Professional Documents
Culture Documents
Transaction ID 60332656
Case No. 2017-0177-JRS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
v.
PUBLIC VERSION:
PALANTIR TECHNOLOGIES, INC. MARCH 13, 2017
Defendant.
knowledge, information and belief, states and alleges for its Verified Complaint
follows:
investor in Palantir that owns well over 5,000,000 common and preferred shares of
necessary to assess the value of their investments or to assess the nature and extent
of improper and illegal conduct perpetrated by Palantir and its officers, directors,
2. This Complaint and its exhibits have temporarily been filed pursuant
Although KT4 does not agree that the disclosure of this Complaint and its exhibits
filed the materials under seal to provide Palantir with an opportunity to seek the
Courts guidance on whether any information herein should be kept from public
disclosure.
investigate whether and to what extent Palantir and its officers, directors, agents,
Alexander Karp and Palantir Chairman and founding investor Peter Thiel) to
sell their Palantir shares while improperly preventing or hindering the ability
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c. improperly depriving disfavored investors of even basic
shareholders;
for the purpose of depriving KT4 (and possibly other disfavored investors)
compensation and benefits to officers that lower the value of Palantir stock
3
for Palantir CEO Alexander Karp); (ii) diluting the value of Palantir
proper corporate purpose; and (iii) providing (or causing others to provide)
Delectable, Inc.;
the rights of first refusal and rights of co-sale provided in various corporate
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documents; and by failing to disregard transactions effected in contravention
basic information necessary to understand the value of their investments and the
amending its corporate documents for the sole purpose of foreclosing KT4s
examine corporate books and records and talk with corporate officers
immediately after KT4 made written requests for information expressly allowed by
Law (the General Corporation Law), having made the required written demand
for inspection under 220 more than five (5) business days prior to the filing of
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6. Despite KT4s lawful and appropriate requests for financial
specified books and records on September 20, 2016 (the Demand, attached
hereto as Exhibit 21)Palantir has refused to produce any of the requested books
7. KT4s purposes for the inspection set forth in the Demand and herein
each category of books and records that KT4 seeks to inspect and copy is
copies of the Companys books and records under Section 7-220 of the General
Corporation Law. Given KT4s unambiguous statutory rights, Palantir must make
KT4 and its duly authorized representatives with access to and copies of the books
THE PARTIES
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100 Hamilton Ave.Palo Alto, CA 94301. A true and correct copy of the Palantir
with a registered agent at Incorp Services, Inc., 919 North Market Street, Suite
425, Wilmington, DE 19801 and a principal place of business at: c/o Manning
JURISDICTION
12. The Court has jurisdiction over the claims asserted in this Verified
FACTUAL ALLEGATIONS
available to KT4, the allegations below are based upon what KT4 has been able to
adduce from its own experience, press reports, and accounts of others involved in
these events. Palantir has deprived KT4 of sufficient information to assess and
describe more fully the improper conduct of Palantir and its officers, directors,
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A. KT4 Invests in Palantir and Obtains Contractual Rights Pursuant to
Investors Rights Agreements and First Refusal and Co-Sale
Agreements
14. At various times from June 2006 through December 2012, KT4
5,696,977 shares of Palantir common and preferred stock. (KT4 also owns 29,917
15. In connection with these investments, Palantir, KT4, and each other
Investors Rights Agreements, all such agreements executed by KT4 contained the
provisions discussed in detail herein providing major investors such as KT4 with:
(a) a right to inspect Palantirs books and records and discuss the operations of
Palantir with company executives; and (b) rights of first offer as to any subsequent
rounds of financing.
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16. The Investors Rights Agreements into which KT4 entered in
connection with its investments in Palantir on June 15, 2006 and February 15, 2008
(and any subsequent iterations of those agreements that were executed by KT4)
provide KT4 with the right to receive certain financial statements and information
Agreements states:
9
Exhibit 2 (2008 Investors Rights Agreement).
connection with its investments in Palantir on June 15, 2006 and February 15, 2008
(and any subsequent iterations of those agreements that were executed by KT4)
also provide major investors such as KT4 with a right of inspection of the
Companys properties and its books of account and records, as well as the right to
discuss the Companys affairs, finances, and accounts with its officers.
part:
connection with its investments in Palantir on June 15, 2006 and February 15, 2008
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(and any subsequent iterations of those agreements that were executed by KT4)
also provide major investors such as KT4 with a right of first offer in the event
Palantir were to offer shares to any investor. To effectuate that right, the Investors
Rights Agreements require that the Company provide notice to all major investors
such as KT4 regarding its intent to make such an offering. Specifically, section 2.4
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12
Exhibit 2 (2008 Investors Rights Agreement).
and each other investor in Palantirs preferred shares executed a First Refusal and
First Refusal and Co-Sale Agreements, all such agreements executed by KT4
contained the provisions discussed in detail herein providing investors such as KT4
with: (a) the right of first refusal in the event any founding investor (such as Karp
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and Thiel) were to sell their shares; (b) rights of co-sale in the event any founding
Investor (such as Karp and Thiel) were to offer to sell shares, to the extent
investors and the Company decline to purchase all, or a portion, of such shares
pursuant to their rights of first refusal; (c) the right to have Palantir disregard any
sale of shares by a founder in such a manner as to deprive KT4 of its rights of first
refusal and co-sale; and (d) the right to sell to any founder who purports to sell
shares in such a prohibited manner the type and number of shares equal to the
transferee had the transfer given effect to KT4s rights of first refusal and co-sale.
20. The First Refusal and Co-Sale Agreements into which KT4 entered in
connection with its investments in Palantir on June 15, 2006 and February 15, 2008
(and any subsequent iterations of those agreements that were executed by KT4)
provide holders of preferred shares, such as KT4, with a right of first refusal in the
event any founding Investor (such as Karp and Thiel) were to offer to sell their
shares, to the extent the Company declines to purchase all, or a portion, of such
shares. To effectuate that right, the First Refusal and Co-Sale Agreements require
that a founding Investor offering shares for sale provide notice to all preferred
stock holders such as KT4 regarding its intent to make such an offering.
Specifically, section 2.1 of the First Refusal and Co-Sale Agreements states, in
relevant part:
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Exhibit 3 (2008 Amended and Restated First Refusal and Co-Sale
Agreement).
21. The First Refusal and Co-Sale Agreements into which KT4 entered in
connection with its investments in Palantir on June 15, 2006 and February 15, 2008
(and any subsequent iterations of those agreements that were executed by KT4)
also provide holders of preferred shares, such as KT4, with a right of co-sale in the
event any founding Investor (such as Karp and Thiel) were to offer to sell shares,
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to the extent such holders and the Company decline to purchase all, or a portion, of
such shares pursuant to their rights of first refusal. To effectuate that right, the
First Refusal and Co-Sale Agreements require that a founding Investor offering
shares for sale provide notice to all preferred stock holders such as KT4 regarding
its intent to make such an offering. Specifically, section 2.2 of the First Refusal
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Exhibit 3 (2008 Amended and Restated First Refusal and Co-Sale
Agreement).
22. Founding investors such as Karp and Thiel are prohibited from
preferred shares of the above-discussed rights of first refusal and co-sale, and the
First Refusal and Co-Sale Agreements obligate Palantir to rescind and disregard
KT4 have the right to require such founding investor to purchase shares from other
accordance with the above right of co-sale. Specifically, section 2.5 of the First
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Exhibit 3 (2008 Amended and Restated First Refusal and Co-Sale
Agreement).
inspection, first offer, first refusal, and co-sale when it was solicited, and agreed, to
invest in Palantir.
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B. Palantir and Its Insiders Thwart and Hinder Disfavored Investors
Efforts To Sell Their Shares, and Misappropriate the Opportunities,
Without Offering Disfavored Investors the Required Rights of First
Offer, First Refusal, or Co-Sale
Palantir has engaged in a pattern and practice of thwarting or hindering the efforts
known to KT4 to have similar concerns to those discussed hereinto sell their
Palantir shares, and instead taking, or attempting to take, those opportunities for
policies regarding transfers and sales of Palantir stock, and uses its position as
transfer agent of Palantir shares, to make clear to investors that no transfer or sale
of shares can be effected without the Companys approval. (These practices and
Development Kevin Kawasaki, see Exhibit 4 (January 5, 2016 Selling Group email
and January 11, 2016 Kawasaki response), but Palantir has refused to make them
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b. Disfavored investors such as KT4 therefore are required to
provide notice to the Company once they have fully negotiated a transfer or sale of
Company and/or its officers, directors, agents, and/or majority shareholders then
use the information provided to them about potential sales of Palantir stock to
contact the intended transferee in order to interfere with the sale and dissuade the
investor.
place of the disfavored investor, and effect its/their own sale of shares to the
intended transferee.
25. KT4 details herein two examples of such conduct, but it is informed
and believes, and on that basis alleges, that the Company and its officers, directors,
26. One example of this pattern and practice is the conduct of Palantir and
those putatively acting on its behalf with respect to a sale of certain of KT4s
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Palantir shares to the hedge fund Highbridge Capital Management LLC
purchase price and all material terms and conditions of the sale. On or about
May 7, 2015, KT4 notified Palantir of the impending sale, identified the shares to
be sold and their purchaser, and disclosed the consideration to be paid and all other
DTA (a firm that KT4 believes was supervised by, and conducted business under
the broker license of, SF Sentry Securities, Inc.), of this information and, upon
behalf, from KT4, and to effect a sale from Palantir to Highbridge instead. At the
time, DTA and its principals Alexander Fishman and Alexander Davis enjoyed a
KT4 and other disfavored investors had negotiated a sale, and instead to purchase
shares directly from Palantir. Had Highbridge acceded to Palantirs and DTAs
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tactics and purchased shares directly from Palantir, such a transaction would have
Fishman he had made a deal with KT4 for the purchase and that he did not break
31. It was only when Karp was informed that Highbridge was an affiliate
JPMorgan CEO Jamie Dimon would be asked to contact Karp directly to express
displeasure at the Companys and DTAs tactics, that Karp intervened personally
and caused the Company and DTA finally to relent. At that point, apparently
fearing his relationship with a major client, Karp caused the planned transaction
between KT4 and Highbridge to be approved immediately (on or about May 31,
32. Palantir and DTA experienced more success in their next effort to
impede KT4s sale of stock and misappropriate the opportunity for themselves. By
December 2015, KT4 and others (collectively, the Selling Group) had negotiated
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a sale of hundreds of millions of dollars worth of Palantir shares to a special
the purchase price and all material terms and conditions of the sale. All parties to
the transaction agreed that the sale had been fully negotiated, and were preparing
33. The Selling Group designated Rosco Hill (then part of the Selling
Group) to inform Palantir of the impending sale given the Companys role in
approving the transfer. Upon information and belief, Hill informed Kevin
from purchasing shares from the Selling Group, and to arrange its own direct
35. In or about early-January 2016, the Selling Group became aware that
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shares by the Company; that as a result, came to believe it was required to
pursue a transaction directly with the Company instead of with the Selling Group;
and that was therefore planning to withdraw from the transaction. The
Selling Group wrote to the Company on January 5, 2016, asking it to direct its
agent DTA to clarify to that could still pursue the fully negotiated
from the Company. See Exhibit 4 (January 5, 2016 Selling Group email and
January 11, 2016 by denying that DTA was representing Palantir in connection
with any sale of shares to , claiming it was that had approached Palantir
regarding such a sale (and not the other way around), and claiming that the
Company did not intend to pursue any transaction with . See Exhibit 4
(January 5, 2016 Selling Group email and January 11, 2016 Kawasaki response).
37. In fact, DTA had been operating on Palantirs behalf, and had made
the approach to in an effort to subvert the Selling Groups sale and effect its
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represent Palantir Technologies in Palo Alto and have
been asked by the company to reach out to your firm as
you guys demonstrated a level of interest in the company
through a third party [i.e., the Selling Group]. If this is
not the case, I apologize. In any event, I would appreciate
a response back at your convenience so I can discuss the
current offering, process and timing.
38. In reality, Davis was seeking contact with not to discuss the
current offering, process and timing of the transaction that had been negotiated
with the Selling Group, but to dissuade from following through with that
investors, such as Alexander Karp and Peter Thiel, instead. These efforts by
Davis, Palantir, and the founding investors were successful: As a direct result of
those efforts, declined to consummate the transaction with the Selling Group.
39. Because Palantir has refused to provide any books and records
pertinent to these transactions, it is not clear to KT4 whether, at some point after
Kawasakis false denial regarding DTAs activities, Palantir and/or the relevant
40. To the extent such a sale occurred and was comprised in part or in
whole of primary Palantir shares by the Company, Palantir would have been
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required, pursuant to the terms of the Investors Rights Agreement then in effect, to
provide investors such as KT4 with notice of the transaction and a right of first
41. To the extent such a sale occurred and was comprised in part or in
whole of secondary Palantir shares by founding investors such as Karp and Thiel,
the relevant founding investors would have been required, pursuant to the terms of
the First Refusal and Co-Sale Agreement then in effect, to provide investors such
as KT4 with notice of the transaction and rights of first refusal and/or co-sale. The
relevant founding investors did not do so. The Company would therefore have
been required, pursuant to the terms of the First Refusal and Co-Sale Agreement
exercise its rights, under the First Refusal and Co-Sale Agreements, to sell to the
founding investors involved in these possible transactions the type and number of
shares equal to the number of shares KT4 would have been entitled to transfer to
the transferees had these possible transfers been effected pursuant to and in
compliance with the terms of the First Refusal and Co-Sale Agreements.
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C. Palantir Leverages Its Control of Financial Information To Interfere
with Its Investors Ability To Sell Their Shares, To Force Potential
Buyers and Sellers of Palantir Stock To Use DTA and/or Fishman as
Intermediaries, and To Pay DTA and/or Fishman Unjustifiable
Commissions
and on that basis alleges, that Palantir also exerts control over sales or potential
regarding Palantir.
44. KT4 is informed and believes, and on that basis alleges, that until
sometime after KT4 made the request and demand for financial information
financial information in connection with the sale of Palantir stock other than
Palantir shares, and potential buyers of Palantir shares, have been forced by
intermediary. Palantir thereby has used DTA and Fishman as additional means to
legitimate work, and had no role in matching buyer to seller, Palantir often
DTA and/or Fishman. Those who have been unwilling to effect sales or purchases
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through DTA have been unable to pursue the sale or purchase of Palantir stock.
This has enriched DTA and Fishman while harming Palantirs stockholders, who
ultimately bear the burden of these payments and who suffer the consequences of
KT4 was informed by a Managing Director at UBS Securities that in or about the
summer of 2016, UBS Securities brokered a transaction for the sale of a large
number of Palantir shares from the Company to a third party. Karp intervened and
notwithstanding that Fishman and DTA had performed no work on the transaction
and had no role in bringing the buyer and seller together. UBS acceded to
Palantirs demand.
above, KT4 was informed, by a participant in the secondary market for Palantir
in Palantir in or about May 2014. At that time, the Company did not have
secondary shares.
48. Both funds were informed by Palantir and by DTA that they could
only purchase secondary Palantir shares by using DTA as intermediary. Both were
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further informed by Palantir and DTA that they could receive no financial
purchase Palantir shares on the secondary market other than through DTA, they
described above in Paragraph 48, each of these two funds determined it was unable
Palantir.
50. KT4 is informed and believes, and on that basis alleges, that Palantir
thereof, to third parties, while preventing disfavored investors from doing the
same. KT4 details herein certain examples of such conduct, but it is informed and
believes, and on that basis alleges, that the Company and its officers, directors,
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agents, and/or majority shareholders have engaged in this conduct on other
occasions as well.
relationships with Palantir or who participate in the secondary market for Palantir
shares, that Palantir has permitted founding investors Alexander Karp and Peter
Thiel, and entities they control, to sell Palantir shares (either directly or through
including KT4, other members of the Selling Group, participants in the secondary
market, and any number of current and former Palantir employeeshave been
prohibited by Palantir from selling their shares. Palantir has effected this
sell their Palantir stock and upon potential purchasers of Palantir shares from such
52. Although the First Refusal and Co-Sale Agreement then in effect
required that Karp and Thiel, as founding investors, provide investors such as KT4
with notice of the transaction and rights of first refusal and/or co-sale as a
condition of transferring their shares, Karp and Thiel knowingly failed to do so,
with Palantirs knowledge and assistance. In light of this failure, the Company was
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required, pursuant to the terms of the First Refusal and Co-Sale Agreement then in
refused to provide, KT4 is unable to exercise its rights, under the First Refusal and
transactions the type and number of shares equal to the number of shares KT4
would have been entitled to transfer to the transferees had these transfers been
effected pursuant to and in compliance with the terms of the First Refusal and Co-
Sale Agreements.
Alexander Karp pursuant to which Karp will be afforded the opportunity to sell his
position in Palantir either to the Company or a third party within a relatively short
timeframe, which would allow Karp to exit his position in Palantir without creating
and on that basis alleges, that Palantir has used its employees and former
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investors from learning information that could permit them to value their Palantir
the quality of employees Palantir is able to hire and retain. Palantir employees
were lured to the company with stock and option grants and promises of future
liquidity, only to learn later that they are prevented from realizing value from the
stock and option grants that comprise a significant portion of their compensation
including the imposition of gag ordersupon employees efforts to sell their stake
in the Company.
57. Various press articles have reported that Palantir is struggling to stem
staff departures. It has been reported that [m]ore than 100 Palantir employees,
including several prominent managers, have left the company this year [2016]
through April 15, a confidential log shows. At that rate, the company is on track to
turn over about 20% of its staff in 2016, almost double the average rate of the three
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58. According to reports, [t]o participate in a company-arranged stock
sale, former Palantir employees first had to promise not to . . . talk to the media
without its approval. Further, according to the terms to which former employees
were required to assent as a condition of their sale of Palantir shares, [i]f they get
any inquiries about Palantir from reporters, . . . they must immediately notify
Palantir and then email the company a copy of the inquiry within three business
employees and former employees wishing to sell their Palantir stock, which
prevents any information about Palantir from being made available to investors
there does not exist a liquid market in which to sell Palantir equity, many such
employees have no choice other than to agree to the onerous terms demanded by
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potential customers (including any customer lists), capitalization, stockholders or
stock through an investment vehicle that was controlled by Meline von Brentano
been jointly owned by Brentano and Alexander Karp. Those shares were held by
transfer of those shares to KT4. At that time, Palantir refused to effect the transfer
of these shareswhich Abramowitz had bought and paid for long agounless he
signed a nondisclosure agreement such as the one referenced above, even though
those shares had not previously been subject to any such restriction. Because KT4
has refused to sign this nondisclosure agreement, Palantir has held the shares in
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c. KT4 has been informed by another Palantir investor that even
when that investor sought to transfer shares into his own charitable trust in or about
December 2014, Palantir forced him to sign such a nondisclosure agreement, even
61. The purpose and effect of these gag orders is not to protect any
a small group within Palantir can have access to information regarding Palantirs
financial health and the activities of its officers, directors, agents, and majority
reports that the Company is mismanaged. See, e.g., Exhibit 9 (Palantir Cofounder
2016) (reporting that Palantir has struggled with high turnover and big-name
customer cancellations and that Palantir has raised $2.42 billion to date but spent
over $500 million in 2015 without making a profit); Exhibit 10 (Peter Thiels
Catch, Vanity Fair, June 23, 2016) (reporting that [t]he big-data company, whose
clients include the F.B.I. and N.S.A., has struggled to retain executives and
employees and that [o]ther big-name clients like Coca-Cola have declined to
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F. Palantir Fails To Hold Annual Meetings or Otherwise Provide
Information to Its Shareholders Regarding Its Financial Performance
financial performance through annual shareholder meetings: During the more than
ten years KT4 has been a shareholder of Palantir, the Company has never held an
annual stockholders meeting or, if it has held such a meeting, it has never
63. Palantirs Bylaws require that the Company hold at least one annual
further require that stockholders be provided with notice of the date, time, and
location of all stockholder meetings. Id. Art. II 7. The Bylaws further require
that the Company prepare and make, at least ten days before every meeting of
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder; that such list be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior to
the meeting; and that the list be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
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64. To KT4s knowledge, Palantir has never held an annual stockholder
meeting and has never made available to its stockholders a stockholder list.
65. And while Palantir deprives KT4 and other investors of any
made or authorized statements to the press to the effect that Palantirs value is
approximately $20 billion. See, e.g., Exhibit 12 (Palantir Seeks New Funding at
financing that values the data-analysis company at $20 billion, people with
knowledge of the matter said.); Exhibit 13 (Peter Thiels Palantir Spreads Its
66. Although Palantirs Bylaws also provide that actions that may be
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that would
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entitled to vote thereon were present and voted, Exhibit 11 Art. II 9, in such an
instance, [p]rompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing, id. Other than in connection with specific
transactions (e.g., his 2006 purchase of Palantir shares), KT4 has never provided
such written consent. Nor has KT4 ever received noticeprompt or otherwise
of the taking of corporate action without a meeting by less than unanimous written
consent.
67. During the ten years KT4 has owned shares of Palantir, Palantir has
never issued a dividend to its shareholders. It is unclear whether Palantir has even
This failure to issue dividends, combined with the Companys efforts to prevent
disfavored investors from selling their Palantir shares, means that, because of the
actions of Palantir and its officers, directors, agents, and majority shareholders,
disfavored investors such as KT4 have been hindered from receiving full value
inability of disfavored investors to obtain full value from their investments, Karp
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who induced early investors to purchase Palantir shares, and induced employees to
come to Palantir and be paid in equity, with promises of an initial public offering
subsequently publicly stated that he would not consider taking Palantir public.
See, e.g., Exhibit 14 (Free advice: Dont go public, says Palantirs CEO,
CNBC.com, March 19, 2014). (After being served with the Initial Request and the
220 Demand, both of which requested information about whether the Company
had considered an initial public offering, Karp in October 2016 suddenly purported
to reverse his position and told the press that he was now positioning the company
Palantir that various third parties have sought to purchase Palantir in part or in
whole or to take Palantir public. It is unclear whether the Board of Directors even
considered these sales, as Delaware law requires, which would have been in the
70. Because Palantir has refused to provide KT4 access to any of the
Companys books and records, KT4 cannot ascertain whether (a) the Board failed
to consider these offers in violation of its own duty in placing the interests of
corporate insiders such as Alexander Karp and Peter Thiel ahead of those of the
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Company and its shareholders; or (b) Palantir insiders who were approached
including Karp and Thielhave violated their fiduciary duties by failing even to
71. In connection with recent sales of Palantir shares, the Company has
required disclosures to new investors that Palantir stock is illiquid, that there is no
market for Palantir stock, and that there may never be a market for Palantir stock.
(Purchaser is fully aware of: (a) the highly speculative nature of the Shares;
(b) the financial hazards involved; (c) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that Purchaser may not be able to
sell or dispose of the Shares or use them as collateral for loans); . . . .). Tellingly,
72. Palantir has refused to provide to investors such as KT4 such basic
regarding equity grants made to officers. Such information would permit investors
such as KT4 to ascertain whether, while Palantir has refused to issue dividends, it
40
has at the same time spent unreasonable amounts on lavish expenses for its
73. One reason KT4 questions whether Palantir has paid unreasonable
expenses is that KT4 has been informed by individuals with ongoing relationships
necessary or serve a valid corporate purpose. KT4 also has been informed by an
impossible for KT4 to assess the extent to which Palantirs officers and directors
75. Because Palantirs Board of Directors has the ability, pursuant to the
41
existing investors with the right to purchase newly issued stock, investors such as
KT4 must have the ability to examine Palantirs books and records to ascertain
whether Palantirs officers and directors, or others, have been granted excessive
stock or options in the Company that have resulted in unreasonable and improper
76. By letter dated August 16, 2016, KT4, through its counsel, exercised
its rights under the Investors Rights Agreement by making a written demand on
Palantir for inspection of its books and records pursuant to Sections 2.1 and 2.2 of
the operative Amended and Restated Investors Rights Agreement (the Initial
Request). A true and correct copy of the Initial Request is attached hereto as
77. In the Initial Request, KT4 sought materials and information to which
KT4 was entitled, as a major investor in Palantir, pursuant to the Investors Rights
convenient time and location, and requested a response from the Company within
five (5) business days confirming that it would meet its obligations under the
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J. Palantir Purports To Retroactively Amend the Investors Rights
Agreement To Foreclose KT4s Right to Financial InformationBut
Refuses To Provide a Copy of Itand Brings a Meritless Lawsuit in
California
79. While Palantirs in-house counsel claimed Palantir was preparing its
response to KT4s Initial Request, Palantir and its founding investors were instead
informed and believes, and on that basis alleges, that Palantir and its founding
80. KT4 has never been provided with any information concerning how
the Investors Rights Agreement supposedly was retroactively amended. KT4 also
has not been provided a copy of the purported retroactively amended Investors
Rights Agreementeven though Palantir takes the position that the amendment
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81. On or about September 1, 2016, Palantir filed a complaint in Superior
Court of the State of California for the County of Santa Clara (the California
Complaint was twofold: (1) to seek to delay indefinitely, if not eliminate, Palantirs
obligation to provide the books and records (and, thus, evidence of wrongdoing by
KT4 and its Managing Member, Mr. Abramowitz (who was named personally in
the California Complaint), into dropping its quest for information by alleging that
various inventions of Mr. Abramowitz, for which he has sought patent protection,
are meritless. This Complaint is not the appropriate avenue to resolve Palantirs
lawsuit must be resolved for this Court to grant KT4 the relief it seeks here.
alleged to have occurred years ago, and the filing of the patent applications that
44
2014; yet Palantir made these allegations only after KT4 requested access to the
83. Palantir also seeks in its California Complaint to justify its failure to
provide KT4 with any information about its investment in Palantir and the conduct
provide KT4 with a list of officers, directors, and shareholdersby relying on its
any trade secrets or intellectual property. Indeed, the Investors Rights Agreement
expressly provided that Palantir did not have to provide KT4 any information that
demonstrated by its conduct after filing the lawsuit on September 1, 2016. Upon
information and belief, Palantirs first step upon filing was not to seek to serve Mr.
Abramowitz, KT4, or any of the other entities it named as defendants, but rather to
alert the press to the complaint. Palantirs actions had their intended consequence:
Starting the very next day, various publications reported on the lawsuit, all before
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Palantir had served a single defendant. See Exhibit 19 (Palantir Says Major
2016); see also, e.g., Exhibit 20 (Palantir Has Filed a Dramatic Lawsuit Against a
intermediary well known to all parties: If KT4 and Mr. Abramowitz were to
86. By letter dated September 20, 2016, KT4 exercised its rights under the
inspection of its books and records pursuant to Section 7-220 of the General
Corporation Law (the Demand). A true and correct copy of the Demand is
87. In the Demand, KT4 requested access to the books and records of the
stock ledger, and the list of shareholders, and to make copies or extracts therefrom;
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and, without limiting the foregoing, that it provide KT4 and its attorneys with
access to, and the ability to make copies of or extracts from certain materials
necessary for KT4 to: (1) ascertain the value of its investment in Palantir; and
(2) investigate the nature and extent of wrongdoing by Palantirs officers, directors,
88. Specifically, KT4 stated, under oath, that it sought these materials
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unjustified payments and/or commissions to Alexander
Fishman, Alexander Davis, Disruptive Technology
Advisers or DTA, other past and present employees or
affiliates of DTA, and/or Delectable, Inc.;
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committed securities fraud or other securities violations
in connection with the purchase and sale of Palantir
stock.
Exhibit 21 (Demand).
In a letter sent by counsel, Palantir repeated the false allegation that Mr.
and every request in KT4s 220 letter, notwithstanding that those requests pertain
solely to the value of KT4s investment in Palantir and the misconduct of its
officers, directors, agents, and majority shareholders and have nothing to do with
from Palantirs counsel further argued that Mr. Abramowitz failed to prove his
Palantir was required to provide at the required annual stockholder meetings that
Palantir failed to holdbecause his letter request failed to state with particularity
every instance of the wrongdoing that Palantir has concealed from its investors. In
support of this argument, Palantirs counsel cited cases that govern the standards
for complaints, not for 220 demand letters. See Exhibit 23 (Palantir Response).
90. As of the date of this Verified Complaintwhich is more than five (5)
provide access to, any of the books and records described in the Demand.
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91. On Tuesday, February 14, 2017, after being advised that this 220
Complaint would soon be filed in Delaware, counsel for Palantir contacted counsel
for KT4 and offered to provide access to (i) its most recent audited consolidated
deficit and cash flows for the years then ended, and the related notes to the
recent date, aggregated by share class and series. Exhibit 24 (2/13/17 J. Zach
email). Counsel made this offer to resolve [KT4s] demandin other words, the
offer was conditional upon KT4 dropping nearly every one of the requests for
information described in the Demand. Id. Moreover, this offer was expressly
pursuant to 220, to all of the information sought in the Demand; that if the
Company were to provide any such information, KT4 would omit that category of
information from the information sought in the instant Complaint; that Palantirs
offer (which still did not include so much as a list of the Companys officers and
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directors, or the list of stockholders the Company was required by law to produce
for inspection at the required annual stockholder meetings that Palantir never held)
was not a good-faith effort to resolve the requests; that the accusations regarding
would provide Palantirs email and KT4s response to this Court; that Palantirs
insistence that KT4 agree not to use any information in litigation against the
Company was improper; and that KT4 would abide by whatever restrictions might
be imposed by this Court governing the use of the information sought. Exhibit 25
KT4 is wholly unable to value Palantir and its ownership interest in Palantir.
in the fraud, mismanagement, abuse, and breach of fiduciary duty discussed herein.
books and records demanded in KT4s September 20, 2016 letter (Exhibit 21) is
necessary to enable KT4 both to value its considerable investment in Palantir, and
to assess the nature and extent of fraud, mismanagement, abuse, and breach of
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fiduciary duty committed by Palantirs officers, directors, agents, and majority
shareholders. KT4 made each such demand in good faith and for a proper purpose.
COUNT I
DEMAND FOR INSPECTION OF PALANTIRS
BOOKS AND RECORDS UNDER 8 DEL. C. 7-220
set forth in paragraphs 1 through 96 of this Verified Complaint, as if fully set forth
herein.
have the right to inspect for any proper purpose, and make copies and extracts
from, the corporations stock ledger, a list of its stockholders, and its other books
attorney or other agent acting for the stockholder pursuant to subsection (b) of this
section or does not reply to the demand within 5 business days after the demand
has been made, the stockholder may apply to the Court of Chancery for an order to
100. KT4, a major stockholder of Palantir, exercised its rights under the
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101. KT4s Demand fully complied with the provisions of Section 7-
220(b) of the General Corporation Law governing the form and manner of
102. KT4s stated purposes in the Demand are proper under Delaware law
statutory rights.
103. Palantir has refused to provide KT4 with any of the books and records
requested in the Demand and has no legitimate basis for its refusal.
Court should compel Palantir to produce to KT4 all of the books and records
(a) entering judgment in favor of KT4 and against Palantir on this Verified
Complaint;
(b) summarily compelling Palantir to provide KT4 and its duly authorized
representatives with the books and records requested in the Demand or,
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(c) granting KT4 such other and further relief as the Court deems just and
proper, including the costs and reimbursements of this action and reasonable
attorneys fees.
Barry S. Simon (pro hac pending) Bartholomew J. Dalton, Esq. (ID: 808)
Jonathan B. Pitt (pro hac pending) Andrew C. Dalton, Esq. (ID: 5878)
725 Twelfth Street NW 1106 West 10th Street
Washington, DC 20005 Wilmington, DE 19806
(202) 434-5000 (telephone) (302) 652-2050 (telephone)
(202) 434-5029 (facsimile) (302) 652-0687 (facsimile)
bsimon@wc.com bdalton@bdaltonlaw.com
jpitt@wc.com adalton@bdaltonlaw.com
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