-----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, Ho0RyVdFUFt/bdwpK8zNwyS3bXZU8/Cmk0WmIw17qKNDM2LIC7Mg+hWnV1tekY1x 1GQGjjKyKEZ0ypxoAKizxw== 0000902561-97-000224.txt : 19970702 0000902561-97-000224.hdr.sgml : 19970702 ACCESSION NUMBER: 0000902561-97-000224 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970701 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ILLINOIS SUPERCONDUCTOR CORPORATION CENTRAL INDEX KEY: 0000888693 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 363688459 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45362 FILM NUMBER: 97633632 BUSINESS ADDRESS: STREET 1: 451 KINGSTON COURT CITY: MOUNT PROSPECT STATE: IL ZIP: 60056 BUSINESS PHONE: 8473919400 MAIL ADDRESS: STREET 1: 451 KINGSTON COURT CITY: MT PROSPECT STATE: IL ZIP: 60056 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DROBNY SHELDON CENTRAL INDEX KEY: 0000938811 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 95 REVERE DR STREET 2: SUITE A CITY: NORTHBROOK STATE: IL ZIP: 60062 MAIL ADDRESS: STREET 1: 95 REVERE DR STREET 2: SUITE A CITY: NORTHBROOK STATE: IL ZIP: 60062 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- SCHEDULE 13D UNDER THE SECURITIES ACT OF 1934 AMENDMENT NO. 1 ILLINOIS SUPERCONDUCTOR CORPORATION - ------------------------------------------------------------------------------ (NAME OF SUBJECT COMPANY) Common Stock, par value $.001 per share (Including the Associated Rights) - ------------------------------------------------------------------------------ (TITLE OF CLASS OF SECURITIES) 452284 10 2 - ------------------------------------------------------------------------------ (CUSIP NUMBER OF CLASS OF SECURITIES) Sheldon Drobny 95 Revere Drive Suite A Northbrook, Illinois 60062 (847) 562-0700 - ------------------------------------------------------------------------------ (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS June 24, 1997 - ------------------------------------------------------------------------------ (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 Rule 13d-1 (b) (3) or (4), check the following box [ ] Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) CUSIP NO.: 452284 10 2 13D 1 NAME OF REPORTING PERSONS S.S. OR I.R.S IDENTIFICATION NOS. OF ABOVE PERSONS Sheldon Drobny ###-##-#### - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (_) (b) (x) - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS PF - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) (_) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 204,617 ------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 186,161 ------------------------------------------------------------------- Page 2 of 8 Pages 9 SOLE DISPOSITIVE POWER REPORTING 204,617 PERSON --------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 186,161 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 390,778 shares of Common Stock - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (_) - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.7% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------------------------------------------------------------------------- Page 3 of 8 Pages This Amendment No. 1 to Schedule 13D amends the original Schedule 13D filed by the reporting person on April 8, 1996 (the "Original 13D"). ITEM 1. SECURITY AND ISSUER Common Stock, par value $.001 per share (the "Common Stock") Illinois Superconductor Corporation (the "Issuer") 451 Kingston Court Mount Prospect, Illinois 60056 ITEM 2. IDENTITY AND BACKGROUND (c) Managing Director Paradigm Group, L.L.C. 95 Revere Drive Suite A Northbrook, IL 60062 Partner Adler Drobny Fischer, L.L.C. 95 Revere Drive Suite A Northbrook, IL 60062 Registered Representative Merrill Weber & Co., Inc. 95 Revere Drive Suite A Northbrook, IL 60062 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Purchases of Common Stock since the filing date of the Original 13D were financed by personal funds. ITEM 4. PURPOSE OF TRANSACTION. The purpose of purchases of Common Stock since the filing date of the Original 13D was for continuing investment in the Issuer. Page 4 of 8 Pages (a) Mr. Drobny will continue to assess his investment in the Issuer on an ongoing basis and may consider acquisitions or dispositions of shares of Common Stock from time to time in the future. As discussed in greater detail below at Item 5(c) hereof, Mr. Drobny intends to acquire additional shares of Common Stock in order to restore his beneficial ownership of Common Stock to previous levels. (b) None. (c) None. (d) On June 23, 1997, Mr. Drobny met with Mr. Ora E. Smith, President and Chief Executive Officer of the Issuer to discuss his dissatisfaction with the present composition of the Issuer's board of directors (the "Board") and ways of enhancing the performance of the Issuer's senior management, other than Mr. Smith. Mr. Drobny expressed his desire for the Board to be composed of persons who are also significant stockholders of the Issuer and his desire to seek certain changes in the Issuer's senior management. On June 24, 1997, Mr. Drobny delivered a letter to Mr. Smith outlining Mr. Drobny's proposals to effect the changes discussed by Mr. Drobny and Mr. Smith on June 23, 1997. Mr. Drobny's proposals included the following: (i) a proposal that all of the Issuer's current directors (except for Mr. Smith) resign from the Board and that other individuals be appointed to the Board, including Messrs. Shan Padda, Stewart Shiman and Semir Sirazi; (ii) a proposal that Dr. Semir Sirazi, currently Vice President and General Manager of the Cable Access Business Unit at 3Com Corporation (formerly U.S. Robotics Corporation,) be appointed Chief Executive Officer, President and Chairman of the Board of Directors of the Issuer; (iii) a proposal that the Issuer's Rights Agreement dated as of February 9, 1996 be amended so as to exclude shares of Common Stock owned by each of Mr. Drobny, Mr. Aaron J. Fischer and Mr. Stewart Shiman respectively; (iv) a proposal that the newly composed Board analyze the Issuer's current financing and make appropriate changes; and (v) a proposal to hold a special meeting of the Board as soon as possible to effect the foregoing proposals. Mr. Drobny's letter to Mr. Smith is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In order to protect his investment and the investments of the Issuer's other shareholders, Mr. Drobny intends to continue to seek to effect the foregoing proposals through continued dialogue with Mr. Smith and other members of the Board, through contact with the Issuer's other shareholders or otherwise. (e) None. (f) The information set forth in the press release attached hereto as Exhibit 99.2 is incorporated herein by reference. (g) See above. Page 5 of 8 Pages (h) None. (i) None. (j) See above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The aggregate number and percentage of shares of Common Stock beneficially owned by Mr. Drobny is 390,778. This number includes 84,603 shares that Mr. Drobny can acquire pursuant to warrants, 142,323 shares of Common Stock owned by Drobny/Fischer, an Illinois general partnership ("Drobny/Fischer") and 43,838 shares of Common Stock owned by Paradigm Venture Investors, L.L.C., of which Mr. Drobny is a Managing Director. (b) The number of shares of Common Stock as to which Mr. Drobny has sole power to vote or direct the vote is 204,617. Mr. Drobny shares the power to vote or direct the vote with Mr. Aaron J. Fischer respecting 186,161 shares of Common Stock. The number of shares of Common Stock as to which Mr. Drobny has sole power to dispose or direct the disposition is 204,617. Mr. Drobny shares the power to dispose or direct the disposition with Mr. Fischer respecting 186,161 shares of Common Stock. Mr. Fischer is a partner in Adler Drobny Fischer, L.L.C. and a Managing Director of Paradigm Group, L.L.C. Mr. Fischer's address is 95 Revere Drive, Suite A, Northbrook, IL 60062. Mr. Fischer is a U.S. citizen. (c) In the past 60 days Drobny/Fischer disposed of a total of 121,000 shares of Common Stock in open market sales. These shares were pledged as collateral for a loan and were disposed of without the knowledge and consent of Drobny/Fischer as a result of a decline in the price of the Issuer's stock. Mr. Drobny currently intends to purchase all or part of such number of shares. During such period Mr. Drobny has acquired a total of 16,000 shares of Common Stock in open market purchases. (d) No other person is known to have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of shares of the Common Stock beneficially owned by Mr. Drobny. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Page 6 of 8 Pages Mr. Drobny and Mr. Aaron J. Fischer are general partners of Drobny/Fischer, which is a member in Paradigm Group, L.L.C., of which Mr. Drobny and Mr. Fischer are Managing Directors. Drobny/Fischer is a party to the Operating Agreement of Paradigm and Mr. Drobny and Mr. Fischer are both parties to the general partnership agreement of Drobny/Fischer. There are no other contracts, arrangements or understandings between Mr. Drobny, Mr. Fischer or Drobny/Fischer regarding shares of Common Stock. Except with respect to shares of Common Stock beneficially owned by Drobny/Fischer, Mr. Drobny expressly disclaims membership in any "group" within the meaning of Rule 13d-5(b) with respect to any equity securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 99.1 Letter dated June 24, 1997 from Mr. Drobny to Mr. Smith. 99.2 Press Release dated June 30, 1997. Page 7 of 8 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 30, 1997 /s/ Sheldon Drobny ------------------------------- Sheldon Drobny Page 8 of 8 Pages EX-99.1 2 PARADIGM VENTURE INVESTORS, LLC 95 REVERE DRIVE, SUITE A NORTHBROOK, ILLINOIS 60062 Telephone No. (847) 562-0700 Facsimile No. (847) 291-9567 June 24, 1997 PERSONAL AND CONFIDENTIAL ------------ Mr. Ora Smith c/o Illinois Superconductor Corporation 451 Kingston Court Mount Prospect, IL Re: Illinois Superconductor Corporation ("ISCO") Dear Ora: I enjoyed meeting with you last night, and I continue to be excited about ISCO's prospects. ISCO faces a critical time in its history. As we discussed, it is time for ISCO to enlist new directors and enhance existing management to confront its current challenges, and I consider your involvement to be integral to meeting these challenges. In accordance with your request, I describe in this letter a "road map" for an orderly transition. 1. I will amend my Schedule 13D to indicated my desire that: (a) all directors of ISCO demonstrate their commitment to ISCO and its future by their holding or purchasing a significant equity stake in ISCO; and (b) with new directors, enhance new management. 2. All current directors of ISCO will resign, except for you. I will provide reasonable releases to these directors for all actions taken prior to their resignation. 3. In accordance with Section 7.4 of the Certificate of Incorporation, you will appoint other individuals as directors of ISCO, including, without limitation, Shan Padda (Chairman and Chief Executive Officer of Sabratek), Stewart Shiman and Semir Sirzai. Mr. Ora Smith June 24, 1997 4. The new board of directors will: (a) release all previous directors in connection with all actions taken prior to their resignation; (b) amend the "poison pill" to exclude my stock ownership and that of Aaron Fischer and Stewart Shiman from the effects of the poison pill; and (c) immediately seek to reorganize the management team to better reflect ISCO's transition from a development company to an operating company. 5. The new board of directors will analyze all current financing, and, if they see fit, make any appropriate changes. 6. Appropriate disclosure will be made, including press releases regarding the changes to ISCO. Based on our discussions, I would like you to call a special meeting of the board of directors as soon as possible so that we can complete these matters by the end of this week. Ora, as we discussed, I think these actions provide for a smooth transition in ISCO's management with a minimum of disruption to ISCO and to its investors. I am, of course, available to discuss this further with you at your convenience. Very truly yours, Sheldon Drobny cc: Mr. Semir Sirazi EX-99.2 3 Exhibit 99.2 SHELDON DROBNY, STOCKHOLDER OF ILLINOIS SUPERCONDUCTOR CORPORATION - (NASDAQ:ISCO) PROPOSES MANAGEMENT CHANGES AT ISC NORTHBROOK, IL, MONDAY, JUNE 30, 1997 -- Sheldon Drobny, a private investor who is one of the largest stockholders of Illinois Superconductor Corporation (NASDAQ:ISCO), today amended his Schedule 13D Filing to propose management changes at ISC, and to reflect his belief that ISC's Directors should be significant stockholders. Mr. Drobny also reported that he recently proposed to ISC's current president that Semir Sirazi, Vice President and General Manager of the Cable Access Business Unit at 3Com Corporation (formerly U.S. Robotics Corp., which was acquired by 3Com) become ISC's Chief Executive Officer, President and Chairman of the Board of Directors. Dr. Sirazi has purchased and currently holds more than 35,000 shares of the common stock of ISC. Dr. Sirazi, 42 years old, has over twenty years of experience in the communications and computer fields. At U.S. Robotics Corp., Dr. Sirazi managed research and development, marketing, sales and operations in various businesses. He was one of the founders of U.S. Robotics' Network Systems Division, which sold system products to RBOC's (regional bell operating companies), inter- exchange carriers, internet service providers and wireless carriers. Before Dr. Sirazi became General Manager of the Cable Access Business Unit, he was actively involved with business development, strategic alliances and mergers and acquisitions involving all areas of U.S. Robotics. In that position, Dr. Sirazi represented the company before the investment community. Dr. Sirazi has B.S. and M.S. degrees in electronics and communications and a Ph.D. degree in computer science. "I have no question about ISC's technology," said Mr. Drobny. "The fact that ISC has received orders or letters of intent to buy filters for use in networks of seven of the nine largest cellular companies in the country bears this out. Through its SpectrumMaster filters, ISC has solved significant problems in troubled zones. With its RangeMaster filters, ISC has provided an opportunity for cell site owners to cut their costs dramatically." Mr. Drobny continued, "Unfortunately, ISC has failed to communicate its success to the marketplace and the public. For example, although ISC's sales continue to increase, it refuses to identify the purchasers, or the number of filters sold in each location. We believe that this is material information that the investing public has a right to know." Mr. Drobny concluded, "Ora Smith, the current president, and the current board deserve much credit for bringing ISC from a pure start-up to a company with positive sales. Now, it is essential that individuals with extensive operational experience and a Wall Street orientation be brought in to steer the company down its new path and execute its new business plan. I look forward to meeting with the board of directors of ISC to quickly and smoothly accomplish this transition." Mr. Drobny has not determined what additional actions he may take in the near future. For additional information, contact: Sheldon Drobny (847) 291-4200 Steven Shapiro (847) 562-0700 # # # -----END PRIVACY-ENHANCED MESSAGE-----