Only on rare occasions does discord disturb the pastoral peace of the Tefen Industrial Park, the fief of Stef Wertheimer and Iscar, his blades empire. It is even more unusual when such discord comes to the attention of the public.
The disturbance of peace and quiet has been going on for over two years in Micro Tools, one of the plants belonging to the Wertheimer conglomerate. Last month the dam burst – the Wertheimer family and Micro Tools general manager Rami Bonen, who holds 15% of the company, filed suit against each other, following a bitter dispute between them, in the course of which Bonen was fired from his position.
The Wertheimers were the first to apply to the courts. Bonen soon followed through his attorney, filing suit in the Labor Court and the Tel Aviv District Court for a total of NIS 15 million. Bonen also asked the Court to reduce the limitations imposed by his work agreements restraining him from competing with his employers, claiming that the restrictions are unreasonable, discriminatory, and oppressive.
Bonen, 54, who has served as Micro Tools general manager since its founding, claims that the Wertheimer family for many years benefited from his strenuous labors and extensive know-how. He states that the Wertheimers crassly violated the agreements signed with him when asked to pay its obligations to him, including the purchase of shares in Micro Tools and severance payments, and that negotiations with him were not conducted in good faith.
The cross actions between Wertheimer and Bonen are somewhat reminiscent of the Wertheimer family’s widely publicized struggle in 1996-1997 to acquire Discount Investments’ minority share in Iscar. In the end, the family paid $250 million to make Iscar and Blades Technology private companies, after the decades-long partnership with Discount Investments was dissolved.
As far as the Wertheimer family is concerned, the Discount Investments chapter is over and done with. Iscar has been a private company for three years, with amazing profits far from the eyes of the public and investors. Readers of the economic press usually encounter Stef and Eitan Wertheimer through their occasionally published Zionist-drenched meditations on the future of Israeli industry, or in the course of some business venture or other (they recently invested tens of millions of dollars in advanced technology companies).
Micro Tools was founded in 1981 by the Wertheimer family and Bonen, who owns a 15% share of the company. Micro Tools acts as a subcontractor for small parts, mostly carbide and ceramic-pressed, used in manufacturing. The company’s customers include giant computer, electronics, and optics companies, such as Motorola and IBM. Micro Tools currently employs a staff of around 100, and exports 95% of its $8 million annual sales.
According to Bonen, the Wertheimer family did not hesitate to exploit the ownership structure of Micro Tools, which provides it with full control of the company, for its own private benefit, following the family’s past difficulties, also utilizing its control of Iscar for the same purpose. He claims that on more than one occasion know-how and personnel were removed from Micro Tools for the benefit of Iscar without recompense. In addition, he asserts that Stef Wertheimer insisted that Micro Tools purchase carbide, its main raw material, from Iscar at significantly higher than market prices, while ordering it not to buy this raw material from competing companies, which would have reduced Micro Tools’ procurement costs by a third.
Bonen alleges that the Wertheimer family viewed his success as a thorn in its side, fearing the possibility of future competition with him. Bonen claims that various steps were taken to clip his wings, which eventually led to his removal from the company. Among other things, he asserts that in 1998, the Wertheimer family attempted to deprive Micro Tools of the flexible pressing technology it had spent eight years developing. Stef Wertheimer coveted the technology, and notified Bonen that it would be transferred to Iscar without compensation.
According to Bonen, following lengthy negotiations, it was agreed in March 1998 that Iscar would use the technology, in exchange for allocating 5% of Micro Tools to Bonen, at a company value of $10 million. When it became obvious to Bonen that the Wertheimer family was not honoring the agreement, citing various bizarre pretexts, Bonen gave notice of his desire to resign from management of the company.
Following this announcement, a written agreement was signed between the parties establishing Bonen’s employment and severance conditions. As part of the agreement, at Stef Wertheimer’s insistence, Bonen signed a non-compete agreement with Micro Tools and Iscar, in the event of his resignation from the company.
Bonen claims that shortly thereafter, the Wertheimer family began to work to remove him from the company and deprive him of his rights. In his legal action, he cites, among other things, Eitan Wertheimer’s desire for shares of Objet Geomtrics, a start-up specializing in three-dimensional models made according to computer-produced diagrams.
Bonen alleges that Wertheimer demanded the transfer to him of most of Bonen’s share in Objet Geometrics: “The Wertheimer family behaved at all times as if Micro Tools and its assets were their exclusive property. Their behavior toward the company was and remains that of feudal lords, who regards its employees’ assets, whatever they are, as their own.”
In September 1999, just before the holidays, Stef Wertheimer notified Bonen of his desire to part, and stated clearly that the only possible alternative was for Bonen to sell his share of Micro Tools according to a mutually acceptable assessor’s estimate.
Bonen asserts that the parties had barely agreed on the conditions of his resignation, when Stef Wertheimer suddenly assembled Micro Tools senior employees and notified them that as of October 11, 1999, Rami Bonen would no longer be manager of the company. According to Bonen, Wertheimer took this action at a time when he was on an overseas business trip for Micro Tools. Bonen himself was not invited to the board meeting and general meeting, in which it was decided “unanimously” by Stef Wertheimer to fire him.
Bonen’s suit describes the Wertheimer family’s systematic violation of various clauses in the agreement signed with him. The overall amount of the claim totals NIS 15 million. Bonen is suing the Wertheimer family and companies under their control for NIS 2.8 million (NIS 2.3 million for his consent to grant technology to Iscar, and the rest for damage to his reputation) in the Tel Aviv District Court. He is also asking that the family be required to fulfill the agreement for purchase of his shares in Micro Tools and for payment of a NIS 6.3 million advance, as well as his share of a NIS 17 million dividend. He is demanding NIS 4.4 million for delay of pay and NIS 1.5 million in severance pay in the Labor Court.
Wertheimer family: Bonen founded a start-up using confidential information
The Wertheimer family fired the opening shot in its legal struggle against Rami Bonen. At the beginning of last month, the family filed suit against Bonen and a company he owns, alleging that it served as a channel for improperly transferring funds from Micro Tools.
The Wertheimer family’s suit claims that during 1999, it learned to its surprise that, concurrently with his work as Micro Tools general manager, Bonen had been setting up and managing start-ups, while utilizing Micro Tools’ unique know-how and commercial secrets. The family asserts that Bonen’s activity was a crude violation of his loyalty obligation and good faith, advancing his private interests at the cost of the time spent working for Micro Tools.
The Wertheimer family suit adds that it learned that Bonen violated the absolute trust placed in him by personally appropriating large amounts of Micro Tools’ funds, without notifying the company board and without its permission.
According to the suit, these withdrawals, together with interest and linkage, total NIS 801,000. The suit is for a total of NIS 1.2 million.
The essence of the Wertheimer family claim concerns what it defines as “Micro Tools’ confidential information, which was exploited by Bonen.” The suit alleges that since 1994, Bonen has led a “double life”, concealed from the board and controlling shareholders of Micro Tools.
The suit lists Bonen’s involvement in three technology ventures: Jethead, Idanit Technologies, and Objet Geometrics. According to the family, Bonen brought the management know-how in initiating and founding printing heads and printer head technology companies. This know-how, which was the sole property of Micro Tools, included its commercial secrets.
During its activity, Jethead developed printing heads for Idanit Technologies and transferred its accumulated know-how in exchange for Idanit shares. The suit alleges that in 1995, Bonen initiated Idanit’s request that Micro Tools develop for it a method of adapting a print head within a printer that Idanit wished to manufacture.
Micro Tools completed the project and developed the required method for Idanit, even though the project had not been approved by the Micro Tools board. Three years later, Idanit Technologies was acquired by Scitex for $60 million, and Bonen, who owned a share of the company, received a significant sum, for which the claimants were unable to provide an accurate figure.
According to the Wertheimer family claim, Bonen also initiated Objet Geometrics’s request to Micro Tools to plan a method for adapting a printer head within a printer for three-dimensional models. During 1998-1999, Micro Tools produced an adaptation method application for Objet Geometrics. The suit alleges that Objet later transferred its orders from Micro Tools to a company owned by the Bonen family.
The Wertheimer family claims that after its recent discovery of Bonen’s deeds and misdeeds and their gravity, Stef Wertheimer cancelled the severance agreements signed with Bonen in January 1999.
In addition to the financial action filed against Bonen, the Wertheimer family is demanding that he be required to surrender to it all the benefits he received from Jethead, Objet Geometrics, and Idanit Technologies, as well as the proceeds from the sale to Scitex of Bonen’s shares in Idanit. The family is also asking the Court to require Bonen to hand over his shares in Objet Geometrics, in which the suit alleges he invested a great deal of his time, at the expense of time that should have been spent in Micro Tools.
Published by Israel's Business Arena on September 12, 2000