Civil Case (Tel Aviv) 53928-02-24 Alon Blue Square Israel Ltd. v. Triple-M Power Plants Ltd. - part 2

C(1)      A complete mix of contractual claims on the shareholder level and claims at the corporate level

49. From the reading of the requests, it could be believed that they are nothing more than a direct continuation of the previous requests and the first decision. "Whatever I live in, I feel like it," Alma began her request, and of course not even the place of Chekhov's gun from the first act was absent in her request.
50. However, the connection between the claims and contractual claims, and the corporate level, is tenuous, and this was said even after the Applicants' desperate attempts to link the two, within the framework of completing the argument that came after I noted the acute difficulty in the applications.
51. As stated, the Applicants refer to the 2017 agreement as the "shareholders' agreement", and as clarified above, it is not such (and it should be emphasized: any comment regarding the prospects of the proceeding is only prima facie, taking into account the preliminary stage of the examination of the application). The company, quite simply, is not a party to the agreement (which is not supposed to apply to anyone other than its signatories, it explicitly states in it); the same is true of Keystone, which is certainly aware of the agreement and reported its existence and is not yet a party to its corporate provisions.  I am of course aware of the attempts, Mainly by Alma, to apply the provisions of the agreement to Keystone and the company in the lawsuit, and these will be examined later, but for the time being we will define them as mines.
52. The previous requests dealt with the question of the conduct of the shareholders, and the willingness of IPMH to promote the change in the articles of association despite the provisions of the agreement (which it repudiates after it was abandoned years ago, its method). The current requests have nothing to do with shareholder ownership: this is a decision of the company's board of directors, which clearly operates within the limits of the powers given by the legislature to the company's management, as opposed to its shareholders.  The directors, needless to say, (and perhaps in light of the conduct of the directors on behalf of Alma and Raboa, it is necessary to say) are supposed to act in the best interest of the company, not in the interest of the shareholders.
53. Of course, if the company is a party to a certain agreement, the board of directors must act in accordance with the limitations of the agreement. This is not the case when, as in our case, the company is not a party to the 2017 agreement, the agreement is not of all shareholders, it is certainly not part of the company's founding documents (which was founded many years before it was signed).  The directors (and again - every comment is only prima facie) are not only not obligated to act in accordance with the provisions of the 2017 agreement (assuming for the purpose of the discussion that there is a contradiction between it and decisions regarding the promotion of the venture), However, they are prevented from taking into account the said agreement, and they are obligated to exercise independent discretion (see: section 106(a) of the Companies Law, 5759-1999; Zohar Goshen and Assaf Eckstein Corporate Law 108 (2023)).  This is certainly the case when none of the Applicants argued, for about six years, that an attempt should be made to adopt the corporate provisions of the 2017 Agreement within the framework of the Articles of Association, which bind the Company and all its shareholders (see: Section 17 of the Companies Law, 5759-1999; Civil Appeal 6041/15 Hamma in Tax Appeal v.  Mueller, paragraph 19 (September 25, 2016); Civil Appeal 3051/98 Darin v.  Discount Investment Company Ltd., IsrSC 59(1) 673, 696 (2004); Compare on the other hand: Civil Appeal 94/20 Luskin v.  Giv'ot Olam Oil in a Tax Appeal (August 18, 2022), from which Square is trying to build (paragraph 18 to complete the argument), where provisions regarding the exercise of veto rights in the board of directors have already been established in the bylaws, and the Supreme Court has commented that its acquisition in a private company does not contradict the obligation to exercise independent discretion).  Again, this is an agreement to which not all shareholders are a party, a condition for raising difficult arguments for its application to the company even in the absence of a corresponding bylaws (compare: (Opening Motion 345/07 (M.A.-Tel Aviv) Lima Holding B.V.    Ayoud (June 21, 2009)).
54. The motions do not in fact address the fact that attacking the decisions by virtue of an agreement between some of the shareholders, to which the company is not a party, is problematic:

"...  In the ordinary state of affairs, the law does not recognize the binding legal validity of agreements against a company that is not a party to them, nor did it approve them retroactively.  Even when these agreements are drawn up between all the founding shareholders, the company is not subject to them insofar as it itself is not a party to that agreement and does not become a party to the agreement even after it was established by virtue of its approval.  As a result, such contractual stipulations are not binding on the company.  All the more so, they cannot bring about the annulment of decisions of the company's institutions that were lawfully made.  A shareholder who considers himself harmed by a decision of a company that contradicts the stipulation in a contract he has entered into with another shareholder, cannot, as a rule, on the basis of this contract, cause the cancellation of the decision that was lawfully made by the company's organs.  The same applies to protection against dilution that is anchored in a contract entered into between all the shareholders to which the company is not a party and has not approved it.  In this situation, the shareholder, who considers himself harmed by the dilution of his holdings, has the possibility of filing a claim on contractual grounds against the other shareholders - the additional parties to the same contract" (The Emma, at paragraph 25).

55. The most likely path to attack the decisions is on the corporate level. On the other hand, dealing with the 2017 agreement and its alleged breach is particularly difficult.  The Applicants' attempt, only to complete the argument, to connect the contractual path between some of the shareholders and the corporate path that deals with attacking the decisions of the Board of Directors, is further difficult.

C(2)      Allegations of violation of the 2017 agreement - They are not Persuasive

56. First, the Applicants' path to convincing that the 2017 agreement is binding - at least on IPMH - is still long, as explained in my first decision, all the more so in their attempt to persuade that the agreement should also be applied to the company. But even the claims of breach of the agreement - assuming that it applies and is relevant at the time of attacking board decisions - are not simple either.
57. With regard to the fact that the company is seeking to engage outside the areas of activity agreed upon in the 2017 agreement in a manner that requires the consent of 75% of the shareholders: this argument is already problematic because the areas of activity that require consent were defined as those that include the company's exit from the energy or infrastructure sector (and the very use of two alternatives weakens the argument that the parties' intention was to build the power plant without necessarily turning to any other business whatsoever). Alma completely ignores the issue of infrastructure in its request; at the very least, it tries to explain that a data center is not Included in the field of infrastructure.  Arguments that without elaborating, it should be said that the Respondents' explanations as to why this is clearly a project in the field of infrastructure are immeasurably convincing and are backed up by proper references.
58. The claim of a "100%" dividend is also not simple: apart from the fact that there is certainly no agreement between some of the shareholders (not all, not in the articles of association) that bind the board of directors, which is responsible for distributing the dividend, a dividend will come from profits that can be distributed. This does not necessarily mean that the board of directors must decide to approve investments, which are intended to ultimately bring profits to the company, and it is not the shareholders' desire for short-term revenues that will prevail over the company's best interests (see: Civil Appeal 1734/21 Brut v.  Discount Investment Company Ltd., at paragraph 16 of the opinion of the Honorable Justice Mintz (April 27, 2023)).
59. Other arguments, regarding the establishment of a subsidiary, or the mortgage of land, or the right to refuse to purchase it, are not related to the decisions made by the board of directors in practice, at least at this stage, without regard to the fact that other difficulties reviewed in the resolution have good force in these matters as well.

C(3)      Claims of flaws on the corporate level, as well as discrimination - are not convincing

60. The Applicants sought to attack the decisions on the corporate level as well, and these arguments are far from convincing. Thus, the argument that seems to have constituted the beginning of the preparation of the ground for a legal proceeding, in the form of the failure to receive information from the director on behalf of Raboa, was not substantiated, and was seen more as an attempt to create grounds for attacking the expected decisions than a real difficulty.  Thus, the argument regarding the failure to receive sufficient information also does not appear to be strong enough to intervene in the decision of the Board of Directors, especially in view of the considerable scope of information presented to the directors, and the considerable thorough work, accompanied by first-rate consultants, who stood in the background of the decision.  Even at the meeting itself, the directors on behalf of the Applicants, when they were able to petition for explanations and additional information, were not heard requesting such information prior to voting.  There is a similar difficulty in the arguments regarding the failure to examine alternatives: they were examined.  The allegations that the board of directors is dissolved at its discretion and transferred to management are also devoid of substance: the board of directors instructed the company's management to act within the framework it outlined, and decisions that the board of directors deserves to undertake in the future, explicitly left in its hands the authority to undertake them.

61. Claims regarding "discrimination" are also not clear, except for the applicants' dependence on the veto rights granted to them by virtue of the 2017 agreement. There is nothing in the entire said venture that the Applicants were able to demonstrate that it was intended specifically to benefit IPMH or Keystone, or that it was supposed to come at the expense of the Applicants alone.
62. The balance of convenience is clearly tilted towards the applicants' obligation
63. The precedence of the balance of convenience, as is well known. Here, we are dealing with a request that the court, in a decision on a request for temporary relief, apparently finally cancel a project on a huge scale that could bring the company enormous profits, and which was decided - ostensibly lawfully - by the company's board of directors, in accordance with its business judgment.  All of this, mainly, is due to an agreement that is in doubt as to whether it still binds the few shareholders to whom they are a party.  But according to his words, he does not appear to be obligated by any other party, let alone the company (in whose articles of association there is no mention of the agreement), and in any case the board of directors.
64. The Applicants' attempt to downplay the meaning of the orders must be rejected. According to the approach of Square in its application (paragraph 61) and of Alma (who ignored the possible damage to the company) in the hearing, these are only orders that will enable the company to "examine appropriate alternatives and make an informed decision regarding the land." Well, worthy alternatives have been examined, and they have been examined for the past two and a half years with the utmost thoroughness and with an investment of millions of shekels, with the assistance of appropriate consultants.  The company does not need time to examine whether there are other alternatives to the real estate (and regarding the rental of the land adjacent to a power plant, as it was already made clear about two years ago that there is a difficulty in doing so), but rather to implement its decisions.  It is also clear that if an order is issued, there will be no point in examining anything: why should the board of directors invest another minute of its time, not to say months and years, if in any case it is the minority shareholders who will ultimately decide whether to exercise their alleged veto power, and the court will be quick to accede to them.
65. It should also be clarified why a temporary injunction means that it may destroy the project; Alternatively, there is an acute risk of harming the chances of profiting from the enormous investment in it: an order, if possible, remains in effect until the conclusion of the main proceeding. It is over, in the circumstances of the Materia and the litigants here, in many years.  A business opportunity that exists in early 2026 (after the company has worked for more than a year on its implementation, insofar as this is the alternative chosen) will certainly not stand as such in a few years, if then the order is lifted.  In this context, the company supported its response with a detailed opinion by Tusk that relates to the significance of the delay in the project.  Without going into all its commercial details, Appendix 1 to the company's response: that this is a window of opportunity that is the result of the state of the data center market in Israel, and the need to promote the venture when there is a severe shortage of supply, and not when supply increases within two to three years.  Advancing the project now will enable proper engagements with customers and establish the company's reputation as a relevant player, while postponing schedules will reduce its ability to integrate into the market.  The postponement will also harm the company's executive, operational, and financial momentum, which promoted the project for a long time before the final decision to adopt it, as well as the company's credibility, and most importantly, undermine the economic viability of the project and harm the expected returns.  This very important issue, which affects the balance of convenience, was in fact not addressed in the applications, and even when the respondents responded and the opinion was presented, no real reference came from the Applicants to what was stated therein, let alone a professional opinion to support their claims.  All they propose, therefore, is to avoid the risks that they find in the project, to leave the land unused for many years, and to prevent the company from trying to take advantage of the opportunity that it has on its way to achieve profits on a very significant scale (a matter that, by the way, would justify, if I thought that there was any place to accept the application, to oblige the applicants to provide a matching guarantee on a huge scale to ensure the possible damages from the granting of the order).  as per the provision of Regulation 96 of the Regulations).
66. The Applicants add: A project in which the investment is evident and whose risks are considerable. Incidentally, so is the construction of a power plant.  However, the management of the company and the informed and informed choice of ventures that involve risks and substantial profit on the side of them, are entrusted in principle to the company's board of directors; not to the shareholders; not to the court.
67. On the other hand, apart from insisting on the need for "the fulfillment of an agreement", the Applicants find it difficult to point out any damage that may be caused to them, other than the monetary one: in particular a dividend that was (perhaps) supposed to reach them, instead of the execution of the project. It is clear that a server farm will be built irreversibly, but it entails financial damage that can be indemnified, if only it turns out in the future that there is damage, and there is a cause, and there is a claim based on these, which is not the case today.
68. All of the above so far leads to the rejection of the applications.
69. Expenses In connection with requests for interim relief
70. As stated in Regulation 51 of the Regulations, "At the end of the hearing of each application, the court will rule on the expenses of the application and to whom they apply, regardless of the outcome of the main proceeding, unless it finds that there are special reasons not to charge such expenses." The criteria for determining them are in accordance with the provisions of the legislature and case law (Regulations 151-156 of the Regulations; Civil Appeal 9535/04 "Bialik 10" faction v. "Yesh Atid Labilik" faction, IsrSC 60(1) 391 (2005); Civil Appeal Authority 6793/08 Loir in Tax Appeal v.  Meshulam Levinstein Engineering and Contracting in Tax Appeal (June 28, 2009); Civil Appeal Authority 2507/24 Lavon v.  Sharon (April 14, 2024)).
71. The legal expenses constitute the indemnification of the litigant for his expenses in the proceeding, taking into account the outcome of the proceeding, the resources for managing the proceeding, the conduct of the parties and the expression of the balance between the right of access to the courts, the right to property and the interest of equality between the parties (see: Civil Appeal 10740-11-25 Liserowitz v. Tapiro People Build for People in a Tax Appealand the references there (January 7, 2026)).  The starting point: As a rule, the party who won the proceeding should be awarded real costs, subject to their reasonableness, proportionality and necessity for the conduct of the proceeding.  Sometimes, in the absence of other considerations (see: Regulation 153 of the Regulations), this will be the end point.
72. In our case, there are no reasons whatsoever to deviate from the starting point, except in the context of the request to add evidence submitted by Keystone and demanded Alma's response. The respondents did not specify the amount of their expenses, in a manner that allows the court to determine the reasonable, necessary and proportionate rate of expenses in the circumstances of the case (see: Civil Appeal 2617/00 Kinneret Quarries (Limited Partnership) v.  Local Planning and Building Committee, Nazareth Illit, IsrSC 60(1) 600; 619 (2005)).  In our case, when the parties are legally fighting for the advancement of a project with a current investment of about ILS 1 billion, the legal expenses are considerable (as illustrated by the eye-opening and in-depth pleadings of all the parties), and it is reasonable to assume that these expenses easily reach six figures for each of the respondents: expenses that were required to be answered in an orderly but urgent manner during the emergency hour, a lengthy hearing, and afterwards, in view of the applicants' desire to complete - comprehensive plea supplements on their behalf as well (compare: The dispute in a matter of a similar magnitude, of the Dorad Power Plant, which was clarified before me (Civil Case (M.A.-Tel Aviv) 52061-07-25 Edelcom in a Tax Appeal v.  Dorad Energy in a Tax Appeal (August 11, 2025), where the expenses that were proven, even before the filing of the response to the application and the holding of a hearing, amounted to ILS 100,000-150,000 for each respondent who presented references in the matter).
73. The expenses incurred by a respondent in order to dismiss a request for interim relief, which falls within the scope of a main proceeding, will not necessarily be awarded to him in full, and it may not even be close to it: "Insofar as we are dealing with a decision to charge costs in a proceeding that does not conclude the litigation, the extent of the trouble of counsel for the parties in that proceeding will be examined, and taking into account that those who sent them will be able to be entitled to indemnification within the framework of the main proceeding" (Lauer, supra, In paragraph 20; See also my decision in the aforementioned Dorad case , where each respondent received indemnity in the sum of ILS 40,000 out of all his expenses, which are much higher, in connection with the Applicant's withdrawal from the application for temporary relief, one day before the date of filing the answers to the application).
74. The reason for this only partial indemnification of the respondent, who won his case in the interim application for interim relief, is that in the usual situation, an answer to a request for temporary relief will come before a statement of defense, when an important part of the response will include a reference to the claim on its merits, and only part of it will relate to issues unique to the matters of temporary relief, such as matters of delay, good faith and a balance of convenience. The decision on the request for interim relief is not tantamount to putting nails in the main proceeding.  Hence, the fate of the expenses related to the claim on its merits deserves as a rule to be decided at the conclusion of the examination of the main proceeding, even if the respondent-defendant succeeded in repelling the request for interim relief (see: the Dorad case, supra, at paragraphs 25-26).
75. The situation in our case is different: there is no relevant main proceeding . There are lawsuits, and the respondents have already filed statements of defense for them.  But now this is a new matter, as stated.  As far as the matter relates to the square request, we have before us only a request to amend the statement of claim, which may be accepted and it may certainly not be accepted, in which case there will be no accommodation for the respondents to petition for payment of the balance of their expenses.  As far as the matter relates to Alma's request, there is not even a request for amendment available, and all the more so that the respondents have no framework to petition for payment of the full amount of their expenses that they incurred at the time of the response to the request for interim relief.  They are therefore now entitled to, within the limits of the customary considerations, with significant expenses that will reflect the reasonable, necessary and proportionate rate of expenses in the circumstances of the case, due to the main intensive defense against requests that are not anchored in temporary relief.
76. For the implementation of the aforesaid, against the background of the aforementioned criteria that apply: for the defense of each of the three respondents (the company, IPMH, and the Keystone Group) against the two applications combined, she is entitled to her attorneys' fees in the sum of ILS 80,000. The Applicants will be divided.  Keystone's request to add evidence in Alma's case will deduct from the aforesaid a sum of ILS 10,000.
77. It should be clarified in the circumstances: to the extent that in the end a main proceeding, other than the present claims, is conducted, which will revolve around matters to which the Respondents were required in their responses to requests for interim relief, the Applicants will be able to argue on the issue of expenses at the end of that proceeding, even taking into account the expenses that the Respondents were awarded herein.

Conclusion

76. Both requests for temporary relief, which should have been avoided, are rejected.
77. For expenses in connection with the two applications for interim relief, which were discussed together: In favor of the company (respondent 1), attorney's fees in the total amount of ILS 80,000, an amount to be shared by the two applicants, is hereby awarded. IPMH will receive the same amount, also divided equally among the applicants.  Keystone will receive ILS 70,000 in rent, of which ILS 40,000 will be paid by Quarter, and the rest will be paid by Alma.

Granted today, April 01, 2026, in the absence of the parties.