The founders of Geo Interactive Media Group, now known as Emblaze (LSE: BLZ), have petitioned the Tel Aviv District Court to strike out the suit against them by Malam Systems, controlled by Gad Zeevi. The petitioners are Naftali Shani, Zuri Dadush, Eli Reifman and Sharon Carmel.
Malam Systems claims that the petitioners convinced Malam to invest $400,000 in their company in exchange for a 50.1% controlling stake. Later, they convinced Malam to sign a separation agreement, while Geo was already in the midst of a unique technological development for online data transmission.
The petitioners claim the suit is actually for NIS 873 million, hiding behind an apparently innocent declaratory remedy – registering the controlling shares in Geo under Malam’s name.
The petitioners claim they never committed to sell their shares to Malam. They were only a party to the investment agreement, in which Geo committed to allocate new shares to Malam from the company’s authorized and unissued capital. Therefore, the only suit that could possibly be brought against them is for financial compensation for the shares’ value. Consequently, they argue, the lawsuit is without cause of action and should be dismissed.
Published by Israel's Business Arena on 3 April 2001