Civil Case (Center) 14545-07-23 Philip Roitman v. Cortica Ltd. - part 4

The second was an email message dated June 28, 2015 sent by Yigal to the plaintiff in response to an email message sent to him by the plaintiff, in which he asked the plaintiff to refrain from talking to Temasek about Cortica matters (Exhibit 15 of the plaintiff's exhibits at p.  75).

The third was an email message dated February 9, 2016 sent by Yigal to the plaintiff in response to an email sent to him by the plaintiff, in which Yigal replied that Cortica had completed an investment round and was not looking for investment opportunities at that time (Exhibit 15 of the plaintiff's exhibits at p.  75).

71. A review of these emails indicates that they do not contain any notice of termination of the agreement:
72. The notice of September 2, 2014 is not a notice on behalf of Cortica, but rather a notice on behalf of Temasek, and therefore in any case it should not be considered a "notice of cancellation" of the agreement. Nor does it suggest, as the defendants claim, that Temasek "closed the door" to an investment in Cortica, since it explicitly states that Temasek would like to continue contacts with Cortica and meet with it down the road, after 6-12 months have passed, and in the words of the statement:

"… but would very much like to keep in touch as you continue to prove out your business model - perhaps we can re-engage in 6-12 months to get an update". 

73. Yigal himself believed in real time that this was not a "slam on the door", in his reply to that message (while sending a copy to the plaintiff):

"It be great to stay in touch as the company grows.  I will probably be in Singpore towards the end of this year.  Would be great to meet!"

74. The fact that the plaintiff continued to contact Yigal about 9 months later, on 28 June 2015 and thereafter, on 9 February 2016, and the fact that Yigal did not insist that the agreement between the parties was cancelled, also indicates that the aforesaid notice of 2 September 2014 could not be regarded as a cancellation of the agreement.
75. The emails dated June 28, 2015 and February 9, 2016 are also not notices of the termination of the agreement.
76. In a statement dated June 28, 2015, Yigal replied to the plaintiff that he was between flights and asked the plaintiff not to talk to Temasek about Cortica. He did not mention that the agreement was canceled, although, according to him, the agreement was canceled as early as September 2014.
77. In a statement dated February 9, 2016, Yigal replied to the plaintiff:

"We have completed a major round and not looking for more financing at the moment."

78. This announcement does not claim that the agreement was canceled or that the agreement was canceled, but rather the opposite is true - Yigal himself used the words "at the moment", i.e., leaving an opening for future investments.
79. Therefore, it is not clear how the defendants expect the plaintiff to understand from these notices that the agreement has been canceled and no longer exists.
80. In light of the above, the defendants' arguments that the agreement was limited to a certain investment round or a certain period should be rejected, and their claim that the agreement was canceled before Temasek's investment in Autobrines was made should be rejected.

Is Autobraines a "related company" to Cortica?

81. The investment transaction for which the plaintiff demands a commission concerns Tamasek's investment in Autobrians, and not in Cortica, which is the main contractor in the agreement.
82. A perusal of the agreement shows that it was entered into between the plaintiff and Cortica "with its affiliated entities", that is, between the plaintiff and companies related to Cortica.
83. The defendants' claim that the term "affiliated entities" was intended by the subsidiary, Cortica-US, Inc., is inconsistent with the language of the agreement, since the expression appears in the agreement in the plural, and does not refer to a specific company. If the intention of the parties was to a certain company, it is presumed that they would have explicitly stated this in the agreement, and at least use the singular.
84. Also, when the parties wanted to limit the definition to subsidiaries, they explicitly used the term "subsidiaries" (see: Definition of "Potential Partner" in the Introduction to the Agreement). The very use of the term "affiliated entities", which means "affiliated companies" and not "subsidiaries", indicates that the parties' intention was for a broader definition, and not for the narrow definition of a subsidiary, and certainly not for a specific subsidiary.
85. In addition, the fact that the term "affiliated entities" relates, as the defendants claim, to past or present related companies, does not exclude the possibility that the reference is also to related companies that were established after the conclusion of the agreement, since, as stated, the agreement was not limited in time and therefore applies to related companies at any given moment.
86. If so, it is necessary to examine whether Autobrayns is a "related company" to Cortica.
87. AutoBrains was founded in 2018, following Cortica's decision to split into different corporations/activities, each of which operates on the basis of the technology developed by Cortica in a different field. Autobrians' activity is in the automotive sector.
88. As can be seen from the testimony of Yigal Vasher, the activity in the automotive sector began as a study within Cortica, even before the establishment of Autobrines, and it was decided to separate this activity, following a demand by the automotive companies that requested, as a condition for investing in Autobrians, to separate its activity from the rest of the group's activities, regardless of the agreement with the plaintiff. Both Yigal and Asher confirmed that Cortica is the "germination" of the companies, that research in the field of automotive began before Autobrines was established, that Autobrines was founded on the basis of Cortica's technological core and is a "spin-off" of Cortica (see Yigal's testimony at p. 151 of the transcript of Q.  21 and 30 and at p.  152, Q.  1 and Q.  5-6; testimony at p.  107 of the transcript of Q.  23-25; p.  108, Q.  19; p.  111, Q.  17-19, p.  120, s.  21-24).
89. Autobraines is presented by the defendants themselves as a company "of the Cortica Group" (see: Exhibit 50 of the plaintiff's exhibits, which is an article from the Walla website! Money dated June 2, 2022, bearing the headline "Autobrians, part of the 'Cortica' Group, expands and recruits dozens of employees for a variety of positions", and Exhibit 51, which is an interview by Yigal from The Marker website dated November 1, 2021, in which Yigal presented Autobrians as a company of the Cortica Group). The same is true on the Cortica website, where Cortica publishes articles about Autobrians (Exhibit 38 to the plaintiff's exhibits, Yigal's testimony at p. 153 of the transcript of Q.  22-27).
90. Yigal admitted in his interrogation that even today there is a circulation of information and intellectual property between Cortica and Autobrain (p. 159 of the transcript of Q. 1-2).
91. The plaintiff presented additional evidence indicating that Cortica and Autobrians are related companies:
92. A similar company name - at the time of its establishment, Autobrayns was called "Cortica Automobil Ltd". Subsequently, its name was changed to "Cartica Ltd.", which is a pun on the name "Cortica" and the automotive field, and finally the name was changed to Autobrians (this was confirmed both by Yigal at p.  148 of the transcript of questions 22-28 and by Asher at p.  109, questions 14-18).
93. Shareholder relocation - With the establishment of Autobrines, the shareholders in Cortica were automatically transferred to Autobrians, without additional investment. When asked if the shareholders of Cortica received shares in Autobrians, he replied: "Technically, on day zero you do the split, you do mirroring" (p.  123 of the transcript of Q.  9).  The fact that Cortica does not hold shares of Autobrians (or vice versa) and that there is no absolute identity between the shareholders of the two companies does not indicate that these are not related companies.  According to case law, the test for defining "control" is a substantive test, which assesses the degree of ability of one entity or another to direct or influence the corporation's activity.  A quantitative test, based on the proportion of the means of control held by a shareholder, may serve as an auxiliary tool in this regard, but will not always suffice in itself for the purpose of defining control (see: Civil Appeal 7414/08 Taro Pharmaceutical Industries in a Tax Appeal v.  Sun Pharmaceutical Industries Ltd .  (Nevo, September 7, 2010)).  In our case, Yigal is at the head of the management of the two companies, and he is the issuer and the one who brings about both, directs their activities and influences them, a fact that indicates that the companies are "related companies".  The agreement does not refer to and is not related at all to securities law, and therefore the use of the definition of "related companies" in the Securities Law, 5728-1968, is not relevant to our case, and as stated, this term should be interpreted more broadly.

• Identical Address - After the companies split up, Autobrines was registered at Cortica's address and they shared the same offices (see: testimony at p. 110 of the transcript of Q.  11-12).  The fact that there was a separation between the ministries subsequently does not indicate a lack of connection between the companies.

1. The identity of the founders - in both companies, Yigal and Mr. Yehoshua Y. Ze'evi as "founders" (see: Yigal's testimony at p.  148 of the transcript of Q.  26-28).
2. The identity of the officers - in both companies they served:

Yigal - as a general manager (in a certain period of time for both of them at the same time) and as a director in both of them (see: Yigal's testimony at p.  126 of the minutes of Q.  25-30 and testimony at p.  110 of Q.  14-15).