Free Stipulation - District Court of Federal Claims - federal

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

....................-IMPRIMIS INVESTORS LLC and WI SOFTWARE INVESTORS LLC,

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Plaintiffs, ·against· INSIGHT VENTURE MANAGEMENT, INC., JEFFREY HORING, JERRY MURDOCK, , INSIGHT VENTURE ASSOCIATES II, LLC, and INSIGHT VENTURE ASSOCIATES III, LLC, Defendants. --------------------------------------.----.-----------··----·-·····x INSIGHT VENTURE MANAGEMENT, INC., INSIGHT VENTURE ASSOCIATES II, LLC, JEFFREY HORING, JERRY MURDOCK and PETER SOBILOFF, Counterclaim and Third·Party Plaintiffs, -against· IMPRIMIS INVESTORS LLC, WI SOFTWARE INVESTORS LLC, and WEXFORD CAPITAL LLC flkia WEXFORD MANAGEMENT LLC, Counterclaim and Third·Party Defendants.

Index No. 00-604431 Justice Cahn

AMENDED AND CONSOLIDATED COMPLAINT

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RAMANAN RAGHAVENDRAN, Plaintiff, Index No. 02-600071 · against· Justice Cahn IMPRIMIS INVESTORS LLC, WEXFORD SPECIAL SITUATIONS 1997, L.P., WEXFORD SPECIAL SITUATIONS INSTITUTIONAL, L.P., WEXFORD SPECTRUM INVESTORS LLC, WEXFORD MANAGEMENT LLC, WEXFORD INSIGHT SOFTWARE INVESTORS LLC and DOES 1·10, Defendants.

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EXHIBIT

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IMPRIMIS INVESTORS LLC and WI SOFTWARE INVESTORS LLC,

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Plaintiff, - againstINSIGHT CAPITAL PARTNERS II, L.P., INSIGHT CAPITAL PARTNERS (CAYMAN) II, L.P., INSIGHT CAPITAL PARTNERS III, L.P., INSIGHT CAPITAL PARTNERS III COINVESTORS, L.P., INSIGHT CAPITAL PARTNERS (CAYMAN) III, L.P., RAMANAN RAGHAVENDRAN, PETER SOBILOFF, AND UBS CAPITAL II LLC, Defendants.

Index No. 02·601619 Justice Cahn

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Plaintiffs Imprimis Investors LLC ("Imprimis") and WI Software Investors LLC ('WISI" and, collectively with Imprimis, "Plaintiffs"), as and for their Amended and Consolidated Complaint against defendants Insight Venture Management, ("Insight"), Jeffrey Horing ("Haring"), Jerry Murdock ("Murdock"), Inc.

Ramanan

Raghavendran ("Raghavendran"), Peter Sobiloff ("Sobiloff," and, collectively with Horing, Murdock and Raghavendran, the "Insight Principals"), Insight Venture

Associates II, LLC, ("Insight Venture II"), Insight Venture Associates III, LLC ("Insight Venture III," and collectively with Insight, and Insight Venture II, the "Insight Entities"), Insight Capital Partners II, L.P. ("Insight 11"), Inliight Capital Partners (Cayman) II, L.P. ("Insight Cayman II"), Insight Capital Partners III, L.P. ("Insight III"), Insight Capital Partners III Co-Investors, L.P. ("Insight Co-Investors"), Insight Capital Partners (Cayman) III, L.P. ("Insight Cayman III" and, collectively with Insight III and Insight CoInvestors, the "New Funds," and, collectively with Insight III, Insight Co-investors, Insight

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II, and Insight Cayman II, the "Insight Funds," and, collectively with the other Insight Funds, the Insight Entities and the Insight Principals, the "Insight Defendants"). and UBS Capital II LLC rUBS") allege, on actual knowledge as to Plaintiffs' status, actions, and knowledge, and on information and belief as to all other matters, as follows: Nature of this Action

1.

Through these consolidated actions,1 Plaintiffs seek redress from

the Insight Defendants and UBS for the wrongful diversion of highly valuable Investment Opportunities (as defined below) that belonged to Plaintiffs, and for other tortious conduct committed by Defendants. In so doing, Insight, inter alia, breached contractual and fiduciary obligations to Imprimis and WISI; the Insight Defendants made repeated, material misrepresentations to Plaintiffs in an effort to hide their wrongdoing. and all Defendants converted Investment Opportunities. This wrongful conduct deprived

Imprimis and WISI of more than $288.7 million in investment profits that properly should have flowed to Plaintiffs.

In October, 2000, Plaintiffs initiated the action entitled Imprimis Investors LLC and WI Software Investors LLC v. Insight Venture Management. Inc.. at a/., Index No. 00-604431 (Justice Cahn) ("the Original Action"). Plaintiffs subsequently initiated an action entitled Imprimis Investors LLC and WI Software Investors LLC v. Ins~ht Capital Partners II. L.P" at aL, Index No. 02-601519, (Justice Cahn) (the' elated Action"). On or about January 7, 2002, Ramanan Raghavendran, one of the defendants in the Related ActIon, commenced the action entitled Ramanan Raghavendran v, Imprimis Investors LLC. et a/., Index No. 02-600071 (Justice Cahn) (the "Raghavendran Action") against Plaintiffs in the Original Action, as well as certain parties related to plaintiffs. By Stipulation and Order dated July 10, 2002 ("the Order"), this Court directed that the Original, Related and Raghavendran Actions be consolidated for purposes of discovery and all other pre-trial proceedings. Pursuant to 112 of the Order, Imprimis Investors LLC and WI Software Investors LLC have consolidated herein their complaints in the Original Action and the Related Action.

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2.

Defendants' wrongdoing stems from Defendant Insight's breaches

of two contracts - the "Consulting Agreements" - with WISI and Imprimis, and tortious conduct by all Defendants. Under the Consulting Agreements, among other things.

Insight was required to provide WISI and, subsequently, Imprimis, with a right of first refusal to participate in up to 50 percent (or more under certain circumstances) of investments in the software and related industries identified by Insight in accordance with the Consulting Agreements (the "Investment Opportunities").

3.

Despite its clear obligations, Insight failed to provide Plaintiffs with

numerous Investment Opportunities that it had identified. as required by the ConsUlting Agreements. Instead, Insight, along with the other Insight Defendants, "cherry picked" the investments and diverted certain particularly lucrative Investment Opportunities to their own existing and/or newly-formed managed limited partnerships, and to prospective investors in those partnerships. The Insight Defendants' scheme was
(i)

intended, inter alia, to facilitate the marketing of these new partnerships by:

permitting favored affiliates and others, including UBS, to co-invest with Insight in the diverted Investment Opportunities; and (ii) allowing Insight to represent to prospective investors that its new funds would make investments in these lucrative Investment Opportunities. Key elements of this wrongful scheme include: (i) Insight's intentional failure to provide Plaintiffs with notice of certain of the diverted Investment Opportunities; (ii) Insight's failure to notify Plaintiffs of material changes in previously presented Investment Opportunities: (iii) delaying the closings of other diverted Investment Opportunities identified during the term of Consulting Agreements until after the April 3, 1999 date referenced in the Consulting Agreements; (iv) the Insight

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