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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 13 , 1999
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LAZARE KAPLAN INTERNATIONAL INC.
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(Exact Name of registrant as specified in its charter)
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Delaware 1-7848 13-2728690
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
529 Fifth Avenue, New York, New York 10017
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (212) 972-9700
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Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
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ITEM 5. OTHER EVENTS
On or about April 13,1999, International Diamond Traders CY B.V.B.A.
("IDT") and Avi Neumark ("Neumark"), the President and controlling stockholder
of IDT, commenced an action in the U.S. District Court for the Southern District
of New York against Lazare Kaplan International Inc. ("LKI"), Lazare Kaplan
Belgium, N.V., a subsidiary of LKI ("LKB"), and Maurice Tempelsman, Leon
Tempelsman and Sheldon Ginsberg, each of whom is a director and officer of LKI
and a director of LKB. The plaintiffs allege, among other things, that LKI and
its principals fraudulently induced IDT to make more than $1.75 million in
payments to LKI in connection with an alleged "joint venture" for the purchase
of rough diamonds, excluded IDT from this relationship and expropriated its
interest, defamed the plaintiffs, causing injury to their business reputation
and interfered with plaintiffs' business prospects. The plaintiffs are seeking
damages of $1.75 million, together with interest, general, consequential and
other damages in an unspecified amount and punitive damages. The plaintiffs
further seek the value of half of the alleged profits since September 1998, the
date at which the relationship was allegedly wrongfully terminated. In addition,
the plaintiffs allege that LKI's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1998 inaccurately includes all of the sales of LKI's Angolan
operations. LKI believes that the plaintiffs' allegations are without merit and
intends to vigorously defend this action.
In a related matter, on or about April 13, 1999, Novel Diamonds Inc.
("Novel") and Lexco Limited ("Lexco") submitted a demand for arbitration to the
International Chamber of Commerce naming as respondents, LKI, Lazare Kaplan
(Bermuda) Ltd., a wholly-owned subsidiary of LKI, LKN Diamond Company, LTD.
("LKN") and Sheldon Ginsberg. Each of the claimants is controlled by Neumark.
The claimants have alleged, among other things, that the respondents are in
breach of their obligations to transfer LKI's "rough diamond trading sight" (the
"sight") to LKN as was allegedly required by a 1994 shareholders agreement and
have improperly barred claimants and Mr. Neumark from access to the "sight"
business. As a result of the foregoing, the claimants are seeking damages of $5
million and at least 50% of the profits from the "sight" business since
September 1998, plus interest, and 50% of the net asset value of LKN, including
the "sight." LKI believes that the claimants' allegations are without merit and
intends to vigorously defend this action.
The two above actions followed the institution, earlier this year, of an
arbitration proceeding jointly submitted by Neumark, IDT and LKI. This matter
was voluntarily submitted to arbitration by Neumark, IDT and LKI to resolve all
monetary disputes between the parties as a result of the termination of their
relationship, except for those that are the subject of the foregoing actions.
All matters submitted to arbitration have been substantially resolved with the
exception of the following (i) whether there is any goodwill arising from the
alleged relationship in Angola, and (ii) if goodwill exists, the value of such
goodwill and the amount of the payment, if any, to be made. LKI believes
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that such claim for goodwill is without merit and is vigorously defending its
position that no payment for goodwill is appropriate.
If the opposing parties are successful in some or all of above related
proceedings, LKI's business could be materially and adversely affected.
In addition, on April 22, 1999, Neumark commenced an action in Delaware
Chancery Court against LKI seeking the right to inspect, and make copies of,
certain books and records of LKI and LKB.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LAZARE KAPLAN INTERNATIONAL INC.
(Registrant)
Date: May 7, 1999 By: /s/ Sheldon L. Ginsberg
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Sheldon L. Ginsberg
Executive Vice President
and Chief Financial Officer
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