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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
MFIC Corporation
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
595073 10 7
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(CUSIP Number)
J.B. Jennings
134 Cascade Drive
Battle Creek, Michigan 49015
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 28, 2000
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(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(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 595073 10 7 13D
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
J.B. Jennings
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
NUMBER OF
700,000
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
None
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
450,000
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
250,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
700,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.26%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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This Amendment No. 1 to Schedule 13D relates to the acquisition of 250,000
additional shares of Common Stock of MFIC Corporation by J.B. Jennings on
February 28, 2000, pursuant to the Settlement Agreement (as defined below).
Items 1, 2, 3, 4, 5, 6 and 7 of the Schedule 13D are hereby amended to read in
their entirety as follows:
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the common stock, $0.1 par value
per share (the "Common Stock"), of MFIC Corporation (formerly known as
Microfluidics International Corporation), a Delaware corporation ("MFIC" or
"Microfluidics"), the principal executive offices of which are located at 30
Ossipee Road, Newton, Massachusetts 02164.
ITEM 2. IDENTIFY AND BACKGROUND.
J.B. Jennings' business address is 134 Cascade Drive, Battle Creek,
Michigan 49015. Mr. Jennings is a private investor. Mr. Jennings has not, during
the last five years, been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors) nor has he been a party to any civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which he was or is subject to any judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to federal or state securities laws or finding any violation with respect to
such laws. Mr. Jennings is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On August 14, 1998, Microfluidics purchased (the "Acquisition") the assets
of both Epworth Manufacturing Company and Morehouse-COWLES, Inc. (the "Acquired
Companies"). Mr. Jennings and Bret A. Lewis each owned 50% of the Acquired
Companies. In connection with the Acquisition and pursuant to the terms of an
Asset Purchase Agreement, dated as of June 19, 1998, between Microfluidics and
the Acquired Companies (the "Asset Purchase Agreement"), Microfluidics issued
450,000 shares of its Common Stock to Mr. Jennings as partial consideration for
the assets of the Acquired Companies and also issued promissory notes in the
aggregate amount of $800,000 (the "Notes") to one of the Acquired Companies. On
the day prior to the closing of the Acquisition, August 13, 1998, the closing
price of the Common Stock on NASDAQ was $1.75 per share.
On January 17, 2000, MFIC entered into a Settlement Agreement (the
"Settlement Agreement"), pursuant to which, among other things, Messrs. Jennings
and Lewis agreed to accept 500,000 shares of the Common Stock as payment of
$500,000 of the Notes. On February 28, 2000, Mr. Jennings received 250,000
shares of Common Stock (the "Additional Shares") from MFIC as payment of
$250,000 of the Notes.
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ITEM 4. PURPOSE OF THE TRANSACTION.
The shares, the ownership of which is reported hereby, were acquired by Mr.
Jennings for investment purposes. Mr. Jennings reserves the right from time to
time to acquire additional shares, or to dispose of some or all of his shares.
Except as set forth above, Mr. Jennings does not have any plan or proposal
which relates to, or would result in, any of the matters referred to in
paragraphs (a) through (j) of Item 4 of the General Instructions for Schedule
13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Based upon the outstanding number of shares set forth in MFIC's
Form 10-Q for the fiscal quarter ended September 30, 1999, and information
received by Mr. Jennings concerning issuance of Common Stock subsequent to
September 30, 1999, Mr. Jennings' beneficial ownership of 700,000 shares of
Common Stock constitutes beneficial ownership of 9.26% of the total number of
shares of outstanding Common Stock.
(b) Mr. Jennings has the sole power to vote or to direct the vote of,
and sole power to dispose or direct the disposition of, the 450,000 shares of
Common Stock acquired in connection with the Acquisition. Mr. Jennings has the
sole power to vote or to direct the vote of the Additional Shares. The power of
Mr. Jennings to dispose of, or direct the disposition of, the Additional Shares,
is subject to the right to purchase and the right of first refusal of MFIC
Corporation with respect to the Additional Shares described in Section 6 below.
(c) During the past sixty days, Mr. Jennings has not effected any
transactions in shares of Common Stock except pursuant to the Settlement
Agreement.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Microfluidics and Mr. Jennings entered into an Asset Purchase Agreement,
dated as of June 19, 1998 (the "Asset Purchase Agreement"), pursuant to which
Microfluidics purchased the assets of the Acquired Companies from Mr. Jennings,
in part, for 450,000 shares of Common Stock.
In addition, Microfluidics entered into a Stockholders Agreement (the
"Stockholders Agreement" and with the Asset Purchase Agreement, the "1998
Agreements") with Mr. Jennings and Bret A. Lewis, another shareholder of the
Acquired Companies, dated August
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14, 1998. The Stockholders Agreement provided for terms and conditions governing
the transfer of shares of Common Stock owned by Messrs. Jennings and Lewis, the
management and operation of Microfluidics, the relations among Messrs. Jennings
and Lewis and certain other matters.
On January 17, 2000, MFIC entered into the Settlement Agreement, pursuant
to which, among other things, Messrs. Jennings and Lewis agreed to accept
500,000 shares of the Common Stock as payment of $500,000 of the Notes. On
February 28, 2000, Mr. Jennings received the Additional Shares from MFIC as
payment of $250,000 of the Notes. Pursuant to the Settlement Agreement, Mr.
Jennings (i) granted MFIC a right to purchase the Additional Shares from Mr.
Jennings for a term of three years from the date of issuance of the Additional
Shares (the "Purchase Period") at a price of $1.75 per share, and (ii) granted
MFIC a right of first refusal to purchase the Additional Shares during the
Purchase Period. Pursuant to the Settlement Agreement, MFIC and Messrs. Jennings
and Lewis released each other from the 1998 Agreements, except for certain
continuing obligations of MFIC as stated therein.
Except as described in Items 3 and 4 above and in this Item 6, Mr. Jennings
does not have any contract, arrangement, understanding or relationship with any
person with respect to any security of MFIC.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit No. Description
1.1 Asset Purchase Agreement, dated as of June 19, 1998, by and
between Microfluidics and the Acquired Companies.*
1.2 Stockholders' Agreement, dated August 14, 1998 by and among
Microfluidics, Mr. Jennings and Mr. Lewis.*
1.3 Settlement Agreement, dated January 17, 2000, by and among MFIC,
Mr. Jennings, Mr. Lewis and the Acquired Companies.
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* Previously filed.
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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: March 6, 2000 /s/ J.B. Jennings
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J.B. Jennings, by Russell A. Kreis,
Attorney-in-Fact
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STATE OF MICHIGAN )
) SS
COUNTY OF CALHOUN )
KNOW ALL MEN BY THESE PRESENTS that J.B. Jennings, having an address at 134
Cascade Drive, Battle Creek, MI 49015, has made, constituted and appointed and
BY THESE PRESENTS, does make, constitute and appoint Russell A. Kreis, having an
address at 8225 Mooresbridge Drive, Portage, MI 49024, his true and lawful
Attorney-in-fact for him and in his name, place and stead to sign and execute in
any and all capacities the Schedule 13D relating to MFIC Corporation and any or
all amendments to the Schedule 13D, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, giving and granting unto Russell A. Kreis, said
attorney-in-fact, full power and authority to do and perform each and every act
and thing, requisite and necessary to be done in about the premises, as fully,
to all intents and purposes as he might or could do if personally present at the
doing thereof, with full power of substitution and revocation, hereby ratifying
and confirming all that said Attorney-in-fact or his substitutes shall lawfully
do or cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS THEREOF, J.B. Jennings has hereunto set his hand this 2nd day of
March, 2000.
/s/ J.B. Jennings
--------------------------------
J.B. Jennings
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EXHIBIT 1.3
SETTLEMENT AGREEMENT
This Agreement which is executed on this 17TH day of JANUARY, 2000 is by and
among:
MFIC Corporation, formerly Microfluidies International Corporation, a
corporation organized under the laws of Delaware ("MFIC" or the "Company"); and
J.B. Jennings and Bret A. Lewis ("Jennings & Lewis") in their individual
capacities and Bret Lewis' in his capacity as the President of JLJ Properties,
Inc. ("JLJ Inc.") and Lake Shore Industries, Inc., formerly Epworth
Manufacturing Company ("Lake Shore").
WHEREAS: On or about August 14, 1998 MFIC purchased the assets and selected
liabilities of Epworth Manufacturing Company, a corporation organized under the
laws of Michigan ("Epworth") and the purchased the assets and selected
liabilities of Morehouse-COWLES, Inc., a corporation organized under the laws of
California ("MC");
WHEREAS: The beneficial owners of Epworth and MC were Jennings & Lewis, each of
whom held 50% of the outstanding shares of Epworth and MC;
WHEREAS: As a result of the August 14, 1998 purchase of the assets and selected
liabilities of Epworth and MC by MFIC, said MFIC issued two promissory notes to
Lake Shore in the aggregate amount of Eight Hundred Thousand Dollars ($800,000)
(the "Subordinated Loans") where said notes were subordinated to a loan to MFIC
from Comerica Bank ("Comerica").
WHEREAS: MFIC, Lakeshore and Jennings & Lewis have indicated their intention to
restate the Subordinated Notes and to settle other pending disputes between them
through this Agreement;
WHEREAS: MFIC and JLJ Inc. have been involved in litigation pertaining to a
dispute relating to a lease executed by MFIC in favor of JLJ Inc. (the "M-43
lease"), which the parties now agree to settle, and
WHEREAS: MFIC, Jennings & Lewis, Lake Shore, and JLJ Inc. have executed a letter
of understanding dated December 20, 1999, which agreement is herein incorporated
by reference and a copy of which is attached hereto as EXHIBIT A.
THEREFORE: the parties warrant and agree as follows:
1. MFIC and JLJ Inc. warrant and agree to settle all disputes relating to
the M-43 litigation, including the withdrawal by MFIC of all pending
litigation, with
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prejudice, in exchange for MFIC tendering JLJ Inc. payment totaling
Fifty Eight Thousand Dollars ($58,000) under the following terms and
conditions:
A. MFIC shall, upon execution of: (i) this Agreement and (ii) the
Termination of Lease agreement attached hereto as EXHIBIT B,
tender to JLJ Inc. a check in the amount of Thirty Thousand
Dollars ($30,000) based upon approval of a letter of
understanding dated December 20, 1999 by JLJ Inc., Lake Shore,
and Jennings & Lewis.
The balance due to JLJ Inc. in the amount of Twenty Eight
Thousand Dollars ($28,000) shall be paid to JLJ Inc. not later
than one business day after the closing by MFIC of a new credit
facility of up to Four Million Five Hundred Thousand Dollars
($4,500,000) which shall replace the current facility with
Comerica (the "2000 Credit Facility"). However, JLJ Inc.
acknowledges and agrees that should MFIC be unable to close on
the 2000 Credit Facility on or before June 30, 2000 then the
balance due shall be added to the balance of any then outstanding
subordinated promissory note(s) due Lake Shore or such notes as
shall be contemplated hereby or entered into herein after.
2. The subordinated loans ("Subordinated Loans") as set forth in the
August 14, 1998 Acquisition of the Assets and Assumption of Selected
Liabilities Agreement (the "August 14 Agreements") will be restated as
of the date of the closing of the 2000 Credit Facility and will
reflect that at such closing, the total obligation to Jennings & Lewis
will be Eight Hundred Thousand Dollars ($800,000) (the "Subordinated
Loan Balance") which will specifically include any and all interest
which has accrued and is then currently unpaid and any other
deductions or set-off to which either MFIC, Lake Shore, or Jennings &
Lewis may have or be entitled to under any rights or agreements.
3. Jennings & Lewis, individually and on behalf of Lake Shore, warrant
and agree that they will accept as payment in full for Five Hundred
Thousand Dollars ($500,000) of the Subordinated Loan Balance, Five
Hundred Thousand (500,000) shares of MFIC Common Stock (the "Shares").
The Shares will be issued to Jennings & Lewis, without registration,
at a price of One Dollar ($1.00) per share (the "Issue Price").
Jennings & Lewis acknowledge that they are currently shareholders in
MFIC and that they fully understand that MFIC shares are traded solely
on the NASDAQ - Over The Counter BULLETIN BOARD ("OTC-BB") and that as
such, the per share value determined herein above has been set solely
by agreement of MFIC and Jennings & Lewis and is not necessarily
reflective of the book, current or future value of MFIC stock.
Jennings & Lewis further acknowledge that as of the date of execution
of this Agreement, MFIC stock is trading on the OTC-BB at a price
which is substantially less then the agreed Issue
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Price and that MFIC has not represented or otherwise warranted to them
that the value of the stock is expected or will rise to or above the
price set forth herein above.
4. Jennings & Lewis warrant and agree that under the terms of their
acceptance of the Shares as payment for $500,000 of the Subordinated
Loan Balance, that they shall grant to MFIC, an unconditional right to
purchase back from them the 500,000 shares of MFIC stock, as described
herein above, for a term not to exceed three (3) years from the date
of the issuance of the Shares for a fixed price of One Dollar and
seventy five cents ($1.75) per share. Jennings & Lewis further warrant
and agree that MFIC shall have a first right of refusal to purchase
the Shares during the three-year period.
5. Lake Shore agrees to convert the remaining portion of the Subordinated
Loan Balance into a five (5) year promissory note which will become a
general corporate obligation of MFIC and which will be subordinated
under terms and conditions similar to those set forth in an agreement
of subordination between Jennings & Lewis and Comerica, executed and
effective as of August 12, 1998 and which may also include those terms
and conditions of subordination as set forth in a "Position Statement
Regarding Subordinated Debt and Requirements of Subordination
Agreement with a Replacement Lender", which is attached hereto as a
portion of EXHIBIT A. This note would be executed by MFIC in favor of
Lake Shore in the amount Three Hundred Thousand Dollars ($300,000), at
a per annum interest of 10% for a five (5) year term and subject to
the terms and conditions which are set forth below (the "2000
Subordinated Loan").
A. The execution of the 2000 Subordinated Loan shall not be effected
until MFIC has executed the 2000 Credit Facility. Jennings &
Lewis and Lake Shore acknowledge and agree that MFIC shall be
bound to execute the 2000 Subordinated Loan documents (under the
terms and conditions as set forth in this Agreement) not later
than two (2) business days after the closing of the 2000 Credit
Facility.
B. The 2000 Subordinated Loan shall be subordinated to the interests
of the lender(s) under the 2000 Credit Facility without regard to
any provisions contained in the August 14 Agreements. Any
provisions regarding acceleration of the subordinated debt or its
collection thereof which are contained in the 2000 Credit
Facility shall be considered to be binding on the 2000
Subordinated Loan and Lake Shore warrants and agrees that it will
not attempt to collect or otherwise accelerate the payment of the
2000 Subordinated Loan except under those provisions which will
be contained in the 2000 Subordinated Loan agreement or in the
2000 Credit Facility.
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C. Lake Shore further warrants and agrees that the 2000 Subordinated
Loan shall not be transferred, assigned, encumbered, pledged or
hypothecated by it during its term, nor shall it dispose of any
right, claim, title or interest in the 2000 Subordinated Loan
without the express written approval of MFIC as evidenced solely
by the Company's Chairman or Board of Directors. Lake Shore
grants unconditionally to MFIC a first right of refusal (of not
less then ten (10) business days) to purchase the 2000
Subordinated Loan under the same terms and conditions as those
offered by or to any qualified purchaser. Lake Shore warrants and
agrees that should MFIC grant it the right to sell the 2000
Subordinated Loan to a third party (where such agreement to sell
shall not be unreasonably withheld by MFIC), then the terms and
conditions of such sale shall clearly require that the purchaser
be a qualified investor under the Securities Act of 1933, that
such purchaser execute an investment representation letter under
terms which are acceptable to MFIC and the terms of the 2000
Credit Facility and that the purchaser execute a letter of
assent, agreeing to be bound by the conditions as set forth in
this Agreement and all succeeding documents, including the terms
and conditions of the 2000 Credit Facility which specifically
relate to the subordination of other MFIC obligations and the
2000 Subordinated Loan.
D. Lake Shore and MFIC each agree that the terms of the 2000
Subordinated Loan shall provide that MFIC shall be required to
pay Lake Shore interest only on a quarterly basis, interest in
arrears, during the first year of the 2000 Subordinated Loan.
Thereafter principal and interest shall be calculated into 48
equal payments payable on the 15th day of each month following
the one year anniversary of the 2000 Subordinated Loan agreement.
E. Lake Shore agrees that the terms of 2000 Subordinated Loan shall
provide that neither it, nor the 2000 Subordinated Loan agreement
shall restrict or take any action intended to limit or otherwise
preclude the 2000 Credit Facility from being transferred or sold
from one lender to another for any reason what so ever. Lake
Shore further warrants and agrees that it will execute any
additional subordination documents or agreements which may be
required by each or any lender of the 2000 Credit Facility, or
any subsequent borrowing which replaces the 2000 Credit Facility,
so long as the terms of such additional subordination documents
or agreements are not materially different from the terms as set
forth in this document or where in fact they do not impose any
restrictions or other conditions which would be considered a
substantive change from the rights, duties and obligations of
Lake Shore under this Agreement.
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F. Lake Shore grants to MFIC, or a replacement senior lender
participating in the 2000 Credit Facility, an unconditional right
to purchase the 2000 Subordinated Loan for a discount of Twenty
Percent (20%) where such purchase is completed prior to or
simultaneous with the closing of the 2000 Credit Facility, as set
forth herein above.
6. Except as noted herein after, the parties do hereby release, remise
and forever discharge the other of and from any and all claims, causes
of action, costs and liabilities of any nature, known or unknown, to
the fullest extent permitted by law, arising from or as a result of
the August 14 Agreements. Notwithstanding the foregoing, MFIC's
obligations: (a) to Jennings & Lewis under their respective employment
agreements dated August 14, 1998, (b) to B2 Enterprises, Inc. under a
lease dated August 14, 1998, and to Lake Shore pursuant to the
Subordinated Loans, are not affected by such release and discharge
except under the terms and conditions and as anticipated by this
Agreement.
Executed by the parties effective at the date first set forth above.
MFIC CORPORATION /s/ J.B. Jennings
-----------------------------------
J.B. Jennings
/s/ Irwin J. Gruverman
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Irwin J. Gruverman, Chairman & C.E.O.
/s/ Bret A. Lewis
-----------------------------------
Bret A. Lewis
JLJ PROPERTIES, INC. LAKE SHORE INDUSTRIES, INC.
/s/ Bret A. Lewis /s/ Bret A. Lewis
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Bret A. Lewis, President Bret A. Lewis, President
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