<PAGE>
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.)
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
# # #
