On December 21, 2005, the Court entered the Order by Judge Larry A. Burn approving the Plan of Allocation, and awarding attorneys’ fees in the amount of 25% of the Settlement Fund and reimbursement expenses in an aggregate amount of $247,549.25. Further, Lead Plaintiff Israel Shurkin was awarded the amount of $2,050 for reimbursement of time and expenses incurred in representing the Securities Class. The day, the Court also entered the Final Judgment and Order of Dismissal with Prejudice, and the case was terminated.
On September 27, 2005, a Stipulation of Settlement and Order by Judge Larry A. Burns was filed. According to the Stipulation, the settlement fund is in the amount of $61,500,000 in cash. The Holder Actions, originally filed in the Superior Court for the State of California, County of San Diego, and included in the claims of the July 18, 2005 First Amended Consolidated Complaint, also established a settlement fund in the amount of $3,000,000.
On May 10, 2004, an Amended Complaint was filed. On July 12, 2004, the Court entered the Stipulation consolidating related class actions, granting the motion to appoint Israel Shurkin as lead plaintiff and approving lead plaintiff's choice of lead counsel. On September 17, 2004, a Consolidated Complaint was filed, and the defendants responded by filing motions to dismiss the Consolidated Complaint. On May 16, 2005, the Court entered the Order granting the motion for leave to file a First Amended Consolidated Complaint and denied the defendants’ motions to dismiss as moot. On July 18, 2005, a First Amended Consolidated Complaint was filed. On August 29, 2005, the plaintiffs filed a motion for preliminary approval of settlement.
The original complaint alleges that Titan and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The Complaint alleges that defendants made material misstatements with respect to the Company's financial results. More specifically, the Complaint alleges that defendants failed to disclose and indicate the following in defendants' effort to get its merger with Lockheed Martin Corporation ('Lockheed Martin') approved by shareholders and various regulators: (1) that foreign consultants for Titan were engaging in questionable and potentially illegal activities; (2) that foreign consultants for Titan made improper payments to foreign government officials in violation of Foreign Corrupt Practices Act; (3) that Titan improperly accounted for the funds used in these payments; and (4) as a result, Titan's improper accounting for such payments allowed Titan to enter into a definitive merger agreement with Lockheed Martin.
More specifically, the complaint alleges that on February 13, 2004, Titan announced that representatives of Lockheed Martin and Titan recently initiated meetings with the Department of Justice and the Securities and Exchange Commission to advise of an internal review relating to certain agreements between Titan and international consultants and related payments in foreign countries. The complaint alleges that on March 5, 2004, Lockheed Martin announced that it had learned of allegations that improper payments were made, or items of value were provided, by consultants for Titan or its subsidiaries to foreign officials. Also on March 5, 2004, Titan confirmed that it had learned of allegations that improper payments were made, or items of value were provided, by consultants for the company or its subsidiaries to foreign officials. The allegations were identified as part of an ongoing review conducted with Lockheed Martin of payments to Titan's international consultants in connection with the proposed acquisition of Titan by Lockheed Martin.
News of this shocked the market with shares of Titan falling $1.82 per share to close at $19.11 per share. On March 22, 2004, The Wall Street Journal reported that internal investigators of both Titan and Lockheed Martin had found that Titan had made potentially improper payments oversees. According to the article, Titan made millions of dollars in suspicious payments, some as recently as last year, while competing for business in Africa, the Middle East, and Asia. Moreover, the article reported that the Company was scheduled to hold talks with the Department of Justice about a possible plea agreement. On news of this shares of Titan fell $0.43 per share to close at $19.73 per share.