Quovadx, Inc. is a global software and services firm, primarily for the healthcare industry.

According to the Company’s Form 10-K for the fiscal year ended December 31, 2005, on May 17, 2004, a purported class action Complaint was filed in the United States District Court for the District of Colorado, entitled Henderson v. Quovadx, Inc. et al, Case No. 04-M-1006 (OES), against Quovadx, its now-former Chief Executive Officer, its now-former Chief Financial Officer and its Board of Directors. The Complaint alleged violations of Section 11 and Section 15 of the Securities Act of 1933, as amended, purportedly on behalf of all former stockholders of Rogue Wave Software, Inc. who acquired Quovadx common stock in connection with the Company’s exchange offer effective December 19, 2003. The claims are based upon the same theories and allegations as asserted in the Section 10(b) class action, entitled Heller v. Quovadx, Inc., et al., Case No. 04-M-0665 (OES) (D. Colo.). The court denied Plaintiff’s motion to consolidate this Section 11 action with the Section 10(b) cases. On July 14, 2004, the Company and outside director Defendants filed an answer to the Complaint, denying allegations of wrongdoing and asserting various affirmative defenses. On October 4, 2004, the Company’s former CEO and CFO filed an answer to the Complaint, denying allegations of wrongdoing and asserting various affirmative defenses. On June 29, 2005, the court appointed the Special Situations Fund III, L.P., and three other related funds (collectively, “SSF”) as lead Plaintiffs. On July 26, 2005, SSF filed an amended Complaint, under the caption Special Situations Fund III, L.P., et al. v. Quovadx, Inc., et al., Case No. 04-M-1006 (“SSF”). The amended Complaint asserts the same claims as those asserted in the original Complaint, and includes an additional allegation that the Infotech revenue was falsely recognized as part of a fraud to inflate Quovadx’ stock price for the Rogue Wave acquisition.

On August 1, 2005, the court approved the appointment of SSF’s Counsel as lead Plaintiffs’ Counsel. On August 23, 2005, the Company and outside director Defendants filed an answer to the amended Complaint, denying allegations of wrongdoing and asserting various affirmative defenses. On August 25, 2005, the Company’s former CEO and CFO filed an answer to the amended Complaint, denying allegations of wrongdoing and asserting various affirmative defenses. On December 1, 2005, SSF filed a motion for partial summary judgment on the issue of liability under Section 11. On December 23, 2005, SSF filed a motion to dismiss without prejudice the individual Defendants, and all Defendants indicated to the court they do not oppose this motion to dismiss the individual Defendants. On January 11, 2006, the Company filed a statement of non-opposition to SSF’s motion for partial summary judgment, conceding that the subsequently restated third quarter 2003 financial statements incorporated by reference in the S-4 Registration Statement established prima facie liability for the Company to the Plaintiff class under Section 11. On February 24, 2006, the court held a scheduling conference. Pursuant to the court’s instruction at that conference, Counsel for all parties are in the process of agreeing upon a proposed scheduling order, and notice to the class members. Although the Company has not opposed a determination of its prima facie liability under Section 11, because the parties have not yet conducted discovery on, or completed expert analysis of, issues regarding damages and causation, it is not possible for us to quantify the extent and amount of liability in this action.

As summarized by the same SEC filing, on December 13 and 14, 2005, a voluntary mediation was held among the following parties: Plaintiffs in each of the Heller, SSF and derivative cases; the Company; the individual director Defendants; the former officer Defendants; and the various director and officer insurance carriers. As a result of the mediation and subsequent discussions, the parties reached a preliminary understanding to settle the Heller case and the derivative cases.

In a press release dated January 3, 2007, Quovadx announced that it has reached an agreement to settle for $7.8 million the last of three legacy lawsuits that arose from the Company's 2004 restatement of historical financial results. On December 26, 2006, the Company entered into a memorandum of understanding ("MOU") with lead Plaintiffs to settle claims brought in the class action originally entitled Henderson v. Quovadx, Inc. et al., filed on May 17, 2004. The suit, subsequently consolidated under the caption Special Situations Fund III, L.P. et al. v. Quovadx, Inc., was pending in federal court in the District of Colorado. Under the terms of the MOU, Quovadx will pay $7.8 million, by January 15, 2007, into a settlement fund established by the lead Plaintiffs' Counsel in exchange for a release with prejudice of all claims that were or could have been asserted by the Plaintiffs against the Company and the former individual Defendants arising out of or relating to the acquisition of Quovadx common stock in connection with Quovadx's December 2003 exchange offer for all outstanding shares of Rogue Wave Software, Inc. The lead Plaintiffs' attorneys' fees and expenses, in amounts approved by the Court, as well as the cost of administering the settlement, will be paid from the settlement fund. The agreement is subject to, among other things, approval by the Court.

On February 9, 2007, the Court entered the Order signed by U.S. District Judge Richard P. Matsch granting motion to preliminarily approve the class action settlement. The Settlement Fairness Hearing was set for May 4, 2007 at 10 AM.

According to a press release dated May 7, 2007, Quovadx announced that on May 4, 2007, in federal court in the District of Colorado, Senior District Judge Richard P. Matsch granted final court approval of the settlement of the class action lawsuit captioned Special Situations Fund III, L.P. et al. v. Quovadx, Inc. This is the final resolution of the three legacy shareholder lawsuits that arose from the Company's 2004 restatement of historical financial results.