IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`SCHNEUR SCHNEERSON,
`
`Plaintiff,
`
`C.A. No. 2024-0729-LM
`
`v.
`
`EXABEAM, INC.,
`
`Defendant.
`
`PUBLIC VERSION
`
`Filed: July 12, 2024
`
`VERIFIED COMPLAINT FOR RELIEF PURSUANT TO 8 DEL. C. § 220
`TO COMPEL INSPECTION OF BOOKS AND RECORDS
`Plaintiff Schneur Schneerson (“Plaintiff”), by and through his undersigned
`
`counsel, submits this Verified Complaint for Relief Pursuant to 8 Del. C. § 220 to
`
`Compel Inspection of Books and Records.1 Plaintiff, upon knowledge as to himself
`
`and his own actions, and upon information and belief as to all other matters, alleges
`
`as follows:
`
`NATURE OF THE ACTION
`This is an action under 8 Del. C. § 220 (“Section 220”) to compel
`
`1.
`
`Exabeam, Inc. (“Exabeam” or the “Company”) to produce certain of the Company’s
`
`books and records to Plaintiff.
`
`2.
`
`Plaintiff is the owner of Exabeam common stock.
`
`1 Unless stated otherwise, all capitalized terms are defined in the Demand (as defined
`in ¶4 herein).
`
`2
`
`EFiled: Jul 12 2024 03:32PM EDT
`Transaction ID 73647203
`Case No. 2024-0729-LM
`
`
`
`SCHNEUR SCHNEERSON,
`
`Plaintiff,
`
`C.A. No. 2024-0729-LM
`
`v.
`
`EXABEAM, INC.,
`
`Defendant.
`
`PUBLIC VERSION
`
`Filed: July 12, 2024
`
`VERIFIED COMPLAINT FOR RELIEF PURSUANT TO 8 DEL. C. § 220
`TO COMPEL INSPECTION OF BOOKS AND RECORDS
`Plaintiff Schneur Schneerson (“Plaintiff”), by and through his undersigned
`
`counsel, submits this Verified Complaint for Relief Pursuant to 8 Del. C. § 220 to
`
`Compel Inspection of Books and Records.1 Plaintiff, upon knowledge as to himself
`
`and his own actions, and upon information and belief as to all other matters, alleges
`
`as follows:
`
`NATURE OF THE ACTION
`This is an action under 8 Del. C. § 220 (“Section 220”) to compel
`
`1.
`
`Exabeam, Inc. (“Exabeam” or the “Company”) to produce certain of the Company’s
`
`books and records to Plaintiff.
`
`2.
`
`Plaintiff is the owner of Exabeam common stock.
`
`1 Unless stated otherwise, all capitalized terms are defined in the Demand (as defined
`in ¶4 herein).
`
`2
`
`EFiled: Jul 12 2024 03:32PM EDT
`Transaction ID 73647203
`Case No. 2024-0729-LM
`
`
`
`3.
`
`On May 15, 2024, Exabeam announced that it had reached a definitive
`
`agreement with LogRhythm, a rival cybersecurity maker owned by Thoma Bravo,
`
`to consummate the Merger, a private stock-for-stock transaction (the “Merger”).
`
`The Merger was approved via written consent, meaning the Company’s common
`
`stockholders did not have a vote on the Merger.
`
`4.
`
`On June 28, 2024, Plaintiff served Exabeam with a valid demand for
`
`proper purposes to inspect certain of Exabeam’s books and records pursuant to
`
`Section 220 (the “Demand”).2 As detailed in the Demand, there is a credible basis
`
`to suspect that the Company’s directors and/or officers breached their fiduciary
`
`duties, as the Merger is cancelling the Company’s common stockholder’s shares for
`
`no consideration, while the Company’s insiders, with ties to Thoma Bravo, stand
`
`gain significantly from the Merger.
`
`5.
`
`On July 8, 2024, Exabeam sent Plaintiff a written response declining to
`
`produce any books and records in response to the Demand (the “Refusal”).3
`
`6.
`
`In light of representations made by counsel for the Company, Plaintiff
`
`expects the proposed Merger will close imminently. To date, Plaintiff has not
`
`received notice of the closing of the Merger. Plaintiff, therefore, files this action to
`
`2 A true and correct copy of the Demand is attached hereto as Exhibit A.
`3 A true and correct copy of the Refusal is attached hereto as Exhibit B.
`3
`
`
`
`maintain his standing to enforce his rights under Section 220 with respect to his
`
`Demand.
`
`PARTIES
`Plaintiff is an owner of Exabeam common stock. A true and correct
`
`7.
`
`copy of Plaintiff’s Stock Transfer Agreement between and among Plaintiff and the
`
`Company, by which Plaintiff acquired his common shares in the private company,
`
`is attached to the Demand.
`
`8.
`
`Defendant Exabeam is a Delaware corporation with its principal place
`
`of business in Foster City, California. Exabeam is a privately funded cybersecurity
`
`company owned by Thoma Bravo.
`
`SUBSTANTIVE ALLEGATIONS
`On May 4, 2024, the Company entered into the Merger Agreement,
`
`9.
`
`agreeing to merge with LogRhythm in a private stock-for-stock transaction.
`
`10. Thereafter, the Company sent stockholders an information statement
`
`concerning the Merger, dated June 18, 2024 (the “Information Statement”). The
`
`Information Statement informed the common stockholders that the Merger was
`
`approved via written consent by certain insider stockholders, and that the common
`
`stockholders will receive no consideration for their shares in the Merger. However,
`
`the Information Statement provides the common stockholders sparse detail
`
`concerning the origin and process leading up to the Merger. Indeed, the background
`
`4
`
`
`
`of the merger section of the Information Statement spans only one and a quarter
`
`pages.
`
`11. On June 28, 2024, Plaintiff served the Company with his Demand.
`
`12.
`
`Plaintiff’s Demand, which highlights the lack of information provided
`
`to stockholders in connection with the Merger, establishes that Plaintiff has a
`
`credible concern that the Merger, which is cancelling the Company’s common
`
`stockholder’s shares for no consideration and providing unique benefits to certain
`
`insiders, involved breaches of fiduciary duty and is neither fair nor value-
`
`maximizing to the Company’s common stockholders. The Demand also details
`
`Plaintiff’s concerns that a majority of the Company’s board of directors have direct
`
`ties to the ultimate acquirer, Thoma Bravo, and may have improperly tilted the sales
`
`process in Thoma Bravo’s favor.
`
`13.
`
`The Demand was accompanied by (i) Plaintiff’s Limited Power of
`
`Attorney appointing his counsel as his agents in connection with the Demand; (ii)
`
`Plaintiff’s sworn Verification declaring that Plaintiff is an Exabeam stockholder; and
`
`(iii) a copy of Plaintiff’s Stock Transfer Agreement, by which Plaintiff acquired his
`
`common stock in the private Company.
`
`14. The Demand identified specific categories of Formal and Informal
`
`Board Materials and Officer-Level Materials for inspection, as well as certain other
`
`specific documents, including advisor engagement letters and conflict disclosures,
`5
`
`
`
`
`related to Plaintiff’s proper purpose in investigating wrongdoing in connection with
`
`the Merger process.
`
`15. On June 28, 2024, Plaintiff’s counsel sent the Company’s counsel a
`
`courtesy copy of the demand and inquired as to the timing of the closing of the
`
`Merger.4
`
`16. On July 1, 2024, the Company’s counsel responded and stated that “it
`
`is currently anticipated that the merger will close on July 2, 2024.”5
`
`17. On July 8, 2024, Exabeam refused the Demand. The Company stated
`
`that Plaintiff has failed to meet his burden to establish ownership standing, failed to
`
`set forth a credible basis to infer mismanagement or wrongdoing, and is overbroad
`
`in scope. While the Refusal claimed the Merger was “now-completed,” the Refusal
`
`never specifically stated that the Merger closed and did not state that Plaintiff lost
`
`standing due to the Merger’s closure. Nevertheless, the Company refused to produce
`
`any books and records in response to the Demand.
`
`18.
`
`To date, neither Plaintiff nor Plaintiff’s counsel has received notice of
`
`the Merger’s closing from either the Company or the Company’s counsel. Nor has
`
`Exabeam or LogRhythm issued a press release announcing the closing of the
`
`4 See Email from D. Baker to A. McCusker (June 28, 2024), attached hereto as
`Exhibit C.
`5 See id. (Email from R. Stottmann to D. Baker (July 1, 2024)).
`6
`
`
`
`Merger. Therefore, Plaintiff brings his action now to maintain his standing to
`
`enforce his rights under Section 220 with respect to the Demand.
`
`COUNT I
`
`(Inspection of Books and Records Under 8 Del. C. § 220)
`Plaintiff repeats and realleges each and every allegation above as if set
`
`19.
`
`forth in full herein.
`
`20. On June 28, 2024, Plaintiff, an owner of Exabeam common stock,
`
`served his Demand on Exabeam for inspection of the books and records identified
`
`in the Demand.
`
`21.
`
`Plaintiff complied with all requirements under Section 220 respecting
`
`the form and manner of making a demand for the inspection of books and records.
`
`22.
`
`The Demand stated the proper purpose of investigating possible
`
`mismanagement and/or breaches of fiduciary duty by the Company’s officers and/or
`
`directors in connection with the Merger, which is cancelling the common
`
`stockholder’s shares for no consideration, while providing benefits to insiders who
`
`have ties to the owner of the acquirer, Thoma Bravo.
`
`23. On July 8, 2024, the Company refused the Demand.
`
`24.
`
`Plaintiff is entitled to inspect the copy and books and records identified
`
`in the Demand.
`
`25.
`
`Plaintiff has no adequate remedy at law.
`7
`
`
`
`PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiff respectfully requests that the Court enter an Order:
`
`Entering judgment in favor of Plaintiff and against Exabeam;
`
`Declaring that the Demand complied with the requirements of Section
`
`A.
`
`B.
`
`220;
`
`C.
`
`Requiring Exabeam to permit the inspection and copying of each and
`
`every book and record requested in Plaintiff’s Demand;
`
`D.
`
`Awarding Plaintiff the costs and expenses incurred in this action,
`
`including reasonable attorneys’ fees; and
`
`E.
`
`Granting Plaintiff any and all further relief as the Court deems just and
`
`proper.
`
`Dated: July 9, 2024
`
`OF COUNSEL:
`
`BLOCK & LEVITON LLP
`Jason Leviton
`260 Franklin St. Suite 1860
`Boston, MA 021110
`(617) 398-5600
`
`BLOCK & LEVITON LLP
`
`/s/ Lindsay K. Faccenda
`Kimberly A. Evans (#5888)
`Lindsay K. Faccenda (#5772)
`Daniel M. Baker (#7071)
`3801 Kennett Pike, Suite C-305
`Wilmington, DE 19807
`(302) 499-3600
`kim@blockleviton.com
`lindsay@blockleviton.com
`daniel@blockleviton.com
`
`Counsel for Plaintiff
`Schneur Schneerson
`
`8
`
`
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
