and all others similarly situated, ) case no. plaintiff...
TRANSCRIPT
UNITED STATES DISTRICT COURTWESTERN DISTRICT OF TEXAS
Austin Division
LAURENCE PASKOWITZ, on Behalf of Himself)and All Others Similarly Situated, ) Case No .
Plaintiff, )
v. )
)MOTIVE, INC., SCOTT L. HARMON, )PAUL M . BAKER, )
Defendants. ) DEMAND FOR JURY TRIAL
CLASS ACTION COMPLAIN T
Plaintiff, Laurence Paskowitz (" Plaintiff') individually and on behalf of all other
persons similarly situated , by his undersigned a ttorneys , alleges upon personal
knowledge as to himself and his own acts, and information and belief as to all other
ma tters , based upon , inter alga , the investigation conducted by and through his
attorneys , which included , among other things : ( i) a review of the public documents and
announcements made by defendants ; ( ii) Securities and Exchange Commission ("SEC")
filings made by defendants ; (iii) an analysis of publicly-available news a rticles and
repo rts ; (iii) press releases issued by defendants ; and (iv ) other matters of public record .
NATURE OF THE ACTIO N
1 . This is a federal class action on behalf of purchasers of the common stock of
Motive, Inc. ("Motive" or the "Company") between July 11, 2005 and October 26, 2005,
inclusive (the "Class Period"), seeking to pursue remedies under the Securities
Exchange Act of 1934 (the "Exchange Act") .
2 . During the Class Period, Motive projected third quarter 2005 revenues to be in
the range of $24.5 million to $25.5 million . Just two months later, however, th e
I : Motive%PleadingskComplaint.doc 1
Company announced that third quarter revenues would be closer to $16 .1 million, due
to decreased demand for its product . On this news, the price of the Company's
common stock fell $4 .45, a decrease of 36%. Defendants' previous guidance was false
or misleading. At the time such guidance was released Motive knew of the decreased
demand for its product and that its news inflated revenue projection had no reasonable
basis. Additionally, on October 27, 2005, before the market opened, Motive announced
its financial results for the quarters ended March 31, 2005 and June 30, 2005 and th e
six-month period ended June 30, 2005 . On this news the Company's share price fell a n
additional $0.41, a decline of more than 11 % .
JURISDICTION AND VENU E
3. The claims asse rted herein arise under and pursuant to Sections 1 0(b) and 20(a)
of the Exchange Act (15 U . S . C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated
thereunder by the Securities and Exchange Commission ("SEC") (17 C. F . R. §
240.1Ob- 5) .
4 . This Court has jurisdiction over the subject matter of this action pursuant to 28
U .S.C . §§ 1331 and 1337 and Section 27 of the Exchange Act (15 U . S. C. § 78aa) .
5. Venue is proper in this District pursuant to Section 27 of the Exchange Act, and
28 U .S .C. § 1391(b). Many of the acts charged herein, including the preparation and
dissemination of materially false and misleading information , occurred in substantial part
in this District . Additionally , Motive maintains its chief executive offices and principal
place of business within this District .
6 . In connection with the acts alleged in this complaint , Defendants , directly or
indirectly, used the means and instrumentalities of interstate commerce , including, bu t
I :%MotivelPleadings%Complaint.doc 2
not limited to, the mails, interstate telephone communications and the facilities of the
national securities markets .
PARTIES
7 . Plaintiff, as set forth in the accompanying certification incorporated by reference
herein, purchased Motive common stock during the Class Period and was damaged
thereby .
8. Defendant Motive is a corporation organized under the laws of the State of
Texas with its principal executive offices located at 12515 Research Boulevard, Building
5, Austin, Texas. Motive describes itself as a leading provider of management software
for networked products and services .
9. Defendant Scott L . Harmon ("Harmon") served, at all relevant times, as Motive's
Chief Executive Officer and the Chairman of its Board of Directors .
10. Defendant Paul M . Baker ("Baker") served, at all relevant times, as Motive' s
Chief Financial Officer since February, 2000 .
11 . Defendants Harmon and Baker will sometimes be referred to hereinafter
collectively as the "Individual Defendants" .
12 . Because of the Individual Defendants' positions with the Company, they had
access to the adverse undisclosed information about its business, operations, products,
operational trends, financial statements, markets and present and future business
prospects via access to internal corporate documents (including the Company's
operating plans, budgets and forecasts and reports of actual operations compared
thereto), conversations and connections with other corporate officers and employees,
attendance at management and Board of Directors meetings and committees thereof
and via reports and other information provided to them in connection therewith .
I :\MotiveTleadings\Complaint.doc 3
13. Each of the above officers of Motive, by virtue of their high-level positions with
the Company, directly participated in the management of the Company, was directly
involved in the day-to-day operations of the Company at the highest levels and was
privy to confidential proprietary information concerning the Company and its business,
operations, products, growth, financial statements, and financial condition, as alleged
herein. Said defendants were involved in drafting, producing, reviewing and/or
disseminating the false and misleading statements and information alleged herein, were
aware, or recklessly disregarded, that the false and misleading statements were being
issued regarding the Company, and approved or ratified these statements, in violation
of the federal securities laws .
14. As officers and controlling persons of a publicly-held company whose common
stock was, and is, registered with the SEC pursuant to the Exchange Act ; and is traded
on NASDAQ ; and is governed by the provisions of the federal securities laws, the
Individual Defendants each had a duty to disseminate promptly, accurate and truthful
information with respect to the Company's financial condition and performance, growth,
operations, financial statements, business, products, markets, management, earnings
and present and future business prospects, and to correct any previously-issued
statements that had become materially misleading or untrue, so that the market price of
the Company's publicly-traded securities would be based upon truthful and accurate
information . The Individual Defendants' misrepresentations and omissions during the
Class Period violated these specific requirements and obligations . .
15 . The Individual Defendants participated in the drafting, preparation, and/or
approval of the various public and shareholder and investor reports and othe r
I :%MotivelPleadings%Complaint.doc 4
communications complained of herein and were aware of, or recklessly disregarded, the
misstatements contained therein and omissions therefrom, and were aware of their
materially false and misleading nature, Because of their Board membership and/or
executive and managerial positions with Motive, each of the Individual Defendants had
access to the adverse undisclosed information about Motive's business prospects and
financial condition and performance as particularized herein and knew (or recklessly
disregarded) that these adverse facts rendered the positive representations made by or
about Motive and its business issued or adopted by the Company materially false and
misleading .
16 . The Individual Defendants, because of their positions of control and authority as
officers and/or directors of the Company, were able to and did control the content of the
various SEC filings, press releases and other public statements pertaining to the
Company during the Class Period . Each Individual Defendant was provided with copies
of the documents alleged herein to be misleading prior to or shortly after their issuance
and/or had the ability and/or opportunity to prevent their issuance or cause them to be
corrected . Accordingly, each of the Individual Defendants is responsible for the
accuracy of the public reports and releases detailed herein and is therefore primarily
liable for the representations contained therein .
PLAINTIFF'S CLASS ACTION ALLEGATION S
17, Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased
or otherwise acquired the securities of Motive between July 11, 2005 and October 26,
2005, inclusive, and who were damaged thereby . Excluded from the Class are the
Company, the officers and directors of the Company, members of their immediat e
I :%MotivelPleadings%Compfaint.doc 5
families and their legal representatives , heirs , successors or assigns and any entity
in which the Company has or had a controlling interest .
18 . The members of the Class are so numerous that joinder of all members is
impracticable . While the exact number of Class members is unknown to plaintiff at thi s
time and can only be ascertained through appropriate discovery, plaintiff believes that
there are hundreds or thousands of members in the proposed Class . Record owners
and other members of the Class may be identified from records maintained by Motive or
its transfer agent and may be notified of the pendency of this action by mail, using the
form of notice similar to that customarily used in securities class actions .
19. Plaintiffs claims are typical of the claims of the members of the Class, as all
members of the Class are similarly affected by defendant's wrongful conduct in violation
of federal law as complained of herein .
20. Plaintiff will fairly and adequately protect the interests of the members of the
Class and have retained counsel competent and experienced in class and securities
litigation .
21 . 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 statements made by defendants to the investing public during the
Class Period misrepresented or omitted material facts about the business, operations
and management of Motive ;
(b) whether the federal securities laws were violated by defendants' acts as
alleged herein and harmed the members of the Class ; and
I :WotiveU3leadings\Complaini.doc 6
(c) to what extent the members of the Class have sustained damages and the
proper measure of damages .
22. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable .
Furthermore, as the damages suffered by individual Class members may be relatively
small, the expense and burden of individual litigation make it impossible for members of
the Class to individually redress the wrongs done to them . There will be no difficulty in
the management of this action as a class action .
SUBSTANTIVE ALLEGATION S
23. Motive describes itself as a leading provider of management software for
networked products and services . The Company claims that products and services with
built-in Motive management capabilities are more self-managing - able to self-diagnose,
self-repair, self-monitor, self-upgrade, and self-regulate, as well guide as individuals
through simple management steps when necessary .
24. The Class Period begins on July 11, 2005. On that date, Motive announced its
preliminary second quarter results for the quarter ended June 30, 2005 . In its press
release announcing the preliminary second quarter results, defendant Harmon stated as
follows:
"Although this quarter we added several new customers and renewed andextended relationships with a number of existing customers, we had asignificant transaction push out past the end of the quarter and ourconsulting services revenue fell short of our estimates . . . . While we aredisappointed with our expected second quarter financial results, we donot believe they are indicative of a decline in the need for ourmanagement automation software . "
(Emphasis added.)
I :WotivokPleadingsIComplaini.doc 7
25. On July 27, 2005, Motive issued a press release entitled "Motive, Inc . Announces
Second Quarter Results ." The press release affirmatively announced financial results
for the second quarter ended June 30, 2005 of pro forma net income of $0 .3 million or
$0.01 per diluted share as compared to $0 .8 million or $0.04 per diluted share for the
second quarter of 2004, and GAAP net loss for the second quarter of 2005 of $1 .8
million or ($0.07) per share, compared to a net loss of $2 .1 million or ($0 .20) per share
for the second quarter of 2004. In this press release, Defendant Harmon was quoted as
saying :
"I am confident in the strength of our markets , particularly asbroadband providers continue to invest heavily in the roll-out of advancedservices . In addition, I am excited by the increasing role for Motive'ssoftware in addressing the complexity of new enterprise applications . . . . Ibelieve that our management software products are well-positionedto take advantage of these opportunities in both the near- and long-term."
The press release further stated :
Core revenue for the third quarter of 2005 is expected to be in the range of$23.5 million to $24 .5 million, and total revenue is expected to be in therange of $24 .5 million to $25 .5 million . Core revenue for the fiscal year2005 is expected to be in the range of $95 .5 million to $97 .5 million, andtotal revenue is expected to be in the range of $99.5 million to $101 .5million . Pro forma earnings are expected to be in the range of $0.05 to$0.06 per diluted share for the third quarter of 2005 and in the rangeof $0.21 to $0.24 per diluted share for fiscal year 2005 .
(Emphasis added .)
26. On October 4, 2005, Motive issued a press release entitled "Motive, Inc .
Announces Prelimina ry Third Quarter Results " in which the expected quarterly and
year- end results announced in the July 27, 2005 press release were revised to
anticipate a loss for the qua rter. The press release stated as follows :
Motive, Inc. (NASDAQ : MOTV), a leading provider of managementsoftware , today announced prelimina ry results for the third quarter ende d
f :IMoUve\Pleadings%Compiaint.doc 8
September 30, 2005. The company expects core revenue for the thirdquarter of 2005, which excludes impact from business acquisitions, to bein the range of $15 .5 million to $17 .5 million, compared to core revenue of$23 million for the same period last year. Total revenue for the thirdquarter of 2005 is expected to be in the range of $16.5 million to $18 .5million .
Motive 's pro forma loss per share for the third quarter of 2005 isexpected to be in the range of ($0.12) to ($0.17) per diluted share,compared to pro forma earnings per share of $0 .05 per diluted sha refor the same period last year . Motive's GAAP loss per share for thethird quarter of 2005 is expected to be in the range of ($0.20) to($0.27) per diluted share . Pro forma earnings and loss per share exclude(i) the amortization of acquired technology, intangibles and deferred stockcompensation and (ii) receipt of cash associated with a legal settlement,and assume a pro forma effective tax rate of 35 percent .
"These results have led us to make significant changes in two keyareas ," said Scott Harmon, CEO of Motive . "First, with regard to ourenterprise business , we have decided that the investment necessaryfor Motive to cultivate relationships with Global 2000 enterprises isgreater than we can sustain , and we are reviewing strategic optionsfor this business . As a result, we will focus on our core strength inthe communications market which will drive the company's futurestrategic direction and success . Second , we are taking immediatesteps to bring our cost structure in line with our new businessrequirements ."
Harmon added : "Most importantly, I believe that the changes we aremaking will allow us to focus 100 percent on growing our leadershipposition in the communications market and expanding our relationshipswith the world's leading telecommunications and cable broadbandcompanies . "
"Given the anticipated changes to our business , we no longer expectto achieve the revenue and EPS guidance that we previouslyreleased for the remainder of 2005," said Paul Baker, CFO of Motive .
(Emphasis added .)
27 . On this news , the price of the Company 's stock fell from $6 .26 to $4 .01 at the
close of trading on October 5, 2005, a decline of 36%.
I :1Motive\PleadingsNComplaint.doc 9
28. Before the market opened on October 27, 2005, Motive issued a press releas e
entitled "Motive , Inc. Announces Third Quarter Results and Restatement of Results fo r
Prior Two Quarters ." The press release stated as follows :
Motive, Inc . (NASDAQ: MOTV), a leading provider of managementsoftware, today announced financial results for the quarter endedSeptember 30, 2005, as well as the decision to restate its financialresults for the quarters ended March 31 , 2005 and June 30 , 2005 andthe six-month period ended June 30, 2005 . As a result, the financialstatements previously issued by Motive for these periods should nolonger be relied upon.
During the first quarter of 2005, Motive signed a new license agreementwith one of its European resellers . The agreement provided for the resellerto pay Motive a total of $5 .8 million in maintenance and license fees, andgave the reseller the right to sublicense certain Motive software to aleading European broadband provider . Motive has had a relationship withthis reseller for the last three years, during which the reseller hassuccessfully completed several large transactions to provide Motivesoftware to multiple broadband providers . The provider referenced in thereseller agreement has used Motive software for more than two years .
As of Oct . 26, 2005, the reseller had not paid $5 .2 million, which was theinitial payment invoiced upon execution of the agreement with 90-daypayment terms . Although the agreement provides that the reseller'sobligation to pay fees to Motive is not contingent upon the resellersublicensing the Motive software, Motive now believes that thecollection of the receivable is dependent upon the resellersublicensing the software to Its customer. Since this condition doesnot meet Motive 's revenue recognition policy requirements , Motivedecided on Oct . 26, 2005 to restate its financial results for the three-month periods ended March 31, 2005 and June 30, 2005 , and the six-month period ended June 30, 2005 , and will not reflect any revenuefrom this arrangement in the nine months ended Sept . 30, 2005 .Motive will recognize revenue from this arrangement when Motive'srevenue recognition criteria are met .
Motive will amend its Quarterly Reports on Form 10-Q for the quartersended March 31, 2005 and June 30, 2005 to reflect the restatementdescribed above . The financial statement tables attached to this pressrelease include the expected adjustments from this restatement . None ofthe adjustments resulting from the restatements has any impact on cashbalances for any period .
1:\MotivelPleadings\Complaint.doc 10
29. Following the October 27, 2005 announcement, the price of Motive's commo n
stock that same day fell more than 11 % from $4 .12 per share to $3 .66 per share o n
extremely heavy volume .
30. The statements made in ¶¶ 24, 25, and 26 were materially false and misleading
because they failed to disclose and misrepresented the following material adverse facts
which were known to the Defendants or recklessly disregarded by them : (1) that there
was a decline in the demand for Motive's management automation software such that
Motive has now admitted that it needs to focus on the communications market instea d
of cultivating relationships with Global 2000 enterprises ; (2) that Motive knew that i t
could not realize revenues of $24.5 million to $25.5 million for the third quarter of 2005 ;
and (3) that its financial results for the quarters ended March 31, 2005 and June 30 ,
2005 were not prepared and presented in accordance with GAAP .
APPLICABILITY OF PRESUMPTION OF RELIANCE :FRAUD - ON- THE- MARKET DOCTRIN E
31 . At a ll relevant times, the market for Motive's securities was an efficient market fo r
the following reasons , among others :
(a) Motive's stock met the requirements for listing, and was listed an d
actively traded on the NASDAQ, a highly efficient and automated market ;
(b) As a regulated issuer, Motive filed periodic public reports with the SE C
and the NASDAQ ;
(c) Motive regularly communicated with public investors via establishe d
market communication mechanisms, including through regular disseminations of pres s
releases on the national circuits of major newswire services and through other wide-
l:%Motive\PfeadingslCompla int.doc 11
ranging public disclosures, such as communications with the financial press and other
similar reporting services ; and
(d) Motive was followed by several securities analysts employed by
major brokerage firms who wrote reports which were distributed to the sales force and
certain customers of their respective brokerage firms. Each of these reports was
publicly available and entered the public marketplace .
32. As a result of the foregoing, the market for Motive's securities promptly digested
current information regarding Motive from all publicly available sources and reflected
such information in Motive's stock price . Under these circumstances, all purchasers of
Motive's securities during the Class Period suffered similar injury through their purchase
of Motive's securities at artificially inflated prices and a presumption of reliance applies .
NO SAFE HARBOR
33 . The statutory safe harbor provided for forward-looking statements under
certain circumstances does not apply to any of the allegedly false statements pleaded in
this complaint as the statements were not forward-looking statements or otherwise
covered by the statutory safe harbor or the bespeaks caution doctrine .
ADDITIONAL ALLEGATIONS OF SCIENTE R
34. In addition to the above-described involvement, each Individual Defendant had
knowledge of Motive's problems and was motivated to conceal such problems . Each
Defendant is liable for (i) making false statements, or (ii) failing to disclose adverse facts
known to it or him about Motive .
35. Defendants' fraudulent scheme and course of business that operated as a fraud
or deceit on purchasers of Motive stock was a success, as it (i) deceived the investing
public regarding Motive's prospects and business; (ii) artificially inflated the price of
:1MotiveT[eadings%Complaint.doc 12
Motive's common stock; and (iii) caused plaintiffs and other members of the Class to
purchase STI common stock at artificially inflated prices .
36 . Defendant Harmon was motivated to commit the wrongdoing alleged herein i n
order to sell Motive stock at artificially inflated prices . This stock was held by SL H
Holdings, Ltd ., of which Defendant Harmon is the general partner. During the Class
Period, Defendant Harmon sold a total of 8,000 shares of Motive common stock at
artificially inflated prices, for proceeds of $49 ,585.67 , as particularized in the followin g
table:
Scott L. Harmon : CEO
Number of $ ValueTransaction Date Shares $ Price
10/03/2005 3,700 $6.1649 $22,810 .1 310/03/2005 100 6.21 621 .0010/03/2005 200 6.205 1241 .0010/04/2005 100 6.14 614.0010/04/2005 300 6.15 1845 .0010/04/2005 37 6.17 228 .2910/04/2005 100 6.18 618 .0010/04/2005 200 6.19 1238 .0010/04/2005 600 6.2 3720 .0010/04/2005 200 6.21 1242 .0010/04/2005 200 6.23 1246.0010/04/2005 200 6.24 1248 .0010/04/2005 200 6.245 1249 .0010/04/2005 213 6.25 1331 .2510/04/2005 200 6.255 1251 .0010/04/2005 950 6 .26 5947.0010/04/2005 400 6 .27 2508 .0010/04/2005 100 6.28 628.00TOTAL 8000 $49,585.67
I :WotivekP[eadingalComplainl.doc 13
LOSS CAUSATION
37. Defendants' wrongful conduct, as alleged herein, directly and proximately caused
the damages suffered by Plaintiff and the Class .
38. During the Class Period, Plaintiff and the Class purchased securities of Motive at
artificially inflated prices and were damaged thereby . The price of Motive's common
stock declined when the misrepresentations made to the market, and/or the information
alleged herein to have been concealed from the market, and/or the effects thereof, were
revealed, causing investors' losses .
FIRST CLAIM FOR RELIE F
Against All Defendants for Violation of Section 1 0(b) of the Exchange Act andRule 10b-5 Promulgated Thereunde r
39. Plaintiff repeats and restates each and every allegation contained above as if
fully set forth herein .
40. During the Class Period, Motive and the Individual Defendants carried out a plan,
scheme and course of conduct which was intended to and, throughout the Class Period,
did: (I) deceive the investing public, including plaintiff and other Class members, as
alleged herein ; (ii) artificially inflate and maintain the market price of Motive's securities ;
and (iii) cause plaintiff and other members of the Class to purchase Motive's securities
at artificially inflated prices . In furtherance of this unlawful scheme, plan and course of
conduct, these defendants took the actions set forth herein .
41 . The defendants named in this Claim : (I) employed devices, schemes, and
artifices to defraud ; (ii) made untrue statements of material fact and/ or omitted to state
material facts necessary to make the statements not misleading; and (iii) engaged in
acts, practices, and a course of business which operated as a fraud and deceit upon th e
1 :lMotive%PleadingalComplaint.doc 14
purchasers of the Company's securities in an effort to maintain artificially high marke t
prices for Motive's securities in violation of Section 10(b) of the Exchange Act and SEC
Rule 1Qb-5 .
42. In addition to the duties of full disclosure imposed on defendants as a result o f
the making of affirmative statements and reports to the investing public, the defendants
named in this claim had a duty to promptly disseminate truthful information that woul d
be material to investors in compliance with the integrated disclosure provisions of th e
SEC as embodied in SEC Regulations S-X (17 C . F. R. Sections 210 .01 et seq .) and S-
K (17 C . F. R . Sections 229 .10 et seq .) and other SEC regulations , including accurate
and truthful information with respect to the Company 's operations , financial condition
and earnings so that the market price of the Company 's securities would be based on
truthful , complete and accurate information .
43. Motive, and Individual Defendants directly and indirectly, by the use, means or
instrumentalities of interstate commerce and/or of the mails, engaged and participated
in a continuous course of conduct to conceal adverse material information about it s
business, operations and future prospects as specified herein .
44. Motive and Individual Defendants employed devices, schemes and artifices to
defraud, while in possession of material adverse non-public information and engaged in
acts, practices, and a course of conduct as alleged herein in an effort to assure
investors of Motive's value and performance and continued substantial growth, which
included the making of, or the participation in the making of, untrue statements of
material facts and omitting to state material facts necessary in order to make the
statements made about STI and its business operations and future prospects in the ligh t
I :XMotivekPleadingskComplaint.doc 15
of the circumstances under which they were made, not misleading, as set forth more
particularly herein, and engaged in transactions, practices and a course of business
which operated as a fraud and deceit upon the purchasers of Motive's securities during
the Class Period .
45. These Defendants' material misrepresentations and/or omissions were done
knowingly or recklessly and for the purpose and effect of concealing Motive's operating
condition and future business prospects from the investing public and supporting the
artificially inflated price of its securities .
46 . As a result of the dissemination of the materially false and misleading information
and failure to disclose material facts, as set forth above, the market price of Motive's
securities was artificially inflated during the Class Period . In ignorance of the fact that
market prices of Motive's publicly-traded securities were artificially inflated, and relying
directly or indirectly on the false and misleading statements made by these defendants,
or upon the integrity of the market in which the securities trade, and/or on the
absence of material adverse information that was known to or recklessly disregarded by
defendants but not disclosed in public statements by defendants during the Class
Period, plaintiff and the other members of the Class acquired Motive securities during
the Class Period at artificially high prices and were damaged thereby .
47. At the time of said misrepresentations and omissions, plaintiff and other
members of the Class were ignorant of their falsity, and believed them to be true . Had
plaintiff and the other members of the Class and the marketplace known of the true
financial condition and business prospects of Motive, which were not disclosed by the
defendants named in this Claim, plaintiff and other members of the Class would not
I :%Motive\Pleadings\Complaint.doc 16
have purchased or otherwise acquired their Motive securities, or, if they had acquired
such securities during the Class Period, they would not have done so at the artificially
inflated prices which they paid .
48. By virtue of the foregoing, the defendants named in this Claim have violated
Section 10(b) of the Exchange Act, and Rule 1 Ob-5 promulgated thereunder .
49. As a direct and proximate result of defendants' wrongful conduct, plaintiff and the
other members of the Class suffered damages in connection with their respective
purchases and sales of the Company's securities during the Class Period .
SECOND CLAIM FOR BELIE F
Against the Individual Defendants for Violations of Section 20(a) ofThe Exchange Act.
50. Plaintiff repeats and realleges each and every allegation contained above as if
fully set forth herein .
51 . The Individual Defendants acted as controlling persons of Motive within the
meaning of Section 20(a) of the Exchange Act as alleged herein . By virtue of their high-
level positions, and their ownership and contractual rights, participation in, knowledge
and/or awareness of the Company's operations and/or intimate knowledge of the false
financial statements filed by the Company with the SEC and disseminated to the
investing public, the Individual Defendants had the power to influence and control and
did influence and control, directly or indirectly, the decision-making of the Company,
including the content and dissemination of the various statements which plaintiffs
contend are false and misleading . The Individual Defendants were provided with or had
unlimited access to copies of the Company's reports, press releases, public filings and
other statements alleged by plaintiffs to be misleading prior to and/or shortly after thes e
1 :%Motive\Pleadings\Complaint.doc 17
statements were issued and had the ability to prevent the issuance of the statements or
cause the statements to be corrected .
52 . In particular, each of these defendants had direct and supervisory involvement in
the day-to-day operations of the Company and, therefore, is presumed to have had the
power to control or influence the particular transactions giving rise to the securities
violations as alleged herein, and exercised the same .
53. As set forth above, Motive and the Individual Defendants each violated Sectio n
10(b) and Rule lOb-5 by their acts and omissions as alleged in this Complaint . By virtue
of their positions as controlling persons, the Individual Defendants are liable pursuant to
Section 20(a) of the Exchange Act . As a direct and proximate result of defendants'
wrongful conduct, plaintiff and other members of the Class suffered damages in
connection with their purchases of the Company's securities during the Class Period, in
an amount to be established at trial .
JURY TRIAL DEMANDED
Plaintiff hereby demands a trial by jury .
WHEREFORE, plaintiff prays for relief and judgment, as follows :
(a) Determining that this action is a proper class action, designating plaintiff
as Lead Plaintiff and certifying plaintiff as a class representative under Rule 23 of the
Federal Rules of Civil Procedure and plaintiffs counsel as Lead Counsel ;
(b) Awarding compensatory damages in favor of plaintiff and the other Class
members against defendants for all damages sustained as a result of defendant's
wrongdoing, in an amount to be proven at trial, including interest thereon ;
(c) Awarding plaintiff and the Class their reasonable costs and expenses
incurred in this action, including counsel fees and expert fees ; and
I:\Motive\Pleadings\Complaint .doc 18
(d) Such other and further relief as the Court may deem just and proper.
Dated : November 2, 2005 Respectfully submi tted,
William B . Federman , TBA # 00794935FEDERMAN & SHERWOO D120 N. Robinson , Suite 2720Oklahoma City, OK 73102Phone: (405) 235-1560Fax: (405) 239-2112wfederman(a aol.com
-and-2926 Maple Avenue, Suite 200Dallas , TX 75201
I :WotivelPleadings\Complaint.doc 19
1 . Plaintiff has reviewed the complaint against Mo tive, inc . ("MOTV') , and certain otherdefendants , and authorizes its filing .
2 . Plaintiff did not acquire the security that is the subject of this action at the direction ofPlaintiffs counsel or in order to pa rticipate in this private action or any other litigation under the federalsecu rities laws.
3 . Plaintiff is willing to serve as a representative par ty on behalf of a class, includingproviding testimony at deposition and trial, if necessary .
4. Plaintiff represents and warrants that he is fully authorized to enter into and execute thiscertification.
5 . Plaintiff will not accept any payment for serving as a representative party on behalf of theclass beyond the Plaintiffs pro rata share of any recovery, except such reasonable costs and expenses(including lost wages ) directly relating to the representation of the class as approved by the cou rt.
6 . Plaintiff has made no transaction(s) during the Class Period in MOTV common stock,except those set forth below :
Purchases
Date (s) Numberof Shares
Price
1015105 1200 3.87
Sales
Date(s) Numberof Shares
Price
10/27/05 1200 3.45
7. During the three years prior to the date of this Certification, Plaintiff has not served ormoved to serve as a representative party for a class in an action filed under the federal securities laws .
I declare under penalty of perjury, under the laws of the United States, this 27th day ofOctober, 2005 that the information above is accurate .
T'd BEET SGO S ;G Z tmo)sed a3uaune] dg* :ZO So L.Z aa0