued development will depend on broad acceptance
of irradiated foods by consumers, food producers and providers, restaurant
chains and food retailers. This acceptance may not occur.

    Titan Wireless's principal strategy is to provide products used in telephony
systems in developing countries. We cannot guarantee that a substantial market
for telephony services in developing countries will ever develop, or if such a
market does develop, that fixed-site satellite equipment will capture a
significant portion of that market. The development of a market for telephony
services in developing counties will depend upon a variety of factors including
whether a particular country has sufficient resources to support such a market
and whether the telephony services are offered at a reasonable cost to the end
users of such services. Titan Wireless's ability to penetrate the telephony
market in developing countries will be adversely affected to the extent that
other competing elements of the communications infrastructure, such as telephone
lines, other satellite-delivered solutions and fiber optic cable and television
cable, are installed in the developing countries. In addition, the development
and implementation of telephony systems will be dependent upon, among other
items, the continued development of necessary technologies, continued financial
and other support from governmental agencies, the implementation of
cost-effective systems, market acceptance for such systems and approval by
appropriate regulatory agencies.

                                       18
<PAGE>
    WE HAVE A LIMITED HISTORY OF COMMERCIALIZING NEW TECHNOLOGIES AND OUR
COMMERCIAL BUSINESSES MAY NOT REMAIN OR EVER BECOME SUCCESSFUL.

    In 1991, we adopted a strategy of seeking to develop commercial businesses
using technology developed in our defense businesses. Our Titan Scan and Titan
Wireless businesses are a product of this strategy. Many of our commercial
businesses are in an early stage of development or have only recently begun to
offer their products, services, systems or solutions in the emerging markets in
which they operate. These technology-based businesses are subject to risks
inherent in companies at these early stages of development, including:

    - the risks that their base technology will become obsolete and that they
      will fail to respond in a timely and cost-effective manner to rapid
      technological changes;

    - the risks associated with operating in markets that are subject to a high
      degree of competition;

    - the risk that they will have inadequate management resources to capitalize
      on market opportunities and execute their strategy;

    - the risk that they will be unable to manage rapid growth effectively;

    - the risk that they will be unable to execute successfully each portion of
      their business strategy on schedule;

    - the risk that we may not identify markets with sufficient opportunities to
      justify our investments in products and solutions for these markets;

    - the market and operating risks that are unique to each particular
      business; and

    - the risk that adequate capital may not be available to fund their
      continued development.

    WE CANNOT GUARANTEE THAT CAYENTA'S PENDING INITIAL PUBLIC OFFERING WILL
CLOSE OR THAT WE WILL BE ABLE TO EXECUTE ON OUR STRATEGY OF OBTAINING PUBLIC OR
PRIVATE FINANCING TO FUND THE GROWTH OF OUR COMMERCIAL BUSINESSES.

    As part of our strategy of seeking external financing to grow our commercial
businesses, our Cayenta subsidiary has filed a registration statement for an
initial public offering of its common stock. We cannot guarantee that Cayenta
will succeed in completing the offering, which may be adversely affected by
market conditions or other factors. We have extended a credit facility of up to
a maximum of $70.0 million to Cayenta under which Cayenta owed us approximately
$54 million as of January 21, 2000. Cayenta may not use the proceeds of its
initial public offering to pay amounts outstanding under its credit facility
with us.

    In addition, we may seek public or private financing for one or more of our
commercial businesses to fund their growth, including through initial public
offerings or spin-offs for any of our segments. We cannot guarantee that
adequate capital to fund our growth will be available to us or be available on
acceptable terms or that we will complete any spin-off of any of our segments.

    WE DEPEND ON GOVERNMENT CONTRACTS FOR A MAJORITY OF OUR REVENUES.

    We earn a majority of our total revenues from U.S. government contracts. Any
cancellations or modifications of our significant contracts or subcontracts, or
failure by the U.S. government to exercise an option period relating to those
contracts or subcontracts, could hurt our business, financial condition and
results of operations in the short or long term. Continuing declines in U.S.
defense and other federal agency budgets also may hurt our prospects.

    Our revenues from U.S. government business represented approximately 81% of
our total revenues in 1996, 82% of our total revenues in 1997, and 80% of our
total revenues in 1998. On a pro forma basis giving effect to our acquisition of
Advanced Communication Systems, our revenues from U.S.

                                       19
<PAGE>
government business represented approximately 88% of our total revenues for the
twelve months ended September 30, 1999. This percentage may rise in the future.
Although we bid for and are awarded long-term U.S. government contracts and
subcontracts, the U.S. government only funds these contracts on an annual basis,
and many of our contracts and subcontracts include option years. The U.S.
government may cancel these contracts at any time without penalty or may change
its requirements, programs or contract budget, and generally has the right not
to exercise option periods. The U.S. Congress may decline to appropriate funds
needed to complete the contracts awarded to us or the prime contractor. On our
subcontracts, we generally do not control the prime contractor's allocation of
resources. We also depend upon the prime contractor to perform its obligations
on the primary government contract. In addition to contract cancellations and
declines in agency budgets, our prospects may be adversely affected by:

    - budgetary constraints affecting U.S. government spending generally, and
      changes in fiscal policy or available funding;

    - curtailment of the U.S government's use of technology services providers;

    - the adoption of new laws or regulations;

    - technological developments;

    - U.S. government shutdowns, such as that which occurred during the U.S.
      government's 1996 fiscal year;

    - competition and consolidation in our business areas; and

    - general economic conditions.

These or other factors could cause government agencies to reduce their purchases
under contracts, to exercise their right to terminate contracts or not to
exercise options to renew contracts. Any of these actions could have a material
adverse effect on our business, financial condition and results of operations.

    GOVERNMENT AUDITS OF OUR GOVERNMENT CONTRACTS COULD CAUSE A MATERIAL
NEGATIVE ADJUSTMENT TO OUR REVENUES.

    Our government contracts are subject to cost audits by the government. These
audits may occur several years after completion of the audited work. Audits may
result in a recalculation of contract revenues or result in the government
refusing to reimburse some of our contract costs and fees. Generally, we resolve
audit issues by negotiation without material adjustments. However, in the
future, we could have a material adjustment to revenue as a result of an audit,
including an audit of one of the companies we have recently acquired. Before we
acquired them, some of our recently acquired companies did not impose internal
controls as rigorous as those we impose on the government contracts we perform.
As part of the integration process, we seek to apply our policies throughout the
acquired companies.

    OUR OPERATING MARGINS MAY DECLINE UNDER OUR FIXED-PRICE CONTRACTS IF WE FAIL
TO ESTIMATE ACCURATELY THE RESOURCES NECESSARY TO SATISFY OUR OBLIGATIONS.

    Some of our contracts are fixed-price contracts under which we bear the risk
of any cost overruns. Our profits are adversely affected if our costs under
these contracts exceed the assumptions we used in bidding for the contract.

    WE ARE NOT ABLE TO GUARANTEE THAT WE WILL RETAIN OUR CONTRACTS WITH THE U.S.
GOVERNMENT AND SUBCONTRACTS UNDER U.S. GOVERNMENT PRIME CONTRACTS IN ANY
COMPETITIVE REBIDDING PROCESS.

    Upon expiration of a U.S. government contract or subcontract under U.S.
government prime contracts, if the government customer requires further services
of the type provided in the contract,

                                       20
<PAGE>
there is frequently a competitive rebidding process. We cannot guarantee that
we, or the prime contractor, will win any particular bid, or that we will be
able to replace business lost upon expiration or completion of a contract.
Further, all U.S. government contracts are subject to protest by competitors.
The unexpected termination of one or more of our significant contracts could
result in significant revenue shortfalls. The termination or nonrenewal of any
of our significant contracts, short-term revenue shortfalls, the imposition of
fines or damages, or our suspension or debarment from bidding on additional
contracts could have a material adverse effect on our business, financial
condition and results of operations.

    MANY OF OUR U.S. GOVERNMENT CUSTOMERS SPEND THEIR PROCUREMENT BUDGETS
THROUGH GSA SCHEDULE CONTRACTS, AND WE ARE REQUIRED TO COMPETE FOR POST-AWARD
ORDERS.

    Budgetary pressures and reforms in the procurement process have caused many
U.S. government customers increasingly to purchase goods and services through
"indefinite delivery, indefinite quantity" contracts, General Service
Administration, or GSA, Schedule contracts and other multiple award or
government-wide acquisitions contract vehicles. Our failure to compete
effectively in this procurement environment could have a material adverse effect
on our business, financial condition and results of operations. These contract
vehicles have resulted in increased competition and pricing pressure and
required us to make sustained post-award efforts to realize revenues under the
relevant contract. We cannot guarantee that we will continue to increase
revenues or otherwise sell successfully under these contract vehicles.

    WE MAY BE LIABLE FOR PENALTIES UNDER A VARIETY OF PROCUREMENT RULES AND
REGULATIONS, AND CHANGES IN GOVERNMENT REGULATIONS COULD ADVERSELY AFFECT OUR
BUSINESS.

    Our defense and commercial businesses must comply with and are affected by
various government regulations. Among the most significant regulations are the
following:

    - the Federal Acquisition Regulations, which comprehensively regulate the
      formation, administration and performance of government contracts;

    - the Truth in Negotiations Act, which requires certification and disclosure
      of all cost and pricing data in connection with contract negotiations;

    - the Cost Accounting Standards, which impose accounting requirements that
      govern our right to reimbursement under certain cost-based government
      contracts; and

    - laws, regulations and Executive Orders restricting the use and
      dissemination of information classified for national security purposes and
      the exportation of certain products and technical data.

These regulations affect how our customers and we do business and, in some
instances, impose added costs on our businesses. Any changes in applicable laws
could adversely affect the financial performance of the business affected by the
changed regulations. Any failure to comply with applicable laws could result in
contract termination, price or fee reductions or suspension or debarment from
contracting with the U.S. government.

    OUR FAILURE TO RETAIN QUALIFIED TECHNICAL AND MANAGEMENT PERSONNEL COULD
ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.

    We need to maintain our workforce of highly qualified technical and
management personnel for each of our segments, including our engineers, computer
programmers and personnel with security clearances required for classified work.
In addition, our future success will depend in part on our ability to identify,
recruit and retain additional qualified personnel, including individuals with
security clearances required for classified work. The loss of any key personnel
could negatively affect our business, financial condition and results of
operations. Our employees generally have many other job opportunities, and there
is intense competition for their services. Consequently, we strive to maintain
an entrepreneurial work environment and provide financial incentives to attract
and retain our key

                                       21
<PAGE>
personnel. We cannot guarantee that we will be able to continue to attract and
retain personnel with the advanced technical and security clearance
qualifications necessary for the development of our business.

    WE COMPETE IN HIGHLY COMPETITIVE MARKETS AGAINST MANY COMPANIES THAT ARE
LARGER, BETTER FINANCED AND BETTER KNOWN THAN TITAN.

    Our businesses operate in highly competitive markets. Many of our
competitors are larger, better financed and better known companies who may
compete more effectively than us. We believe we must continue to expand our
defense information technology business so that we can remain price competitive
and compete for larger contracts. For that reason, we are continuing to look for
acquisition candidates. Our commercial businesses compete against other
technologies as well as against companies with similar products. In order to
remain competitive, we must invest to keep our products technically advanced and
compete on price and on value added to our customers. Our ability to compete may
be adversely affected by limits on our capital resources and our ability to
invest in maintaining and expanding our market share. Any adverse financial
developments could make us a less effective competitor.

    WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR ACQUISITIONS OF OTHER COMPANIES.

    Since January 1, 1998, we have acquired seven defense information technology
companies as part of our consolidation strategy for our defense business. Four
of these seven transactions were structured as stock-for-stock pooling of
interests transactions. In addition, since January 1, 1999, we have acquired
four information technology services and solutions companies as part of
Cayenta's development of its total services provider offering. We are in the
process of acquiring Advanced Communication Systems which itself has acquired
multiple companies, most recently in September 1999. We also have agreed to
acquire one, and have a non-binding letter of intent to acquire another,
privately-held defense information technology company. The acquisition and
integration of new companies involves risk. The integration of acquired
businesses may be costly and may result in a decrease in our revenues or a
decrease in the value of our common stock for the following reasons, among
others:

    - we may need to divert more management resources to integration than we
      planned, which may adversely affect our ability to pursue other more
      profitable activities;

    - the difficulties of integration may be increased by the necessity of
      coordinating geographically separated organizations, integrating personnel
      with disparate business backgrounds and combining different corporate
      cultures;

    - we may not eliminate as many redundant costs as we anticipated in
      selecting our acquisition candidates; and

    - one or more of our acquisition candidates also may have liabilities or
      adverse operating issues that we failed to discover through our diligence
      prior to the acquisition.

Consequently, our recent acquisitions may not improve our business, financial
condition and results of operations in the short-term or long-term as we expect
them to do.

    We intend to continue to look for complementary businesses or technologies
to acquire so that we can expand our core businesses. However, we may not find
any more attractive candidates or may find that the acquisition terms are not
favorable to us. In addition, we may compete with other companies for these
acquisition candidates. Instability in the U.S. securities markets and
volatility in our stock price may make acquisitions with our stock more
expensive. We also may not adequately assess the risks inherent in a particular
acquisition candidate or correctly assess the candidate's potential contribution
to our financial performance. Accordingly, our acquisition strategy may not
improve our overall business, financial condition and results of operations and
could weaken them.

    WE MAY NOT ACQUIRE ADVANCED COMMUNICATION SYSTEMS, WHICH WOULD FORCE US TO
MAKE AN OFFER TO REPURCHASE UP TO 50% OF THE AGGREGATE LIQUIDATION AMOUNT OF
EACH OF THE HIGH TIDES AND THE TRUST'S

                                       22
<PAGE>
COMMON SECURITIES AND RENDER MEANINGLESS THE PRO FORMA FINANCIAL INFORMATION IN
THIS OFFERING CIRCULAR.

    Our acquisition of Advanced Communication Systems is expected to close
during the first quarter of 2000. Consummation of the acquisition is subject to
various conditions, including approval by the stockholders of Advanced
Communication Systems, who are expected to vote on the acquisition in
February 2000. Although we believe that all such conditions will be satisfied,
we cannot guarantee that the requested stockholder approval will be obtained,
that all other conditions to the acquisition will be satisfied or that we will
not be required to offer to repurchase up to 50% of the aggregate liquidation
amount of each of the HIGH TIDES and the trust's common securities. We will be
required to make the repurchase offer in the event that we do not consummate our
acquisition of Advanced Communication Systems on or prior to March 31, 2000. In
the event of a bankruptcy or similar proceeding involving Titan between the date
of this offering circular and March 31, 2000, the holders of the HIGH TIDES or
common securities will have no special claim to the proceeds from this offering
that are dedicated to fund the repurchase offer.

    We have included various pro forma financial information in this offering
circular that assume that we consummated our acquisition of Advanced
Communication Systems as of certain dates or for various periods. In the event
that we do not consummate our acquisition of Advanced Communication Systems,
that financial information would not be meaningful.

    WE MAY INCUR SIGNIFICANT COSTS IN PROTECTING OUR INTELLECTUAL PROPERTY.

    As a policy, we seek to protect our proprietary technology and inventions
through patents, copyrights, trade secret law and other legal protections. While
our patent portfolio is valuable, our financial success ultimately depends upon
our ability to deliver products and services that meet customer needs, not on
intellectual property laws. We may, however, incur significant expense both in
protecting our intellectual property and in defending or assessing claims with
respect to intellectual property owned by others. Any patent or other
infringement litigation by or against us could have an adverse effect on our
business, financial condition and results of operations. We also could be forced
to modify or abandon one or more planned or current products based upon our
assessment of intellectual property risks or actual or threatened claims by
other companies.

    On January 6, 2000, Ion Beam Applications s.a., a Belgian corporation, and
some of its U.S. subsidiaries filed an action for declaratory judgment in a
federal court in Virginia against us relating to our patent for our SureBeam
technology. The action attacks the validity of our patent, seeks a declaration
that Ion Beam Applications and its customers have not infringed any of the 62
claims in our patent, and alleges that we have engaged in unfair competition and
that our conduct constitutes patent misuse. We intend to vigorously defend our
patent position. However, a finding in favor of Ion Beam Applications in this
action could adversely affect our business, financial condition and results of
operations by reducing the growth of our Titan Scan business segment and
preventing us from generating the revenues that we expect from food
pasteurization.

    OUR QUARTERLY AND ANNUAL FINANCIAL PERFORMANCE AND STOCK PRICE HAVE
HISTORICALLY FLUCTUATED AND MAY CONTINUE TO FLUCTUATE SIGNIFICANTLY IN THE
FUTURE.

    Our revenues are affected by factors such as the unpredictability of sales
and contracts awards due to the long procurement process for most of our
products and services, defense and intelligence budgets, competition and general
economic conditions. Our product mix and unit volume, our ability to keep
expenses within budgets, our distribution channels and our pricing affect our
gross margins. These factors and other risk factors described herein may
adversely affect our financial performance within a period and cause our
financial results to fluctuate significantly on a quarterly or annual basis.
Consequently, we do not believe that comparison of our financial performance
from period to period is necessarily meaningful or predictive of our likely
future performance. It is possible that in some future quarter or quarters our
operating results will be below the expectations of public market analysts or
investors. If so, the market price of our common stock may decline
significantly.

                                       23
<PAGE>
    From time to time, there may be significant volatility in the market price
for our common stock. Over the past three years, the market price of our common
stock has fluctuated over a wide range. During our last four complete fiscal
quarters, the highest sale price of our common stock on the New York Stock
Exchange was $48.38 and the lowest sale price of our common stock was $4.75. A
number of factors involving Titan and our industry could contribute to future
fluctuations in our stock price, including the risk factors described herein.

    RISKS OF OUR INTERNATIONAL OPERATIONS, INCLUDING ECONOMIC CONDITIONS IN
EMERGING MARKETS, COULD ADVERSELY AFFECT THE PROSPECTS OF OUR COMMERCIAL
COMMUNICATIONS BUSINESS.

    We sell commercial communications products and services primarily in
developing countries. Our revenues from sales of these products and services in
foreign countries represented 3% of our total revenues for the nine months ended
September 30, 1999. We expect our revenues from these activities in foreign
countries to increase. Although we generally sell our commercial communications
products and services in U.S. dollars, currency devaluations and adverse market
conditions in emerging markets have negatively affected demand for our
commercial communications products and services and, consequently, our revenues
for this segment. Our commercial communications products generally require
substantial capital investments, and our potential customers have not had the
capital resources to make these investments. We have assisted our established
marketing partner in Indonesia by providing trade credit that has subsequently
been extended with a final installment due in September 2000. Because of market
conditions in Indonesia and other factors, there is a risk that our customer in
Indonesia may not be able to pay this debt in accordance with the extended
terms. Further, we do not have the capital resources or tolerance of risk to
finance the purchase of our commercial communications products, and therefore
rely upon our customers' abilities to obtain financing. As a result, revenues in
this group may be adversely affected by economic conditions in emerging markets
and the unavailability of financing on reasonable terms. We also are
increasingly seeking opportunities to capture operating revenues from the use of
our systems to provide telephony services. These services generally are billed
in U.S. dollars but may in the future be billed in local currency. We do not
believe that our international operations currently subject us to material risks
from fluctuations in currency exchange rates. However, as we increase our
commercial communications activities in foreign countries, our risks from
fluctuations in currency exchange rates could increase.

    Selling products or services in international markets also entails other
market, economic, cultural, legal and political risks, conditions and expenses.
These risks include:

    - trade barriers;

    - export and import restrictions and other applicable laws;

    - political and economic instability;

    - difficulties in collecting amounts owed to us; and

    - difficulties in managing overseas employees and contractors.

Any one of these factors or other international business risks could adversely
affect our financial performance.

    OUR OPERATING RESULTS MAY SUFFER IF A SIGNIFICANT NUMBER OF OUR U.S. NAVY
CONTRACTS ARE DELAYED OR CANCELED.

    A significant percentage of our products and services are predominantly sold
and performed under contracts with various parts of the U.S. Navy or with prime
contractors to the U.S. Navy. Although these various parts of the U.S. Navy are
subject to common budgetary pressures and other factors, our various U.S. Navy
customers exercise independent purchasing decisions. However, because of such
concentration of our contracts, we are vulnerable to adverse changes in our
business, financial

                                       24
<PAGE>
condition and results of operations if a significant number of our U.S. Navy
contracts and subcontracts are simultaneously delayed or canceled for budgetary
or other reasons.

    THE COVENANTS IN OUR EXISTING CREDIT FACILITY RESTRICT OUR FINANCIAL AND
OPERATIONAL FLEXIBILITY, AND IT IS LIKELY THAT OUR ANTICIPATED REPLACEMENT
CREDIT FACILITY WILL CONTAIN SIMILAR OR MORE RESTRICTIVE COVENANTS.

    Our existing credit facility contains covenants that restrict, among other
things, our ability to borrow money, make particular types of investments or
other restricted payments, swap or sell assets, merge or consolidate, or make
acquisitions. An event of default under our credit facility could allow the
lenders to declare all amounts outstanding to be immediately due and payable. We
have pledged substantially all of our consolidated assets and the stock of our
subsidiaries to secure the debt under our credit facility. If the amounts
outstanding under the credit facility were accelerated, the lenders could
proceed against our consolidated assets and the stock of our subsidiaries. Any
event of default, therefore, could have a material adverse effect on our
business. Our credit facility also requires us to maintain specified financial
ratios. Our ability to meet these financial ratios can be affected by events
beyond our control, and we cannot assure you that we will meet those ratios. We
expect to replace our credit facility. It is likely that any replacement credit
facility will contain similar or more restrictive covenants. We also may incur
future debt obligations that might subject us to restrictive covenants that
could affect our financial and operational flexibility or subject us to other
events of default.

    OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY DISRUPTIONS IN OUR SUPPLY
OF PRODUCTS AND COMPONENTS OR SERVICES.

    Because our internal manufacturing capacity is limited, we use contract
manufacturers. While we use care in selecting our manufacturers, this
arrangement gives us less control over the quality and price of products or
components than if we manufactured them ourselves. In some cases, we obtain
products from a sole supplier or a limited group of suppliers. Consequently, we
risk disruptions in our supply of key products and components if our suppliers
fail or are unable to perform because of strikes, natural disasters, financial
condition or other factors. Any material supply disruptions could adversely
affect our business, financial condition and results of operations as well as
our ongoing product cost structure.

    OUR BUSINESS IS SUBJECT TO SIGNIFICANT ENVIRONMENTAL REGULATION.

    We are subject to environmental and safety laws and regulations governing
the use, storage and disposal of hazardous substances or wastes and imposing
liability for the cleanup of contamination from these substances. We cannot
completely eliminate the risk of contamination or injury from these substances
or wastes, and, in the event of such an incident, we could be held liable for
any damages that result. From time to time, we have been notified of violations
of government and environmental regulations. We attempt to correct these
violations promptly without any material impact on our operations. In addition,
we may be required to incur significant additional costs to comply with
environmental laws and regulations in the future. These costs, and any future
violations or liability under environmental laws or regulations, could have a
material adverse effect on our business, financial condition and results of
operations.

    FAILURE TO ACHIEVE YEAR 2000 COMPLIANCE COULD HAVE A NEGATIVE EFFECT ON OUR
FINANCIAL CONDITION.

    We implemented a Year 2000 compliance program to address various areas of
the business that may encounter difficulties as a result of the Year 2000 issue.
Because of our history of acquisitions, we have a number of business units that
use different systems, some of which we know have Year 2000 issues. We estimate
that the cost of moving business units to new systems will ultimately range from
$1.0 million to $2.0 million. If any of the business units experience system
failures as a result of the Year 2000 issue, disruptions could occur in some key
business processes, such as labor and other cost accumulation, project
management and billing. If the business units cannot timely correct all Year
2000

                                       25
<PAGE>
problems, these problems may have material adverse effects on our financial
position, results of operations or cash flows. To date, none of our business
units has experienced system failures as a result of the Year 2000 issue.

    Most of our customers, in particular the U.S. government, utilize complex
billing and accounting systems to determine the timing and the amounts that will
be paid to us under our contracts. In addition, several of our major strategic
partners rely on complex software systems to coordinate and control their
day-to-day operations. These complex systems may not be Year 2000 compliant.
Although these customers and strategic partners advised us that they expected to
resolve any Year 2000 issues before December 31, 1999, we cannot guarantee that
our billing procedures and cycles, or our joint sales and marketing efforts,
will not be interrupted in the future. If these Year 2000 issues involving our
customers and business partners are not resolved on time, or at all, our
business, financial position, results of operations or cash flows could be
materially and adversely affected. To date, none of our billing procedures or
cycles, or our joint sales and marketing efforts, has been interrupted.

    SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK IN THE OPEN MARKET BY
ADVANCED COMMUNICATION SYSTEMS STOCKHOLDERS COULD DEPRESS OUR STOCK PRICE.

    If Advanced Communication Systems stockholders sell substantial amounts of
our common stock in the public market following the proposed acquisition,
including shares issued on 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
would deem appropriate. Based on the number of outstanding shares of Advanced
Communication Systems common stock as of January 20, 2000, we would issue
5,478,600 shares in the acquisition if our average stock price used to calculate
the exchange ratio is greater than $32.50 but less than or equal to $35.75 and
6,982,232 shares in the acquisition if our average stock price used to calculate
the exchange ratio is at least $22.95 but less than $25.50. In addition, we will
assume all outstanding options to purchase Advanced Communication Systems common
stock, which will be converted into options to acquire additional shares of our
common stock using the same exchange ratio which is applicable to Advanced
Communication Systems common stock in the merger. All of the shares of our
common stock issued to Advanced Communication Systems stockholders, including
those issued upon the exercise of options, will be freely tradable without
restrictions or further registration under the Securities Act, unless they are
issued to an "affiliate" of Advanced Communication Systems as that term is
defined under the Securities Act, at the time the acquisition is submitted for
approval by Advanced Communication Systems stockholders. The term "affiliate"
would include directors, executive officers and some significant stockholders of
Advanced Communication Systems.

    WE DO NOT ANTICIPATE THAT WE WILL PAY DIVIDENDS ON OUR COMMON STOCK.

    We have not paid cash dividends on our common stock within the past three
years and we do not anticipate that we will pay cash dividends in the
foreseeable future. We may pay cash dividends only if we comply with financial
tests and other restrictions contained in agreements relating to our
indebtedness.

    PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND IN DELAWARE
LAW COULD DISCOURAGE TAKEOVER ATTEMPTS WE OPPOSE EVEN IF OUR STOCKHOLDERS MIGHT
BENEFIT FROM A CHANGE IN CONTROL OF TITAN.

    Provisions in our certificate of incorporation and bylaws and in the
Delaware General Corporation Law may make it difficult and expensive for a third
party to pursue a takeover attempt we oppose even if a change in control of
Titan would be beneficial to the interests of our stockholders. Our bylaws
permit our stockholders to take action by written consent instead of at a
meeting and to nominate directors or bring other business before stockholder
meetings only if they comply with advance notice and other procedural
requirements in our bylaws. Our board of directors currently has the authority
under our certificate of incorporation to issue up to 2,500,000 authorized
shares of its preferred stock

                                       26
<PAGE>
in one or more series and to fix the powers, preferences and rights of each
series without stockholder approval. The ability to issue preferred stock could
discourage unsolicited acquisition proposals or make it more difficult for a
third party to gain control of Titan, or otherwise could adversely affect the
market price of our common stock. Further, as a Delaware corporation, we are
subject to section 203 of the Delaware General Corporation Law. This section
generally prohibits us from engaging in mergers and other business combinations
with stockholders that beneficially own 15% or more of our voting stock, or with
their affiliates, unless our directors or stockholders approve the business
combination in the prescribed manner.

    WE HAVE ADOPTED A SHAREHOLDER RIGHTS PLAN WHICH COULD DISCOURAGE HOSTILE
ACQUISITIONS OF CONTROL IN WHICH OUR STOCKHOLDERS MAY WISH TO PARTICIPATE.

    In 1995, our board of directors adopted a "poison pill" shareholder rights
plan, which may discourage a third party from making a proposal to acquire Titan
which we have not solicited or do not approve, even if the acquisition would be
beneficial to our stockholders. As a result, our stockholders who wish to
participate in such a transaction may not have an opportunity to do so. Under
our rights plan, preferred share purchase rights, which are attached to our
common stock, generally will be triggered upon the acquisition, or actions that
would result in the acquisition, of 15% or more of our common stock by any
person or group. If triggered, these rights would entitle our stockholders other
than the acquiror to purchase, for the exercise price, shares of our common
stock having a market value of two times the exercise price. In addition, if a
company acquires us in a merger or other business combination not approved by
the board of directors, these rights will entitle our stockholders other than
the acquiror to purchase, for the exercise price, shares of the common stock of
the acquiring company having a market value of two times the exercise price.

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
January 21, 2000, we had approximately $141 million of indebtedness under our
existing credit facility. We expect to use borrowings of approximately
$77 million under our new credit facility to repay existing indebtedness of
Advanced Communication Systems when we close the acquisition and to pay certain
acquisition-related expenses. 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
existing credit facility prohibits payments of principal, including redemption
payments, on the debentures without the prior consent of the lenders under our
existing credit facility.

                                       27
<PAGE>
    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 TIDES. Although our existing credit facility permits
our subsidiaries to distribute funds to us to make payments on the debentures,
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
set forth on the cover page of this offering circular, 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.

                                       28
<PAGE>
    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.

    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.

                                       29
<PAGE>
    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.

    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
offering circular.

    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

                                       30
<PAGE>
    - 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

    - ensure that the trust will be classified as a grantor trust.

    THE HIGH TIDES AND THE DEBENTURES DO NOT HAVE AN ESTABLISHED MARKET.

    Prior to this offering, there has been no public market for the HIGH TIDES.
We do not intend to list the HIGH TIDES on a national securities exchange or
automated interdealer quotation system. It is expected that the HIGH TIDES will
be eligible for trading in The PORTAL. One or more of the initial purchasers
intend to make a secondary market for the HIGH TIDES. However, 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.

                                USE OF PROCEEDS

    We estimate that the gross proceeds from the sale of the HIGH TIDES will be
$200.0 million. The trust will use these proceeds, together with the proceeds
from the issuance of the trust's common securities, to purchase debentures from
us. After deducting the commissions to the initial purchasers that we have
agreed to pay on behalf of the trust, and other offering expenses, we estimate
that we will receive net proceeds of $193 million from the sale of the
debentures to the trust, or $241.5 million if the over-allotment option of the
initial purchasers is exercised in full. We will be required to make a
repurchase offer for up to 50% of the aggregate liquidation amount of each of
the HIGH TIDES and the trust's common securities if our acquisition of Advanced
Communication Systems does not close on or prior to March 31, 2000. We will
dedicate 50% of the proceeds from the sale of debentures to the trust, plus an
amount equal to 2.5% of that portion of those proceeds, to fund the repurchase
offer, and use the remaining net proceeds to repay indebtedness outstanding
under our existing credit facility. The indebtedness to be repaid under our
existing credit facility has an interest rate of LIBOR plus 3%, which was
approximately 9.75% per annum on February 2, 2000, and maturity dates from
September 29, 2004 through June 9, 2005. That indebtedness was incurred by us to
fund acquisitions and our working capital requirements. If our acquisition of
Advanced Communication Systems closes on or prior to March 31, 2000, we will use
the proceeds from the sale of debentures to the trust that otherwise would have
been used to fund the repurchase offer for general corporate purposes, including
funding of our working capital requirements. In addition, a portion of these
proceeds also may be used to acquire or invest in complementary businesses,
technologies and products. We have agreed to acquire one, and have a non-binding
letter of intent to acquire another, privately-held defense information
technology company.

                                       31
<PAGE>
                        PRICE RANGE OF OUR COMMON STOCK

    Our common stock is listed on The New York Stock Exchange under the symbol
"TTN."

    The table below shows, for the periods indicated, the reported high and low
trading prices of our common stock on The New York Stock Exchange.

<TABLE>
<CAPTION>
                                                                   PRICE RANGE
                                                              ----------------------
                                                                HIGH          LOW
                                                              --------      --------
<S>                                                           <C>           <C>

CALENDAR YEAR 1997
  First Quarter.............................................   $ 3.75        $ 2.88
  Second Quarter............................................     4.38          2.75
  Third Quarter.............................................     7.44          4.19
  Fourth Quarter............................................     8.38          5.25

CALENDAR YEAR 1998
  First Quarter.............................................   $ 6.88        $ 5.50
  Second Quarter............................................     8.25          5.75
  Third Quarter.............................................     6.56          3.81
  Fourth Quarter............................................     6.19          4.25

CALENDAR YEAR 1999
  First Quarter.............................................   $ 6.25        $ 4.75
  Second Quarter............................................    11.00          4.94
  Third Quarter.............................................    14.63          9.38
  Fourth Quarter............................................    48.38         13.13

CALENDAR YEAR 2000
  First Quarter (through February 3, 2000)..................   $49.63        $33.38
</TABLE>

    As of January 20, 2000, there were 3,486 holders of record of Titan common
stock.

    On February 3, 2000, the last reported sale price of our common stock on The
New York Stock Exchange was $40.3125.

                                DIVIDEND POLICY

    We did not declare or pay a cash dividend on our common stock in any of the
periods shown in the table above. We may pay cash dividends only if doing so
complies with financial tests and other restrictions contained in agreements
relating to our indebtedness, including the debentures. Other than earnings
distributed as quarterly dividends to holders of our public preferred stock, we
anticipate that, for the foreseeable future, we will continue to retain any
earnings for use in the operation of our business.

                                       32
<PAGE>
                                 CAPITALIZATION

    The following table sets forth as of September 30, 1999:

    - our unaudited actual capitalization;

    - our unaudited pro forma capitalization as adjusted to give effect to
     acquisitions we completed after such date;

    - our unaudited pro forma capitalization as adjusted to give effect to
     acquisitions we completed after such date and this offering; and

    - our unaudited pro forma capitalization as adjusted to give effect to
     acquisitions we completed after such date, this offering, our probable
     acquisition of Advanced Communication Systems, and related borrowings under
     a new credit facility that we anticipate entering into following this
     offering.

    This table should be read in conjunction with the consolidated financial
statements and the unaudited pro forma financial information and, in each case,
the related notes included elsewhere in this offering circular or incorporated
by reference herein.

<TABLE>
<CAPTION>
                                                             AS OF SEPTEMBER 30, 1999
                                           ------------------------------------------------------------
                                                                      PRO FORMA FOR     PRO FORMA FOR
                                                                        COMPLETED         COMPLETED
                                                      PRO FORMA FOR   ACQUISITIONS    ACQUISITIONS, ACS
                                                        COMPLETED       AND THIS          AND THIS
                                            ACTUAL    ACQUISITIONS      OFFERING          OFFERING
                                           --------   -------------   -------------   -----------------
                                                                  (IN THOUSANDS)
<S>                                        <C>        <C>             <C>             <C>
Cash and cash equivalents:...............  $  4,207      $  4,620        $110,220          $  6,235
                                           ========      ========        ========          ========
Short-term debt and current portion of
  long-term debt.........................    13,052        14,397           7,287             8,251
Long-term debt, less current portion:
Senior secured credit facility...........   110,712       150,064          69,774            22,904
Other....................................     7,090         7,590           7,590             8,010
                                           --------      --------        --------          --------
  Total long-term debt...................   117,802       157,654          77,364            30,914
Company obligated mandatorily redeemable
  convertible preferred securities of a
  subsidiary trust whose sole assets are
  senior subordinated debentures of
  Titan..................................        --            --         200,000           200,000
Stockholders' equity:
  Preferred stock, $1.00 par value,
    authorized 2,500,000 shares;
    cumulative convertible preferred
    stock, $13,897 liquidation
    preference, authorized 1,068,102
    shares, issued and outstanding
    694,872 shares.......................       695           695             695               695
  Series A junior participating,
    authorized 454,071 shares, none
    issued...............................        --            --              --                --
  Common stock...........................       437           437             437               552
  Additional paid-in capital.............    98,833        98,833          98,833           141,344
  Retained earnings (deficit)............   (10,492)       (7,968)         (7,968)           (8,195)
    Total stockholders' equity...........    86,837        89,361          89,361           131,450
                                           --------      --------        --------          --------
Total capitalization.....................  $217,691      $261,412        $374,012          $370,615
                                           ========      ========        ========          ========
</TABLE>

                                       33
<PAGE>
                              ACCOUNTING TREATMENT

    For financial reporting purposes, we will treat the trust as one of our
subsidiaries. Accordingly, we will include the accounts of the trust in our
consolidated financial statements. We will 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 will
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.

    We have not included separate financial statements of the trust because we
do not consider those financial statements material to you because:

    - Titan, a reporting company under the Exchange Act, will own, directly or
      indirectly all of the voting securities of the trust;

    - the trust has no independent operations but exists for the sole purpose of
      issuing securities representing undivided beneficial interests in the
      trust's assets and investing the proceeds in the debentures; and

    - we will fully and unconditionally guarantee the obligations of the trust
      under the HIGH TIDES and the common securities to the extent that the
      trust has funds available to meet such obligations.

                                       34
<PAGE>
                       PENDING AND COMPLETED ACQUISITIONS

PENDING ACQUISITIONS

    TITAN SYSTEMS

    On December 9, 1999, we entered into an agreement to acquire Advanced
Communication Systems in a merger that we anticipate will constitute a tax-free
reorganization and be accounted for as a pooling of interests. We expect that
our acquisition of Advanced Communication Systems will close during the first
quarter of 2000, subject to the satisfaction of the conditions contained in the
merger agreement, including the affirmative vote of Advanced Communication
Systems' stockholders. Based on the number of outstanding shares of Advanced
Communication Systems common stock as of January 20, 2000, we would issue
5,478,600 shares in the acquisition if our average stock price used to calculate
the exchange ratio is greater than $32.50 but less than or equal to $35.75 and
6,982,232 shares in the acquisition if our average stock price used to calculate
the exchange ratio is at least $22.95 but less than $25.50. In addition, we will
assume all outstanding options to purchase Advanced Communication Systems common
stock, which will be converted into options to acquire additional shares of our
common stock using the same exchange ratio which is applicable to Advanced
Communication Systems common stock in the merger. Advanced Communication Systems
provides communication services, information systems and aerospace services,
predominantly to U.S. government agencies and to commercial customers, and is a
leader in U.S. Navy satellite communications. Recently, Advanced Communication
Systems began expanding its network and database design and support services to
the U.S. military and developing business with other federal agencies, state and
local governments and commercial customers.

    We also have agreed to acquire one, and have a non-binding letter of intent
to acquire another, privately-held defense information technology company. One
of these companies provides highly specialized information technology systems
and services to the intelligence community, and had estimated revenues of
approximately $23.2 million for the year ended December 31, 1999. The other
company specializes in the design, development and delivery of
telecommunications systems and products and software technologies, and had
revenues of approximately $18.0 million for its fiscal year ended June 30, 1999.

COMPLETED ACQUISITIONS -- 1999

    TITAN SYSTEMS

    On June 9, 1999, Titan Systems acquired System Resources Corporation
("System Resources"), an information technology government contractor, through a
stock purchase for a purchase price of $35 million, subject to certain
post-closing adjustments, consisting of $33 million in cash paid at closing,
less a $500,000 holdback, and $2 million in promissory notes which bear interest
at 7% per annum and become fully payable on June 9, 2000. In addition, we agreed
to pay the System Resources stockholders one-half of approximately $1.5 million
in System Resources receivables aged more than 720 days to the extent that any
of those receivables are collected within the two year period following the
closing date. The transaction was accounted for as a purchase.

    On July 22, 1999, Titan Systems acquired all of the outstanding stock of
Atlantic Aerospace Electronics Corporation ("Atlantic Aerospace"), a defense and
commercial technology and systems company which focuses on applied research and
development in information technologies, for cash of approximately $18 million,
subject to certain post-closing adjustments, plus potential payments of up to $3
million contingent upon certain future contract awards. The transaction was
accounted for as a purchase.

                                       35
<PAGE>
    CAYENTA

    On January 1, 1999, Cayenta acquired substantially all of the assets of
Transnational Partners II, LLC ("Transnational Partners"), an enterprise
application integration consulting company. Cayenta acquired these assets for an
initial installment of $7 million in cash and 2,345,000 shares of Cayenta's
convertible preferred stock. Cayenta will pay off an additional $2.8 million
note that it issued as part of its acquisition of Transnational Partners, plus
7% interest thereon, in February 2000.

    On November 2, 1999, Cayenta acquired J.B. Systems, Inc., an enterprise
asset management company doing business under the name Mainsaver ("Mainsaver").
Cayenta acquired Mainsaver for $11.7 million in cash, of which $8.2 million was
paid at the closing. Of the $3.5 million withheld at the closing, $500,000 is
due in February 2000 and $3 million is due in May 2001, plus 7.5% interest
thereon in each case, after satisfaction of possible working capital adjustments
or indemnification obligations. In addition, Cayenta paid approximately $3.4
million to reduce outstanding indebtedness of Mainsaver.

    On December 7, 1999, Cayenta acquired Assist Cornerstone Technologies, Inc.
("Assist"), an e-commerce solutions and software company. Cayenta acquired
Assist for 516,458 shares of its Class A common stock and approximately $12.9
million in cash, of which $9.9 million was paid at the closing. Of the $3
million withheld at the closing, $1.7 million is due in March 2000 and $1.3
million is due in June 2001, plus 8% interest thereon in each case, after
satisfaction of possible working capital adjustments or indemnification
obligations. In addition, Cayenta paid approximately $3.2 million to retire
outstanding indebtedness of Assist and redeem all of its outstanding redeemable
preferred stock.

    On December 23, 1999, Cayenta acquired SFG Technologies, Inc. ("SFG
Technologies"), a solutions and software provider focusing on revenue cycle
services for the utility industry. Cayenta acquired SFG Technologies for $11.6
million in cash, of which $9.5 million was paid at the closing. Of the
approximately $2.0 million placed into escrow at the closing, approximately
$500,000 is due in March 2000 and $1.5 million is due in June 2001, after
satisfaction of possible working capital adjustments or indemnification
obligations. In addition, Cayenta paid approximately $3.1 million to retire
outstanding indebtedness of SFG Technologies and redeem all of its outstanding
redeemable preferred stock.

    Each of Cayenta's acquisitions was accounted for using the purchase method.

COMPLETED ACQUISITIONS -- 1998

    TITAN SYSTEMS

    On February 27, 1998, we consummated a merger with DBA Systems, Inc.
("DBA"), in a stock-for-stock transaction. DBA is a developer and manufacturer
of digital imaging products, electro-optical systems and threat
simulation/training systems whose products and systems are primarily used by the
defense and intelligence communities. We issued approximately 6,100,000 shares
of our common stock in exchange for all the outstanding shares of DBA stock and
assumed options representing approximately 441,000 shares of our common stock.
The merger constituted a tax-free reorganization and has been accounted for as a
pooling of interests.

    On March 31, 1998, we acquired all of the outstanding common stock of
Validity Corporation ("Validity") for $12 million in cash, and notes payable to
the shareholders of Validity totaling $3 million, subject to post-closing
adjustments, if any. The transaction was accounted for as a purchase. Validity
is an information technologies company providing systems engineering and
integration, software engineering, network technologies, and test and evaluation
services to the U.S. military and a variety of U.S. governmental customers.

                                       36
<PAGE>
    On June 30, 1998, we consummated a merger with Horizons Technology, Inc.
("Horizons"), in a stock-for-stock transaction. Horizons is a provider of
systems engineering and program management services, computer systems
integration and high-end software. We issued approximately 3,200,000 shares of
our common stock in exchange for all the outstanding shares of Horizons capital
stock. The merger constituted a tax-free reorganization and has been accounted
for as a pooling of interests.

    On August 24, 1998, we consummated a merger with VisiCom Laboratories, Inc.
("VisiCom"), in a stock-for-stock transaction. VisiCom specializes in
information technology solutions. We issued approximately 4,172,000 shares of
our common stock in exchange for all the outstanding shares of VisiCom and
assumed VisiCom's stock options representing approximately 593,000 shares of our
common stock. The merger constituted a tax-free reorganization and has been
accounted for as a pooling of interests.

    On October 23, 1998, we consummated a merger with Delfin Systems ("Delfin")
in a stock-for-stock transaction. Delfin provides systems engineering and
program management services, signal intelligence systems, and program
integration and high-end software. We issued approximately 3,628,000 shares of
our common stock in exchange for all the outstanding shares of Delfin common
stock and assumed Delfin stock options representing approximately 823,000 shares
of our common stock. The merger constituted a tax-free reorganization and has
been accounted for as a pooling of interests.

                                       37
<PAGE>
                       UNAUDITED PRO FORMA FINANCIAL DATA
                (IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
                                  (UNAUDITED)

    THE FOLLOWING UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND BALANCE SHEET
DATA HAVE BEEN DERIVED FROM, AND SHOULD BE READ IN CONJUNCTION WITH OUR
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE RELATED NOTES, AND
THOSE OF ADVANCED COMMUNICATION SYSTEMS, TRANSNATIONAL PARTNERS, MAINSAVER,
ASSIST, AND SFG TECHNOLOGIES CONTAINED ELSEWHERE IN THIS OFFERING CIRCULAR OR
INCORPORATED BY REFERENCE HEREIN. THE UNAUDITED PRO FORMA STATEMENT OF
OPERATIONS AND BALANCE SHEET DATA SHOULD ALSO BE READ IN CONJUNCTION WITH THE
OTHER INFORMATION CONTAINED IN THIS SECTION OF THE OFFERING CIRCULAR. THE PRO
FORMA STATEMENT OF OPERATIONS DATA FOR THE YEARS ENDED DECEMBER 31, 1996 AND
1997 ASSUMES THAT WE COMPLETED THE ACQUISITION OF ADVANCED COMMUNICATION SYSTEMS
AS OF THE BEGINNING OF EACH SUCH PERIOD. THE PRO FORMA STATEMENT OF OPERATIONS
DATA FOR THE YEAR ENDED DECEMBER 31, 1998, FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1999 AND FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1999
ASSUMES THAT WE COMPLETED THE ACQUISITIONS OF ADVANCED COMMUNICATION SYSTEMS,
TRANSNATIONAL PARTNERS, MAINSAVER, ASSIST, AND SFG TECHNOLOGIES AS OF THE
BEGINNING OF EACH SUCH PERIOD. THE PRO FORMA BALANCE SHEET DATA AS OF
SEPTEMBER 30, 1999 ASSUMES THAT WE COMPLETED THESE ACQUISITIONS AS OF SUCH DATE.
OUR ACQUISITION OF ADVANCED COMMUNICATION SYSTEMS IS EXPECTED TO CLOSE IN THE
FIRST QUARTER OF 2000. THE PRO FORMA STATEMENT OF OPERATIONS AND BALANCE SHEET
DATA IS NOT NECESSARILY INDICATIVE OF OUR OPERATING RESULTS OR FINANCIAL
CONDITION THAT WOULD HAVE OCCURRED HAD THESE ACQUISITIONS OCCURRED AS OF THE
DATES INDICATED OR OF ANY EXPECTED FUTURE RESULTS.

<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED    TWELVE MONTHS
                                                   YEAR ENDED DECEMBER 31,          SEPTEMBER 30,          ENDED
                                                ------------------------------   -------------------   SEPTEMBER 30,
                                                  1996       1997       1998       1998       1999          1999
                                                --------   --------   --------   --------   --------   --------------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
PRO FORMA STATEMENT OF OPERATIONS DATA:
Revenue.......................................  $277,641   $328,117   $440,433   $298,724   $451,274      $592,983
Costs and expenses:
  Cost of revenues............................   211,964    254,240    315,465    216,375    324,771       423,861
  Selling, general and administrative
    expense...................................    46,479     47,859     82,426     54,144     86,438       114,720
  Research and development expense............     5,023      7,466      8,786      6,133      8,128        10,781
  Special acquisition related charges and
    other.....................................        --      8,510      9,891      4,553         --         5,338
                                                --------   --------   --------   --------   --------      --------
    Total costs and expenses..................   263,466    318,075    416,568    281,205    419,337       554,700
                                                --------   --------   --------   --------   --------      --------
Operating profit (loss).......................    14,175     10,042     23,865     17,519     31,937        38,283
Interest expense..............................    (5,021)    (6,779)   (12,783)    (8,964)   (12,392)      (16,211)
Interest income...............................       696      1,025        512        302        585           795
                                                --------   --------   --------   --------   --------      --------
Income (loss) from continuing operations
  before income taxes.........................     9,850      4,288     11,594      8,857     20,130        22,866
Income tax provision..........................     2,603      3,934      5,784      3,730      7,901         9,955
                                                --------   --------   --------   --------   --------      --------
Income (loss) from continuing operations
  before cumulative effect of change in
  accounting principle, net...................  $  7,247   $    354   $  5,810   $  5,127   $ 12,229      $ 12,911
                                                ========   ========   ========   ========   ========      ========
Basic earnings per share
  Income from continuing operations...........  $   0.16   $  (0.01)  $   0.12   $   0.11   $   0.25      $   0.28
                                                ========   ========   ========   ========   ========      ========
    Weighted average shares...................    39,459     40,485     42,802     42,521     45,983        43,769
                                                ========   ========   ========   ========   ========      ========
Diluted earnings per share
  Income from continuing operations...........  $   0.16   $  (0.01)  $   0.11   $   0.10   $   0.22      $   0.26
                                                ========   ========   ========   ========   ========      ========
    Weighted average shares...................    39,836     40,485     43,936     43,627     53,396        46,987
                                                ========   ========   ========   ========   ========      ========
</TABLE>

                                       38
<PAGE>

<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED    TWELVE MONTHS
                                                   YEAR ENDED DECEMBER 31,          SEPTEMBER 30,          ENDED
                                                ------------------------------   -------------------   SEPTEMBER 30,
                                                  1996       1997       1998       1998       1999          1999
                                                --------   --------   --------   --------   --------   --------------
<S>                                             <C>        <C>        <C>        <C>        <C>        <C>
OTHER DATA:
  Non-recurring charges.......................  $     --   $ 11,756   $ 11,469   $  4,758   $    237      $  6,948
  EBITDA (1)..................................    22,621     31,482     48,739     31,409     44,236        61,566
  Adjusted EBITDA (2).........................    22,621     31,482     56,503     40,020     54,502        70,985
  Depreciation and Amortization...............     8,446      9,684     13,405      9,132     12,062        16,335
  Capital Expenditures........................     7,008      7,325      7,057      4,630      7,332         9,759
  Ratio of Earnings to Fixed Charges (3)......      2.2x       1.4x       1.7x       1.8x       2.3x          2.2x
</TABLE>

<TABLE>
<CAPTION>
                                                                  AS OF
                                                              SEPTEMBER 30,
                                                                   1999
                                                              --------------
<S>                                                           <C>
PRO FORMA BALANCE SHEET DATA:
Cash and cash equivalents...................................     $ 6,235
Working capital.............................................     114,632
Property and equipment, net.................................      38,175
Total assets................................................     505,669
Total debt..................................................     232,165
Stockholders' equity........................................     131,450
</TABLE>

------------------------------

(1) EBITDA for any relevant period represents earnings before non-recurring
    special acquisition related charges and other interest, taxes, depreciation
    and amortization, assuming that we completed the acquisitions described in
    the introductory paragraph to this financial data as of the dates stated
    therein. We have included EBITDA because we understand that it is one
    measure used by some investors to determine our operating cash flow and
    historical ability to service our indebtedness. However, other companies in
    our business may present EBITDA differently than we do. EBITDA is not a
    measurement of financial performance under generally accepted accounting
    principles and should not be considered by an investor as an alternative to
    net income or operating income as an indicator of our operating performance
    or cash flow from operations, or as an alternative to cash flows as a
    measure of liquidity.

(2) Adjusted EBITDA for any relevant period (for the twelve months ended
    September 30, 1999 and December 31, 1998 and the nine months ended
    September 30, 1998 and 1999) represents EBITDA as adjusted, giving effect to
    the acquisitions of System Resources Corporation and Atlantic Aerospace
    Electronics Corporation, stated on a pro forma basis before non-recurring
    charges as if they had occurred at the beginning of each such period.
    Adjusted EBITDA also includes the effect of conforming Advanced
    Communication Systems' fiscal year end in 1998 and 1999 of September 30th to
    our fiscal year end. Also, Adjusted EBITDA includes certain anticipated cost
    savings, net of certain incremental expenses, of $4.9 million (for the
    acquisition of Advanced Communication Systems and for our software
    acquisitions). Cost savings associated with the Advanced Communication
    Systems acquisition include the retirement of the chief executive officer,
    costs of operating as a public company and consolidation of legal and audit
    services, among others. Cost savings associated with the acquisitions of
    Mainsaver, Assist and SFG Technologies include consolidation of accounting
    functions and employee benefits, consolidation of professional services, and
    reduction in personnel. Actual results and cost savings may differ
    materially from those reflected in Adjusted EBITDA due to higher than
    expected integration costs, higher than expected costs associated with
    expanding our business segments' operations or an increase in our other
    costs. Such estimated cost savings do not qualify as pro forma adjustments
    under Regulation S-X promulgated under the Securities Act and constitute
    forward-looking statements within the meaning of the Private Securities
    Litigation Reform Act of 1995. Accordingly, such cost savings have been
    excluded from the pro forma adjustments in our unaudited pro forma
    historical financial information. Arthur Andersen LLP does not express any
    opinion or other form of assurance with respect to Adjusted EBITDA or any
    components thereof. See "Cautionary Statement About Forward-Looking
    Statements."

(3) For purposes of computing the pro forma ratio of earnings to fixed charges,
    earnings consist of income before income taxes plus fixed charges and "fixed
    charges" consist of interest expense (including amortization of debt
    discount and expense), leasing expense and the estimated interest factor
    attributable to rentals. The pro forma ratio of earnings to combined fixed
    charges and preferred dividends was 2.1x during 1996, 1.4x during 1997, 1.7x
    during 1998, 1.8x during the nine months ended September 30, 1998, and 2.3x
    during the nine months ended September 30, 1999.

                                       39
<PAGE>
                   UNAUDITED PRO FORMA FINANCIAL INFORMATION

    The accompanying pro forma financial statements should be read in
conjunction with the notes to consolidated financial statements contained in our
Annual Report on Form 10-K/A for the year ended December 31, 1998, the notes to
consolidated financial statements contained in our Quarterly Report on Form 10-Q
for the nine months ended September 30, 1999 and the notes to the consolidated
financial statements contained in the Advanced Communication Systems' Annual
Report on Form 10-K for the year ended September 30, 1999 and the notes to the
Transnational Partners, Mainsaver, Assist and SFG Technologies financial
statements. We refer to Transnational Partners, Mainsaver, Assist and SFG
Technologies hereinafter as the acquired companies.

    The following unaudited pro forma condensed balance sheets and unaudited pro
forma condensed statements of operations have been prepared to illustrate the
estimated effects of the acquisitions of Advanced Communication Systems and the
acquired companies, for balance sheet purposes as of September 30, 1999, and for
statement of operations purposes for the year ended December 31, 1998, 1997 and
1996 and for the nine months ended September 30, 1999. The operating results for
Transnational Partners are included in our operating results for the nine months
ended September 30, 1999. The unaudited pro forma condensed statements of
operations combine our revenues and expenses for the year ended December 31,
1998 with revenues and expenses of Advanced Communication Systems for the year
ended September 30, 1998 and with the acquired companies aggregate revenues and
expenses for the year ended December 31, 1998; and our revenues and expenses for
the nine months ended September 30, 1999 with the revenues and expenses of
Advanced Communication Systems for the nine months ended June 30, 1999 and with
the acquired companies' aggregate revenues and expenses for the nine months
ended September 30, 1999. The unaudited pro forma condensed statements of
operations for 1997 and 1996 combine our revenues and expenses for the years
ended December 31, 1997 and 1996 with the revenues and expenses of Advanced
Communication Systems for the years ended September 30, 1997 and 1996.

    The unaudited pro forma adjustments are based upon available information and
upon certain assumptions that we believe are reasonable in the circumstances.
The unaudited pro forma statements of operations include the recurring items
which are directly attributable to acquisitions, such as amortization of
additional goodwill, increase in interest expense, increase in preferred
dividends, and the related tax effects thereof. The unaudited pro forma combined
balance sheet gives effect to the acquisition of Advanced Communication Systems
and the acquired companies as if they had occurred on September 30, 1999. The
unaudited pro forma combined statements of operations give effect to acquisition
of Advanced Communication Systems as if it had occurred on January 1, 1996, and
give effect to the acquisitions of the acquired companies as if they had
occurred on January 1, 1998. The unaudited pro forma statements do not purport
to represent what our financial position or results of operations would actually
have been if the acquisitions in fact had occurred on the date or at the
beginning of the periods indicated, nor do they purport to project our financial
position or results of operations for any future date or period.

                                       40
<PAGE>
                             THE TITAN CORPORATION
             UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                            PRO FORMA
                                                                           ADJUSTMENTS   PRO FORMA
                                                      TITAN       ACS       (NOTE 4)      COMBINED    MAINSAVER     ASSIST
                                                     --------   --------   -----------   ----------   ----------   --------
<S>                                                  <C>        <C>        <C>           <C>          <C>          <C>
REVENUES...........................................  $274,059   $156,403     $    --      $430,462     $ 6,267      $9,585
Costs and expenses:
  Cost of revenues.................................   211,147    106,183          --       317,330       1,626       5,596
  Selling, general and administrative expense......    32,957     39,265          --        72,222       3,962       4,049
  Research and development expense.................     5,317         --          --         5,317       1,774         440
  Special acquisition related charges and other....        --         --          --            --          --          --
                                                     --------   --------     -------      --------     -------      ------
    Total costs and expenses.......................   249,421    145,448          --       394,869       7,362      10,085
                                                     --------   --------     -------      --------     -------      ------
Operating profit (loss)............................    24,638     10,955          --        35,593      (1,095)       (500)
Interest expense...................................    (6,712)    (2,741)         --        (9,453)       (309)       (146)
Interest income....................................       585         --          --           585          --          --
                                                     --------   --------     -------      --------     -------      ------
Income from continuing operations before income
  taxes............................................    18,511      8,214          --        26,725      (1,404)       (646)
Income tax provision...............................     5,553      3,256          --         8,809          --          --
                                                     --------   --------     -------      --------     -------      ------
Income (loss) from continuing operations before
  cumulative effect of change in accounting
  principle, net...................................  $ 12,958   $  4,958     $    --      $ 17,916     $(1,404)     $ (646)
                                                     ========   ========     =======      ========     =======      ======
Basic earnings per share:
  Income from continuing operations................  $   0.33   $   0.57     $    --      $   0.38     $    --      $   --
                                                     ========   ========     =======      ========     =======      ======
    Weighted average shares........................    38,076      8,663      (1,272)       45,467          --         516
                                                     ========   ========     =======      ========     =======      ======
Diluted earnings per share:
  Income from continuing operations................  $   0.29   $   0.56     $    --      $   0.34     $    --      $   --
                                                     ========   ========     =======      ========     =======      ======
    Weighted average shares........................    45,732      8,788      (1,397)       53,123          --         516
                                                     ========   ========     =======      ========     =======      ======
Depreciation & Amortization........................  $  6,797   $  2,738     $    --      $  9,535     $   163      $  122
Non-recurring Charges..............................        --         --          --            --         237          --
EBITDA (Note 2)....................................    31,435     13,693          --        45,128        (695)       (378)
Adjusted Pro forma EBITDA (Note 2).................    33,800     16,694       3,000        53,494        (695)       (378)

<CAPTION>
                                                                 PRO FORMA
                                                                ADJUSTMENTS   PRO FORMA
                                                       SFG       (NOTE 4)      COMBINED
                                                     --------   -----------   ----------
<S>                                                  <C>        <C>           <C>
REVENUES...........................................   $4,960      $    --      $451,274
Costs and expenses:
  Cost of revenues.................................      219           --       324,771
  Selling, general and administrative expense......    4,113        2,092        86,438
  Research and development expense.................      597           --         8,128
  Special acquisition related charges and other....       --           --            --
                                                      ------      -------      --------
    Total costs and expenses.......................    4,929        2,092       419,337
                                                      ------      -------      --------
Operating profit (loss)............................       31       (2,092)       31,937
Interest expense...................................     (215)      (2,269)      (12,392)
Interest income....................................       --           --           585
                                                      ------      -------      --------
Income from continuing operations before income
  taxes............................................      184)      (4,361)       20,130
Income tax provision...............................       --         (908)        7,901
                                                      ------      -------      --------
Income (loss) from continuing operations before
  cumulative effect of change in accounting
  principle, net...................................   $ (184)     $(3,453)     $ 12,229
                                                      ======      =======      ========
Basic earnings per share:
  Income from continuing operations................   $   --      $    --      $   0.25
                                                      ======      =======      ========
    Weighted average shares........................       --           --        45,983
                                                      ======      =======      ========
Diluted earnings per share:
  Income from continuing operations................   $   --      $    --      $   0.22
                                                      ======      =======      ========
    Weighted average shares........................       --         (243)       53,396
                                                      ======      =======      ========
Depreciation & Amortization........................   $  150      $ 2,092      $ 12,062
Non-recurring Charges..............................       --           --           237
EBITDA (Note 2)....................................      181           --        44,236
Adjusted Pro forma EBITDA (Note 2).................      181        1,900        54,502
</TABLE>

                                       41
<PAGE>
                             THE TITAN CORPORATION
             UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                     PRO FORMA
                                                                    ADJUSTMENTS   PRO FORMA
                                               TITAN       ACS       (NOTE 4)      COMBINED      TNP      MAINSAVER     ASSIST
                                              --------   --------   -----------   ----------   --------   ----------   --------
<S>                                           <C>        <C>        <C>           <C>          <C>        <C>          <C>
REVENUES                                      $218,678   $58,398       $  --       $277,076     $3,669      $5,909      $8,069

Costs and expenses:
  Cost of revenues..........................   168,816    37,364          --        206,180      2,665       2,043       5,132
  Selling, general and administrative
    expense.................................    26,936    16,130          --         43,066        110       3,392       3,173
  Research and development expense..........     4,025        --          --          4,025         --         594         273
  Special acquisition related charges and
    other...................................     4,553        --          --          4,553         --          --          --
                                              --------   -------       -----       --------     ------      ------      ------
    Total costs and expenses................   204,330    53,494          --        257,824      2,775       6,029       8,578
                                              --------   -------       -----       --------     ------      ------      ------
Operating profit (loss).....................    14,348     4,904          --         19,252        894        (120)       (509)
Interest expense............................    (5,399)     (740)         --         (6,139)        --         (93)       (235)
Interest income.............................       262        --          --            262          7          --          33
                                              --------   -------       -----       --------     ------      ------      ------
Income (loss) from continuing operations
  before income taxes.......................     9,211     4,164          --         13,375        901        (213)       (711)
Income tax provision........................     3,336     1,505          --          4,841          4          --        (207)
                                              --------   -------       -----       --------     ------      ------      ------
Income (loss) from continuing operations
  before cumulative effect of change in
  accounting principle, net.................  $  5,875   $ 2,659       $  --       $  8,534     $  897      $ (213)     $ (504)
                                              ========   =======       =====       ========     ======      ======      ======

Basic earnings per share:
  Income from continuing operations.........  $   0.15   $  0.40       $  --       $   0.19     $   --      $   --      $   --
                                              ========   =======       =====       ========     ======      ======      ======
    Weighted average shares.................    34,614     6,729         662         42,005                     --         516
                                              ========   =======       =====       ========     ======      ======      ======
Diluted earnings per share:
  Income from continuing operations.........  $   0.15   $  0.39       $  --       $   0.18     $   --      $   --      $   --
                                              ========   =======       =====       ========     ======      ======      ======
    Weighted average shares.................    36,013     6,855         536         43,404      2,345          --         516
                                              ========   =======       =====       ========     ======      ======      ======
Depreciation & Amortization.................  $  5,378   $   983       $  --       $  6,361     $   --      $  253      $  228
Non-recurring Charges.......................     4,553        --          --          4,553         --         205          --
Pro forma EBITDA (Note 2)...................    24,279     5,887          --         30,166        894         338        (281)
Adjusted Pro forma EBITDA (Note 2)..........    28,735    10,042          --         38,777        894         338        (281)

<CAPTION>
                                                          PRO FORMA
                                                         ADJUSTMENTS   PRO FORMA
                                                SFG       (NOTE 4)      COMBINED
                                              --------   -----------   ----------
<S>                                           <C>        <C>           <C>
REVENUES                                       $4,001      $    --      $298,724
Costs and expenses:
  Cost of revenues..........................      355           --       216,375
  Selling, general and administrative
    expense.................................    2,311        2,092        54,144
  Research and development expense..........    1,241           --         6,133
  Special acquisition related charges and
    other...................................       --           --         4,553
                                               ------      -------      --------
    Total costs and expenses................    3,907        2,092       281,205
                                               ------      -------      --------
Operating profit (loss).....................       94       (2,092)       17,519
Interest expense............................     (228)      (2,269)       (8,964)
Interest income.............................       --           --           302
                                               ------      -------      --------
Income (loss) from continuing operations
  before income taxes.......................     (134)      (4,361)        8,857
Income tax provision........................       --         (908)        3,730
                                               ------      -------      --------
Income (loss) from continuing operations
  before cumulative effect of change in
  accounting principle, net.................   $ (134)     $(3,453)     $  5,127
                                               ======      =======      ========
Basic earnings per share:
  Income from continuing operations.........   $   --      $    --      $   0.11
                                               ======      =======      ========
    Weighted average shares.................       --           --        42,521
                                               ======      =======      ========
Diluted earnings per share:
  Income from continuing operations.........   $   --      $    --      $   0.10
                                               ======      =======      ========
    Weighted average shares.................       --       (2,638)       43,627
                                               ======      =======      ========
Depreciation & Amortization.................   $  198      $ 2,092      $  9,132
Non-recurring Charges.......................       --           --         4,758
Pro forma EBITDA (Note 2)...................      292           --        31,409
Adjusted Pro forma EBITDA (Note 2)..........      292           --        40,020
</TABLE>

                                       42
<PAGE>
                             THE TITAN CORPORATION
             UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                            PRO FORMA
                                                           ADJUSTMENTS   PRO FORMA
                                      TITAN       ACS       (NOTE 4)      COMBINED      TNP      MAINSAVER     ASSIST      SFG
                                     --------   --------   -----------   ----------   --------   ----------   --------   --------
<S>                                  <C>        <C>        <C>           <C>          <C>        <C>          <C>        <C>
REVENUES                             $303,428   $107,752      $ --        $411,180     $5,644     $ 7,218     $11,523     $4,868

Costs and expenses:
  Cost of revenues.................   232,041     69,847        --         301,888      4,067       2,387       6,917        206
  Selling, general and
    administrative expense.........    37,553     28,834        --          66,387        146       5,187       4,477      3,016
  Research and development
    expense........................     5,590         --        --           5,590         --         946         397      1,853
  Special acquisition related
    charges and other..............     9,891         --        --           9,891         --          --          --         --
                                     --------   --------      ----        --------     ------     -------     -------     ------
    Total costs and expenses.......   285,075     98,681        --         383,756      4,213       8,520      11,791      5,075
                                     --------   --------      ----        --------     ------     -------     -------     ------
Operating profit (loss)............    18,353      9,071        --          27,424      1,431      (1,302)       (268)      (207)
Interest expense...................    (7,377)    (1,918)       --          (9,295)        --        (165)       (319)      (363)
Interest income....................       392         82        --             474          9          --          29         --
                                     --------   --------      ----        --------     ------     -------     -------     ------
Income (loss) from continuing
  operations before income taxes...    11,368      7,235        --          18,603      1,440      (1,467)       (558)      (570)
Income tax provision...............     4,155      2,861        --           7,016          5          --        (180)        --
                                     --------   --------      ----        --------     ------     -------     -------     ------
Income (loss) from continuing
  operations before cumulative
  effect of change in accounting
  principle, net...................  $  7,213   $  4,374      $ --        $ 11,587     $1,435     $(1,467)    $  (378)    $ (570)
                                     ========   ========      ====        ========     ======     =======     =======     ======

Basic earnings per share:
  Income from continuing
    operations.....................  $   0.18   $   0.61      $ --        $   0.26     $   --     $    --     $    --     $   --
                                     ========   ========      ====        ========     ======     =======     =======     ======
    Weighted average shares........    34,895      7,221       170          42,286         --          --         516         --
                                     ========   ========      ====        ========     ======     =======     =======     ======
Diluted earnings per share:
  Income from continuing
    operations.....................  $   0.18   $   0.60      $ --        $   0.25     $   --     $    --     $    --     $   --
                                     ========   ========      ====        ========     ======     =======     =======     ======
    Weighted average shares........    36,177      7,326        65          43,568      2,345          --         516         --
                                     ========   ========      ====        ========     ======     =======     =======     ======
Depreciation & Amortization........  $  7,126   $  2,264      $ --        $  9,390     $   --     $   295     $   309     $  198
Non-recurring Charges..............     9,891         --        --           9,891         --       1,578          --         --
Pro forma EBITDA (Note 2)..........    35,370     11,335        --          46,705      1,431         571          41         (9)
Adjusted Pro forma EBITDA (Note
  2)...............................    40,595     13,874        --          54,469      1,431         571          41         (9)

<CAPTION>
                                      PRO FORMA
                                     ADJUSTMENTS   PRO FORMA
                                      (NOTE 4)      COMBINED
                                     -----------   ----------
<S>                                  <C>           <C>
REVENUES                               $    --      $440,433
Costs and expenses:
  Cost of revenues.................         --       315,465
  Selling, general and
    administrative expense.........      3,213        82,426
  Research and development
    expense........................         --         8,786
  Special acquisition related
    charges and other..............         --         9,891
                                       -------      --------
    Total costs and expenses.......      3,213       416,568
                                       -------      --------
Operating profit (loss)............     (3,213)       23,865
Interest expense...................     (2,641)      (12,783)
Interest income....................         --           512
                                       -------      --------
Income (loss) from continuing
  operations before income taxes...     (5,854)       11,594
Income tax provision...............     (1,057)        5,784
                                       -------      --------
Income (loss) from continuing
  operations before cumulative
  effect of change in accounting
  principle, net...................    $(4,797)     $  5,810
                                       =======      ========
Basic earnings per share:
  Income from continuing
    operations.....................    $    --      $   0.12
                                       =======      ========
    Weighted average shares........         --        42,802
                                       =======      ========
Diluted earnings per share:
  Income from continuing
    operations.....................    $    --      $   0.11
                                       =======      ========
    Weighted average shares........     (2,493)       43,936
                                       =======      ========
Depreciation & Amortization........    $ 3,213      $ 13,405
Non-recurring Charges..............         --        11,469
Pro forma EBITDA (Note 2)..........         --        48,739
Adjusted Pro forma EBITDA (Note
  2)...............................         --        56,503
</TABLE>

                                       43
<PAGE>
                             THE TITAN CORPORATION

             UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                             PRO FORMA
                                                                            ADJUSTMENTS   PRO FORMA
                                                       TITAN       ACS       (NOTE 4)     COMBINED
                                                      --------   --------   -----------   ---------
<S>                                                   <C>        <C>        <C>           <C>
Revenues............................................  $275,923   $52,194       $   --     $328,117
Costs and expenses:
  Cost of revenues..................................   216,553    37,687           --      254,240
  Selling, general and administrative expense.......    36,731    11,128           --       47,859
  Research and development expense..................     7,466        --           --        7,466
  Special acquisition related charges and other.....     6,600     1,910           --        8,510
                                                      --------   -------       ------     --------
    Total costs and expenses........................   267,350    50,725           --      318,075
                                                      --------   -------       ------     --------
Operating profit....................................     8,573     1,469           --       10,042
Interest expense....................................    (6,643)     (136)          --       (6,779)
Interest income.....................................       872       153           --        1,025
                                                      --------   -------       ------     --------
Income from continuing operations before income
  taxes.............................................     2,802     1,486           --        4,288
Income tax provision................................     4,184      (250)          --        3,934
                                                      --------   -------       ------     --------
Income (loss) from continuing operations before
  cumulative effect of change in accounting
  principle, net....................................  $ (1,382)  $ 1,736       $   --     $    354
                                                      ========   =======       ======     ========
Basic earnings per share:
  Income (loss) from continuing operations..........  $  (0.07)  $  0.40       $   --     $  (0.01)
                                                      ========   =======       ======     ========
    Weighted average shares.........................    33,094     4,306        3,085       40,485
                                                      ========   =======       ======     ========
Diluted earnings per share:
  Income (loss) from continuing operations..........  $  (0.07)  $  0.40       $   --     $  (0.01)
                                                      ========   =======       ======     ========
    Weighted average shares.........................    33,094     4,352        3,039       40,485
                                                      ========   =======       ======     ========
Depreciation & Amortization.........................  $  9,213   $   471       $   --     $  9,684
Non-recurring Charges...............................     9,846     1,910           --       11,756
Pro forma EBITDA....................................    27,632     3,850           --       31,482
</TABLE>

                                       44
<PAGE>
                             THE TITAN CORPORATION

             UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1996

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                             PRO FORMA
                                                                            ADJUSTMENTS   PRO FORMA
                                                       TITAN       ACS       (NOTE 4)     COMBINED
                                                      --------   --------   -----------   ---------
<S>                                                   <C>        <C>        <C>           <C>
Revenues............................................  $245,976   $31,665       $   --     $277,641
Costs and expenses:
  Cost of revenues..................................   192,657    19,307           --      211,964
  Selling, general and administrative expense.......    36,226    10,253           --       46,479
  Research and development expense..................     5,023        --           --        5,023
                                                      --------   -------       ------     --------
    Total costs and expenses........................   233,906    29,560           --      263,466
                                                      --------   -------       ------     --------
Operating profit....................................    12,070     2,105           --       14,175
Interest expense....................................    (4,764)     (257)          --       (5,021)
Interest income.....................................       639        57           --          696
                                                      --------   -------       ------     --------
Income from continuing operations before income
  taxes.............................................     7,945     1,905           --        9,850
Income tax provision................................     2,603        --           --        2,603
                                                      --------   -------       ------     --------
Income from continuing operations before cumulative
  effect of change in accounting principle, net.....  $  5,342   $ 1,905       $   --     $  7,247
                                                      ========   =======       ======     ========
Basic earnings per share:
  Income from continuing operations.................  $   0.14   $  0.51       $   --     $   0.16
                                                      ========   =======       ======     ========
    Weighted average shares.........................    32,068     3,733        3,658       39,459
                                                      ========   =======       ======     ========
Diluted earnings per share:
  Income from continuing operations.................  $   0.14   $  0.50       $   --     $   0.16
                                                      ========   =======       ======     ========
    Weighted average shares.........................    32,445     3,806        3,585       39,836
                                                      ========   =======       ======     ========
Depreciation & Amortization.........................  $  8,044   $   402       $   --     $  8,446
Non-recurring Charges...............................        --        --           --           --
Pro forma EBITDA....................................    20,114     2,507           --       22,621
</TABLE>

                                       45
<PAGE>
                             THE TITAN CORPORATION
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                            AS OF SEPTEMBER 30, 1999
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                           PRO FORMA
                                                                          ADJUSTMENTS
                                                     TITAN       ACS       (NOTE 4)     PRO FORMA    MAINSAVER     ASSIST
                                                    --------   --------   -----------   ----------   ----------   --------
<S>                                                 <C>        <C>        <C>           <C>          <C>          <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.......................  $  4,207   $  1,615     $    --      $  5,822     $     --    $   413
  Accounts receivable, net........................   131,787     67,834          --       199,621        1,559      2,627
  Inventories.....................................    12,492        932          --        13,424           --         --
  Prepaid expenses and other......................     8,938      2,896          --        11,834           69        380
  Deferred income taxes...........................     5,635         --       3,345         8,980           --         --
                                                    --------   --------     -------      --------     --------    -------
    Total current assets..........................   163,059     73,277       3,345       239,681        1,628      3,420
  Property and equipment, net.....................    28,476      7,908          --        36,384          805        293
  Goodwill, net...................................    89,064     61,603          --       150,667           --         --
  Other assets....................................    11,929        414          --        12,343           64        260
  Net assets of discontinued operations...........       580         --          --           580           --         --
                                                    --------   --------     -------      --------     --------    -------
    Total assets..................................  $293,108   $143,202     $ 3,345      $439,655     $  2,497    $ 3,973
                                                    ========   ========     =======      ========     ========    =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Line of credit..................................  $  6,163   $     --     $    --      $  6,163     $  1,512    $    --
  Accounts payable................................    29,598      5,773          --        35,371          953      1,219
  Acquisition debt................................     4,800         --          --         4,800           --         --
  Current portion of long-term debt...............     2,089        964          --         3,053          211        187
  Accrued compensation and benefits...............    17,008         --          --        17,008           --        508
  Other accrued liabilities.......................    11,971     37,345          --        49,316        2,244        445
  Net liabilities of discontinued operations......        39         --          --            39           --         --
                                                    --------   --------     -------      --------     --------    -------
    Total current liabilities.....................    71,668     44,082          --       115,750        4,920      2,359
                                                    --------   --------     -------      --------     --------    -------
  Line of credit..................................   110,712     47,580          --       158,292           --         --
  Long-term debt..................................     7,090        420      11,150        18,660        1,653      2,327
  Other non-current liabilities...................    16,801      1,226          --        18,027          485        197
  Redeemable preferred stock......................        --         --          --            --           --        305

STOCKHOLDERS' EQUITY:
  Cumulative convertible
    Series A junior participating.................       695         --          --           695           --         --
  Common stock....................................       437        115          --           552        6,197          5
  Capital in excess of par value..................    98,833     42,511          --       141,344           --          9
  Retained earnings (deficit).....................   (10,492)     7,578      (7,805)      (10,719)     (10,758)    (1,229)
  Treasury stock..................................    (2,636)      (310)         --        (2,946)          --         --
                                                    --------   --------     -------      --------     --------    -------
    Total stockholders' equity....................    86,837     49,894      (7,805)      128,926       (4,561)    (1,215)
                                                    --------   --------     -------      --------     --------    -------
    Total liabilities and stockholders' equity....  $293,108   $143,202     $ 3,345      $439,655     $  2,497    $ 3,973
                                                    ========   ========     =======      ========     ========    =======

<CAPTION>
                                                                PRO FORMA
                                                               ADJUSTMENTS
                                                      SFG       (NOTE 4)     PRO FORMA
                                                    --------   -----------   ----------
<S>                                                 <C>        <C>           <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.......................  $    --      $    --      $  6,235
  Accounts receivable, net........................    2,639           --       206,446
  Inventories.....................................       --           --        13,424
  Prepaid expenses and other......................      290           --        12,573
  Deferred income taxes...........................       --           --         8,980
                                                    -------      -------      --------
    Total current assets..........................    2,929           --       247,658
  Property and equipment, net.....................      693           --        38,175
  Goodwill, net...................................       --       55,794       206,461
  Other assets....................................      128           --        12,795
  Net assets of discontinued operations...........       --           --           580
                                                    -------      -------      --------
    Total assets..................................  $ 3,750      $55,794      $505,669
                                                    =======      =======      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Line of credit..................................  $   947      $(1,512)     $  7,110
  Accounts payable................................    1,266           --        38,809
  Acquisition debt................................       --           --         4,800
  Current portion of long-term debt...............      400         (400)        3,451
  Accrued compensation and benefits...............       --           --        17,516
  Other accrued liabilities.......................    1,996        7,300        61,301
  Net liabilities of discontinued operations......       --           --            39
                                                    -------      -------      --------
    Total current liabilities.....................    4,609        5,388       133,026
                                                    -------      -------      --------
  Line of credit..................................       --       39,352       197,644
  Long-term debt..................................    3,110       (6,590)       19,160
  Other non-current liabilities...................      504        5,176        24,389
  Redeemable preferred stock......................       --         (305)           --
STOCKHOLDERS' EQUITY:
  Cumulative convertible
    Series A junior participating.................       --           --           695
  Common stock....................................       --       (6,202)          552
  Capital in excess of par value..................    2,981       (2,990)      141,344
  Retained earnings (deficit).....................   (7,454)      21,965        (8,195)
  Treasury stock..................................       --           --        (2,946)
                                                    -------      -------      --------
    Total stockholders' equity....................   (4,473)      12,773       131,450
                                                    -------      -------      --------
    Total liabilities and stockholders' equity....  $ 3,750      $55,794      $505,669
                                                    =======      =======      ========
</TABLE>

                                       46
<PAGE>
                             THE TITAN CORPORATION

                    NOTES TO PRO FORMA FINANCIAL STATEMENTS

                                  (UNAUDITED)

1. GENERAL

    Cayenta, a majority owned subsidiary of ours, acquired substantially all of
the assets and liabilities of Transnational Partners in January 1999.
Thereafter, Cayenta acquired Mainsaver in November 1999, and Assist and SFG
Technologies in December 1999. (See Note 3--The Acquired Companies). On
December 9, 1999, we entered into an agreement to acquire Advanced Communication
Systems.

2. BASIS OF PRESENTATION

    The accompanying unaudited pro forma condensed consolidated financial
statements are based on adjustments to our historical consolidated financial
statements to give effect to the acquisitions described in Note 3 below and the
proposed acquisition of Advanced Communication Systems. The pro forma condensed
consolidated statements of operations assume the acquisitions were consummated
as of the beginning of the periods presented. The pro forma condensed
consolidated statements of operations are not necessarily indicative of results
that would have occurred had the acquisitions been consummated as of the
beginning of the periods presented or the results that may be attained in the
future.

    Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted pursuant to the rules and regulations of the SEC. The pro forma
condensed consolidated financial statements should be read in conjunction with
the historical consolidated financial statements of Titan, Advanced
Communication Systems and the historical financial statements of the acquired
companies.

    The information in the unaudited pro forma condensed consolidated statements
of operations for the year ended December 31, 1998 and for the nine months ended
September 30, 1999 and 1998 have been derived from (i) the audited statements of
operations of Titan, Advanced Communication Systems, Transnational Partners and
each of the acquired companies for the year ended December 31, 1998, (except
with respect to Advanced Communication Systems which includes the audited
statement of operations for the year ended September 30, 1998 and SFG
Technologies which includes the audited eight month period ended December 31,
1998 and the unaudited four month period ended April 30, 1998) (ii) our
unaudited statements of operations for the nine months ended September 30, 1999,
(iii) the unaudited statements of operations of Advanced Communication Systems
for the nine months ended June 30, 1999 and 1998 and (iv) the unaudited
statements of operations of the acquired companies for the nine months ended
September 30, 1999. The information in the unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1997 and
1996 have been derived from (i) our audited statements of operations for the
years ended December 31, 1997 and 1996 and the (ii) audited statements of
operations of Advanced Communication Systems for the years ended September 30,
1997 and 1996.

    The financial statements of SFG Technologies are translated from Canadian
dollars to U.S. dollars based on the end of the period exchange rate for balance
sheet items and average for the period rates for statement of operations data.
There are no significant differences between U.S. and Canadian GAAP relative to
SFG Technologies.

    EBITDA for any relevant period represents earnings before non-recurring
special acquisition related charges and other interest, taxes, depreciation and
amortization, assuming that we completed the acquisitions described in the
introductory paragraph to this financial data as of the dates stated therein. We
have included EBITDA because we understand that it is one measure used by some
investors to determine our operating cash flow and historical ability to service
our indebtedness. However, other companies in our business may present EBITDA

                                       47
<PAGE>
                             THE TITAN CORPORATION

              NOTES TO PRO FORMA FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

2. BASIS OF PRESENTATION (CONTINUED)

differently than we do. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered by
an investor as an alternative to net income or operating income as an indicator
of our operating performance or cash flow from operations, or as an alternative
to cash flows as a measure of liquidity.

    Adjusted EBITDA for any relevant period (for the twelve months ended
September 30, 1999 and December 31, 1998 and the nine months ended
September 30, 1998 and 1999) represents EBITDA as adjusted, giving effect to the
acquisitions of System Resources Corporation and Atlantic Aerospace Electronics
Corporation, stated on a pro forma basis before non-recurring charges as if they
had occurred at the beginning of each such period. Adjusted EBITDA also includes
the effect of conforming Advanced Communication Systems' fiscal year end in 1998
and 1999 of September 30th to our fiscal year end. Also, Adjusted EBITDA
includes certain anticipated cost savings, net of certain incremental expenses,
of $4.9 million (for the acquisition of Advanced Communication Systems and for
our software acquisitions). Cost savings associated with the Advanced
Communication Systems acquisition include the retirement of the chief executive
officer, costs of operating as a public company and consolidation of legal and
audit services, among others. Cost savings associated with the acquisitions of
Mainsaver, Assist and SFG Technologies include consolidation of accounting
functions and employee benefits, consolidation of professional services, and
reduction in personnel. Actual results and cost savings may differ materially
from those reflected in Adjusted EBITDA due to higher than expected integration
costs, higher than expected costs associated with expanding our business
segments' operations or an increase in our other costs. Such estimated cost
savings do not qualify as pro forma adjustments under Regulation S-X promulgated
under the Securities Act and constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Accordingly,
such cost savings have been excluded from the pro forma adjustments in our
unaudited pro forma historical financial information. Arthur Andersen LLP does
not express any opinion or other form of assurance with respect to Adjusted
EBITDA or any components thereof. See "Cautionary Statement About
Forward-Looking Statements."

3. ACQUISITIONS

    All acquisitions were accounted for as purchases. Accordingly the operating
results are reflected in the consolidated results of Cayenta from the date of
acquisition. Summary information on the acquisitions follows:

THE ACQUIRED COMPANIES

    TRANSNATIONAL PARTNERS.  In January 1999, Cayenta acquired substantially all
of the assets of Transnational Partners, an enterprise application integration
consulting company. Cayenta acquired these assets for an initial installment of
$7.0 million in cash and 2,345,000 shares of Cayenta's convertible preferred
stock. Cayenta will pay off an additional $2.8 million note that was issued as
part of its acquisition of Transnational Partners, plus 7% interest thereon, in
February 2000. Acquisition goodwill of $12.3 million is being amortized on a
straight-line basis over 30 years.

    MAINSAVER.  In November 1999, Cayenta acquired Mainsaver, an enterprise
asset management company. Cayenta acquired Mainsaver for $11.7 million in cash,
of which $8.2 million was paid at the closing. Of the $3.5 million withheld at
the closing, $500,000 is due in February 2000 and $3.0 million is due in May
2001, after satisfaction of possible working capital adjustments or
indemnification obligations. In addition, Cayenta paid approximately
$3.4 million to reduce outstanding indebtedness of Mainsaver.

                                       48
<PAGE>
                             THE TITAN CORPORATION

              NOTES TO PRO FORMA FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

3. ACQUISITIONS (CONTINUED)

    ASSIST CORNERSTONE.  In December 1999, Cayenta acquired Assist, an
e-commerce solutions and software company. Cayenta acquired Assist for 516,000
shares of its Class A common stock and approximately $12.9 million in cash, of
which $9.9 million was paid at the closing. Of the $3.0 million withheld at the
closing, $1.7 million is due in March 2000 and $1.3 million is due in June 2001,
after satisfaction of possible working capital adjustments or indemnification
obligations. In addition, Cayenta paid approximately $3.2 million to retire
outstanding indebtedness of Assist and redeem all of its outstanding redeemable
preferred stock.

    SFG TECHNOLOGIES.  In December 1999, Cayenta acquired SFG Technologies, a
solutions and software provider focusing on revenue cycle services for the
utility industry. Cayenta acquired SFG Technologies for $11.6 million in cash,
of which $9.5 million was paid at the closing. Of the approximately
$2.0 million placed into escrow at the closing, approximately $500,000 is due in
March 2000 and $1.5 million is due in June 2001, after satisfaction of possible
working capital adjustments or indemnification obligations. In addition, Cayenta
paid approximately $3.1 million to retire outstanding indebtedness of SFG
Technologies and redeem all of its outstanding redeemable preferred stock.

    Acquisition costs related to the 1999 acquired companies approximated $5.1
million which includes approximately $2.1 million of estimated fair value
assigned to 495,800 warrants granted to an investment advisor for certain
advisory services performed in connection with these acquisitions. Goodwill
related to these acquisitions amounted to approximately $55.8 million and is
being amortized over 20 years.

4. ADJUSTMENTS TO HISTORICAL FINANCIAL STATEMENTS

    The following pro forma adjustments have been made to the historical
condensed consolidated balance sheets and statements of operations as if the
acquisitions described in Note 3 and the acquisition of Advanced Communication
Systems were consummated at September 30, 1999 and as of the beginning of the
periods presented, respectively:

    BALANCE SHEETS

    1999 Acquisitions:

        (a) To reflect the goodwill related to the acquired companies,

        (b) To reflect the retirement of certain debt of the acquired companies
    using advances under our line of credit,

        (c) To reflect the purchase price holdbacks and to accrue for
    transaction costs, and

        (d) To eliminate the acquired companies' equity accounts.

    Advanced Communication Systems Acquisition:

        (e) To reflect the impact of estimated direct transaction costs of the
    acquisition of Advanced Communication Systems and estimated costs of
    integrating the companies, of approximately $11.2 million. These transaction
    costs consist primarily of investment banking fees, costs of filings with
    regulatory agencies, and accounting, legal, financial printing and other
    related costs.

                                       49
<PAGE>
                             THE TITAN CORPORATION

              NOTES TO PRO FORMA FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

4. ADJUSTMENTS TO HISTORICAL FINANCIAL STATEMENTS (CONTINUED)

    STATEMENTS OF OPERATIONS

    1999 Acquisitions:

        (f) To reflect incremental amortization (on a straight-line basis over
    20 years) of goodwill related to the purchase of Mainsaver, Assist and SFG
    Technologies and to reflect the amortization (on a straight line basis over
    30 years) of goodwill related to the Transnational Partners acquisition.

        (g) To reflect incremental interest expense on advances under our line
    of credit to fund the cash portion of the purchase prices of the
    Transnational Partners acquisition and of the purchases of Mainsaver, Assist
    and SFG Technologies and to reflect interest expense related to holdback
    amounts for the Mainsaver, Assist and SFG Technologies acquisitions.

        (h) To reflect (i) the change in income taxes related to pro forma
    adjustments, and (ii) income taxes on Transnational Partners as if it were a
    C corporation for federal income tax purposes.

    Advanced Communication Systems Acquisition:

        (i) The unaudited pro forma combined net income (loss) per common share
    is based upon the weighted average number of common and equivalent shares of
    our common stock outstanding for each period at an assumed exchange ratio of
    .7843 of a share of our common stock for each share of Advanced
    Communication Systems common stock, assuming 9,424,000 shares of Advanced
    Communication Systems common stock issued and outstanding, which amount
    includes common stock subject to issued and outstanding stock options. The
    exchange ratio assumes an average of our stock price of at least $22.95 but
    less than $25.50, which is the range below which Advanced Communication
    Systems has the right, subject to conditions, to terminate the merger
    agreement. The effect of the assumed conversion of our convertible
    subordinated debentures was antidilutive for all periods presented.

NON-RECURRING CHARGES

    Non-recurring charges represent special acquisition related charges, plus
certain costs incurred by DBA in 1997 related to the write-down of certain
assets impaired in 1997, and costs incurred by Mainsaver in connection with its
1998 leveraged recapitalization.

                                       50
<PAGE>
                       SELECTED HISTORICAL FINANCIAL DATA
                (IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)

    TITAN DERIVED THE FOLLOWING INFORMATION FROM ITS AUDITED CONSOLIDATED
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1994 THROUGH
1998 AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1998 AND 1999. THE FOLLOWING INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF
TITAN AND RELATED NOTES CONTAINED ELSEWHERE IN THIS OFFERING CIRCULAR.

    THE SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS DATA FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND 1999 AND THE CONSOLIDATED BALANCE SHEET DATA AS OF
SEPTEMBER 30, 1999 ARE UNAUDITED BUT INCLUDE, IN THE OPINION OF MANAGEMENT, ALL
ADJUSTMENTS, CONSISTING OF ONLY NORMAL RECURRING ADJUSTMENTS, NECESSARY FOR A
FAIR PRESENTATION OF SUCH DATA. RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS WHICH MAY BE EXPECTED FOR ANY
OTHER INTERIM PERIODS OR FOR THE YEAR AS A WHOLE.

<TABLE>
<CAPTION>
                                                                                                   NINE MONTHS ENDED
                                                         YEAR ENDED DECEMBER 31,                     SEPTEMBER 30,
                                           ----------------------------------------------------   -------------------
                                             1994       1995       1996       1997       1998       1998       1999
                                           --------   --------   --------   --------   --------   --------   --------
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................  $230,611   $244,882   $245,976   $275,923   $303,428   $218,678   $274,059
Cost and expenses:
  Cost of revenues.......................   172,947    189,237    192,657    216,553    232,041    168,816    211,147
  Selling, general and administrative
    expense..............................    35,871     37,513     36,226     36,731     37,553     26,936     32,957
  Research and development expense.......     5,749      6,907      5,023      7,466      5,590      4,025      5,317
  Special acquisition related charges and
    other................................    (1,200)     6,249         --      6,600      9,891      4,553         --
                                           --------   --------   --------   --------   --------   --------   --------
    Total costs and expenses.............   213,367    239,906    233,906    267,350    285,075    204,330    249,421
                                           --------   --------   --------   --------   --------   --------   --------
Operating Profit.........................    17,244      4,976     12,070      8,573     18,353     14,348     24,638
Interest expense.........................    (2,327)    (2,817)    (4,764)    (6,643)    (7,377)    (5,399)    (6,712)
Interest income..........................       389        392        639        872        392        262        585
                                           --------   --------   --------   --------   --------   --------   --------
Income from continuing operations before
  income taxes...........................    15,306      2,551      7,945      2,802     11,368      9,211     18,511
Income tax provision (benefit)...........     5,103        498      2,603      4,184      4,155      3,336      5,553
                                           --------   --------   --------   --------   --------   --------   --------
Income from continuing operations before
  cumulative effect of change in
  accounting principle...................    10,203      2,053      5,342     (1,382)     7,213      5,875     12,958
Cumulative effect of change in accounting
  principle, net.........................        --         --         --         --    (19,474)   (19,474)        --
Loss from discontinued operations, net of
  taxes..................................    (4,024)   (12,942)    (6,326)   (17,930)    (7,444)    (5,617)        --
                                           --------   --------   --------   --------   --------   --------   --------
  Net income (loss)......................     6,179    (10,889)      (984)   (19,312)   (19,705)   (19,216)    12,958
Dividend requirements on preferred
  stock..................................      (695)      (695)      (803)      (875)      (778)      (605)      (521)
                                           --------   --------   --------   --------   --------   --------   --------
  Net income (loss) applicable to common
    stock................................  $  5,484   $(11,584)  $ (1,787)  $(20,187)  $(20,483)  $(19,821)  $ 12,437
                                           ========   ========   ========   ========   ========   ========   ========
Basic earnings per share:
    Income from continuing operations....  $   0.31   $   0.04   $   0.14   $  (0.07)  $   0.18   $   0.15   $   0.33
    Cumulative effect of change in
      accounting principle...............        --         --         --         --      (0.56)     (0.56)        --
    Loss from discontinued operations....     (0.13)     (0.42)     (0.20)     (0.54)     (0.21)     (0.16)        --
                                           --------   --------   --------   --------   --------   --------   --------
  Net income (loss)......................  $   0.18   $  (0.38)  $  (0.06)  $  (0.61)  $  (0.59)  $  (0.57)  $   0.33
                                           ========   ========   ========   ========   ========   ========   ========
    Weighted average shares..............    30,388     30,545     32,068     33,094     34,895     34,614     38,076
                                           ========   ========   ========   ========   ========   ========   ========
Diluted earnings per share:
    Income from continuing operations....  $   0.31   $   0.04   $   0.14   $  (0.07)  $   0.18   $   0.15   $   0.29
    Cumulative effect of change in
      accounting principle...............        --         --         --         --      (0.54)     (0.54)        --
    Loss from discontinued operations....     (0.13)     (0.42)     (0.20)     (0.54)     (0.21)     (0.16)        --
                                           --------   --------   --------   --------   --------   --------   --------
  Net income (loss)......................  $   0.18   $  (0.37)  $  (0.06)  $  (0.61)  $  (0.57)  $  (0.55)  $   0.29
                                           ========   ========   ========   ========   ========   ========   ========
    Weighted average shares..............    30,388     31,167     32,445     33,094     36,177     36,013     45,732
                                           ========   ========   ========   ========   ========   ========   ========
</TABLE>

                                       51
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   NINE MONTHS ENDED
                                                         YEAR ENDED DECEMBER 31,                     SEPTEMBER 30,
                                           ----------------------------------------------------   -------------------
                                             1994       1995       1996       1997       1998       1998       1999
                                           --------   --------   --------   --------   --------   --------   --------
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>        <C>
OTHER DATA:
  Non-recurring charges..................  $     --   $  6,249   $     --   $  9,846   $  9,891   $  4,553   $     --
  EBITDA (1).............................  $ 21,818   $ 17,766   $ 20,114   $ 27,632   $ 35,370   $ 24,278   $ 31,435
  Depreciation and Amortization..........     4,574      6,541      8,044      9,213      7,126      5,377      6,797
  Capital Expenditures...................     7,894     10,869      6,638      6,647      4,038      2,284      5,672
  Ratio of Earnings to Fixed Charges
    (2)..................................       4.2x       1.5x       2.1x       1.3x       2.1x       2.3x       3.1x
</TABLE>

<TABLE>
<CAPTION>
                                                                                                            AS OF
                                                                                                         NINE MONTHS
                                                                  AS OF DECEMBER 31,                        ENDED
                                                 ----------------------------------------------------   SEPTEMBER 30,
                                                   1994       1995       1996       1997       1998          1999
                                                 --------   --------   --------   --------   --------   --------------
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
  Cash and equivalents.........................  $  9,447   $  9,477   $  5,719   $ 11,383   $ 11,079      $  4,207
  Investments..................................        --      5,000      9,888         --         --            --
  Working capital..............................    46,184     36,730     62,634    115,779     64,450        91,391
  Property and equipment, net..................    27,333     32,730     29,391     27,666     25,702        28,476
  Total assets.................................   150,424    163,060    193,288    183,703    192,567       293,108
  Total debt...................................    13,915     33,364     54,242     62,200     75,240       130,854
  Stockholders' equity.........................    78,296     71,691     82,279     65,447     50,711        86,837
</TABLE>

------------------------------

(1) EBITDA for any relevant period represents earnings before non-recurring
    special acquisition related charges and other interest, taxes, depreciation
    and amortization. We have included EBITDA because we understand that it is
    one measure used by some investors to determine our operating cash flow and
    historical ability to service our indebtedness. However, other companies in
    our business may present EBITDA differently than we do. EBITDA is not a
    measurement of financial performance under generally accepted accounting
    principles and should not be considered by an investor as an alternative to
    net income or operating income as an indicator of our operating performance
    or cash flow from operations, or as an alternative to cash flows as a
    measure of liquidity.

(2) For purposes of computing the ratio of earnings to fixed charges, earnings
    consist of income before income taxes plus fixed charges and "fixed charges"
    consist of interest expense (including amortization of debt discount and
    expense), leasing expense and the estimated interest factor attributable to
    rentals. The ratio of earnings to combined fixed charges and preferred
    dividends was 3.8x during 1994, 1.4x during 1995, 2.0x during 1996, 1.3x
    during 1997, 2.1x during 1998, 2.2x during the nine months ended
    September 30, 1998, and 2.9x during the nine months ended September 30,
    1999.

                                       52
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The following discussion is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
included in this offering circular or incorporated in this offering circular by
reference. You should carefully read this entire offering circular, including
the "Risk Factors" section above and the other risks detailed in this section,
before making an investment in the HIGH TIDES.

OVERVIEW AND OUTLOOK

    We are a leading diversified technology company that provides information
technology, communications and electron beam food pasteurization and medical
product sterilization systems and services. Through extensive government-funded
research and development activities since 1981 under contracts totaling in
excess of $2 billion, we have accumulated a broad portfolio of technologies,
intellectual property and expertise from which we have developed many of our
commercial businesses. The core technologies supporting our Titan Scan and Titan
Wireless segments were derived from technologies originally developed for
government applications. We believe that our government contracts business
enhances our technical expertise with sophisticated technologies and facilitates
our ability to develop commercial applications. We fund the development of
commercial technologies from our technology base both internally as well as in
conjunction with partners. In 1996, for example, we contributed the core
technology to form Servnow! Nettechnologies, Inc., which is now known as
IPivot, Inc. IPivot develops software products that improve the performance of
server farms, web sites and software applications. We raised the capital
required to fund IPivot from venture capital sources. In November 1999, we
received approximately $42 million in cash for our 8.1% equity interest when
IPivot was acquired by Intel Corporation. We plan to continue building our
technology portfolio, identifying commercial applications and entering into
strategic relationships to further our growth.

    We have organized our business into five segments that reflect the specific
markets and industries in which we operate:

<TABLE>
<CAPTION>
SEGMENT                                 SEGMENT DECRIPTION
-------                -----------------------------------------------------
<S>                    <C>
Titan Systems          Information technology and communications solutions
                       for defense, intelligence, and other U.S. and allied
                       government agencies

Cayenta                Total services provider of comprehensive information
                       technology solutions for its customers' business
                       functions, including e-business, finance, accounting,
                       customer billing and collection, contract management,
                       supply chain integration and enterprise asset
                       management

Titan Scan             Electron beam food pasteurization and medical product
                       sterilization systems and services

Titan Wireless         Satellite communication systems and services which
                       support telephony in developing countries

Emerging Technologies  Development of commercial applications for
                       technologies created by our other business segments
                       through government-sponsored research and development
                       programs
</TABLE>

    Each of Titan Systems, Titan Scan and Titan Wireless is a wholly owned
subsidiary of ours, and has a management team that has significant relevant
experience in the segment's particular business

                                       53
<PAGE>
and market area. Consistent with our strategy of aligning management motivation
with stockholder interests, each of these wholly owned subsidiaries has its own
key employee stock option plan to foster an entrepreneurial environment. We have
created stock option plans for each of Titan Systems, Titan Scan and Titan
Wireless. As of December 31, 1999, Titan Systems had approximately 13% of its
fully diluted common stock that had been reserved for issuance under its plan,
and each of Titan Scan and Titan Wireless had approximately 16% of their fully
diluted common stock that had been reserved for issuance under their respective
plans.

    We control approximately 97% of the voting power of Cayenta through our
ownership of 10 million shares of Class B common stock. Each Class A share is
entitled to one vote and each Class B share is entitled to ten votes, with Class
A and Class B shares voting together on all matters submitted to the vote of the
holders of common stock. Cayenta has filed a registration statement on Form S-1
for an initial public offering of an as yet undetermined number of shares of its
Class A common stock that are estimated to have an aggregate value, excluding
the over-allotment option, of $70.0 million. If the proposed offering is
completed, the 2,345,000 outstanding shares of Series A preferred stock of
Cayenta will convert into Class A common stock of Cayenta. We cannot be certain
that Cayenta will be able to complete its offering or complete the offering at
the currently expected offering size. We currently expect to retain in excess of
90% of the voting power of Cayenta following its proposed initial public
offering. In addition, Cayenta has reserved 2,450,000 shares of Class A common
stock under stock option plans. Cayenta has also issued warrants for 495,800
shares of its Class A common stock that have a weighted average exercise price
of $13.11 per share.

    TITAN SYSTEMS

    Titan Systems provides and is expected to continue to provide the largest
percentage of our consolidated revenues. During the nine months ended
September 30, 1999, Titan Systems had total revenues of $219.5 million, which
represented 80.1% of our consolidated revenues for the period. Titan System's
revenues have continued to grow internally and through our well-defined strategy
of increasing our core competencies through acquiring defense information
technology companies as part of the industry consolidation of defense companies.
We expect to continue to support this segment's growth through strategic
acquisitions.

    On December 9, 1999, we entered into an Agreement and Plan of Merger to
acquire Advanced Communication Systems, Inc. in a stock-for-stock, pooling of
interest transaction that we expect to close by the end of our first quarter of
2000. Advanced Communication Systems provides communications, information
systems and aerospace services and solutions primarily to U.S. government
agencies. During the twelve months ended September 30, 1999, Advanced
Communication Systems had revenues from government contracts of approximately
$199 million. Advanced Communication Systems itself has participated in the
industry consolidation and acquired another company in September 1999 in a cash
transaction accounted for as a purchase. As of September 30, 1999, Advanced
Communication Systems had recorded goodwill of $57.6 million that is being
amortized over a period from five to 40 years in connection with its
acquisitions. Advanced Communication Systems also expects to record additional
goodwill of up to approximately $10 million at December 31, 1999 relating to a
potential $10 million earn-out that will be payable in February 2000 in
connection with an acquisition it made in 1998. The additional goodwill will be
amortized over 40 years.

    During 1999, Titan Systems acquired System Resources Corporation ("System
Resources") for a cash purchase price of approximately $35.0 million, subject to
certain post-closing working capital adjustments and offsets for indemnification
claims, consisting of $33.0 million in cash paid at closing, less a
$0.5 million holdback, and $2 million in promissory notes which bear interest at
7% per annum and become fully payable on June 9, 2000, the one year anniversary
of the closing of the transaction. In addition, we agreed to pay the System
Resources stockholders one-half of approximately $1.5 million in System
Resources receivables aged more than 720 days to the extent that any of those
receivables are

                                       54
<PAGE>
collected within the two-year period following the closing date. We also retired
approximately $10 million in System Resources indebtedness. On July 22nd, Titan
Systems also acquired Atlantic Aerospace Electronics Corporation for
approximately $18 million, all of which was paid at closing. In addition, we may
pay up to $3 million in connection with earn-outs tied to the receipt of
specific future contract awards, subject to offsets for indemnification claims.
We accounted for both of these acquisitions as purchases and recorded
approximately $41 million in goodwill, which is being amortized on a
straight-line basis over 40 years.

    During 1998, we completed five acquisitions, DBA Systems, Inc. on
February 27th, The Validity Corporation on March 31st, Horizons
Technology, Inc. on June 30th, VisiCom Laboratories, Inc. on August 24th, and
Delfin Systems, Inc. on October 23rd. With the exception of the Validity
acquisition, each of these mergers was a stock-for-stock transaction accounted
for as a pooling of interests. We recorded goodwill of approximately $18 million
in connection with the Validity transaction, which is being amortized over 30
years.

    Titan Systems' backlog, including both funded and unfunded backlog, was
approximately $621.3 million at September 30, 1999. Titan Systems also had
remaining priced options of approximately $207 million at September 30, 1999. If
Titan Systems' completes its acquisition of Advanced Communication Systems, it
expects a substantial increase in its backlog. At September 30, 1999, Advanced
Communication Systems had funded and unfunded backlog of $704.6 million.
Although backlog represents only business which is considered to be firm, we
cannot guarantee that cancellations or scope adjustments will not occur.

    Titan Systems' operating margin is affected by the mix of contract types
(cost reimbursement, fixed-price or time and materials) as well as by the mix of
prime contracts versus subcontracts. Significant portions of Titan Systems'
contracts are cost reimbursement contracts, under which Titan Systems is
reimbursed for all actual costs, plus a fee or profit. The financial risks under
these contracts generally are lower than those associated with other types of
contracts, and margins are also typically lower. The U.S. government also has
awarded Titan Systems fixed-price contracts. Such contracts carry higher
financial risks because Titan Systems must deliver the contracted services at a
cost below the fixed price in order to earn a profit.

    The following table summarizes the percentage of revenues of Titan Systems
attributable to each contract type for the period indicated:

<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                                       DECEMBER 31,
                                                    -------------------
CONTRACT TYPE                                         1998       1999
-------------                                       --------   --------
<S>                                                 <C>        <C>
Cost Reimbursement................................     49.8%      44.6%
Fixed-Price.......................................     32.0       27.0
Time and Materials................................     18.2       28.4
                                                     ------     ------
                                                      100.0%     100.0%
                                                     ======     ======
</TABLE>

The percentage of Advanced Communication Systems' revenues attributable to cost
reimbursement contracts was 45.0%, the percentage attributable to fixed-price
contracts was 23.0%, and the percentage attributable to time and materials
contracts was 32.0%, for the twelve months ended September 30, 1999.

    Revenues on cost reimbursement contracts are recognized to the extent of
costs incurred plus a proportionate amount of fees earned. Revenues on time and
materials contracts are recognized at the contractual rates as labor hours and
direct expenses are incurred. Revenues on fixed-price contracts are recognized
on the percentage-of-completion method based on costs incurred in relation to
total estimated costs.

                                       55
<PAGE>
    CAYENTA

    During the period between 1995 and January 1999, Cayenta developed its
systems integration and software application expertise. In January 1999, Cayenta
acquired substantially all of the assets of Transnational Partners II, LLC
("Transnational Partners"), an enterprise application integration consulting
company, to broaden its systems integration capabilities and access
Transnational Partners' customer base. Cayenta acquired these assets for an
initial installment of $7.0 million in cash and 2,345,000 shares of its
convertible preferred stock. Cayenta will pay off an additional $2.8 million
note that it issued as part of its acquisition of Transnational Partners, plus
7% interest thereon, in February 2000. During late 1999, Cayenta acquired J.B.
Systems, Inc., an enterprise asset management company doing business under the
name Mainsaver ("Mainsaver"). Cayenta acquired Mainsaver for $11.7 million in
cash, of which $8.2 million was paid at the closing. Of the $3.5 million
withheld at the closing, $0.5 million is due in February 2000 and $3.0 million
is due in May 2001, plus 7.5% interest thereon in each case, after satisfaction
of possible working capital adjustments or indemnification obligations. In
addition, Cayenta paid approximately $3.4 million to reduce outstanding
indebtedness of Mainsaver. Also during late 1999, Cayenta acquired Assist
Cornerstone Technologies, Inc. ("Assist"), an e-commerce solutions and software
provider. Cayenta acquired Assist for 516,458 shares of its Class A common stock
and approximately $12.9 million in cash, of which $9.9 million was paid at the
closing. Of the $3.0 million withheld at the closing, $1.7 million is due in
March 2000 and $1.3 million is due in June 2001, plus 8% interest thereon in
each case, after satisfaction of possible working capital adjustments or
indemnification obligations. In addition, Cayenta paid approximately $3.2
million to retire outstanding indebtedness of Assist and redeem all of its
outstanding redeemable preferred stock. Cayenta also acquired SFG
Technologies, Inc. ("SFG Technologies"), a solutions and software provider
focusing on revenue cycle services for the utility industry, during the fourth
quarter of 1999. Cayenta acquired SFG Technologies for $11.6 million in cash, of
which $9.5 million was paid at the closing. Of the approximately $2.0 million
placed into escrow at the closing, approximately $0.5 million is due in
March 2000 and $1.5 million is due in June 2001, after satisfaction of possible
working capital adjustments or indemnification obligations. In addition, Cayenta
paid approximately $3.1 million to retire outstanding indebtedness of SFG
Technologies and redeem all of its outstanding redeemable preferred stock.
Cayenta intends to integrate the software and solutions developed by these
companies into its total services provider, or TSP, offering.

    In September 1999, together with Sempra Energy's information solutions
subsidiary and modis, an application integrator, Cayenta established Soliance,
LLC, a joint venture that markets and delivers systems and solutions, including
TSP offerings, to the utility industry. Cayenta owns a 10% equity interest in
Soliance and has a management services agreement with Soliance under which it
provides TSP services to Soliance's customers.

    Cayenta has historically derived its revenues from its application
integration and consulting services and from sales of its proprietary software
solutions. Cayenta provides its services primarily on a fixed-time, fixed-price
basis and, to a lesser extent, on a time and materials basis. Under its
fixed-time, fixed-price contracts, Cayenta recognizes revenues on a percentage
of completion basis. Cayenta's fixed-time, fixed-price contracts usually require
an advance payment from its customer with additional payments due on achievement
of specific milestones or on a predetermined schedule. Revenues earned but not
yet billed are recorded as unbilled receivables. Under its time and materials
contracts, Cayenta is paid at an agreed upon hourly rate for the actual time
spent on a customer's projects, and revenues are recorded at the time services
are performed. For the nine months ended September 30, 1999, Cayenta's revenues
from fixed-time, fixed-price contracts represented 66% of its actual revenues
and its revenues from time and materials contracts represented 34% of its actual
revenues. Each of Mainsaver, Assist and SFG Technologies recognizes revenues
from the sale of its proprietary software when the software is delivered and
accepted, in accordance with the American Institute of Certified Public
Accountants' Statement of Position 97-2, "Software Revenue Recognition." The
related software

                                       56
<PAGE>
support and maintenance is billed at the beginning of the maintenance period,
recognized ratably over the term of the applicable contract and recorded as
deferred revenues until recognized.

    As Cayenta expands the portion of its business that is based on its TSP
offering, Cayenta intends to enter into contracts with terms of between three
and five years. Cayenta expects revenues from its TSP offering to consist of
periodic recurring fees from ongoing services that will be recognized ratably
over the applicable contract's term. In addition, Cayenta expects to receive
application integration and consulting fees that will be recognized in
accordance with its revenue recognition policies discussed above.

    Historically, Cayenta's interest expense has related to borrowings from us
to fund its acquisitions and working capital requirements. As of January 21,
2000, Cayenta owed approximately $54.0 million to us under a credit facility on
which Cayenta will make quarterly interest payments at the greater of the rate
of 10% per annum or our effective weighted average interest rate under our
senior credit facility. Cayenta may not use the proceeds of its proposed initial
public offering to pay amounts outstanding under its credit facility with us.

    Under its variable stock option plan, Cayenta has granted options to certain
employees who have agreed to resell shares purchased with those options to
Cayenta. Cayenta has recorded deferred compensation related to these option
grants in an aggregate amount of $155,000 through September 30, 1999. As of
September 30, 1999, there are 628,000 options outstanding that are subject to
this buyback provision, for which Cayenta expects to record deferred
compensation expense equal to the difference between these options' exercise
price of $0.36 per share and the price per share in the proposed initial public
offering multiplied by all 628,000 options. Cayenta also issued 245,000 options
to employees not covered by this buyback option at exercise prices that were
less than the deemed fair market value of the underlying common shares on the
date of grant. Cayenta has recognized deferred compensation relating to these
grants of $514,000 and will amortize this deferred charge to expense over the
four-year vesting period of these options. We expect that there will be an
additional charge related to deferred compensation at the time the initial
public offering closes, and that this charge may be material.

    If Cayenta completes its proposed initial public offering, Cayenta expects
to incur operating losses as it invests in the further development of its total
services provider, or TSP, offering. Cayenta expects its selling, general and
administrative expenses to increase significantly as it expands its recruiting
efforts, further develops and launches its TSP offering, initiates its branding
campaign, increases its direct sales staff and builds its administrative
infrastructure. Cayenta also expects its research and development expenses to
increase as it integrates recently acquired software into, and further develops,
its TSP offering.

    TITAN SCAN

    Titan Scan currently derives primarily all its revenues from providing
turnkey medical product sterilization systems for use at a customer's own
facility and from providing medical product sterilization services at
Titan-owned facilities in San Diego and Denver. Titan Scan's San Diego and
Denver facilities currently run seven days per week, perform sterilization
services for an average of 19 hours per day, and have performed over 100,000
hours of contract sterilization services.

    Titan Scan currently derives a small portion of its revenues, and in the
future expects to derive significant revenues, from providing electron beam food
pasteurization services using our SureBeam technology. In December 1999, the
U.S. Department of Agriculture ("USDA") issued regulations setting forth
guidelines for the irradiation of meats. In anticipation of these regulations,
Titan Scan built, at Cloverleaf Cold Storage's facility in Sioux City, Iowa, the
first electron beam food pasteurization facility in the United States. In
addition, Titan Scan entered into multiyear arrangements with many of the major
poultry and meat providers in the United States, including Cargill, IBP, Tyson
Foods, Emmpak and Huisken Meats, among others. Titan Scan's multiyear
arrangements with its

                                       57
<PAGE>
customers generally provide that Titan Scan will be the exclusive provider of
electronic pasteurization services whenever these companies elect to use
pasteurization technology. Our Sioux City, Iowa facility became operational in
December 1999 and once at full capacity will be able to pasteurize in excess of
250 million pounds of product annually. In January 2000, Titan Scan agreed to
build a second facility in Arkansas with a strategic partner. The strategic
partner will form a new entity to operate the SureBeam system, and Titan Scan
will own a minority interest in the new entity. The facility is scheduled to
become operational in December 2000. Also in January 2000, Titan Scan announced
that it had sold a SureBeam system to Japan's Mitsubishi Corp. that is expected
to be fully operational by the first quarter of 2001. In connection with the
sale, Mitsubishi will form a new entity to operate the SureBeam system, which is
expected to be initially used for medical product sterilization, Titan Scan will
hold an equity interest in the new entity, and Mitsubishi will market Titan
Scan's SureBeam technology in Japan. We cannot be certain that consumers will
accept irradiated foods and that meat and poultry providers and producers will
begin to use our pasteurization services. We also cannot guarantee the volume of
beef or poultry that meat and poultry providers and producers will elect to have
electronically pasteurized.

    Together with a strategic partner, we are currently building a facility in
Hilo, Hawaii that will use our SureBeam technology for the disinfestation of
fruits and vegetables produced in Hawaii. Titan Scan will receive revenues from
the installation of our system in the plant and has an option to purchase a less
than 20% minority equity interest in the entity operating the facility, which
will receive revenues from disinfestation services. We cannot be certain that
the facility will attain market acceptance or generate significant revenues that
will be realized by Titan Scan through profit allocations if Titan Scan
exercises its option to purchase an equity interest in the entity operating the
facility.

    On January 6, 2000, Ion Beam Applications s.a., a Belgian corporation, and
some of its U.S. subsidiaries filed an action for declaratory judgment in a
federal court in Virginia against us relating to our patent for our SureBeam
technology. The action attacks the validity of our patent, seeks a declaration
that Ion Beam Applications and its customers have not infringed any of the 62
claims in our patent, and alleges that we have engaged in unfair competition and
that our conduct constitutes patent misuse. We intend to vigorously defend our
patent position. However, a finding in favor of Ion Beam Applications in this
action could adversely affect our business, financial condition and results of
operation by reducing the growth of our Titan Scan business segment and
preventing us from generating the revenues that we expect from food
pasteurization.

    With respect to equipment sales, we recognize revenue on a percentage of
completion basis. Service revenues are recognized as the related services are
performed.

    If irradiated foods gain market acceptance, Titan Scan expects that its
revenues from pasteurization services would increase significantly. Depending
upon market demand, Titan Scan may build additional food pasteurization
facilities, which would increase its level of capital expenditures.

    TITAN WIRELESS

    Titan Wireless develops and produces advanced satellite ground terminals,
satellite voice/data modems, networking systems and other products to support
telephony in developing countries for government and commercial customers
worldwide. Titan Wireless's technology relies heavily on our Demand Assigned
Multiple Access, or DAMA, technology, which enables more cost-effective and
efficient use of satellite transmission capacity by allowing each ground
terminal in a satellite network to communicate with any other terminal in the
network.

    To date, Titan Wireless's revenues have been generated primarily through the
sale of products to commercial carriers of telephony services. Titan Wireless is
increasingly seeking to generate recurring service revenues from the telephony
systems it installs, and intends to derive at least 50% of all future revenues
from providing telecommunications services. In 1999, Titan Wireless formed Sakon
LLC with

                                       58
<PAGE>
Sakon Corporation to provide carrier, direct dial telephony and enhanced
communications services in certain developing countries. In November 1999, Titan
Wireless formed a strategic relationship with Telecel International Limited, a
large wireless communications service provider to the African continent, to
provide satellite-based telecommunications services in Africa.

    Titan Wireless also owns a 50% equity interest in Titan Africa, Benin, which
is building a satellite-based telephone system for Benin's national telephone
company. Titan Wireless, the prime contractor for the project, will install the
major satellite hub, the Very Small Aperture Terminal hardware, the billing
system and network control system. Alcatel of France is a major subcontractor to
Titan Wireless on this project, and will handle the delivery, installation and
integration of the digital cellular system, wireless local loop, fiber optic
system and primary hub switching technology of the system. Titan Wireless will
build out the entire system, which is expected to be completed in 2001, co-
operate the system with the national telephone company for approximately eight
years, and then transfer the operations to the national telephone company. A
majority of the build-out costs under this contract will be subcontract costs
payable by Titan Wireless to Alcatel. Titan Wireless's operating margin on work
performed by subcontractors is substantially lower than its operating margin on
work it performs itself. In addition to realizing revenue and profit on the
equipment portion of the project, Titan Wireless will share in the revenue and
profit generated by the system while it is co-operating the system.

    With respect to systems sales, we recognize revenue on a percentage of
completion basis. For equipment sales, we recognize revenue on shipment. Service
revenues are recognized as the related services are performed. As Titan Wireless
increases the number of developing countries in which it provides international
long distance telecommunications, Titan Wireless expects its revenues and
operating income to increase.

    EMERGING TECHNOLOGIES.

    This segment's operating activities consist primarily of the ImagClear 5000
fingerprint digitization system business, our truck and train tracking and
monitoring system business and other early stage commercial businesses,
including businesses in which we have less than a 20% equity interest. Emerging
Technologies pursues commercial applications for technologies originally
developed in our Titan Systems' segment or developed by defense companies we
have acquired.

    In November 1999, we received approximately $42 million in cash for our 8.1%
equity interest in IPivot, Inc., which was acquired by Intel Corporation. IPivot
develops software products that improve the performance of server farms, web
sites and software applications. In 1996, we contributed the core technology to
form Servnow! Nettechnologies, Inc., which later changed its name to IPivot.
IPivot was one of the businesses contained in our Emerging Technologies segment.

                                       59
<PAGE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED                  NINE MONTHS
                                                     DECEMBER 31,             ENDED SEPTEMBER 30,
                                                    (IN THOUSANDS)              (IN THOUSANDS)
                                            ------------------------------   ---------------------
CONSOLIDATED FINANCIAL DATA                   1996       1997       1998       1998        1999
---------------------------                 --------   --------   --------   ---------   ---------
                                                                                  (UNAUDITED)
<S>                                         <C>        <C>        <C>        <C>         <C>
Revenues..................................  $245,976   $275,923   $303,428   $218,678    $274,059

Cost of revenues..........................   192,657    216,553    232,041    168,816     211,147

Selling, general and administrative.......    36,226     36,731     37,553     26,936      32,957

Research and development..................     5,023      7,466      5,590      4,025       5,317

Special acquisition related charges and
  other...................................        --      6,600      9,891      4,553          --
                                            --------   --------   --------   --------    --------

Operating profit..........................    12,070      8,573     18,353     14,348      24,638

Interest expense, net.....................     4,125      5,771      6,985      5,137       6,127

Income tax provision......................     2,603      4,184      4,155      3,336       5,553

Cumulative effect of change in accounting
  principle, net..........................        --         --    (19,474)   (19,474)         --

Loss from discontinued operations, net....    (6,326)   (17,930)    (7,444)    (5,617)         --
                                            --------   --------   --------   --------    --------

Net income (loss).........................  $   (984)  $(19,312)  $(19,705)  $(19,216)   $ 12,958
                                            ========   ========   ========   ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED                  NINE MONTHS
                                                     DECEMBER 31,             ENDED SEPTEMBER 30,
                                            ------------------------------   ---------------------
AS A PERCENTAGE OF REVENUES                   1996       1997       1998       1998        1999
---------------------------                 --------   --------   --------   ---------   ---------
<S>                                         <C>        <C>        <C>        <C>         <C>
Revenues..................................     100.0%     100.0%     100.0%     100.0%      100.0%

Cost of revenues..........................      78.4       78.5       76.5       77.2        77.0

Selling, general and administrative.......      14.7       13.3       12.4       12.3        12.0

Research and development..................       2.0        2.7        1.8        1.8         1.9

Special acquisition related charges and
  other...................................        --        2.4        3.3        2.1          --
                                            --------   --------   --------   --------    --------

Operating profit..........................       4.9        3.1        6.0        6.6         9.0

Interest expense, net.....................       1.7        2.1        2.3        2.3         2.2

Income tax provision......................       1.1        1.5        1.4        1.5         2.0

Cumulative effect of change in accounting
  principle, net..........................        --         --      (6.4)      (8.9)          --

Loss from discontinued operations, net....     (2.6)      (6.5)      (2.4)      (2.5)          --
                                            --------   --------   --------   --------    --------

Net income (loss).........................     (0.4)      (7.0)      (6.5)      (8.8)         4.7
                                            ========   ========   ========   ========    ========
</TABLE>

                                       60
<PAGE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED                  NINE MONTHS
                                                     DECEMBER 31,             ENDED SEPTEMBER 30,
                                                    (IN THOUSANDS)              (IN THOUSANDS)
                                            ------------------------------   ---------------------
                                              1996       1997       1998       1998        1999
                                            --------   --------   --------   ---------   ---------
                                                                                  (UNAUDITED)
<S>                                         <C>        <C>        <C>        <C>         <C>
SEGMENT FINANCIAL DATA:

TITAN SYSTEMS
  Revenues................................  $211,124   $225,686   $259,442   $188,366    $219,545
  Operating profit........................    18,770      8,361     25,270     18,356      21,604

TITAN SOFTWARE SYSTEMS
  Revenues................................    18,505     17,374     21,470     13,242      29,330
  Operating profit (loss).................      (137)     4,580      5,137      3,232       6,173

TITAN SCAN
  Revenues................................     7,930      8,254     11,184      8,049       9,985
  Operating profit (loss).................      (390)      (204)     1,121        503       1,668

TITAN WIRELESS
  Revenues................................     3,430     18,405      6,717      6,004       9,885
  Operating profit (loss).................    (5,421)    (1,074)    (6,732)    (3,057)      1,656

EMERGING TECHNOLOGIES AND BUSINESSES
  Revenues................................     4,987      6,204      4,615      3,017       5,314
  Operating profit (loss).................      (209)      (286)        34       (235)        732

CORPORATE/OTHER...........................      (543)    (2,804)    (6,477)    (4,451)     (7,195)
                                            --------   --------   --------   --------    --------
TOTAL REVENUES............................  $245,976   $275,923   $303,428   $218,678    $274,059

TOTAL OPERATING PROFIT....................  $ 12,070   $  8,573   $ 18,353   $ 14,348    $ 24,638
</TABLE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED                  NINE MONTHS
                                                     DECEMBER 31,             ENDED SEPTEMBER 30,
                                            ------------------------------   ---------------------
                                              1996       1997       1998       1998        1999
                                            --------   --------   --------   ---------   ---------
<S>                                         <C>        <C>        <C>        <C>         <C>
SEGMENT REVENUES AS A PERCENTAGE OF TOTAL
  REVENUES:
TITAN SYSTEMS.............................      85.9%      81.8%      85.5%      86.1%       80.1%

TITAN SOFTWARE SYSTEMS....................       7.5%       6.3%       7.1%       6.1%       10.7%

TITAN SCAN................................       3.2%       3.0%       3.7%       3.7%        3.6%

TITAN WIRELESS............................       1.4%       6.7%       2.2%       2.7%        3.6%

EMERGING TECHNOLOGIES AND BUSINESSES......       2.0%       2.2%       1.5%       1.4%        1.9%
                                            --------   --------   --------   --------    --------

                                               100.0%     100.0%     100.0%     100.0%      100.0%
                                            ========   ========   ========   ========    ========
</TABLE>

    Historically, we operated our business in five segments--Information
Technologies, Software Systems, Medical Sterilization and Food Pasteurization,
Communications Systems and Emerging Technologies and Businesses. We have renamed
three of our five historical segments as follows: Information Technologies has
been renamed Titan Systems, Medical Sterilization and Food Pasteurization has
been renamed Titan Scan and Communications Systems has been renamed Titan
Wireless. All of our segments are comprised of multiple operating entities.

                                       61
<PAGE>
RESULTS OF OPERATIONS

REVENUES

    CONSOLIDATED.  Revenues increased from $218.7 million for the nine months
ended September 30, 1998 to $274.1 million for the nine months ended
September 30, 1999.

    TITAN SYSTEMS.  Titan Systems' revenues increased from $188.4 million for
the nine months ended September 30, 1998 to $219.5 million for the nine months
ended September 30, 1999. This increase was due primarily to revenues generated
as a result of the acquisitions of Validity, System Resources and Atlantic
Aerospace and increased subcontract revenues and to a lesser degree due to
internal growth experienced by several of the information technologies and
systems businesses. These increased revenues were partially offset by reduced
shipments of certain defense communications products.

    SOFTWARE SYSTEMS (INCLUDING CAYENTA).  Software Systems' revenues increased
from $13.2 million for the nine months ended September 30, 1998 to $29.3 million
for the nine months ended September 30, 1999. This growth resulted primarily
from a significant new contract with a customer that accounted for $9.8 million
in revenues in the period and $8.3 million in revenues contributed by the
Transnational Partners business that was acquired in January 1999.

    TITAN SCAN.  Titan Scan's revenues increased from $8.0 million for the nine
months ended September 30, 1998 to $10.0 million for the nine months ended
September 30, 1999. This increase primarily relates to the completion of two
medical sterilization systems during the second quarter of 1999, and to
increased utilization at the San Diego and Denver contract medical sterilization
facilities and at the medical sterilization facility in the Dominican Republic
that we operate for Baxter Corporation.

    TITAN WIRELESS.  Titan Wireless's revenues increased from $6.0 million for
the nine months ended September 30, 1998 to $9.9 million for the nine months
ended September 30, 1999. The increase in revenues was due principally to
revenues recorded on its contract to provide a telecommunications system in
Benin, Africa, and to a lesser extent, due to revenues related to the launching
of long distance service in El Salvador and Cameroon. Also included in revenues
for the nine months ended September 30, 1999 is $1.5 million reflecting the
collection of a portion of receivables from PT. Pasifik Satelit Nusantara
("PSN"), for which we had previously provided a valuation allowance against the
amounts outstanding.

    EMERGING TECHNOLOGIES AND BUSINESSES.  Emerging Technologies' revenues
increased from $3.0 million for the nine months ended September 30, 1998 to $5.3
million for the nine months ended September 30, 1999. This increase was due
primarily to increased shipments of fingerprint digitization systems.

SELLING, GENERAL AND ADMINISTRATIVE

    Our selling, general and administrative expenses ("SG&A") increased from
$26.9 million for the nine months ended September 30, 1998 to $33.0 million for
the nine months ended September 30, 1999. SG&A, as a percentage of revenue,
decreased slightly from 12.3% for the nine months ended September 30, 1998 to
12.0% for the nine months ended September 30, 1999. This decrease resulted
primarily from the cost reduction measures implemented in our Titan Systems
segment.

RESEARCH AND DEVELOPMENT

    Research and development costs ("R&D") increased from $4.0 million for the
nine months ended September 30, 1998 to $5.3 million for the nine months ended
September 30, 1999. These increases were due to the increased level of R&D
spending in the Titan Systems segment, specifically related to imaging products.
We anticipate that the level of R&D spending will continue to increase for the
remainder of fiscal 1999 and through fiscal 2000 across all of our core business
segments.

                                       62
<PAGE>
OPERATING PROFIT

    CONSOLIDATED.  Our operating profit increased from $14.3 million for the
nine months ended September 30, 1998 to $24.6 million for the nine months ended
September 30, 1999. This increase was due primarily to the increased revenues
noted above and a special charge for merger-related and other expenses of $4.6
million included in operating results for the nine months ended September 30,
1998.

    TITAN SYSTEMS.  Titan Systems' operating profit increased from $18.4 million
for the nine months ended September 30, 1998 to $21.6 million for the nine
months ended September 30, 1999. This increase was due primarily to the
increased revenues noted above. Included in Titan Systems' results of operations
for the nine months ended September 30, 1998 are special acquisition related
charges of $3.4 million and $0.4 million related to costs incurred to file a
registration statement with the Securities and Exchange Commission ("SEC").
Excluding these special charges, operating income decreased $0.6 million from
$22.2 million in the nine months ended September 30, 1998 to $21.6 million in
the same period in 1999. One time credits in the nine months ended
September 30, 1998 resulted in higher than normal operating profit margins. In
addition, a change in product and service revenue mix, an increase in lower
margin subcontract revenue volumes, and increased R&D expenditures for certain
imaging and defense satellite communications products also resulted in lower
operating margins during the nine months ended September 30, 1999. The impact of
the change in revenue mix and increased R&D investment was partially offset by
credits related to favorable determinations from certain government agencies.

    SOFTWARE SYSTEMS (INCLUDING CAYENTA).  Software Systems' operating profit
increased from $3.2 million for the nine months ended September 30, 1998 to $6.2
million for the nine months ended September 30, 1999. This increase resulted
primarily from the increase in revenues noted above.

    TITAN SCAN.  Titan Scan's operating profit increased from $0.5 million for
the nine months ended September 30, 1998 to $1.7 million for the nine months
ended September 30, 1999. This increase resulted primarily from the increase in
revenues noted above.

    TITAN WIRELESS.  Titan Wireless's operating results improved from an
operating loss of $3.1 million for the nine months ended September 30, 1998 to
an operating profit of $1.7 million for the nine months ended September 30,
1999. This increase resulted primarily from the increase in revenues noted
above. Titan Wireless's operating results for the nine months ended September
30, 1999 include $2.1 million reflecting the collection of a portion of
receivables from PSN, for which we had previously provided a valuation allowance
against the amounts outstanding. Titan Wireless's operating results for the nine
months ended September 30, 1998 include special charges of $0.4 million related
to costs incurred in connection with a withdrawn registration statement.

    EMERGING TECHNOLOGIES AND BUSINESSES.  Emerging Technologies' operating
results improved from an operating loss of $0.2 million for the nine months
ended September 30, 1998 to an operating profit of $0.7 million for the nine
months ended September 30, 1999. This increase resulted primarily from the
increased revenues noted above.

INTEREST EXPENSE, NET

    Our net interest expense increased from $5.1 million for the nine months
ended September 30, 1998 to $6.1 million for the nine months ended
September 30, 1999. This increase resulted primarily from increased borrowings
under our bank credit facility, principally in connection with our acquisitions
of System Resources and Atlantic Aerospace.

INCOME TAXES

    Our income tax provision decreased from a 36% effective rate for the nine
months ended September 30, 1998 to a 30% effective rate for the nine months
ended September 30, 1999. The higher rate for the nine months ended
September 30, 1998 was due primarily to the inability to offset losses of

                                       63
<PAGE>
certain acquired entities with income of other entities. We expect our effective
income tax rate to remain stable in the foreseeable future at an approximate
rate of 30% to 34%.

NET INCOME (LOSS)

    We reported net income of $13.0 million for the nine months ended
September 30, 1999 compared to a net loss of $19.2 million for the nine months
ended September 30, 1998. Included in the results for the nine months ended
September 30, 1998 is a special pre-tax charge for merger-related and other
expenses of $4.6 million. Included in the results for the nine months ended
September 30, 1998 are losses from discontinued operations of $5.6 million. In
addition, we adopted Statement of Position ("SOP") 98-5 ("Start-up Costs") in
1998, which resulted in a $19.5 million write-off of capitalized start-up costs
recorded as a cumulative effect of a change in accounting principle.

FISCAL YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

REVENUES

    CONSOLIDATED.  Our consolidated revenues increased from $246.0 million in
1996 to $275.9 million in 1997 and from $275.9 million in 1997 to $303.4 million
in 1998. Increased revenues were reported in the Titan Systems, Software Systems
and Titan Scan segments in 1998. Revenue growth in 1998 was primarily
attributable to the impact of acquisitions made and integrated into our Titan
Systems segment, work performed on new business in the Software Systems segment,
and the near-completion of two SureBeam systems in the Titan Scan segment.
Revenue growth in 1997 was primarily attributable to revenues generated by
Eldyne, Inc. and Unidyne Corporation, which integrate, install and maintain
information systems on U.S. ships and submarines and we acquired in May 1996 and
integrated into Titan Systems, as well as increased deliveries of telephony
units and Mini-DAMA units in our Titan Wireless and Titan Systems segments.

    TITAN SYSTEMS.  Titan Systems' revenues increased from $211.1 million in
1996 to $225.7 million in 1997 and from $225.7 million in 1997 to $259.4 million
in 1998. The increase in 1998 primarily relates to $23.0 million of revenue
generated from Validity, which was purchased in March 1998, and to a lesser
degree, revenues related to a claim with the U.S. government for work performed
in a prior year, increased shipments of Mini-DAMA units and increased sales
volume of certain VisiCom products. The increased revenue in 1997 was primarily
related to a full-year's revenues generated from Eldyne and Unidyne, which were
acquired in May 1996, increased shipments of Mini-DAMA units and increased
revenues generated under a contract awarded to DBA in 1996.

    SOFTWARE SYSTEMS (INCLUDING CAYENTA).  Software Systems' revenues decreased
from $18.5 million in 1996 to $17.4 million in 1997 and increased from $17.4
million in 1997 to $21.5 million in 1998. The increase in 1998 resulted
primarily from several new customers and from increased revenues from one
federal agency which accounted for approximately $6.8 million, $8.9 million and
$11.2 million of Software Systems' revenues during 1996, 1997 and 1998,
respectively, partially offset by a reduction in revenues from a major
telecommunications customer. The decline in 1997 resulted primarily from reduced
demand from the latter customer, substantially offset by increased revenues from
several new and existing customers. Cayenta expects to diversify its customer
base as it expands its sales and marketing efforts and further develops and
launches its TSP offering.

    TITAN SCAN.  Titan Scan's revenues increased from $7.9 million in 1996 to
$8.3 million in 1997 and from $8.3 million in 1997 to $11.2 million in 1998. The
increase in 1998 is a result of revenue recognized, using the
percentage-of-completion method of accounting, for two turnkey sterilization
systems which were ordered by customers in late 1997 and substantially completed
in 1998. Increased processing of medical products at our two medical
sterilization facilities also contributed to this revenue growth. Revenues in
1997 were also favorably impacted by increased processing of medical products as
well as the sale of our turnkey sterilization systems to Guidant Corporation and
Baxter Healthcare.

                                       64
<PAGE>
    TITAN WIRELESS.  Titan Wireless's revenues increased from $3.4 million in
1996 to $18.4 million in 1997 and decreased from $18.4 million in 1997 to $6.7
million in 1998. The decline in 1998 revenues was due primarily to the decreased
shipments made on our contract with PSN for telephony units in Indonesia. The
revenue increase in 1997 primarily reflected the fulfillment of our initial
contract with PSN for telephony units and increased market acceptance for
certain of our modem and networking products.

    EMERGING TECHNOLOGIES AND BUSINESSES.  Emerging Technologies' revenues
increased from $5.0 million in 1996 to $6.2 million in 1997 and decreased from
$6.2 million in 1997 to $4.6 million in 1998. The decline in 1998 was due
primarily to the wind-down of our environmental consulting business during the
first quarter of 1998, partially offset by increased sales volume of our
fingerprint digitization systems. The increase in 1997 revenues was due to
increased sales volume of fingerprint digitization systems.

SELLING GENERAL AND ADMINISTRATIVE

    Our SG&A expenses increased from $36.2 million in 1996 to $36.7 million in
1997 and from $36.7 million in 1997 to $37.6 million in 1998. SG&A, as a
percentage of revenues, decreased from 14.7% in 1996 to 13.3% in 1997 and from
13.3% in 1997 to 12.4% in 1998. The reductions in 1997 and 1998 reflect the
impact of cost reduction measures as well as economies of scale and efficiencies
that have been achieved. In addition, we have eliminated many duplicate
functions and costs as part of our process of integrating certain of our
acquired businesses. In early 1997, we implemented a streamlining process of our
administrative functions. This process focused on eliminating redundancies, and
resulted in increased efficiencies, reduced infrastructures, and, ultimately,
reduced costs. This process continued throughout 1998, and we intend to continue
it.

RESEARCH AND DEVELOPMENT

    Our R&D expenses increased from $5.0 million in 1996 to $7.5 million in 1997
and decreased from $7.5 million in 1997 to $5.6 million in 1998. The reduced
level of R&D expenditures in 1998 primarily reflects the completion of certain
development and certification efforts of certain defense communications products
within our Titan Systems segment which were substantially completed in 1997. The
increase in 1997 was due primarily to these development and certification
efforts that were completed in 1998, certain of which took longer than expected
to complete.

OPERATING PROFIT

    CONSOLIDATED.  Our operating profit decreased from $12.1 million in 1996 to
$8.6 million in 1997 and increased from $8.6 million in 1997 to $18.4 million in
1998. Our operating profits have been significantly impacted by a number of
factors in each of 1996, 1997 and 1998. The 1998 operating results include a
charge of $9.9 million primarily related to the direct transaction costs
incurred on the Delfin, VisiCom, Horizons and DBA mergers, and to a lesser
degree certain costs incurred to integrate these businesses into us, as well as
certain integration costs incurred in other business segments. The 1997
operating results include a charge of $9.8 million related primarily to
provisions taken to reflect certain asset impairments and an estimated
environmental liability pertaining to a DBA manufacturing facility which is held
for sale. The 1996 operating performance reflects our continuing investment in
and funding of our commercial ventures.

    TITAN SYSTEMS.  Titan Systems' operating profit decreased from $18.8 million
in 1996 to $8.4 million in 1997 and increased from $8.4 million in 1997 to $25.3
million in 1998. The 1998 operating income includes a charge of $7.2 million
related to $6.8 million of special acquisition and integration related charges
principally comprised of direct transaction and integration costs incurred by us
in conjunction with the mergers of DBA, Horizons, VisiCom and Delfin and $0.4
million of costs incurred

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<PAGE>
to file a registration statement with the SEC which was ultimately withdrawn.
The 1997 operating income includes charges of $9.8 million related to the write
down of property held for sale, an estimated environmental liability for DBA,
which we acquired during 1998 and for which we recorded a special charge of $3.0
million during 1997, and certain other asset write-downs recorded in connection
with the acquisition of DBA. Excluding the impact of these charges, Titan
Systems' operating income decreased from $18.8 million in 1996 to $18.2 million
in 1997 and increased from $18.2 million in 1997 to $32.5 million in 1998,
primarily from the increased revenues discussed above, as well as from certain
cost reduction efforts taken during 1997 and 1998.

    SOFTWARE SYSTEMS (INCLUDING CAYENTA).  Software Systems' operating profit
improved from an operating loss of $0.1 million in 1996 to an operating profit
of $4.6 million in 1997 and from an operating profit of $4.6 million in 1997 to
an operating profit of $5.1 million in 1998. The 1998 increase in operating
performance reflects the impact of the increased revenues discussed above. The
1997 results reflect the impact of cost reductions achieved, offset somewhat by
additional costs associated with a negotiated conclusion of certain contracts.
The 1996 operating loss was due primarily to reduced sales from the previously
mentioned telecommunications customer, the timing of corresponding decreases in
SG&A, and additional costs associated with the aforementioned conclusion of
contracts.

    TITAN SCAN.  Titan Scan's operating results improved from an operating loss
of $0.4 million in 1996 to an operating loss of $0.2 million in 1997 and from an
operating loss of $0.2 million in 1997 to an operating profit of $1.1 million in
1998. This improvement was primarily due to the increase in revenues mentioned
above.

    TITAN WIRELESS.  Titan Wireless's operating results improved from an
operating loss of $5.4 million in 1996 to an operating loss of $1.1 million in
1997 and worsened from an operating loss of $1.1 million in 1997 to an operating
loss of $6.7 million in 1998. The 1998 operating results include special charges
of $2.4 million including pre-operating and start-up costs of $0.5 million
related to the Titan Africa, Benin operation, $1.4 million related to employee
termination and retention costs related to the reorganization of this business,
as well as approximately $0.5 million related to costs incurred to file a
registration statement with the SEC which was ultimately withdrawn. Excluding
the impact of these charges, operating loss, as adjusted, was $4.3 million in
1998 compared to an operating loss of $1.1 million in 1997 and an operating loss
of $5.4 million in 1996. The increase in operating loss in 1998 was attributable
to the decline in revenues noted above. Operating performance improved in 1997
from 1996 due primarily to increased revenues combined with decreased SG&A and
R&D expenses as a percentage of revenues.

    EMERGING TECHNOLOGIES AND BUSINESSES.  Emerging Technologies' operating
results declined from an operating loss of $0.2 million in 1996 to an operating
loss of $0.3 million in 1997 and improved from an operating loss of $0.3 million
in 1997 to an operating profit of $0.03 million in 1998. The improved operating
results in 1998 were due primarily to the increase in revenues discussed above.

INTEREST EXPENSE, NET

    Our net interest expense increased from $4.1 million in 1996 to $5.8 million
in 1997 and from $5.8 million in 1997 to $7.0 million in 1998. Net interest
expense has increased over 1996, 1997 and 1998, primarily as a direct result of
the increased level of our borrowings, primarily to fund the growth in the
various segments. In 1998 and 1997, the principal component of interest expense
was related to our convertible senior subordinated debentures, substantially all
of which had been converted into our common stock by the end of the fourth
quarter of 1999. In 1996, the principal component of interest expense was
related to our borrowings under our bank lines of credit. Borrowings from our
primary bank lines of credit, excluding working capital lines from acquired
companies, averaged $28.9 million at a weighted average interest rate of 7.7%
during 1998, $10.8 million at a weighted average interest rate of 8.1% during
1997, and $12.3 million at a weighted average interest rate of 8.2% during 1996.
Also

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<PAGE>
included in interest expense is interest on our deferred compensation and
retiree medical obligations. Interest expense related to these items was $0.9
million for 1998, $0.8 million for 1997 and $0.8 million for 1996.

INCOME TAXES

    Income taxes reflect effective rates of 37% in 1998, 149% in 1997 and 33% in
1996. The difference between the actual provision and the effective rate (based
on the United States statutory tax rate) in 1998 and 1996 was due primarily to
state income taxes. The increased rate in 1997 was due primarily to significant
non-deductible expenses which were recorded for financial reporting purposes, as
well as the inability to offset losses of certain acquired entities with income
of other entities. We anticipate that our effective income tax rate will remain
stable in the foreseeable future at an approximate rate of 30% to 34%.

NET LOSS

    Our reported net loss increased from $1.0 million in 1996 to $19.3 million
in 1997 and from $19.3 million in 1997 to $19.7 million in 1998. Included in the
net losses for 1996, 1997 and 1998 are net losses from discontinued operations
of $6.3 million, $17.9 million and $7.4 million, respectively, relating to our
winding down of our access control systems and broadband communications
businesses as well as operations discontinued by certain of the companies
acquired by us during 1998. In addition, we adopted Statement of Position (SOP)
98-5 ("Start-up Costs") in 1998, which resulted in a $19.5 million write-off of
capitalized start-up costs recorded as a cumulative effect of a change in
accounting principle.

LIQUIDITY AND CAPITAL RESOURCES

    During the nine months ended September 30, 1999, we used $8.7 million for
the operating requirements of continuing operations. Cash of $50.9 million was
used for our acquisitions of Transnational Partners, System Resources and
Atlantic Aerospace and cash used for discontinued operations was $5.8 million.
Cash was provided primarily by borrowings under our line of credit of $76.9
million.

    We have a receivable of approximately $3.9 million from our Indonesian
customer, PSN, due on September 30, 2000, which accrues interest at 10% per
annum. At any time prior to the payment of the obligation in full, we may elect
to convert all or a portion of the principal and interest due into common stock
of PSN, based on its then current market value. In addition, if PSN sells any of
its interest in its wholly-owned subsidiary, subject to other third party
obligations, PSN is required to immediately pay to us the lesser of the $3.9
million or the total amount of the outstanding balance owed to us. In the event
that PSN obtains financing from additional sources, the payment terms of its
obligations to us will be renegotiated at that time. Titan has received payments
from PSN in accordance with the negotiated payment terms.

    On June 9, 1999, in conjunction with the acquisition of System Resources,
our bank syndicate, with The Bank of Nova Scotia as the administrative agent,
amended and increased our existing credit facility. The revised credit facility,
totaling $190 million, includes a $55 million line of credit for working capital
and general corporate purposes, $60 million ($25 million original and $35
million new facility) in lines of credit dedicated to acquisitions and a $75
million term loan. The credit facility is secured by substantially all of the
assets of Titan. Quarterly repayment schedules are in increasing percentages
over 4 years beginning September 1999 for the $25 million original portion of
the acquisition line and June 2000 for the $35 million new portion of the
acquisition line. The $75 million term loan is to be repaid quarterly at .25% of
original principal beginning September 30, 1999 through September 29, 2004 and
at 23.75% thereafter until the final payment at maturity on June 9, 2005. We

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<PAGE>
have the option to borrow at the bank's base rate plus a margin of 2% or at
LIBOR plus a margin of 3% on the $75 million term loan. Margins applicable to
the remaining lines are based on the ratio of total debt to earnings before
interest, taxes, depreciation and amortization, or EBITDA. As of January 21,
2000, we had approximately $141 million of indebtedness outstanding under this
credit facility.

    We have received a commitment letter from Credit Suisse First Boston, New
York branch, pursuant to which Credit Suisse First Boston, New York branch, has
agreed, subject to the terms and conditions set forth in the commitment letter,
to provide a new credit facility to us. We expect to replace our existing credit
facility with this new credit facility, which we anticipate will be secured by
substantially all of our and our subsidiaries' assets and guaranteed by
substantially all of our subsidiaries. Credit Suisse First Boston, a New York
branch, has committed to provide a senior secured multi-draw term loan facility
in an aggregate principal amount of up to $75 million, a senior secured term
loan facility in an aggregate principal amount of $75 million, and a five-year
senior secured revolving credit facility in an aggregate principal amount of up
to $100 million. Loans made under the multi-draw term loan facility would mature
on the sixth anniversary of the closing date of the new credit facility, and
amortize as follows: 2.5% quarterly in year two of the credit facility, 3.75%
quarterly in year three of the credit facility, 5% quarterly in year four of the
credit facility, 6.25% quarterly in year five of the credit facility and 7.5%
quarterly in year six of the credit facility. Loans made under the term loan
facility would mature on the seventh anniversary of the closing date of the new
credit facility, and amortize as follows: 0.25% quarterly for years one through
six of the credit facility and 23.5% quarterly for year seven of the credit
facility. Under each of the term loan facilities and the revolving facility, we
would have the option to borrow at the bank's base rate or at adjusted LIBOR
plus, in each case, an applicable ratio based on the ratio of our total debt to
EBITDA. We expect that the definitive documentation for the new credit facility
would also contain, among others, financial covenants that set maximum debt to
EBITDA limits and require us to maintain minimum interest and fixed charge
coverages and levels of net worth. We cannot guarantee that we will be able to
enter into satisfactory definitive documentation for, and ultimately access, the
new credit facility described above. We expect to use borrowings of
approximately $77 million under our new credit facility to repay existing
indebtedness of Advanced Communications Systems when we close the acquisition
and to pay certain acquisition-related expenses.

    In November 1999, we received approximately $42 million in cash for our 8.1%
equity interest in IPivot, Inc. when IPivot was acquired by Intel Corporation.
IPivot develops software products that improve the performance of server farms,
web sites and software applications, and was one of the businesses in our
Emerging Technologies segment. In 1996, we formed Servnow! Nettechnologies,
Inc., which later changed its name to IPivot, and contributed its core
technology. We are entitled to receive up to approximately $3 million in
additional purchase price upon expiration of the escrow arrangements for this
transaction.

    During the fourth quarter of 1999, Cayenta acquired Mainsaver, Assist and
SFG Technologies to further develop its TSP offering. Cayenta paid cash at the
closings for these acquisitions of approximately $39.1 million, which went to
the applicable sellers as well as to retire outstanding indebtedness and redeem
outstanding redeemable preferred stock of the entities acquired.

    After deducting the commissions to the initial purchasers that we have
agreed to pay on behalf of the trust, and other offering expenses, we estimate
that we will receive net proceeds of $193 million from the sale of the
debentures to the trust, or $241.5 million if the over-allotment option of the
initial purchasers is exercised in full. We will be required to make a
repurchase offer for up to 50% of the aggregate liquidation amount of each of
the HIGH TIDES and the trust's common securities if our acquisition of Advanced
Communication Systems does not close on or prior to March 31, 2000. We will
dedicate 50% of the proceeds from the sale of debentures to the trust, plus an
amount equal to 2.5% of that portion of those proceeds, to fund the repurchase
offer, and use the remaining net proceeds to

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<PAGE>
repay indebtedness outstanding under our existing credit facility. If our
acquisition of Advanced Communication Systems closes on or prior to March 31,
2000, we will use the proceeds from the sale of debentures to the trust that
otherwise would have been used to fund the repurchase offer for general
corporate purposes, including funding of our working capital requirements. In
addition, a portion of these proceeds also may be used to acquire or invest in
complementary businesses, technologies and products.

    Funding for the advancement of our strategic goals, including acquisitions
and continued investment in targeted commercial businesses and start-up
ventures, is expected to continue. We plan to finance these requirements from a
combination of sources, which include cash generation from our core businesses,
our new credit facility as described above and other available cash sources.
Management believes that the combination of net proceeds from this offering,
amounts available under the new credit facility and cash flow expected to be
generated from our operations will be sufficient to fund planned investments and
working capital requirements for at least the next twelve months. However, we
could elect, or we could be required, to raise additional funds during that
period and we may need to raise additional capital in the future. Additional
capital may not be available at all, or may not be available on terms favorable
to us. Any additional issuance of equity or equity-linked securities may result
in substantial dilution to our stockholders. Management is continually
monitoring and reevaluating its level of investment in all of its operations,
specifically the increased investment required in fiscal 2000 to further grow
its commercial businesses, and the financing sources available to achieve our
goals in each business area.

YEAR 2000 READINESS DISCLOSURE

    We implemented a Year 2000 compliance program to address our current
hardware and software products and development tools and all of our major
computing information systems networks, desktop systems and infrastructure. In
addition, we contacted business associates such as our third party vendors,
business partners, contractors and service providers to assess their level of
readiness. We estimate that the cost of moving business units to new systems
will ultimately range from $1.0 million to $2.0 million. We do not expect to
experience any material disruptions or other problems relating to the Year 2000
rollover in the operation of our internal hardware and software systems. As a
result of prior assessments, we do not expect our current products or services
to have material Year 2000 issues, and, to date, we have not received any claims
or other indications that any of our segment's products and services are not
Year 2000 compliant. Our products and services generally do not have provisions
for extended warranties; as such, we do not expect that we will have to spend
any material amounts to make any of our prior products Year 2000 compliant.
Since September 30, 1999, our subsidiary Cayenta has completed three
acquisitions of computer software companies. Each of the acquired companies
represented to Cayenta that they used commercially reasonable efforts to make
their systems and products Year 2000 compliant. We cannot predict whether any of
the products of our recently acquired businesses may have Year 2000 issues.

    Most of our customers, in particular the U.S. government, utilize complex
billing and accounting systems to determine the timing and the amounts that will
be paid to us under our various contracts. In addition, several of our major
strategic partners rely on complex software systems to coordinate and control
their day-to-day operations. These complex systems may not be Year 2000
compliant. Although these customers and strategic partners have advised us that
they expect to resolve any Year 2000 issues prior to December 31, 1999, we
cannot guarantee that our billing procedures and cycles, or our joint sales and
marketing efforts, will not be interrupted. If these customers' or business
partners' Year 2000 issues are not resolved on time, or at all, our financial
position, results of operations or cash flows could be materially and adversely
affected.

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<PAGE>
                                    BUSINESS

OVERVIEW

    We are a leading diversified technology company that provides information
technology, communications and electron beam food pasteurization and medical
product sterilization systems and services. Through extensive government-funded
research and development activities since 1981 under contracts totaling in
excess of $2 billion, we have accumulated a broad portfolio of technologies,
intellectual property and expertise from which we have developed many of our
commercial businesses. The core technologies supporting our Titan Scan and Titan
Wireless segments were derived from technologies originally developed for
government applications. We believe that our government contracts business
enhances our technical expertise with sophisticated technologies and facilitates
our ability to develop commercial applications. We fund the development of
commercial technologies from our technology base both internally as well as in
conjunction with partners. In 1996, for example, we contributed the core
technology to form Servnow! Nettechnologies, Inc., which is now known as IPivot.
IPivot develops software products that improve the performance of server farms,
web sites and software applications. We raised the capital required to fund
IPivot from venture capital sources. In November 1999, we received approximately
$42 million in cash for our 8.1% equity interest when IPivot was acquired by
Intel Corporation. We plan to continue building our technology portfolio,
identifying commercial applications and entering into strategic relationships to
further our growth.

    We have organized our business into five segments that reflect the specific
markets and industries in which we operate:

<TABLE>
<CAPTION>
SEGMENT                                 SEGMENT DECRIPTION
-------                -----------------------------------------------------
<S>                    <C>
Titan Systems          Information technology and communications solutions
                       for defense, intelligence, and other U.S. and allied
                       government agencies

Cayenta                Total services provider of comprehensive information
                       technology solutions for its customers' business
                       functions, including e-business, finance, accounting,
                       customer billing and collection, contract management,
                       supply chain integration and enterprise asset
                       management

Titan Scan             Electron beam food pasteurization and medical product
                       sterilization systems and services

Titan Wireless         Satellite communication systems and services which
                       support telephony in developing countries

Emerging Technologies  Development of commercial applications for
                       technologies created by our other business segments
                       through government-sponsored research and development
                       programs
</TABLE>

    Each of our segments has a management team with significant relevant
experience in the segment's particular business and market area. Consistent with
our strategy of aligning management motivation with stockholder interests, each
of our segments (except Emerging Technologies which is not a separate
subsidiary) has its own key employee stock option plan to foster an
entrepreneurial environment.

    On a pro forma basis for the acquisitions we completed during 1999 as well
as our proposed acquisition of Advanced Communication Systems, our revenues were
approximately $593 million and our earnings before non-recurring special
acquisition related charges and other interest, taxes,

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<PAGE>
depreciation and amortization, or EBITDA, were approximately $61.6 million for
the twelve months ended September 30, 1999.

    We believe that the markets in which we operate are large and growing:

<TABLE>
<CAPTION>
SEGMENT                           TARGET MARKET PROFILE
-------        ------------------------------------------------------------
<S>            <C>
Titan Systems  The U.S. government is among the largest buyers of
               information technology systems and services in the world.
               According to the Government Electronic Industries Alliance,
               the U.S. government's information technology budget for its
               fiscal year 2000 is expected to be approximately $34
               billion. In a statement to the House Committee on National
               Security, Secretary of Defense William S. Cohen stated that
               the defense budget will emphasize advanced information
               technologies related to Command, Control, Communications,
               Computers, Intelligence, Surveillance and Reconnaissance, or
               C4ISR.

Cayenta        Forrester Research projects that the market for business to
               business e-business will grow from $43 billion in 1998 to
               $1.3 trillion in 2003. In addition, International Data
               Corporation estimates that the worldwide market for
               consulting, design, systems integration, support, management
               and outsourcing services associated with the development,
               deployment and management of Internet sites will grow at a
               five year compounded annual growth rate of 59% from $7.8
               billion in 1998 to $78.5 billion in 2003.

Titan Scan     With 75.4 billion pounds of meat, including beef, pork and
               poultry, produced in the United States in 1999, Titan Scan
               estimates that the market for food pasteurization systems
               and services could develop to be in excess of $3.0 billion
               annually if irradiated foods gain consumer acceptance. If
               such consumer acceptance occurs, Titan Scan believes that
               meat producers will initially elect to pasteurize a portion
               of their ground beef and poultry production. According to a
               market research report, the global market for sterilization
               services for medical products was approximately $368 million
               in 1999.

Titan          In our targeted markets, telephone availability is
Wireless       relatively low. In 1998, according to the International
               Telecommunication Union, countries in our targeted markets,
               which represent approximately one-third of the world's
               population, had fewer than two subscriber lines per 100
               inhabitants compared to 66.13 in the United States.
</TABLE>

COMPETITIVE STRENGTHS

We attribute our growth and performance to several factors within each of our
business segments:

TITAN SYSTEMS

    LONG STANDING CUSTOMER RELATIONSHIPS.  Founded in 1981, Titan Systems has an
extensive history of providing information systems and communications solutions
to defense, intelligence and other U.S. and allied government agencies.
Collectively, Titan Systems' senior management has on average 20 years of
industry experience and has developed long-standing, key customer relationships
across all of the U.S. military services and several NATO countries, which have
contributed to Titan Systems' success in securing new contracts.

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<PAGE>
    BROAD SOLUTION CAPABILITIES.  Titan Systems has extensive knowledge of the
operations and information systems and communications requirements of the
defense industry and provides a full range of systems engineering and technical
support for the C4ISR initiatives of the Department of Defense, or DoD. Titan
Systems designs, builds, tests, installs and maintains systems that collect,
digitize, compress, transmit, receive, decompress, and display information and
permit their users to analyze data in a secured environment. This ability to
provide full-service solutions, coupled with our employee base of over 1,500
"Secret" and above-cleared personnel, enables us to bid on larger, more
comprehensive C4ISR defense contracts. Advanced Communication Systems' employee
base includes more than 1,300 "Secret" and above-cleared personnel.

    PROVEN ACQUISITION STRATEGY.  In anticipation of changes in U.S. government
procurement policies toward awarding more comprehensive contracts to meet its
defense-related requirements, we initiated an acquisition strategy in 1997.
Since January 1, 1998, we have acquired and integrated seven defense information
technology companies into Titan Systems. If acquired, Advanced Communication
Systems will also be integrated into Titan Systems. We believe the enhanced
technology and personnel resources provided by our acquisitions enable Titan
Systems to serve its customers with comprehensive solutions for their
information systems needs.

CAYENTA

    TOTAL SERVICES PROVIDER.  As a total services provider, or TSP, Cayenta
delivers comprehensive, tailored solutions to its customers that combine its
customers' information technology strategy, application development and
configuration, systems integration, hosting and support. We believe Cayenta's
TSP offering provides its customers with a number of benefits over internally
developed and hosted systems, including lower and more predictable capital and
operating costs, timely deployment, adaptable solutions, and scalable and
reliable hosted applications.

    COMPLETE E-BUSINESS SOLUTION.  Cayenta integrates customers' web sites and
other e-business portals with business support systems and provides its
customers with a single point of contact for managing and monitoring their
e-business transactions. Cayenta integrates a customer's web site and other
business support systems with its proprietary solutions for order processing,
catalog management, customer service, inventory management, order fulfillment,
billing, collections, and account settlement.

    REVENUE CYCLE SERVICES OFFERING.  Cayenta offers solutions that enable its
customers to address their complex pricing, billing, settlement and supply-chain
requirements and improve their e-business capabilities. Cayenta's software also
provides audit and compliance functions that accommodate the complex contract
terms prevalent in e-business and permit Cayenta's customers to more effectively
monitor their receivables and manage the fulfillment process.

    INTEROPERABLE AND ADAPTABLE SOLUTIONS.  Cayenta's solutions are
interoperable, permitting its customers to integrate different systems within
their organizations and between their organizations and those of their trading
partners. Cayenta's solutions also are adaptable, accommodating customer
technology preferences while facilitating easy access across the Internet.
Cayenta offers solutions that reduce its customers' manual and redundant
business processes and permit them to add or change software applications as
their businesses evolve.

    TAILORED SOLUTIONS FOR CUSTOMERS' BUSINESS PROCESSES.  Cayenta has expertise
in its target industries that helps it to define and deliver timely solutions
tailored to its customers' market dynamics and business opportunities. All of
Cayenta's solutions allow customers to supplement standard software applications
with additional functionality tailored to their business needs. To achieve this
additional functionality, Cayenta uses software components that extend the
capabilities of standard software applications.

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<PAGE>
TITAN SCAN

    SUPERIOR ELECTRON BEAM PASTEURIZATION AND STERILIZATION TECHNOLOGY.  Titan
Scan provides patented and proprietary systems and services which pasteurize
food and sterilize medical products in an efficient, safe and environmentally
friendly manner. The market for pasteurization and sterilization systems has
historically been served by two technologies--Gamma and etholene oxide, or EtO.
We believe Titan Scan's proprietary electron beam process, or SureBeam system,
which uses commercial electricity as its source of power, is superior to Gamma
and EtO technology because it:

    - requires significantly less processing time;

    - poses no known environmental risks;

    - may result in reduced product degradation; and

    - can be introduced directly into a food processor's or manufacturer's
      production line and is scalable to meet customer processing requirements.

Gamma and EtO technologies require the handling and use of hazardous materials.
Other costs associated with Gamma and EtO typically include the cost of
transporting the product from the customer's production site to the Gamma or EtO
facility, and the associated inventory carrying cost. We believe our SureBeam
systems offer a reliable, efficient, more environmentally acceptable and
generally superior alternative to Gamma and EtO.

    REGULATORY CLEARANCE FOR SUREBEAM TECHNOLOGY.  In December 1997, the Food
and Drug Administration, or FDA, approved irradiation of meat, finding that
irradiation of meat, at its recommended doses, does not diminish the food's
nutritional value in any detectable way. In December 1999, the U.S. Department
of Agriculture, or USDA, issued regulations setting forth guidelines for the
irradiation of meat.

    EXCLUSIVE CUSTOMER ARRANGEMENTS.  Titan Scan has executed multiyear
arrangements with many of the major poultry and meat providers and producers in
the United States, including Cargill, IBP, Tyson Foods, Emmpak and Huisken
Meats, among others. These companies produced approximately 75% of the
25.8 billion pounds of beef and approximately 43% of the 75.4 billion pounds of
meat, including beef, pork and poultry, produced in the United States in 1999.
Titan Scan believes that if irradiated foods gain market accceptance, these
producers will initially elect to pasteurize a portion of their ground beef and
poultry production. Titan Scan's multiyear arrangements with its customers
generally provide that it will be the exclusive provider of electronic
pasteurization services whenever any of these companies elect to use
pasteurization technology. In addition, at Cloverleaf Cold Storage's facility in
Sioux City, Iowa, Titan Scan has built the first electron beam pasteurization
facility in the United States, and also has arrangements with Zero Mountain Cold
Storage, Mitsubishi and Hawaii Pride to build similar facilities.

TITAN WIRELESS

    SOLUTIONS ARE WELL-SUITED TO TARGET MARKETS.  Telephone service for remote
areas of many developing countries has not been practical for a number of
economic and technical reasons. In our targeted markets, telephone availability
is relatively low. In 1998, according to the International Telecommunication
Union, countries in our targeted markets, which represent approximately
one-third of the world's population, had fewer than two subscriber lines per 100
inhabitants compared to 66.13 in the United States. Titan Wireless has designed
a network of fixed-site satellite terminals that provide cost-effective
telephone, facsimile and data communications services to areas not previously
served by developing countries' national public switched telephone networks, or
PSTNs. These solutions are well-suited to conditions in developing countries,
which are Titan Wireless's target markets, because they combine the following
characteristics:

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<PAGE>
       LOW OPERATING COSTS.  Titan Wireless's telephony products utilize its
       defense-derived DAMALink network management software system, which allows
       for multiple simultaneous users to efficiently access the same satellite
       channel, resulting in "space segment" cost savings and improved
       operational flexibility.

       CONNECTS TO NATIONAL AND INTERNATIONAL TELEPHONE NETWORKS.  Titan
       Wireless's telephony system is one of the first revenue generating
       systems to provide a direct connection to a country's PSTN. This system
       makes it possible for telephone calls to be placed from remote terminals
       to any phone within the country through a national PSTN and any phone in
       the world through an international PSTN.

       SCALABLE AND ADAPTABLE.  Titan Wireless's telephony systems are scalable
       to provide the capacity required to meet a specific location's
       communications needs. In addition, the core technologies and designs of
       Titan Wireless's telephony terminals can be adapted for private
       commercial networks.

       ACCOMMODATES A VARIETY OF POWER SOURCES.  Titan Wireless's ground
       terminals are capable of operating on a wide range of locally available
       power sources. For example, its Xpress Connection is capable of operating
       on solar power.

    STRONGLY POSITIONED THROUGH STRATEGIC ALLIANCES.  Titan Wireless develops
and markets its telephony products through strategic alliances in developing
countries in Africa, Latin America and Asia. Through its Sakon joint venture,
Titan Wireless is currently providing long distance telecommunications services
in eight developing countries, and expects to provide long distance
telecommunications in at least six additional developing countries.

EMERGING TECHNOLOGIES AND BUSINESSES

    PROVEN ABILITY TO TRANSITION OUR TECHNOLOGY TO COMMERCIAL
BUSINESSES.  Emerging Technologies introduces new commercial applications from
our rich technology portfolio, superior research and development capabilities
and stream of government-funded projects. The core technologies supporting Titan
Scan and Titan Wireless were created from technologies originally developed for
government use. In 1996, we contributed the core technology to form Servnow!
Nettechnologies, Inc., which is now known as IPivot. In November 1999, as a
result of the acquisition by Intel Corporation of IPivot, we received
approximately $42 million for our 8.1% equity interest.

BUSINESS STRATEGY

We believe a key element of Titan's success is our innovative use of technology
that provides comprehensive, efficient solutions to our government and
commercial customers. We believe that our sophisticated technical abilities will
allow us to expand our customer base, improve our operating results and continue
to grow.

    Our objectives are:

    - to enhance our leading position in providing information technology and
      communications solutions to defense, intelligence and other U.S. and
      allied government agencies; and

    - to further our strong track record of commercializing proprietary
      technologies designed to serve global markets.

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    To achieve these objectives, we intend to pursue the following strategies:

       MAINTAIN TECHNOLOGY LEADERSHIP.  Since inception, we have received
       substantial government funding to conduct research and development and
       create advanced information technology solutions and communications
       systems for government uses. Based largely on activities that have been
       supported by government funding, we have created a diversified portfolio
       of technology and developed many of our commercial businesses, like Titan
       Scan and Titan Wireless. We will continue to bid for government-funded
       research and development work and government contracts that we believe
       will expose our technical personnel to sophisticated technologies,
       challenge their skills, and increase their abilities to transition
       systems and solutions developed for the government to commercial
       applications. We will also continue to actively seek acquisition
       candidates whose technology portfolio and personnel resources complement
       and supplement our own. We believe that these efforts, combined with our
       extensive expertise and capabilities, will allow us to further our
       government relationships and position us to win new government contracts,
       while also strengthening our ability to provide systems and solutions to
       commercial customers in a variety of markets.

       PURSUE STRATEGIC TRANSACTIONS.  Our acquisition program is a key
       component to our overall business strategy. We believe the enhanced
       technology and personnel resources which our acquisitions have provided
       enable us to complete larger, more comprehensive government contracts and
       to market our services to new customers. To further our growth and enter
       new markets, we intend to pursue strategic acquisitions of complementary
       businesses, technologies and products. We plan to achieve operating
       efficiencies and cost savings following our acquisitions through
       centralization of strategic planning, corporate development,
       administrative, financial and other services. We also intend to pursue
       strategic alliances, primarily to access new customers and establish
       additional channels of distribution for our core businesses and
       technologies.

       GROW PROFITABLY.  We are dedicated to growing our business and enhancing
       our profitability. We have instituted successful cost reduction programs
       for each of our acquired companies and continually seek opportunities to
       improve our operating margins. In early 1997, we implemented a
       streamlining process for our administrative functions. This process
       focused on eliminating redundancies and resulted in increased
       efficiencies and reduced infrastructures and costs. We plan to continue
       implementing similar initiatives and to improve cash flow through
       enhanced receivables management.

       PURSUE INITIAL PUBLIC OFFERINGS FOR CORE SUBSIDIARIES.  We intend to
       finance the growth of Cayenta, Titan Scan and Titan Wireless by obtaining
       public or private financing, including through initial public offerings
       of common stock of these segments. To the extent possible, we intend to
       structure these initial public offerings in order to preserve the ability
       to later distribute the stock we retain in these segments to our
       stockholders on a tax-free basis. Under existing law, we must own at
       least 80% of the total voting power and 80% of any class of nonvoting
       capital stock of a subsidiary to be able to effect a tax-free
       distribution of a subsidiary's stock. In addition, both Titan and the
       subsidiary must meet numerous other requirements under the Internal
       Revenue Code, including requirements relating to the subsidiary's
       operating history and the subsidiary must have a business purpose for the
       spin-off distribution. To date, our subsidiary Cayenta has filed a
       registration statement for an initial public offering of its stock. If
       the offering is completed, we have no present intention of distributing
       our Cayenta shares to the Titan stockholders. Our existing credit
       facility does not permit us to distribute the stock of our subsidiaries
       to Titan stockholders without consent of the lenders. It also requires
       that if we complete an offering of securities of a subsidiary, we must
       pay down the credit facility by the amount of the net proceeds of the
       offering. We expect our new credit facility will contain similar
       restrictions except that we will not have to pay down the credit facility
       if Cayenta completes its initial public offering and Cayenta will no

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       longer be a guarantor of the new credit facility. As a result of the
       foregoing factors and other factors, we may not be able to distribute
       interests in these segments to our stockholders.

OPERATING SEGMENTS

TITAN SYSTEMS

    OVERVIEW.  Titan Systems provides comprehensive information systems
solutions to defense, intelligence, and other U.S. and allied government
agencies with sophisticated data management, information processing, information
fusion, knowledge-based systems and communications requirements. Titan Systems
also develops and manufactures digital imaging products, electro-optical
systems, threat simulation/training systems and intelligence electronic hardware
primarily used in defense and intelligence applications. Titan Systems also
installs, tests and maintains all of these specialized products. In addition,
Titan Systems develops and delivers defense communications products to the U.S.
military and allied governments. For the twelve months ended September 30, 1999,
Titan Systems had revenues of approximately $290.6 million and EBITDA of
approximately $37.4 million. As of September 30, 1999, Titan Systems had a total
backlog of approximately $621.3 million, consisting of $171.6 million in U.S.
government funded backlog and $449.8 million in U.S. government unfunded
backlog.

    INDUSTRY OVERVIEW.  The U.S. government is among the largest buyers of
information technology systems and services in the world. According to the
Government Electronic Industries Alliance, the U.S. government's information
technology budget for its fiscal year 2000 is expected to be approximately $34
billion. In a statement to the House Committee on National Security, Secretary
of Defense William S. Cohen stated that the defense budget will emphasize
advanced information technologies related to Command, Control, Communications,
Computers, Intelligence, Surveillance and Reconnaissance, or C4ISR. The U.S.
government's focus on information technology reflects the critical role that
this capability plays both in national security and in improving government
efficiency. The U.S. military is placing greater emphasis on increasing
productivity while using fewer resources by employing systems that act as "force
multipliers." To further this strategy, military agencies are relying on
communications products and systems that provide secure, reliable and efficient
transmission of voice and data in demanding environments. Additionally, the
government is increasingly using open systems that incorporate commercial
off-the-shelf products, which are generally less expensive and more available
than products specifically designed for military purposes, to minimize the
impact of the shrinking defense budget.

    STRATEGY.  Titan Systems' objective is to be the premier provider of
information technology and communications solutions to defense, intelligence and
other U.S. and allied government agencies. To achieve this objective, Titan
Systems intends to pursue the following strategies:

       FURTHER TECHNOLOGY ADVANTAGE.  Titan Systems has received in excess of $2
       billion in government funds, the majority of which have been directed
       towards the research and development of advanced information technology
       and communications systems and solutions. Titan Systems' successful track
       record with research and development projects has helped us create a
       diversified portfolio of technology and obtain additional research and
       development funding. We believe that, because of Titan Systems' expertise
       and capabilities with a wide range of technologies, it is well positioned
       to provide information technology and communications systems and services
       to its customers. Titan Systems will seek to maintain this advantage by
       keeping pace with new developments in technology, by continuing to
       compete for contracts that require high-quality, sophisticated technical
       solutions, and by continuing to make strategic acquisitions that bring it
       additional technology and enhance its overall solutions capabilities.

       BUILD UPON OUR COMPETITIVE STRENGTHS IN THE DEFENSE MARKET.  Founded in
       1981, Titan Systems has an extensive history of providing information
       systems and communications solutions to

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       defense and intelligence-related government agencies. Through this
       experience, we have established a broad base of customer relationships,
       comprehensive information systems and communications solutions, extensive
       intellectual property and more than 1,500 "Secret" and above cleared
       personnel. Advanced Communication Systems' employee base includes more
       than 1,300 "Secret" and above-cleared personnel. We intend to build upon
       these competitive strengths to further existing customer relationships
       and to secure new opportunities.

       PURSUE STRATEGIC ACQUISITIONS.  Strategic acquisitions are a key
       component to Titan Systems' overall business strategy. We believe that
       the enhanced technical and personnel resources resulting from our recent
       and pending acquisitions will enable Titan Systems to provide more
       comprehensive information technology solutions to serve its customers'
       needs. We intend to continue to pursue strategic acquisitions of
       complementary businesses, technologies and products that will enable
       Titan Systems to expand further its existing businesses and to gain
       access to new markets, technologies, and products.

    SERVICES AND PRODUCTS

    INFORMATION SYSTEMS SOLUTIONS.  Titan Systems' information technology
solutions and services include systems analysis and design, object-oriented
software development services and systems integration. Titan Systems' initial
work in this area generally involves a joint analysis of the customer's
enterprise structure and processes and information system needs. Once this
analysis is completed, Titan Systems provides process re-engineering and designs
the technology solution to meet the customer's needs. This process typically
involves software development by Titan Systems, coupled with integration of
commercial off-the-shelf software and hardware as available. Titan Systems also
provides a variety of professional and technical support services, including
electronics and mechanical design and fabrication, computer-aided drafting and
manufacturing services, technical documentation and prototyping. As a result of
the complex nature of Titan Systems' customer solutions, its engagements often
are long-term and involve follow-on contracts. Titan Systems markets its
information systems solution services to military and intelligence agencies of
the U.S. government, countries within NATO and other U.S. defense partners
worldwide.

    Examples of Titan Systems' information systems solution services and
products include the following:

    - NATO INFORMATION SYSTEMS. Titan Systems' initial contract with NATO
      provided for the design and delivery of an integrated secure
      communications and information system for automated support of data
      transfer between intelligence sites throughout Europe. Titan Systems has
      since won NATO's three follow-on command and control system contracts and,
      to date, has been NATO's primary contractor for its command and control
      systems.

    - JOINT INTEROPERABILITY TEST COMMAND C4I SUPPORT. Titan Systems supports a
      wide range of the Joint Interoperability Test Command's Command, Control,
      Communications, Computers and Intelligence, or C4I, information systems
      initiatives under a $141 million five-year contract. Its activities in
      support of these initiatives include planning, conducting, evaluating and
      reporting all C4I testing, as well as designing, developing, engineering
      and acquiring selected items of equipment, instrumentation and systems
      used in the testing process.

    - SUPPORT OF JOINT STARS AIRCRAFT AND GROUND SYSTEMS. Titan Systems supports
      a variety of research and development and test and evaluation efforts on
      the Joint Surveillance Target Attack Radar System, or STARS, aircraft and
      related ground systems. This contract is the latest in a series of sole
      source and competitive awards under which Titan Systems has provided
      engineering services to the Joint STARS Joint Task Force since its
      inception. Titan Systems was awarded this $49 million "indefinite
      delivery, indefinite quantity" labor hour contract in April 1997. Under
      this contract, Titan Systems provides the following: flight test
      engineering and test mission planning, test engineering, operations and
      ground/flight execution support, test management, computer operations,
      configuration management, human factors engineering,

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      administrative support, logistics support, computer analysis and modeling,
      resource management, and prototyping in support of test and contingency
      operations.

    - FAA SYSTEM ENGINEERING. Titan Systems has been instrumental in providing
      high quality technical support and services and related infrastructure to
      the FAA's National Airspace System, or NAS, modernization program. Under
      this five-year contract awarded in 1999, Titan Systems provides engineers,
      mathematicians, computer scientists and other technical personnel to
      support high fidelity simulations and to perform technical studies and
      evaluations for the NAS's system engineering and laboratory development
      operations.

    COMMUNICATIONS PRODUCTS.  Titan Systems designs and develops its
communications products using an approach that is similar to the approach it
uses to design, develop and implement its information technology solutions and
services. Titan Systems offers a range of turnkey, fully functional line of
defense communications products. Examples of Titan Systems' communications
products include the following:

    - DAMA PRODUCTS. Titan Systems' Demand Assigned Multiple Access, or DAMA,
      products combine low cost, low power, reduced weight and size, and reduced
      component count for high reliability. Each of Titan Systems' DAMA products
      has been developed with an open-architecture format that allows future
      upgrades and enhancements to be provided as communications needs evolve,
      and are designed to support commercial off-the-shelf components. Titan
      Systems markets its DAMA products directly to all branches of the U.S.
      military, its allies and international companies that supply such allies,
      and also works with strategic partners such as Motorola Corporation to
      incorporate its technologies into their products.

    - SIGNAL INTELLIGENCE MANPACK SYSTEMS. Titan Systems provides small, low
      weight communications intercept and direction finding Manpack systems to
      U.S. special forces under a contract with the U.S. Special Operations
      Command. An incumbent on this program for 10 years, these systems are worn
      by individual soldiers and used to intercept and exploit enemy signals for
      force protection and early detection of enemy location. Manpacks are
      designed to operate and survive in urban, forested and desert terrain
      battlefield environments.

    ADVANCED COMMUNICATION SYSTEMS ACQUISITION.  Advanced Communication Systems
provides a wide range of technology services and solutions, predominantly to
U.S. government as well as to commercial customers. Advanced Communication
Systems operates primarily in three interrelated areas:

       COMMUNICATION SERVICES.  Advanced Communication Systems' communication
       services include the design, development, integration and implementation
       of complete communications solutions across the full spectrum of media,
       ranging from land lines to wireless technologies, with particular
       strengths in satellite communication services, information systems and
       aerospace services.

       INFORMATION SERVICES.  Advanced Communication Systems' information
       services include the design and installation of and support services for
       information management and local area network/wide area network systems,
       as well as multimedia training, Internet/intranet solutions and database
       support.

       AEROSPACE SERVICES.  Advanced Communication Systems' aerospace services
       include systems engineering, life-cycle support, and program management
       services for a broad range of military systems.

    We intend to acquire Advanced Communication Systems (and expect to do so in
the first quarter of 2000) for the following reasons:

    - the acquisition will result in a significant increase in our revenues and
      cash flow;

    - we will acquire technical personnel with skills and expertise that are in
      great demand as well as applicable to technologies and products that are
      complementary to our own;

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    - the increased technical and personnel resources of Titan Systems resulting
      from the acquisition will enable it to better serve the defense industry
      and complete larger and more comprehensive contracts; and

    - the acquisition will provide us with additional U.S. Navy and U.S. Air
      Force contracts and otherwise allow us to increase our customer base.

    CONTRACT PROFILE

    TITAN SYSTEMS.  Titan Systems is one of a select group of qualified
suppliers of information technology solutions and services to the U.S.
government under multiple long-term contract vehicles. Titan Systems is
currently performing work under approximately 520 contracts. No single Titan
Systems contract accounted for more than 6.0% of our total 1999 revenues, and no
single Titan Systems or Advanced Communication Systems contract accounted for
more than 4.0% of our 1999 revenues combined with Advanced Communication
Systems' fiscal 1999 revenues. In 1999, approximately 28.4% of our revenues were
generated by time and materials contracts, approximately 44.6% of our revenues
were generated by cost reimbursement contracts, and approximately 27.0% of our
revenues were generated by fixed-price contracts.

    ADVANCED COMMUNICATION SYSTEMS.  Advanced Communication Systems also
maintains a diversified government contract base. Advanced Communication Systems
is currently performing work under approximately 120 contracts. Two of Advanced
Communication Systems' contracts accounted for approximately 12.3% of its fiscal
1999 revenues. In its fiscal year 1999, approximately 32% of Advanced
Communication Systems' revenues were generated by time and materials contracts,
approximately 45% of its revenues were generated by cost reimbursement
contracts, and approximately 23% of its revenues were generated by fixed-price
contracts.

    BACKLOG.  Titan Systems and Advanced Communication Systems possess a
substantial backlog of contracts that provide multiyear revenues. Most of their
contracts generate revenue over a one to five-year period. In the past, Titan
Systems and Advanced Communication Systems have generally been successful in
expanding the scope of their principal contracts by offering more comprehensive
information technology solutions. On a pro forma basis which reflects our
acquisition of Advanced Communication Systems, Titan Systems' had an estimated
total funded contract backlog of $236.4 million and a total unfunded contract
backlog of $1,089.6 million as of September 30, 1999.

    These backlog amounts consist of "funded" backlog, which is based upon
aggregate contract revenues remaining to be earned by Titan Systems or Advanced
Communication Systems at a given time, but only to the extent such amounts have
been appropriated by Congress and allocated to the contract by the procuring
government agency. "Unfunded" backlog consists of the aggregate contract
revenues expected to be earned as customers incrementally allot funding to
existing contracts, whether Titan Systems or Advanced Communication Systems is
acting as a prime contractor or subcontractor, and the aggregate contract
revenues to be funded on contracts which have been newly awarded to Titan
Systems or Advanced Communication Systems.

    Management believes that year-to-year comparisons of backlog are difficult
and not necessarily indicative of future revenues. Titan Systems' and Advanced
Communication Systems' backlog is typically subject to large variations from
quarter to quarter as existing contracts are renewed or new contracts are
awarded. Additionally, all United States government contracts included in
backlog, whether or not funded, may be terminated at the convenience of the
United States government.

CAYENTA

    OVERVIEW.  Cayenta is a total services provider, or TSP, of comprehensive
information technology solutions for its customers' business functions. Cayenta
operates, hosts, manages and supports standard and proprietary software
applications tailored for its customers' business processes, including
e-business, finance, accounting, customer billing and collection, contract
management, supply chain integration and

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enterprise asset management. By using its proprietary software applications in
addition to standard software application packages, Cayenta can rapidly build
and deploy solutions that best meet its customers' needs. Cayenta's solutions
are scalable and reliable and enable its customers to manage the increasing
frequency and complexity of e-business transactions. Cayenta's solutions also
interoperate with its customers' existing internal systems and with those of
their trading partners. Cayenta's customers include 800.com, the District of
Columbia, the FAA, Sempra Energy and Waste Management. For the twelve months
ended September 30, 1999, Cayenta had pro forma revenues of approximately
$37.6 million and pro forma EBITDA of approximately $8.8 million.

    INDUSTRY OVERVIEW.  The rapid growth of the Internet and increased frequency
of e-business transactions is creating significant new opportunities and
challenges for businesses. Businesses are using the Internet to improve
communications internally and with their trading partners, to enhance
operational efficiencies and to strengthen customer relationships. The impact of
the Internet encompasses both business-to-business and business-to-customer
transactions. Forrester Research, an independent research firm, projects that
the market for business-to-business e-business will grow from $43 billion in
1998 to $1.3 trillion in 2003 while business-to-consumer e-business will grow
from $8 billion to $108 billion over the same period.

    The complexity of e-business transactions has accelerated with the
widespread adoption of the Internet. For example, these transactions frequently
contain complex billing mechanics and settlement terms that involve multiple
parties who participate in the supply and fulfillment chain. Tracking these
payments and settlements requires scalable and reliable information technology
systems that facilitate the flow of information both within organizations and
externally. Businesses face significant challenges in their efforts to
capitalize on the opportunities presented by the Internet, including:

    - developing comprehensive end-to-end e-business solutions that link web
      sites with accounting and fulfillment systems and accommodate and account
      for complex billing, settlement and supply-chain transactions;

    - tailoring standard software applications to their business processes while
      ensuring that these applications are compatible with those of their
      trading partners;

    - solving integration and compatibility issues caused by the patchwork of
      legacy systems that businesses often implemented without a focused
      information technology strategy;

    - integrating data from disparate systems to increase its value; and

    - adopting and integrating new and rapidly changing technologies while
      preserving investments in existing systems.

Companies must meet these challenges while overcoming a number of obstacles,
including:

    - capital constraints and total cost of ownership;

    - technological obsolescence of many current systems;

    - ensuring that e-business applications are available at all times;

    - meeting increased online customer service demands; and

    - attracting and retaining qualified information technology professionals.

    International Data Corporation, an independent research firm, expects the
worldwide market for Internet services to grow at a five-year compounded annual
growth rate of 59% from $7.8 billion in 1998 to $78.5 billion in 2003.
International Data Corporation defines Internet services as the consulting,
design, systems integration, support, management and outsourcing services
associated with the development, deployment and management of Internet sites.

    Many businesses currently have to juggle multiple applications, integrators
and vendors to address their e-business challenges. Most information technology
companies specialize in only a single aspect of total services delivery, such as
web design, application development, systems integration or hosting of
commercially available applications. For example, application service providers,
or ASPs, generally only

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host and manage standard third-party software applications at a centrally
managed facility. The complexity of combining all of these elements from
different providers makes it difficult for businesses to implement e-business
solutions in a cost-effective and timely manner.

    Accordingly, businesses are increasingly demanding that information
technology services companies have a comprehensive understanding of their
business processes and deliver a tailored solution that combines strategy,
systems integration, hosting and support. Cayenta believes that this demand is
largely unmet in the information technology service provider and ASP
marketplaces.

    STRATEGY.  Cayenta's objective is to be the leading TSP. To achieve this
objective, Cayenta intends to pursue the following strategies:

       BUILD ITS TSP CUSTOMER BASE.  Cayenta intends to capitalize on its
       existing customer relationships to generate TSP sales as its customers
       replace or upgrade systems and increase their e-business activities.
       Cayenta will also market its TSP offering to new customers by developing
       an industry-focused direct sales force specializing in TSP sales. Cayenta
       will provide special incentives to its sales force to convert existing
       customers to its new TSP offering. Cayenta also intends to create new
       sales channels for its TSP offering by developing relationships with
       hosting companies and third-party software providers. Cayenta believes
       its TSP offering will allow it to establish stronger relationships with
       customers, provide a recurring revenue stream, and enable it to sell
       additional services.

       CONTINUE TO ENHANCE ITS TSP OFFERING.  Cayenta intends to expand its TSP
       capabilities by establishing command centers where it will monitor,
       manage and support its customer solutions, including elements of those
       solutions provided by third parties. Cayenta also intends to establish
       additional solution centers in strategic locations to develop its TSP
       offering and other solutions in collaboration with customers. Cayenta
       further intends to enhance its TSP offering by developing solutions for
       other business processes such as customer relationship management.
       Cayenta plans to add these new solutions by establishing strategic
       alliances and partnerships with industry and technology leaders as well
       as by enhancing its current solutions.

       TARGET SPECIFIC INDUSTRIES.  Cayenta targets industries whose complex
       information technology and time to market requirements make them natural
       customers for its TSP offering. Cayenta currently has expertise in
       multiple industries, including utilities, telecommunications, basic
       services, such as waste disposal and retail. Cayenta intends to further
       penetrate these industries by establishing strategic alliances and joint
       ventures with industry sector leaders and hiring senior executives from
       within these industries. As part of these efforts, Cayenta intends to
       engage in joint systems development, whereby both Cayenta and its partner
       retain rights to developed solutions, and enter into joint arrangements
       with customers to resell solutions. For example, through a joint venture,
       Cayenta provides TSP services to that joint venture's customers in the
       utility industry. Cayenta expects that these ventures will provide it
       with opportunities to broaden its technical offerings and to create new
       sales and marketing channels. Cayenta believes that focusing on specific
       industries provides it with a competitive advantage in developing
       solutions for those industries, and expands its market coverage while
       decreasing its dependence on individual industries.

       PROMOTE THE CAYENTA BRAND.  Cayenta's goal is to create brand recognition
       of Cayenta as the leading TSP. To promote its brand, Cayenta intends to
       expand its corporate marketing and advertising efforts, with the specific
       objective of targeting selected industries. Cayenta believes establishing
       the Cayenta brand will enable it to market its TSP offering more
       effectively and to differentiate it from its competitors.

       PURSUE RESCUE MISSIONS.  Cayenta plans to provide rescue services for
       customers faced with failing information technology projects and to use
       these rescue projects to establish long-term customer relationships.
       Cayenta believes that providing these solutions and services will result
       in sustained revenues and future opportunities to sell its TSP offering.

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       ATTRACT AND TRAIN QUALIFIED PERSONNEL.  To expand its business and
       satisfy anticipated increases in customer demand for its TSP offering,
       Cayenta intends to aggressively recruit new staff. Cayenta also may add
       new staff through strategic acquisitions. Cayenta believes opening new
       solution centers that allow it to support its customers locally will
       relieve its staff's travel burdens and be attractive to potential
       technical and consulting employees.

       CONTINUE TO DEVELOP CORE COMPETENCIES.  Cayenta will expand its systems
       integration and software application development expertise. Cayenta
       intends to continue incorporating advanced systems technologies into both
       standard and tailored software applications that Cayenta designs and
       implements for customers. Cayenta seeks out and tests new technologies as
       part of its internal research activities and in conjunction with customer
       projects. Cayenta invests in advanced systems technology such as Internet
       and portal applications, data warehouses and custom client server and
       distributed systems. Cayenta augments its software offerings by utilizing
       software from open source and other Internet-based software development
       initiatives. Cayenta's ability to successfully implement solutions based
       on leading technology enables it to gain insight into the relative
       strengths and weaknesses of competing technologies and to sell
       value-added consulting and integration services.

    SERVICES.  Cayenta is a TSP of comprehensive information technology
solutions for its customers' business functions. Cayenta operates, hosts,
manages, and supports standard and proprietary software applications tailored
for its customers' business processes, including e-business, finance,
accounting, customer billing and collection, contract management, supply chain
integration and enterprise asset management.

    Cayenta has a well-defined approach that enables it to deliver
cost-effective and timely solutions. This approach is grounded on reusable
processes and software applications, including industry-specific templates, and
the use of solution centers to develop solutions in collaboration with
customers. These solution centers afford the collaborating Cayenta/customer team
complete access to Cayenta's reusable processes, software applications and
industry-specific templates. Cayenta has expertise in multiple industries,
including utilities, telecommunications, basic services, such as waste disposal
and retail, and intends to further penetrate these industries by establishing
strategic alliances and joint ventures. Cayenta also participates in partnership
programs with leading providers of software, hardware and other elements of its
TSP offering.

    The following examples are representative of the information technology
challenges that Cayenta has addressed, and the solutions it has provided to its
customers.

    - Sempra Energy Challenge:

        To facilitate the integration of the information technology operations
    of two large utilities that merged and create an information technology
    solution for operations in the deregulated industry.

       CAYENTA SOLUTION.  Cayenta developed a set of shared software development
       and integration components that reduced Sempra Energy's development and
       operational support costs, linked SAP with Sempra Energy's legacy systems
       in less than 200 days, developed a new billing and contract management
       system for the deregulated environment, implemented enterprise directory
       and security systems, and deployed Internet business applications for
       Sempra Energy. Cayenta also created training and mentoring programs to
       assist Sempra Energy's information technology staff.

    - Energy America Challenge:

        To build a complete revenue cycle services solution in under eight weeks
    for a rapidly growing retailer of gas and electricity and provide ongoing
    operational support, through Soliance, as a TSP.

       CAYENTA SOLUTION.  Cayenta provided customer enrollment, contract
       management, and customer billing and care applications to Energy America
       that are reusable and facilitate its entrance into new markets. Cayenta
       also integrated Energy America's accounting and

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       wholesale commodity purchase systems with the systems of its banking,
       utility, and printing service providers. As part of its TSP offering,
       Cayenta assists Energy America in developing new rates, resolving
       customer disputes, and performing both operational and regulator-driven
       analysis.

    - Federal Aviation Administration Challenge:

        To create a unified information system to monitor and analyze the status
    of the U.S. air traffic control system for the FAA.

       CAYENTA SOLUTION.  Cayenta developed a web portal application that
       utilizes its systems integration, data warehousing, and web technology to
       link major information systems of the FAA, and integrated and organized
       data from these operational and reporting systems to enable the FAA to
       consolidate data and gain insight on the operating performance of the
       U.S. air traffic control systems. These solutions are accessible on the
       FAA's intranet using standard browser technology.

    - Waste Management Challenge:

        To provide Waste Management with scalable systems that integrate
    operations resulting from its merger and acquisition activity.

       CAYENTA SOLUTION.  In one week, Cayenta created web-based tracking and
       status tools that enable Waste Management to monitor financial and key
       operational measures. Cayenta also provided a complete information
       technology blueprint to enhance Waste Management's information technology
       environment, including recommendations for application packages, system
       integration architecture, system management tools, data architecture, and
       Internet strategy and recommended improvements in Waste Management's
       revenue cycle management process. Cayenta continues to build and deploy
       Internet solutions to help Waste Management better manage its core
       operations.

    - 800.com Challenge:

        To create a scalable end-to-end e-business solution for a leading
    Internet retailer of consumer electronics and home entertainment products.

       CAYENTA SOLUTION.  Cayenta installed and integrated its e-business order
       and revenue cycle services with 800.com's web site and accounting and
       fulfillment systems, enabling 800.com to handle over 10,000 orders per
       day, reduce its manual business processes and provide customer care over
       the Internet and through its call centers. With Cayenta's system, 800.com
       can recognize and process an order as soon as it is placed.

TITAN SCAN

    OVERVIEW.  Titan Scan utilizes its patented electron beam technology to
provide food pasteurization turnkey systems and services to the food processing
industry and sterilization systems and services to medical product
manufacturers. Titan Scan developed its proprietary electron beam pasteurization
and sterilization process from technology developed during our involvement in
the Strategic Defense Initiative, or "Star Wars," program of the 1980s. Titan
Scan's electron beam process disrupts the DNA structure of microorganisms on or
within the product being pasteurized or sterilized. We believe that our patented
electron beam pasteurization and sterilization systems, or SureBeam systems,
which use commercial electricity as their source of power, offer a reliable,
efficient, more environmentally acceptable and generally superior alternative to
their principal competition, Gamma and EtO.

    Titan Scan has executed multiyear arrangements with many of the major
poultry and meat providers and producers in the United States, including
Cargill, IBP, Tyson Foods, Emmpak, and Huisken Meats, among others. These
companies produced approximately 75% of the 25.8 billion pounds of beef and
approximately 43% of the 75.4 billion pounds of meat, including beef, pork and
poultry, produced in the United States in 1999. Titan Scan believes that if
irradiated foods gain market

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<PAGE>
acceptance, these producers will initially elect to pasteurize a portion of
their ground beef and poultry production. Titan Scan's multiyear arrangements
with its customers generally provide that it will be the exclusive provider of
electronic pasteurization services whenever any of these companies elect to use
pasteurization technology. For the twelve months ended September 30, 1999, Titan
Scan had revenues of approximately $13.2 million and EBITDA of approximately
$3.1 million.

    INDUSTRY OVERVIEW.  Although contaminated food is one of the most widespread
health problems in the world, lack of regulatory approval and consumer
acceptance historically have limited the development of the market for
electronic food pasteurization. In December 1997, the FDA approved irradiation
of meat, finding that irradiation of meat, at its recommended doses, does not
diminish the food's nutritional value in any detectable way. In December 1999,
the USDA issued regulations setting forth guidelines for the irradiation of
meat. We believe our SureBeam technology meets these regulations. Subject to
consumer acceptance of irradiated foods, Titan Scan estimates that the U.S.
market for food pasteurization systems and services could develop to be in
excess of $3.0 billion annually. If such consumer acceptance occurs, Titan Scan
believes that meat producers will initially elect to pasteurize a portion of
their ground beef and poultry production.

    Commercial sterilization of medical products began in the early 1960s.
Government regulations in the United States and many other countries require
medical products to be sterile or to have minimal microbial levels. Accordingly,
sterilization has become an essential step in the manufacturing process for
medical products in many countries throughout the world. In order to provide
safe products and to comply with applicable government regulations,
manufacturers generally have either developed internal sterilization
capabilities or have outsourced their sterilization needs through service
contracts. According to a market research report, the global market for
sterilization services for medical products was approximately $368 million in
1999.

    STRATEGY.  Titan Scan's objectives are to be the world's leading provider of
food pasteurization systems and services, and to increase its presence as a
provider of sterilization services for medical product manufacturers. To achieve
these objectives, Titan Scan intends to pursue the following strategies:

       BUILD STRATEGICALLY LOCATED FACILITIES.  Titan Scan intends to continue
       to build food pasteurization facilities that provide electron beam
       pasteurization services in strategic locations that are near major
       producers or providers of beef, chicken, fruits or vegetables. For
       example, our facility in Sioux City, Iowa is located in proximity to
       several leading meat producers, including IBP and Cargill. We expect that
       building facilities in strategic locations will accelerate the
       development of a market for food pasteurization services.

       INSTALL MORE TURNKEY FOOD PASTEURIZATION SYSTEMS.  We intend to sell or
       lease turnkey food pasteurization systems directly into customer
       production lines. Where feasible, we intend to enter into strategic
       relationships where we will receive equity in the production line's
       operator and/or continued service revenues in exchange for providing our
       pasteurization products and services.

       DEVELOP NEW OPPORTUNITIES FOR SUREBEAM.  While currently focused on
       pasteurizing beef, chicken, fruits and vegetables and sterilizing medical
       products, we are evaluating new applications for our SureBeam technology.
       In addition, we are seeking to enter new geographic markets. In January
       2000, Titan Scan announced that it had sold a SureBeam system to Japan's
       Mitsubishi Corp. that is expected to be fully operational by the first
       quarter of 2001. In connection with the sale, Mitsubishi will form a new
       entity to operate the SureBeam system, which is expected to be initially
       used for medical product sterilization, Titan Scan will hold an equity
       interest in the new entity, and Mitsubishi will market Titan Scan's
       SureBeam technology in Japan.

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<PAGE>
    TURNKEY SYSTEMS AND SERVICES.  Titan Scan's SureBeam technology provides
customers with distinct advantages compared to Gamma and EtO technologies:

       INCORPORATED INTO CUSTOMER PRODUCTION LINE.  SureBeam can be incorporated
       into customers' production lines, which eliminates the transportation and
       associated inventory carrying costs that are common with Gamma and EtO
       technologies.

       SCALABLE SYSTEM.  SureBeam systems are scalable and can be easily
       integrated into a customer's production line or in a facility to meet
       large processing requirements.

       FASTER PROCESSING TIME.  An electron beam pasteurizes food products or
       sterilizes medical products in a matter of seconds, as compared to Gamma
       and EtO technologies that require several hours.

       REDUCED MATERIAL DEGRADATION.  Because of the shorter exposure time to
       the irradiation source, electron beam processing reduces the oxidation
       effects to products and thus reduces material degradation.

       FLEXIBLE DOSING.  Titan Scan's electron beam systems can switch from one
       targeted dose to another in a matter of a few seconds.

       UNIFORM, CONTROLLED DOSE.  Electron beam processing delivers a measurable
       and consistent dose to products based upon pre-set accelerator
       parameters. All processing parameters are under constant measurement by a
       built-in computer, and variation occurring during a processing run
       automatically shuts down the system until the reason for the variation
       can be determined and corrected.

       NO RE-SOURCING REQUIRED.  SureBeam processing is not accomplished via a
       radioactive isotope such as Cobalt 60, which is used in Gamma
       sterilization, but rather through accelerated electrical energy.
       Accordingly, a SureBeam facility does not need to be out of service for
       any period of time in order to re-introduce the pasteurization or
       sterility source into operation.

       SAFETY.  SureBeam facilities do not use Gamma or EtO radiation. They
       operate using electrical power and, in the event of a problem, can be
       deactivated by simply shutting off the power.

    Titan Scan provides its customers with turnkey SureBeam systems for use in
their own production lines and provides processing services for food
pasteurization and medical device sterilization. In anticipation of the recently
issued USDA regulations, Titan Scan built, at Cloverleaf Cold Storage's facility
in Sioux City, Iowa, the first electron food pasteurization facility in the
United States. This facility is specifically designed for the pasteurization of
various types of food. The Sioux City facility became operational in
December 1999 and, at full capacity, will be able to pasteurize in excess of 250
million pounds of product annually. The facility has the capability of
pasteurizing large cases of products as well as products that are not uniform in
shape or size. In January 2000, Titan Scan announced that it will build a
facility in Arkansas with its partner, Zero Mountain Cold Storage. The facility
is scheduled to become operational in December of 2000. Zero Mountain Cold
Storage will form a new entity to operate the SureBeam system, and Titan Scan
will own a minority interest in the new entity. In January 2000, Titan Scan
announced that it had sold a SureBeam system to Japan's Mitsubishi Corp. that is
expected to be fully operational by the first quarter of 2001. In connection
with the sale, Mitsubishi will form a new entity to operate the SureBeam system,
which is expected to be initially used for medical product sterilization, Titan
Scan will hold an equity interest in the new entity, and Mitsubishi will market
Titan Scan's SureBeam technology in Japan. Titan Scan is also currently
building, with a partner, a SureBeam facility in Hilo, Hawaii for the
disinfestation of fruits and vegetables.

                                       85
<PAGE>
    To date, turnkey SureBeam systems are used in medical device production
lines of Guidant Corporation in San Diego, California, Baxter Corporation in the
Dominican Republic and Rochialle Corporation in Wales. In addition, Titan Scan
offers contract sterilization services for medical product manufacturers at
facilities that it owns in San Diego and Denver. These facilities have performed
over 100,000 hours of contract sterilization services and are currently running
seven days per week and performing sterilization services 19 hours per day.

TITAN WIRELESS

    OVERVIEW.  Titan Wireless develops and produces advanced satellite ground
terminals, satellite voice/data modems, networking systems and other products to
support telephony in developing countries for government and commercial
customers worldwide. Additionally, Titan Wireless is increasingly seeking to
generate recurring service revenues from the telephony systems it installs.
Titan Wireless's technology relies heavily on our DAMA technology, which enables
more cost-effective and efficient use of satellite transmission capacity by
allowing each ground terminal in a satellite network to communicate with any
other terminal in the network. Our DAMA technology was developed under DoD
contracts beginning in 1986. Titan Wireless has also developed substantial
expertise in critical engineering disciplines such as satellite ground system
design, radio frequency and digital engineering, digital and communications
signal processing software, network management and modem technology.

    Titan Wireless's leading product, Xpress Connection, uses existing
geosynchronous satellites to provide low-cost voice, facsimile and data services
to connect villages to a national public switched telephone network, making it
possible to provide low-cost telephone service to vast unserved areas. Titan
Wireless develops and markets its telephony systems through strategic alliances
for sales of products in developing countries. For example, through its
strategic relationship with Sakon, Titan Wireless is providing international
long distance telephony services in El Salvador, Cameroon, Kuwait, Jordan, Saudi
Arabia, Guatemala, Nigeria and Bangladesh. For the twelve months ended
September 30, 1999, Titan Wireless had revenues of approximately $10.6 million
and EBITDA of approximately $0.4 million.

    INDUSTRY OVERVIEW.  Vast regions of the world remain without adequate
telecommunications infrastructure. In 1998, according to the International
Telecommunication Union, countries in our targeted markets, which represent
one-third of the world's population, had fewer than two subscriber lines per 100
inhabitants compared to 66.13 in the United States. Although many of these
countries are developing urban wired telephony systems, economic considerations
in these countries have made the provision of wired telephone service to remote
areas cost prohibitive. A combination of several factors, including advancement
in voice transmission technologies, development of low cost ground terminals and
the existence of commercial satellite availability has made telephone service
(including voice, fax and data services) possible in these remote areas.

    Today, there are principally three transmission alternatives available for
providing telephone service in remote areas: wired, terrestrial wireless and
satellite networks. Of these three alternatives, satellite networks are uniquely
suited to provide a rapidly available, lower cost solution for the telephony
market. Wired networks require the installation of significant infrastructure
over long distances and difficult terrain and are generally cost prohibitive for
use in remote areas and can take a number of years to complete. Terrestrial
wireless systems, in particular microwave radio networks, are subject to
line-of-sight limitations requiring a large number of microwave towers (one
approximately every 20 to 50 kilometers), compete for use of radio frequencies
and require substantial time and expense to install. Satellite networks, on the
other hand, provide broad geographic coverage. In fact, most areas with large
rural populations are within the range of one or more commercial satellites in
orbit today. At any location within the range of these satellite networks,
telephony services can be established simply by installing small, low-cost
ground terminals with links to the country's public switched telephone network.
Moreover, such satellite networks have relatively lower infrastructure costs

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<PAGE>
compared to wired and terrestrial wireless networks, are not constrained by
topographical or climatic characteristics and can be rapidly and economically
deployed, upgraded and reconfigured.

    The three principal types of satellite communications networks are direct
broadcast, mobile, and fixed-site. Direct broadcast satellite networks, which
provide a direct transmission link from high-power satellites to customers over
a wide geographic area, are best suited for one-way, continuous transmissions
such as direct-to-home television, music and data. For this reason, direct
broadcast is not optimal in the telephony market. Mobile satellite networks,
which enable voice and data communications through small portable terminals,
utilize specially designed satellites which operate at higher power and at lower
frequencies with less bandwidth. As a result, mobile satellite systems generally
are more expensive and are not as well suited for telephony applications in
developing countries. Fixed-site satellite telephony systems, which provide
television, voice, facsimile and data communications between fixed ground
terminals and geosynchronous satellites, are increasingly being utilized by
developing countries.

    STRATEGY.  Titan Wireless's objective is to become a leading provider of
telephony systems and services in developing countries. To achieve this
objective, Titan Wireless intends to pursue the following strategies:

       INCREASE SERVICE REVENUES.  Titan Wireless intends to expand its sales,
       installation and integration activities for telephony systems and
       participate in the service revenues from installed equipment. One of its
       key initiatives is to provide long distance telecommunications services
       in developing countries. Through its Sakon joint venture, Titan Wireless
       is currently providing long distance telecommunications services in eight
       developing countries, and expects to provide long distance
       telecommunications in at least six additional developing countries. Titan
       Wireless's business plan is to derive at least 50% of all future revenues
       from providing telecommunications services.

       EXPAND STRATEGIC ALLIANCES.  Titan Wireless utilizes strategic alliances
       to enter new markets. Titan Wireless continually evaluates potential
       additional strategic alliances that can provide financial, technological
       and/or marketing resources for its products. Titan Wireless seeks
       partnerships with regional and local telephone service providers who can
       obtain operating permits and play a key role in the installation and
       operation of a satellite telephone network in a developing country.

       LEAD SATELLITE COMMUNICATIONS TECHNOLOGY INNOVATION.  Titan Wireless has
       combined expertise gained under government-sponsored development projects
       and its own internal development efforts to become a leader in low-cost,
       efficient satellite communications technology. Titan Wireless's close
       ties with satellite-based telecommunications service providers enable it
       to identify and understand the current needs of the market, anticipate
       future trends and develop technologies and products that are designed to
       address those needs and trends.

    PRODUCTS AND SERVICES. Titan Wireless develops and sells bandwidth
efficient, turnkey systems and products which address the demand for telephony
solutions in developing countries. Titan Wireless's commercial products include:

<TABLE>
<CAPTION>
PRODUCT                                           DECRIPTION
-------                          --------------------------------------------
<S>                              <C>
Xpress Connection                Network of fixed-site satellite ground
                                 terminals designed to provide basic
                                 telephony solutions to remote areas of
                                 developing countries. Interoperable with
                                 national public switched telephone network.
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
PRODUCT                                           DECRIPTION
-------                          --------------------------------------------
<S>                              <C>
Multi-Media Very Small Aperture  Key portions of ground terminal, primarily
Terminals or VSATs               software and Application Specific Integrated
                                 Circuit chip sets to be used in a
                                 satellite-based communication system
                                 designed to provide quality and cost
                                 competitive multi-function
                                 telecommunications services to individual
                                 homes and businesses in areas not adequately
                                 served by the public switched telephone
                                 network. Interoperable with Xpress
                                 Connection and public switched telephone
                                 network, the Internet and other public data
                                 networks.

CCM 4000                         Modem product designed to allow a single
                                 ground terminal to provide service for up to
                                 four simultaneous users. Utilized in Xpress
                                 Connection networks and in private telephone
                                 and data networks. Cost-effective
                                 alternative to installing additional
                                 terminals where demand warrants.

MRVC                             Voice digitizing, compression and
                                 multiplexing product sold to commercial
                                 markets.
</TABLE>

    Titan Wireless establishes switched telephone network gateways in developing
countries that effectively route calls via satellite through a bank of local
telephone lines. The quality of service provided by Titan Wireless is near toll
quality, which we believe will satisfy the quality demands of many citizens of
developing countries. Through one network management center, or hub, Titan
Wireless can manage up to 50 gateways, which connect directly into the hub, and
10,000 VSATs. Titan Wireless currently operates a hub and intends to add other
hubs in key geographic locations which will enable it to provide global
telephony coverage.

    Titan Wireless's project for the national telephone company of Benin,
Africa, illustrates the combination of Titan Wireless's product and services
offerings. Titan Wireless, the prime contractor for the project, will install
the major satellite hub, the VSAT hardware, the billing system and network
control system. Alcatel of France is a major subcontractor to Titan Wireless on
this project, and will handle the delivery, installation and integration of the
digital cellular system, wireless local loop, fiber optic system and primary hub
switching technology of the system. Titan Wireless will build out the entire
system, which is expected to be completed in 2001, co-operate the system with
the national telephone company for approximately eight years, and then transfer
the operations to the national telephone company. In addition to realizing
revenue and profit on the equipment portion of the project, Titan Wireless will
share in the revenue and profit generated by the system while it is co-
operating the system.

    Titan Wireless is also building upon its experience in telephony to
selectively pursue private networking opportunities in developing countries. For
example, in Thailand, Titan Wireless sold key elements of a private voice, data
and facsimile communications network to The Bank for Agriculture and
Agricultural Cooperatives.

EMERGING TECHNOLOGIES AND BUSINESSES

    Emerging Technologies consists of new technologies and early-stage
businesses, including businesses in which we own only a minority interest.
Emerging Technologies pursues commercial

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<PAGE>
applications for technologies originally developed in government-sponsored
research and development programs and, to a lesser extent, in internally funded
programs. Emerging Technologies employs our rich technology portfolio, superior
research and development capabilities and stream of government-funded projects
to create solutions to technology-related problems that we can sell to multiple
commercial markets. For the twelve months ended September 30, 1999, Emerging
Technologies had revenues of approximately $6.9 million and EBITDA of
approximately $1.0 million.

    The following are examples of some of the technologies and businesses that
are currently included in our Emerging Technologies segment.

       TOMOTHERAPEUTICS, a majority-owned company of ours, is developing an
       x-ray needle system designed to rapidly generate x-rays at a local level
       in the treatment of tumors and other abnormal tissues. This system is
       still in the development stage. TomoTherapeutics licensed its technology
       to Influence, Inc. in exchange for a potential equity interest in
       Influence and royalty payments.

       FLASHCOM, a private company in Florida, is utilizing our technology to
       provide tracking and monitoring systems for trucks, trains and cargo
       containers, using a nationwide two-way wireless network to link
       dispatchers, managers and customers with remote shipments and equipment
       assets. We have retained an approximate 5% ownership position in
       FlashCom.

       WAVX, a publicly traded company, acquired its core encryption technology
       from us. WAVX's core product, the embedded application security system,
       is a firewall-on-a-chip technology that enables localization of secure
       e-commerce transactions at a personal computer, set-top box, or other
       information sharing device. We have realized several million dollars from
       sales of our residual equity interest in WAVX over the past few years. We
       no longer have an equity interest in WAVX. We are entitled to receive 5%
       of any revenues derived from WAVX products that utilize our technology
       for the first $1 million in revenues, and 2% on any revenues in excess of
       $1 million.

       IMAGCLEAR 5000 automatically scans over 2,500 fingerprint cards per day
       and can extract individual fingerprints from each card for electronic
       distribution to the FBI and other law enforcement agencies around the
       globe. This technology has received the highest level of certification
       attainable from the FBI for capturing fingerprint images. To date, we
       have received orders to provide over 40 ImagClear 5000 card scan systems
       and supporting equipment, including to NEC Technologies, which will use
       the fingerprint processors as part of its participation in the FBI's Card
       Scan Service program.

    In 1996, we contributed the core technology to form Servnow! Technologies,
Inc., which is now known as IPivot. IPivot develops software products that
improve the performance of server farms, web sites and software applications. In
1997, we secured $4.6 million of venture capital and ultimately raised a total
of $15 million of venture capital for the development of this business. In
November 1999, we received approximately $42 million in cash for our 8.1% equity
interest in IPivot when IPivot was acquired by Intel Corporation.

    We intend to utilize both public and private investments as the primary
funding source for the continued commercial development of our rich technology
portfolio. We have no capitalized amounts on our consolidated balance sheets for
any of the developing technologies and businesses within our Emerging
Technologies segment.

GOVERNMENT CONTRACTS

    A substantial portion of our revenues are dependent upon continued funding
of United States and allied government agencies, as well as continued funding of
the programs targeted by our businesses. Our revenues from U.S. government
business represented approximately 81% of our total revenues for

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<PAGE>
the year ended December 31, 1996, approximately 82% of our total revenues for
the year ended December 31, 1997, approximately 80% of our total revenues for
the year ended December 31, 1998, and approximately 80% of our total revenues
for the nine months ended September 30, 1999. On a pro forma basis giving effect
to our acquisition of Advanced Communication Systems, our revenues from U.S.
government business represented approximately 88% of our total revenues for the
twelve months ended September 30, 1999. Any significant reductions in the
funding of United States government agencies or in the funding areas targeted by
our businesses could materially and adversely affect our business, results of
operations and financial condition.

    U.S. government contracts are subject to termination for the convenience of
the government, as well as termination, reduction or modification in the event
of budgetary constraints or any change in the government's requirements. When we
subcontract with prime contractors, such subcontracts are also subject to the
ability of the prime contractor to perform its obligations under its prime
contract. We often have little or no control over the resources allocated by the
prime contractor to the prime contract, and any failure by the prime contractor
to perform its obligations under the prime contract could result in our loss of
our subcontract. In addition, our contract-related costs and fees, including
allocated indirect costs, are subject to audits and adjustments by negotiation
between us and the U.S. government. As part of the audit process, the government
audit agency verifies that all charges made by a contractor against a contract
are legitimate and appropriate. Audits may result in recalculation of contract
revenues and non-reimbursement of some contract costs and fees. Any audits of
our contract-related costs and fees could result in material adjustments to our
revenues. In addition, U.S. government contracts are conditioned upon the
continuing availability of congressional appropriations. Congress usually
appropriates funds on a fiscal year basis even though contract performance may
take several years. Consequently, at the outset of a major program, the contract
is usually incrementally funded and additional funds are normally committed to
the contract by the procuring agency as Congress makes appropriations for future
fiscal years. Any failure of such agencies to continue to fund such contracts
could have a material adverse effect on our business, results of operations and
financial condition.

    Our business with the U.S. government and prime contractors is generally
performed under cost reimbursement, fixed-price or time and materials contracts.
Cost reimbursement contracts for the government provide for reimbursement of
costs plus the payment of a fee. Under fixed-price contracts, we agree to
perform certain work for a fixed price. Under time and materials contracts, we
are reimbursed for labor hours at negotiated hourly billing rates and are
reimbursed for travel and other direct expenses at actual costs plus applied
general and administrative expense. The following table gives the percentage of
revenues realized by us from the three primary types of government contracts
during the periods indicated.

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                   ------------------------------
CONTRACT TYPE                                        1997       1998       1999
-------------                                      --------   --------   --------
<S>                                                <C>        <C>        <C>
Cost Reimbursement...............................     51.6%      49.8%      44.6%
Fixed-Price......................................     32.8       32.0       27.0
Time and Materials...............................     15.6       18.2       28.4
                                                    ------     ------     ------
                                                     100.0%     100.0%     100.0%
                                                    ======     ======     ======
</TABLE>

                                       90
<PAGE>
    The following table gives the percentage of revenues realized by Advanced
Communication Systems from the three primary types of government contracts
during the periods indicated.

<TABLE>
<CAPTION>
                                                      YEAR ENDED SEPTEMBER 30,
                                                   ------------------------------
CONTRACT TYPE                                        1997       1998       1999
-------------                                      --------   --------   --------
<S>                                                <C>        <C>        <C>
Cost Reimbursement...............................     59.0%      41.0%      45.0%
Fixed-Price......................................     35.0       22.0       23.0
Time and Materials...............................      6.0       37.0       32.0
                                                    ------     ------     ------
                                                     100.0%     100.0%     100.0%
                                                    ======     ======     ======
</TABLE>

RAW MATERIALS

    We operate both fabrication and assembly facilities and also purchase
certain components and assemblies from other suppliers. No one supplier accounts
for a significant portion of total purchases.

PATENTS, TRADEMARKS AND TRADE SECRETS

    Our policy is to apply for patents and other appropriate statutory
protection when we develop new or improved technology. We presently hold 130
U.S. and international patents, as well as a number of trademarks and
copyrights. However, we do not rely solely on these statutory protections to
protect our technology and intellectual property. In addition to seeking patent
protection for our inventions, we rely on the laws of unfair competition and
trade secrets to protect our unpatented proprietary rights. We attempt to
protect our trade secrets and other unpatented proprietary information through
agreements with customers, vendors, employees and consultants. In addition,
various names used by us for our products and services have been registered with
the United States Patent and Trademark Office.

BACKLOG

    Contracts undertaken by us may extend beyond one year. Accordingly, portions
are carried forward from one year to the next as part of backlog. Because many
factors affect the scheduling of projects, no assurance can be given as to when
revenue will be realized on projects included in our backlog. Although backlog
represents only business which is considered to be firm, we cannot guarantee
that cancellations or scope adjustments will not occur. The majority of backlog
represents contracts under the terms of which cancellation by the customer would
entitle us to all or a portion of our costs incurred and potential fees.

    Many of our contracts with the U.S. government are funded by the procuring
agency from year to year, primarily based on its fiscal requirements. This
results in two different categories of U.S. government backlog: funded and
unfunded backlog. "Funded backlog" consists of the aggregate contract revenues
remaining to be earned by us at a given time, but only to the extent such
amounts have been appropriated by Congress and allocated to the contract by the
procuring government agency. "Unfunded backlog" consists of the aggregate
contract revenues expected to be earned as our customers incrementally allot
funding to existing contracts, whether we are acting as a prime contractor or
subcontractor, and the aggregate contract revenues to be funded on contracts
which have been newly awarded to us. "Backlog" is the total of the government
and commercial funded and unfunded backlog.

                                       91
<PAGE>
    Our backlog consisted of the following approximate amounts as of the
following dates:

<TABLE>
<CAPTION>
                                                 DECEMBER 31,
                                              -------------------         SEPTEMBER 30,
BACKLOG                                         1997       1998                1999
-------                                       --------   --------   --------------------------
                                                               (IN THOUSANDS)
<S>                                           <C>        <C>        <C>
U.S. Government funded backlog..............  $126,720   $106,635   $                  171,574
U.S. Government unfunded backlog............   356,052    466,149                      449,769
Commercial backlog..........................    48,367     47,227                       47,651
                                              --------   --------   --------------------------
Total backlog...............................  $531,139   $620,011   $                  668,994
                                              ========   ========   ==========================
</TABLE>

    In addition to the backlog described above, at September 30, 1999, we had
remaining priced options of over $207 million for the delivery of certain C4ISR
systems and program management services. We expect that a substantial number of
these options will be exercised in the future, although we cannot guarantee that
any options will be exercised.

    Management believes that year-to-year comparisons of backlog are difficult
and not necessarily indicative of future revenues. Our backlog is typically
subject to large variations from quarter to quarter as existing contracts are
renewed or new contracts are awarded. Additionally, all United States government
contracts included in backlog, whether or not funded, may be terminated at the
convenience of the United States government.

    We expect to realize approximately 46% of our September 30, 1999 backlog by
September 30, 2000.

    Advanced Communication Systems' backlog consisted of the following
approximate amounts as of the following dates:

<TABLE>
<CAPTION>
                                                        SEPTEMBER 30,
                                                ------------------------------
BACKLOG                                           1997       1998       1999
-------                                         --------   --------   --------
                                                        (IN THOUSANDS)
<S>                                             <C>        <C>        <C>
Funded........................................  $  5,323   $ 57,454   $ 64,797
Unfunded......................................   141,314    456,592    639,809
                                                --------   --------   --------
Total.........................................  $146,637   $514,046   $704,606
                                                ========   ========   ========
</TABLE>

    Advanced Communication Systems includes remaining priced options in its
unfunded backlog amount, which we exclude from unfunded backlog. Advanced
Communication Systems believes that approximately 29.6% of its backlog as of
September 30, 1999 will result in revenues on or prior to September 30, 2000.

    Included in Advanced Communication Systems' total contract backlog at
September 30, 1999, is approximately $52.5 million attributable to its two
significant cost plus fixed fee contracts with the U.S. Navy. During 1999, the
U.S. Navy established an Omnibus contract, that was awarded to a competitor in
September 1999. This contract encompassed a number of the tasks that previously
were performed under these two contracts. Management of Advanced Communication
Systems believes that it will be able to utilize other contract vehicles to
perform a substantial number of tasks previously performed under these
contracts, however there is no assurance that Advanced Communication Systems
will be able to do so.

COMPETITION

    TITAN SYSTEMS.  Titan Systems is one of many companies involved in providing
information systems solutions for a variety of programs for agencies of the U.S.
government and prime contractors for these

                                       92
<PAGE>
agencies. Most activities in which Titan Systems engages are very competitive
and require highly skilled and experienced technical personnel. Many of Titan
Systems' competitors have significantly greater financial and personnel
resources than Titan Systems. Competitors in this industry include Anteon Corp.,
Autometrics, BTG, Inc., Booz-Allen Hamilton Inc., CACI International, Inc.,
Comptek Research, Inc., Computer Sciences Corporation, Dynamics Research
Corporation, General Dynamics Corporation, GRC International, Government
Technology Services, Inc., Lockheed Martin Corporation, Metric, Raytheon
Company, Science Applications International Corporation, Tracor, TRW, and
ViaSat. Titan Systems believes that the primary competitive factors for its
information systems services include technical skills, experience in the
industry and customer relationships.

    CAYENTA.  The information technology services business is intensely
competitive and subject to rapid technological change. Cayenta expects the
competition to continue and intensify. Cayenta's competitors include:

    - application service providers, such as Breakaway Solutions and
      USinternetworking;

    - information technology service providers and system integrators, such as
      Andersen Consulting, Answerthink, Cambridge Technology, EDS, KPMG, Sapient
      and Tanning Technology;

    - Internet professional service providers, such as Proxicom, Scient, and US
      Interactive; and

    - internal information technology departments of current and potential
      clients.

    In comparison with Cayenta, many of its competitors, are larger, and have
more brand recognition and substantially greater financial infrastructure,
personnel, and marketing resources. In addition, there are low barriers to entry
into Cayenta's business. Cayenta does not own any technologies that preclude or
inhibit competitors from entering its industry. Existing or future competitors
may independently develop and patent or copyright technologies that are superior
or substantially similar to Cayenta's technologies. The costs to develop and to
provide information technology services are relatively low. Moreover, barriers
to entry, particularly in the application integration and consulting components
of Cayenta's TPS offering, are low. Therefore, Cayenta will likely continue to
face additional competition from new entrants into its industry, like software
product companies.

    TITAN SCAN.  The market for turnkey food pasteurization systems and services
has only recently begun to develop. We expect that food producers and providers
will continue to be reluctant to use Gamma radiation to pasteurize foods. As the
market for electronic pasteurization of food develops, we expect competition to
increase.

    The market for medical product sterilization services is intensely
competitive and is characterized by significant price competition. Titan Scan's
market for medical product sterilization services is fragmented as a result of
geographical limitations on the transportation of products for sterilization,
multiple technologies and the mix of in-house and contract sterilization
facilities. Although Titan Scan believes that it is the only provider of
relatively small, low-cost, turnkey systems for in-house use by medical product
manufacturers, Titan Scan currently faces competition from several providers of
contract Gamma sterilization services, several providers of contract electron
beam sterilization services and a significantly larger number of providers of
contract EtO sterilization services. Certain of Titan Scan's competitors and
potential competitors in the medical product sterilization market have
substantially greater financial, marketing, distribution, technical and other
resources than Titan Scan, or offer multiple sterilization technologies or
operate multiple sterilization facilities at geographically advantageous sites,
which may enable them to address a broader range of the sterilization
requirements of individual customers.

    TITAN WIRELESS.  The industries and markets in which Titan Wireless competes
are highly competitive, and we expect that competition will increase in such
markets. Titan Wireless encounters intense competition from numerous companies,
including large and emerging domestic and

                                       93
<PAGE>
international companies, many of which have far greater financial, engineering,
technological, marketing, sales and distribution and customer service resources
than Titan Wireless. Some of Titan Wireless's competitors include Gilat
Satellite Networks Ltd., Hughes Network Systems, Scientific Atlanta Inc., STM
Wireless Inc. and ViaSat, Inc. Furthermore, the satellite communications
industry itself competes with other technologies such as terrestrial wireless,
copper wire and fiber optic communications systems.

    EMERGING TECHNOLOGIES AND BUSINESSES.  Because it is attempting to
commercialize a number of diverse technologies and products, Emerging
Technologies effectively competes in many areas. Other companies are engaged in
significant research and development activities in these areas, either on their
own or in collaboration with others. Some of these companies have greater
financial and personnel resources, and more experience in these specific areas
than we do. We anticipate that Emerging Technologies will face increased
competition in the future as new companies enter these areas and additional and
potentially more sophisticated technologies become available.

RESEARCH AND DEVELOPMENT

    We maintain a staff of engineers, other scientific professionals and support
personnel engaged in development of new applications of technology and
improvement of existing products. These programs' costs are expensed as
incurred. Total expenditures for research and development were $9.8 million in
1996, $12.8 million in 1997, $10.0 million in 1998 and $8.2 million for the nine
months ended September 30, 1999. These expenditures included Titan-funded
research and development of $5.0 million in 1996, $7.5 million in 1997, $5.6
million in 1998 and $5.3 million for the nine months ended September 30, 1999.
The remainder of our research and development expenditures was customer-
sponsored. The majority of our customer-sponsored research and development
activity is funded under contracts with the United States government.

GOVERNMENT AND ENVIRONMENTAL REGULATIONS

    We must comply with and are affected by various government regulations.
These regulations affect how we and our customers can do business and, in some
instances, impose added costs to our businesses. Any changes in applicable laws
could adversely affect the financial performance of the business affected by the
changed regulations. Any failure to comply with applicable laws could result in
material fines and penalties or affect how we conduct our business in the
future.

    We are subject to environmental and safety laws and regulations governing
the use, storage and disposal of hazardous substances or wastes and imposing
liability for the cleanup of contamination from these substances. We cannot
completely eliminate the risk of contamination or injury from these substances
or wastes, and, in the event of such an incident, we could be held liable for
any damages that result. From time to time, we have been notified of violations
of government and environmental regulations. We attempt to correct these
violations promptly without any material impact on our operations. In addition,
we may be required to incur significant additional costs to comply with
environmental laws and regulations in the future. These costs, and any future
violations or liability under environmental laws or regulations, could have a
material adverse effect on our business, financial condition and results of
operations.

EMPLOYEES

    As of September 30, 1999, we employed approximately 3,000 employees,
predominantly located in the United States. Advanced Communication Systems
employed approximately 1,974 employees as of September 30, 1999.

                                       94
<PAGE>
                                   MANAGEMENT

    The following table provides information concerning our directors and
executive officers.

    Our executive officers and their respective positions with Titan and ages
are set forth in the following table. There are no family relationships between
any of our directors or executive officers and other directors or executive
officers of Titan. Executive officers serve at the discretion of the board of
directors.

EXECUTIVE OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
                                                                                            YEAR IN WHICH
                                                                                            HE/SHE BECAME
NAME                                                 POSITION                     AGE      OFFICER/DIRECTOR
----                                ------------------------------------------  --------   ----------------
<S>                                 <C>                                         <C>        <C>
OFFICERS

Gene W. Ray......................   Chairman of the Board of Directors,            61            1981
                                    President and Chief Executive Officer
Eric M. DeMarco..................   Executive Vice President and Chief             36            1997
                                    Financial Officer
Nicholas J. Costanza.............   Senior Vice President, General Counsel and     44            1999
                                     Secretary
Larry A. Oberkfell...............   Senior Vice President, President and Chief     46            1999
                                     Executive Officer of Titan Scan
                                     Corporation
Mellon C. Baird..................   Senior Vice President, and President and       68            1998
                                     Chief Executive Officer of Titan Systems
Herbert L. Bradley...............   Senior Vice President, and President and       58            1999
                                     Chief Executive Officer of Titan Wireless
David P. Porreca.................   Senior Vice President, and President and       57            1999
                                     Chief Executive Officer of Cayenta
Ronald B. Gorda..................   Senior Vice President                          44            1994
Deanna Hom Petersen..............   Vice President and Corporate Controller        32            1997
Louis L. Fowler..................   Vice President and Assistant Secretary         61            1989
Dianne D. Scott..................   Vice President                                 50            1995

DIRECTORS
Charles R. Allen.................   Director                                       73            1989
Joseph F. Caligiuri..............   Director                                       71            1984
Daniel J. Fink...................   Director                                       73            1985
Robert Hanisee...................   Director                                       61            1998
Robert E. La Blanc...............   Director                                       65            1996
Thomas G. Pownall................   Director                                       78            1992
James Roth.......................   Director                                       63            1998
</TABLE>

    The term of office of each executive officer is until his or her respective
successor is elected and has been qualified, or until his or her death,
resignation or removal. The board of directors elects officers annually at its
first meeting following the Annual Meeting of Stockholders.

    DR. RAY was a co-founder of Titan Systems, Inc., the parent of which merged
into us in 1985. He served as a Director, Chief Executive Officer and President
of Titan Systems from its inception in 1981 until the merger. He has been our
Chairman of the Board of Directors since May 1999 and President and Chief
Executive Officer since the merger.

                                       95
<PAGE>
    MR. DEMARCO has been our Executive Vice President and Chief Financial
Officer since August 1998 and was our Senior Vice President and Chief Financial
Officer from January 1997 to August 1998. From June 1986 to January 1997, he
held various positions at Arthur Andersen LLP, most recently as a Senior
Manager.

    MR. COSTANZA has been our Senior Vice President, General Counsel and
Secretary since August 1999. From mid-1998 to the end of 1998, he was Executive
Vice President, General Counsel and Secretary of Enfinity Corporation, a
manufacturing company. From 1980 to early 1998, he held various positions at
Exide Electronics Group, Inc., most recently as Vice President, Chief
Administrative Officer, General Counsel and Secretary.

    MR. OBERKFELL has been our Senior Vice President and the President and Chief
Executive Officer of Titan Scan Corporation since November 1999. From December
1995 to November 1999, he held various positions at Anchor Food Products, Inc.,
a manufacturer of frozen food appetizers, most recently as Chief Executive
Officer. From October 1992 to December 1995, he held various positions at Orval
Kent Food Company, a refrigerated salad company, most recently as Chief
Executive Officer.

    MR. BAIRD has been our Senior Vice President, and President and Chief
Executive Officer of Titan Systems since September 1998. Since November 1990 he
has been President and Chief Executive Officer of Delfin Systems, now a
wholly-owned subsidiary of Titan. From 1986 to 1990, Mr. Baird was President and
Chief Executive Officer of Tracor. Prior thereto, Mr. Baird held senior
positions at Eaton Corporation, Sanders Associates, Inc., F&M Systems Company,
and Varo, Inc.

    MR. BRADLEY has been our Senior Vice President, and President and Chief
Executive Officer of Titan Wireless, Inc. since January 1999. Prior thereto, he
had been executive director of product development at Global One since February
1996. From February 1989 to February 1996, Mr. Bradley was President of Sprint
China, Sprint International.

    MR. PORRECA has served as our Senior Vice President, and President and Chief
Executive Officer of Cayenta since January 1999. From June 1995 to December
1998, he served as Chief Executive Officer and Senior Member of an enterprise
software consulting company, Transnational Partners II. From August 1989 to
June 1995, he served as Chief Executive Officer of Expersoft Corporation, a
software development and services company.

    MR. GORDA has been our Senior Vice President since February 1995 and Chief
Operating Officer of Linkabit Wireless, Inc., a division of Titan Systems, since
September 1997. He served as President of the Linkabit division of Titan from
June 1993 to September 1997. From May 1994 to February 1995, he was a Vice
President of Titan. From August 1991 to June 1993, he served as Senior Vice
President of the SATCOM Systems business unit of the Linkabit division. Prior
thereto, he was Senior Program Manager of the SATCOM Command and Control
division of Rockwell International from April 1986 to July 1991.

    MS. PETERSEN has been our Corporate Controller since December 1996 and Vice
President of Titan since July 1998. From September 1993 to December 1996,
Ms. Petersen was our Corporate Manager of Operations Analysis. From January 1990
to September 1993, she held various positions at Arthur Andersen LLP, most
recently as a Senior Auditor.

    MR. FOWLER has been our Vice President and Assistant Secretary since
September 1989. From March 1987 to September 1989 he served as Vice President of
Titan Systems, Inc. Prior thereto, Mr. Fowler was Director of Contracts of Titan
Systems, Inc. from March 1985 to March 1987.

    MS. SCOTT has been Vice President since June 1995. From July 1992 to April
1995 she was an independent consultant. From April 1987 to June 1992 she was a
principal with the Scott Group, Inc.

    MR. ALLEN was employed by TRW, Inc., a diversified manufacturing company,
from 1955 to 1986, where he held a number of executive management positions,
including director from 1972 to 1986, and Executive Vice President and Chief
Financial Officer from 1977 to 1986.

                                       96
<PAGE>
    MR. CALIGIURI was employed by Litton Industries, Inc., a diversified
manufacturing and services company, from 1969 to 1993, where he held a number of
executive management positions, including Executive Vice President from
September 1981 to April 1993.

    MR. FINK was employed by General Electric Co. from 1967 to 1982, where he
held a number of executive management positions, including Senior Vice President
of Corporate Planning and Development, after which he founded and has been the
President of D. J. Fink Associates, Inc., a management consulting firm.

    MR. HANISEE was a founding partner of Amdec Securities, and later was
President of Seidler Amdec Securities. From 1992 to 1998, he managed the
Convertible Securities Group of Trust Company of the West, and until recently
was Portfolio Manager for the Global Telecom Trust. He is currently the Chief
Investment Officer for Asset Allocation in the Private Client Services Group of
Trust Company of the West.

    MR. LA BLANC was a General Partner with Salomon Brothers, an investment
banking firm, from 1969 to 1979. From 1979 to 1981, he was Vice Chairman of
Continental Telecom, Inc., after which he founded and has been the President of
Robert E. La Blanc Associates, Inc., a financial and technical consulting firm.
He currently serves on the board of directors of Salient 3
Communications, Inc., a telecommunications and equipment and services company,
Storage Technology Corp., a provider of network computing storage, Tribune
Company, a media company, Chartered Semiconductor Manufacturing Ltd., a
semiconductor manufacturer, and a family of Prudential mutual funds.

    MR. POWNALL was employed by Martin Marietta Corporation, a diversified
manufacturing and services company, from 1963 to 1992, where he held a number of
executive management positions, including director from September 1971 to April
1992, Chief Executive Officer from April 1982 to April 1988, and Chairman of the
Board of Directors from January 1983 to April 1988.

    MR. ROTH was formerly Chairman, President and Chief Executive Officer of GRC
International, where he held numerous key executive management positions
throughout a 24-year career.

    In the event we close our acquisition of Advanced Communication Systems,
George A. Robinson, who currently is the Chairman, President and Chief Executive
Officer of Advanced Communication Systems, will become a director of Titan after
the acquisition. Mr. Robinson is a founder of Advanced Communication Systems and
has served as Chairman, President and Chief Executive Officer of Advanced
Communication Systems since its inception in 1987. From 1986 to 1987,
Mr. Robinson held the position of Vice President for East Coast Operations of
Advanced Digital Systems, Inc., a military communication software development
company. Before working at Advanced Digital Systems, Mr. Robinson spent over
20 years as a civilian employee in the U.S. Navy Satellite Communication
program, most recently as Deputy Director.

COMMITTEES OF THE BOARD OF DIRECTORS

    Titan's board of directors has an Audit Committee and a Compensation, Stock
Option and Pension Committee. The members of the Audit Committee are Mr. Allen,
Chairman, and Messrs. Caligiuri, Fink, Hanisee, La Blanc, Pownall and Roth. This
Committee monitors our basic accounting policies, reviews audit and management
reports and makes recommendations regarding the appointment of the independent
auditors. The members of the Compensation, Stock Option and Pension Committee
are Mr. Pownall, Chairman, and Messrs. Allen, Caligiuri, Fink, Hanisee, La Blanc
and Roth. This Committee deals with the hiring and election of corporate
officers, salary and incentive compensation policies for officers and
executives, and the granting of stock options and stock appreciation rights to
employees.

    As of January 1999, directors who are not officers receive directors' fees
at an annual rate of $30,000, paid quarterly, and $1,500 per meeting for each
meeting attended in excess of five meetings

                                       97
<PAGE>
per calendar year. Additionally, directors who serve as chairs to committees of
the board of directors receive $1,000 per quarter. In addition to the above
compensation, pursuant to the terms of our existing 1996 Directors' Stock Option
and Equity Participation Plan, as amended, or the Plan, options to purchase
5,000 shares of our common stock are granted to each director at fair market
value upon election to the board of directors. Directors also receive
non-discretionary annual grants of options to purchase 5,000 shares of common
stock under the Plan. The options vest at 25% per year. Directors who are not
also our employees may elect to receive their directors' fees in common stock,
pursuant to the terms of the Plan.

AGREEMENTS WITH EXECUTIVE OFFICERS

    We have entered into agreements with our executive officers (each
hereinafter referred to as the "Executive") to reinforce and encourage their
continued dedication without distraction arising from the possibility of a
change in control occurring to us. The terms of the agreements provide that, in
the event of a change in control (as defined in the agreements), and the
termination of the Executive's employment at any time during the period
beginning fifteen days prior to a change in control and ending two years
following a change in control (hereinafter referred to as the "termination
period") by us other than for cause or disability or by the Executive for good
reason (as defined in the agreements), the Executive will be paid a lump sum
amount equal to two times his base salary plus maximum annual bonus.
Additionally, the Executive will receive a prorated bonus for the year of
termination and continuation of medical and dental benefits covering the
Executive and his dependents for 2 years following the termination. The payments
are limited to ensure deductibility for tax purposes under Section 280G of the
Internal Revenue Code.

    If the Executive's employment is terminated prior to the termination period
but following a potential change in control (as defined in the agreements), such
termination would be deemed to be within the termination period and to have been
(i) by us without cause (if such termination was at the direction of the
acquiring person) or (ii) by the Executive with good reason (if the Executive
terminates his employment and the event which constitutes good reason occurs
following such potential change in control and at the direction of the acquiring
person).

    Under the agreements, a change in control is defined as the occurrence of
any of the following:

    - the acquisition by any person, together with its affiliates, of beneficial
      ownership of capital stock of ours possessing 25% or more of the combined
      voting power of our outstanding capital stock;

    - within any two year period, the majority of the members of the board of
      directors were to be comprised of individuals other than those who were
      members at the beginning of such period, unless the new members elected
      during such period were approved by two-thirds of the members of the board
      of directors still in office who were members of the board of directors at
      the beginning of such two-year period;

    - all or substantially all of our assets are sold as an entirety to any
      person or related group of persons; or

    - a merger of us with or into another corporation or the merger of another
      corporation into us with the effect that immediately after such
      transaction, our stockholders immediately prior to such transaction hold
      less than a majority interest of the total voting power entitled to vote
      in the election of directors, managers or trustees of the entity surviving
      such transaction.

    A potential change in control shall be deemed to have occurred, for purposes
of the agreements, if we enter into an agreement, the consummation of which
would result in a change in control.

                                       98
<PAGE>
                             PRINCIPAL STOCKHOLDERS

    The following table presents information regarding the beneficial ownership
of our common stock as of January 14, 2000 by:

    - each person known by us to be the beneficial owner of more than 5% of our
      outstanding common stock;

    - each of our directors;

    - our chief executive officer and our four most highly compensated executive
      officers in 1998 other than the chief executive officer;

    - all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                                 SHARES
                                                              BENEFICIALLY      PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                         OWNED(2)        OF CLASS(3)
---------------------------------------                       ------------      -----------
<S>                                                           <C>               <C>
Charles R. Allen............................................   47,420   (4)       *
Mellon C. Baird.............................................  250,036   (5)       *
Herbert L. Bradley..........................................   10,000   (6)       *
Joseph F. Caligiuri.........................................   38,500   (7)       *
Nicholas J. Costanza........................................      179   (8)       *
Eric M. DeMarco.............................................   94,316   (9)       *
Daniel J. Fink..............................................   37,584   (10)      *
L.L. Fowler.................................................   67,994   (11)      *
Ronald B. Gorda.............................................  211,633   (12)      *
Robert I. Hanisee...........................................    1,930   (13)      *
Robert E. La Blanc..........................................   30,500   (14)      *
Lawrence A. Oberkfell.......................................       --           --
Deanna Hom Petersen.........................................   23,324   (15)      *
David P. Porreca............................................    7,500   (16)      *
Thomas G. Pownall...........................................   62,048   (17)      *
Gene W. Ray.................................................  772,177   (18)     1.68   %
James E. Roth...............................................   11,250   (19)      *
Dianne D. Scott.............................................   20,630   (20)      *
All directors and executive officers as a group (16           1,687,021 (21)     3.62   %
  persons)..................................................
</TABLE>

------------------------

*   Less than 1%

 (1) Except as otherwise provided, the address of each owner is c/o The Titan
     Corporation, 3033 Science Park Road, San Diego, California 92121.

 (2) The information regarding beneficial ownership of our common stock has been
     presented according to rules of the SEC and is not necessarily indicative
     of beneficial ownership for any other purpose. Under the SEC rules,
     beneficial ownership of our common stock includes any shares as to which a
     person has sole or shared voting power or investment power and also any
     shares which a person has the right to acquire within 60 days through the
     exercise of any stock option or other right. Under California and some
     other state laws, personal property owned by a married person may be
     community property that either spouse may manage and control. We have no
     information as to whether any shares shown in this table are subject to
     such community property laws.

 (3) Percentage of beneficial ownership as to any person as of a particular date
     is calculated by dividing the number of shares beneficially owned by that
     person by the sum of the number of shares outstanding as of such date and
     the number of shares as to which that person has the right to acquire
     voting or investment power with respect to their shares. Information with
     respect to

                                       99
<PAGE>
     beneficial owners of more than 5% of the common stock is based upon the
     most recent Schedule 13D or Schedule 13G on file with the SEC.

 (4) Includes outstanding options exercisable within 60 days after January 14,
     2000 to purchase 27,500 shares.

 (5) Includes outstanding options exercisable within 60 days after January 14,
     2000 to purchase 249,502 shares and 534 shares held by the trustees of our
     401(k) Retirement Plan and Employee Stock Ownership Plan.

 (6) Includes outstanding options exercisable within 60 days after January 14,
     2000 to purchase 10,000 shares.

 (7) Includes outstanding options exercisable within 60 days after January 14,
     2000 to purchase 22,500 shares.

 (8) Includes 179 shares held by the trustees of our 401(k) Retirement Plan.

 (9) Includes outstanding options exercisable within 60 days after January 14,
     2000 to purchase 77,500 shares and 1,496 shares held by the trustees of our
     401(k) Retirement Plan and Employee Stock Ownership Plan.

 (10) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 27,500 shares.

 (11) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 48,500 shares and 18,381 shares held by the trustees of
      our 401(k) Retirement Plan and Employee Stock Ownership Plan.

 (12) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 180,000 shares and 22,419 shares held by the trustees of
      our 401(k) Retirement Plan and Employee Stock Ownership Plan.

 (13) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 1,250 shares.

 (14) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 22,500 shares.

 (15) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 18,375 shares and 4,449 shares held by the trustees of
      our 401(k) Retirement Plan and Employee Stock Ownership Plan.

 (16) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 7,500 shares.

 (17) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 21,250 shares.

 (18) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 467,500 shares and 75,935 shares held by the trustees of
      our 401(k) Retirement Plan and Employee Stock Ownership Plan.

 (19) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 1,250 shares.

 (20) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 18,000 shares and 2,630 shares held by the trustees of
      our 401(k) Retirement Plan and Employee Stock Ownership Plan.

 (21) Includes outstanding options exercisable within 60 days after January 14,
      2000 to purchase 1,094,652 shares and 100,384 shares held by the trustees
      of our 401(k) Retirement Plan and Employee Stock Ownership Plan.

                                      100
<PAGE>
                              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 will be amended and restated in its entirety as of the date
the trust initially issues the HIGH TIDES. Unless the context requires
otherwise, "Titan," "we," "us," "our" or similar terms in this section refer
solely to 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 will directly acquire common securities of the trust in an aggregate
liquidation amount equal to at least 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 will have four trustees,
which we refer to in this offering circular as declaration trustees:

    - two of the trustees, referred to as administrative trustees, will be
      officers of Titan; and

    - the third trustee will be the property trustee and the fourth trustee will
      be the Delaware statutory trustee, each of which will be 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. See "Description of HIGH TIDES--Voting Rights;
Amendment of the Declaration."

    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. See "Description of Convertible
Senior Subordinated Debentures."

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    The address of the principal office of the trust is c/o The Titan
Corporation, 3033 Science Park Road, San Diego, California 92121-1199, and its
telephone number is (858) 552-9500.

                                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

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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.

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 offering circular, 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

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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 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 offering circular 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.

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    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 occurence of certain
market events, the final remarketing 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.

                                      105
<PAGE>
    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 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 offering circular
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 offering circular 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

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<PAGE>
      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;

    - 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

                                      107
<PAGE>
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 offering circular under
"--Effect of a Failed Remarketing."

    The remarketing agreement provides that the remarketing agent will not be
obligated to remarket HIGH TIDES if:

    - in the remarketing agent's judgment there is a material misstatement or
      omission in any (a) disclosure document provided by us or the trust in
      connection with the remarketing or (b) document publicly disclosed
      (including in a filing pursuant to the Securities Exchange Act of 1934) by
      or on behalf of us or the trust, unless in each case the remarketing agent
      is satisfied that such misstatement or omission has been properly
      corrected;

    - we have failed to have a registration statement for the HIGH TIDES
      declared effective on or prior to the tender notification date or such
      registration statement does not remain effective through and including the
      reset date, unless we have provided to the remarketing agent an opinion of
      counsel, experienced in matters relating to securities law, (a) that
      registration of the HIGH TIDES under the Securities Act is not necessary
      for their sale or (b) that such registration statement need not become
      effective until the date the initial remarketing period is required to
      commence under the remarketing agreement and the remarketing agent
      consents to such delay; or

    - either we or the trust fails to satisfy conditions customary in an
      offering.

    Broker-dealers, if any, which obtain purchasers for the HIGH TIDES will be
paid a commission or fee by the remarketing agent based upon the remarketing fee
described above and the number of HIGH TIDES sold. Broker-dealers will enter
into broker-dealer agreements with the remarketing agent, which will provide for
their participation in the remarketing and will require them to follow certain
private placement procedures. The identity of the broker-dealers, if any, which
will participate in the remarketing has not yet been determined. The remarketing
agent will have the right to select broker-dealers at any time prior to the
reset date. No broker-dealer will be obligated to purchase the HIGH TIDES.

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                           DESCRIPTION OF HIGH TIDES

    Under the terms of the declaration of trust, the administrative trustees on
behalf of the trust will issue the HIGH TIDES and the common securities in fully
registered form without interest coupons. The HIGH TIDES will represent
preferred undivided beneficial ownership interests in the assets of the trust,
and the holders of the HIGH TIDES will be 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 will not
initially be qualified under the Trust Indenture Act. However, by its terms the
declaration of trust will incorporate selected provisions of the Trust Indenture
Act. Upon effectiveness of the shelf registration statement, the declaration of
trust will be 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 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 executed by us for your benefit will provide for a
guarantee on a subordinated basis with respect to the HIGH TIDES but will 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 will accrue on the HIGH TIDES from the date of their original
issuance 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

                                      109
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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 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 offering circular, 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 offering circular, 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.

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    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."

    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 offering circular 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 will covenant 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;

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    - 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 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

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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.

    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

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    - 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 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

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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

    - 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."

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    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.

    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.

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    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 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

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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 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

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      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 the date of this offering circular.

    The distribution by us of the debentures will effectively result in the
cancellation of the HIGH TIDES.

OFFER TO REPURCHASE THE HIGH TIDES

    If the acquisition of Advanced Communication Systems is not consummated by
March 31, 2000, the property trustee on behalf of the trust will offer to
purchase up to 50% of the aggregate liquidation amount of each of the HIGH TIDES
and the trust's common securities, each at a purchase price equal to 102.5% of
the liquidation amount of the HIGH TIDES and common securities, plus any accrued
and unpaid distributions, if any, to the date of the repurchase.

    The offer to repurchase will be made in compliance with all applicable laws,
including all applicable federal and state securities laws.

    Within 30 days following March 31, 2000, the property trustee on behalf of
the trust will commence the offer to repurchase the HIGH TIDES and the common
securities by mailing to each holder of HIGH TIDES and common securities a
notice, which will govern the terms of the offer to repurchase. The notice will
include the following information:

    - up to 50% of the aggregate liquidation amount of each of the HIGH TIDES
      and the trust's common securities will be accepted for payment, each at a
      purchase price equal to 102.5% of the liquidation amount of the HIGH TIDES
      and common securities,

    - the purchase date,

    - any HIGH TIDES and common securities not tendered will continue to be
      outstanding and accrue distributions,

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    - all HIGH TIDES and common securities tendered and accepted for payment
      will cease to be outstanding after the date on which the HIGH TIDES and
      common securities are purchased,

    - if more than 50% of the aggregate liquidation amount of either the HIGH
      TIDES or the trust's common securities are tendered, the trust will
      repurchase the HIGH TIDES or common securities, as the case may be, on a
      pro rata basis from each tendering holder and

    - instructions for tendering the HIGH TIDES and the trust's common
      securities.

      On the date that the tendered HIGH TIDES and the trust's common securities
are repurchased, the trust will

    - accept tendered and not withdrawn HIGH TIDES and the trust's common
      securities for payment,

    - deposit with the paying agent an amount equal to the aggregate payment
      amount for all of the HIGH TIDES and the trust's common securities so
      tendered and not withdrawn and

    - deliver or cause to be delivered to the property trustee the HIGH TIDES
      and the trust's common securities accepted by the trust, together with a
      certificate stating that the HIGH TIDES and the trust's common securities
      tendered to the trust are accepted for payment. The paying agent will
      promptly mail to each holder of accepted HIGH TIDES and the trust's common
      securities payment equal to the purchase price for the HIGH TIDES and the
      trust's common securities, and the property trustee on behalf of the trust
      will authenticate and mail, or cause to be transferred by book entry, to
      each holder a new security equal in liquidation amount to any unpurchased
      portion of the HIGH TIDES and the trust's common securities surrendered,
      if any, PROVIDED, that each new security will be in the liquidation amount
      of $50 or an integral multiple thereof.

    The property trustee on behalf of the trust will make a public announcement
of the results of the offer to repurchase the HIGH TIDES and the trust's common
securities on or as soon as practicable after the date the securities are
repurchased. For the purposes of this offer to repurchase, the trustee will act
as the paying agent.

    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;

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    (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;

    - 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

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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");

    - 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,

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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 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;

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    - 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.

    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

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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 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;

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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.

    FORM, BOOK-ENTRY PROCEDURES AND TRANSFER

    The HIGH TIDES sold to "qualified institutional buyers" as defined in
Rule 144A under the Securities Act will be issued in the form of one or more
fully registered global HIGH TIDES certificates except as described below. The
global HIGH TIDES certificate will be deposited upon issuance with the property
trustee as custodian for DTC, in New York, New York, 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.

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    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
Securities Exchange Act of 1934. 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 will credit 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."

    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.

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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 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.

    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

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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 Securities Exchange
      Act of 1934;

    - 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.

    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.

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    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 will be governed by and
construed in accordance with the laws of the State of Delaware.

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                 DESCRIPTION OF CONVERTIBLE SENIOR SUBORDINATED
                                   DEBENTURES

    We will issue the convertible senior subordinated debentures under an
indenture between us and Wilmington Trust Company, as debenture trustee. The
indenture will not initially be qualified under the Trust Indenture Act.
However, by its terms, the indenture will incorporate selected provisions of the
Trust Indenture Act. Upon effectiveness of the shelf registration statement, the
indenture 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 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 will invest the proceeds from issuing those securities in
our 5 3/4% Convertible Senior Subordinated Debentures due February 15, 2030.
Interest will 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.

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<PAGE>
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 offering
circular will apply, with such changes as are necessary, to the 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

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<PAGE>
    - 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;

       - 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."

                                      133
<PAGE>
    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 amount of debentures plus any accrued but unpaid interest on the
portion being redeemed, if redeemed during the 12 month period up to but
excluding February 20:

<TABLE>
<CAPTION>
                                                    PRICE PER $50
                     PERIOD                       PRINCIPAL AMOUNT
------------------------------------------------  -----------------
<S>                                               <C>
2004............................................       $ 50.72
2005............................................       $ 50.00
</TABLE>

(2) after the reset date (except in the event of a failed final remarketing), in
accordance with the term call protections, if any, established in the
remarketing; and (3) in whole or in part, at any time on or after the third
anniversary of the reset date following a failed final remarketing at a
redemption price equal to 100% of the then outstanding aggregate principal
amount of the debentures to be redeemed, plus any accrued and unpaid interest on
the portion being redeemed. The term "term redemption price" means any
redemption price established in the remarketing. The initial redemption price
and the term redemption price are each referred to as an optional redemption
price. The remarketing agent will establish term call protections, if any, in
the remarketing that when taken together with the term rate and the term
conversion ratio and price, if any, result in a price per HIGH TIDES equal to
101% of the liquidation amount thereof. However, we may not, at any time, redeem
the debentures for a price less than the aggregate principal amount thereof plus
any accrued and unpaid interest thereon.

    In the event of any redemption in part, we will not be required to:

    - issue, register the transfer of or exchange any debenture during a period
      beginning at the opening of business 15 days before the date of mailing of
      a notice of redemption of debentures selected for redemption and ending at
      the close of business on the day of such mailing; and

    - register the transfer of or exchange any debentures so selected for
      redemption, in whole or in part, except the unredeemed portion of any
      debenture being redeemed in part.

    In no event will we optionally redeem the debentures during a deferral
period. Accordingly, prior to optionally redeeming the debentures, all interest
accrued and unpaid (together, in the case of a deferral period, with interest
thereon, to the extent permitted by law) to the interest payment date
immediately preceding the optional redemption date will be paid in full.

    TAX EVENT REDEMPTION

    We may also, under limited circumstances within 90 days of the occurrence
and continuation of a 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.

    OFFER TO REPURCHASE THE DEBENTURES

    If the acquisition of Advanced Communication Systems is not consummated by
March 31, 2000, we will offer to purchase and the trust will accept such offer
and agree to sell debentures held by the trust

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<PAGE>
in an amount equal to the total price to be paid by the trust for the HIGH TIDES
and the trust's common securities tendered to the trust pursuant to the
repurchase offer in an aggregate purchase price not to exceed 50% of the
aggregate liquidation amount of each of the HIGH TIDES and the trust's common
securities. See the section "Description of HIGH TIDES--Offer to Repurchase the
HIGH TIDES." We will purchase the debentures at a purchase price equal to 102.5%
of the principal amount of the debentures, plus any accrued and unpaid interest,
if any, to the date of the repurchase.

    On the date that the tendered HIGH TIDES and the trust's common securities
are purchased by the trust, we will pay the trust an amount equal to the total
price paid by the trust for the tendered HIGH TIDES and the trust's common
securities in an aggregate amount not to exceed 50% of the aggregate liquidation
amount of each of the HIGH TIDES and the trust's common securities. This will be
in exchange for the debentures and such debentures will cease to be outstanding
on that 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.

    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

                                      135
<PAGE>
       - 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;

    - 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

                                      136
<PAGE>
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.

    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 Securities Exchange Act of 1934. 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

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      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 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 Amended and Restated Credit Agreement
dated as of June 9, 1999, among us, 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, as amended, 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 us, as any such agreement may be amended from time to
time, 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

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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

    - 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 January 21, 2000, we had
$141 million of indebtedness under our Credit Agreement. 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
      Securities Exchange Act of 1934, 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.

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    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 New York, New York, 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.

    GOVERNING LAW

    The indenture and the debentures will be governed by and construed in
accordance with the laws of the State of New York.

    INFORMATION CONCERNING THE DEBENTURE TRUSTEE

    The debenture trustee will be 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 are issued, we will execute and deliver a guarantee for
the benefit of the holders of the HIGH TIDES. Wilmington Trust Company will act
as guarantee trustee under the guarantee. The guarantee will be qualified under
the Trust Indenture Act upon the effectiveness of the shelf registration
statement. 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 will hold 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 Titan Corporation
and not the trust or any of our other consolidated subsidiaries.

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    GENERAL

    Pursuant to the guarantee, we will irrevocably agree 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 will be 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.

    The guarantee will rank subordinate and junior only in right of payment to
all of our Secured Debt. In addition, our obligations under the guarantee will
be 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 will constitute our unsecured obligation and will rank
subordinate and junior only in right of payment to all of our Secured Debt in
the same manner as the debentures.

    The guarantee will constitute 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 will be 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.

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    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.

    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 will be governed by and construed in accordance with the laws
of the State of New York.

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     RELATIONSHIP AMONG THE HIGH TIDES, THE CONVERTIBLE SENIOR SUBORDINATED
                          DEBENTURES AND THE GUARANTEE

FULL AND UNCONDITIONAL GUARANTEE

    We will irrevocably guarantee 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 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;

    - 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.

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    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.

                          DESCRIPTION OF CAPITAL STOCK

    Our authorized capital stock as of January 14, 2000 consisted of:

    - 100,000,000 shares of common stock, par value $.01 per share, of which
      45,407,090 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 694,872 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 7,125,000 shares of common stock of which 2,862,518 shares were covered by
outstanding options as of January 20, 2000. We also have 500,000 shares of
common stock reserved for issuance under our Employee Stock Purchase Plan of
which 241,625 shares were issued and outstanding as of January 20, 2000 and
1,000,000 shares of common stock reserved for issuance under our Employee Stock
Ownership Plan of which 364,637 shares were issued and outstanding as of
January 24, 2000.

    On December 9, 1999, we entered into an agreement to acquire Advanced
Communication Systems, Inc. The aggregate number of shares of our common stock
that we will issue in exchange for shares of Advanced Communication Systems
common stock will be determined at the time of the

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acquisition according to a formula contained in the acquisition agreement. Based
on the number of outstanding shares of our common stock and Advanced
Communication Systems common stock as of January 20, 2000, we would issue
5,478,600 shares in the acquisition if our average stock price used to calculate
the exchange ratio is greater than $32.50 but less than or equal to $35.75 and
6,982,232 shares in the acquisition if our stock price used to calculate the
exchange ratio is at least $22.95 but less than $25.50.

    The following summary describes the material terms of our capital stock and
stockholder rights plan. The description of capital stock and stockholder rights
plan is qualified by reference to our certificate of incorporation, as amended,
bylaws and stockholder rights plan.

COMMON STOCK

    DIVIDENDS.  Subject to the right of the holders of any class of preferred
stock, holders of shares of our common stock are entitled to receive dividends
that may be declared by our board of directors out of legally available funds.
No dividend may be declared or paid in cash or property on any share of any
class of common stock unless simultaneously the same dividend is declared or
paid on each share of that and every other class of common stock; provided,
that, in the event of stock dividends, holders of a specific class of common
stock shall be entitled to receive only additional shares of that class.

    VOTING RIGHTS.  Holders of our common stock are entitled to one vote for
each share held. Holders do not have cumulative voting rights.

    LIQUIDATION RIGHTS.  Upon our liquidation, dissolution or winding-up, the
holders of our common stock are entitled to share ratably in all assets
available for distribution after payment in full to creditors and holders of our
preferred stock, if any.

    OTHER PROVISIONS.  The holders of our common stock are not entitled to
preemptive or similar rights.

PREFERRED STOCK

    We are 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.

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CUMULATIVE CONVERTIBLE PREFERRED STOCK

    DIVIDENDS.  Each share of cumulative convertible preferred stock accrues
dividends at the rate of $1.00 per share per annum.

    VOTING RIGHTS.  Holders of our cumulative convertible preferred stock are
entitled to one-third of one vote for each share held. Holders do not have
cumulative voting rights.

    LIQUIDATION RIGHTS.  Upon our liquidation, dissolution or winding-up, the
holders of our cumulative convertible preferred stock are entitled to a
liquidation preference of $20 per share plus any unpaid cumulative dividends
before any distribution to holders of our common stock.

    CONVERSION RIGHTS.  Each outstanding share of cumulative convertible
preferred stock is convertible into our common stock, at the option of the
holder, at a rate of two-thirds shares of common stock for each share of
cumulative convertible preferred stock.

    REDEMPTION.  Each share of cumulative convertible preferred stock is
redeemable, but only at our option, at a redemption price of $20 per share plus
any accrued and unpaid dividends.

    OTHER PROVISIONS.  The holders of our cumulative convertible preferred stock
are not entitled to preemptive or similar rights.

PREFERRED SHARE PURCHASE RIGHTS

    Each outstanding share of our common stock has or will have attached to it
one preferred share purchase right, which we refer to as a right. Each right
entitles the registered holder of common stock to purchase from us, upon the
occurrence of specified events, one one-hundredth of a share of our series A
junior participating preferred stock, which we refer to as the participating
preferred shares, at a price of $42 per one one-hundredth of a participating
preferred share, subject to adjustment. The terms of the rights are set forth in
a rights agreement dated as of August 21, 1995 between us and American Stock
Transfer and Trust Company, as rights agent.

    Until the distribution date described below, we will not issue separate
certificates evidencing the rights. Until that date, the rights will be
evidenced, with respect to any common stock certificate, by that 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

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    - 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, any entity
holding our common stock for or under an employee benefit plan of ours or any of
our subsidiaries. In addition, a person who would otherwise be an acquiring
person will not be considered an acquiring person if our board of directors
determines in good faith that such person inadvertently became the beneficial
owner of 15% or more of our common stock and such person divests itself, as
promptly as practicable, of beneficial ownership of a sufficient number of
shares of our common stock so that it would no longer otherwise qualify as an
acquiring person.

    The rights agreement provides that, until the distribution date, or earlier
redemption or expiration of the rights, the rights will be transferred only with
our common stock. The rights will be evidenced, with respect to any common stock
certificate outstanding as of September 7, 1995, by that common stock
certificate with a summary of the rights attached to it. Until the distribution
date, or earlier redemption or expiration of the rights, new common stock
certificates issued after September 7, 1995 upon transfer or new issuances of
common stock will contain a notation incorporating the rights agreement by
reference. Until the distribution date, the surrender for transfer of any
certificates for common stock, even without a summary of the rights attached to
it, also will constitute the transfer of the rights associated with the common
stock represented by that certificate. As soon as practicable after the
distribution date, separate certificates evidencing the rights will be mailed to
holders of record of our common stock as of the close of business on the
distribution date, and the separate right certificates alone will evidence the
rights. Only our common stock issued before the distribution date will be issued
with rights.

    The rights are not exercisable until the distribution date. The rights will
expire on August 17, 2005, unless the expiration date is extended or unless the
rights are earlier redeemed or exchanged by us, in each case as described below.

    The purchase price payable for the participating preferred shares, and the
number of participating preferred shares or other securities or property
issuable, upon exercise of the rights, as well as the number 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.

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The number of outstanding rights and the number of one one-hundredths of a
participating preferred share issuable upon exercise of each right are also
subject to adjustment in the event of a dividend or other distribution on the
common stock payable in common stock or subdivisions, consolidations or
combinations of our common stock occurring, in any of those cases, before the
distribution date.

    Participating preferred shares purchasable upon exercise of the rights will
not be redeemable. Each participating preferred share will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per share, but will be
entitled to an aggregate dividend of 100 times the dividend declared per share
of our common stock. If there is a liquidation, the holders of the participating
preferred shares will be entitled to a minimum preferential liquidation payment
of $100 per share, but will be entitled to an aggregate payment of 100 times the
payment made per share of our common stock. Each participating preferred share
will have 100 votes, voting together with our common stock. If there is a
merger, consolidation or other transaction in which our common stock is
exchanged, each participating preferred share will be entitled to receive 100
times the amount received per share of our common stock. These rights are
protected by customary antidilution provisions.

    Because of the nature of the dividend, liquidation and voting rights of the
participating preferred shares, the value of the one one-hundredth interest in a
participating preferred share purchasable upon exercise of each right should
approximate the value of one share of our common stock.

    If any person or group becomes an acquiring person, except pursuant to
specified cash offers for all outstanding shares of our common stock approved by
our board of directors, or if we are the surviving corporation in a merger with
an acquiring person or any affiliate or associate of an acquiring person and our
common stock is not changed or exchanged, proper provision will be made so that
each holder of a right, other than rights beneficially owned by the acquiring
person, which will become null and void, will have the right to receive upon
exercise of the right at the then-current market price, instead of participating
preferred shares, that number of shares of our common stock having a market
value of two times the exercise price of the right. If we do not have sufficient
common stock issued but not outstanding, or authorized but unissued, to permit
the exercise in full of the rights, we will be required to take all action
necessary to authorize additional common stock for issuance upon exercise of the
rights. If, after a good-faith effort, we are unable to take all necessary
action, we will substitute, for each share of common stock that would otherwise
be issuable upon exercise of a right, a number of participating preferred
shares, or fractional participating preferred shares, with the same market value
as that share of common stock.

    If, after a person or group has become an acquiring person, we are acquired
in a merger or other business combination transaction or 50% or more of its
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.

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    With specified exceptions, no adjustments in the purchase price for the
preferred shares will be required until cumulative adjustments require an
adjustment of at least 1% of that purchase price. No fractional participating
preferred shares will be issued, other than fractions which are integral
multiples of one one-hundredth of a participating preferred share, which may, at
our election, be evidenced by depositary receipts. Instead of issuing fractional
participating preferred shares, we will make an adjustment in cash based on the
market price of the participating preferred shares on the last trading day
before the date of exercise.

    Upon approval by our board of directors, we may redeem the rights, in whole,
but not in part, at a price of $.01 per right at any time until ten days
following the public announcement that a person or group has become an acquiring
person. Our board of directors, with the concurrence of a majority of the
continuing directors, may extend the period during which the rights are
redeemable beyond the ten days following the public announcement that a person
or group has become an acquiring person. Under circumstances described in the
rights agreement, the decision to redeem will require the concurrence of a
majority of the continuing directors. Immediately upon the determination of our
board of directors to redeem the rights, we will make an announcement of the
redemption. Upon the redemption, the right to exercise the rights will terminate
and the only right of right holders will be to receive the redemption price.

    Until a right is exercised, the holder of the right, in the capacity of a
holder, will have no rights as a stockholder of ours, including, without
limitation, the right to vote or to receive dividends. Although the distribution
of the rights will not be taxable to stockholders or to us, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
rights become exercisable for our common stock or other consideration, or for
common stock of the acquiring company or its parent as set forth above.

    Any of the provisions of the rights agreement may be amended or supplemented
by our board of directors before the distribution date. From and after the
distribution date, we and the rights agent may amend or supplement the rights
agreement from time to time without the approval of any holders of rights

    - to cure any ambiguity, to correct or supplement any defective or
      inconsistent provisions,

    - to shorten or lengthen any time period under the rights agreement relating
      to when the rights may be redeemed, so long as, under specified
      circumstances, a majority of the continuing directors approve the
      shortening or lengthening, or

    - to make any other provisions with respect to the rights which we and the
      rights agent may deem necessary or desirable.

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;

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    - upon completion of the transaction which resulted in the stockholder
      becoming an interested stockholder, the interested stockholder owned at
      least 85% of the voting stock of the corporation outstanding at the time
      the transaction commenced, excluding for purposes of determining the
      number of shares outstanding those shares owned by persons who are
      directors and also officers and by employee stock plans in which employee
      participants do not have the right to determine confidentially whether
      shares held subject to the plan will he tendered in a tender or exchange
      offer; or

    - at or after that time, the business combination is approved by the board
      of directors and authorized at an annual or special meeting of
      stockholders, and not by written consent, by the affirmative vote of at
      least 66 2/3% of the outstanding voting stock which is not owned by the
      interested stockholder.

    Section 203 defines "business combination" to include the following:

    - any merger or consolidation of the corporation with the interested
      stockholder;

    - any sale, transfer, pledge or other disposition of 10% or more of the
      assets of the corporation involving the interested stockholder;

    - subject to specified exceptions, any transaction that results in the
      issuance or transfer by the corporation of any stock of the corporation to
      the interested stockholder;

    - any transaction involving the corporation that has the effect of
      increasing the proportionate share of the stock of any class or series of
      the corporation beneficially owned by the interested stockholder; or

    - any receipt by the interested stockholder of the benefit of any loans,
      advances, guarantees, pledges or other financial benefits provided by or
      through the corporation.

    In general, section 203 defines an "interested stockholder" as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by that entity or person.

TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.

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             CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

GENERAL

    The following, in the opinion of Cooley Godward LLP, counsel to Titan and
the trust, is a summary of the material United States federal income tax
consequences of the purchase, ownership, disposition, and conversion of HIGH
TIDES and our common stock by persons that acquire HIGH TIDES pursuant to the
initial offering at their original offering price. 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

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below. Neither the trust nor Titan has sought, nor will either seek, a ruling
from the Internal Revenue Service (the "IRS") on 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 issuance of the HIGH TIDES, Cooley Godward LLP will
render 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

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"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 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

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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 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

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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, 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

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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 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.

                                      156
<PAGE>
    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. No assurance can be given
that the value of the HIGH TIDES held by benefit plan investors will be less
than 25% of the total value of such HIGH TIDES at the completion of the initial
offering or 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. See "Transfer
Restrictions." 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

                                      157
<PAGE>
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 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.

                                      158
<PAGE>
                              REGISTRATION RIGHTS

    We and the trust will enter into a registration agreement with the initial
purchasers of the HIGH TIDES for the benefit of the holders of the HIGH TIDES
wherein we and the trust will agree, at our sole expense, to

       - file as soon as practicable, but in no event more than 75 days after
         the original issuance of the HIGH TIDES, a shelf registration covering
         resales of the HIGH TIDES, the guarantee, the debentures and the
         related common stock issuable upon conversation of the HIGH TIDES;

       - use our best efforts to cause the shelf registration statement to be
         declared effective under the Securities Act within 150 days after the
         original issuance 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, in the event that a shelf registration statement is filed, provide
to each holder for whom the shelf registration statement was filed copies of the
prospectus that is a part of the shelf registration statement, 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 security holder
in the related prospectus and to deliver a prospectus 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 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 the prospectus that is part of the shelf
registration statement 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 the prospectus 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 the prospectus within ten
business days after our last suspension.

    Upon recept of such notice, holders of the HIGH TIDES are required to cease
disposing of securities under the prospectus until the holders either receive
copies of a prospectus supplement or are advised in writing by us or the trust
that offers and sales of the securities and use of the prospectus 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 registration statement.

    If either (1) within 75 days of the original issuance of the HIGH TIDES we
have not filed the shelf registration statement, (2) within 150 days of the
original issuance of the HIGH TIDES the shelf registration statement has not
been declared effective by the SEC, or (3) a shelf registration statement is
declared effective by the SEC and 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 agreement, then
additional interest, referred to in this offering circular 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

                                      159
<PAGE>
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 agreement.

    The registration agreement will be governed by, and construed in accordance
with, the laws of the State of New York. This summary of the registration
agreement is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration agreement. A form of the
registration agreement is available upon request.

                                      160
<PAGE>
                              PLAN OF DISTRIBUTION

    Subject to the terms and conditions set forth in the purchase agreement
dated February 3, 2000, we and the trust have agreed that the trust will sell to
Credit Suisse First Boston Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation, who will be the initial purchasers, the following number
of HIGH TIDES:

<TABLE>
<CAPTION>
                                                                    NUMBER OF
                     INITIAL PURCHASER                             HIGH TIDES
                     -----------------                             ----------
<S>                                                                <C>
Credit Suisse First Boston Corporation......................        3,200,000
Donaldson, Lufkin & Jenrette Securities Corporation.........          800,000
                                                                    ---------

        Total...............................................        4,000,000
                                                                    =========
</TABLE>

    The purchase agreement provides that the initial purchasers of the HIGH
TIDES are obligated to purchase all of the HIGH TIDES, if any are purchased,
other than those HIGH TIDES covered by the over-allotment option described
below. The purchase agreement also provides that if an initial purchaser
defaults the purchase commitments of non-defaulting initial purchasers may be
increased or the offering may be terminated.

    The initial purchasers propose to offer the HIGH TIDES initially at the
offering price on the cover page of this offering circular. After the initial
offering, the price to investors may be changed.

    In view of the fact that the proceeds of the sale of the HIGH TIDES will be
used by the trust to purchase the debentures, the purchase agreement provides
that we will pay as compensation to the initial purchasers a commission of
$1.50 per each of the HIGH TIDES.

    We and the trust have granted to the initial purchasers a 30-day option to
purchase, on a pro rata basis, up to 1,000,000 additional HIGH TIDES at the
initial offering price. The option may be exercised for any reason.

    The HIGH TIDES have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except to qualified institutional buyers in reliance on Rule
144A under the Securities Act. Resales of the HIGH TIDES are restricted as
described in the Transfer Restrictions section of this offering circular.

    We along with the trust, our directors and officers have agreed that we will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the SEC a registration statement under the Securities
Act relating to:

       - any trust certificates or other securities of the trust;

       - any preferred stock or any of our other securities that are
         substantially similar to the HIGH TIDES or the debentures;

       - any of our shares of common stock or any of our other capital stock; or

       - any other securities that are convertible into, or exercisable for,
         trust certificates or other securities of the trust, or preferred stock
         or substantially similar securities of ours, or our common stock or
         other capital stock of ours,

or publicly disclose the intention to make any offer, sale, pledge, disposition
or filing, for a period of 90 days after the date of this offering circular
without the prior written consent of Credit Suisse First Boston Corporation.
However, this lock-up agreement will not apply to shares of our common stock
issued to holders of Advanced Communication Systems common stock (certain of
whom are subject to affiliate agreements relating to the resale of our
securities) in connection with our acquisition of that

                                      161
<PAGE>
company and will not prevent (1) the issuance or delivery of securities upon
conversion, exchange or exercise of any of our other securities outstanding on
the date of this offering circular, (2) our capital stock issued under benefit
or incentive plans maintained for our officers, directors or employees or
(3) our common stock or other securities issued by us in connection with
acquisitions (provided that the recipients of such common stock or other
securities are bound by the foregoing restrictions) and (4) the registration of
securities pursuant to a demand made under registration rights agreements
existing on the date of this offering circular or upon the inclusion of such
securities on the registration statement for the HIGH TIDES pursuant to rights
granted under such registration rights agreements.

    Both we and the trust have agreed to indemnify the initial purchasers
against liabilities or contribute to payments which the initial purchasers may
be required to make in that respect.

    The HIGH TIDES are new securities for which there currently is no market.
The HIGH TIDES are expected to be made eligible for trading in PORTAL. The
initial purchasers have advised us and the trust that they presently intend to
make a market in the HIGH TIDES as permitted by applicable law. However, the
initial purchasers are not obligated to make a market in the HIGH TIDES and any
market-making may be discontinued at any time in their sole discretion. In
addition, any market-making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the pendency
of the shelf registration statement. Accordingly, no assurance can be given as
to the development or liquidity of any market for the HIGH TIDES.

    The initial purchasers may engage in over-allotment, stabilizing
transactions, covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act.

       - Over-allotment involves sales in excess of the offering size, which
         creates a short position for the initial purchasers.

       - Stabilizing transactions permit bids to purchase the underlying
         security so long as the stabilizing bids do not exceed a specified
         maximum.

       - Covering transactions involve purchases of HIGH TIDES in the open
         market after the distribution has been completed in order to cover
         short positions.

       - Penalty bids permit the initial purchasers to reclaim a selling
         concession from a broker-dealer when the HIGH TIDES originally sold by
         the broker-dealer are purchased in a stabilizing or covering
         transaction to cover short positions.

These stabilizing transactions, covering transactions and penalty bids may cause
the price of the HIGH TIDES to be higher than it would otherwise be in the
absence of the transactions. These transactions, if commenced, may be
discontinued at any time.

    From time to time, certain of the initial purchasers and their affiliates
have provided advisory and investment banking services to us, for which
customary compensation has been received. It is expected that such initial
purchasers will continue to provide such services to us in the future.

                                      162
<PAGE>
                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

    The distribution of the HIGH TIDES in Canada is being made only on a private
placement basis exempt from the requirement that we and the trust prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the HIGH TIDES are effected. Accordingly, any resale of the HIGH
TIDES in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the HIGH TIDES.

REPRESENTATIONS OF PURCHASERS

    Each purchaser of HIGH TIDES in Canada who receives a purchase confirmation
will be deemed to represent to us, the trust and the dealer from whom such
purchase confirmation is received that (1) the purchaser is entitled under
applicable provincial securities laws to purchase such HIGH TIDES without the
benefit of a prospectus qualified under such securities laws, (2) where required
by law, that the purchaser is purchasing as principal and not as agent and
(3) the purchaser has reviewed the text above under "Resale Restrictions."

RIGHTS OF ACTION (ONTARIO PURCHASERS)

    The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws. Following a decision of the U.S. Supreme
Court, it is possible that Ontario purchasers will not be able to rely upon the
remedies set out in Section 12(a)(2) of the United States Securities Act of 1933
where securities are being offered under a U.S. private placement memorandum
such as this document.

ENFORCEMENT OF LEGAL RIGHTS

    All the trust's trustees and our directors and officers as well as the
experts named herein may be located outside of Canada and, as a result, it may
not be possible for Canadian purchasers to effect service of process within
Canada upon us, the trust or these persons. All or a substantial portion of our
assets, the assets of the trust and the assets of these persons may be located
outside of Canada and, as a result, it may not be possible to satisfy a judgment
against us, the trust or these persons in Canada or to enforce a judgment
obtained in Canadian courts against us, the trust or these persons outside of
Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

    A purchaser of HIGH TIDES to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any HIGH
TIDES acquired by the purchaser pursuant to this offering. The report must be in
the form attached to British Columbia Securities Commission Blanket Order (BOR)
#95/17, a copy of which may be obtained from us. Only one report must be filed
in respect of HIGH TIDES acquired on the same date and under the same prospectus
exemption.

                                      163
<PAGE>
TAXATION AND ELIGIBILITY FOR INVESTMENT

    Canadian purchasers of HIGH TIDES should consult their own legal and tax
advisers with respect to the tax consequences of an investment in the shares of
HIGH TIDES in their particular circumstances and with respect to the eligibility
of the shares of HIGH TIDES for investment by the purchaser under relevant
Canadian legislation.

                             TRANSFER RESTRICTIONS

    The securities offered by this offering circular have not been registered
under the Securities Act and may be offered or sold only to qualified
institutional buyers in reliance on the exemption from the registration
requirements of the Securities Act provided by Rule 144A.

    Each purchaser of the HIGH TIDES will be deemed to have represented and
agreed (terms used in this paragraph that are defined in Rule 144A under the
Securities Act are used herein as defined therein) that:

    (1) the purchaser (i) is a qualified institutional buyer; (ii) the purchaser
       is aware that the sale to it is being made in reliance on Rule 144A and
       (iii) acquiring the HIGH TIDES for its own account or for the account of
       a qualified institutional buyer.

    (2) the purchaser understands that the HIGH TIDES are being offered in a
       transaction not involving any public offering in the United States within
       the meaning of the Securities Act, that the securities have not been and,
       except as described in the offering circular, will not be registered
       under the Securities Act and that (A) if in the future it decides to
       offer, resell, pledge or otherwise transfer any of the securities, the
       securities may be offered, resold, pledged or otherwise transferred only
       (i) to a person whom the seller reasonably believes is a qualified
       institutional buyer in a transaction meeting the requirements of
       Rule 144A, (ii) pursuant to an exemption from registration under the
       Securities Act provided by Rule 144 (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 that (B) the purchaser will, and each subsequent holder is required
       to, notify any subsequent purchaser, pledgee or transferee of the
       securities from it of the resale restrictions referred to in (A) above.

    (3) the purchaser understands that the HIGH TIDES will, until the expiration
       of the holding period with respect to the HIGH TIDES set forth in clause
       (k) of Rule 144 promulgated under the Securities Act, unless otherwise
       agreed by us, the trust and the holder thereof, bear a legend
       substantially to the following effect:

        "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 OR
    OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
    EXEMPTION THEREFROM. EACH PURCHASER 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 ISSUER AND
    TITAN THAT (A) THIS SECURITY AND ANY CONVERTIBLE SENIOR SUBORDINATED
    DEBENTURES ISSUABLE UPON EXCHANGE THEREFOR AND

                                      164
<PAGE>
    COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD,
    PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) INSIDE THE UNITED STATES 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) the HIGH TIDES may not be sold or transferred to, and the purchaser is
       not acquiring the HIGH TIDES for or on behalf of, and will not transfer
       the HIGH TIDES to, any pension or welfare plan as defined in Section 3 of
       the Employee Retirement Income Security Act of 1974, as amended
       ("ERISA"), except that such purchase for or on behalf of a pension or
       welfare plan shall be permitted:

        (i) to the extent such purchase is made by or on behalf of a bank
            collective investment fund maintained by the purchaser in which no
            plan (together with any other plans maintained by the same employer
            or employee organization) has an interest in excess of 10% of the
            total assets in such collective investment fund, and the other
            applicable conditions of Prohibited Transaction Class
            Exemption 91-38 issued by the Department of Labor are satisfied;

        (ii) to the extent such purchase is made by or on behalf of an insurance
             company pooled separate account maintained by the purchaser in
             which, at any time while the HIGH TIDES are outstanding, no plan
             (together with any other plans maintained by the same employer or
             employee organization) has an interest in excess of 10% of the
             total of all assets in such pooled separate account, and the other
             applicable conditions of Prohibited Transaction Class
             Exemption 90-1 issued by the Department of Labor are satisfied;

       (iii) to the extent such purchase is made on behalf of a plan by (A) an
             investment adviser registered under the Investment Advisers Act of
             1940, as amended (the "1940 Act"), that had as of the last day of
             its most recent fiscal year total assets under its management and
             control in excess of $50.0 million and had stockholders' or
             partners' equity in excess of $750,000, as shown in its most recent
             balance sheet prepared in accordance with generally accepted
             accounting principles, or (B) a bank as defined in
             Section 202(a)(2) of the 1940 Act with equity capital in excess of
             $1.0 million as of the last day of its most recent fiscal year, or
             (C) an insurance company which is qualified under the laws of more
             than one state to manage, acquire or dispose of any assets of a
             pension or welfare plan, which insurance company has as of the last
             of its most recent fiscal year, net worth in excess of
             $1.0 million and which is subject to supervision and examination by
             a State authority having supervision over insurance companies and,
             in any case, such investment adviser, bank or insurance company is
             otherwise a qualified professional asset manager, as such term is
             used in Prohibited Transaction Class Exemption 84-14 issued by the
             Department of Labor, and the assets of such plan when combined with
             the assets of other plans established or maintained by the same
             employer (or affiliate thereof) or employee organization and
             managed by such investment adviser, bank or insurance company, do
             not represent more than 20% of the total client assets managed by
             such investment adviser,

                                      165
<PAGE>
             bank or insurance company at the time of the transaction, and the
             other applicable conditions of such exemption are otherwise
             satisfied;

        (iv) to the extent such plan is a governmental plan (as defined in
             Section 3 of ERISA) which is not subject to the provisions of
             Title I of ERISA or Section 401 of the Internal Revenue Code of
             1986, as amended (the "Code");

        (v) to the extent such purchase is made by or on behalf of an insurance
            company using the assets of its general account, the reserves and
            liabilities for the general account contracts held by or on behalf
            of any plan, together with any other plans maintained by the same
            employer (or its affiliates) or employee organization, do not exceed
            10% of the total reserves and liabilities of the insurance company
            general account (exclusive of separate account liabilities), plus
            surplus as set forth in the National Association of Insurance
            Commissioners Annual Statement filed with the state of domicile of
            the insurer, in accordance with Prohibited Transaction Class
            Exemption 95-60, and the other applicable conditions of such
            exemption and otherwise satisfied;

        (vi) to the extent such purchase is made by an in-house asset manager
             within the meaning of Part IV(a) of Prohibited Transaction Class
             Exemption 96-23, such manager has made or properly authorized the
             decision for such plan to purchase HIGH TIDES, under circumstances
             such that Prohibited Transaction Class Exemption 96-23 is
             applicable to the purchase and holding of such Notes; or

       (vii) to the extent such purchase will not otherwise give rise to a
             transaction described in Section 406 or Section 4975(c)(1) of the
             Code for which a statutory or administrative exemption is
             available.

                                 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. Cooley Godward LLP will pass upon the validity of the
debentures, the guarantee and the common stock issuable upon conversion of the
HIGH TIDES. Skadden, Arps, Slate, Meagher & Flom LLP will pass upon certain
matters on behalf of the initial purchasers.

                                      166
<PAGE>
                         INDEPENDENT PUBLIC ACCOUNTANTS

    The consolidated financial statements of The Titan Corporation as of
December 31, 1997 and 1998 and for each of the three years in the period ended
December 31, 1998, 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, included (or incorporated by reference) in
this offering circular, have been audited by Arthur Andersen LLP, independent
public accountants, as stated in their reports appearing or incorporated by
reference herein.

    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, included in this offering circular have
been audited by Arthur Andersen LLP, independent public accountants, as stated
in their reports appearing herein.

    The financial statements of Assist Cornerstone Technologies, Inc. as of
December 31, 1998 and 1997, and for each of the three years in the period ended
December 31, 1998, incorporated by reference in this offering circular have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon incorporated by reference herein, and are incorporated by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.

    The consolidated financial statements of SFG Technologies, Inc. as of
December 31, 1998 and April 30, 1998 and for the eight months ended
December 31, 1998 and for the years ended April 30, 1996, 1997 and 1998,
incorporated by reference in this offering circular have been audited by KPMG
LLP, independent auditors, as indicated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of such
firm as experts in accounting and auditing.

                                      167
<PAGE>
        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
                                                                                                         PAGE
                                                                                                     -------------
<S>                                                                                                  <C>
TITAN CORPORATION

Report of Independent Public Accountants...........................................................       F-2

Financial Statements:

  Consolidated Statements of Operations............................................................       F-3

  Consolidated Balance Sheets......................................................................       F-4

  Consolidated Statements of Cash Flows............................................................       F-5

  Consolidated Statements of Stockholders' Equity..................................................       F-6

  Notes to Consolidated Financial Statements.......................................................   F-7 - F-28

ADVANCED COMMUNICATION SYSTEMS CORPORATION

Report of Independent Public Accountants...........................................................      F-29

Consolidated Balance Sheets as of September 30, 1999 and 1998......................................      F-30

Consolidated Statements of Operations for the Years Ended September 30, 1999, 1998 and 1997........      F-31

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended September 30, 1999,
  1998 and 1997....................................................................................      F-32

Consolidated Statements of Cash Flows for the Years Ended September 30, 1999, 1998 and 1997........      F-33

Notes to Consolidated Financial Statements.........................................................   F-34 - F-50

SCHEDULE:

Schedule II -- Valuation and Qualifying Accounts...................................................      F-51
</TABLE>

                                      F-1
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Titan Corporation:

    We have audited the accompanying consolidated balance sheets of The Titan
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Titan Corporation and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

                                          ARTHUR ANDERSEN LLP

San Diego, California
February 15, 1999 (except with respect
to the matter discussed in Notes 1 and
5 for which the date is March 31, 1999)

                                      F-2
<PAGE>
                             THE TITAN CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                     FOR THE YEARS ENDED
                                                                                         DECEMBER 31,
                                                                             ------------------------------------
                                                                                1998         1997         1996
                                                                             -----------  -----------  ----------
<S>                                                                          <C>          <C>          <C>
Revenues...................................................................  $   303,428  $   275,923  $  245,976
                                                                             -----------  -----------  ----------
Costs and expenses:
  Cost of revenues.........................................................      232,041      216,553     192,657
  Selling, general and administrative expense..............................       37,553       36,731      36,226
  Research and development expense.........................................        5,590        7,466       5,023
  Special acquisition related charges and other............................        9,891        6,600          --
                                                                             -----------  -----------  ----------
  Total costs and expenses.................................................      285,075      267,350     233,906
                                                                             -----------  -----------  ----------
Operating profit...........................................................       18,353        8,573      12,070
Interest expense...........................................................       (7,377)      (6,643)     (4,764)
Interest income............................................................          392          872         639
                                                                             -----------  -----------  ----------
Income from continuing operations before income taxes and cumulative effect
  of change in accounting principle........................................       11,368        2,802       7,945
Income tax provision.......................................................        4,155        4,184       2,603
                                                                             -----------  -----------  ----------
Income (loss) from continuing operations before cumulative effect of change
  in accounting principle..................................................        7,213       (1,382)      5,342
Cumulative effect of change in accounting principle, net of taxes..........      (19,474)          --          --
Loss from discontinued operations, net of taxes............................       (7,444)     (17,930)     (6,326)
                                                                             -----------  -----------  ----------
Net loss...................................................................      (19,705)     (19,312)       (984)
Dividend requirements on preferred stock...................................         (778)        (875)       (803)
                                                                             -----------  -----------  ----------
Net loss applicable to common stock........................................  $   (20,483) $   (20,187) $   (1,787)
                                                                             ===========  ===========  ==========
Basic earnings (loss) per share:
  Income (loss) from continuing operations.................................  $       .18  $      (.07) $      .14
  Cumulative effect of change in accounting principle......................         (.56)          --          --
  Loss from discontinued operations........................................         (.21)        (.54)       (.20)
                                                                             -----------  -----------  ----------
  Net loss.................................................................         (.59)        (.61)       (.06)
                                                                             ===========  ===========  ==========
  Weighted average shares..................................................       34,895       33,094      32,068
                                                                             ===========  ===========  ==========
Diluted earnings (loss) per share:
  Income (loss) from continuing operations.................................  $       .18  $      (.07) $      .14
  Cumulative effect of change in accounting principle......................         (.54)          --          --
  Loss from discontinued operations........................................         (.21)        (.54)       (.20)
                                                                             -----------  -----------  ----------
  Net loss.................................................................  $      (.57) $      (.61) $     (.06)
                                                                             ===========  ===========  ==========
  Weighted average shares..................................................       36,177       33,094      32,445
                                                                             ===========  ===========  ==========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-3
<PAGE>
                             THE TITAN CORPORATION

                          CONSOLIDATED BALANCE SHEETS

              (IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                AS OF DECEMBER 31,
                                                                                               --------------------
                                                                                                 1998       1997
                                                                                               ---------  ---------
<S>                                                                                            <C>        <C>
                                                      ASSETS
Current Assets:
  Cash and cash equivalents..................................................................  $  11,079  $  11,383
  Investments................................................................................         --      4,499
  Accounts receivable--net...................................................................     88,068     72,653
  Inventories................................................................................      8,646     18,826
  Net assets of discontinued operations......................................................         --      3,930
  Prepaid expenses and other.................................................................      2,176      2,743
  Deferred income taxes......................................................................     10,978      8,298
                                                                                               ---------  ---------
      Total current assets...................................................................    120,947    122,332
Property and equipment--net..................................................................     25,702     27,666
Goodwill--net of accumulated amortization of $7,620 and $6,078...............................     38,694     21,274
Other assets--net............................................................................      6,579      8,756
Net assets of discontinued operations........................................................        645      3,675
                                                                                               ---------  ---------
Total assets.................................................................................  $ 192,567  $ 183,703
                                                                                               =========  =========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Lines of credit............................................................................  $     368  $  23,130
  Accounts payable...........................................................................     21,335     16,086
  Acquisition debt...........................................................................      3,000         --
  Current portion of long-term debt..........................................................      1,581      1,505
  Accrued compensation and benefits..........................................................     12,682     14,300
  Other accrued liabilities..................................................................     11,659     10,522
  Net liabilities of discontinued operations.................................................      5,872         --
                                                                                               ---------  ---------
      Total current liabilities..............................................................     56,497     65,543
Line of credit...............................................................................     39,632         --
Long-term debt...............................................................................     30,659     37,565
Other non-current liabilities................................................................     15,068     12,148
Commitments and contingencies

Series B cumulative convertible redeemable preferred stock, $3,000 liquidation preference, 6%
  cumulative annual dividend, -0- and 500,000 shares issued and outstanding..................         --      3,000
Stockholders' Equity:
  Preferred stock: $1 par value, authorized 2,500,000 shares:
    Cumulative convertible, $13,897 liquidation preference:
      694,872 shares issued and outstanding..................................................        695        695
    Series A junior participating, authorized 250,000 shares:
      None issued............................................................................         --         --
  Common stock: $.01 par value, authorized 100,000,000 shares, issued and outstanding:
    36,650,460 and 34,776,764 shares.........................................................        367        348
Capital in excess of par value...............................................................     75,157     69,332
Retained earnings (deficit)..................................................................    (22,929)    (2,337)
Treasury stock (962,530 and 971,894 shares), at cost.........................................     (2,579)    (2,591)
                                                                                               ---------  ---------
      Total stockholders' equity.............................................................     50,711     65,447
                                                                                               ---------  ---------
Total liabilities and stockholders' equity...................................................  $ 192,567  $ 183,703
                                                                                               =========  =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4
<PAGE>
                             THE TITAN CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                            FOR THE YEARS ENDED
                                                                                               DECEMBER 31,
                                                                                      -------------------------------
                                                                                        1998       1997       1996
                                                                                      ---------  ---------  ---------
<S>                                                                                   <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations............................................  $   7,213  $  (1,382) $   5,342
Adjustments to reconcile income (loss) from continuing operations to net cash
  provided by (used for) continuing operations:
      Depreciation and amortization.................................................      7,126      9,213      8,044
      Deferred income taxes and other...............................................       (498)     1,926     (1,655)
      Write-off of assets, investments and environmental accrual....................         --      9,846         --
      Poolings of interests.........................................................       (109)       695         --
      Change in operating assets and liabilities, net of effects from businesses
       sold and acquired:
            Accounts receivable.....................................................    (12,427)    (4,102)     7,989
            Inventories.............................................................     (2,290)    (1,047)    (6,069)
            Prepaid expenses and other assets.......................................      1,081       (879)       594
            Accounts payable........................................................      3,705        874     (3,467)
            Income taxes payable....................................................         --         --       (653)
            Accrued compensation and benefits.......................................     (2,298)     1,531     (1,587)
            Restructuring activities................................................         --       (815)    (4,099)
            Other liabilities.......................................................     (1,635)    (6,165)      (684)
                                                                                      ---------  ---------  ---------
Net cash provided by (used for) continuing operations...............................       (132)     9,695      3,755
                                                                                      ---------  ---------  ---------
Loss from discontinued operations...................................................     (7,444)   (17,930)    (6,326)
Changes in net assets and liabilities of discontinued operations....................      5,630      7,426     (2,639)
                                                                                      ---------  ---------  ---------
Net cash used for discontinued operations...........................................     (1,814)   (10,504)    (8,965)
                                                                                      ---------  ---------  ---------
Net cash used for operating activities..............................................     (1,946)      (809)    (5,210)
                                                                                      ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................................     (4,038)    (6,647)    (6,638)
Proceeds, net of transaction costs, from sale of businesses.........................         --        200      2,492
Payment for purchase of businesses, net of cash acquired............................    (11,679)        --     (2,679)
Proceeds from sale of investments...................................................      4,499     19,199      5,000
Purchase of investments.............................................................         --    (15,410)    (9,888)
Other...............................................................................        146        235       (283)
                                                                                      ---------  ---------  ---------
Net cash used for investing activities..............................................    (11,072)    (2,423)   (11,996)
                                                                                      ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to debt...................................................................     16,870     12,671     37,762
Retirements of debt.................................................................     (1,447)    (3,137)   (21,909)
Redemption of Series B Preferred Stock..............................................     (3,000)        --         --
Deferred debt issuance costs........................................................         --         --     (2,035)
Proceeds from stock issuances.......................................................      1,214        708        433
Purchase of stock from benefit plan.................................................         --       (471)        --
Dividends paid......................................................................       (778)      (875)      (803)
Other...............................................................................       (145)        --         --
                                                                                      ---------  ---------  ---------
Net cash provided by financing activities...........................................     12,714      8,896     13,448
                                                                                      ---------  ---------  ---------
Net increase (decrease) in cash and cash equivalents................................       (304)     5,664     (3,758)
Cash and cash equivalents at beginning of year......................................     11,383      5,719      9,477
                                                                                      ---------  ---------  ---------
Cash and cash equivalents at end of year............................................  $  11,079  $  11,383  $   5,719
                                                                                      =========  =========  =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5
<PAGE>
                             THE TITAN CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                    CUMULATIVE                         CAPITAL
                                                    CONVERTIBLE                       IN EXCESS    RETAINED
                                                     PREFERRED                         OF PAR     EARNINGS/   TREASURY
                                                       STOCK        COMMON STOCK        VALUE     (DEFICIT)     STOCK      TOTAL
                                                   -------------  -----------------  -----------  ----------  ---------  ---------
<S>                                                <C>            <C>                <C>          <C>         <C>        <C>
Balances at December 31, 1995....................    $     695        $     317       $  54,933   $   19,270  $  (3,524) $  71,691

  Stock issued for acquisition...................           --               18          10,659           --         --     10,677
  Other stock issued.............................           --                1             161           --         --        162
  Exercise of stock options and other............           --                3             349          (16)       (62)       274
  Shares contributed to employee benefit plans...           --               --             827         (261)       626      1,192
  Income tax benefit from employee stock
    transactions.................................           --               --              70           --         --         70
  Dividends on preferred stock--
    Cumulative Convertible, $1.00 per share......           --               --              --         (695)        --       (695)
    Series B, 6% annual..........................           --               --              --         (108)        --       (108)
  Net loss.......................................           --               --              --         (984)        --       (984)
                                                     ---------        ---------       ---------   ----------  ---------  ---------
Balances at December 31, 1996....................          695              339          66,999       17,206     (2,960)    82,279
  Conversion of subordinated debt................           --                5           1,597           --         --      1,602
  Exercise of stock options and other............           --                2             726          (51)        37        714
  Stock issued for acquisition...................           --                2             503           --         --        505
  Shares contributed to employee benefit plans...           --               --              12           --        332        344
  Shares purchased from benefit plan.............           --               --            (545)          --         --       (545)
  Income tax benefit from employee stock
    transactions.................................           --               --              40           --         --         40
  Pooling of interests...........................           --               --              --          695         --        695
  Dividends on preferred stock--
    Cumulative Convertible, $1.00 per share......           --               --              --         (695)        --       (695)
    Series B, 6% annual..........................           --               --              --         (180)        --       (180)
  Net loss.......................................           --               --              --      (19,312)        --    (19,312)
                                                     ---------        ---------       ---------   ----------  ---------  ---------
Balances at December 31, 1997....................          695              348          69,332       (2,337)    (2,591)    65,447
  Conversion of subordinated debt................           --               15           5,368           --         --      5,383
  Stock repurchase...............................           --               (1)           (752)          --         --       (753)
  Exercise of stock options and other............           --                4             848           --         12        864
  Conversion of warrants.........................           --                1             349           --         --        350
  Poolings of interests..........................           --               --              --         (109)        --       (109)
  Shares contributed to employee benefit plans...           --               --            (100)          --         --       (100)
  Income tax benefit from employee stock
    transactions.................................           --               --             112           --         --        112
  Dividends on preferred stock--
    Cumulative Convertible, $1.00 per share......           --               --              --         (695)        --       (695)
    Series B, 6% annual..........................           --               --              --          (83)        --        (83)
  Net loss.......................................           --               --              --      (19,705)        --    (19,705)
                                                     ---------        ---------       ---------   ----------  ---------  ---------
Balances at December 31, 1998....................    $     695        $     367       $  75,157   $  (22,929) $  (2,579) $  50,711
                                                     =========        =========       =========   ==========  =========  =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<PAGE>
                             THE TITAN CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    NATURE OF OPERATIONS.  The Titan Corporation (the "Company" or "Titan")
provides information technology and electronic systems and services to
government and commercial customers. The Company groups its businesses into four
core business segments--Information Technologies, Software Systems, Medical
Sterilization and Food Pasteurization, and Communications Systems--and a fifth
business segment, Emerging Technologies and Businesses. The Company provides
engineering, technical, management and consulting services in the areas of
national security, software systems, communication systems, information systems,
threat simulation/training systems, electronic control systems, advanced
research and development, and medical products sterilization and food
pasteurization. The Company also develops, designs, manufactures and markets
satellite communications subsystems, digital imaging products, electro-optical
systems, and pulsed power products including linear accelerators.

    The Company is involved in a number of start-up ventures, most notably the
commercial satellite communications business in Titan's Communications Systems
segment. The Company believes that the primary source of revenues for this
business will be international customers in developing countries, primarily
within Asia, Africa and South America.

    PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include
the accounts of Titan and its subsidiaries. All significant intercompany
transactions and balances have been eliminated. The accompanying consolidated
financial statements have been restated to reflect four acquisitions in 1998
that have been accounted for as poolings of interests (see Note 2). From time to
time, the Company makes investments in joint ventures which primarily involve
international locations and operations. Management evaluates its investment in
each joint venture on an individual basis for purposes of determining whether or
not consolidation is appropriate. Investments in such ventures are generally
consolidated in instances where the Company retains control through
decision-making ability and a greater than 50% ownership interest. In the
absence of such factors, the Company generally accounts for these investments
under the equity method.

    USE OF ESTIMATES.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

    REVENUE RECOGNITION.  A majority of the Company's revenue, both government
and commercial, is derived from products manufactured and services performed
under cost-reimbursement, time-and-materials, and fixed-price contracts wherein
revenues are generally recognized as services are performed, using the
percentage-of-completion method, which includes revenues recognized as units are
delivered. Total estimated costs are based on management's assessment of costs
to complete the project based upon evaluation of the level of work achieved and
costs expended to date. Estimated contract losses are fully charged to
operations when identified.

    CASH EQUIVALENTS.  All highly liquid investments purchased with an original
maturity of three months or less are classified as cash equivalents.

                                      F-7
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    INVESTMENTS.  The Company does not invest in securities as its primary
business and does not maintain a trading account. Occasionally, however, the
Company purchases financial instruments with maturities greater than three
months from the date of acquisition, principally investment grade commercial
paper and U.S. Treasury obligations. Such securities are classified as
"available for sale" as required by Statement of Financial Accounting Standards
No. 115 ("SFAS 115") "Accounting for Certain Investments in Debt and Equity
Securities." As of December 31, 1998, the Company has no such investments. As of
December 31, 1997, all such investment securities owned by the Company matured
in one year or less and were carried at their current market value, which
approximated their cost, as required by SFAS 115.

    UNBILLED ACCOUNTS RECEIVABLE.  Unbilled accounts receivable include
work-in-process which will be billed in accordance with contract terms and
delivery schedules, as well as amounts billable upon final execution of
contracts, contract completion, milestones or completion of rate negotiations.
Generally, unbilled accounts receivable are expected to be collected within one
year. Payments to the Company for performance on certain U.S. Government
contracts are subject to audit by the Defense Contract Audit Agency. Revenues
have been recorded at amounts expected to be realized upon final settlement.

    CONCENTRATION OF CREDIT RISK.  As the Company expands its business into
international markets and developing countries, certain accounts receivable may
be exposed to credit risk due to political and economic instability in these
areas. To mitigate credit risk in foreign countries, the Company generally
denominates its foreign contracts in U.S. dollars and requires payment primarily
in the form of stand-by letters of credit, advance deposits, or wire transfers,
prior to shipment.

    INVENTORIES.  Inventories include the cost of material, labor and overhead,
and are stated at the lower of cost, determined on the first-in, first-out
(FIFO) and weighted average methods, or market. The Company periodically
evaluates its on-hand stock and makes appropriate disposition of any stock
deemed excess or obsolete.

    PROPERTY AND EQUIPMENT.  Property and equipment are stated at cost.
Depreciation is provided using the straight-line method, with estimated useful
lives of 25 to 40 years for buildings, 2 to 40 years for leasehold improvements
and 3 to 10 years for machinery and equipment and furniture and fixtures.
Certain machinery and equipment in the Company's medical sterilization business
is depreciated based on units of production.

    GOODWILL.  The excess of the cost over the fair value of net assets of
purchased businesses ("goodwill") is amortized on a straight-line basis over
varying lives ranging from 5 to 30 years. The Company periodically re-evaluates
the original assumptions and rationale utilized in the establishment of the
carrying value and estimated lives of its goodwill. The criteria used for these
evaluations include management's estimate of the asset's continuing ability to
generate positive income from operations and positive cash flow in future
periods as well as the strategic significance of the intangible asset to the
Company's business objectives.

    IMPAIRMENT OF LONG-LIVED ASSETS.  Periodically, the Company reviews for
possible impairment its long-lived assets and certain identifiable intangibles
to be held and used. Whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be fully recoverable, asset values are
adjusted accordingly.

                                      F-8
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    STOCK-BASED COMPENSATION.  The Company has elected to adopt the disclosure
only provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). Accordingly, the Company
will continue to account for its stock based compensation plans under the
provisions of APB No. 25.

    INCOME TAXES.  The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which requires the use of the liability method of accounting for deferred
income taxes. Under this method, deferred income taxes are recorded to reflect
the tax consequences on future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each year-end.
If it is more likely than not that some portion or all of a deferred tax asset
will not be realized, a valuation allowance is recognized.

    PER SHARE INFORMATION.  The Company computes earnings per share based on the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128").

                                      F-9
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    The following data summarize information relating to the per share
computations for continuing operations before the cumulative effect of a change
in accounting principle:

<TABLE>
<CAPTION>
                                                                            FOR THE YEAR ENDED DECEMBER 31, 1998
                                                                       ----------------------------------------------
                                                                            INCOME           SHARES        PER-SHARE
                                                                         (NUMERATOR)      (DENOMINATOR)     AMOUNTS
                                                                       ----------------  ---------------  -----------
<S>                                                                    <C>               <C>              <C>
Income from continuing operations....................................  $          7,213
Less preferred stock dividends.......................................              (778)
                                                                       ----------------     ---------      ---------
Basic EPS:
  Income from continuing operations available to common
    stockholders.....................................................             6,435        34,895      $    0.18

Effect of dilutive securities: Stock options.........................                --         1,282          (0.00)
                                                                       ----------------     ---------      ---------

Diluted EPS:
  Income from continuing operations available to common stockholders
    plus assumed conversions.........................................  $          6,435        36,177      $    0.18
                                                                       ================     =========      =========
</TABLE>

<TABLE>
<CAPTION>
                                                                            FOR THE YEAR ENDED DECEMBER 31, 1997
                                                                       ----------------------------------------------
                                                                            INCOME           SHARES        PER-SHARE
                                                                         (NUMERATOR)      (DENOMINATOR)     AMOUNTS
                                                                       ----------------  ---------------  -----------
<S>                                                                    <C>               <C>              <C>
Loss from continuing operations......................................  $         (1,382)
Less preferred stock dividends.......................................              (875)
                                                                       ----------------     ---------      ---------
Basic EPS:
  Loss from continuing operations available to common stockholders...  $         (2,257)       33,094      $   (0.07)
                                                                       ================     =========      =========
Diluted EPS:.........................................................                  Same as basic
</TABLE>

<TABLE>
<CAPTION>
                                                                            FOR THE YEAR ENDED DECEMBER 31, 1996
                                                                       ----------------------------------------------
                                                                            INCOME           SHARES        PER-SHARE
                                                                         (NUMERATOR)      (DENOMINATOR)     AMOUNTS
                                                                       ----------------  ---------------  -----------
<S>                                                                    <C>               <C>              <C>
Income from continuing operations....................................  $          5,342
Less preferred stock dividends.......................................              (803)
                                                                       ----------------     ---------      ---------
Basic EPS:
  Income from continuing operations available to common
    stockholders.....................................................             4,539        32,068      $    0.14

Effect of dilutive securities: Stock options.........................                --           377          (0.00)
                                                                       ----------------     ---------      ---------
Diluted EPS:
  Income from continuing operations available to common stockholders
    plus assumed conversions.........................................  $          4,539        32,445      $    0.14
                                                                       ================     =========      =========
</TABLE>

                                      F-10
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    In 1998, options to purchase approximately 742,000 shares of common stock
were not included in the computation of diluted EPS, because the options'
exercise price was greater than the average market price of the common shares.
In 1998, 1997 and 1996, 463,268 shares of common stock that could result from
the conversion of cumulative convertible preferred stock, as well as common
shares that could result from the conversion of the Company's convertible
subordinated debentures and Series B cumulative convertible redeemable preferred
stock, were not included in the computation of diluted EPS, as the effect would
have been anti-dilutive on the results of continuing operations.

    COMPREHENSIVE INCOME.  Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). This statement establishes standards for reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements. The objective of the statement is to report a
measure of all changes in equity of an enterprise that result from transactions
and other economic events of the period other than transactions with owners. The
adoption of the accounting and disclosure provisions of SFAS 130 has had no
impact on the Company's financial statements, as comprehensive income is the
same as net income for all periods presented.

    BUSINESS SEGMENTS.  In December 1997, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS 131"). This statement establishes
standards for reporting and disclosure of operating segments on a basis
consistent with that of the management structure. As a result of adopting SFAS
131, in 1997, the Company restated its segments for all periods presented. On
March 31, 1999, the Company realigned certain operations among its business
segments to better position these operations for strategic transactions pursuant
to the Company's corporate strategy. As a result, the Company is reporting all
commercial satellite communications operating results in its Communications
Systems segment, and all defense information technologies and services operating
results are reported in its Information Technologies segment. This realignment
also conforms to the provisions of SFAS 131. All current and prior year segment
data presented in these financial statements have been restated to conform to
the 1999 realignement.

    NEW ACCOUNTING STANDARDS.  In 1998, the Company adopted Statement of
Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions
and Other Postretirement Benefits" ("SFAS 132"). This statement revises and
standardizes employers' disclosures about pension and other postretirement
benefit plans, but it does not change the measurement or recognition of those
plans. This statement further requires restatement of disclosure provisions for
earlier periods provided for comparative purposes. The adoption of SFAS 132 has
had no material impact on the Company's financial statements or related
disclosures thereto.

    In 1998, the Company adopted the provisions of AICPA Statement of Position
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP 98-1"). This statement provides guidance on accounting for
the costs of computer software developed or obtained for internal use and
identifies characteristics of internal-use software as well as assists in
determining when computer software is for internal use. The adoption had no
material impact on the Company's financial statements or related disclosure
thereto.

                                      F-11
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    In 1998, the Company adopted the provisions of AICPA Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). This
Statement provides guidance on the financial reporting of start-up and
organization costs and requires that such costs of start-up activities be
expensed as incurred. The Company adopted SOP 98-5 in the third quarter ended
September 30, 1998, recording a one-time, non-cash charge of $19,474. The charge
primarily represents previously capitalized start-up costs incurred in the
Company's discontinued broadband communications business and deferred
pre-contract costs as well as non-recurring engineering costs previously carried
in inventory in accordance with SOP 81-1 in the Company's Communications Systems
segment. The adoption of SOP 98-5 by the Company was recorded effective January
1, 1998 as a cumulative effect of change in accounting principle in the
Statement of Operations for the year ended December 31, 1998.

NOTE 2. MERGERS AND ACQUISITIONS

    On October 23, 1998, the Company consummated a merger with Delfin Systems
("Delfin") in a stock-for-stock transaction. Delfin provides systems engineering
and program management services, signal intelligence systems, and program
integration and high-end software. Titan issued approximately 3,628,000 shares
of Titan common stock in exchange for all the outstanding shares of Delfin
common stock and assumed Delfin stock options representing approximately 823,000
shares of Titan common stock, based on an exchange ratio of approximately .50
shares of Titan common stock for each share of Delfin common stock. The merger
constituted a tax-free reorganization and has been accounted for as a pooling of
interests.

    On August 24, 1998, the Company consummated a merger with VisiCom
Laboratories, Inc., ("VisiCom") in a stock-for-stock transaction. VisiCom
specializes in information technology solutions. Titan issued approximately
4,172,000 shares of common stock in exchange for all the outstanding shares of
VisiCom and assumed VisiCom's stock options representing approximately 593,000
shares of Titan common stock, based on an exchange ratio of approximately .45
shares of Titan common stock for each share of VisiCom's common stock. The
merger constituted a tax-free reorganization and has been accounted for as a
pooling of interests.

    On June 30, 1998 the Company consummated a merger with Horizons
Technology, Inc., ("Horizons") in a stock-for-stock transaction. Horizons is a
provider of systems engineering and program management services, computer
systems integration and high-end software. Titan issued approximately 3,200,000
shares of common stock in exchange for all the outstanding shares of Horizons
stock based on exchange ratios of approximately .37 and .82 shares of Titan
common stock for each share of Horizons' common stock and Horizons' preferred
stock, respectively. The merger constituted a tax-free reorganization and has
been accounted for as a pooling of interests.

    On February 27, 1998, the Company consummated a merger with DBA Systems,
Inc. ("DBA"), in a stock-for-stock transaction. DBA is a developer and
manufacturer of digital imaging products, electro-optical systems and threat
simulation/training systems whose products and systems are primarily used by the
defense and intelligence communities. Titan issued approximately 6,100,000
shares of common stock in exchange for all the outstanding shares of DBA stock
and assumed options representing approximately 441,000 shares of Titan common
stock based on an exchange ratio of approximately 1.37 shares of Titan's common
stock for each share of DBA stock. The merger constituted a tax-free
reorganization and has been accounted for as a pooling of interests.

                                      F-12
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)

    Effective January 1, 1998, Delfin's September 30, VisiCom's March 31,
Horizons' January 31 and DBA's June 30 fiscal year-ends have been changed to
coincide with Titan's year-end. Accordingly, the accompanying financial
statements presented herein have been restated to include the combined results
of operations, financial positions and cash flows of Delfin, VisiCom, Horizons
and DBA as if the mergers had occurred at the beginning of the periods
presented.

    The combining periods of Titan, Delfin, VisiCom, Horizons and DBA are as
follows:

<TABLE>
<CAPTION>
                                                   FISCAL YEARS 1997 AND 1996
                                   -----------------------------------------------------------
<S>                                <C>
Titan............................  Fiscal years ended December 1997 and 1996
Delfin...........................  Fiscal years ended September 1997 and 1996
VisiCom..........................  Fiscal years ended March 1998 and 1997
Horizons.........................  Fiscal years ended January 1998 and 1997
DBA..............................  Twelve months ended December 1997 and June 1996
</TABLE>

<TABLE>
<CAPTION>
                                                    FISCAL YEAR 1997 QUARTERLY PERIODS
                                             ------------------------------------------------
                                                Q1 97        Q2 97       Q3 97       Q4 97
                                             -----------  -----------  ---------  -----------
<S>                                          <C>          <C>          <C>        <C>
Titan......................................     March 97      June 97   Sept. 97     Dec. 97
Delfin.....................................     Dec. 96      March 97    June 97     Sept. 97
VisiCom....................................      June 97     Sept. 97   Dec. 97      March 98
Horizons...................................     April 97      July 97   Oct. 97      Jan. 98
DBA........................................     March 97      June 97   Sept. 97     Dec. 97
</TABLE>

    For the six months ended December 31, 1996, revenues of $11,724 and net
income of $695 were reported by DBA. Such amounts are not reflected in the
accompanying statements of operations as DBA's fiscal year ended June 30, 1997
was conformed to Titan's fiscal year ended December 31, 1997. DBA's six-month
1996 net income of $695 is reflected as a pooling adjustment in the accompanying
Statement of Stockholders' Equity for the year ended December 31, 1996. Other
adjustments to conform Delfin's, VisiCom's and Horizons' fiscal year-ends were
not significant and resulted in a net pooling adjustment of $(109) in 1998,
which is reflected in the accompanying Statement of Stockholders' Equity for the
year ended December 31, 1998.

                                      F-13
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)

    The separate and combined results of Titan, Delfin, VisiCom, Horizons and
DBA in prior years are as follows:

<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31, 1997
                                                          ------------------------------------
                                                                        INCOME
                                                                      (LOSS)FROM
                                                                      CONTINUING   NET INCOME
                                                           REVENUES   OPERATIONS     (LOSS)
                                                          ----------  -----------  -----------
<S>                                                       <C>         <C>          <C>
Titan...................................................  $  167,050  $     5,188   $   5,165
Delfin..................................................      26,534         (127)       (127)
VisiCom.................................................      31,360       (1,352)    (13,397)
Horizons................................................      26,281        1,640      (4,222)
DBA.....................................................      24,698       (6,731)     (6,731)
                                                          ----------  -----------   ---------
                                                          $  275,923  $    (1,382)  $ (19,312)
                                                          ==========  ===========   =========
</TABLE>

<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31, 1996
                                                          ------------------------------------
                                                                        INCOME
                                                                       LOSS FROM
                                                                      CONTINUING   NET INCOME
                                                           REVENUES   OPERATIONS     (LOSS)
                                                          ----------  -----------  -----------
<S>                                                       <C>         <C>          <C>
Titan...................................................  $  133,676   $     (50)   $  (3,378)
Delfin..................................................      29,629         (92)         (92)
VisiCom.................................................      32,650       1,389          381
Horizons................................................      29,551       2,934          944
DBA.....................................................      20,470       1,161        1,161
                                                          ----------   ---------    ---------
                                                          $  245,976   $   5,342    $    (984)
                                                          ==========   =========    =========
</TABLE>

    DBA's loss from continuing operations and net loss for the year ended
December 31, 1997 include recognition of a special charge of $9,846 for the
write-down of certain assets to net realizable value and accrual for certain
liabilities as described in Notes 8 and 14.

    Net income (loss) reflects the discontinued operations of the broadband
communications business, the access control systems business and certain
operations discontinued by companies prior to their acquisition by Titan. Refer
to Note 3 for further discussion.

    On March 31, 1998, the Company acquired all of the outstanding common stock
of Validity Corporation ("Validity") for $12 million in cash, and notes payable
to the shareholders of Validity totaling $3 million, subject to post-closing
adjustments, if any, due and payable March 31, 1999, and bearing interest at the
prime rate. The transaction has been accounted for as a purchase; accordingly,
Validity's results of operations have been consolidated with the Company's
results of operations beginning April 1, 1998. The excess of the purchase price
over the estimated fair value of net assets acquired is being amortized on a
straight line basis over 30 years, and amounted to approximately $18.6 million
as of December 31, 1998.

    During the year ended December 31, 1998, the Company recorded special
acquisition related and other charges of $9,891, which includes approximately
$5,500 of direct transaction costs (consisting

                                      F-14
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)

primarily of investment banking and other professional fees), $3,800 of
integration expenses and $600 of pre-operating and start-up costs of the
AfroNetwork, Benin operation. Approximately $4,600 of the direct transaction
costs were incurred in connection with the Delfin, VisiCom, Horizons and DBA
mergers. The remaining $900 in transaction fees were related to costs incurred
to file a withdrawn registration statement of Linkabit Wireless.

    The integration costs included approximately $3,500 for severance,
outplacement and retention costs incurred in the Information Technologies and
Communications Systems segments. Included in these amounts were termination
benefits associated with employment agreements, as well as retention amounts
associated with employee retention agreements. The integration costs also
include $330 related to the closure and elimination of leased facilities,
primarily duplicate field offices.

    Accruals for unpaid special charges of $1,090 and $250 remain in other
current and non-current liabilities, respectively, at December 31, 1998. Unpaid
amounts at year-end are primarily termination, retention and other integration
costs which will be paid by December 31, 1999.

    On May 24, 1996, the Company completed the acquisition of three
privately-held affiliated businesses--Eldyne, Inc. ("Eldyne"), Unidyne
Corporation ("Unidyne") and Diversified Control Systems, LLC ("DCS"). The
overall transaction consideration, excluding associated transaction costs and
expenses, consisted of $1 million cash, 1,779,498 shares of Titan common stock
with an assigned value of $6.00 per share, the issuance of 500,000 shares of a
new class of cumulative convertible redeemable preferred stock (see Note 9),
assumption of indebtedness and a promissory note for $1 million issued to the
principal stockholder of the acquired companies. The $1 million note was due and
paid on March 15, 1997, and earned interest of 10% per annum. Titan also entered
into an agreement with the principal stockholder, providing for annual payments
of $.3 million, payable monthly, for 6 years beginning May 24, 1996. The net
present value of this agreement ($1.5 million) was recorded as additional
purchase price at the acquisition date. This obligation was settled in full on
January 2, 1997. Estimated other direct costs of the acquisition were
approximately $3 million. The acquisition has been accounted for as a purchase,
and, accordingly, Titan's consolidated financial statements include the
operating results of the three acquired companies since May 24, 1996. The excess
of the purchase price over the estimated fair value of net assets acquired of
$16.9 million at December 31, 1998 is being amortized using a straight-line
method over 30 years.

NOTE 3. DISCONTINUED OPERATIONS

    In December 1998, the Company's Board of Directors adopted a plan to wind
down the Company's access control systems business. The results of this business
have been accounted for as a discontinued operation. Revenues for the access
control business were $3,122, $4,136 and $1,808 and operating profit (loss) was
$(3,026), $492 and $483 for the years ended December 31, 1998, 1997 and 1996,
respectively. The 1998 loss includes a charge of $1,500 for the estimated costs
to be incurred in future periods in connection with the winding down of this
business.

    In 1997, the Company's Board of Directors adopted a plan to divest the
Company's broadband communications business. The results of the broadband
communications business have been accounted for as a discontinued operation in
accordance with Accounting Principles Board Opinion No. 30, which among other
provisions, anticipates that the plan of disposal will be carried out within one
year. During

                                      F-15
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 3. DISCONTINUED OPERATIONS (CONTINUED)

1998, the Company received cash payments of $4,400 for licensing of the
broadband technology and as settlement of certain contingencies related to the
broadband patents. As a result of a periodic review by management of the
likelihood of receiving further proceeds from the sale of the broadband
technology, which would enable the Company to realize the remaining net assets
of the broadband business, a decision was reached by management in the third
quarter of 1998 to write off such remaining net assets. The write-off resulted
in a pre-tax charge to loss from discontinued operations of $4,638.
Additionally, approximately $7,200 in previously capitalized start-up costs were
written off as part of the cumulative effect of the change in accounting
principle (see Note 1). Revenues for the broadband communications business were
$-0-, $551 and $2,238 for the years ended December 31, 1998, 1997 and 1996,
respectively. Titan deferred losses from the discontinued operation of $9,271 in
1997, which primarily represented amortization and wind-down costs of the
business.

    In addition to the discontinued operations of the access control systems
business and the broadband business as discussed above, the accompanying
consolidated financial statements reflect operations discontinued by certain of
the companies acquired by Titan in 1998. The decisions to dispose of or
otherwise wind down these operations were made by the separate Boards of
Directors of the respective acquired companies prior to entering into any
discussions with Titan regarding the potential acquisitions of these entities by
Titan. All periods presented reflect these specific operations as discontinued
operations. Revenue for these discontinued operations aggregated $10,899, $7,999
and $9,367 for the years ended December 31, 1998, 1997 and 1996, respectively,
and losses attributable to these discontinued operations aggregated $-0-,
$17,907 and $2,998 for the same respective periods. Aggregate charges for
estimated costs to be incurred in future periods in connection with the winding
down of these operations amounted to approximately $6,800, substantially all of
which was recorded by the acquired companies in the last quarter of 1997.
Operating losses of approximately $5.8 million were charged against this accrual
during 1998. Additionally, a pre-tax charge of $1,300 was taken in the third
quarter of 1998 based on management's most recent review of estimated future
wind-down costs.

    Net liabilities of discontinued operations at December 31, 1998 consist
primarily of accrued liabilities of approximately $12,700, net of current assets
(primarily accounts receivable and inventory) of approximately $6,200. The
liabilities consist of accruals for contract losses, estimated wind-down costs
and costs related to the closure and elimination of leased facilities. Long-term
net assets of discontinued operations are primarily fixed assets.

                                      F-16
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 4. OTHER FINANCIAL DATA

    Following are details concerning certain balance sheet accounts:

<TABLE>
<CAPTION>
                                                                                               1998       1997
                                                                                             ---------  ---------
<S>                                                                                          <C>        <C>
Accounts Receivable:
  U.S. Government--billed..................................................................  $  44,021  $  33,031
  U.S. Government--unbilled................................................................     30,710     23,648
  Trade....................................................................................     13,586     16,692
  Less allowance for doubtful accounts.....................................................       (249)      (718)
                                                                                             ---------  ---------
                                                                                             $  88,068  $  72,653
                                                                                             =========  =========
Inventories:
  Materials................................................................................  $   3,871  $   4,343
  Work-in-process..........................................................................      1,788     12,421
  Finished goods...........................................................................      2,987      2,062
                                                                                             ---------  ---------
                                                                                             $   8,646  $  18,826
                                                                                             =========  =========
Property and Equipment:
  Machinery and equipment..................................................................  $  45,299  $  51,238
  Furniture and fixtures...................................................................      8,320      6,726
  Land, buildings and leasehold improvements...............................................     13,902     14,960
  Construction in progress.................................................................        358        406
                                                                                             ---------  ---------
                                                                                                67,879     73,330
Less accumulated depreciation and amortization.............................................    (42,177)   (45,664)
                                                                                             ---------  ---------
                                                                                             $  25,702  $  27,666
                                                                                             =========  =========
</TABLE>

NOTE 5. SEGMENT INFORMATION

    In the fourth quarter of 1997, the Company realigned certain operations
within its existing segments and added a fifth segment as a result of adopting
Statement of Financial Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"). On March 31, 1999, the
Company realigned certain operations among its business segments to better
position these operations for strategic transactions pursuant to the Company's
corporate strategy. As a result, the Company is reporting all commercial
satellite communications operating results in its Communications Systems
segment, and all defense information technologies and services operating results
are reported in its Information Technologies segment. This realignment also
conforms to the provisions of SFAS 131. All current and prior year segment data
presented in these financial statements have been restated to conform to the
1999 realignment.

    The Information Technologies segment provides information systems solutions
primarily to government customers with large data management, information
manipulation, information fusion, knowledge-based systems and communications
requirements, develops and produces advanced satellite communications products
and manufactures digital imaging products, electro-optical systems and threat
simulation/training systems primarily used by the defense and intelligence
communities. This segment also supports high priority government programs by
providing systems integration, information systems

                                      F-17
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 5. SEGMENT INFORMATION (CONTINUED)

engineering services, development of systems and specialized products, as well
as systems research, development and prototyping. Other services provided
include research and development under government funded contracts for the
Department of Defense (DoD) and other customers.

    The Software Systems segment is a systems integrator that provides systems
integration services and solutions for commercial and non-defense clients with
distributed computing environments.

    The Medical Sterilization and Food Pasteurization segment provides medical
product sterilization services at two Titan facilities and manufactures and
sells turnkey electron beam sterilization and food pasteurization systems to
customers for use in their own facilities.

    The Communications Systems segment develops and produces advanced satellite
communications products and systems for commercial customers.

    The Emerging Technologies and Businesses segment includes several businesses
which apply the Company's proprietary knowledge and core competencies to
industrial and commercial opportunities.

    Substantially all of the Company's operations are located in the United
States. Export revenues amounted to approximately $18,893, $21,365 and $10,693
in 1998, 1997 and 1996, respectively, primarily to countries in the Far East and
Western Europe. All international sales are denominated in U.S. dollars.

    The following tables summarize industry segment data for 1998, 1997 and
1996.

<TABLE>
<CAPTION>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Revenues:
  Information Technologies...................................................  $  259,442  $  225,686  $  211,124
  Software Systems...........................................................      21,470      17,374      18,505
  Medical Sterilization and Food Pasteurization..............................      11,184       8,254       7,930
  Communications Systems.....................................................       6,717      18,405       3,430
  Emerging Technologies and Businesses.......................................       4,615       6,204       4,987
                                                                               ----------  ----------  ----------
                                                                               $  303,428  $  275,923  $  245,976
                                                                               ==========  ==========  ==========
</TABLE>

                                      F-18
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 5. SEGMENT INFORMATION (CONTINUED)

    Sales to the United States Government, including both defense and
non-defense agencies, and sales as a subcontractor as well as direct sales,
aggregated approximately $242,560 in 1998, $225,016 in 1997, and $199,901 in
1996. Inter-segment sales were not significant in any year.

<TABLE>
<CAPTION>
                                                                                     1998       1997       1996
                                                                                   ---------  ---------  ---------
<S>                                                                                <C>        <C>        <C>
Operating Profit (Loss):
  Information Technologies.......................................................  $  25,270  $   8,361  $  18,770
  Software Systems...............................................................      5,137      4,580       (137)
  Medical Sterilization and Food Pasteurization..................................      1,121       (204)      (390)
  Communications Systems.........................................................     (6,732)    (1,074)    (5,421)
  Emerging Technologies and Businesses...........................................         34       (286)      (209)
  Corporate......................................................................     (6,477)    (2,804)      (543)
                                                                                   ---------  ---------  ---------
                                                                                   $  18,353  $   8,573  $  12,070
                                                                                   =========  =========  =========
</TABLE>

    Corporate includes corporate general and administrative expenses, certain
corporate restructuring charges, and gains or losses from the sale of
businesses. Corporate general and administrative expenses are generally
recoverable from contract revenues by allocation to operations.

<TABLE>
<CAPTION>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Identifiable Assets:
  Information Technologies...................................................  $  131,371  $  109,383  $  123,875
  Software Systems...........................................................      14,959       8,114       6,139
  Medical Sterilization and Food Pasteurization..............................      14,518      15,466      14,851
  Communications Systems.....................................................       5,085      10,655       3,525
  Emerging Technologies and Businesses.......................................          67       6,391       1,759
  Discontinued Operations, net...............................................         645       7,605      15,031
  General corporate assets...................................................      25,922      26,089      28,108
                                                                               ----------  ----------  ----------
                                                                               $  192,567  $  183,703  $  193,288
                                                                               ==========  ==========  ==========
</TABLE>

                                      F-19
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 5. SEGMENT INFORMATION (CONTINUED)

    General corporate assets are principally cash, prepaid expenses, property
and equipment, deferred income taxes and other assets.

<TABLE>
<CAPTION>
                                                                                         1998       1997       1996
                                                                                       ---------  ---------  ---------
<S>                                                                                    <C>        <C>        <C>
Depreciation and Amortization of Property and
  Equipment, Goodwill, and Other Assets:
    Information Technologies.........................................................  $   4,769  $   6,395  $   5,494
    Software Systems.................................................................        475        617      1,152
    Medical Sterilization and Food Pasteurization....................................        876        681        781
    Communications Systems...........................................................        381        453        139
    Emerging Technologies and Businesss..............................................         25         85         65
    Corporate........................................................................        600        982        413
                                                                                       ---------  ---------  ---------
                                                                                       $   7,126  $   9,213  $   8,044
                                                                                       =========  =========  =========
Capital Expenditures:
  Information Technologies...........................................................  $   2,651  $   4,988  $   3,995
  Software Systems...................................................................        325        453        261
  Medical Sterilization and Food Pasteurization......................................        211        643      1,378
  Communications Systems.............................................................        463        358        694
  Emerging Technologies and Businesses...............................................         30         86         83
  Corporate..........................................................................        358        119        227
                                                                                       ---------  ---------  ---------
                                                                                       $   4,038  $   6,647  $   6,638
                                                                                       =========  =========  =========
</TABLE>

NOTE 6. INCOME TAXES

    The components of the income tax provision from continuing operations are as
follows:

<TABLE>
<CAPTION>
                                                                                         1998       1997       1996
                                                                                       ---------  ---------  ---------
<S>                                                                                    <C>        <C>        <C>
Current:
  Federal............................................................................  $     782  $   2,046  $   2,131
  State..............................................................................        278        374        377
                                                                                       ---------  ---------  ---------
                                                                                           1,060      2,420      2,508
Deferred.............................................................................      3,095      1,764         95
                                                                                       ---------  ---------  ---------
                                                                                       $   4,155  $   4,184  $   2,603
                                                                                       =========  =========  =========
</TABLE>

                                      F-20
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 6. INCOME TAXES (CONTINUED)

    Following is a reconciliation of the income tax provision from continuing
operations expected (based on the United States federal income tax rate
applicable in each year) to the actual tax provision on income:

<TABLE>
<CAPTION>
                                                                                         1998       1997       1996
                                                                                       ---------  ---------  ---------
<S>                                                                                    <C>        <C>        <C>
Expected Federal tax provision on continuing operations..............................  $   3,865  $     953  $   2,701
State income taxes, net of Federal income tax benefit................................        341         92        (18)
Research credit......................................................................         --       (324)        --
Goodwill amortization................................................................        218        351         88
Keyman life insurance................................................................         24         24         36
Acquisition special charges and other................................................       (293)     3,088       (204)
                                                                                       ---------  ---------  ---------
Actual tax provision on continuing operations........................................  $   4,155  $   4,184  $   2,603
                                                                                       =========  =========  =========
</TABLE>

    The deferred tax asset as of December 31, 1998 and 1997, results from the
following temporary differences:

<TABLE>
<CAPTION>
                                                                                               1998       1997
                                                                                             ---------  ---------
<S>                                                                                          <C>        <C>
Loss carryforward..........................................................................  $   7,746  $   7,798
Employee benefits..........................................................................      4,275      4,923
Loss from discontinued operations..........................................................         --     (3,338)
Tax credit carryforwards...................................................................      2,096      2,546
Inventory and contract loss reserves.......................................................     10,199      8,919
Depreciation...............................................................................     (1,378)    (1,400)
Deferred tax on foreign profit.............................................................         --      1,123
Other......................................................................................       (306)      (759)
                                                                                             ---------  ---------
                                                                                                22,632     19,812
Valuation allowance........................................................................    (11,200)   (11,200)
                                                                                             ---------  ---------
Net deferred tax asset.....................................................................  $  11,432  $   8,612
                                                                                             =========  =========
</TABLE>

    Realization of certain components of the net deferred tax asset is dependent
upon the Company generating sufficient taxable income prior to expiration of
loss and credit carryforwards. Although realization is not assured, management
believes it is more likely than not that the net deferred tax asset will be
realized. The amount of the net deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable income
during the carryforward period are changed. Also, under Federal tax law, certain
potential changes in ownership of the Company which may not be within the
Company's control may limit annual future utilization of these carryforwards.
Deferred income taxes of $454 and $314 are included in Other Assets at December
31, 1998 and 1997, respectively.

    Cash paid for income taxes was $1,343 and $1,195 in 1998 and 1997,
respectively. Net tax refunds in 1996 were $277.

                                      F-21
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 7. DEBT

    On July 29, 1998, the Company entered into a credit agreement with a bank
syndicate under which it may borrow up to $80 million, replacing its existing
line of credit agreement. The credit facility includes a five year $55 million
working capital line of credit and a $25 million component dedicated for
acquisitions which converts any outstanding balances after one year into a term
loan, to be repaid in increasing quarterly amounts over four years. The Company
has the option to borrow at the bank base rate or at LIBOR, plus applicable
margins based on the ratio of total debt to EBITDA (earnings before interest,
taxes, depreciation and amortization). The agreement contains, among other
financial covenants, provisions which set maximum debt to EBITDA limits and
which require the Company to maintain stipulated levels of EBITDA, tangible net
worth, a minimum quick ratio, and minimum coverage of fixed charges, as defined.
Initial proceeds of $36.1 million were used to pay off and replace the then
outstanding line of credit balances with the Company's, Horizons' and VisiCom's
banks and for working capital purposes. At December 31, 1998, the outstanding
balances on the working capital line and the acquisition line were $35 million
and $5 million (of which $368 is current), respectively. The borrowings were
subject to a weighted average interest rate of 7.09%, and commitments under
letters of credit reducing availability under the working capital line were
$950.

    In November 1996, Titan issued $34,500 of 8.25% convertible subordinated
debentures due 2003. At December 31, 1998, $27,515 remain outstanding. The
debentures are convertible into common stock of the Company at a conversion
price of $3.50 per share, subject to adjustment upon the occurrence of certain
events. The debentures are redeemable, on or after November 2, 1999, initially
at 104.125% of principal amount and at decreasing prices thereafter to 100% of
principal amount through maturity, in each case together with accrued interest.
The debentures also may be repaid at the option of the holder upon a change in
control, as defined in the indenture governing the debentures, at 100% of
principal amount plus accrued interest. The net proceeds from the issuance of
these securities were used to repay borrowings under the Company's bank lines of
credit and for working capital and general corporate purposes.

    At December 31, 1998 and 1997, Titan had $3,328 and $4,319, respectively,
outstanding under two promissory notes, secured by certain machinery and
equipment, at interest rates of 8.5% and 7.42%, respectively. At December 31,
1998, $1,101 is due within one year. At December 31, 1998 and 1997, the Company
also had outstanding a mortgage note collateralized by real estate with a
balance of $747 and $1,196, respectively, at an interest rate of LIBOR plus
2.5%, of which $112 is due within one year. Long-term debt at entities acquired
by the Company in 1998 was $650 ($368 short-term) at December 31, 1998.

    Cash paid for interest, primarily on these borrowings, was $6,491, $6,254
and $3,847 in 1998, 1997, and 1996, respectively. At December 31, 1998 the
Company was in compliance with all financial covenants under its various debt
agreements.

NOTE 8. COMMITMENTS AND CONTINGENCIES

    The Company leases certain buildings and equipment under non-cancelable
operating lease agreements. These leases generally require the Company to pay
all executory costs such as taxes, insurance and maintenance related to the
leased assets. Certain of the leases contain provisions for periodic rate
accelerations to reflect cost-of-living increases. Rental expense under these
leases was $10,130 in 1998, $9,457 in 1997 and $11,928 in 1996. The Company has
entered into a long-term lease

                                      F-22
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 8. COMMITMENTS AND CONTINGENCIES (CONTINUED)

agreement for facilities which are owned by an entity in which Titan has a
minority ownership interest. Rental expense in 1998, 1997 and 1996 includes
$921, $904 and $884, respectively, paid under this agreement.

    Future minimum lease payments under noncancelable operating leases at
December 31, 1998, are as follows:

<TABLE>
<S>                                                                  <C>
1999...............................................................  $   8,311
2000...............................................................      6,649
2001...............................................................      5,310
2002...............................................................      4,567
2003...............................................................      3,613
Thereafter.........................................................      9,343
                                                                     ---------
    Total minimum lease payments...................................  $  37,793
                                                                     =========
</TABLE>

    In 1997, DBA recorded a $3.0 million charge in recognition of certain
environmental matters at its Kissimmee facility including, but not limited to,
soil contamination and potential asbestos and lead-based paint contamination.
These matters became known to DBA as a result of an environmental study
performed as part of Titan's due diligence process related to the merger with
DBA. The accrual has been recorded in accordance with SFAS No. 5 and SOP 96-1
and represents an initial estimate which could change significantly as further
studies are performed.

    In the accompanying balance sheet, approximately $.2 million is included in
other current liabilities and the remaining $2.8 million is included in other
non-current liabilities based on the estimated timing of continued assessments
and remediation work to be performed. This property is currently on the market
and the Company has received several indications of interest (see Note 14). The
Company has commenced its pre-cleanup activities, which are being coordinated
with the sale of the property.

    On April 19, 1995 Titan was served in a lawsuit entitled DONALD P. SHAW V.
TITAN CORPORATION (the "Lawsuit"). The Lawsuit was pending in the United States
District Court for the Eastern District of Virginia, Alexandria Division, and
sought compensatory damages in an aggregate amount of $3,000 and punitive
damages in the amount of $1,050 on account of alleged wrongful termination and
intentional infliction of emotional distress. The Lawsuit resulted in a verdict
for the plaintiff awarding $65 in compensatory damages and $350 in punitive
damages which was affirmed on appeal in February 1998.

    In the ordinary course of business, defense contractors are subject to many
levels of audit and investigation by various government agencies. Further, the
Company and its subsidiaries are subject to claims and from time to time are
named as defendants in legal proceedings. The Company may also assert claims
from time to time. In the opinion of management, the amount of ultimate
liability or recovery with respect to these actions will not materially affect
the financial position or results of operations of the Company.

                                      F-23
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 9. SERIES B CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK

    The Company's Series B Preferred Stock had a par value of $1.00, accrued
dividends at a rate of 6% per annum payable quarterly in arrears cumulatively,
had a liquidation preference of $6.00 per share plus accrued and unpaid
dividends (the "Series B Liquidation Preference") and entitled the holder
thereof to one vote per outstanding share, voting together as a class with the
holders of shares of outstanding Common Stock (and any other series or classes
entitled to vote therewith) on all matters submitted for a shareholder vote. The
Series B Preferred Stock was redeemable at the Series B Liquidation Preference
(i) at the holder's option, after May 24, 1998 until May 24, 2001, and (ii) at
the Company's option, after May 24, 2001 until May 24, 2006. The Company
redeemed all of the outstanding shares of Series B Preferred Stock in 1998.

NOTE 10. CUMULATIVE CONVERTIBLE PREFERRED STOCK

    Each share of $1.00 cumulative convertible preferred stock is entitled to
1/3 vote, annual dividends of $1 per share and is convertible at any time into
2/3 share of the Company's common stock. Common stock of 463,248 shares has been
reserved for this purpose. Upon liquidation, the $1.00 cumulative convertible
preferred stockholders are entitled to receive $20 per share, plus cumulative
dividends in arrears, before any distribution is made to the common
stockholders.

NOTE 11. COMMON STOCK

    At December 31, 1998, approximately 47,974,672 common shares were reserved
for future issuance for conversion of convertible subordinated debentures,
preferred stock, and all stock incentive plans.

    On August 17, 1995, the Board of Directors adopted a Shareholder Rights
Agreement and subsequently distributed one preferred stock purchase right
("Right") for each outstanding share of the Company's common stock. Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock, par value $1.00 per
share (the "Preferred Shares") at a price of $42.00 per one one-hundredth of a
Preferred Share, subject to adjustment. The Rights become exercisable if a
person or group acquires, in a transaction not approved by the Company's Board
of Directors ("Board"), 15% or more of the Company's common stock or announces a
tender offer for 15% or more of the stock.

    If a person or group acquires 15% or more of the Company's common stock,
each Right (other than Rights held by the acquiring person or group which become
void) will entitle the holder to receive upon exercise a number of shares of the
Company's common stock having a market value of twice the Right's exercise
price. If the Company is acquired in a transaction not approved by the Board,
each Right may be exercised for common shares of the acquiring company having a
market value of twice the Right's exercise price. Titan may redeem the Rights at
$.01 per Right, subject to certain conditions. The Rights expire on August 17,
2005.

NOTE 12. STOCK-BASED COMPENSATION PLANS

    The Company provides stock-based compensation to officers, directors and key
employees through various fixed stock option plans and to all non-executive
employees through an employee stock purchase plan. The Company has adopted the
disclosure only provisions of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation." Accordingly, no

                                      F-24
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 12. STOCK-BASED COMPENSATION PLANS (CONTINUED)

compensation cost has been recognized for the fixed stock option or stock
purchase plans. Had compensation cost for the Company's stock-based compensation
plans been determined based on the fair value at the grant dates for awards
under those plans consistent with the method of SFAS 123, the Company's results
of operations would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                                  1998         1997        1996
                                                                               -----------  -----------  ---------
<S>                                                            <C>             <C>          <C>          <C>
Net loss.....................................................     As reported  $   (19,705) $   (19,312) $    (984)
                                                                    Pro forma      (20,827)     (21,019)    (1,654)
Net loss per share, basic....................................     As reported        (0.59)       (0.61)     (0.06)
                                                                    Pro forma        (0.62)       (0.66)     (0.08)
Net loss per share, diluted..................................     As reported        (0.57)       (0.61)     (0.06)
                                                                    Pro forma        (0.60)       (0.66)     (0.08)
</TABLE>

    The Company currently has options available for grant under the Stock Option
Plans of 1990, 1994 and 1997, The 1989 Directors' Stock Option Plan and The 1996
Directors' Stock Option and Equity Participation Plan (the "1996 Directors'
Plan"). Options authorized for grant under the employee plans and under the
directors' plans are 3,000,000 and 185,000, respectively. Under the 1996
Directors' Plan, a director may elect to receive stock in lieu of fees, such
stock to have a fair market value equal to the fees. Under all plans, the
exercise price of each option equals the market price of the Company's stock on
the date of grant. Under the employee plans, an option's maximum term is ten
years. Under the directors' plans, options expire 90 days after the option
holder ceases to be a director. Employee options may be granted throughout the
year; directors' options are granted annually during the first two or three
years as a director. All options vest in 25% increments beginning one year after
the grant date. Stock options assumed by the Company as a result of the mergers
discussed in Note 2 generally retain the terms under which they were granted.

    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model using the following weighted-average
assumptions: zero dividend yield and an expected life of 5 years in all years;
expected volatility of 71% in 1998, 70% in 1997 and 87% in 1996; and a risk free
interest rate of 4.74% in 1998, 5.72% in 1997 and 6.57% in 1996.

                                      F-25
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 12. STOCK-BASED COMPENSATION PLANS (CONTINUED)

    A summary of the status of the Company's fixed stock option plans as of
December 31, 1998, 1997 and 1996, and changes during the years ending on those
dates is presented below:
<TABLE>
<CAPTION>
                                                                   1998                      1997               1996
                                                         ------------------------  ------------------------  -----------
                                                                       WEIGHTED                  WEIGHTED
                                                                        AVERAGE                   AVERAGE
                                                           SHARES      EXERCISE      SHARES      EXERCISE      SHARES
                                                            (000)        PRICE        (000)        PRICE        (000)
                                                         -----------  -----------  -----------  -----------  -----------
<S>                                                      <C>          <C>          <C>          <C>          <C>
Outstanding at beginning of year.......................       3,697    $    3.66        3,155    $    3.37        3,148
Granted................................................         808         4.30        1,175         3.77        1,202
Exercised..............................................        (258)        2.70         (207)        2.75         (241)
Cancelled..............................................        (589)        4.31         (426)        3.10         (954)
                                                          ---------    ---------    ---------    ---------    ---------
Outstanding at end of year.............................       3,658         3.77        3,697         3.66        3,155
                                                          =========    =========    =========    =========    =========
Options exercisable at year-end........................       1,898                     1,994                     1,814
Weighted-average fair value of options granted during
  the year.............................................   $    5.46                 $    3.42                 $    2.47

<CAPTION>
                                                          WEIGHTED
                                                           AVERAGE
                                                          EXERCISE
                                                            PRICE
                                                         -----------
<S>                                                      <C>
Outstanding at beginning of year.......................   $    3.22
Granted................................................        3.45
Exercised..............................................        2.13
Cancelled..............................................        2.71
                                                          ---------
Outstanding at end of year.............................        3.37
                                                          =========
Options exercisable at year-end........................
Weighted-average fair value of options granted during
  the year.............................................
</TABLE>

    The following table summarizes information about fixed stock options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>
                                                       OPTIONS EXERCISABLE
          OPTIONS OUTSTANDING            -----------------------------------------------
---------------------------------------                      NUMBER
  RANGE OF       NUMBER      WEIGHTED       WEIGHTED       EXERCISABLE      WEIGHTED-
  EXERCISE     OUTSTANDING    AVERAGE        AVERAGE           AT            AVERAGE
   PRICES      AT 12/31/98   REMAINING   EXERCISE PRICE     12/31/98     EXERCISE PRICE
-------------  -----------  -----------  ---------------  -------------  ---------------
<S>            <C>          <C>          <C>              <C>            <C>
$ 0.05 - 3.94   1,852,964    6.06 years     $    2.19        1,283,420      $    2.25
  4.00 - 5.88   1,418,805    8.39 years          4.79          445,636           4.60
  6.06 - 9.50     386,232    7.81 years          7.57          168,732           8.34
                ---------   -----------                    -----------
                3,658,001    7.15 years                      1,897,788
                =========   ===========                    ===========
</TABLE>

    Under the 1995 Employee Stock Purchase Plan, the Company is authorized to
issue up to 500,000 shares of common stock to its full-time employees. Elected
officers of the Company are not eligible to participate. Under the terms of the
plan, employees may elect to have between 1 and 10 percent of their regular
earnings, as defined in the plan, withheld to purchase the Company's common
stock. The purchase price of the stock is 85 percent of the lower of its market
price at the beginning or at the end of each subscription period. A subscription
period is six months, beginning January 1 and July 1 of each year. Approximately
13%, 11% and 11% of eligible employees participated in the Plan and purchased
92,089, 110,461 and 89,865 shares of the Company's common stock in 1998, 1997
and 1996, respectively. The weighted-average fair value of the purchase rights
granted in 1998, 1997 and 1996 was $1.61, $1.06 and $1.71, respectively.

    Four of the Company's wholly-owned subsidiaries have stock option plans for
the granting of subsidiary common stock, which is not publicly traded. The
exercise price of all options granted under these plans equals the fair value of
the subsidiary stock at the date of grant as determined by the subsidiaries'
board of directors. If all options available for grant in these plans were
exercised, the Company's ownership in each of the subsidiaries would be diluted
by no greater than 20% to 30%.

                                      F-26
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 13. BENEFIT PLANS

    The Company has various defined contribution benefit plans covering certain
employees. The Company's contributions to these plans were $3,326, $2,914 and
$3,040 in 1998, 1997 and 1996, respectively. Titan's and Horizons' combined
discretionary contributions to their Employee Stock Ownership Plans were $295,
$372 and $120 in 1998, 1997 and 1996, respectively. Discretionary contributions
to a profit sharing plan covering certain employees were $150, $175 and $150 in
1998, 1997 and 1996, respectively. During 1997 and 1996, the Company utilized
treasury stock of $344 and $1,192, respectively, for benefit plan contributions.

    The Company has a non-qualified executive deferred compensation plan for
certain officers and key employees. The Company's expense for this plan was
$824, $821 and $901 in 1998, 1997 and 1996, respectively. Interest expense for
the years ended December 31, 1998, 1997 and 1996 includes $650, $527 and $561,
respectively, related to the plan. Included in other non-current liabilities is
$4,311 and $3,954 related to this plan at December 31, 1998 and 1997,
respectively. The Company also has performance bonus plans for certain of its
employees. Related expense amounted to approximately $3,316, $2,125 and $1,709
in 1998, 1997 and 1996, respectively.

    The Company has previously provided for postretirement benefit obligations
of operations discontinued in prior years. The Company has no postretirement
benefit obligations for any of its continuing operations nor for its recently
discontinued businesses.

NOTE 14. DBA ASSET IMPAIRMENTS

    The Company has a 141,000 square foot manufacturing facility located in
Kissimmee, Florida which was acquired in the merger with DBA. The property has
been held for sale since June 1996. As a result of several factors, including
offers received by third parties, management concluded that there had been an
impairment in the carrying value of the asset. A charge of $2.0 million was
recorded in the Company's financial statements for the year ended December 31,
1997 which reflects management's estimate of the impairment, including estimated
disposal costs. Titan management has a program of ongoing maintenance (and
environmental remediation - see Note 8) and is actively marketing the property
for sale through various channels. Management regularly reviews this asset for
further impairment, and believes that the recorded book value at December 31,
1998 reflects an amount which is not less than net realizable value.

    In September 1997, DBA invested $1.6 million in a start-up venture. To date,
this start-up venture has not yet generated any significant business and has
generated no significant revenue. In light of these circumstances, Titan
management believed that there was an impairment in the value of the investment
as recorded by DBA. An adjustment to write down the investment by $1.6 million
was recorded in the results of operations for the year ended December 31, 1997.

NOTE 15. SUBSEQUENT EVENT

    In January 1999, the Company's wholly-owned subsidiary, Titan Software
Systems Corporation, acquired Transnational Partners II, LLP ("TNP"), a software
services company which provides infrastructure and enterprise resources planning
solutions for major corporations, for $9.8 million in a transaction that will be
accounted for as a purchase. The purchase price consisted of $7 million cash, a
$2.8 million note due January 2000 (bearing interest at 7%), subject to certain
post-closing adjustments, and a preferred stock representing a minority interest
in Titan Software Systems Corporation, which comprises the Company's Software
Systems segment.

                                      F-27
<PAGE>
                             THE TITAN CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE
DATA)

<TABLE>
<CAPTION>
                                                           FIRST     SECOND      THIRD     FOURTH      TOTAL
1998                                                      QUARTER    QUARTER    QUARTER    QUARTER      YEAR
-------------------------------------------------------  ---------  ---------  ---------  ---------  ----------
<S>                                                      <C>        <C>        <C>        <C>        <C>
Revenues...............................................  $  64,630  $  75,413  $  78,635  $  84,750  $  303,428
Gross profit...........................................     15,163     17,071     17,628     21,525      71,387
Income from continuing operations before cumulative
  effect of change in accounting principle.............        954      2,973      1,948      1,338       7,213
Net income (loss)......................................    (18,349)     3,184     (4,051)      (489)    (19,705)
Basic earnings per share:
  Income from continuing operations....................       0.02       0.08       0.05       0.03        0.18
  Net income (loss)....................................      (0.55)      0.09      (0.11)     (0.02)      (0.59)
Diluted earnings per share:
  Income from continuing operations....................       0.02       0.07       0.05       0.03        0.18
  Net income (loss)....................................      (0.53)      0.08      (0.09)     (0.02)      (0.57)
</TABLE>

<TABLE>
<CAPTION>
                                                            FIRST     SECOND       THIRD      FOURTH      TOTAL
1997                                                       QUARTER    QUARTER     QUARTER     QUARTER      YEAR
--------------------------------------------------------  ---------  ---------  -----------  ---------  ----------
<S>                                                       <C>        <C>        <C>          <C>        <C>
Revenues................................................  $  67,827  $  70,255  $    66,931  $  70,910  $  275,923
Gross profit............................................     14,808     17,102       14,776     12,684      59,370
Income (loss) from continuing operations................      2,253      2,301       (4,366)    (1,570)     (1,382)
Net income (loss).......................................      1,172      1,619      (15,765)    (6,338)    (19,312)
Basic earnings (loss) per share:
  Income (loss) from continuing operations..............       0.06       0.06        (0.14)     (0.05)      (0.07)
  Net income (loss).....................................       0.03       0.04        (0.48)     (0.20)      (0.61)
Diluted earnings (loss) per share:
  Income (loss) from continuing operations..............       0.06       0.06        (0.14)     (0.05)      (0.07)
  Net income (loss).....................................       0.03       0.04        (0.48)     (0.20)      (0.61)
</TABLE>

    The above financial information for each quarter reflects all normal and
recurring adjustments.

    Previously reported amounts have been restated to reflect the acquisitions,
accounted for as poolings of interests, of Horizons, VisiCom and Delfin in the
second, third and fourth quarters of 1998, respectively, the discontinuance of
the Company's access control systems business in the fourth quarter of 1998, and
to reflect the cumulative effect of a change in accounting principle as
effective in the first quarter of 1998.

    Net results for the first quarter of 1998 reflect a charge of $19,474 for
the cumulative effect of a change in accounting principle (see Note 1). Income
(loss) from continuing operations and net income (loss) include special charges
of $1,460, $3,093 and $5,338 in the first, third and fourth quarters of 1998,
respectively, and asset and investment write-downs and environmental accrual of
$5,000 and $4,846 in the third and fourth quarters of 1997, respectively (see
Notes 2 and 14).

                                      F-28
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Advanced Communication Systems, Inc:

    We have audited the accompanying consolidated balance sheets of Advanced
Communication Systems, Inc. (a Delaware corporation) and subsidiaries as of
September 30, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for each of the three
years in the period ended September 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Advanced Communication
Systems, Inc. and subsidiaries as of September 30, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1999, in conformity with generally accepted
accounting principles.

    Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

                                          ARTHUR ANDERSEN LLP

Vienna, Virginia
November 12, 1999

                                      F-29
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

                          CONSOLIDATED BALANCE SHEETS

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
Cash and cash equivalents...................................  $  1,615   $  2,457
Contract receivables, net...................................    67,834     54,059
Other receivables...........................................     1,617        374
Prepaid expenses............................................     1,279        958
Inventories.................................................       932        583
                                                              --------   --------
    Total current assets....................................    73,277     58,431
                                                              --------   --------
Property and equipment, net.................................     7,908      8,044
Other assets:
Software development costs, net.............................        --      3,186
Intangibles, net............................................    61,603     49,726
Other non-current assets....................................       414        348
                                                              --------   --------
    Total other assets......................................    62,017     53,260
                                                              --------   --------
        Total assets........................................  $143,202   $119,735
                                                              ========   ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...........................  $     87   $     87
Obligations under capital leases............................       877      1,100
Accounts payable............................................     5,773      9,577
Accrued expenses and other current liabilities..............    27,789     22,772
Billings in excess of revenue...............................     1,182      1,208
Deferred profit.............................................     5,319         --
Income taxes payable........................................       738      1,104
Deferred income tax liability...............................     2,317      1,059
                                                              --------   --------
    Total current liabilities...............................    44,082     36,907
Obligations under capital leases--long-term.................       420        523
Deferred income tax liability--long-term....................     1,226        858
Long-term debt..............................................    47,580     36,564
                                                              --------   --------
    Total liabilities.......................................    93,308     74,852
                                                              --------   --------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
  authorized, no shares issued and outstanding..............        --         --
Common stock, $.01 par value, 40,000,000 shares authorized,
  11,450,000 shares issued at September 30, 1999 and 1998          115        115
Paid-in capital.............................................    42,511     41,105
Retained earnings...........................................     7,578      3,991
Less--Treasury stock, 2,701,513 shares at September 30, 1999
  and 2,854,887 shares at September 30, 1998................      (310)      (328)
                                                              --------   --------
    Total stockholders' equity..............................    49,894     44,883
                                                              --------   --------
        Total liabilities and stockholders' equity..........  $143,202   $119,735
                                                              ========   ========
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-30
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues....................................................  $218,252   $107,752   $52,194
Direct costs................................................   147,667     69,847    37,687
Indirect, general and administrative expenses...............    53,863     28,834    11,128
Provision for doubtful accounts.............................     2,514         --        --
Write-off of capitalized software development costs (Note
  7)........................................................     3,893         --        --
Write-off of acquired in-process R & D costs (Note 4).......        --         --     1,910
                                                              --------   --------   -------
Income from operations......................................    10,315      9,071     1,469
Interest expense............................................    (4,492)    (1,918)     (136)
Other income, net...........................................       160         82       153
                                                              --------   --------   -------
Income before taxes.........................................     5,983      7,235     1,486
Provision (benefit) for income taxes........................     2,402      2,861      (250)
                                                              --------   --------   -------
Net income..................................................  $  3,581   $  4,374   $ 1,736
                                                              ========   ========   =======
Net income per share-basic..................................  $   0.41   $   0.61   $  0.40
                                                              ========   ========   =======
Net income per share-diluted................................  $   0.41   $   0.60   $  0.40
                                                              ========   ========   =======
Weighted average shares outstanding-basic...................     8,680      7,221     4,306
                                                              ========   ========   =======
Weighted average shares outstanding-diluted.................     8,803      7,326     4,352
                                                              ========   ========   =======
Pro forma statements of operations data:
    (unaudited--Note 2)
Income before taxes as reported.............................                        $ 1,486
Pro forma income tax provision..............................                            571
                                                                                    -------

Pro forma net income........................................                        $   915
                                                                                    =======

Pro forma net income per share-basic........................                        $  0.20
                                                                                    =======

Pro forma net income per share-diluted......................                        $  0.19
                                                                                    =======

Pro forma weighted average shares outstanding-basic.........                          4,682
                                                                                    =======

Pro forma weighted average shares outstanding-diluted.......                          4,729
                                                                                    =======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-31
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                          ADJUSTMENT
                                                                                              FOR
                                                                                          REDEMPTION
                                                                                         VALUE GREATER
                                          COMMON STOCK                                   THAN AMOUNTS
                                     ----------------------   PAID-IN     RETAINED        PAID IN BY        TREASURY
                                       SHARES      AMOUNT     CAPITAL     EARNINGS       STOCKHOLDERS         STOCK       TOTAL
                                     ----------   ---------   --------   -----------   -----------------   -----------   --------
<S>                                  <C>          <C>         <C>        <C>           <C>                 <C>           <C>
BALANCE AT SEPTEMBER 30, 1996......   6,750,000       67       16,506        4,520          (16,438)           (280)       4,375
Net income.........................          --       --           --        1,736               --              --        1,736
Sale of common stock...............   2,225,000       23       14,341           --               --              --       14,364
Sale of treasury stock.............          --       --           --           --               --              57           57
Purchase of treasury stock.........          --       --           --           --               --             (66)         (66)
Stockholder distributions..........          --       --           --       (6,625)              --              --       (6,625)
Translation adjustment.............          --       --           --          (13)              --              --          (13)
Cancellation of stock repurchase
  agreements.......................          --       --      (16,438)          --           16,438              --           --
                                     ----------     ----      --------     -------         --------           -----      -------

BALANCE AT SEPTEMBER 30, 1997......   8,975,000       90       14,409         (382)              --            (289)      13,828
Net income.........................          --       --           --        4,374               --              --        4,374
Sale of common stock...............   2,000,000       20       22,627           --               --              --       22,647
Common stock issued for
  acquisition......................     475,000        5        3,295           --               --              --        3,300
Exercise of stock options and
  purchases under the Employee
  Stock Purchase Plan..............          --       --          589           --               --             (39)         550
Tax benefit attributable to the
  exercise of non-qualified stock
  options..........................          --       --          185           --               --              --          185
Translation adjustment.............          --       --           --           (1)              --              --           (1)
                                     ----------     ----      --------     -------         --------           -----      -------

BALANCE AT SEPTEMBER 30, 1998......  11,450,000      115       41,105        3,991               --            (328)      44,883
Net income.........................          --       --           --        3,581               --              --        3,581
Exercise of stock options and
  purchases under the Employee
  Stock Purchase Plan..............          --       --        1,262           --               --              18        1,280
Tax benefit attributable to the
  exercise of non-qualified stock
  options..........................          --       --          144           --               --              --          144
Translation adjustment.............          --       --           --            6               --              --            6
                                     ----------     ----      --------     -------         --------           -----      -------

BALANCE AT SEPTEMBER 30, 1999......  11,450,000     $115      $42,511      $ 7,578         $     --           $(310)     $49,894
                                     ==========     ====      ========     =======         ========           =====      =======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-32
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
Net income..................................................  $  3,581   $  4,374   $ 1,736
Adjustments to reconcile net income to net cash (used in)
  provided by operating activities--
  Depreciation and amortization.............................     3,804      2,264       471
  Provision for doubtful accounts...........................     2,514         --        --
  Write-off of capitalized software development costs.......     3,893         --        --
  Deferred tax liability....................................     1,626      1,078      (238)
  Reduction of deferred profit..............................    (1,024)        --        --
  Write-off of acquired in-process R & D costs..............        --         --     1,910
  Changes in assets and liabilities:
    Contract receivables....................................   (15,062)    (9,579)   (9,414)
    Other receivables.......................................    (1,624)      (157)     (303)
    Income taxes receivable.................................        --        529      (636)
    Prepaid expenses........................................      (321)       532       (84)
    Inventories.............................................      (349)       (39)     (182)
    Other assets............................................       (60)        40       (80)
    Accounts payable........................................    (3,793)    (1,459)      715
    Accrued expenses and other current liabilities..........     4,251      2,242     4,983
    Billings in excess of revenue...........................       (26)       606      (502)
    Income taxes payable....................................      (372)     1,165        --
                                                              --------   --------   -------
      Net cash (used in) provided by operating activities...    (2,962)     1,596    (1,624)
                                                              --------   --------   -------

Cash flows from investing activities:
Acquisitions, net of cash acquired..........................    (1,974)   (54,175)   (4,438)
Purchases of property and equipment.........................    (1,906)    (2,492)     (678)
Capitalized software development costs......................      (707)    (2,339)     (626)
Contingent purchase price payment...........................    (5,000)        --        --
Collection of notes receivable--stockholders................        --         --       443
                                                              --------   --------   -------
      Net cash used in investing activities.................    (9,587)   (59,006)   (5,299)
                                                              --------   --------   -------
Cash flows from financing activities:
Net proceeds from the sale of common stock..................        --     22,647    14,364
Net borrowings (repayments).................................        16       (884)       --
Net borrowings (repayments) under line of credit............    10,971     35,000    (2,701)
Deferred financing costs....................................      (234)       (45)       --
Net repayments of obligations under capital leases..........      (326)      (145)       --
Exercise of stock options and purchases under the ESPP......     1,280        550        57
Stockholder distributions...................................        --         --    (3,164)
Purchase of treasury stock..................................        --         --       (66)
                                                              --------   --------   -------
      Net cash provided by financing activities.............    11,707     57,123     8,490
                                                              --------   --------   -------
Net (decrease) increase in cash.............................      (842)      (287)    1,567
Cash and cash equivalents, beginning of period..............     2,457      2,744     1,177
                                                              --------   --------   -------
Cash and cash equivalents, end of period....................  $  1,615   $  2,457   $ 2,744
                                                              ========   ========   =======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-33
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION:

    Advanced Communication Systems, Inc. (the "Company") was incorporated in
1987 in the state of Delaware. The Company provides communications, information
systems and applied technology, predominantly to U.S. government agencies and to
a lesser extent commercial and international customers. In August 1997, the
Company acquired RF Microsystems, Inc. ("RFM"), a provider of technical and
engineering services to the Department of Defense in the areas of
communications, navigation, electronic warfare and digital signal systems. In
fiscal 1998, the Company acquired Integrated Systems Control, Inc. ("ISC"), a
satellite communication engineering company, Advanced Management Incorporated
("AMI"), a provider of a wide range of information technology services and
SEMCOR, Inc. ("SEMCOR"), a provider of technical and engineering services in the
areas of communication services, information and applied technology. In fiscal
1999, the Company acquired Program Support Associates, Inc. ("PSA"). PSA
develops, installs and supports online, real time financial management
information systems primarily to the Department of Defense.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of Advanced
Communication Systems, Inc. and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.

NET INCOME PER COMMON SHARE

    Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." This statement
replaces the previously reported primary and fully diluted net income per share
with basic and diluted net income per share. Unlike primary net income per
share, basic net income per share excludes any dilutive effects of stock
options. Diluted net income per share is similar to the previously reported
fully diluted net income per share. All net income per share amounts have been
restated to conform to SFAS No. 128. No reconciling items existed between the
net income used for basic and diluted net income per share. The only reconciling
item between the shares used for basic and diluted net income per share related
to outstanding stock options.

PRO FORMA NET INCOME PER SHARE (UNAUDITED)

    Prior to June 25, 1997, the Company elected to be treated as an S
corporation and was not subject to federal and certain state income taxes. The
pro forma statement of operations data reflects federal and state income taxes
at applicable rates as if the Company had not elected S corporation status for
the period indicated. Pro forma net income per share has been computed by
dividing pro forma net income by the pro forma weighted average number of common
shares outstanding during the period.

    The pro forma weighted average shares outstanding is based on: (i) the
weighted average shares outstanding during the period assuming the dilutive
effect of all options outstanding for diluted pro forma net income per share and
(ii) the assumed sale of a sufficient number of shares of the Company's common
stock necessary to fund the distribution of all undistributed S corporation
earnings in excess of the preceding twelve months earnings, through the date of
the offering.

                                      F-34
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

MANAGEMENT'S USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

SUPPLEMENTAL STATEMENTS OF CASH FLOWS DATA

    The Company paid income taxes in the amount of approximately $1,193,000,
$198,000 and $608,000 and interest expense of approximately $4,318,000,
$1,925,000 and $136,000 during the fiscal years ended September 30, 1999, 1998
and 1997, respectively. The Company acquired all of the outstanding shares of
ISC in exchange for 475,000 shares of the Company's Common Stock in fiscal 1998.
(See Note 4).

REVENUE RECOGNITION

    The Company provides services, primarily to the U.S. government, on a
contractual basis. Revenue on cost plus fixed fee contracts is recognized to the
extent of costs incurred plus a proportionate amount of fees earned. Revenue on
time and materials contracts is recognized at the contractual rates as labor
hours and direct expenses are incurred. Revenue on fixed price contracts is
recognized on the percentage-of-completion method based on costs incurred in
relation to total estimated costs. Anticipated contract losses are recognized as
soon as they become known and estimable.

    The Company also provides off-the-shelf hardware and software products to
the U.S. government under the GSA Schedule Contract and to commercial companies.
Related revenue is recognized when products are shipped or when customers have
accepted the products, depending on contractual terms.

CONCENTRATIONS OF CREDIT RISK

    Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist of cash and cash equivalents and contract
receivables. The Company maintains cash and cash equivalents in a high credit
quality financial institution. The credit risk with respect to contract
receivables is mitigated because the majority of the Company's contract
receivables are due from agencies of the U.S. government, and non-government
receivables are comprised of relatively small amounts due from a diverse
customer base.

    For the years ended September 30, 1999, 1998 and 1997, approximately
$198,966,000, $97,463,000, and $48,284,000, respectively, of the Company's
revenues were derived from contracts or subcontracts funded by the U.S.
government, most of which were funded by the Department of Defense. Government
contracts can be terminated at any time by the government without cause, are
subject to competitive rebidding process upon expiration, require compliance
with various contract procurement regulations and are subject to audit by the
Defense Contract Audit Agency and other government auditors.

                                      F-35
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include short-term investments with original
maturities of three months or less.

INVENTORIES

    Inventories consisting of computer and communications hardware, that are
used in the completion of contractual obligations, are stated at the lower of
cost or market. Cost is determined using the average cost method.

PROPERTY AND EQUIPMENT

    Property and equipment are recorded at cost and are depreciated over their
estimated useful lives, five to seven years, primarily using the straight-line
method. One of the Company's subsidiaries uses an accelerated method and will
adopt the straight-line method in fiscal 2000. Leasehold improvements are
amortized on a straight-line basis over the shorter of the useful life of the
asset or the lease terms. Buildings are depreciated over forty years on a
straight-line basis.

SOFTWARE DEVELOPMENT COSTS

    In compliance with SFAS No. 86, Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed, certain software development
costs are capitalized in the accompanying balance sheets. Capitalization of
software development costs begins upon the establishment of technological
feasibility. Capitalization ceases and amortization of capitalized costs begins
when the software product is commercially available for general release to
customers. Amortization of capitalized software development costs is computed
using the straight-line method over the remaining estimated economic life of the
product, not to exceed five years (See Note 7).

RESEARCH AND DEVELOPMENT EXPENSES

    The Company expenses research and development costs as they are incurred.
Research and development expenses for all periods presented were not material
except for acquired in-process research and development costs (See Note 4).

INTANGIBLE ASSETS

    Intangible assets, net of accumulated amortization, consists of the
following:

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30,
                                               -------------------   AMORTIZATION
                                                 1999       1998        PERIOD
                                               --------   --------   ------------
<S>                                            <C>        <C>        <C>
Goodwill.....................................  $57,586    $45,687    5 - 40 years
Customer lists...............................    3,673      3,929        16 years
Debt financing costs.........................      344        110         2 years
                                               -------    -------
                                               $61,603    $49,726
                                               =======    =======
</TABLE>

                                      F-36
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

    Debt financing costs represents fees and other costs incurred in connection
with the issuance of long term debt. These costs are amortized to interest
expense over the term of the related debt using the effective interest rate
method.

IMPAIRMENT OF LONG-LIVED ASSETS

    The Company reviews its long-lived assets, including software development
costs and property and equipment, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. To determine recoverability of its long-lived assets, the Company
evaluates the probability that future undiscounted net cash flows, without
interest charges, will be less than the carrying amount of the assets. The
Company has determined that as of September 30, 1999 and 1998, there has been no
impairment in the carrying value of long-lived assets, with the exception of the
write-off related to software development costs of approximately $3,893,000
discussed in Note 7.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    Financial instruments are defined as cash, evidence of an ownership interest
in an entity, or a contract that imposes an obligation to deliver cash or other
financial instruments to a second party. The carrying amounts of current assets
and current liabilities in the accompanying financial statements approximate
fair value due to the short maturity of these instruments. The carrying amount
of long-term debt approximates fair value based on borrowing rates currently
available to the Company for bank loans with similar terms and maturities.

INCOME TAXES

    From October 1, 1989 through June 25, 1997, the Company elected to be
treated as an S corporation and was not subject to federal and certain state
income taxes. As a result, no provision for federal and state income taxes has
been included in the historical statements of operations prior to June 25, 1997.
On June 25, 1997, in connection with the initial public offering, the
S corporation status was terminated, thereby subjecting future income of the
Company to federal and state income taxes. Subsequent to June 25, 1997, the
Company has provided for federal and state income taxes in the statements of
operations at the effective tax rates.

RECLASSIFICATION

    Certain prior period amounts have been reclassified to conform with the
current year's presentation.

3. OFFERINGS OF COMMON STOCK AND DISTRIBUTIONS TO STOCKHOLDERS:

    In July 1997, the Company consummated the initial public offering of its
common stock (the "Initial Public Offering"), selling 2,225,000 shares of common
stock, including the underwriter's overallotment option of 375,000 shares, for
$7.50 per share. The Initial Public Offering resulted in net proceeds to the
Company of approximately $14,400,000 after deducting underwriters discounts and
offering expenses payable by the Company. In connection with the Initial Public
Offering, the Company

                                      F-37
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. OFFERINGS OF COMMON STOCK AND DISTRIBUTIONS TO STOCKHOLDERS: (CONTINUED)

terminated its S corporation election and made distributions to the pre-Initial
Public Offering stockholders of its undistributed S corporation earnings of
approximately $6,600,000.

    In May 1998, the Company consummated a public offering of 2,000,000 shares
of its common stock for $12.375 per share. The offering resulted in net proceeds
to the Company of approximately $22,600,000 after deducting underwriting
discounts and offering expenses payable by the Company. The majority of the
proceeds was used to pay the outstanding debt incurred in the acquisition of AMI
(See Note 4).

4. ACQUISITIONS:

RF MICROSYSTEMS, INC.

    In August 1997, the Company acquired all of the outstanding common stock of
RFM for cash consideration of $5,000,000. The acquisition has been accounted for
as a purchase, and the financial results of RFM have been included in the
results of operations from the date of acquisition. The total purchase price has
been allocated to the acquired assets and liabilities assumed at their estimated
fair values in accordance with the provisions of Accounting Principles Board
Opinion No. 16. The excess of the purchase price over the net assets acquired is
being carried as goodwill, in the amount of $1,698,000, which is being amortized
over its estimated useful life of 15 years. The consolidated statement of
operations includes a $1,910,000 charge, based on a third-party appraisal, taken
at the time of the acquisition for acquired in-process research and development
costs related to acquired technology that has not reached technological
feasibility and that has no alternative future use.

INTEGRATED SYSTEMS CONTROL, INC.

    In November 1997, the Company acquired all of the outstanding shares of ISC
in exchange for 475,000 shares of the Company's common stock. The acquisition
has been accounted for as a purchase and accordingly the total purchase price
has been allocated to acquired assets and liabilities assumed at their estimated
fair values. The excess of the purchase price over the net assets acquired is
being carried as goodwill, in the amount of approximately $1,428,000, which is
being amortized over its estimated useful life of 30 years.

ADVANCED MANAGEMENT INCORPORATED

    In February 1998, the Company acquired all of the outstanding shares of AMI
for $19,500,000 in cash and additional contingent payments for each of two
consecutive twelve month periods following the closing date of the acquisition
up to a maximum of $5,250,000 for each period. AMI did not achieve the financial
goals required for the first twelve-month period and management believes it is
unlikely that AMI will achieve the financial goals for the second twelve-month
period ending January 31, 2000. The acquisition has been accounted for as a
purchase, and accordingly, the purchase price has been allocated to the acquired
assets and liabilities assumed at their estimated fair values. The excess of the
purchase price over the net assets acquired is being carried as intangible
assets, including goodwill and customer lists, in the amounts of approximately
$12,648,000 and $4,100,000, respectively, which is being amortized over their
estimated useful lives of 40 and 16 years, respectively.

                                      F-38
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. ACQUISITIONS: (CONTINUED)

SEMCOR, INC.

    In June 1998, the Company acquired all of the outstanding shares of SEMCOR
for a preliminary purchase price of $38,100,000 in cash and additional
contingent payments based on the achievement of certain financial goals for the
six-month period ending December 31, 1998, up to a maximum of $5,000,000 and for
the twelve-month period ending December 31, 1999, up to a maximum of
$10,000,000. SEMCOR successfully achieved the financial goals for the six-month
period ended December 31, 1998, as outlined in the stock purchase agreement, and
accordingly the selling shareholders were paid the maximum of $5,000,000 in
February 1999. The Company believes that a substantial portion of the second
contingent payment that is due in February 2000, will be payable to the selling
shareholders. The acquisition has been accounted for as a purchase, and
accordingly the preliminary purchase price has been allocated to the acquired
assets and liabilities assumed at their estimated fair values, based on a
third-party appraisal. In connection with the final determination of the fair
value of assets acquired and pursuant to the provisions of Accounting Principles
Board Opinion No. 16, the Company has valued acquired contracts in process at
contract price, minus the estimated costs to complete and an allowance for the
normal industry profit on its effort to complete such contracts, which amounted
to $6,343,000. Effective April 1, 1999, this adjustment has been reflected in
the accompanying balance sheet as an increase to goodwill and a corresponding
increase to deferred profit. The Company recognized approximately $1,024,000 as
a reduction of costs in fiscal 1999, with the remaining $5,319,000 to be
recorded as a reduction of costs in future periods as work on certain contracts
is performed. The excess of the preliminary purchase price and the first
contingent payment over the net assets acquired is being carried as goodwill, in
the amount of $41,784,000, and is being amortized over its estimated useful life
of 40 years. The amount to be paid for the second contingent payment will be
recorded on the measurement date of December 31, 1999, as additional goodwill.

PROGRAM SUPPORT ASSOCIATES, INC.

    In September 1999, the Company acquired all of the outstanding shares of PSA
for $2,300,000 in cash, of which $662,000 is included in accrued expenses at
September 30, 1999, and additional contingent payments, up to $1,000,000, upon
the achievement of certain financial goals during the period commencing January
1, 2000, and ending December 31, 2000. The acquisition has been accounted for as
a purchase, and accordingly, the total purchase price has been allocated to the
acquired assets and liabilities assumed at their estimated fair values. The
excess of the purchase price over the net assets acquired is being carried as
goodwill, in the amount of approximately $1,942,000, which will be amortized
over 20 years.

    The following unaudited pro forma summary presents information as if each
acquisition had occurred at the beginning of the fiscal year preceding the
period in which the acquisition was

                                      F-39
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. ACQUISITIONS: (CONTINUED)

consummated. The pro forma information does not necessarily reflect the results
that would have occurred nor is it necessarily indicative of future results of
operations of the combined companies.

<TABLE>
<CAPTION>
                                                      YEAR ENDED SEPTEMBER 30,
                                                ------------------------------------
                                                   1999         1998         1997
                                                ----------   ----------   ----------
                                                 (IN THOUSANDS EXCEPT PER PER SHARE
                                                               DATA)
<S>                                             <C>          <C>          <C>
Revenues......................................   $223,065     $190,596     $181,446
Net income....................................   $  3,783     $  4,614     $  3,005
Net income per share--basic...................   $   0.44     $   0.64     $   0.58
Net income per share--diluted.................   $   0.43     $   0.63     $   0.57
</TABLE>

5. CONTRACT RECEIVABLES:

    Contract receivables consist of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
U.S. government:
  Amounts billed..........................................  $25,625    $22,088
  Recoverable costs and accrued profit on progress
    completed; not billed.................................   38,422     27,777
                                                            -------    -------
    Subtotal..............................................   64,047     49,865
                                                            -------    -------
Commercial customers:
  Amounts billed..........................................    3,513      4,469
  Recoverable costs and accrued profit on progress
    completed; not billed.................................    1,235        864
                                                            -------    -------
    Subtotal..............................................    4,748      5,333
                                                            -------    -------
Less allowance for doubtful accounts......................      961      1,139
                                                            -------    -------
    Total.................................................  $67,834    $54,059
                                                            =======    =======
</TABLE>

    In fiscal 1999, the Company incurred a charge for an uncollected receivable
from the Australian Navy in the amount of approximately $1,800,000. The
receivable was related to the development and installation of RANSALTS, a
SALTS-type product.

                                      F-40
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. PROPERTY AND EQUIPMENT:

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Land........................................................   $1,231     $1,231
Buildings...................................................    1,946      1,946
Furniture and equipment.....................................   10,232      9,411
Equipment under capital leases..............................    3,470      4,366
Leasehold improvements......................................      294        305
                                                               ------     ------
                                                               17,173     17,259
Less accumulated depreciation and amortization..............    9,265      9,215
                                                               ------     ------
Total property and equipment, net...........................   $7,908     $8,044
                                                               ======     ======
</TABLE>

7. SOFTWARE DEVELOPMENT COSTS:

    Software development costs consist of the following:

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,
                                                             -------------------
                                                               1999       1998
                                                             --------   --------
                                                               (IN THOUSANDS)
<S>                                                          <C>        <C>
Cost.......................................................  $ 4,357     $3,650
Less accumulated amortization..............................     (464)      (464)
Less write-off.............................................   (3,893)        --
                                                             -------     ------
Total software development costs, net......................  $    --     $3,186
                                                             =======     ======
</TABLE>

    Software development costs capitalized were $707,000, $2,339,000 and
$626,000 in the years ended September 30, 1999, 1998 and 1997, respectively.
Amortization expense for the years ended September 30, 1999, 1998 and 1997 was
approximately $0, $103,000 and $137,000 respectively.

    In 1999, the Company discontinued development of its SALTS related software
products, and accordingly, the results of operations for the year ended
September 30, 1999, includes a one-time charge of approximately $3,893,000 in
capitalized SALTS software development costs.

                                      F-41
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

    Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Accrued salaries, benefits and related taxes..............  $ 5,695    $ 7,098
Accrued vacation..........................................    3,663      3,243
Accrued bonuses...........................................    1,320        763
Accrued subcontractor and other direct costs..............   14,465      8,841
Accrued acquisition costs.................................      763        744
Provision for loss contracts..............................      683      1,391
Other accrued expenses and current liabilities............    1,200        692
                                                            -------    -------
                                                            $27,789    $22,772
                                                            =======    =======
</TABLE>

9. RELATED-PARTY TRANSACTIONS:

    In 1993, the Company entered into a ten-year lease with a real estate
management company ("10089 Management") to lease its headquarters facility. The
owners of 10089 Management include the principal stockholders of the Company.
The lease was scheduled to expire on August 31, 2003 and required rental
payments of approximately $29,000 per month, increased annually based on the
Consumer Price Index. In July 1999, the facility was sold to a non-affiliated
third party from whom the Company currently leases the facility.

    The Company also provided management services for 10089 Management at no
cost. Included in other receivables at September 30, 1998, was $88,000 due from
10089 Management for reimbursable operating expenses paid for by the Company.

                                      F-42
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. LONG-TERM DEBT:

    Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Line of credit:
  $60,000,000 line of credit with a commercial bank
    expiring February 28, 2002............................  $46,000    $35,000
  $400,000 line of credit with a commercial bank, interest
    at Prime plus 1%, due on demand.......................       50         --
Notes payable:
  Note payable to bank, interest at 9.9%, due
    February 2005, secured by a First Deed of Trust on an
    office building.......................................      951        964
Note payable to Urban Business Development Corporation,
  interest at 8.575%, due January 2015, guaranteed by the
  Small Business Administration and secured by a Second
  Deed of Trust on an office building.....................      666        687
                                                            -------    -------
                                                             47,667     36,651
Less current maturities...................................       87         87
                                                            -------    -------
                                                            $47,580    $36,564
                                                            =======    =======
</TABLE>

    The aggregate maturities of long-term debt in each of the next five fiscal
years is as follows (in thousands): $87 in 2000; $41 in 2001; $46,045 in 2002;
$48 in 2003; $55 in 2004 and $1,390 thereafter.

LINES OF CREDIT

    In February 1998, the Company entered into a line of credit arrangement,
consisting of two credit facilities aggregating $35,000,000, with a commercial
bank, refinancing the Company's then-existing line of credit and the outstanding
commercial bank debt of ISC. The Company's subsidiary, ISC, had three notes
payable totaling approximately $1,671,000 at the date of acquisition, secured by
accounts receivable, equipment and other assets, which were repaid using the
above mentioned facility in February 1998. The credit facility was also used to
finance the acquisition of AMI and to provide for the working capital needs of
the Company. The first facility, in an amount up to $15,000,000, may be used to
finance acquisitions, working capital, and other corporate purposes, and bears
interest at either the bank's prime rate or at a London interbank offered rate
("LIBOR") for one, two or three month periods, plus a percentage, not more than
2.2%, which depends on the Company's historical performance. The second
facility, in an amount up to $20,000,000, may be used to finance acquisitions,
and bears interest at either the bank's prime rate or at a LIBOR rate plus a
percentage, not more than 2.45%, which depends on the Company's historical
financial performance. The credit agreement contains various covenants requiring
the Company and its subsidiaries, on a consolidated basis, to maintain certain
financial ratios, including, funded debt to earnings before interest,
depreciation, income taxes and amortization ("EBITDA"), EBITDA coverage ratio
and minimum net worth and prohibits the payment of dividends.

                                      F-43
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. LONG-TERM DEBT: (CONTINUED)

    In June 1998, the line of credit arrangement was increased to $45,000,000,
from $35,000,000, to finance the acquisition of SEMCOR and to provide for the
working capital needs of the Company. This credit arrangement was subject to
similar terms and conditions as the original arrangement that was entered into
in February 1998.

    In February 1999, the line of credit arrangement was increased to
$60,000,000 to finance the additional contingent payment to the selling
shareholders of SEMCOR and to provide for the working capital needs of the
Company. This credit arrangement was subject to similar terms and conditions as
the original arrangement that was entered into in February 1998.

    Subsequent to year-end, the Company and the commercial bank executed an
amendment to the line of credit arrangement that restated the definition of
EBITDA to exclude $4,800,000 in calculating the funded debt to EBITDA financial
covenant with respect to any fiscal period from September 30, 1999, through and
including June 30, 2000. As of September 30, 1999, $58,400,000 was available on
this credit arrangement and the outstanding balance was $46,000,000 with an
additional $3,800,000 in standby letters of credit.

    In September 1999, the Company acquired PSA, and as a result, assumed its
liabilities that, in part, consisted of $50,000 outstanding under a line of
credit. This credit arrangement with a commercial bank, in the amount of
$400,000, bears interest at the bank's prime rate plus one percent and is due on
demand.

    At September 30, 1999, and 1998, the Company had $46,050,000 and
$35,000,000, respectively, outstanding under these arrangements. For the years
ended September 30, 1999, 1998 and 1997, interest expense under these credit
facilities was approximately $3,803,000, $1,410,000 and $136,000, respectively,
at weighted average interest rates of 8.16%, 8.10% and 8.75%, respectively.

11. INCOME TAXES:

    Following the completion of the Offering, the Company became subject to
federal and state income taxes. The following audited information for the years
ended September 30, 1999 and 1998, and the unaudited pro forma information for
the year ended September 30, 1997, has been determined based on the provisions
of SFAS No. 109. The September 30, 1997, information reflects income tax expense
(benefit) that the Company would have incurred had it been subject to federal
and state income taxes. The income tax provision for the years ended
September 30, 1999 and 1998, are based on actual amounts as the Company was
subject to federal and state income taxes for both years.

<TABLE>
<CAPTION>
                                                     YEARS ENDED SEPTEMBER 30,
                                               --------------------------------------
                                                 1999       1998     1997 (PRO FORMA)
                                               --------   --------   ----------------
                                                                       (UNAUDITED)
                                                           (IN THOUSANDS)
<S>                                            <C>        <C>        <C>
Income tax provision (benefit)
Current
  Federal....................................   $  391     $1,359          $521
  State......................................      803        440            75
Deferred.....................................    1,208      1,062           (25)
                                                ------     ------          ----
                                                $2,402     $2,861          $571
                                                ======     ======          ====
</TABLE>

                                      F-44
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INCOME TAXES: (CONTINUED)

    The provision for income taxes results in effective rates that differ from
the federal statutory rate as follows:

<TABLE>
<CAPTION>
                                                             SEPTEMBER 30,
                                                 --------------------------------------
                                                   1999       1998     1997 (PRO FORMA)
                                                 --------   --------   ----------------
                                                                         (UNAUDITED)
<S>                                              <C>        <C>        <C>
Statutory federal income tax rate..............     34.0%     34.0%          34.0%
State income taxes, net of federal tax
  benefit......................................      6.4       5.8            4.9
Other..........................................     (0.3)     (0.3)          (0.5)
                                                  ------      ----           ----
                                                    40.1%     39.5%          38.4%
                                                  ======      ====           ====
</TABLE>

    The Company had net operating loss carryforwards of approximately
$1,007,000, as of September 30, 1997, that were fully utilized in 1998.

    The components of the net deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                            -------------------
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Deferred tax assets
  Acquired in-process R & D write-off.....................  $   659    $   711
  Cash to accrual adjustment..............................      423        846
  Accrued vacation........................................    1,258        828
  Reserves................................................      318        208
  Accrued bonus...........................................      339        161
  Other...................................................      216         87
                                                            -------    -------
                                                              3,213      2,841
                                                            -------    -------
Deferred tax liabilities
  Unbilled receivables....................................   (4,309)    (2,332)
  Cash to accrual adjustment..............................     (456)      (879)
  Capitalized software development costs..................       --     (1,217)
  Amortization............................................   (1,303)      (250)
  Acquired contracts in process...........................     (379)        --
  Other...................................................     (309)       (80)
                                                            -------    -------
                                                             (6,756)    (4,758)
                                                            -------    -------
Total deferred tax liability..............................  $(3,543)   $(1,917)
                                                            =======    =======
</TABLE>

12. STOCKHOLDERS' EQUITY:

RECAPITALIZATION AND STOCK SPLIT

    On May 5, 1997, the Company amended and restated its Certificate of
Incorporation to increase the number of authorized shares to 40,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred
Stock, par value $.01 per share. In June 1997, the Board of Directors approved a
stock dividend having the effect of a 6,750-for-1 stock split of the Common
Stock, which

                                      F-45
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. STOCKHOLDERS' EQUITY: (CONTINUED)

was paid to the stockholders effective June 25, 1997. The change in the
Company's Common Stock for the stock dividend has been given retroactive effect
for all periods presented.

STOCK REDEMPTION AGREEMENTS

    All of the outstanding shares of common stock and options, upon exercise,
were subject to Stock Redemption Agreements. Under certain circumstances, the
Company was required to buy back the stock at a price equal to fair value, as
determined by the Board of Directors. Adjustment for redemption value greater
than amounts paid in by stockholders represents the change in the redemption
value per share of outstanding Common Stock in each period. The redemption value
per share, based on the fair market value, was $4.44 as of September 30, 1996.
The Stock Redemption Agreements were terminated in connection with the initial
public offering and the corresponding accretion was removed. All treasury stock
purchases were a result of the provisions of these Stock Redemption Agreements.

STOCK PLANS AND AGREEMENTS

    The 1997 Stock Incentive Plan of the Company (the "1997 Plan") was adopted
by the Company's Board of Directors effective March 1997 and by the Company's
stockholders on March 25, 1997. The Company may grant options, stock
appreciation rights, "performance" awards and restricted and unrestricted stock
(collectively, the "Awards") to purchase up to 450,000 shares of common stock,
plus additional annual amounts to participants in the Plan as prescribed in the
Amendment to the 1997 Stock Incentive Plan. In 1999, the Company's stockholders
approved an amendment to the 1997 Plan, that provided for automatic increases in
the number of shares reserved for issuance thereunder effective on the first
trading day of each of January 1999 and 2000. This amendment provides that the
Plan shall increase by a number of shares equal to the lesser of (i) two percent
(2%) of the total number of shares of the Company's common stock issued and
outstanding on the last trading day of the preceding December or (ii) 400,000
shares. (Such number shall be subject to adjustment by the Company's Board of
Directors under the terms of the Plan to take into account the effect of
extraordinary corporate transactions such as reorganization, merger,
consolidation, recapitalization, restructuring or other distribution, stock
split, spin-off or sale of substantially all of the Company's assets). The
additional amount reserved for issuance effective January 1, 1999, was 172,524
shares. The 1997 Plan has a term of 10 years. Options granted under the 1997
Plan can have an exercise period of up to 10 years. The 1997 Plan provides for
the grant of stock options to directors, employees (including officers) and
consultants of the Company and its subsidiaries. Pursuant to the 1997 Plan,
options may be incentive stock options within the meaning of Section 422 of the
Code or nonstatutory stock options, although incentive stock options may be
granted only to employees. All incentive stock options are nontransferable other
than by will or the laws of descent and distribution. At September 30, 1999 and
1998, 111,266 shares and 41,900 shares, respectively, were available for grant
under this plan.

    The 1996 Stock Incentive Plan of the Company (the "1996 Plan") was adopted
by the Company's Board of Directors and approved by the Company's stockholders
effective July 1996. The Company may grant options, stock appreciation rights,
"performance" awards and restricted and unrestricted stock (collectively, the
"Awards") to purchase up to 337,500 shares of common stock to participants in
the 1996 Plan. The 1996 Plan has a term of 10 years. Options granted under the
1996 Plan can have an exercise period of up to 10 years. The 1996 Plan provides
for the grant of stock options to directors,

                                      F-46
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. STOCKHOLDERS' EQUITY: (CONTINUED)

employees (including officers) and consultants of the Company and its
subsidiaries. Pursuant to the 1996 Plan, options may be incentive stock options
within the meaning of Section 422 of the Code or nonstatutory stock options,
although incentive stock options may be granted only to employees. All incentive
stock options are nontransferable other than by will or the laws of descent and
distribution. At September 30, 1999 and 1998, 49,775 shares and 24,250 shares,
respectively, were available for grant under the 1996 Plan.

    The Company's Employee Stock Purchase Plan (the "ESPP") was adopted by the
Board of Directors in March 1998. A total of 325,000 shares of common stock have
been reserved for issuance under the ESPP. Eligible employees may purchase a
limited number of shares of the Company's stock at 90% of the market value at
certain plan-defined dates. The ESPP automatically terminates on the earlier of
March 31, 2008 or the issuance of the maximum number of shares available under
the ESPP. At September 30, 1999 and 1998, 98,076 shares and 6,280 shares,
respectively, were issued under the ESPP. Pursuant to the terms of the Merger
Agreement with The Titan Corporation (See Note 15), the ESPP will be suspended
after December 31, 1999.

    In 1993, the Board of Directors granted options to purchase 101,250 shares
of common stock to various employees. The employees were fully vested in the
options upon granting, and the options expire on the earlier of January 1, 1998
or termination of employment. As of September 30, 1999, 1998 and 1997, none of
these options was exercisable. All sales of treasury stock were a result of the
exercise of options and stock issued under the Employee Stock Purchase Plan.

    The following table summarizes the activity of all the Company's stock
options:

<TABLE>
<CAPTION>
                                                                                          WEIGHTED
                                                                                          AVERAGE
                                                          NUMBER     EXERCISE PRICE    EXERCISE PRICE
                                                         OF SHARES      PER SHARE        PER SHARE
                                                         ---------   ---------------   --------------
<S>                                                      <C>         <C>               <C>
Shares under option, September 30, 1996................   229,500    $   0.70 - 4.44       $ 3.12
  Options granted......................................   115,000               6.50         6.50
  Options granted......................................   108,800       7.50 - 9.875         8.10
  Options exercised....................................   (81,000)              0.70         0.70
  Options forfeited....................................   (13,500)              4.44         4.44
                                                          -------    ---------------       ------
Shares under option, September 30, 1997................   358,800       0.70 - 9.875         6.21
  Options granted......................................   391,800     8.875 - 14.375        11.06
  Options exercised....................................   (83,833)       4.44 - 7.50         5.79
  Options forfeited....................................   (30,250)     4.44 - 12.125         4.69
                                                          -------    ---------------       ------
Shares under option, September 30, 1998................   636,517      4.44 - 14.375         9.30
  Options granted......................................   165,975       8.50 - 11.75        11.41
  Options exercised....................................   (61,578)     4.44 - 11.375         7.01
  Options forfeited....................................   (87,342)     4.44 - 11.375        10.85
                                                          -------    ---------------       ------
Shares under option, September 30, 1999................   653,572    $ 4.44 - 14.375       $ 9.85
                                                          =======    ===============       ======
</TABLE>

    Options outstanding at September 30, 1999 had a weighted average remaining
contractual life of 6.7 years. The fair value per share of all options issued in
1999, estimated on the date of grant using the Black-Scholes option pricing
model, is $6.19.

                                      F-47
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. STOCKHOLDERS' EQUITY: (CONTINUED)

    The Company adopted the disclosure requirements of SFAS No. 123, Accounting
for Stock-Based Compensation, effective for the Company's September 30, 1997
financial statements. The Company applies Accounting Principles Board Opinion
No. 25 and related interpretations in accounting for its stock plans. No
compensation cost has been recognized for its stock plans based on the intrinsic
value of the stock options at date of grant (i.e., the difference between the
exercise price and the fair value of the common stock). Had compensation cost
for the Company's stock-based compensation plans been determined based on the
fair value at the grant dates under those plans consistent with the method of
FASB Statement 123, the Company's net income and net income per share would have
been reduced to the amounts indicated below:

<TABLE>
<CAPTION>
                                                      YEAR ENDED SEPTEMBER 30
                                               --------------------------------------
                                                 1999       1998     1997 (PRO FORMA)
                                               --------   --------   ----------------
                                                                       (UNAUDITED)
<S>                                            <C>        <C>        <C>
Net income (in thousands)--
  As reported................................   $3,581     $4,374         $ 915
  SFAS No. 123 pro forma.....................   $3,000     $3,891         $ 826
Net income per share--
  As reported--basic.........................   $ 0.41     $ 0.61         $0.20
  SFAS No. 123 pro forma--basic..............   $ 0.35     $ 0.54         $0.18
  As reported--diluted.......................   $ 0.41     $ 0.60         $0.19
  SFAS No. 123 pro forma--diluted............   $ 0.34     $ 0.53         $0.17
</TABLE>

    The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                                      SEPTEMBER 30
                                                          ------------------------------------
                                                            1999          1998          1997
                                                          --------      --------      --------
<S>                                                       <C>           <C>           <C>
Expected Dividend Yield.................................     0.0%          0.0%          0.0%
Risk-Free Interest Rate.................................     5.3%          4.5%          6.4%
Expected Volatility.....................................    44.0%         58.7%         57.6%
Expected Life (in years)................................     7.0           8.0           7.5
</TABLE>

13. COMMITMENTS:

LEASE COMMITMENTS

    The Company has entered into a master leasing agreement in which the Company
sells computer equipment at the original purchase price to a leasing company and
then leases the equipment back. There have been no gains or losses associated
with these sales/leasebacks. All leases related to this master leasing agreement
have been accounted for as capital leases. As of September 30, 1999 and 1998 the
Company recorded approximately $1,297,000 and $1,623,000, respectively, for
obligations under capital leases.

    The Company leases office space and equipment under various operating and
capital lease agreements expiring through June 2004. Most leases include a
provision for annual rent adjustments

                                      F-48
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. COMMITMENTS: (CONTINUED)

based on changes in various economic indices. Future minimum lease payments
under noncancelable operating leases as of September 30, 1999, were as follows:

<TABLE>
<CAPTION>
                                                            OPERATING   CAPITAL
YEAR ENDED SEPTEMBER 30,                                     LEASES      LEASES
------------------------                                    ---------   --------
                                                               (IN THOUSANDS)
<S>                                                         <C>         <C>
2000......................................................   $ 4,560     $  973
2001......................................................     4,045        450
2002......................................................     2,608         --
2003......................................................     1,291         --
2004......................................................       295         --
Less interest.............................................        --       (126)
                                                             -------     ------
  Total...................................................   $12,799     $1,297
                                                             =======     ======
</TABLE>

    During 1993, the Company entered into a lease agreement for office space
with a related party which includes the principal stockholders of the Company
(See Note 9). For the years ended September 30, 1999, 1998 and 1997, rent
expense related to this lease totaled $280,000, $336,000 and $257,000,
respectively. Amounts representing aggregate rent expense on all operating
leases, excluding the related party lease, totaled $3,257,000, $2,426,000 and
$1,066,000 for the years ended September 30, 1999, 1998 and 1997, respectively.

PROFIT-SHARING PLAN

    The Company provides a profit-sharing plan (401(k) plan) which covers
substantially all employees. Under the terms of the plan, the Company may make
discretionary profit-sharing contributions and discretionary matching
contributions, each determined annually by the Board of Directors. Contributions
charged to expense for the years ended September 30, 1999, 1998 and 1997, were
$1,843,000, $860,000 and $236,000, respectively.

LITIGATION

    In August 1999, the Company filed an action against the McGraw-Hill
Companies, Inc. ("McGraw-Hill") in the United States District Court for the
District of New Jersey (the "New Jersey Action"), seeking recovery of
approximately $186,000 in fees for services performed pursuant to certain
contracts. McGraw-Hill has threatened to file a counterclaim against the Company
seeking recovery of $500,000, on allegations that the Company negligently
designed certain software for McGraw-Hill, which negligence caused significant
problems to McGraw-Hill customers. The Company files its answer to the
counterclaim in December 1999, and it believes that it has a meritorious defense
to the counterclaims and intends to conduct a vigorous defense.

    The Company is from time to time involved in litigation incidental to the
conduct of its business. The Company currently is not a party to any legal
proceedings, other than the action referred to above, and, in the opinion of
management the amount of ultimate liability or recovery with respect to such
actions will not materially affect the financial position or results of
operations of the Company.

                                      F-49
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SEGMENT REPORTING

    The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 131, Disclosure about Segments of an Enterprise and Related
Information. SFAS No. 131 requires publicly-held companies to report financial
and other information about key revenue-producing segments of the entity for
which such information is available and is utilized by the chief operating
decision-maker in deciding how to allocate resources and in assessing
performance. SFAS No. 131 permits operating segments to be aggregated if they
have similar products and services, customers, methods of distribution, and
belong to the same regulatory environment.

    The Company's revenues are derived predominately from the U.S. Government
through long-term cost reimbursement, fixed-price or time and materials
contracts. The Company's operating margin is affected by the mix of contract
types. These contracts are administered and executed under the Federal
Acquisition Regulations. The Company makes vertical market disclosures such as,
communication services, information systems and aerospace services. The chief
operating decision-maker does not allocate resources and does not assess the
performance by the above classifications. The Company manages on a contract by
contract basis. Accordingly, the Company's government contracts are considered
to be one reportable operating segment.

15. SUBSEQUENT EVENTS

AGREEMENT AND PLAN OF MERGER

    On December 9, 1999, the Company entered into a definitive agreement to
merge with The Titan Corporation ("Titan", NYSE: TTN) in a tax-free exchange of
Titan common stock for the Company's common stock at an approximate value
ranging from $18 to $22 per the Company's common share. The transaction has been
approved by the board of directors of both companies and is subject to the
Company's shareholder and regulatory approval.

EXECUTIVE RETIREMENT PLAN

    On October 25, 1999, the Board of Directors approved an executive retirement
plan which is intended to be an unfunded plan for purposes of providing deferred
compensation to a select group of management or highly compensated employees. An
employee shall become a participant under this plan upon approval of the
Compensation Committee following recommendation by the Chief Executive Officer
of the Company. The Chief Executive Officer is currently the only participant in
the plan and is eligible to receive, upon his retirement, approximately one year
of salary of $350,000.

                                      F-50
<PAGE>
                      ADVANCED COMMUNICATION SYSTEMS, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                             BALANCE AT              CHARGED TO                 BALANCE AT
                                             BEGINNING                  OTHER                     END OF
DESCRIPTION                                  OF PERIOD    CHARGES    ACCOUNTS(1)   DEDUCTIONS     PERIOD
-----------                                  ----------   --------   -----------   ----------   ----------
<S>                                          <C>          <C>        <C>           <C>          <C>
Year ended September 30, 1999:
  Allowance for doubtful accounts..........    $1,139      $2,514     $     --       $(2,692)     $  961

Year ended September 30, 1998:
  Allowance for doubtful accounts..........    $   --      $   --     $  1,917       $  (778)     $1,139

Year ended September 30, 1997:
  Allowance for doubtful accounts..........    $   --      $   --     $     --       $    --      $   --
</TABLE>

------------------------

(1) Represents amounts that were charged to the allowance for doubtful accounts
    as a result of purchase accounting and the allocation of the purchase price
    to the acquired assets and liabilities at their fair values.

                                      F-51
<PAGE>
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