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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934
For the fiscal year ended DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the transition period from______________to______________
Commission file number 0-19507
SUBMICRON SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3607944
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6620 GRANT WAY
ALLENTOWN, PENNSYLVANIA 18106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 391-9200
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.0001
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
Based on the closing sale price of March 3, 1997, the aggregate market value of
the voting stock held by nonaffiliates of the Registrant was $49,140,720.
The number of shares outstanding of the Registrant's Common Stock was 16,890,014
at March 3, 1997.
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Part III of the Annual Report on Form 10-K for the year ended December 31, 1996
of SubMicron Systems Corporation (the "Company") is hereby amended and restated
in its entirety as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below is certain information regarding the Company's
directors and executive officers:
POSITIONS WITH
NAME AGE THE COMPANY
- ---- --- -----------
David F. Levy 52 Chairman of the Board,
Chief Executive Officer
and Director(1)
James S. Molinaro 35 President of SubMicron
Systems, Inc. and
Director(2)
Daniel G. Hajjar 58 Chief Operating Officer
R. G. Holmes 50 Chief Financial Officer and Treasurer
John P. Traub 50 President of Systems
Chemistry and Director(3)
Ronald B. Booth 48 Director(3)
Richard J. Busis 43 Director(3)
Maurice J. Gallagher, Jr. 47 Director(2)
Barry W. Ridings 45 Director(2)
Leonard R. Weisberg 67 Director(1)
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(1) Term expires at 1999 annual meeting.
(2) Term expires at 1998 annual meeting.
(3) Term expires at 1997 annual meeting.
Mr. Levy, the founder of SubMicron, was SubMicron's Chairman of the
Board, President and Chief Executive Officer from its inception in 1988 until
the merger of SubMicron Systems, Inc. into the Company in August 1993 (the
"Merger"). He assumed these positions with the Company upon
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consummation of the Merger. In addition, Mr. Levy was Treasurer of the Company
from the Merger until December 1995. Prior to his founding of SubMicron, Mr.
Levy was Vice President--Automation Division of Dexon from February 1988 to
November 1988 and Vice President, Sales and Marketing of Dexon, from November
1985 to February 1988. From 1983 to 1985, Mr. Levy was Vice President of Sales
and Marketing for Micro Air Systems and from 1978 to 1982, he was head of the
Manufacturing Systems and Procedures Group for Signetics Corporation. Mr. Levy
has a B.S. degree in Mechanical Engineering from Pontifica Universidade Catolica
and an MBA from John F. Kennedy University of Orinda, California.
Mr. Molinaro was Vice President, Chief Operating Officer and Secretary
of SubMicron from January 1989 until the Merger. He assumed these positions with
the Company upon consummation of the Merger and held such positions until
December 1995. As part of a reorganization of the Company's corporate structure,
in December 1995, Mr. Molinaro became the President of SubMicron, the Company's
principal operating subsidiary, in lieu of his positions with the Company. Mr.
Molinaro has served as a director of SubMicron since 1989 and as a director of
the Company since the Merger. During November and December 1988, Mr. Molinaro
served as a consultant to Dexon, Inc., a semiconductor equipment manufacturer,
and from June 1986 to November 1988, Mr. Molinaro served as Director of Research
and Development for Dexon. Mr. Molinaro has a B.S. degree in Mechanical
Engineering from Pennsylvania State University.
Daniel G. Hajjar has been Chief Operating Officer since September 1995,
and was Vice President, Business Operations from 1993 to such time. From 1985 to
1993, Mr. Hajjar held a number of management positions in Operations, Business
Development and Engineering with Matrix Integrated Systems, Inc., most recently
as Vice President of Operations. Prior thereto, Mr. Hajjar was in operations
management with GCA Corp., and President/CEO of Trans-International Trading,
Inc. Mr. Hajjar holds a B.S. degree in Industrial Technology from Northeastern
University.
R.G. Holmes has been Chief Financial Officer since July 1995 and
Treasurer since December 1995. From 1987 to 1994, Mr. Holmes was Vice President
Finance and Chief Financial Officer of Celgene Corporation. From 1982 to 1987,
he held senior management positions in corporate planning and finance with
Ziyad, Inc. Mr. Holmes holds a B.S. degree in Industrial Engineering from Lehigh
University and an M.B.A. from Harvard University.
Mr. Traub has been a director of the Company since the acquisition of
Systems Chemistry Incorporated by the Company in 1995. Mr. Traub has been
President and Chief Executive Officer of Systems Chemistry since 1989 and was
Chairman of the Board of Systems Chemistry from 1993 until its acquisition by
the Company.
Mr. Booth has been a director of the Company since April 1997. Mr. Booth
has been President of Pacific Air Aviation, Inc., an air charter company in Las
Vegas, Nevada, since October 1993. From October 1992 to September 1993, Mr.
Booth was Chief Financial Officer of Arcadian Motor Carrier, Inc., a nationwide
trucking operation, and from September 1984 to October 1992, he was Vice
President of Finance for WestAir Commuter Airlines. Mr. Booth is a Certified
Public Accountant and has a B.S. degree in Business Administration/Accounting
from California State University, Chico.
Mr. Busis has been a director of the Company since April 1997. Since
1995, Mr. Busis has been a senior member of the law firm of Cozen and O'Connor.
From 1992 to 1995, Mr. Busis was a partner at the law firm of Wolf, Block,
Schorr and Solis-Cohen. Mr. Busis received a J.D. from the Harvard
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Law School and an M.A. and B.A. from the University of Pennsylvania.
Mr. Gallagher has been a director of the Company since April 1997. Mr.
Gallagher participated in the founding of ValuJet Airlines, Inc. in July 1992
and has served as a director of ValuJet since its inception. He served as
ValuJet's President from its inception until June 1993 and as its Chief
Financial Officer until May 1994. Mr. Gallagher also served as Vice Chairman of
the Board of ValuJet from June 1993 until October 1996. In addition, since May
1992, Mr. Gallagher has been involved as an investor in various aviation related
and other companies. From May 1992 until March 1993, he served as a director of
Mesa Airlines, Inc., and from 1983 to August 1992, he served as an executive
officer and director of WestAir Holding, Inc., the parent of a regional airline
headquartered in Fresno, California. WestAir Holding, Inc. was acquired by Mesa
Airlines in May 1992. Mr. Gallagher has an M.B.A. from the University of
California at Berkeley.
Mr. Ridings has been a director of the Company since its inception and
was a director of SubMicron from March 1993 until the Merger. Since March 1990,
Mr. Ridings has been a Managing Director for Alex. Brown & Sons. From June 1986
to March 1990, Mr. Ridings was a Managing Director for Drexel Burnham Lambert,
investment bankers. Mr. Ridings is also a director of Noodle Kidoodle, Inc., New
Valley Corporation, Norex Industries, Inc., Telemundo Group, Inc., Search
Capital Group, Inc. and TransCor Waste Services Inc. Mr. Ridings received an
M.B.A. from Cornell University.
Mr. Weisberg was a director of SubMicron from its inception until the
Merger and became a director of the Company upon consummation of the Merger. Mr.
Weisberg was Vice President, Research and Engineering for Honeywell Inc. from
1980 until his retirement at the end of 1994. Prior to joining Honeywell, Mr.
Weisberg served as Director of Electronics and Physical Sciences in the Office
of the Secretary of Defense of the United States Department of Defense.
Previously, Mr. Weisberg was Vice President and Director of the Central Research
Laboratory of Itek Corporation and was Director of the Semiconductor Device
Research Laboratory of RCA Laboratories. Mr. Weisberg has a B.A. in Physics from
Clark University and an M.A. in Physics from Columbia University.
BOARD COMMITTEES
The Board has an Audit Committee, a Compensation Committee and a Nominating
Committee. The Compensation Committee also administers the Company's Amended and
Restated 1991 Stock Option Plan, the 1993 Executive Stock Option Plan and the
Employee Stock Purchase Plan. Messrs. Weisberg and Ridings are currently the
members of the Compensation Committee, the Stock Option Committee and the Audit
Committee. Messrs. Levy, Weisberg and Ridings are members of the Nominating
Committee.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company or its
subsidiaries receives $1,500 for each meeting of the Board he attends. In
addition, under the Company's 1995 Stock Option Plan for Non-Employee Directors,
each non-employee director receives an option to purchase 5,000 shares of Common
Stock upon election to the Board and an annual grant of an option to purchase
3,000 shares of Common Stock on the day following the Company's Annual Meeting
of Stockholders (or on June 30 if the Annual Meeting has not been held by such
date). The exercise price for options granted under such Plan is the fair market
value of a share of Common Stock on date of grant. Such options generally become
exercisable eleven months after the date of grant and terminate five years from
the date of grant.
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ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by the Company as
well as certain other compensation paid or accrued during fiscal 1994, 1995 and
1996 to David F. Levy, the Company's Chief Executive Officer, and to each of the
Company's three other executive officers (collectively, the "Named Executives"):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM
------------------------------------------ COMPENSATION
OTHER ANNUAL AWARDS ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION ----------------------- COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (1) OPTIONS (#) ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David F. Levy, 1996 360,000 34,000 47,617(2) 73,000 ______
Chairman of the 1995 340,000 46,320 ______ 55,000 ______
Board, President 1994 300,000 ______ ______ ______ ______
and Chief Executive
Officer
- -----------------------------------------------------------------------------------------------------------------------
R. G. Holmes, 1996 150,000 ______ 23,894(2) 20,000 ______
Chief Financial 1995 75,000(3) ______ ______ 20,000 ______
Officer and
Treasurer
- -----------------------------------------------------------------------------------------------------------------------
Daniel G. Hajjar, 1996 150,000 15,000 ______ 36,500 ______
Chief Operating 1995 150,000 ______ ______ 40,000 ______
Officer
- -----------------------------------------------------------------------------------------------------------------------
James S. Molinaro, 1996 340,000 34,000 ______ 25,000
President, 1995 340,000 46,320 ______ 45,000 ______
SubMicron 1994 300,000 ______ ______ ______ ______
=======================================================================================================================
</TABLE>
- --------------------------
(1) Except as noted below, none of the Named Executives received any other
annual compensation not categorized as salary or bonus except for
perquisites and other personal benefits which in the aggregate did not
exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported for such Named Executive.
(2) Includes automobile reimbursement of $24,042 and $23,894 for Messrs.
Levy and Holmes, respectively.
(3) Mr. Holmes joined the Company in June 1995.
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STOCK OPTION GRANTS
The following table contains information concerning grants of stock
options under the Stock Option Plan to the Chief Executive Officer and to each
of the other Named Executives during 1996. The Company does not have any plan
pursuant to which stock appreciation rights ("SARs") may be granted.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term (1)
---------------------------------------------------------------- ------------------------------
Number of
Securities % of Total
Underlying Options Granted
Options to Employees in Exercise Price Expiration
Name Granted(#)(2) 1996 ($/Sh) Date 5% 10%
- ---------------- ------------- --------------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
David F. Levy 50,000 4.8 8.875 3/14/06 279,250 707,250
23,000 2.2 8.50 3/25/06 123,050 311,650
R.G. Holmes 20,000 1.9 9.625 1/30/06 121,100 306,700
Daniel G. Hajjar 25,000 2.4 9.625 1/30/06 151,375 383,375
11,500 1.1 8.50 3/25/06 61,525 155,825
James S. Molinaro 25,000 2.4 9.625 1/30/06 151,375 383,375
</TABLE>
- --------------------
(1) Illustrates the value that might be realized upon exercise of options
immediately prior to the expiration of their term, assuming specified
compounded rates of appreciation on the Common Stock over the term of
the options. Assumed rates of appreciation are not necessarily
indicative of future stock performance.
(2) All options granted vest on the first anniversary of their date of
grant.
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STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information regarding the stock
options exercised by each of the Named Executives during 1996 and the value of
options held by each of the Named Executives at December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
=======================================================================================================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE DECEMBER 31, 1996 (#) AT DECEMBER 31, 1996 ($)(1)
ACQUIRED ON REALIZED ------------------------------- -------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David F. Levy ______ ______ 323,125 73,000 ______ ______
- -----------------------------------------------------------------------------------------------------------------------
R. G. Holmes ______ ______ 5,000 35,000 ______ ______
- -----------------------------------------------------------------------------------------------------------------------
Daniel G. Hajjar ______ ______ 35,000 49,000 ______ ______
- -----------------------------------------------------------------------------------------------------------------------
James S. Molinaro ______ ______ 313,125 25,000 ______ ______
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</TABLE>
(1) None of the Named Executives had outstanding options as of December 31,
1996 with an exercise price below $4.125, the last sale price of the
Common Stock on the Nasdaq National Market on December 31, 1996.
EMPLOYMENT CONTRACTS
David F. Levy and James S. Molinaro have each entered into an employment
agreement with the Company which initially provided for each of them to earn a
base salary of $265,200, which base salary may be increased or decreased from
time to time in the sole discretion of the Company's Board. In no event,
however, may such base salary be less than $240,000 per annum. As discussed
under the report of the Compensation Committee, for fiscal 1996, the base
salaries of Messrs. Levy and Molinaro were fixed at $360,000 and $340,000,
respectively. The employment agreements for Messrs. Levy and Molinaro have an
initial five-year term expiring in August 1998 that is automatically renewable
at the end of such term for an additional year and each year thereafter unless
either party to the respective agreements gives notice of nonrenewal. In
addition, Messrs. Levy and Molinaro are each eligible to participate in any
bonus or profit sharing plan adopted by the Company and will be afforded the use
of a leased automobile, inclusive of maintenance and insurance costs, during the
term of his employment.
In the event the Company should terminate the employment of either
Messrs. Levy or Molinaro without cause or if either of them should terminate his
employment because of a material breach by the Company of his employment
agreement, Messrs. Levy or Molinaro, as the case may be, will be entitled to
receive a severance benefit equal to his then annual base salary for a period of
three years. However, if such termination follows a merger or sale of all or
substantially all of
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the Company's assets, Messrs. Levy and Molinaro, as the case may be, will be
entitled to receive a severance benefit equal to his then annual base salary for
a period of five years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Barry W. Ridings, a member of the Compensation Committee, is a Managing
Director of Alex. Brown & Sons. During 1996, Alex. Brown provided certain
investment banking advice to the Company for which it received customary fees.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership as of April 21, 1997 of each person who was known to the
Company to be the beneficial owner of more than 5% of the Common Stock or the
Class A Preferred Stock. Each of the stockholders named below has sole voting
and investment power with respect to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
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Percent of
Name and Address of Number of Percent of Total Voting
Beneficial Owner Title of Class Shares Class Power
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David F. Levy Common Stock 4,695,250(2) 26.6% 23.2%
6620 Grant Way
Allentown, PA 18106
- --------------------------------------------------------------------------------------------------
James S. Molinaro Common Stock 4,695,250(2) 26.6 23.2
6620 Grant Way
Allentown, PA 18106
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Maurice J. Series A 177.50 13.6 1.8
Gallagher, Jr. Preferred Stock
6900 Westcliff Drive
Suite 505
Las Vegas, NV
89128
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Timothy P. Flynn Series A 177.50 13.6 1.8
6900 Westcliff Drive Preferred Stock
Suite 505
Las Vegas, NV
89128
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J.F. Shea Co., Inc. Series A 142.00 10.9 1.5
655 Brea Canyon Preferred Stock
Road
Walnut, CA 91789
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Robert L. Priddy Series A 213.00 16.3 2.2
3435 Kingsboro Preferred Stock
Road NE, #1601
Atlanta, GA 30326
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Lewis H. and Peggy Series A 142.00 10.9 1.5
S. Jordan Preferred Stock
610 Wingspread
Peachtree City, GA
30269
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</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
CRIM Partners, L.P. Series A 81.65 6.3 *
7078 Westchester Preferred Stock
Avenue
White Plains, NY
10604
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</TABLE>
* Less than 1 percent.
(1) With respect to each stockholder, includes any shares issuable upon
exercise of any options held by such stockholder that are or will become
exercisable within sixty days of the record date.
(2) Consists of shares over which the stockholder has power to direct the
voting on the election of directors pursuant to the Voting Agreement (as
defined below). Includes 1,980,500 shares owned by each of Messrs. Levy
and Mr. Molinaro. Also includes options to purchase 396,125 and 338,125
shares of Common Stock held by Messrs. Levy and Molinaro, respectively.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership as of April 21, 1997 of (i) each director, (ii) each of the
Named Executives (as hereinafter defined) and (iii) all the directors and
executive officers as a group. Each of the stockholders named below has sole
voting and investment power with respect to such shares, unless otherwise
indicated.
<TABLE>
<CAPTION>
==================================================================================================
Percent of
Name of Number of Percent of Total Voting
Beneficial Owner Title of Class Shares(1) Class Power
- --------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
David F. Levy Common Stock 4,695,250(2) 26.6% 23.2%
- --------------------------------------------------------------------------------------------------
James S. Molinaro Common Stock 4,695,250(2) 26.6 23.2
- --------------------------------------------------------------------------------------------------
Ronald B. Booth Common Stock ___ ___
Series A *
Preferred Stock 7.1 *
- --------------------------------------------------------------------------------------------------
Richard J. Busis Common Stock ___ ___ ___
- --------------------------------------------------------------------------------------------------
Maurice J. Common Stock ___ ___
Gallagher, Jr. Series A 1.8
Preferred Stock 177.5 13.6
- --------------------------------------------------------------------------------------------------
Barry W. Ridings Common Stock 64,000(3) *
Series A *
Preferred Stock 7.1 *
- --------------------------------------------------------------------------------------------------
John P. Traub (4) Common Stock 306,642(5) 1.8 1.6
- --------------------------------------------------------------------------------------------------
Leonard R. Weisberg Common Stock 40,655(6) * *
- --------------------------------------------------------------------------------------------------
Daniel G. Hajjar Common Stock 81,139(7) * *
- --------------------------------------------------------------------------------------------------
R. G. Holmes Common Stock 35,822(8) * *
- --------------------------------------------------------------------------------------------------
All executive officers Common Stock 5,215,508(9) 29.1
and directors as a Series A 27.3
group (10 persons) Preferred Stock 191.7 14.7
==================================================================================================
</TABLE>
* Less than 1 percent.
(1) With respect to each stockholder, includes any shares issuable upon
exercise of any options held by such stockholder that are or will become
exercisable within sixty days of the record date.
(2) Consists of shares over which the stockholder has power to direct the
voting on the election of directors pursuant to the Voting Agreement.
Includes 1,980,500 shares owned by each of Messrs. Levy and Mr.
Molinaro. Also includes options to purchase 396,125 and 338,125 shares
of Common Stock held by Messrs. Levy and Molinaro, respectively.
(3) Includes options to purchase 8,000 shares of Common Stock.
(4) Mr. Traub's term as a director expires at the 1997 annual meeting and he
is not standing for reelection.
(5) Includes options to purchase 150,000 shares of Common Stock.
(6) Includes options to purchase 18,000 shares of Common Stock.
(7) Includes options to purchase 74,000 shares of Common Stock.
(8) Includes options to purchase 25,000 shares of Common Stock.
(9) Includes options to purchase an aggregate of 1,009,250 shares of Common
Stock.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1996, the Company began leasing certain new facilities in
Allentown, Pennsylvania. During a portion of 1996, a partnership owned by
Messrs. Levy and Molinaro owned the facilities. During 1996, the Company made
a rental payment to such partnership in the aggregate amount of $22,565. The
facility was sold to a third party in March 1997.
Richard J. Busis, a director of the Company, is a senior member of Cozen
and O'Connor, which provides certain legal services to the Company.
On January 31, 1990, SubMicron entered into a Tax Indemnification
Agreement with its stockholders which provided for distributions to be made by
SubMicron for payment of personal tax liabilities imposed on the stockholders as
a result of SubMicron's S Corporation status.
See also Item 11, "Executive Compensation--Compensation Committee
Interlocks and Insider Participation."
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Amendment
to be signed on its behalf by the undersigned thereunto duly authorized.
SUBMICRON SYSTEMS CORPORATION
By: /s/ David F. Levy
---------------------------------
David F. Levy, President and
Chief Executive Officer
Dated: April 29, 1997
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