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Case 1:04-cv-01006-RPM

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Filed 03/08/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 04-cv- O1006- RPM
III L.P. SPECIAL SITUATIONS CAYMAN FUND , L.P. SPECIAL SITUATIONS TECHNOLOGY FUND NEW , L.P. ; and SPECIAL SITUATIONS TECHNOLOGY FUND L.P. , on behalf of themselves and others
SPECIAL SITUATIONS FUND

similarly situated

Plaintiffs

QUOVADX , INC. LORINE R. SWEENEY; GARY T. SCHERPING; JEFFREY M. KRAUSS; FRED L. BROWN; 1. ANDREW COWHERD; JAMES B. HOOVER; CHARLES 1. ROESSLEIN , and JAMES A. GILBERT Defendants.

(PROPOSED) ORDER ON LEAD PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT

THIS MATTER having come before this Court upon Lead Plaintiffs ' Motion for Partial
Summary Judgment as to Liability
(the " Motion ); and having considered the affidavits and

arguments submitted by lead plaintiffs in

support of said Motion; and having considered the

Statement of Non- Opposition submitted by defendant Quovadx , Inc. (" Quovadx ) in response to the

Motion; and having considered the withdrawal of said Motion with respect to defendants Lorine
Sweeney, Gary L.

Scherping, Jeffrey M. Krauss , Fred L. Brown , 1. Andrew Cowherd , James B.

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Hoover , Charles 1. Roesslein and James A. Gilbert (collectively, the " Individual Defendants ); and
the Court being advised in the premises and for good cause shown , hereby ORDERS that:

Said Motion is GRANTED as to Quovadx , pursuant to the following Findings of Fact and
Conclusions of Law:

Findim!s of Fact
On November 3 , 2003 ,

Quovadx filed its Form 10- Q for the third quarter of 2003

ending September 30 , 2003 (Lead Plaintiffs ' Memorandum of Law in Support of Their Motion for
Partial Summary Judgment as to Liability (" Memo.
) at 3).

The financial statements for Quovadx for the third quarter

of 2003 ,

which were

contained in the Form 10- Q for the third quarter of2003 , reported that revenues for that quarter were
approximately $19. 9
million

(id)

The revenues reported by Quovadx for the third quarter of 2003 included revenue
recognized from sales to Infotech Network Group (" Infotech" (id).
On November 4 , 2003 , Quovadx announced

that it had executed a definitive
(id

agreement for the acquisition of Rogue Wave Software , Inc. (" Rogue Wave

at 1).

The acquisition was structured as an exchange offer which provided that Quovadx

would acquire all of the outstanding stock of Rogue Wave for $4. 09 in cash and 0. 5292 of a share of
Quovadx common stock for each share of Rogue Wave common stock.

(id).
Registration Statement on Form S- 4
(the

On November 12 , 2003 , Quovadx filed a

Registration Statement" ) with the Securities and Exchange Commission in connection with its offer
to exchange the common stock of Rogue Wave (id

at 4).

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The Registration Statement incorporated by reference Quovadx s Form 10- Q for the
third quarter of 2003

(id).
The Registration Statement , as amended , became effective on December 19 , 2003

(id).
On December 19 , 2003 ,
shares of Rogue Wave

Quovadx completed the acquisition of all of the outstanding

(id).
On March 15 ,

10.

2004 , Quovadx announced that it restated its financial statements for
(id

the third quarter of 2003 to eliminate all revenue previously recognized from sales to Infotech

5).
11.

As a result of the restatement of the financial statements for the third quarter of 2003

revenues for that quarter were reduced by $4. 6 million to approximately $15.2 million

(id).

Conclusions of Law

The amount of revenues originally reported in Quovadx s Form 10- Q for the third
quarter of 2003 ,
as incorporated by reference in the Registration Statement ,

constituted an untrue

statement of material fact.
Because the Registration Statement , when
aforementioned untrue

it became effective ,
is liable

contained the

statement of material fact ,

Quovadx

under Section

11 of the

Securities Act of 1933 , 15 US. C. 9 77k , to members of the Class (as defined by this Court' s Order
dated November 10 , 2003).

The Court further ORDERS that said Motion is DENIED as moot as to the Individual
Defendants.

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Nothing in this Order shall be construed as determining whether the misstatement in the

Registration Statement caused any damage to the members of the Class , or the amount of damages
that may be recovered by particular members of the Class.

Nothing in this order shall be construed as precluding Lead Plaintiffs from moving for
summary judgment on any other theories of liability, including on the grounds that the Registration
Statement omitted facts in violation of Section 11.
DONE THIS

DAY OF

2006

BY THE COURT:

HON. RICHARD P. MATSCH UNITED STATES DISTRICT JUDGE

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