According to the Company’s FORM 10-Q for the quarter ended June 30, 2006, in July 2001, the Company and several of its current and former officers were named as defendants in two securities class-action lawsuits based on alleged errors and omissions concerning underwriting terms in the prospectus for our initial public offering. In April 2002, these lawsuits were consolidated with more than 300 similar pending cases filed against companies that completed initial public offerings between 1997 and 2000 and the underwriters that took them public. In July 2003, the Company decided to participate in a proposed settlement negotiated by representatives of a coalition of issuers named as defendants in similar actions and their insurers. Although the Company believes that the plaintiffs’ claims have no merit, the Company decided to participate in the proposed settlement to avoid the cost and distraction of continued litigation. The proposed settlement agreement would dispose of all remaining claims against the Company and the individual present and former officers of Concur named as defendants, without any admission of wrongdoing by the Company or the individual defendants. The proposed settlement has been preliminarily approved by the court, but remains subject to final approval by the parties and the court.
The complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) defendant had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendant allocated to those investors material portions of the restricted number of Concur shares issued in connection with the Concur IPO; and (ii) defendant had entered into agreements with customers whereby defendant agreed to allocate Concur shares to those customers in the Concur IPO in exchange for which the customers agreed to purchase additional Concur shares in the aftermarket at pre-determined prices. As alleged in the complaint, the SEC is investigating underwriting practices in connection with several other initial public offerings.