UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO

SPECIAL SITUATIONS FUND III, L .P ., SPECIALSITUATIONS CAYMAN FUND, L .P., SPECIAL SITUATIONSTECHNOLOGY FUND NEW, L .P ., AND SPECIALSITUATIONS TECHNOLOGY FUND II, L .P ., ON BEHALFOF THEMSELVES AND OTHERS SIMILARLY SITUATED ,

Plaintiffs ,

V.

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

Defendants .

Civil Action No .1 :04 - cv - 01006 (RPM )

FIRST AMENDED CLASS ACTION COMPLAIN T

Special Situations Fund III, L.P ., Special Situations Cayman Fund, L.P., Special

Situations Technology Fund New, L .P., and Special Situations Technology Fund II, L .P .

(collectively "Plaintiffs" or "Special Situations") make the following allegations based upon the

investigation of Plaintiffs' counsel, which included a review of United States Securities and

Exchange Commission ("SEC") filings by Quovadx, Inc . ("Quovadx" or "the Company"), as

well as regulatory filings and reports, securities analysts' reports and advisories about the

Company, press releases and other public statements issued by the Company and media reports

about the Company. Plaintiffs believe that substantial additional evidentiary support will exist

for the allegations set forth herein after a reasonable opportunity for discovery .

S5313/6807/25/2005 1753375 .02

SUMMARY OF THE ALLEGATION S

1 . This is a securities class action brought under §§11 and 15 of the Securities Act of

1933 (the "Securities Act"), 15 U.S .C. §§77k and 77o.

2. This case is brought on behalf of all persons and entities, other than Defendants,

who acquired Quovadx common stock in connection with Quovadx's exchange offer for all of

the outstanding shares of Rogue Wave Software, Inc . ("Rogue Wave") which became effective

on or about December 19, 2003 (the "Exchange Offer") . This claim alleges that Quovadx's

Registration Statement on Form S-4 relating to the exchange offer by Quovadx for Rogue Wave,

dated December 10, 2003, (the "Registration Statement") was materially false and misleading

and misrepresented material facts, including, among other things, Quovadx financial results for

the third quarter of 2003 .

3 . This claim is brought against Quovadx, the issuer of the exchange offer, and the

Company's executive officers and directors who signed the Registration Statement in connection

with the exchange offer .

4. On March 15, 2004, the Company announced that it would restate its 2003 third

quarter financial results and revise its previously announced preliminary 2003 fourth quarter and

full year financial results .

5 . The restatement of the third quarter financial results was caused by the

Company's improper recognition of $4 .6 million of revenue from an outsourcing contract with

an Indian conglomerate, InfoTech Network Group (the "InfoTech Contract") . Ultimately, the

Company ended up erasing more than $11 million of fraudulently booked revenue .

6. While the March 15 announcement merely implied that the restatement was the

result of an untimely booking of revenue by the Company -- causing the Company's stock price

to drop from $5 .03 to $3 .58 -- the true extent of the Company's fraud unfolded slowly over time

and was revealed through several press releases issued by the Company after March 15 . Every

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time one of these announcements was issued and new facts came to light, the price of Quovadx

stock plunged deeper, declining to $1 .03 on the day this suit was filed .

JURISDICTION AND VENUE

7. This Court has juri sdiction over the subject matter of this action pursuant t o

Section 27 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78aa and

28 U.S .C .§ 1331 .

8. The claims asserted herein arise under Sections 11 and 15 of the Securities Act o f

1933 (the "Secu rities Act"), 15 U.S .C . §§ 77k and 77o .

9. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because many o f

the acts alleged herein, including the preparation and dissemination of materially false an d

misleading information occurred in this District . Moreover, the Company maintains its principa l

place of business within this District .

10. In connection with the acts alleged in this Complaint, Defendants, directly o r

indirectly, used the means and instrumentalities of interstate commerce, including, but no t

limited to, the mails, interstate telephone communications and the facilities of the nationa l

securities markets .

PARTIES

11 . Plaintiffs Special Situations acquired shares of Quovadx common stock at an

artificially inflated price as set forth in their certification annexed hereto on or about Decembe r

22, 2003, in connection with the acquisition by Quovadx of all of the outstanding shares o f

Rogue Wave and were damaged thereby .

12 . Defendant Quovadx is a global software and services firm which offers an

integrated suite of application development tools and vertical enterprise applications for

companies in healthcare, financial services, software, telecommunications, public sector,

manufacturing, and life sciences. Quovadx is a Delaware corporation with its principal place of

business located at 6400 S. Fiddler's Green Circle, Suite 1000, Englewood, Colorado 80111 .

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13. Defendant Lorine R. Sweeney ("Sweeney") was, at all relevant times, th e

Company's President, Chief Executive Officer and a member of the Board of Directors .

14. Defendant Gary T. Scherping ("Scherping") was, at all relevant times, the

Company's Executive Vice President and Chief Financial Officer .

15. Defendant Jeffrey M. Krauss ("Krauss" ) was, at all relevant times , a director o f

Quovadx . On or about December 10, 2003, Krauss signed Quovadx's Registration Statement on

Form S-4 in connection with the Company's exchange offer for all of the outstanding shares o f

Rogue Wave.

16. Defendant Fred L. Brown ("Brown") was, at all relevant times , a director of

Quovadx . On or about December 10, 2003, Brown signed Quovadx's Registration Statement o n

Form S-4 in connection with the Company' s exchange offer for all of the outstanding shares of

Rogue Wave .

17. Defendant J. Andrew Cowherd ("Cowherd") was, at all relevant times , a directo r

of Quovadx. On or about December 10, 2003, Cowherd signed Quovadx's Registratio n

Statement on Form S-4 in connection with the Company's exchange offer for all of the

outstanding shares of Rogue Wave .

18 . Defendant James B . Hoover ("Hoover") was, at all relevant times, a director o f

Quovadx . On or about December 10, 2003, Hoover signed Quovadx's Registration Statement o n

Form S-4 in connection with the Company's exchange offer for all of the outstanding shares o f

Rogue Wave .

19. Defendant Charles J . Roesslein ("Roesslein") was, at all relevant times, a director

of Quovadx. On or about December 10, 2003, Roesslein signed Quovadx's Registratio n

Statement on Form S-4 in connection with the Company' s exchange offer for all of the

outstanding shares of Rogue Wave .

20. Defendant James A. Gilbert ("Gilbert") was, at all relevant times, a director of

Quovadx. On or about December 10, 2003, Gilbert signed Quovadx ' s Registration Statement on

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Form S-4 in connection with the Company's exchange offer for all of the outstanding shares of

Rogue Wave.

21 . Defendants Sweeney, Scherping, Krauss, Brown, Cowherd, Hoover, Roesslein,

and Gilbert are referred herein as the "Individual Defendants ."

22 . The Individual Defendants were officers and directors of the Company at the tim e

the alleged false and misleading statements were made and are liable as direct participants in the

wrong complained of herein . The Individual Defendants, by reason of their executive positions

with the Company, board membership and/or representations, and/or ownership of the

Company's securities, were controlling persons of the Company and had the power and

influence, and exercised same, to cause the Company to engage in the conduct complained of

herein. The Individual Defendants were in a position to control or influence the contents of, or

otherwise cause corrective disclosures to have been made in the public dissemination of the false

and misleading information.

CLASS ACTION ALLEGATIONS

23 . Plaintiffs brings this action as a class action pursuant to Rule 23(a) and (b)(3) of

the Federal Rules of Civil Procedure on behalf of a class consisting of all persons and entities

who acquired the common stock of Quovadx in connection with Quovadx's Exchange Offer for

all of the outstanding stock of Rogue Wave on or about December 19, 2003 .

24. Members of the Class are so numerous that joinder of all members i s

impracticable . As of March 12, 2004, Quovadx had approximately 39 .4 million shares of

common stock issued and outstanding which were actively traded on Nasdaq . While the exact

number of Class members is unknown to the Plaintiffs at this time and can only be ascertained

through appropriate discovery, Plaintiffs believe that there are thousands of Class members who

acquired Quovadx common stock through the Exchange Offer .

25 . Plaintiffs' claims are typical of the claims of the other members of the Class .

Plaintiffs and the other members of the Class have sustained damages because of the Defendants '

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unlawful activities alleged herein . Plaintiffs have retained counsel competent and experienced in

class and securities litigation and intend to prosecute this action vigorously . The interests of the

Class will be fairly and adequately protected by Plaintiffs . Plaintiffs have no interests which are

contrary to or in conflict with those of the Class that Plaintiffs seek to represent .

26 . A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy. Plaintiffs know of no difficulty to be encountered in the

management of this action that would preclude its maintenance as a class action .

27. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class . Among the

questions of law and fact common to the Class are :

a. whether the federal securities laws were violated by Defendants' acts as

alleged herein ;

b. whether the Defendants misstated Quovadx's financial results for the thir d

quarter of 2003, which results were included in the Registration Statement on Form S-4 file d

with the SEC in connection with the exchange offer for the shares of Rogue Wave ;

c whether Defendants participated directly or indirectly in the course o f

conduct complained of herein ; and

d. whether the members of the Class have sustained damages as a result o f

Defendants' conduct and the proper measure of such damages .

BACKGROUND

28 . On October 22, 2003, the Company issued a press release under the title

"Quovadx Signs $7 .6 Million Distribution and Software Development Agreement with Infotech

Network Group; Agreement Represents Largest Software Sale in Company History ; Outsourcing

Agreement Expected to Improve Services Margins ." This press release set forth in relevant part :

Quovadx, Inc., a global platform software and vertical solutions company,today announced a $7 .6 million software, training, maintenance andsupport agreement with InfoTech Network Group, a consortium of 1 5

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companies providing software development services, back-office and call-center support, based in India and the United States .

Quovadx has recognized $4.6 million of this amount during the thirdquarter of 2003 and expects to recognize the remainder over the nextfour quarters.

29 . In a different press release issued also on October 22, 2003, the Company

reported its "Highest Quarterly Revenue in Company's History, up 33% from Last Year ,

Software License Revenue Increases 183% to Record $7 .8 Million." This press release set fort h

in relevant part :

Quovadx, Inc . [], a global platform software and vertical solutionscompany, today announced financial results for its third quarter endedSeptember 30, 2003 . Total revenue for the third quarter of 2003 was$19.9 million, up 33% from $15 .0 million from the same period last year .The company recorded software license revenue of $7 .8 million thisquarter, up 183% from $2 .8 million for the third quarter of 2002 .

Net loss calculated in accordance with generally accepted accountingprinciples (GAAP) was $(1 .1) million or $(0 .03) per share for the quarterended September 30, 2003 . This compares with a GAAP loss of $(96 .7)million or $(3.22) per share in the third quarter of 2002. In the thirdquarter of 2002, Quovadx booked a one time, non-cash goodwillimpairment charge of $93 .1 million or $(3 .10) per share .

"This quarter's record revenue performance and continued shift toward

high margin software license revenue is evidence that demand for our

products is increasing and that we are climbing a growth curve," said

Lorine Sweeney, president and chief executive officer of Quovadx . "I'm

very pleased that we have now reported four consecutive quarters of

sequential revenue growth and that we have achieved positive cash flow

on an operating basis. We are outperforming our competitors andgaining market share. It's clear that the strategy we've embarked uponis taking hold and gaining momentum . "

Gross margin in the third quarter of 2003 improved to 47 .9%, compared to

36.7% in the third quarter of 2002 . The increase reflects the shift in

revenue mix toward higher margin software revenue. Software revenue

comprised 39% of the company's total revenue in the third quarter of 2003

vs. 18% in the same quarter last year . The company's deferred revenue

grew to $13 .7 million during the quarter from $6.7 million in the second

quarter of 2003 .

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The company has no debt and ended the third quarter with $34 .9 million incash, cash equivalents and short-term investments . Quovadx recordedpositive cash flow from operations in the third quarter of 2003 .

Revenue for the nine months ended September 30, 2003 increased 18% to$56.7 million compared with $48 .00 million in the first nine months of2002. Software license revenue totaled $20 .4 million for nine monthsending September 30, 2003, up 151% from $8 .1 million in the comparableperiod one year ago. The company recorded a 2003 year-to-date loss of$(4.5) million or $(0 .15) per share on a GAAP basis compared to a loss of$(100.7) million or $(3 .36) per share for the first nine months of 2002 .

30. Less than two weeks later , on November 4, 2003, Quovadx announced its

intention to acquire Rogue Wave Software in a cash and stock transaction valued at $71 million .

31 . According to the Registration Statement filed on December 10, 2003, Quovad x

and Rogue Wave, through their financial advisors, commenced discussions regarding a possible

acquisition of Rogue Wave by Quovadx in July 2003 . Quovadx's stock was priced at $3 .00 a

share on July 1, 2003 .

32. By September 2003, Sweeney and Scherping had met several times with certai n

Rogue Wave executives to discuss a potential merger of the two companies . As of October 2,

2003, both companies were engaged in full-blown due diligence in connection with a potential

offer for Rogue Wave stock . Sweeney and Scherping personally participated in a series of

meetings where the terms and potential structures of the merger were discussed . As news of the

potential acquisition conveniently leaked out, Quovadx stock started to raise steadily . On

October 2, 2003, the stock closed at $3.83 a share .

33. On October 10, 2003, Quovadx's Board approved a proposal to acquire Rogu e

Wave and on October 16, 2003 Sweeney delivered to Rogue Wave a non-binding proposal to

acquire all of the capital stock of Rogue Wave for a combination of cash and shares of Quovadx

common stock . By October 17, 2003, the price of Quovadx stock had climbed up to $4 .00 a

share .

34. On October 22, 2003, the same day Quovadx announced the "historical" contract

with InfoTech, representatives of Rogue Wave informed Quovadx that in light of Rogue Wave' s

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higher than expected year-end results, Quovadx's current offer was inadequate and that Quovadx

should consider increasing the merger consideration . On October 27, 2003, Quovadx submitted

a revised non-binding indication of interest to acquire Rogue Wave . By October 28, 2003, the

price of Quovadx's stock had reached $5 .06 a share .

35 . On October 29, 2003, representatives of Rogue Wave met via telephone with

Scherping to discuss Quovadx's business and financial information . By October 30, 2003, the

price of Quovadx's stock was $5 .36 a share .

36. From October 28, 2003 through November 1, 2003, Quovadx, Rogue Wave and

their respective legal advisors, negotiated the Merger Agreement .

37. On November 3, 2003, Quovadx filed its Form 10-Q for the quarter endin g

September 30, 2003 . The Form 10-Q, containing the financial statements of Quovadx for the

third quarter of 2003, was signed by Sweeney and Scherping, who certified that Form 10-Q fully

complied with the requirements of the Securities Exchange Act of 1934, and that the information

contained in the Form 10-Q presented, in all material respects, the financial condition and results

of operations of Quovadx .

38 . In addition, pursuant to the provisions of the Sarbanes-Oxley Act of 2002, 18

U.S .C. § 1350, the Form 10-Q included certifications by Sweeney and Scherping . The

certifications stated :

1 . I have reviewed this quarterly report on Form 10-Q of Quovadx,

Inc . ;

2. Based on my knowledge, this quarterly report does not contain anyuntrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of thecircumstances under which such statements were made, notmisleading with respect to the period covered by this quarterlyreport ;

3 . Based on my knowledge, the financial statements, and otherfinancial information included in this quarterly report, fairlypresent in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, theperiods presented in this quarterly report ;

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4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) forthe registrant and have :

(a) Designed such disclosure controls and procedures, orcaused such disclosure controls and procedures to bedesigned under our supervision, to ensure that materialinformation relating to the registrant, including itsconsolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period inwhich this quarterly report is being prepared ;

(b) Evaluated the effectiveness of the registrant's disclosurecontrols and procedures and presented in this quarterlyreport our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of theperiod covered by this quarterly report based on suchevaluation ;

(c) Disclosed in this quarterly report any change in theregistrant's internal control over financial reporting thatoccurred during the registrant's most recent fiscal quarterthat has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control overfinancial reporting; and

5 . The registrant's other certifying officer and I have disclosed, basedon our most recent evaluation of internal control over financialreport ing , to the registrant ' s auditors and the audit committee ofthe registrant's board of directors :

(a) All significant deficiencies and material weaknesses in thedesign or operation of internal control over financialreporting which are reasonably likely to adversely affectthe registrant's ability to record, process, summarize andreport financial information; and

(b) Any fraud, whether or not mate rial , that involvesmanagement or other employees who have a significan trole in the registrant's inte rnal control over financialreporting .

39. The quarterly report on Form 10-Q also contained the following representatio n

certified by both Sweeney and Scherping :

For purposes of 18 U .S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, in connection with the Quarterly Report ofQuovadx, Inc . (the "Registrant") on Form 10-Q for the quarterly period ended

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September 30, 2003, as filed with the Securities and Exchange Commission (the"Commission") on the date hereof (the "Report"), the undersigned President andChief Executive Officer of the Registrant hereby certifies, to the best of herknowledge and belief, that :

1 . The Report fully complies with the requirements of Section 13(a)or 15(d) of the Securities Exchange Act of 1934, as amended ; and

2 . The information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operationsof the Registrant .

40 . The statements contained in the Form 10-Q were false and misleading -- as later

admitted by the Company and confirmed by an audit committee investigation that took place

only a few months after the filing of the Form 10-Q .

41 . On November 4, 2003, Quovadx issued a press release announcing the acquisitio n

of Rogue Wave, which was structured as an exchange offer whereby 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. Based on the average closing

price of Quovadx stock for the five trading days ending on October 21, 2003, the aggregate

consideration was valued at $6 .85 a share . The total value of the transaction, including

approximately $33 million of acquired cash, was $71 million . The transaction value, net of

acquired cash, was $38 million . On November 4, 2003, Quovadx's stock closed at $4 .97 .

42 . On November 12, 2003, Quovadx filed a Registration Statement with the SEC on

Form S-4 in connection with its offer to exchange the common stock of Rogue Wave . Quovadx

incorporated by reference its Form 10-Q for the third quarter, ending on September 30, 2003 into

this Registration Statement .

FALSE REGISTRATION STATEMENT

43 . On or about December 10, 2003, Quovadx filed a Second Amendment to the

Registration Statement on Form S-4 in connection with the Exchange Offer which became

effective on December 19, 2003 . The Registration Statement included Quovadx's financial

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results for the third quarter of fiscal year 2003, which the Company has admitted were materially

misstated . All of the Individual Defendants signed the Registration Statement .

44. On December 19, 2003, Quovadx completed the acquisition of all of the

outstanding shares of Rogue Wave. The acquisition, structured as an exchange offer, resulted in

Quovadx acquiring all of the outstanding shares 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 . The total

purchase price for the acquisition was $79 .1 million, including 5,656,670 shares of Quovadx

common stock, exchange of stock options valued at $3 .4 million, cash of $8 .0 million net of cash

acquired and $3 .9 million in merger-related costs .

45 . Quovadx's financial results for the third quarter of fiscal year 2003, included

within the Registration Statement, were materially false and misleading . Defendants: (1)

materially overstated Quovadx's revenues, net income and earnings per share ; and (2)

recognized fabricated revenue from contracts between the Company and Infotech Network

Group in violation of GAAP .

THE TRUTH ABOUT THE FRAUD SLOWLY UNFOLD S

46. On March 15, 2004, Quovadx announced that it would delay the filing of its

annual report on Form 10-K for the year ended December 31, 2003 to restate its 2003 third

quarter financial results and revise its previously announced preliminary 2003 fourth quarter and

full year financial results . The March 15 press release was carefully worded and casually

insinuated that the restatement was caused by the Company's "unsuccessful" efforts to collect

funds for previous shipments to InfoTech . The March 15 press release deliberately avoided an

open disclosure of the true facts underlying the restatement of the third quarter of fiscal year

2003 . The press release set forth in relevant part :

"Company Adopts Cash Accounting Treatment for Sales to Infotech Network Group -

Revenue from Sales to Infotech Network Group Removed from 2003 ."

Quovadx, Inc. [] today announced that it will delay the filing of its annualreport on Form 10-K for the year ended December 31, 2003 to restate its

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2003 third quarterfinancial results and revise its previously announcedprelimina ry 2003 fourth quarter and full year financial results. TheCompany has determined that revenue on prior shipments of softwareproduct to Infotech Network Group will be recognized only when cash isreceived . The restatement removes all revenue associated with contractsbetween the Company and Infotech Network Group from its publishedfinancial reports for 2003 . To date, Quovadx has been unsuccessful incollecting funds from this customer. As funds are collected in the future,the Company will include those amounts as revenue in the quartercollected. The restatement will be included in Quovadx's 2003 annualreport on Form 10-K and its restated 2003 third quarter report on Form 10-Q/A.

During 2003 Quovadx believed that it recognized revenue on contractswith Infotech in accordance with generally accepted accounting principles(GAAP) and in a manner consistent with its revenue recognition practices .Based on information known to the Company, Quovadx believed that thecollection of funds owed by Infotech under the contract was probable .

Infortech is a consortium of major Indian information technologycompanies. Quovadx established that Infotech had a $10 million line ofcredit with an Indian bank and that Infotech had committed to establishingletters of credit to facilitate payment to Quovadx .

Quovadx, however, has encountered unanticipated difficulty incollectingfunds through the letter of credit process. Based on a current

evaluation of Infotech's ability to meet the payment terms of its contractwith Quovadx, and after discussion with its outside auditors, the Company

has determined that Quovadx will adopt cash accounting for all sales to

InfotechNetwork Group and revised its previously announced preliminary

fourth quarter financial results by removing all revenue associated with the

shipment of software product to Infotech Network Group .

Quovadx will continue to work with Infotech in an effort to collect allamounts due . Quovadx has been notified that new letters of credit havebeen issued that total $5.6 million. Both Quovadx and Infotech believethat these new letters should facilitate the distribution of funds . However,there is no certainty whether any or all of the amounts owed will becollected, or when any such collection will occur .

Restatement of 2003 Third Quarter Result s

Third quarter, 2003 software license revenues were reduced by $4.6million to $3.2 million and total revenues were reduced from $19.9million to $15.2 million. Net loss calculated in accordance with generallyaccepted accounting principles (GAAP) for the quarter is now $(5 .3)million or $(0 .17) per share compared to the originally reported GAAP net

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loss of $( 1 .1) million or $(0 .03) per share . Deferred revenue was reducedby $3 .0 million .

Revision of 2003 Fourth Quarter and Full Year Results

Fourth quarter 2003 software license revenues were revised to $5 .5

million from $ 12.0 million and total revenues were revised to $19 .6

million from $26 .3 million . Net loss calculated in accordance with

generally accepted accounting p rinciples (GAAP) for the quarter was

$(6 .0) million or $(0.17) per share compared to the previously reported

GAAP net loss of $(0 .5 ) million or $ (0.01) per share .

47. Although the March 15 release directly implied that the reason for the restatement

was the untimely recognition of revenue related to the Infotech Contract , the truth -- as revealed

by the Company itself through subsequent announcements and press releases -- was far from it .

48. On that very same day , the Company hosted a call for investors . During that call ,

Sweeney reiterated the substance of the press release and denied any wrongdoing by the

Company or the Company's management . Sweeney alleged that the problem was caused by the

fact that India did not have a convertible currency and thus the Indian government did not

approve the movement of dollars out of India . Sweeney added that Quovadx had refused to

accept rupees as payment . Sweeney continued to assure analysts and investors that because

Infotech had issued new letters of credit, the funds would be collected . As future press releases

would reveal, Sweeney's statements were false .

49. As a result of the March 15 announcement, the price of Quovadx stock -- whic h

had closed at $5 .03 on March 15 -- fell approximately 29%, to close at $3 .58 per share on March

16, 2003, on unusually high trading volume. However, the Company continued to reassure

analysts and investors alike that while it had to remove all revenue associated with these

contracts from its published financial reports for 2003, it still expected to book such revenue in

2004 .

50. In light of these revelations, analysts' reports around the country expressed

astonishment that Quovadx had taken such a carefree approach to recognizing revenue given the

size of the Infotech Contract and the complexity of the payment terms involved .

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51 . On March 29, 2004, the Company announced that the Securities and Exchang e

Commission had commenced an informal investigation in connection with the March 15, 200 4

Restatement Announcement .

52. On April 12, 2004, the Company issued a press release entitled "Quovadx

Updates State of SEC Inquiry; Retains Hogan & Hartson L .L.P. To conduct Special Review o f

Infotech Relationship ." The press release set forth in relevant part :

Quovadx, Inc . [] today announced that the Securities and ExchangeCommission (SEC) has notified the company that its previouslyannounced informal inquiry has become a formal investigation .

Quovadx also announced that the audit committee of its board ofdirectors has retained the law firm of Hogan & Hartson L .L.P . to conducta special review of the company's relationship with Infotech NetworkGroup and of the company's disclosures concern ing Infotech. At thistime, Quovadx has not yet received payment from Infotech .

Hogan & Hartson is an international law firm headquartered inWashington D .C. with close to 1,000 attorneys practicing in 20 officesaround the world . The 80 lawyers in its three Colorado offices representlocal, national and international clients, principally in the areas ofcorporate, securities and finance, intellectual property and other specialtyareas .

53 . Also on April 12, 2004, under the title "Quovadx Announces Changes T o

Management Team" the Company announced the resignation of Defendants Lorine Sweeney and

Gary Scherping. Jeffrey Krauss, chairman of the board for Quovadx stated that "seeking new

executive leadership at this time is a necessary step ." During an investors call hosted by the

Company later that date, Krauss stated that the resignations were not related to any illegal acts by

Sweeney or Scherping . He confirmed that the SEC had turned its investigation into the

restatement into a formal probe and that Quovadx had not received any payments from India .

54 . Following the two announcements issued by the Company on April 12, 2004 ,

Quovadx's stock price suffered a sharp drop, closing at $2 .09 per share .

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55 . During the following weeks Quovadx's stock price persistently declined, closing

at $2 .05 per share on May 12, 2004 .

56. On May 13, 2004, the Company issued a press release entitled "Quovadx

Provides Update Regarding Form 10-Q, Infotech Network Group ." Among other things, the

release stated that new management had identified two distributor contracts totaling

approximately $1 million entered into 2003 that required further review . The release went on to

say that the Company had notified the SEC of these newly discovered "concerns" and that as a

result of these findings Quovadx was unable to timely file its Quarterly Report on Form 10-Q for

the period ending March 31, 2004 . With respect to the Infotech problem the release stated in

relevant part :

The Quovadx audit committee has completed its investigation of theInfotech Network Group transactions . Their findings include thefollowing .

To date, Quovadx has received no payments from Infotech under thedistribution agreement executed on September 8, 2003. Infotechcontinues to owe the Company approximately $14.1 million for software

that was shipped to Infotech under the distribution agreement. Aspreviously reported, Quovadx has removed all revenue associated withInfotech from its financial reports and has determined that any revenue

from transactions with Infotech will be recognized only if and when cash

is received from them. Based on information obtained by Quovadx to

date, Infotech is an outsourcing agent for Indian companies seekingoutsourcing work . Prior to the distribution agreement with Quovadx, ithad not been a software distributor or sold software. Further, it cannotbe determined that the purported line of credit maintained by Infotech ata bank in India now exists or has existed, that such line of credit was

secured by liquid assets, or that it was capable of backing letters of credit

to be established by Infotech to secure payment under the distributionagreement.

Quovadx also previously reported that it had been notified of the issuanceof letters of credit in favor of Infotech totaling $5 .6 million, which theCompany believed would facilitate payment owed by Infotech under thedistribution agreement . Quovadx no longer expects such letters of credit,or any other credit facilities established by Infotech , to be a source ofpayment by Infotech . The Company now expects to receive payment

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from Infotech only if and when Infotech received sufficient cash fromresale of Quovadx's products . Infotech has provided Quovadx withmemorandums of understanding with state governments in Indiapurportedly for the resale by Infotech of Quovadx's products, but thesememorandums of understanding do not commit such governments topurchase products from Infotech, and there is no assurance if or whenthey, or any other potential customers of Infotech, will do so .

Quovadx's new management and its advisors have also investigated the

circumstances surrounding an outsourcing agreement entered intobetween Quovadx and Infotech on September 8, 2003, under which

Quovadx would pay up to $ 2.46 million to Infotech for outsourcing

services. New Management has determined that this outsourcingagreement was likely an inducement to Infotech to enter into the

distribution agreement referred to above and also executed on

September 8, 2003, and that Infotech would not have entered into thedistribution agreement without concurrently entering into the

outsourcing agreement. There also appears to have been an additional

inducement to Infotech to enter into the distribution agreement in theform of discussions between Infotech and Quovadx's former

management regarding a target of an additional $10 million in

outsourcing services to be purchased by Quovadx from Infotech on an

annual basis. There is no legally binding commitment for Quovadx to

purchase any such additional outsourcing services . Quovadx has advised

Infotech of its obligation to pay the amount owed under the distribution

agreement regardless of whether any further outsourcing services are

purchased by Quovadx .

Quovadx has made payments to Infotech totaling approximately $2.9

million, consisting of a $410,000 payment in October 2003, payments

totaling $500,000 in December 2003 and a payment of approximately $2

million in March 2004. These payments were authorized by Quovadx's

former management, and were purported to be prepayments to Infotech

under the outsourcing agreement. Certain of these payments appear to

have been made for the purpose of enabling Infotech to establish the

letters of credit required to secure Infotech's payment obligations under

the distribution agreement. Infotech has represented to Quovadx that

these funds were used to create the necessary infrastructure to

accommodate the anticipated increase in outsourcing work from

Quovadx to Infotech . Quovadx cannot confirm that the funds were usedfor these purposes, or that it will receive full benefit from the payment of

such funds to Info tech.

In essence, the audit committee investigation confirmed that the Infotech deal was a

hoax, that the revenue from the Infotech Contract never existed at all, and that Sweeney an d

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Scher-ping had orchestrated the massive fraud during September and October of 2003 to inflat e

the price of Quovadx stock precisely at the same time the Company was in the midst of merge r

negotiations with Rogue Wave .

57. Following the announcements issued by the Company on May 13, 2004 ,

Quovadx's stock fell to $1 .29 a share at closing .

58. On May 14, 2004, the Company issued a press release entitled "Quovadx

Announces Change in Executive Sales Position for Its Enterprise Application Division ." The

release stated in relevant part :

Quovadx, Inc . [] today announced that Afshin Cangarlu will assume theresponsibilities of executive vice president (EVP) of sales of theEnterprise Software Application division, effective immediately . . . .Cangarlu will replace David Nesvisky as EVP of sales, who wasterminated on May 14, 2004 . . . . Cangarlu will now also oversee softwaresales .

Since the appointment of the company's new acting CEO and CFO in

April of 2004, Quovadx and its outside auditors have been undertaking a

general review of the company's past accounting practices, its first quartercontracts and of the circumstances leading to the restatement of its 2003

financial results . This review is ongoing . In connection with its review,

the newly appointed leadership team and the board of directors of

Quovadx today announced that Mr . Nesvisky has been terminated,

effective immediately .

On April 12, 2004, the company announced that it had severed relationswith its former president and CEO Lorine Sweeney and CFO Gary

Scherping. Today, Quovadx announced that it has discontinued further

severance payments to these former executives and has demanded thereturn ofseverancepayments already paid to them under their severanceagreements, and the return of prior compensation including bonuses.These changes are a result of the same internal review process.

The demand by Quovadx's new management that Sweeney and Scherping pay back to th e

Company the severance payments, compensation and bonuses received was a clear indicatio n

that the restatement of the third quarter financial statements was not the result of a mer e

accounting error but of a carefully planned fraud .

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59. On May 14, 2004, and as a result of these announcements, Quovadx stock fell to

$1 .29 a share at closing . The price of Quovadx stock dropped 79%, from $4 .91 on December 19,

2003, the date the acquisition of Rogue Wave was consummated, to $1 .03 on May 17, 2004, the

date this suit was brought .

FALSE FINANCIAL STATEMENTS

60. The Company's Registration Statement on Form S-4 , which was signed by each

Individual Defendant and filed with the SEC, included false financial results for the third quarter

of 2003 .

61 . Regulation S-X (17 CM 210.4-01(a)(1)) states that financial statements filed with

the SEC which are not prepared in compliance with GAAP are presumed to be misleading and

inaccurate, despite footnote or other disclosure. GAAP are those principles recognized by the

accounting profession as the conventions, rules and procedures necessary to define accepted

accounting practice at the particular time .

62 . GAAP states: "[R]evenue should not be recognized until it is realized or

realizable and earned." FASB Concepts Statement No. 5, ¶83 . The conditions for the

recognition of revenue are met when "persuasive evidence of an arrangement exists, delivery has

occurred or services have been rendered, the seller's price is fixed or determinable, collectibility

of the sales price is reasonably assured and when the entity has substantially performed the

obligations which entitle it to the benefits represented by the revenue ." Here, Quovadx

improperly recognized revenue when collectibility of the sales price was not reasonably assured,

which is in violation of GAAP .

63 . Given these improper accounting practices, the Company announced financial

results that were in violation of GAAP, the Company's own announced revenue recognition

policies, and the following principles :

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(a) The principle that "interim financial reporting should be based upon the

same accounting principles and practices used to prepare annual financial statements" was

violated (APB No . 28, ¶10) ;

(b) The principle that "financial reporting should provide information that i s

useful to present to potential investors and creditors and other users in making rationa l

investment, credit, and similar decisions" was violated (FASB Statement of Concepts No . 1 ,

¶34) ;

(c) The principle that "financial reporting should provide information abou t

the economic resources of an enterprise, the claims to those resources, and effects o f

transactions, events, and circumstances that change resources and claims to those resources" was

violated (FASB Statement of Concepts No . 1, ¶40) ;

(d) The principle that "financial reporting should provide information about

an enterprise's financial performance during a period" was violated (FASB Statement of

Concepts No . 1, ¶ 42) ;

(e) The principle that "completeness, meaning that nothing is left out of th e

information that may be necessary to insure that it validly represents underlying events an d

conditions" was violated (FASB Statement of Concepts No. 2, ¶79) ;

(f) The principle that "financial reporting should be reliable in that i t

represents what it purports to represent" was violated (FASB Statement of Concepts No . 2, ¶¶58-

59); and

(g) The p rinciple that "conservatism be used as a prudent reaction to

uncertainty to ensure that uncertainties and risks inherent in business situations are adequately

considered" was violated (FASB Statement of Concepts No . 2, ¶95) .

FRAUD-ON-THE-MARKET DOCTRIN E

64. At all relevant times, the market for Quovadx was an efficient market for th e

following reasons, among others :

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a. The Company's common stock met the requirements for public listing and

was listed and actively traded on the NASDAQ National Exchange, a highly efficient market ;

b . As a regulated issuer, the Company filed periodic public reports with the

SEC ; and

c. The Company regularly issued press releases which were carried by

national news wires. Each of these releases was publicly available and entered the public

marketplace.

65 . As a result, the market for the Company's common stock promptly digeste d

current information with respect to Quovadx from all publicly available sources and reflected

such information in the price of the Company's common stock . Therefore, each time the

Company announced new developments in connection with its investigation of the fraud that

caused the restatement of the financial statements for the third quarter of 2003 the market reacted

and Quovadx's stock price declined even more. Under these circumstances, all persons or

entities who acquired the Company's common stock in the Exchange Offer suffered similar

injury through their acquisition of the common stock of Quovadx at artificially inflated prices

and a presumption of reliance applies .

COUNT I

AGAINST ALL DEFENDANT SUNDER SECTION 11 OF THE SECURITIES AC T

66. This Count is brought on behalf of persons who acquired Quovadx common stock

pursuant to the Company's Exchange Offer for all of the outstanding shares of Rogue Wave on

or about December 19, 2003 .

67 . Plaintiff repeats and realleges each and every allegation contained in the above

paragraphs, as if fully set forth herein . As set forth above, with respect to this Count, Plaintiffs

specifically exclude any allegation of knowledge or scienter .

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68. The Registration Statement contained misrepresentations of material facts and

omitted to state material facts required to be stated in order to make the statements contained

therein not misleading . As such, the Defendants are liable to Plaintiffs and the class .

69 . In order to complete the acquisition of Rogue Wave, these Defendants issued ,

caused to be issued and participated in the issuance of materially false and misleading statements

to the investing public that were contained in the Registration Statement . As a direct and

proximate result of Defendants' wrongful conduct, the market price for Quovadx stock sold

pursuant to the Registration Statement was artificially inflated, and Plaintiffs and the class

suffered substantial damages in connection with their acquisition of Quovadx stock in the

Exchange Offer .

70. This action was initiated within two years after the Quovadx common stock was

tendered to former Rogue Wave shareholders under the exchange offer .

71 . Plaintiffs and other class members were damaged by Defendants' misconduct and

by the material misstatements and omissions of the aforementioned Registration Statement .

72. The Defendants utilized national securities exchanges, the mails, telephones and

other instruments of interstate commerce in the offering and sale of Quovadx stock .

73. By reason of the foregoing, defendants Quovadx, Sweeney, Scherping, Krauss,

Brown, Cowherd, Hoover, Roesslein, and Gilbert have violated Section 11 of the Securities Act .

COUNT II :

AGAINST DEFENDANTS SWEENEY AND SCHERPINGUNDER SECTION 15 OF THE SECURITIES AC T

74. Defendants Sweeney and Scherping were controlling persons of Quovadx within

the meaning of Section 15 of the Securities Act by reason of their respective management

positions in Quovadx , and/or their membership on the Quovadx Board of Directors and/or their

stock ownership and/or their participation throughout the relevant time pe riod in the day-to-day

business affairs of Quovadx .

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75 . Because of their positions in the Company and/or their stock ownership, and/or

because of their positions on the Quovadx Board of Directors, these defendants had the power

and influence to control the Company and caused Quovadx to engage in the unlawful acts and

conduct alleged herein .

76. By reason of the foregoing, defendants Sweeney and Scherping have violated

Section 15 of the Securities Act .

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs, on behalf of themselves and the Class, pray for judgment a s

follows :

A. Declaring this action to be a class action properly maintained pursuant to

Rule 23 of the Federal Rules of Civil Procedure ;

B. Awarding Plaintiffs and other members of the Class damages togethe r

with interest thereon ;

C. Awarding Plaintiffs and other members of the Class costs and expenses of

this litigation, including reasonable attorneys' fees, accountants' fees and experts' fees and other

costs and disbursements ; and

D. Awarding Plaintiffs and other members of the Class such

equitable/injunctive or other and further relief as may be just and proper under the

circumstances .

JURY DEMAN D

Plaintiffs demand a trial by jury .

DATED : July 25, 2005

LOWENSTEIN SANDLER PC

-23-

By s/Gavin J . Rooney

Lawrence M. Rolnick, Esq .Gavin J . Rooney, Esq .

Marcela A. Kirberger, Esq .

65 Livingston Avenue

Roseland, New Jersey 07068

(p) 973.597.2500

(f) 973 .597.2400Grooney@Lowenstein .comAttorneys for Plaintiffs

-24-

CERTIFICATION OF NAMED PLAINTIFFSPURSUANT TO FEDERAL SECURITIES LAW S

I, Austin Marxe, on behalf of Lead Plaintiffs Special Situations Fund III, L .P ., Special Situations

Cayman Fund, L.P., Special Situations Technology Fund New, L.P., and Special Situations

Technology Fund II, L.P. (collectively, "Plaintiffs" or "Special Situations") declare that :

1 . I have reviewed the Complaint and authorized its filing .

2 . Plaintiffs did not acquire its shares of Quovadx stock through the Exchange Offerfor Rogue Wave shares either at the direction of counsel or in order to participate in any private

action arising under the PSLRA. Plaintiffs acquired this stock due to their prior holdings ofRogue Wave stock, which shares Special situations acquired as part of its normal research andinvestment activities .

3 . Plaintiffs are willing to serve as a representative party on behalf of the class,including providing testimony at deposition and trial, as necessary .

4. As a result of the Exchange Offer between Quovadx and Rogue Wave, SpecialSituations acquired 366,896 shares of Quovadx stock . This amount was allocated among the

four funds, based upon their respective holdings, as follows :

• 228,895 shares to Special Situations Fund III, L .P .

• 73,492 shares to Special Situations Cayman Fund, L .P .

• 9,922 shares to Special Situations Technology Fund New, L.P .

• 54,588 shares to Special Situations Technology Fund II, L .P .

Special Situations continues to hold these 366,896 shares today .

5 . During the three years prior to the date of this Certificate, Plaintiffs have notsought to serve or served as a representative party for a class in an action filed under the federalsecurities laws .

6. Plaintiffs will not accept any payment for serving as a representative party on

behalf of the class beyond the Plaintiffs ' pro rata share of any recovery , except as ordered or

approved the Court under 15 U.S .C . § 77z-1 .

I declare under penalty of perjury that the foregoing is true and correct .

Executed this 25 day of July, 2005 .

s/Austin w. Marxe Austin W. Marxe

Signature Print Name

Jul 22 2005 2 :24PM HP LRSERJET 333 0

CERTIFICA '

1, Austin Marxe, on behalf of Lead

OF NAMED

Special Situations

Cayman Fund, L .P., Special Situations Technology Fund N

Technology Fund 11, L.P. (collectively, "Plaintiffs" or "Specia l

1 . I have reviewed the Comlulaint and authorized

2. Plaintiffs did not acquire its shares of Quovadxfor Rogue Wave shares either at the di ' tion of counsel or inaction arising under the PSLRA. PI n tiffs acquired this stRogue Wave stock, which shares Spec al situations acquired'investment activities .

3. Plaintiffs are willing to serve as a representsincluding providing testimony at deposi ion and trial, as nece s

4. As a result of the Exch ge Offer between QuSituations acquired 366,896 shares of ovadx stock . Thisfour funds, based upon their respective holdings, as follows :

• 228,895 shares t Special Situations Fun• 73,492 shares to pecial Situations C a• 9,922 shares to S ecial Situations Techn• 54,588 shares to pecial Situations Tec

Special Situations continues to hold the~e 366,896 shares toda y

5 . During the three years rior to the date of t]sought to serve or served as a represen ative party for a classsecurities laws .

6 . Plaintiffs will not acc t any payment for sebehalf of the class beyond the Plaints s' pro rata share of aapproved the Court under 15 U .S.C. § 7z-1 .

I declare under penalty fpejury that the

Executed this 25 day of July, 2005 .

and III; L .P ., Special Situations

r, L.P ., and Special Situations

tuation.S") declare that:

P . 1

filing.

ck through the Exchange Offerrder to participate in any privatek due tp their prior holdings ofpart of its normal research and

i e party; on behalf of the class,

ry .

vadx and Rogue Wave, Specialmount was allocated among the

III, L.P.,Fund,' L.P .

logy Fund New, L .P .0logy Fund 11 , L.P .

Certificate, Plaintiffs have notan action filed under the federal

ng as a representative party on' recovery, except as ordered o r

ig is true and correct .

Signature Print Nate

Lawrence M . Rolnick (LR-0546)Gavin J. Rooney (GR-6251)Marcela A. Kirberger (MK-0529)LOWENSTEIN SANDLER P CAttorneys At Law65 Livingston Avenue

Roseland , New Jersey 07068

973 .597 .2500

Attorneys for Special Situations Fund III, L .P . ;

Special Situations Cayman Fund, L.P . ;

Special Situations Technology Fund New, L .P . ; andSpecial Situations Technology Fund II, L.P.

UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO

SPECIAL SITUATIONS FUND III, L .P., SPECIALSITUATIONS CAYMAN FUND, L .P ., SPECIALSITUATIONS TECHNOLOGY FUND NEW, L .P ., ANDSPECIAL SITUATIONS TECHNOLOGY FUND II, L .P .ON BEHALF OF THEMSELVES AND OTHERSSIMILARLY SITUATED ,

Plaintiffs ,

V.

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

Defendants .

CERTIFICATE OF SERVICE

Civil Action No .1 :04 -cv- 01006 (RPM)

I, MARCELA A. KIRBERGER , of full age, hereby declare as follows :

S5313/6807/25/2005 1756835.01

1 . Today I electronically filed a true copy of the following documents with

the Clerk of Court using the CM/ECF system :

(a) First Amended Class Action Complain t

(b) Certificate of Service .

2. The Clerk of Court using the CM/ECF system will send notification o f

such filing to the following e-mail addresses :

f6aumann(c_~rothgerber.com, phenke(arothber eg r .com

sceraggbcslaw .com, keg~a,gbcslaw.com

jhutchingsgdillandill .com, chuffman(a~dillanddill .com

evan(a,lipsteinlaw.com

cwelling( rothgerber.com, hdoughert(cam rothgerber .com

3 . On the same date, I sent a copy of the aforementioned documents vi a

Regular Mail to the following counsel of record :

John P. Stiggi, Esq . and Nicki Locker, Esq . .(Counsel for Defendants Quovadx, Inc ., Jeffrey M. Krauss, Fred L . Brown, J . Andrew

Cowherd, James B . Hoover, Charles J . Roesslein and James A . Gilbert)Wilson Sonsini Goodrich & Rosati, P .C .

650 Page Mill RoadPalo Alto, CA 9430 4

John Alonzo Hutchings, Esq .(Counsel for Defendants Quovadx, Inc ., Jeffrey M. Krauss, Fred L . Brown, J . Andrew

Cowherd, James B. Hoover, Charles J . Roesslein and James A . Gilbert)Dill, Dill, Can, Stonbraker & Hutchings

455 Sherman Street#300

Denver, CO 80204

Craig Richard Welling, Esq . and Frederick J . Baumann, Esq .(Counsel for Defendants Lorine Sweeney and Gary T . Scherping)

Rothgerber, Johnson & Lyons, LLP

-2-

United States District Court Box 111200 - 17TH Street

#3000Denver, CO 80202

I certify that the foregoing statements made by me are true . I am aware that if any

of the foregoing statements are willfully false, I am subject to punishment .

Dated: July 26, 2005 LOWENSTEIN SANDLER P C

By : s/Marcela A. KirbergerMarcela A. Kirberger, Esq .

65 Livingston AvenueRoseland, NJ 07068-1791Tel . 973 .597.2500Fax 973 .597.2400Attorneys for Plaintiffs SpecialSituations Fund, III L .P . ; SpecialSituations Cayman Fund, L.P . ;Special Situations Technology FundII, L .P . ; and Special SituationsTechnology Fund New, L .P .

-3-