Exabeam, LogRhythm Merger $20.5M Class Action Settlement

Former Exabeam Inc. common stockholders whose shares the company canceled for no consideration when it merged with LogRhythm Inc. on or around July 2, 2024, may be eligible to receive cash and equity from a class action settlement.

Exabeam Inc., some of its directors and officers and the venture capital firms that held its preferred stock agreed to a settlement of $7 million in cash and up to $13.5 million in equity to resolve a stockholder class action lawsuit alleging Exabeam's 2024 merger with LogRhythm unfairly canceled common stockholders' shares through a flawed process.

Who can file a claim?

The settlement class includes all record and beneficial holders of Exabeam common stock whose shares the company canceled in connection with the merger on or around July 2, 2024.

Additional details

• Both individuals and entities can be class members.
• The class includes successors and assigns of eligible holders.
• The class is certified for settlement purposes and is a non-opt-out class under Delaware Court of Chancery rules 23(a), 23(b)(1) and 23(b)(2), meaning class members cannot exclude themselves from the settlement.

How much can class members get?

The settlement includes $7,000,000 in cash and up to $13,500,000 in equity. The amount each class member receives depends on several factors:

• The number of eligible shares canceled in the merger
• The total number of eligible shares in the class (9,928,400)
• The amount of the fund after court-approved deductions

The settlement administrator will distribute the cash on a pro rata basis according to the court-approved plan of allocation, and class members will receive equity through an aggregator entity:

• Each class member's cash payment equals the number of eligible shares they held at closing times the per-share recovery.
• The per-share recovery is the fund divided by the total number of eligible shares.
• Each class member will also receive units in an aggregator entity that holds the equity based on their share of the canceled common stock.
• The equity pays out only after the post-merger parent's institutional investors earn 1.5 times their investment, and the settlement caps total payouts at $13.5 million.
• There is no guarantee the equity will pay out any amount.

No claim form needed to receive payment

Class members do not need to submit a claim form to receive payment. The settlement administrator will pay the cash directly to each record owner of Exabeam common stock as of the merger closing. Class members will receive their equity through the aggregator.

Settlement administrator's mailing address: Exabeam Stockholder Settlement, c/o A.B. Data Ltd., P.O. Box 170500, Milwaukee, WI 53217

$20.5 million settlement

The $20,500,000 settlement fund includes:

• Settlement administration costs: To be determined
• Attorneys' fees: Up to $3,587,500
• Attorneys' expenses: To be determined
• Service awards to plaintiffs: Up to $20,000 total
• Payments to eligible class members: Remainder of the fund

Important dates

• Fairness hearing: Dec. 9, 2026

When is the Exabeam stockholder class action settlement payout date?

The settlement administrator will issue cash payments after the court resolves any appeals and grants final approval of the settlement. The parent company will issue the Class C units to the aggregator within 30 days after the court enters final judgment.

Why did this class action settlement happen?

The class action lawsuit alleged Exabeam's directors and venture capital investors used a flawed process to cancel common stockholders' shares in the merger. The plaintiffs claimed the investors capped Exabeam's valuation so their preferred shares rolled into the new parent and wiped out common stock.

The defendants denied all allegations of wrongdoing but agreed to settle to avoid the burden, inconvenience, expense, risk and distraction of further litigation.

Source

1. Class notice
2. Settlement agreement