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Shareholder Group Sues EMAK Board for Breach of Fiduciary Duties

Posted on: Tuesday, 13 October 2009, 05:00 CDT

LOS ANGELES, Oct. 13 /PRNewswire/ -- Take Back EMAK, LLC, announced the filing of a multi-count lawsuit against current and former directors of EMAK Worldwide, Inc. (OTC: EMAK.PK), following the devastating loss of the company's largest client, Burger King, which represents almost half of total company revenue.

Two institutional investment funds, five individual stockholders, and the shareholder group filed suit in the California Superior Court in Los Angeles County against nine individual defendants: Stephen Robeck, James Holbrook, Jeffrey Deutschman, Jordan Rednor, Howard Bland, Debra Fine, Daniel O'Connor, Alfred Osborne Jr. and Barrie Berg. The 22-page lawsuit, Take Back EMAK, LLC, et al. v. Robeck, et al., Case No. BC422808, sets forth detailed claims for:

• Breach of Fiduciary Duties
• Gross Mismanagement
• Fraud
• Unlawful Business Practices
  

Plaintiffs represent more than a third of total shares outstanding. "We are seeking redress from the individual directors and are not seeking payment from the company which we are all large shareholders of," commented Lloyd Sems, managing director of Sems Diversified Value, LP. "Our goal is to rebuild and rejuvenate EMAK to its former industry leading position."

As cited in an article by Courthouse News Service published on October 1, 2009 entitled "Shareholders Say PR Firm EMAK Blew $100M," the plaintiffs allege that CEO James Holbrook and a complicit board turned one of the best marketing services agencies in the world into a "nearly worthless penny stock." Further, a "conflicted, inattentive and overly deferential board focused on catering to a bullying preferred shareholder, protecting their own self-interest and bending over backwards to enable an overpaid, underperforming and untrustworthy CEO, chairman and outside lawyer to milk the company coffers for as long as possible." This includes refusing to consider multiple premium buyout overtures over the years.

Shareholders have seen their equity stake largely wiped out over the past four years, as the board and failed CEO presided over a company whose former NASDAQ National Market listed stock price declined from over $10.00 per share to recent record lows well under a dollar. The plaintiffs' sole motivation is to restore the value of the company for the benefit of all stakeholders.

Samuel Konig, EMAK's fourth largest common stockholder, commented, "We believe time is of the essence to stabilize and return EMAK to its market leading position for the benefit of all stakeholders, including employees, clients and stockholders. Changing to a board fully aligned with stockholder interests is a key step to turning around the company. We are committed to this pursuit and invite all concerned parties to join us."

SOURCE Take Back EMAK, LLC

Source: PR Newswire

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