SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 6)*
ESC MEDICAL SYSTEMS LTD
(Name of Issuer)
Ordinary Shares, NIS 0.10 par value per Share
(Title of Class of Securities)
M40868107
(CUSIP Number)
Edward Klimerman, Esq.
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
(212)698-7700
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
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 which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
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This Amendment No. 6 (the "Amendment") amends and supplements the Schedule
13D filed on October 9, 1998, as previously amended and restated by Amendment
No. 1 filed on March 12, 1999 and further amended by Amendment No. 2 filed on
March 23, 1999, Amendment No. 3 filed on March 26, 1999, Amendment No. 4 filed
on April 15, 1999 and Amendment No. 5 filed on April 20, 1999 (the "Schedule
13D"), on behalf of Mr. Arie Genger ("Genger"), TPR Investment Associates, Inc.,
a Delaware corporation ("TPR"), TPR's subsidiary, Trans-Resources, Inc., a
Delaware corporation ("TRI"), TRI's indirect subsidiary, Haifa Chemicals
Holdings Ltd., a company incorporated in the State of Israel ("HCH"; Genger and
said corporations, all of which are directly or indirectly controlled by Genger,
being collectively called the "TRI Entities"), and Mr. Thomas G. Hardy ("Hardy";
Hardy and the TRI Entities being collectively called the "Reporting Persons")
with respect to the Ordinary Shares, par value NIS 0.10 per share (the
"Shares"), of ESC Medical Systems Ltd., a company incorporated in the State of
Israel (the "Company"). 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 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
Genger, Barnard J. Gottstein, Hardy, TPR, TRI, Haifa Chemicals Ltd., HCH, and
Barnard J. Gottstein Revocable Trust as defendants (the "Defendants"). According
to the complaint (a copy of which is attached hereto as Exhibit 15), the Company
is seeking to enjoin violations of Section 13(d) of the Securities Exchange Act
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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 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 16 and which is incorporated by reference herein.
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Other than as described above and as previously described in the 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. Materials to be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby amended to add the following exhibits:
Exhibit 15: Complaint
Exhibit 16: Notice of Extraordinary General Meeting to be Convened on June
2, 1999
Exhibit 17: Open Letter to the Shareholders of the Company, dated May 10,
1999, from Messrs. Genger and Gottstein
Exhibit 18: Form of Revocable Proxy/Instrument of Appointment
Exhibit 19: Proxy Information Statement
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: May 10, 1999
/s/ Arie Genger
-------------------------------
Arie Genger
TPR INVESTMENT ASSOCIATES, INC.
By: /s/ Arie Genger
-------------------------------
Arie Genger,
President
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TRANS-RESOURCES, INC.
By:/s/ Arie Genger
----------------------------
Arie Genger,
Chairman of the Board
HAIFA CHEMICALS HOLDINGS LTD.(1)
By:/s/ Arie Genger
----------------------------
Arie Genger
/s/ Thomas G. Hardy
-------------------
Thomas G. Hardy
- ----------
(1)pursuant to power of attorney
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EXHIBIT INDEX
Exhibit
Number Title Page
- ------- ----- ----
15 Complaint 7
16 Notice of Extraordinary General Meeting to be Convened 23
on June 2, 1999
17 Open Letter to the Shareholders of the Company, dated 25
May 10, 1999, from Messrs. Genger and Gottstein
18 Form of Revocable Proxy/Instrument of Appointment 29
19 Proxy Information Statement 31
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Exhibit 15
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------
ESC MEDICAL SYSTEMS, LTD.,
Plaintiff,
COMPLAINT
v. Civil Action No. 99cv2984
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.
- --------------------------------------
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.
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2. Plaintiff ESC 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 hand-picked 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
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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.
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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.
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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.
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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.
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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
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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.
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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).
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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
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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],
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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.
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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,
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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.
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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.
WHERE FORE, 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:
- 15 -
Page 21 of 37 Pages
<PAGE>
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.
- 16 -
Page 22 of 37 Pages
Exhibit 16
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.)
Page 23 of 37 Pages
<PAGE>
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/ Bernard 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
2
Page 24 of 37 Pages
Exhibit 17
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.
Page 25 of 37 Pages
<PAGE>
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.
2
Page 26 of 37 Pages
<PAGE>
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.
3
Page 27 of 37 Pages
<PAGE>
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.
But 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
4
Page 28 of 37 Pages
Exhibit 18
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.
Page 29 of 37 Pages
<PAGE>
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
----------
2
Page 30 of 37 Pages
Exhibit 19
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
Page 31 of 37 Pages
<PAGE>
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.
2
Page 32 of 37 Pages
<PAGE>
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
3
Page 33 of 37 Pages
<PAGE>
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,
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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
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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.
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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.
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