CUSIP No. M40868107 13D
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 7)
ESC Medical Systems Ltd.
(Name of Issuer)
Ordinary Shares, NIS 0.10 par value per share
(Title of Class of Securities)
M40868107
(CUSIP Number)
Barnard J. Gottstein
Carr-Gottstein Properties
550 West 77th Avenue, Suite 1540
Anchorage, Alaska 99501
(907) 278-2277
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Joseph J. Giunta, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
(213) 687-5000
May 10, 1999
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d- 1(e), 13d-1(f) or 13d-1(g), check
the following box:
/ /
Page 1 of 37 Pages
CUSIP No. M40868107 13D
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This Amendment No. 7 (the "Amendment") amends and supplements the
Statement on Schedule 13D, dated September 29, 1998, as amended by
Amendment No. 1, dated January 15, 1999, Amendment No. 2, dated March 9,
1999, Amendment No. 3, dated March 22, 1999, Amendment No. 4, dated March
24, 1999, Amendment No. 5, dated April 14, 1999, and Amendment No. 6, dated
April 19, 1999 (the "Original Schedule 13D"), relating to the Ordinary
Shares, par value NIS 0.10 per share (the "Shares"), of ESC Medical Systems
Ltd., an Israeli corporation (the "Company"). Each of the Barnard J.
Gottstein Revocable Trust, Barnard J. Gottstein, as trustee of the Barnard
J. Gottstein Revocable Trust, and Barnard J. Gottstein, as an individual
(collectively, the "Reporting Persons"), are filing this Amendment to
update the information with respect to the Reporting Persons' purposes and
intentions with respect to the Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Original Schedule 13D is hereby amended and
supplemented as follows:
On April 23, 1999, the Company filed a complaint in the United States
District Court for the Southern District of New York (the "Court"), naming
Arie Genger, Barnard J. Gottstein, Thomas G. Hardy, TPR Investments
Associates, Inc., Trans-Resources, Inc., Haifa Chemicals Ltd., Haifa
Chemicals Holdings, Inc. and Barnard J. Gottstein Revocable Trust as
defendants (the "Defendants"). According to the complaint (a copy of which
is attached hereto as Exhibit 11), the Company is seeking to enjoin
violations of Section 13(d) of the Securities Exchange Act of 1934
("Section 13(d)") and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. In addition, the Company
alleged a breach of fiduciary duty against Thomas G. Hardy in connection
with the alleged violations of Section 13(d). The Company's claims are
based upon Defendants' alleged failure to disclose accurately their
intentions with respect to their holdings in the Company and failure
to disclose promptly their alleged status as a group for purposes of
Section 13(d). The Company is seeking (a) to enjoin Defendants from (i)
soliciting any proxy, consent or authorization with respect to the
Company's securities, or counting or tabulating any such proxy, consent or
authorization they may receive, (ii) acquiring or attempting to acquire any
additional shares of the Company's stock and (iii) voting in person or by
proxy any of the Company's securities; (b) the Court to declare that the
Company is entitled to refuse to recognize any votes for members of its
Board of Directors cast by or on behalf of Defendants, or solicited by
Defendants; and (c) the Court to require Defendants to promptly and
publicly file fully curative disclosure.
In response to the Company's failure to convene an
extraordinary general meeting in accordance with Section 109(a) of the
Israel Companies Ordinance, pursuant to Section 110(a) of the Israel
Companies Ordinance, on May 10, 1999, Messrs. Genger and Gottstein
commenced mailing of a Notice of an Extraordinary General Meeting of
shareholders of the Company to be convened on June 2, 1999, along with
solicitation materials to ADP and to the Company's shareholders of record
on May 10, 1999. The purposes for the Extraordinary General Meeting are set
forth in the Notice of Extraordinary General Meeting, which is attached
hereto as Exhibit 12 and which is incorporated by reference herein.
Other than as described above and as previously described in the
Original Schedule 13D, the Reporting Persons do not have any present plans
or proposals which relate to or would result in (although they reserve the
right to develop such plans or proposals) any transaction, change or event
specified in clauses (a) through (j) of Item 4 of the form of Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Original Schedule 13D is hereby amended to add the
following exhibits:
Exhibit 11: Complaint
Exhibit 12: Notice of Extraordinary General Meeting to be
Convened on June 2, 1999
Exhibit 13: Open Letter to the Shareholders of the
Company, dated May 10, 1999, from Messrs.
Genger and Gottstein
Exhibit 14: Form of Revocable Proxy/Instrument of
Appointment
Exhibit 15: Proxy Information Statement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 10, 1999
/s/ Barnard J. Gottstein
--------------------------------------
Barnard J. Gottstein
Individually and as Trustee of
the Barnard J. Gottstein Revocable
Trust
BARNARD J. GOTTSTEIN REVOCABLE
TRUST
/s/ Barnard J. Gottstein
-------------------------------------
Barnard J. Gottstein
Trustee
EXHIBIT INDEX
Exhibit
Number Title Page
11 Complaint 6
12 Notice of Extraordinary 22
General Meeting to be Convened
on June 2, 1999
13 Open Letter to the 24
Shareholders of the Company,
dated May 10, 1999, from
Messrs. Genger and Gottstein
14 Form of Revocable 28
Proxy/Instrument of
Appointment
15 Proxy Information Statement 31
Exhibit 11
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
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ESC MEDICAL SYSTEMS, LTD.,
PLAINTIFF,
COMPLAINT
V. CIVIL ACTION NO. 99CV2984 (KMW)
ARIE GENGER, BARNARD J. GOTTSTEIN,
THOMAS G. HARDY, TPR INVESTMENTS
ASSOCIATES INC., TRANS-RESOURCES, JURY TRIAL DEMANDED
INC., HAIFA CHEMICALS LTD., HAIFA
CHEMICALS HOLDINGS, INC., AND
BARNARD J. GOTTSTEIN REVOCABLE TRUST,
DEFENDANTS.
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Plaintiff ESC Medical Systems, Ltd., by its attorneys, Simpson
Thacher & Bartlett, alleges for its complaint, upon knowledge with respect
to its own acts, and upon information and belief with respect to all other
matters, as follows:
SUMMARY OF ALLEGATIONS
1. This is a proceeding to enjoin violations of Section 13(d) of the
Securities Exchange Act of 1934 (the "l934 Act"), 15 U.S.C. ss. 78m(d); the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder; and ongoing breaches of fiduciary duty.
2. Medical Systems, Ltd. ("ESC" or the "Company") is an Israeli
corporation engaged in the development, manufacture and marketing of
high-technology medical devices. ESC's stock is publicly listed and traded
on the NASDAQ stock exchange.
3. Defendants are individuals and entities that own, directly or
indirectly, shares of the Company's common stock and who have jointly
embarked on an undisclosed plan to wrest control of ESC in violation of the
federal securities laws.
4. The federal securities laws require that any person who owns or
controls a certain percentage of the shares of a publicly-listed company
make that ownership known to the company, the company's shareholders, and
the public by filing a Schedule l3D with the Securities and Exchange
Commission. Defendants have conceded that they are subject to the filing
requirements of Schedule l3D by making public filings under that provision.
Persons subject to Schedule l3D filing requirements, such as defendants,
must disclose accurately, among other things, their intentions with respect
to their holdings and whether they are acting in concert with others.
Schedule l3D also requires shareholders to disclose promptly any material
changes regarding their ownership or intentions.
5. In violation of these obligations, defendants have not disclosed
their plan to take control of the Company by replacing a majority of its
Board of Directors with their own handpicked nominees or that they are
acting in a group. Indeed, defendants' Schedule l3D filings affirmatively
misrepresent both their intention to gain control of ESC and their group
activity. These misrepresentations have caused and are continuing to cause
irreparable harm to ESC, its shareholders and the investing public.
Pursuant to false and misleading Schedule l3D filings and other materials,
defendants are currently soliciting proxies from ESC shareholders to
replace the majority of ESC's Board of Directors. Defendants must be
enjoined from proceeding with this illegal course of action and be required
to correct their existing misstatements.
6. By participating in defendants' wrongful plan, defendant Hardy,
who is a director of ESC, has also breached his fiduciary duties to the
Company's shareholders.
JURISDICTION AND VENUE
7. This Court has jurisdiction under Section 27 of the Exchange Act,
15 U.S.C. ss. 78aa, 28 U.S.C. ss. 1331, and principles of pendent
jurisdiction.
8. Venue in this district is proper pursuant to Section 27 of the
Exchange Act, 15 U.S.C. ss. 78aa, and 28 U.S.C. ss. 1391, since many of the
acts and transactions complained of have taken place in this district and
will continue to occur in this district unless enjoined, and the claims
sued upon arose in this district.
THE PARTIES
9. Plaintiff ESC Medical Systems, Ltd. is a corporation organized and
existing under the laws of the State of Israel with its principal place of
business at Yokneam, Israel 20692. The Company is engaged in the
development, manufacture and marketing of medical devices utilizing
proprietary intense pulsed light source technology for various non-invasive
medical treatments. As of February 16, 1999, the Company had approximately
28,000,000 shares of common stock outstanding. The Company's shares are
registered pursuant to Section 12(b) of the 1934 Act, 15 U.S.C. ss. 781(b),
and are traded on the NASDAQ Stock Exchange.
10. Defendant Aide Genger is Chairman of the Board and Chief
Executive Officer of defendant Trans-Resources. Inc., and a director and/or
executive officer of defendants TPR Investments Associates, Inc., HAIFA
Chemicals Ltd., and Haifa Chemicals Holdings Ltd.
11. Defendant Barnard J. Gottstein is sole trustee of defendant
Barnard J. Gottstein Revocable Trust.
12. Defendant Thomas G. Hardy is President and Chief Operating
Officer of defendant Trans-Resources, Inc., and a director and/or executive
officer of HAIFA Chemicals Ltd. and Haifa Chemical Holdings Ltd. In
addition, defendant Hardy is a non-management director of ESC.
13. Defendant TPR Investment Associates, Inc. ("TPR") is a Delaware
corporation with its principal place of business at 9 West 57 Street, New
York, New York 10019. Defendant Genger and his family own all of the common
stock of TPR.
14. Defendant Trans-Resources, Inc. ("TRI") is a Delaware corporation
and a wholly-owned subsidiary of TPR with its principal place of business
at 9 West 57 Street, New York, New York 10019.
15. Defendant HAIFA Chemicals Ltd. ("HCL") is an Israeli corporation
and a wholly-owned subsidiary of TRI, with its principal place of business at
Haifa Bay, P.O. Box 1809, Haifa, Israel 31018.
16. Defendant Haifa Chemical Holdings Ltd. ("HCH") is an Israeli
corporation and a wholly-owned subsidiary of HCL, with its principal place
of business at Haifa Bay, P.O. Box 1809, Haifa, Israel 31018.
17. Defendant Barnard J. Gottstein Revocable Trust ("Gottstein
Trust") is a trust for which defendant Gottstein is sole trustee.
FACTUAL BACKGROUND
18. This Complaint arises from the wrongful conduct of defendants in
filing numerous false and misleading disclosures with the Securities and
Exchange Commission. Defendants have misled the Company, its shareholders,
and the investing public by, inter alia:
a. failing to disclose their plan to obtain control of ESC by
gaining control of its Board of Directors;
b. failing to accurately disclose that defendants have been
working together in one or more "groups," as defined by the
federal securities laws; and
c. failing to timely file amendments to correct their materially
false and misleading
disclosures.
DEFENDANTS' FALSE SECURITIES FILINGS
THE INITIAL FILINGS
19. On or about October 9, 1998, Genger filed a Schedule l3D (the
"Genger l3D") (annexed hereto as Exhibit A) on behalf of himself, TPR, TRI,
HCL and HCH (the "TRI Entities"), asserting that those parties had acquired
2,142,272 shares of ESC common stock, Ex. A at 9-11, for "investment
purposes." Id. at 9. It also represented that the reporting parties had no
arrangements or understandings with any other party involving the voting of
ESC stock. Id. at 11. The Genger l3D did not disclose that Genger and the
TRI Entities were acting in concert with any other defendants, when, in
truth, they were. In particular, it did not disclose that Genger and the
TRI Entities were in league with defendant Hardy. Nor did the Genger I3D
disclose defendants' plan to seek control of ESC.
20. Also on or about October 9, 1998, Gottstein filed a Schedule l3D
(the "Gottstein 13D") (annexed hereto as Exhibit B) on behalf of himself as
an individual and as trustee, as well as on behalf of the Gottstein Trust,
to reflect the fact that those parties had acquired 1,396,193 shares of ESC
common stock. Ex. B at 5. The Gottstein 13D represented that the reporting
persons acquired ESC shares for investment purposes, id., and that none of
them had any contract, arrangement, understanding, or relationship with any
other persons. Id. at 6.
21. On or about January 19, 1999, Gottstein filed Amendment No. l to
the Gottstein l3D on behalf of Gottstein and the Gottstein Trust, to
reflect those parties acquisition of additional shares of ESC common stock
("Gottstein Amendment No. l") (annexed hereto as Exhibit C). It did not
disclose that Gottstein and the Gottstein Trust were acting in concert with
other defendants, and did not disclose defendants' plan to seek control of
ESC.
THE MARCH 12, 1999 FILINGS
22. On or about March 12, 1999,Genger, jointly with defendant Hardy,
filed Amendment No. 1 to the Genger l3D, on behalf of Genger, Hardy, and
certain TRI Entities ("Genger Amendment No. l") (annexed hereto as Exhibit
D). This filing represents that Genger and Gottstein reached an agreement
to "work together" on March 9, 1999. Id. at 6, 9. Genger and Gottstein had
agreed that "the composition of [ESC's] Board of directors needed to be
restructured" to give the Company, among other things, "a new sense of
direction." Id. Accordingly, "Genger and [Gottstein] reached an
understanding to cooperate with each other in attempting to achieve a
change in the composition of [ESC's] board of directors." Id. at 7. In
pursuit of these common objectives, Genger and Gottstein also agreed to
share expenses.
23. Genger Amendment No. 1 further discloses that defendant "Hardy
will generally also be cooperating with [Genger, Gottstein and the TRI
Entities] in achieving their strategic objectives with respect to" ESC,
i.e., changing the membership of the Board. Id.
24. It further states that on March 11, 1999, Genger and Gottstein
sent a joint letter to ESC's directors proposing the following
restructuring of ESC's eight member Board:
a. The removal of two management directors other than ESC Chairman
Dr. Shimon Eckhouse;
b. The removal of one non-management director other than defendant
Hardy; and
c. The addition of four new directors to be selected by Genger and
Gottstein. Id. at 9. Defendants' proposal thus would yield a
new nine member Board, with five members -- defendants' four
nominees and Hardy -- controlled by defendants.
25. Nevertheless, Genger Amendment No. l represents that the result
of defendants' proposed restructuring would be that "a majority of [ESC's]
Board would be unaffiliated with either management or Genger and
[Gottstein]." Id. The reporting parties also "expressly disclaim" both (a)
"'group' membership among the Reporting Parties and [Gottstein]," and (b)
"'group' membership among [Genger and] the TRI Entities and Hardy." Id. at
6.
26. Defendants argue that they are not a "group" because -- even
though they have expressly agreed to work together to replace sitting Board
members with their own handpicked nominees -- they have not signed any
written agreement to do so and each purports to retain economic control
over his or its own shares.
27. Also on or about March 12, 1999, Gottstein filed Amendment No. 2
to the Gottstein 13D ("Gottstein Amendment No. 2") (annexed hereto as
Exhibit E), on behalf of himself and the Gottstein Trust. It too disclosed
that Gottstein and Genger had "reached an understanding to cooperate with
each other in attempting to achieve a change in the composition of the
Company's Board of Directors." Ex. E at 5. Nevertheless, Gottstein
Amendment No. 2 denies the existence of defendants' group and denies the
group's intention to take control of ESC by gaining control of its Board.
Id. at 5, 6.
THE MARCH 23, 1999 FILINGS
28. On or about March 23, 1999, Genger, jointly with defendant Hardy,
filed Amendment No. 2 to the Genger l3D ("Genger Amendment No. 2") (annexed
hereto as Exhibit F) on behalf of Genger, Hardy, and certain TRI Entities.
It reports that on March 22, 1999, "the legal representative of Genger and
[Gottstein]" sent a letter to ESC's counsel listing the names of
defendants' four proposed candidates for the Board of Directors. Ex. F. at
8. It expressly denies that any group exists which includes defendants
Hardy or Gottstein. Id. at 7. Genger Amendment No. 2 also incorporates a
letter from counsel for Genger and Gottstein to counsel for ESC which
represents that "[w]ith the change in the composition of the Board
[proposed by defendants] neither management, Mr. Gottstein nor Mr. Genger
will control a majority of the Board of Directors of the Company," and
demands that the ESC Board reply to defendants' proposal "within 24 hours."
Id. at 10 (Ex. 6 to Ex. F).
29. Also on or about March 23, 1999, defendant Gottstein filed
Amendment No. 3 to the Gottstein l3D ("Gottstein Amendment No. 3") (annexed
hereto as Exhibit G) on behalf of Gottstein and the Gottstein Trust,
perpetuating the same misrepresentations as in defendants' prior filings.
THE MARCH 26, 1999 FILINGS
30. On March 26, 1999, Genger, jointly with defendant Hardy, filed
Amendment No. 3 to the Genger 13D ("Genger Amendment No. 3") (annexed
hereto as Exhibit H) on behalf of Genger, Hardy, and certain TRI Entities.
This amendment reports that on March 24, 1999, Genger and Gottstein
received notice that ESC was prepared to consider nominating two of the
four candidates for Director selected by Genger and Gottstein together with
two candidates selected by the Board. Ex. H. at 3. Later that same day,
after having "carefully considered" ESC's proposal, Genger and Gottstein
rejected it and gave ESC until the close of business on March 25, 1999 to
accept defendants' original proposal. Id. at 4, 11 (Ex. 8 to Ex. H). Genger
and Gottstein argued that even though two of their nominees (Messrs.
Spencer and Tadmor) were paid directors of TRI, a company wholly-owned by
Genger, neither was under Genger's "control." Id. at 11 (Ex. 8 to Ex. H).
Defendants added: "In any event, these two individuals, together with Mr.
Hardy, would constitute less than a majority of the Company's Board of
Directors as proposed to be restructured" (emphasis added). Id. Genger and
Gottstein threatened that if the Company failed to accept their proposal,
they would "take all steps necessary to convene an extraordinary general
meeting of shareholders pursuant to Section 109 of Israel Companies
Ordinance for the purpose of removing all of the current directors (other
than Hardy and possibly [the Chairman], and fill all vacancies then
existing with the four nominees named in their proposal, together with such
additional nominees as may be necessary to fill all vacancies" (emphasis
added). Id. at l2 (Ex. 8 to Ex. H). On March 24, 1999, Genger and Gottstein
sent a second letter to ESC demanding copies of ESC's Register of Members.
Id. at 4-5, 13-14 (Ex. 9 to Ex. H).
31. Genger Amendment No. 3 fails to disclose the fact that the
reporting parties are acting as a group as among themselves, and also in
conjunction with Gottstein. Nor did they disclose that their goal is to
gain control of ESC by replacing a majority of the Board with their
nominees. Instead, Genger Amendment No. 3 flatly asserts that "it is not
Mr. Genger's nor Mr. Gottstein's intention to control the Company, but
rather to restructure the Board of Directors with an independent Board."
Id. at 12 (Ex. 8 to Ex. H).
32. Also on March 26, 1999, Gottstein filed Amendment No. 4 to the
Gottstein l3D ("Gottstein Amendment No. 4") (annexed hereto as Exhibit I)
on behalf of Gottstein and the Gottstein Trust, perpetuating the same
falsehoods and omissions as in defendants' prior filings.
THE APRIL 14 AND 15, 1999 FILINGS
33. On or about April 14, 1999, Gottstein filed Amendment No. 5 to
the Gottstein l3D ("Gottstein Amendment No. 5") (annexed hereto as Exhibit
J) on behalf of Gottstein and the Gottstein Trust. In this amendment,
Gottstein reported that on April 14, 1999, he and Gottstein had jointly
commenced mailing solicitation materials to shareholders of ESC, and that
counsel for Genger and Gottstein intended to send, on April 15, 1999, "a
letter addressed to each of [ESC]'s directors demanding that [ESC] convene
an Extraordinary General Meeting." Ex. J. at 2.
34. Attached to Gottstein Amendment No. 5 are copies of the
solicitation materials mailed to ESC shareholders. In the first of these
materials, a joint letter from Genger and Gottstein to ESC shareholders
dated April l2, 1999 (Ex. 6 to Ex. J), Genger and Gottstein represented
that "the Company lacks the professional expertise and appropriate
oversight by a board of directors" that it requires, id. at 4, and that
defendants sought "a truly independent Board of Directors." Id. at 5.
Genger and Gottstein also stated that they were calling an extraordinary
general meeting, and soliciting the shareholders' proxies "to vote . . .
for the purpose of replacing all current directors other than [ESC
Chairman] Shimon Eckhouse and Tom Hardy with six nominees" suggested by
Genger and Gottstein (emphasis added). Id. at 6.
35. Genger's and Gottstein's letter to the shareholders also
referred, accurately, to defendant Hardy as "our representative on the
Board." Id. at 4.
36. In their letter to the shareholders, Genger and Gottstein
asserted that the new board should have as one of its first agenda items
the question of whether changes and/or additions to management are
necessary or desirable. In our opinion, such review should include
consideration of the need for a change of the chief executive officer." Id.
at 5. Nevertheless, Genger and Gottstein once again asserted that "[o]ur
intention is not to acquire control of the Company." Id. at 6.
37. Genger and Gottstein also represented that their six nominees
were "independent." Id. The joint Genger and Gottstein Proxy Information
Statement, however, reveals that one nominee, S.A. Spencer, is "a member of
the board of directors of [TRI], a company founded by Mr. Arie Genger, for
which he receives $15,000 annually" and that "Mr. Spencer's firm provides
investment banking advice to [TRI], for which his firm has received no
compensation since January l, 1998." Id. at 12 (Ex. 8 to Ex. J). The Proxy
Information Statement also reveals that another nominee, Professor Zehev
Tadmor, "serves as a member of the board of directors of [HCL], a
wholly-owned subsidiary of [TRI], for which he receives $15,000 annually,"
and that Professor Tadmor "is a scientific technological consultant for
[TRI], for which he receives a retainer fee . . . . Id. In addition, on
information and belief, defendants' remaining nominees have been
deliberately selected to further Genger and Gottstein's goal of controlling
the Board and "reviewing" the continued employment of senior management,
including Dr. Eckhouse.
38. Genger and Gottstein's solicitation materials also purport to
seek shareholder approval for up to six additional directors nominees --
without even identifying who these individuals might be. Id. at 8 (Ex. 7
(Revocable Proxy) to Ex. J).
39. On or about April 15, 1999, Gottstein delivered to ESC and its
board members a demand that it convene an Extraordinary General Meeting of
the Company's shareholders for the purpose of removing all the directors of
the Company other than defendant Hardy and Dr. Eckhouse and to elect
defendants' six nominees.
40. Also on or about April 15, 1999, Genger, together with Hardy,
filed Amendment No. 4 to the Genger l3D ("Genger Amendment No. 4") (annexed
hereto as Exhibit K) on behalf of Genger, Hardy, and certain TRI Entities.
This filing mirrored Gottstein Amendment No. 5 and perpetuated the same
falsehoods as in defendants' prior filings.
41. On or about April 19, 1999, Gottstein, on behalf of himself and
the Gottstein Trust, filed a further amendment to their Schedule l3D
("Gottstein Amendment No. 6") (annexed hereto as Exhibit L). This amendment
incorporated a joint letter from Genger and Gottstein to ESC's CEO Dr.
Eckhouse in which they argued that they were not attempting to gain control
of ESC and any suggestion that any of defendants' nominees were "somehow
under our influence and control is absurd." Id. at 3.
42. On or about April 20, 1999, Genger, Hardy and certain TRI
Entities, filed a further amendment to the Genger l3D ("Genger Amendment
No. 5") (annexed hereto as Exhibit M). This amendment mirrors Gottstein
Amendment No. 6 and perpetuates the same falsities as defendants' prior
filings.
FIRST CLAIM FOR RELIEF (AGAINST ALL DEFENDANTS FOR
VIOLATION OF THE FEDERAL SECURITIES LAW)
43. Plaintiff repeats and realleges each and every allegation
contained in paragraphs l through 42 of this Complaint as if fully set
forth herein.
44. In each of the documents listed below, the filing parties failed
to disclose material facts including: (a) that they were acting as a
"group," as defined by the Federal securities laws, among themselves and
with the other defendants, and (b) that they had devised, and were working
to implement, a plan to gain control of ESC by taking over its Board of
Directors:
a. Schedule 13D filed by Genger and the TRI Entities on or about
October 9, 1998,
b. Schedule 13D filed by Gottstein and the Gottstein Trust on or
about October 9, 1998,
c. Amendment No. 1 to Schedule l3D filed by Gottstein and the
Gottstein Trust on or about January 19,1999,
d. Amendment No. l to Schedule l3D filed by Genger, Hardy and
certain TRI Entities on or about March 12, 1999,
e. Amendment No. 2 to Schedule 13D filed by Gottstein and the
Gottstein Trust on or about March 12, 1999,
f. Amendment No. 2 to Schedule 13D filed by Genger, Hardy and
certain TRI Entities on or about March 23, 1999,
g. Amendment No. 3 to Schedule l3D filed by Gottstein and the
Gottstein Trust on or about March 23, 1999,
h. Amendment No. 3 to Schedule 13D filed by Genger, Hardy and
certain TRI Entities on or about March 26, 1999,
i. Amendment No. 4 to Schedule 13D filed by Gottstein and the
Gottstein Trust on or about March 26, 1999,
j. Amendment No. 5 to Schedule l3D filed by Gottstein and the
Gottstein Trust on or about April 14, 1999
k. Amendment No. 4 to Schedule 13D filed by Genger, Hardy and
certain TRI Entities on or about April 15, 1999,
l. Amendment No. 6 to Schedule l3D filed by Gottstein and the
Gottstein Trust on or about April l9, 1999, and
m. Amendment No. 5 to Schedule 13D filed by Genger, Hardy and
certain TRI Entities on or about April 20, 1999.
Defendants compounded these omissions by making affirmative
misrepresentations and denials to conceal their group status and
intentions.
45. Defendants also have failed to correct the materially false and
misleading disclosures through timely and accurate amendments.
46. By reason of the foregoing acts, defendants have violated Section
13(d) of the Exchange Act and Rule l3d-l promulgated thereunder.
SECOND CLAIM FOR RELIEF
(AGAINST DEFENDANT HARDY FOR BREACH OF FIDUCIARY DUTY)
47. As a director of the Company, defendant Hardy owes fiduciary
duties to its shareholders, including the duty of candor. Mr. Hardy has
breached these duties by participating in the filing of false and
misleading disclosure documents that conceal his role in defendants' secret
plan to gain control of the Company.
IRREPARABLE INJURY
48. Defendants have violated and continue to violate Section 13(d) of
the Exchange Act, and the rules and regulations promulgated thereunder. The
Company, its shareholders and employees, and the investing public have
suffered and will continue to suffer irreparable injury if defendants are
not (i) enjoined from continuing to violate the securities laws and (ii)
required to make curative disclosure to undo the injury caused by their
illegal conduct. The harm being caused by defendants includes:
a. The Company, its employees and shareholders, and the investing
public have been and are being deprived of the benefits and
protections of the federal securities laws;
b. The price of the Company's stock is being and will be distorted
and will not reflect true market value; and
c. The Company, its shareholders and the investing public have
been and will continue to be forced to make misinformed
decisions regarding the ongoing proxy solicitation initiated by
defendants to gain control of the ESC Board and in connection
with the purchase and sale of the Company's shares.
The Company has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment against defendants and
respectfully requests that:
1. The Court preliminarily and permanently enjoin defendants, their
affiliates, partnerships, subsidiaries, employees, attorneys, and agents,
and all persons acting in concert with or on behalf of them, from directly
or indirectly:
a. soliciting any proxy, consent or authorization with respect to
the Company's securities, or counting or tabulating any such
proxy, consent or authorization they may receive;
b. acquiring or attempting to acquire any additional shares of the
Company's stock; and
c. voting in person or by proxy any of the Company's securities;
2. The Court declare that the Company is entitled to refuse to
recognize any votes for members of its Board of Directors cast by or on
behalf of defendants, or solicited by defendants.
3. The Court require defendants to promptly and publicly file fully
curative disclosure.
4. The Court award plaintiff its attorneys' fees and costs in this
action, and grant such other and further relief as this Court may deem just
and proper.
Dated April 23, 1999
SIMPSON THACHER & BARTLETT
By:/s/ Paul C. Curnin
--------------------------------
Paul C. Curnin (PC-7209)
425 Lexington Avenue
New York, New York 10017-3909
(212) 455-2000
Counsel for Plaintiff
ESC Medical Systems, Ltd.
Exhibit 12
NOTICE OF EXTRAORDINARY GENERAL MEETING
OF SHAREHOLDERS OF ESC MEDICAL SYSTEMS LTD.
TO BE CONVENED JUNE 2, 1999
You are cordially invited to attend an extraordinary general shareholder's
meeting of ESC shareholders to be convened on June 2, 1999 at the Hotel
Intercontinental, 111 E. 48th Street, New York City at 10 A.M. EDT. Only
shareholders of record on May 10, 1999, represented in person or by proxy
at the meeting, will be entitled to vote at the meeting.
This meeting is being called by us, two of your company's largest
shareholders (and our respective affiliated entities) with over 15% of
ESC's outstanding shares, in order to vote on our proposals to remove all
of the then-current directors from the Board of Directors of the Company
(other than Thomas Hardy and Shimon Eckhouse) and to elect the following
six directors: Aharon Dovrat, Philip Friedman, Darrell S. Rigel, M.D., S.A.
Spencer, Mark H. Tabak and Professor Zehev Tadmor. Under Israeli corporate
law, any two shareholders with over 10% ownership have the right to demand
such a meeting, and the Board is obligated to convene it immediately.
Instead of doing so in response to our demand of April 15, the Board
recently set a meeting date of July 15 for our proposal-a full three months
later. To add further insult, they included with that notice the notice of
the regular annual meeting, proposed to be convened just one hour later,
thereby making any vote in our meeting a mockery.
We cannot wait any longer and neither should you. Accordingly, given the
Board's failure to act in a timely manner as we believe is required under
Israeli law, we are exercising our right to convene the meeting ourselves,
and have chosen June 2 as the date for the meeting with a record date of
May 10.(1) We hope you will bring your executed proxy card with you and
attend the meeting. But even if you do not, please execute the enclosed
proxy card and send it to us in the enclosed postage-paid envelope so you
will be represented at the meeting.
- --------
(1) Section 109(a) of the Israel Companies Ordinance (New Version), 1983
states, "Upon demand from [10% shareholders], the company's directors must
. . . convene immediately a lawful extraordinary general meeting of the
company; . . ." (Unofficial English translation, emphasis added.) Section
110(a) of the Israel Companies Ordinance (New Version), 1983 states, "If
the directors do not duly convene the meeting within 21 days from the day
on which the demand was made under section 109, [such shareholders] may
convene the meeting themselves . . . ." (Unofficial English translation.)
SEND MANAGEMENT A MESSAGE.
VOTE NOW TO REPLACE A MAJORITY OF THE CURRENT BOARD.
For the reasons why we believe it is imperative to take action now, please
read our enclosed letter and other proxy material.
Sincerely,
/s/ Arie Genger /s/ Barnard J. Gottstein
Trans-Resources, Inc. Barnard Jacob Gottstein TTEE
By: /s/ Arie Genger By: /s/ Barnard J. Gottstein
---------------------------- --------------------------
Arie Genger Barnard J. Gottstein
Chairman of the Board Trustee
Haifa Chemical Holdings Ltd.
By: /s/ Arie Genger
---------------------------
Arie Genger
Authorized Signatory
TPR Investment Associates, Inc.
By: /s/ Arie Genger
----------------------------
Arie Genger
President
May 10, 1999
Exhibit 13
Open Letter to Shareholders of
ESC Medical Systems Ltd. (the "Company")
May 10, 1999
ELECT A NEW BOARD OF DIRECTORS COMMITTED TO
MAXIMIZING SHAREHOLDER VALUE
Dear Fellow ESC Shareholder:
This is in response to the Company's letter to shareholders, dated April
21, 1999, and to their outrageous announcement that they have set July 15,
1999 as the date for both an extraordinary general meeting and the annual
general meeting.
We believe this is just another delaying tactic that makes a mockery of
shareholder rights and corporate governance.
Under Israeli corporate law, any two shareholders with over 10% ownership
in the Company have the right to demand an extraordinary general meeting,
and the Board is obliged to convene it immediately. We are two of your
Company's largest shareholders with over 15% of the Company's outstanding
shares.
ACCORDINGLY, WE HEREWITH CALL AND INVITE YOU TO ATTEND AN EXTRAORDINARY
GENERAL MEETING OF SHAREHOLDERS OF ESC MEDICAL SYSTEMS LTD. TO BE CONVENED
ON JUNE 2, 1999, AT THE HOTEL INTERCONTINENTAL, 111 E. 48TH STREET, NEW
YORK CITY AT 10 A.M. EDT. Shareholders of record on May 10, 1999,
represented in person or by proxy at the meeting, may vote at that meeting.
Even if you plan to attend the meeting, please execute the enclosed proxy
card and return it in the enclosed postage-paid envelope to assure that you
will be represented at the meeting.
Below we address why this extraordinary general meeting is necessary, and
respond to the Company's letter to you, dated April 21, 1999.
In that letter, Shimon Eckhouse says that the directors proposed by us have
no experience in medical equipment. This is obviously ludicrous. We believe
that each person nominated by us will bring a fresh, independent view to
all of the needs of the Company in addition to the Company's involvement in
medical equipment. For example, Dr. Darrell Rigel, one of our nominees, is
a practicing physician at New York University Medical School and president
of a national medical organization.
WHY ELECT A NEW BOARD?
BECAUSE THE NUMBERS SPEAK FOR THEMSELVES!
ESC's shares have dropped from a high of $46.50 on June 14, 1996, to a low
of $4.75 as recently as February 24, 1999, a decline of over $41.00 per
share. In his letter to shareholders, Eckhouse totally overlooks this
point.
The Company experienced an operating loss of more than $2 million for the
fourth quarter ended December 31, 1998, and has yet to tell us what ESC's
earnings results were for the first quarter ended March 31, 1999.
WE BELIEVE THE CURRENT BOARD OF DIRECTORS IS
WEAK AND INDECISIVE.
It was not until March 1, 1999 that a final budget for 1999 was submitted
to the Board. For a company with annual sales of approximately $220
million, not having a budget prior to entering into the year budgeted,
seems culpably incompetent. IN OUR VIEW, ANY WELL-RUN COMPANY WOULD BE
AGHAST TO CONDUCT ITS AFFAIRS IN SO SLIP-SHOD A MANNER. Eckhouse ignored
this point as well.
SINCE THE BOARD HAS FAILED TO TAKE ACTION TO ADDRESS MANAGEMENT'S
WEAKNESSES, THE ONLY SOLUTION WE SEE IS TO REPLACE A MAJORITY OF THE
CURRENT BOARD WITH DIRECTORS WHO WILL NOT BE AFRAID TO DO WHAT IS NECESSARY
IN ORDER TO REHABILITATE THE COMPANY AND RESTORE THE COMPANY'S CREDIBILITY
IN THE MARKETPLACE.
There is a clear obligation on the part of management and the Board of a
public company like ESC to maintain credibility in the investment
community. Any shareholder wishing to review the lack of credibility that
we believe this management and Board have now developed need only review
analyst reports from major investment banks and/or shareholders' comments
on the Internet.
WE BELIEVE THE CURRENT BOARD OF DIRECTORS
HAS LOST ITS CREDIBILITY.
In March 1999, Eckhouse announced the retention of Warburg Dillon Read LLC
as ESC's "financial advisor." All attempts to find out the purpose, terms
and cost of this retainer agreement have been to no avail.
To our knowledge, the current Board is retaining no fewer than FOUR
separate law firms to advise its directors and management on our proposal
for a new Board. IN OUR VIEW, THIS IS CREATING A SIGNIFICANT DRAIN ON
CORPORATE RESOURCES JUST TO ALLOW MANAGEMENT AND THE CURRENT BOARD THE
OPPORTUNITY TO ENTRENCH THEMSELVES IN OFFICE.
As further evidence of their attempt to entrench themselves, their proposed
annual general meeting in July will consider "employment agreements" with
directors who are executives, plus indemnification of directors. WE BELIEVE
THEIR PROPOSALS CAN ONLY BE INTENDED TO GIVE "GOLDEN PARACHUTES" TO
MANAGEMENT, SHIELD THE BOARD FROM LIABILITY OR PAST NEGLIGENCE, COST THE
COMPANY A LOT OF MONEY, AND MAKE THE COMPANY THAT MUCH HARDER TO
RESTRUCTURE OR SELL.
Instead of making an effort to address our concerns about the very obvious
problems with this Company, the Board and management filed what we consider
to be a totally frivolous lawsuit against us because we requested a meeting
of shareholders in order to do something about these problems. We believe
this is simply another waste of corporate assets and a further attempt to
delay your right to express your opinion.
WE BELIEVE THAT THE CURRENT BOARD MEMBERS ARE MORE CONCERNED ABOUT
SAVING THEIR JOBS THAN CARRYING OUT THEIR FIDUCIARY DUTY TO
MAXIMIZE SHAREHOLDER VALUE.
Management's and the Board's assertions that we are attempting to take
control of the Company are also totally false. We never "took over" Laser
Industries, though Genger affiliates owned more of it than ESC. Instead,
Genger affiliates thoroughly backed a successful and competent Board and
management and assisted Laser in its ascent from a market capitalization of
about $10 million in 1989 until merging into ESC at a valuation of about
$245 million.
AT ESC, WE ARE PROPOSING SUCH AN INDEPENDENT AND COMPETENT BOARD IN THE
HOPE OF RESTORING SHAREHOLDER VALUE FOR US ALL.
Neither of us is proposing to be elected to the Board. Instead, we are
proposing that six nominees who are independent of both of us be elected to
the Board. In fact, assuming that all six of our nominees are elected to
the Board and replace six current Board members, a majority of the Board
will have had no prior business relationship with either of us. TO SUGGEST
THAT THESE DIRECTORS-WHO WOULD BE ELECTED BY A MAJORITY OF OUTSIDE
SHAREHOLDERS-ARE SOMEHOW UNDER OUR INFLUENCE AND CONTROL IS PREPOSTEROUS.
SEND A MESSAGE TO THE BOARD.
VOTE THE ENCLOSED YELLOW PROXY TODAY.
Management's recent letter to its shareholders does not address what we
believe the current Board will never consider-replacing its current chief
executive officer. IN OUR VIEW, A NEW BOARD SHOULD HAVE AS ONE OF ITS FIRST
AGENDA ITEMS THE QUESTION OF WHETHER CHANGES AND/OR ADDITIONS TO
MANAGEMENT, INCLUDING A CHANGE OF THE CHIEF EXECUTIVE, ARE NECESSARY OR
DESIRABLE. This is why we have insisted that any new directors be selected
by the shareholders, not by the current Board or by management. AGAIN, WE
ARE NOT SEEKING TO CONTROL THE COMPANY. RATHER, WE ARE SEEKING TO REMOVE
CONTROL FROM MANAGEMENT WHO SEEM MORE INTERESTED IN THEIR DESIRE TO REMAIN
IN OFFICE AT ALL COSTS THAN IN LISTENING TO THEIR SHAREHOLDERS. While we
hold management primarily responsible for the Company's distressing
results, ultimately it is the responsibility of the Company's Board of
Directors to see to it that management is carrying out its job properly and
effectively.
The Company has recently stated it was "exploring strategic alternatives,"
including a possible sale of the Company. WE WOULD BE HIGHLY IN FAVOR OF
SUCH A SALE IF IT WERE DEMONSTRATED TO BE THE BEST WAY TO MAXIMIZE
SHAREHOLDER VALUE AND IF IT WOULD DELIVER TO THE COMPANY A MORE RESPONSIBLE
MANAGEMENT AND BOARD.
If such sale does not occur, we are all left with the need to turn this
Company around, particularly when we see what this present Board and
management are callously putting our Company through to try in our opinion
to hang on to their positions-all with the help of your money, not theirs.
WE DO NOT BELIEVE THE CURRENT BOARD OR MANAGEMENT HAS THE SKILLS,
CREDIBILITY OR FORTITUDE NECESSARY TO LEAD THE COMPANY BACK TO
PROFITABILITY.
PROTECT YOUR INVESTMENT.
ELECT THE INDEPENDENT DIRECTOR NOMINEES.
For the above reasons, we request that you join us, as the largest
shareholders of ESC, to prevent management and the Board-who have
practically no shareholder interest in your Company-from continuing to take
steps we believe are designed to further entrench themselves at an
unconscionable cost to you and us.
THE CHOICE IS YOURS, NOT THEIRS. We hope you will support our
proposal to restructure the current Board. We urge you to vote the enclosed
YELLOW proxy today! If you have any questions or need assistance, please
call MacKenzie Partners, Inc. at (212) 929-5500 (call collect) or call
toll-free at (800) 322-2885.
Sincerely,
/s/ Barnard J. Gottstein /s/ Arie Genger
Exhibit 14
SOLICITED ON BEHALF OF
ARIE GENGER AND BARNARD J. GOTTSTEIN
ESC MEDICAL SYSTEMS LTD.
REVOCABLE PROXY
The undersigned shareholder of ESC MEDICAL SYSTEMS LTD., an Israeli
corporation (the "Company"), hereby appoints Michael Zellermayer or, in his
absence, Avi D. Pelossof or, in their absence, Yoram Ashery (of Zellermayer
& Pelossof, Advocates, Tel Aviv, Israel, the legal representatives of
Messrs. Genger and Gottstein), as proxies for the undersigned, each with
full power of substitution, to act at an Extraordinary General Meeting
(within the meaning of such term under the Company's Articles of
Association and/or Section 109 or Section 110 of the Israel Companies
Ordinance ("Section 109/110")) of the Company to be convened on June 2,
1999, and at any adjournment(s) or postponement(s) thereof (except for
adjournment(s) for absence of quorum at a Meeting convened pursuant to
Section 109/110), for the purpose of removing any or all of the
then-current directors from the Board of Directors of the Company (the
"Board") (other than Thomas Hardy and Shimon Eckhouse), including all
directors who shall be appointed through the date of such Extraordinary
General Meeting, if any, and electing the nominees set forth below to the
Board, and to transact such other business as may properly come before such
Meeting and any adjournment(s) or postponement(s) thereof (except for
adjournment(s) for absence of quorum at a Meeting convened pursuant to
Section 109/110). The undersigned further agrees that, at any such
Extraordinary General Meeting and at any adjournment(s) or postponement(s)
thereof (except for adjournment(s) for absence of quorum at a Meeting
convened pursuant to Section 109/110), Mr. Zellermayer or, in his absence,
Mr. Pelossof or, in their absence, Mr. Ashery, shall be entitled to cast on
behalf of the undersigned all votes that the undersigned is entitled to
cast at such Extraordinary General Meeting and otherwise to represent the
undersigned at the Extraordinary General Meeting, with the same effect as
if the undersigned were present. The undersigned hereby revokes any proxy
previously given with respect to such shares for such Meeting. This proxy
will be voted FOR proposal 1 set forth as follows, and, in the event that
any matters properly come before such Meeting, it is the intention of Mr.
Zellermayer or, in his absence, Mr. Pelossof or, in their absence, Mr.
Ashery, to vote such proxies in accordance with their respective
discretionary authority, as the case may be, to act in their respective
best judgment, as the case may be:
1. To remove all directors of the Board of Directors of the
Company (other than Thomas Hardy and Shimon Eckhouse), including all
directors who shall be appointed through the date of such
Extraordinary General Meeting, if any, and to elect the following six
directors to serve until the next annual general meeting and until
their successors are duly elected and qualify, unless any office is
vacated earlier pursuant to the relevant provisions of the Articles
of Association of the Company. Neither Messrs. Genger nor Gottstein
are aware of any reason why any nominee, if elected, should be unable
to serve as a director. If any of the nominees are unable to serve,
Mr. Zellermayer or, in his absence, Mr. Pelossof or, in their
absence, Mr. Ashery, will vote the shares FOR the election of such
other nominees as such proxies will select in accordance with their
respective discretionary authority.
Nominees: Aharon Dovrat, Philip Friedman, Darrell S. Rigel,
M.D., S.A. Spencer, Mark H. Tabak and Professor Zehev
Tadmor.
[ ] FOR ALL NOMINEES [ ] WITHHOLD AS TO ALL NOMINEES
FOR ALL NOMINEES(S) (Except as written below)
2. To transact such other business as may properly come before the
Meeting or any adjournment(s) or postponement(s) thereof (except for
adjournment(s) for absence of quorum at a Meeting convened pursuant
to Section 109/110).
The undersigned may revoke his or her instrument appointing a proxy
at any time before voting by filing a notice of revocation with Mr.
Zellermayer, Mr. Pelossof or Mr. Ashery, by filing a later dated instrument
appointing a proxy with Mr. Zellermayer, Mr. Pelossof or Mr. Ashery or by
voting in person at the Extraordinary General Meeting. Any notice of
revocation and any later dated instrument appointing a proxy filed with Mr.
Zellermayer, Mr. Pelossof or Mr. Ashery will be forwarded to the Company.
In furtherance of this proxy, the undersigned is executing an
Instrument of Appointment set forth below in accordance with Article 33 of
the Articles of Association of the Company. A copy of any executed proxy
and Instrument of Appointment will be made available to the chairman of the
Extraordinary General Meeting and will be voted in accordance with any
instructions given herein.
INSTRUMENT OF APPOINTMENT
The undersigned, of the address specified below, being a member of
ESC Medical Systems Ltd. hereby appoint Michael Zellermayer and, in Mr.
Zellermayer's absence from any Extraordinary General Meeting for which this
Instrument of Appointment is being executed, Avi D. Pelossof and, in their
absence, Yoram Ashery, of Zellermayer & Pelossof Advocates, Europe House,
37 King Shaul Boulevard, Tel-Aviv, Israel 64928 (the legal representatives
of Messrs. Genger and Gottstein), as my proxies to vote for me and on my
behalf, each with full power of substitution to act at the Extraordinary
General Meeting of the Company to be convened on June 2, 1999, or a
substitute date to be specified by the Company or Messrs. Genger and
Gottstein for an Extraordinary General Meeting instead of such meeting, and
at any adjournment(s) or postponement(s) thereof (except for adjournment(s)
for absence of quorum at a Meeting convened pursuant to Section 109/110 of
the Israel Companies Ordinance).
Signed this ____ day of ________, 1999.
Signature of Appointer ________________
Signature of Appointer,
if held jointly _______________________
Address of Appointer __________________
Please sign exactly as your name appears hereon and date. If the shares are
held jointly, each holder should sign. When signing as an attorney,
executor, administrator, trustee, guardian or as an officer, signing for a
corporation or other entity, please give full title under signature.
Any questions or requests for assistance or additional copies of this
Open Letter to Shareholders, the Revocable Proxy and Instrument of
Appointment, the Proxy Information Statement and any other related
materials may be directed to the Information Agent at the address and
telephone number set forth below. Shareholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for
assistance concerning Mr. Genger's and Mr. Gottstein's proposal (the
"Proposal").
THE INFORMATION AGENT FOR THE PROPOSAL IS:
MACKENZIE
PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE: (800) 322-2885
_________________
Exhibit 15
PROXY INFORMATION STATEMENT
This Proxy Information Statement is being furnished by Mr. Arie
Genger and Mr. Barnard J. Gottstein to the shareholders of ESC Medical
Systems Ltd., an Israeli corporation (the "Company"), in connection with
the solicitation of proxies in the form enclosed herewith for use at the
Extraordinary General Meeting (within the meaning of such term under the
Company's Articles of Association and/or Section 109 or Section 110 of the
Israel Companies Ordinance ("Section 109/110")) of the Company (the
"Meeting") to be convened on June 2, 1999 and any adjournment(s) or
postponement(s) thereof (except for adjournment(s) for absence of quorum at
a Meeting convened pursuant to Section 109/110), for the purposes of (i)
removing any or all of the then-current directors from the Board of
Directors of the Company (the "Board") (other than Mr. Thomas Hardy and Dr.
Shimon Eckhouse), including all directors who shall be appointed through
the date of such Meeting, if any, and electing the nominees set forth below
under the Section "Proxy Information Statement Concerning the Nominees to
the Board of Directors of the Company," and (ii) transacting such other
business that may properly come before the Meeting and any adjournment(s)
or postponement(s) thereof (except for adjournment(s) for absence of quorum
at a Meeting convened pursuant to Section 109/110). This Proxy Information
Statement should be read in conjunction with the accompanying materials,
all of which is incorporated by reference herein.
Holders of record of the Ordinary Shares of the Company (the
"Ordinary Shares") as of the close of business on May 10, 1999, are
entitled to receive notice of, and to vote at, the Meeting. Pursuant to the
Company's Articles of Association, the holders of a majority of the voting
power represented at a General Meeting in person or by proxy and voting
thereon at such Meeting shall be entitled to remove any directors(s) from
office, to elect directors instead of directors so removed or to fill any
vacancy, however created, in the Board of Directors.
Shares represented by proxies in the form enclosed, if the proxies
are properly executed and returned and not revoked, will be voted as
specified. When no specification is made on a properly executed and
returned proxy, the shares will be voted FOR the removal of all directors
of the Board of Directors of the Company (other than Thomas Hardy and
Shimon Eckhouse), including all directors who shall be appointed through
the date of such Meeting, if any, and FOR the election of all of the
nominees for directors listed below under the Section "Proxy Information
Statement Concerning the Nominees to the Board of Directors of the
Company." None of Michael Zellermayer, Avi D. Pelossof nor Yoram Ashery (of
Zellermayer & Pelossof, Advocates, Tel Aviv, Israel, the legal
representatives of Messrs. Genger and Gottstein and proxies for the
Meeting) has been informed of any matters to come before the Meeting other
than the matters referred to in this Proxy Information Statement. If,
however, any matters properly come before the Meeting, it is the intention
of Mr. Zellermayer or, in his absence, Mr. Pelossof or, in their absence,
Mr. Ashery, to vote such proxies in accordance with their respective
discretionary authority to act in their respective best judgment. To be
voted, proxies must be filed with Mr. Zellermayer, Mr. Pelossof or Mr.
Ashery prior to voting through a proxy solicitation service or otherwise.
Proxies may be revoked before voting by filing a notice of revocation with
Mr. Zellermayer, Mr. Pelossof or Mr. Ashery, by filing a later dated
instrument appointing a proxy with Mr. Zellermayer, Mr. Pelossof or Mr.
Ashery or by voting in person at the Meeting. Any notice of revocation and
any later dated instrument appointing a proxy filed with Mr. Zellermayer,
Mr. Pelossof or Mr. Ashery will be forwarded to the Company.
Your vote is important. Please complete, date, sign and return
the enclosed proxy and Instrument of Appointment as promptly as possible in
order to ensure your representation at the Meeting. A return envelope
(which is postage-prepaid) is enclosed for that purpose. Even if you have
given your proxy and Instrument of Appointment, you may still vote in
person if you attend the Meeting. Please note, however, that if your shares
are held of record by a broker, bank or other nominee and you wish to vote
at the Meeting, you must obtain from the record holder a proxy issued in
your name.
PROXY INFORMATION STATEMENT CONCERNING
THE NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY
The nominees for membership on the Board, named in the table below,
have furnished to Mr. Genger and Mr. Gottstein the following information
concerning their principal occupations, business addresses and other
matters. The nominees are Aharon Dovrat, Philip Friedman, Darrell S. Rigel,
M.D., S.A. Spencer, Mark H. Tabak and Professor Zehev Tadmor (collectively,
the "Nominees"). Other than Mr. Dovrat, all of the nominees are United
States citizens or residents and, as a result, the Company may become
subject to the U.S. securities laws in the same manner as U.S. companies.
Except as disclosed herein, (a) none of the Nominees has ever served as an
officer, director or employee of the Company, and (b) there are no
arrangements or understandings between any Nominee and any other person
pursuant to which he was selected as a Nominee or director of the Company.
BIOGRAPHICAL INFORMATION
Aharon Dovrat. Mr. Dovrat, age 67, is the founder and chairman of
Dovrat & Company, Ltd., a privately-held investment company, and the
founder and chairman of Isal, Ltd., a publicly-traded investment company,
since their inception in January 1999. Between 1991 and December 1998, Mr.
Dovrat served as chairman of Dovrat, Shrem & Company, Ltd., a company
publicly traded on the Tel-Aviv Stock Exchange that divides its operations
into the areas of investment banking and direct investment funds
management, underwriting, securities and brokerage services, real estate
and industry. Between 1965 and 1991, Mr. Dovrat served as president and
chief executive officer of Clal (Israel) Ltd., a holding company which, by
1991, had become Israel's largest independent conglomerate, with capital of
over $400 million and aggregate annual sales in excess of $2.5 billion. Mr.
Dovrat serves as a member of the board of directors of OSHAP Technologies
Ltd., a software company, of Technomatix Technologies Ltd., a software
company, and of Delta Galil Ltd., a textile company. Mr. Dovrat's address
is c/o Dovrat & Company, Ltd., 37 Shaul Hamelech Boulevard, Tel Aviv,
Israel 64928.
Philip Friedman. Mr. Friedman, age 50, is the founder, president and
chief executive officer of Computer Generated Solutions, Inc., a
privately-held company founded by Mr. Friedman in 1984 that specializes in
providing comprehensive computer technology and business solutions to
companies across the globe in a wide variety of industries. Mr. Friedman's
address is c/o Computer Generated Solutions, Inc., 1675 Broadway, New York,
New York 10019.
Darrell S. Rigel, M.D. Dr. Rigel, age 48, has been a faculty member
at New York University Medical School ("NYU") since 1979, and is currently
a physician and Clinical Professor of Dermatology at NYU, and is also an
Adjunct Professor of Dermatology at Mt. Sinai School of Medicine in New
York City. Dr. Rigel is currently serving as president of a national
medical organization. In 1996, Dr. Rigel founded Interactive Horizons,
Inc., a privately-held company in the industry of interactive computer
systems for which Dr. Rigel serves as its president. Dr. Rigel graduated
from Massachusetts Institute of Technology with an SB and an SM in
Management Information Sciences. Dr. Rigel's address is 35 East 35th
Street, #208, New York, New York 10016.
S.A. Spencer. Mr. Spencer, age 67, is the founder, chief executive
officer and principal investor of Holding Capital Group, LLC, a private
LBO, MBO, venture capital and investment firm founded by Mr. Spencer in
1976. Mr. Spencer serves as a member of the board of directors of
Trans-Resources, Inc., a company founded by Mr. Arie Genger. Mr. Spencer's
address is c/o Holding Capital Group, LLC, 104 Crandon Boulevard, Suite
409, Key Biscayne, Florida 33149.
Mark H. Tabak. Mr. Tabak, age 49, is the founder, president and chief
executive officer of International Managed Care Advisors, LLC, a company
Mr. Tabak founded in 1996 that invests in and develops managed care-type
delivery systems addressing mainly primary care needs in Latin America,
Western and Central Europe and Asia, among other regions. Mr. Tabak is also
presently affiliated with Capital Z Partners, a $3 billion fund focusing on
investing in healthcare, insurance and financial services. Between 1993 and
July 1996, Mr. Tabak served as president of AIG Managed Care, Inc., a
subsidiary of American International Group. Between 1990 and 1993, Mr.
Tabak served as president and chief executive officer of Group Health Plan.
Between 1986 and 1990, Mr. Tabak served as president and chief executive
officer of Clinical Pharmaceuticals, Inc., a pharmacy benefit management
company founded by Mr. Tabak in 1986. Between 1982 and 1986, Mr. Tabak
served as president and chief executive officer of HealthAmerica
Development Corporation. Mr. Tabak serves as a director and as a member of
the audit committee of Ceres Group, a company that specializes in the
health insurance industry. Mr. Tabak's address is c/o Capital Z Partners,
One Chase Manhattan Plaza, 44th Floor, New York, New York 10005.
Professor Zehev Tadmor. Professor Tadmor, age 62, is serving as a
Distinguished Institute Professor at the Department of Chemical Engineering
at the Technion Israel Institute of Technology, Israel's major
technological scientific research university (the "Technion"), which he
joined in 1968, and has served as the chairman of the board of the S.
Neaman Institute for Advanced Studies in Science & Technology at the
Technion since October 1998. Between October 1990 and September 1998,
Professor Tadmor served as president of the Technion. Professor Tadmor
serves as a member of the board of directors of Haifa Chemicals Ltd., a
chemical and fertilizer company and a wholly-owned subsidiary of
Trans-Resources, Inc., a company founded by Mr. Genger. Professor Tadmor
also serves as a member of the Technological Advisory Council of Publicard.
Professor Tadmor's address is 62 Tishbi Street, Haifa, Israel 34523.
The Nominees have consented to serve as directors, if elected. In the
event a Nominee named in this Proxy Statement is unable to serve or will
not serve as a director of the Company, Mr. Zellermayer or, in his absence,
Mr. Pelossof or, in their absence, Mr. Ashery, will vote the proxies
solicited hereby at the Meeting for a substitute nominee to be selected by
Mr. Zellermayer or, in his absence, Mr. Pelossof or, in their absence, Mr.
Ashery, in their respective discretion.
STOCKHOLDINGS IN THE COMPANY
None of the Nominees beneficially own any ordinary shares of the
Company, except as follows:
Mr. Dovrat beneficially owns an aggregate of 20,000 ordinary
shares (less than 1% of the 27,301,339 ordinary shares issued and
outstanding as of March 25, 1999). Mr. Dovrat has sole voting and
dispositive power with respect to all of such ordinary shares.
Mr. Friedman beneficially owns an aggregate of 25,000 ordinary
shares (less than 1% of the 27,301,339 ordinary shares issued and
outstanding as of March 25, 1999). Mr. Friedman shares voting and
dispositive power with his wife with respect to all of such ordinary
shares.
Mr. Spencer beneficially owns an aggregate of 11,000 ordinary
shares (less than 1% of the 27,301,339 ordinary shares issued and
outstanding as of March 25, 1999). Mr. Spencer shares voting and
dispositive power with his wife with respect to all of such ordinary
shares.
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others. Except as otherwise
disclosed in this Proxy Information Statement, none of the Nominees is
currently involved, or has been involved since January 1, 1998, in any
transaction, series of transactions or proposed transactions to which the
Company or any of its subsidiaries, Mr. Gottstein or Mr. Genger (including,
without limitation, Trans-Resources, Inc. and its subsidiaries) was or is
to be a party.
Certain Business Relationships. Except as set forth below, none of
the Nominees is currently, or has been since January 1, 1998, involved in
any business relationship with the Company or any of its subsidiaries, Mr.
Gottstein or Mr. Genger (including, without limitation, Trans-Resources,
Inc. and its subsidiaries).
Mr. Spencer serves as a member of the board of directors of
Trans-Resources, Inc., a company founded by Mr. Arie Genger, for
which he receives $15,000 annually. In addition, Mr. Spencer's firm
provides investment banking advice to Trans-Resources, Inc., for
which his firm has received no compensation since January 1, 1998.
Professor Tadmor serves as a member of the board of directors
of Haifa Chemicals Ltd., a wholly-owned subsidiary of
Trans-Resources, Inc, for which he receives $15,000 annually. In
addition, Professor Tadmor is a scientific technological consultant
to Trans-Resources, Inc., for which he receives a retainer fee on a
month-to-month basis.
Indebtedness of Management. None of the Nominees has been indebted to
the Company or any of its subsidiaries, Mr. Gottstein or Mr. Genger
(including, without limitation, Trans- Resources, Inc. and its
subsidiaries) since January 1, 1998.
PROXY INFORMATION STATEMENT CONCERNING
PERSONS MAKING THE PROPOSAL
Arie Genger, age 54, is the Chairman and Chief Executive Officer of
Trans-Resources, Inc. ("TRI"), a privately-owned chemical and fertilizer
company that he founded in 1985. TRI has 13 manufacturing plants in the
United States, Canada, France, Hungary, Spain and Israel. Through TRI, Mr.
Genger is one of the largest foreign private investors in the State of
Israel. In 1989, at the invitation of Laser Industries Limited's ("Laser")
management, TRI purchased the largest single block of shares in Laser. At
the time, Laser had a market capitalization of about $10 million and was
teetering on the verge of bankruptcy. Shortly after purchasing the dominant
ownership position in Laser, the new board overhauled management and
refocused it on both a sales growth and an application diversification
effort. The initiatives adopted by management enabled Laser to grow sales
and net income (loss) from $28.9 million and ($17.2) million in 1989 to
$58.7 million and $8.8 million in 1996, respectively. In the beginning of
1998, Laser merged with ESC at a valuation of about $245.1 million. Prior
to founding TRI, Mr. Genger was recruited from the United States to join
the Israeli government as both the assistant defense and economic minister
in 1981.
Barnard J. Gottstein, age 73, is a founding investor in the Company.
In addition, in 1949 and just out of college, Mr. Gottstein took over
management of J.B. Gottstein & Co., an Alaskan wholesale grocery company
founded by his father in 1915. With Mr. Gottstein as Chairman and
President, the company eventually became the largest wholesale grocery
distributor in Alaska. In 1974, Mr. Gottstein merged his wholesale business
with a grocery store chain to form Carr- Gottstein, Inc. The
wholesale/retail grocery business became the dominant food supplier in
Alaska with annual sales of $550 million and 2,600 employees. Also, the
company created Carr- Gottstein Properties, which became the largest real
estate developer and owner in Alaska. In 1990, the grocery wholesale and
retail operations were sold for $300 million, but Mr. Gottstein still owns
and remains active in Carr-Gottstein Properties. Since 1990, Mr. Gottstein
has become an investor in many publicly- and privately-held companies,
including the Company. In 1992, Mr. Gottstein began investing in the
Company, and since then has watched the Company's progress with great
interest.
