-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AehWnjumQBKyaPO5teWptJr/vrHGCa5/LJ6JVYRsTtNkKjyc587yrhl3oXCh32Hr fzE+iSJCiuOUUSnN8YojPg== 0000891554-99-000915.txt : 19990512 0000891554-99-000915.hdr.sgml : 19990512 ACCESSION NUMBER: 0000891554-99-000915 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990511 GROUP MEMBERS: ARIE GENGER GROUP MEMBERS: HAIFA CHEMICALS HOLDINGS LTD GROUP MEMBERS: THOMAS G. HARDY GROUP MEMBERS: TPR INVESTMENT ASSOCIATES INC GROUP MEMBERS: TRANS RESOURCES INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ESC MEDICAL SYSTEMS LTD CENTRAL INDEX KEY: 0001004945 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-54169 FILM NUMBER: 99616435 BUSINESS ADDRESS: STREET 1: YOKNEAM INDUSTRIAL PK CITY: YOKNEAM ISRAEL 20692 STATE: L5 ZIP: 00000 BUSINESS PHONE: 9729599000 MAIL ADDRESS: STREET 1: 100 CRESENT ROAD CITY: NEEDHAM STATE: MA ZIP: 02194 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRANS RESOURCES INC CENTRAL INDEX KEY: 0000810020 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 362729497 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 9 WEST 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2128883044 MAIL ADDRESS: STREET 1: 9 WEST 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 AMENDMENT NO. 6 TO SCHEDULE 13D 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. |_| Page 1 of 37 Pages 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 Page 2 of 37 Pages 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. Page 3 of 37 Pages 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 Page 4 of 37 Pages 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 Page 5 of 37 Pages 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 Page 6 of 37 Pages EX-15 2 COMPLAINT 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. - 1 - Page 7 of 37 Pages 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 - 2 - Page 8 of 37 Pages 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. - 3 - Page 9 of 37 Pages 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. - 4 - Page 10 of 37 Pages 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. - 5 - Page 11 of 37 Pages 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. - 6 - Page 12 of 37 Pages 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 - 7 - Page 13 of 37 Pages 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. - 8 - Page 14 of 37 Pages 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). - 9 - Page 15 of 37 Pages 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 - 10 - Page 16 of 37 Pages 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], - 11 - Page 17 of 37 Pages 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. - 12 - Page 18 of 37 Pages 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, - 13 - Page 19 of 37 Pages 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. - 14 - Page 20 of 37 Pages 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 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 EX-16 3 NOTICE OF EXTRAORDINARY GENERAL MEETING 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 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 EX-17 4 OPEN LETTER TO SHAREHOLDERS 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 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 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 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 EX-18 5 REVOCABLE PROXY 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 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 EX-19 6 PROXY INFORMATION STATEMENT 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 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 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 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, 4 Page 34 of 37 Pages 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 5 Page 35 of 37 Pages 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. 6 Page 36 of 37 Pages 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. 7 Page 37 of 37 Pages -----END PRIVACY-ENHANCED MESSAGE-----