VitalWorks, Inc. provides healthcare practice management and clinical software and services in the United States.

The Complaint alleges, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder and breach of fiduciary duties. The Complaint alleges that the Defendants made misleading statements and omissions regarding the Company's business and operations, principally in press releases and public conference calls in April 2002 and July 2002, which allegedly had the effect of artificially inflating the market price of VitalWorks common stock during the Class Period, and that six Company officers, including the Defendant officers, sold shares of common stock during the Class Period.

Specifically, the Complaint alleges that the Defendants issued false and misleading statements concerning the Company's increasing revenues and future prospects. On October 23, 2002, VitalWorks announced that it had failed to achieve pre- announced third quarter 2002 revenues and was lowering revenue guidance for the remainder of fiscal year 2002; additionally, the Company reported that it was lowering revenue guidance for fiscal year 2003 by over 10%. Market reaction to Defendants' belated disclosures was swift and severe. On October 24, 2002, the first day of trading following VitalWorks announcements, the price of VitalWorks common shares fell over 56% in value to close at $3.13 per share on record trading volume of over 14 million shares.

Three or more additional Complaints containing substantially similar causes of action as the above referenced matter were filed. The Court appointed a lead Plaintiff on or about May 16, 2003.

On or about July 31, 2003, a Consolidated Class Action Complaint was filed in the United States District Court for the District of Connecticut on behalf of purchasers of the common stock of VitalWorks during the class period of January 24, 2002 to October 23, 2002. The Defendants are VitalWorks and three individual officers and directors. Plaintiffs have asserted claims against the Defendants under Section 10(b) of the Securities Exchange Act of 1934 and against the individual Defendants under Section 20(a) of the Exchange Act. According to the Consolidated Complaint, the Defendants are alleged to have made materially false and misleading statements during the Class Period concerning VitalWorks products and financial forecasts. In addition, the Consolidated Complaint alleges that the individual Defendants acted as controlling persons in connection with the alleged securities law violations. Compensatory damages in an unspecified amount, pre-judgment and post-judgment interest, costs and expenses, including reasonable attorneys' fees and experts' fees and other costs, as well as other relief the Court may deem just and proper are sought.

According to the Company’s FORM 10-Q for the Quarterly Period Ended September 30, 2004, on November 14, 2003, the Defendants filed with the Court a motion to dismiss the Consolidated Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and (9)(b). In a decision entered on October 1, 2004, Untied States District Judge Janet Bond Arterton dismissed with prejudice the Consolidated Complaint as to all Defendants.