Weird things have happened to equally weird startups, but few stories can compare with the bizarre tale of
trying to track down its mystery investor in order to allocate it shares for money already received.
BMidas was established in October 1999. It develops software that allows bank customers to manage their financial services dealings securely over the Internet. One of its managers is no less than the distinguished former director-general of the treasury, Ben-Zion Zilberfarb.
BMidas recently sold its system to the First International Bank of Israel and is reportedly tentatively discussing business relations with the Italian bank Intesa. So far so good.
The company's website does advise that like all startups these days, it is looking for capital ? $5 million, in its case, apparently in exchange for equity. After that common denominator aside, its situation really is one of a kind.
Eeny meeny miny mo
Aside from looking for a financial backer, it is chasing madly after an investor that already handed over money in order to allocate to the investor a due share of equity. In its efforts to corner the coy investor, BMidas has been forced to turn to the courts.
BMidas wants the court to rule to whom it should allocate 10,000 shares in exchange for $117,000 it received, under an agreement it signed with brothers Amit and Noam Agami in April 2000.
The company is pre-empting trouble by employing a legal mechanism called "
" ? interim plea, used to protect an entity that suspects it is about to be sued by different parties presenting contradicting claims.
", the company has to declare that it seeks no ulterior benefit from the subject in question. Then it asks the court to rule between the putative plaintiffs, who have the choice of waiving any claim they may have, or presenting declarations to the court. All are bound by the court's ruling.
Bmidas says that it signed the agreement in principle regarding the investment with the Agami siblings. Later the brothers announced they wanted a company called
(Magamim Investments) to take their place as a party to the agreement.
What's in a name? You can always ask the court
BMidas had no problem with the substitution, it says. It asked attorney Yossi Shaked, representing the Agamis, to deliver Magamim's certificate of incorporation. But Shaked explained that the company was in the process of incorporation. He sent a copy of the incorporation request instead.
But the incorporation request, addressing the Registrar of Companies, gave the requested company name as
Nun Aleph Hashkaot
- N.A. Investments. The petitioners, according to the request, were Noam Agami and one Arie Hofmeister.
Given the discrepancies in names, the company says, it asked its lawyer to contact advocate Shaked and clarify the matter. Shaked explained that the Registrar had rejected the name
Nun Aleph Hashkaot
and that the company name is actually
Consequently, BMidas claims, a rights allocation document was signed transferring the rights of the Agami brothers to Magamim. Shortly afterwards an investment agreement was signed with Magamim, with Noam Agami as signatory. The agreement stated that Magamim would receive the 10,000 shares originally to be allocated to the Agami brothers.
Come December 2000, BMidas received the $117,000 owed under the investment agreement. It therefore sought to allocate the shares to Magamim.
But in early January, BMidas claims, it learned that the allocation could not be made because there is no such company as
So, BMidas says, it contacted the Agamis and their attorney to resolve the conundrum, to no avail. BMidas adds that Shaked said he had suspended the process of registering
because of conflicts between its founders.
The plot thickens
In late January 2001, BMidas says, its CEO received a call from a gentleman named Aviv Ziso, who claimed he had given Noam Agami a check for NIS 100,000 made out to BMidas in order to buy an equity stake.
BMidas' CEO, the company claims, firmly denied that any such check had been received.
Then, the company says, it got a call from a lawyer named Yosef Guy Mosseri representing Ziso and Arie Hofmeister (who, the lawyer said, both have shares in Magamim). Mosseri confirmed the existence of a conflict at the company and asked to receive pertinent material from BMidas. The company sent the material, it claims, with the acquiescence of advocate Shaked.
Nor is that all.
At this stage the Agami brothers contacted BMidas, asking that shares supposed to be allocated to
be allocated to a company named
Nun Aleph Itum v'Hashkaot
(N.A. Insulation and Investments).
But as the wheel turned, advocate Mosseri advised that his clients (Ziso and Hofmeister, if you're following) opposed any such change.
Frustrated, the company claims it contacted Shaked (who represented Magamim in the investment agreement) asking him to name the beneficiaries of the allocation.
Shaked however said that under the circumstances of strife at Magamim, he could not comply.
This is the stage at which BMidas gave up and turned to the courts for a ruling to whom to allocate the 10,000 shares ? to
Nun Aleph Itum v'Hashkaot
as the Agamis want? To Magamim, as Ziso et al demand?
Of course, it isn't as though Magamim actually exists. Before it can receive any allocation of shares, it should really be incorporated first, BMidas points out.