<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Section 240.14a-12
MFIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE>
MFIC CORPORATION
30 Ossipee Road
Newton, Massachusetts 02464-9101
_________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_________________________
To Our Shareholders:
The Annual Meeting of Shareholders of MFIC Corporation, a Delaware
corporation (the "Company"), will be held on Tuesday, June 27, 2000, at 10:00
a.m., local time, at the offices of the Company located at 30 Ossipee Road,
Newton, Massachusetts, for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year and until
their respective successors have been duly elected and qualified.
The nominees the Board of Directors proposes to present for election
are: Irwin J. Gruverman, James N. Little, Vincent B. Cortina, Edward
T. Paslawski and Leo Pierre Roy.
2. To ratify the selection of the firm of Deloitte & Touche LLP as
auditors for the Company for the fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record on the transfer books of the Company at the
close of business on May 12, 2000 are entitled to notice of, and to vote at, the
meeting.
Please sign, date and return the enclosed proxy in the enclosed envelope at
your earliest convenience. If you return your proxy, you may nevertheless
attend the meeting and vote your shares in person.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Irwin J. Gruverman
Chairman of the Board of Directors,
Chief Executive Officer and
Secretary
Newton, Massachusetts
May 26, 2000
<PAGE>
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IN THE UNITED STATES.
PROXY STATEMENT
MEETING OF SHAREHOLDERS
OF MFIC CORPORATION
June 27, 2000
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of MFIC Corporation, a Delaware corporation (the "Company"),
for use at the Annual Meeting of Shareholders to be held on Tuesday, June 27,
2000, at 10:00 a.m., local time, at the offices of the Company located at 30
Ossipee Road, Newton, Massachusetts, and at any adjournments thereof (the
"Meeting").
Only shareholders of record as of the close of business on May 12, 2000
will be entitled to notice of and to vote at the Meeting. As of that date,
7,574,126 shares of common stock, par value $.01 per share (the "Common Stock"),
of the Company were issued and outstanding and entitled to vote at the Meeting.
The shares of Common Stock are the only outstanding voting securities of the
Company. Shareholders are entitled to cast one vote for each share held of
record.
All properly executed proxies returned in time to be counted at the Meeting
will be voted as stated below under "Voting Procedures." Any shareholder giving
a proxy has the right to withhold authority to vote for any individual nominee
to the Board of Directors by writing that nominee's name in the space provided
on the proxy.
Execution of a proxy will not in any way affect a shareholder's right to
attend the Meeting and vote in person. A proxy may be revoked at any time before
it is voted at the Meeting by notifying the Secretary of the Company in writing
at the address set forth above, by submitting a properly executed proxy bearing
a later date, or by revoking the proxy at the Meeting. Attendance at the Meeting
will not by itself constitute the revocation of a proxy.
In addition to the election of directors, the shareholders will consider
and vote upon a proposal to ratify the selection of the Company's auditors, as
further described in this proxy statement. Where a choice has been specified on
the proxy with respect to these matters, the shares represented by the proxy
will be voted in accordance with the specification and will be voted FOR these
matters if no specification is indicated.
<PAGE>
The Board of Directors of the Company knows of no other matters to be
presented at the Meeting. If any other matter should be presented at the Meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders, containing financial statements for the
fiscal year ended December 31, 1999, is being mailed together with this proxy
statement to all shareholders entitled to vote. This proxy statement and the
form of proxy enclosed with this proxy statement were first mailed to
shareholders on or about May 26, 2000.
PRINCIPAL HOLDERS OF VOTING SECURITIES
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership/(1)/ Percent of Class/(2)/
---------------- ----------------------- -------------------
<S> <C> <C>
Irwin J. Gruverman(3) 1,841,805 25.14%
30 Ossipee Road
Newton, Massachusetts 02464-9101
Bret A. Lewis 700,100 9.56%
11323 Skogen Lane
Grand Haven, Michigan 49417
J.B. Jennings 700,000 9.56%
134 Cascade Drive
Battle Creek, Michigan 49015
G.D. Searle & Co.(4) 600,000 8.19%
Box 511D
Chicago, Illinois 60680
</TABLE>
______________________
/(1)/ Information with respect to beneficial ownership is based upon information
furnished by such shareholder.
/(2)/ Shares of Common Stock that a person or entity has the right to acquire
within 60 days of May 1, 2000, according to EquiServe, the Company's
Transfer Agent, pursuant to the exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person or entity, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person or entity shown in
the table. Percentage ownership is based on 7,331,410 shares of Common
Stock issued and outstanding on May 1, 2000.
/(3)/ Consists of (i) 242,300 shares of Common Stock, (ii) 125,000 shares of
Common Stock subject to currently exercisable options, (iii) 274,505
shares of Common Stock owned jointly by Mr. Gruverman and his wife, (iv)
100,000 shares of Common Stock owned by his wife (Mr. Gruverman disclaims
beneficial ownership of the 100,000 shares of Common Stock owned by his
wife), (v) 100,000 warrants granted on 9/23/99, and (vi) 1,000,000 shares
of Restricted Common Stock purchased by Mr. Gruverman on February 28,
2000.
/(4)/ Information with respect to beneficial ownership is based upon information
furnished by G.D. Searle & Co. in a Form 4 filed with the Securities and
Exchange Commission on January 5, 1994.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office for the
ensuing year and until their successors have been elected and qualified. The
Company's By-laws state that the number of directors constituting the entire
Board of Directors shall be determined by resolution of the Board of Directors.
The Board of Directors has set the number of directors at five as of the annual
meeting of shareholders.
Shares represented by all proxies received by the Board of Directors and
not marked as withholding authority to vote for any individual director or for
all directors will be voted FOR the election of all the nominees, unless one or
more nominees is unable or unwilling to serve. The Board of Directors knows of
no reason why any such nominee would be unable or unwilling to serve as a
director, but if such should be the case, proxies may be voted for the election
of some other person as the Board of Directors may recommend in his place, or
for fixing the number of directors at a lesser number. The affirmative vote of a
majority of the shares present, in person or by proxy, and entitled to vote on
the election of directors is required to elect each member of the Board of
Directors. See "Voting Procedures."
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. GRUVERMAN, MR.
LITTLE, MR. CORTINA, MR. PASLAWSKI AND MR. ROY AS DIRECTORS, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A SHAREHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
Occupations of Directors and Executive Officers
The names of the Company's current directors, executive officers, directors
elect and certain information about them are set forth below:
Name Age Title
---- --- -----
Irwin J. Gruverman 66 Chief Executive Officer, Chairman of
the Board and Secretary
Michael A. Lento 49 President and Treasurer
James N. Little 59 Director
Vincent B. Cortina 62 Director
Edward T. Paslawski 49 Director
Leo Pierre Roy 42 Director
3
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IRWIN J. GRUVERMAN has served as the Chief Executive Officer, Chairman of
the Board of Directors and Secretary of the Company since its inception in 1983.
From the Company's inception in 1983 to February 1993, Mr. Gruverman served as
its President. He also currently serves as the President of G&G Diagnostics
Corp., an administrative services company, and as the General Partner of G&G
Diagnostics Limited Partnership II, a human medical diagnostics venture capital
investment partnership, a position which he has held since 1990. See "Related
Transactions." In addition, Mr. Gruverman currently serves on the Board of
Directors of the following public companies: North American Scientific, Inc.;
InVitro International, Inc.; and FiberChem International, Inc. Mr. Gruverman was
Chairman of the Board of Directors of Miragen, Inc., a privately held company
("Miragen") until August 10, 1999. On August 17, 1999 an involuntary petition
for relief under Chapter 7 of Title 11 of the U.S. Code (the Bankruptcy Code)
was filed against Miragen. An order for relief was entered pursuant to the
petition as Miragen did not contest the petition.
MICHAEL A. LENTO has served as the President and Treasurer of the Company
since September 1995 and served as a director of the Company between May 1997
and December 1999. From August 1994 until August 1995, Mr. Lento served as the
Vice President of Marketing of the Company. From November 1993 until August
1994, Mr. Lento, on a consulting basis, acted as the manager of the Company's
cooperative venture with Catalytica, Inc.
JAMES N. LITTLE has served as a director of the Company since December
1995. Since August 1998, Mr. Little has served as Senior Vice President of Cetek
Corporation, a service-based pharmaceutical compound screening company. Prior to
that, from 1981 to August 1998, Mr. Little served as a Senior Vice President of
Sales, Marketing and Business Development for Zymark Corporation, a manufacturer
of scientific robotics equipment.
VINCENT B. CORTINA has served as a director of the Company since May 1997.
Since 1999, Mr. Cortina has served as Director of Operations for Advanced
Instruments, Inc., a manufacturer of laboratory and clinical instruments. Prior
to that he served as a self-employed business consultant. From 1990 to 1996 he
served as President of Advanced Monitors, Inc., a company which develops and
manufactures industrial and commercial instruments.
EDWARD T. PASLAWSKI is the founder and managing partner of Durham Capital,
LLC, an investment-banking firm specializing in arranging and investing equity
in start-ups and growth companies. The company also arranges senior debt,
equipment leasing, mezzanine financing and provides merger and acquisition
advisory services. He is a founder and partner in e-TruckBank.com, LLC, a
development stage B2B Internet services provider to the trucking industry. He
also serves as the Chairman of Coastal Ventures Limited Partnership. Mr.
Paslawski has twenty-five years of commercial banking and venture capital
experience in senior lending positions with major US and International Banks,
including National Bank of Canada, Meridian Capital Corp., First National Bank
of Boston, and The Industrial Bank of Japan.
LEO PIERRE ROY has more than 20 years of experience as a senior manager and
consultant. Since 1998 he has served as the President of Houqua & Company, Inc.,
a consulting firm specializing in strategic planning and development services.
From 1997 to 1998, Mr. Roy
4
<PAGE>
served as President and Chief Operating Officer of Energy Answers Corporation, a
designer, developer and owner of resource recovery, power, recycling and solid
waste management companies. From 1992 to 1996, Mr. Roy served first as Director
of Waste Policy and Planning and later as Undersecretary of the Executive Office
of Environmental Affairs for the Commonwealth of Massachusetts. From 1990 to
1991, Mr. Roy was the Regional Manager of Special Projects for Waste Management,
Inc. From 1985 to 1989, he was the Vice President and Chief Operating Officer of
Orne Enterprises, Inc., a venture capital, environmental technology holding
company.
Board of Directors Meetings and Committees
The Board of Directors of the Company held four (4) meetings during the
fiscal year ended December 31, 1999. The Board of Directors of the Company has
no standing nominating committee. Currently, the Compensation Committee, of
which Messrs. Cortina, Little, and Gruverman are members, determines who should
receive stock options under the Company's stock plans (except for the 1989 Plan,
under which all grants are automatically made) and also reviews and approves
employee remuneration. The Audit Committee, which currently consists of Messrs.
Cortina, Little and Gruverman, oversees the accounting and tax functions of the
Company, including matters relating to the appointment and activities of the
Company's independent auditors. The Compensation Committee held one (1) meeting
and the Audit Committee did not meet during the fiscal year ended December 31,
1999. Ratification of the full Board of Directors is required with respect to
decisions taken by either committee. During the fiscal year ended December 31,
1999, each of the directors attended more than 75% of the aggregate of (i) the
total number of meetings of the Board of Directors, and (ii) the total number of
meetings held by all committees on which each director served.
5
<PAGE>
Beneficial Ownership of Directors and Executive Officers
The following table sets forth for current directors and each executive
officer named in the Summary Compensation Table set forth in Item 11, the
positions currently held by each person with the Company and the number and
percentage of outstanding shares of Common Stock beneficially owned by each
person and by all current directors and executive officers as a group as of May
1, 2000.
<TABLE>
<CAPTION>
Positions and Offices Amount and Nature of
with the Company/(1)/ Beneficial Ownership/(2)(3)/ Percent of Class
--------------------- ---------------------------- ----------------
<S> <C> <C> <C>
Irwin J. Gruverman Chief Executive 1,841,805/(4)/ 25.14%
Officer, Chairman of
the Board of Directors
and Secretary
Michael A. Lento President and Treasurer 205,389/(5)/ 2.81%
James N. Little Director 47,500/(6)/ *
Vincent B. Cortina Director 32,500/(7)/ *
All current 2,127,194/(8)/ 29.04%
directors and
executive officers
as a group (4
persons)
</TABLE>
______________________
/(1)/ Each individual, except Mr. Lento, is also a nominee for Director to be
elected at the Meeting.
/(2)/ Unless otherwise indicated, each person possesses sole voting and
investment power with respect to the shares.
/(3)/ Shares of Common Stock that a person has the right to acquire within 60
days of May 1, 2000, pursuant to the exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person, but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person shown in the table. The
inclusion herein of any shares of Common Stock deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
Percentage ownership is based on 7,331,410 shares of Common Stock issued
and outstanding on May 1, 2000.
/(4)/ Consists of (i) 242,3000 shares of Common Stock, (ii) 125,000 shares of
Common Stock subject to currently exercisable options, (iii) 274,505
shares of Common Stock owned jointly by Mr. Gruverman and his wife, (iv)
100,000 shares of Common Stock owned by his wife, (v) 100,000 Common Stock
purchase warrants, and 1,000,000 shares of restricted Common Stock. Mr.
Gruverman disclaims beneficial ownership of the 100,000 shares of Common
Stock owned by his wife.
/(5)/ Consists of (i) 201,500 shares of Common Stock subject to currently
exercisable options and (ii) 3,889 shares of Common Stock owned jointly by
Mr. Lento and his wife.
/(6)/ Consists of 47,500 shares of Common Stock subject to currently exercisable
options.
/(7)/ Consists of 32,500 shares of Common Stock subject to currently exercisable
options.
/(8)/ Includes 406,500 shares of Common Stock subject to currently exercisable
options. See footnotes 4 through 8 above.
6
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying
Stock All Other
Name and Principal Position Year Salary Bonus Options (#)/(2)/ Compensation/(1)/
--------------------------- ---- ------ ----- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Irwin J. Gruverman 1999 $ 75,600 0
Chief Executive Officer, 1998 $ 95,000 0 200,000 $800
Chairman of the Board of 1997 $ 95,000 0 20,000 $800
Directors and Secretary
Michael A. Lento 1999 $117,066 0
President and Treasurer 1998 $129,942 $ 5,000 346,000 $800
1997 $125,000 $10,000 0 $800
</TABLE>
______________________
/(1)/ Consists of the Company's matching contributions made under its 401(k)
plan on behalf of each Named Executive Officer.
/(2)/ Except for any option to purchase 50,000 shares of Common Stock granted to
Mr. Lento, the options to purchase shares of Common Stock granted to
Messrs. Gruverman and Lento in the fiscal year ended December 31, 1998
were granted to replace existing options as a result of the repricing
described below.
7
<PAGE>
Aggregated Option Exercises and Fiscal Year-end Values
The following table summarizes for each of the Named Executive Officers
unexercised options held at December 31, 1999. None of the Named Executive
Officers held any stock appreciation rights or exercised any stock options or
stock appreciation rights during 1999. The value of unexercised in-the-money
options at the fiscal year end is the difference between the exercise price and
the fair market value of the underlying stock on December 31, 1999 the last
business day of the fiscal year. The closing price of the Company's Common
Stock in the NASDAQ Stock Market on such date was $0.3125.
December 31, 1999 Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options at
At Fiscal Year End Fiscal Year End/(1)/
------------------ ---------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Irwin J. Gruverman 125,000 75,000 $0 $0
Michael A. Lento 201,500 144,500 $0 $0
</TABLE>
______________________
/(1)/ Actual gains, if any, on exercise will depend on the value of the Common
Stock on the date of sale of any shares acquired upon exercise of the
option. The Named Executive Officers do not hold any options, exercisable
or unexercisable, at exercisable prices below the fair market value of
the Common Stock on December 31, 1999 as reported by the NASDAQ Stock
Market. Such options are not "in the money" and their value is,
therefore, zero.
8
<PAGE>
Option Repricing
In October 1998, the Board of Directors and the Compensation Committee
voted to reprice substantially all of the outstanding stock options of the
Company to provide that the exercise price of such options would be the fair
market value of the Common Stock on October 5, 1998, or $1.125. The Company
repriced the options by amending them or cancelling them and granting new
replacement options. The repriced options also contain a vesting schedule
different than the options that they replaced. All options granted on or before
October 6, 1996 were replaced with options that vest in three equal installments
on October 6, 1998, October 6, 1999 and October 6, 2000. All options that were
granted after October 6, 1996, were replaced with options that vest in four
equal installments on October 6, 1998, October 6, 1999 and October 6, 2000 and
October 6, 2001. The Board of Directors and the Compensation Committee repriced
the options to serve as further incentive to the executive officers of the
Company, as well as to numerous other employees. See "Option Grants in Last
Fiscal Year."
Compensation of Directors
Directors, with the exception of Mr. Gruverman and Mr. Lento, received
$1,000 per diem/1/ for each formal meeting of the Board of Directors and a
committee thereof for which they attended and were reimbursed for reasonable
expenses incurred in attending such meetings. Mr. Little holds options to
purchase 62,500 shares of Common Stock at an average exercise price of $1.58 per
share. Mr. Cortina holds options to purchase 47,500 shares of Common Stock at
an average exercise price of $1.54 per share. Messrs. Little and Cortina were
granted the foregoing options pursuant to the 1989 Non-Employee Director Stock
Option Plan (the "1989 Plan"), which automatically grants to each non-employee
director of the Company who holds office at the beginning of each fiscal year an
option to purchase 7,500 shares of the Company's Common Stock. Upon any non-
employee director's first appointment to the Board of Directors, that director
receives an automatic grant of an option to purchase 25,000 shares of the
Company's Common Stock. Options granted pursuant to the 1989 Plan vest in four
equal installments commencing six months from the date of grant and thereafter
on the next three anniversaries of the date of grant.
Employment Agreements
The Company entered into a letter agreement dated December 31, 1999 with
Irwin J. Gruverman, the Company's Chief Executive Officer, Chairman of the Board
and Secretary, pursuant to which Mr. Gruverman's compensation for the 2000
fiscal year was established at $95,000.
_______________________
/1/ The 2000 Board stipend calls for annual payments to each Director of $8,000
regardless of the number of meetings held annually.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and G&G Diagnostics Corp. ("G&G"), a corporation of which
Mr. Gruverman is the President, sole employee and sole stockholder, have entered
into an agreement (the "Letter Agreement") whereby G&G leases space from, and
makes payments to, the Company for rent and direct expenses based on quarterly
invoices provided by the Company. The total amount paid to the Company by G&G
for rent and reimbursement of expenses in 1999 was approximately $79,291, of
which $52,000 was for services provided to G&G by an employee of the Company.
During 1999, the Company leased its two facilities in South Haven, Michigan
from B-2 Enterprises, Inc. and JLJ Properties, Inc. Both of these entities are
owned and controlled by Messrs. J.B. Jennings and Bret A. Lewis, each of whom
was an employee and a director of the Company for a portion of 1999. In 1999,
the Company paid these entities approximately $161,000 in rent. The Company has,
subsequent to January 1, 2000, terminated its Lease of the Facility from JLJ
Properties, Inc.
On August 14, 1998, the Company purchased substantially all of the assets
and assumed certain liabilities of Epworth Manufacturing Company ("Epworth")and
-------
MorehouseCOWLES, Inc. ("Morehouse") pursuant to an Asset Purchase Agreement
---------
dated as of June 19, 1998 by and among the Company, Epworth and Morehouse.
Messrs. Jennings and Lewis ("Sellers") are the sole stockholders of both Epworth
and Morehouse. The purchased assets included cash and cash equivalents, accounts
and notes receivables, inventories, machinery and equipment, intellectual
property rights, furniture and fixtures and leasehold interests and
improvements. In accordance with the Asset Purchase Agreement, the Company paid
or delivered to Sellers (i) $5,508,480 in cash, (ii) two subordinated promissory
notes in the aggregate principal amount of $800,000, and (iii) 900,000 shares of
the Company's Common Stock, subject to the restrictions set forth in a
Stockholders Agreement among the Company and Sellers dated August 14, 1998. As
of December 31, 1999, the Company owed the Sellers $775,000. The amount of
consideration paid by the Company for the assets was determined by the Company's
Board of Directors based, in part, upon a fairness opinion provided to the Board
of Directors by its financial advisor.
On December 20, 1999 the Company signed an agreement in principle (the
"Agreement In Principle") with the Sellers. The Agreement In Principle set forth
understandings among the parties concerning restructuring of the Company's
subordinated debt and resolution of various disputes. On January 17, 2000 a
definitive settlement agreement incorporating these subject matters was executed
between the parties (the "Settlement Agreement"). Pursuant to the Settlement
Agreement, Sellers' subordinated loans totaling $775,000 would be restructured
upon the closing of a new senior loan facility. Such restructuring included all
outstanding and unpaid interest and setoffs to such notes provided for under the
terms of the August 14, 1998 Asset Purchase Agreement. The principal balance of
$300,000 would be structured as a new subordinated promissory note with annual
interest at 10%, with interest only being paid in the first year, and the
principal together with interest then being amortized over 4 years starting in
the second year. A disputed lease between the Company and one of the Seller's
entities for
10
<PAGE>
property located in South Haven, Michigan, which was the subject of a suit to
terminate filed by the Company, was voluntarily dismissed in return for the
payment by the Company of a total of $58,000. The initial payment in the amount
of $30,000 was paid on January 19, 2000 upon execution of the Settlement
Agreement and the balance on February 28, 2000 upon the closing of the senior
credit facility. At such closing, the $475,000 outstanding on the $500,000
August 14, 1998 promissory note, together with accrued interest on that note of
approximately $77,500 and accrued interest on the $300,000 August 14, 1998
promissory note were converted to 500,000 shares of Common Stock. The Company
retained the right to repurchase such shares for a 3 year period at a per share
price of $1.75. The Company dismissed with prejudice by joint stipulation its
lawsuit to terminate the lease. The Company and the Sellers executed a mutual
release of liability related to the August 14, 1998 Asset Purchase Agreement.
On February 28, 2000 the Company entered into a revolving credit and term
loan agreement with National Bank of Canada (the "Lender") providing the Company
with a $4,475,000 three-year revolving credit and term loan facility (the
"Credit Facility"). As one of the Lender's conditions precedent to the closing
of the Credit Facility, the Company's Chairman, Irwin Gruverman, at the closing
of the Credit Facility, purchased an aggregate sum of 1,000,000 shares of
restricted common stock of the Company for $250,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock ("Reporting Persons"), to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Reporting Persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
forms received by the Company and on written representations from certain
Reporting Persons, the Company believes that during the year ended December 31,
1999, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than ten percent beneficial owners were met.
11
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 2000. The Board of Directors proposes that the
shareholders approve this appointment, although such ratification is not
required under Delaware law or the Company's Certification of Incorporation, or
Articles of Organization By-Laws. The Directors have decided that an affirmative
vote of a majority of the shares, in person or represented by proxy, and
entitled to vote at the Meeting be required to ratify such appointment. It is
expected that a member of the firm of Deloitte & Touche LLP will be present at
the Meeting. The representative will be given the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
In the event that ratification of the appointment of Deloitte & Touche LLP
is not obtained at the Meeting, the Board of Directors will reconsider their
appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS, AND PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION
UNLESS A SHAREHOLDER HAS OTHERWISE INDICATED ON THE PROXY CARD.
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Shares represented by
proxies pursuant to which votes have been withheld from any nominee for
director, or which contain one or more abstentions or broker "non-votes," are
counted as present for purposes of determining the presence or absence of a
quorum for the Meeting. A "non-vote" occurs when a broker or other nominee
holding shares for a beneficial owner votes on one proposal, but does not vote
on another proposal because the broker does not have discretionary voting power
and has not received instructions from the beneficial owner.
For all matters being submitted to stockholders at this Meeting, the
affirmative vote of a majority of shares present, in person or represented by
proxy, and entitled to vote on that matter is required for approval. Shares
voted to abstain, since they are not affirmative votes for the matter, will have
the same effect as votes against the matter, while broker "non-votes", since
they are not entitled to vote for the matter, have no effect on the vote.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that stated above. If any other business
should come before the Meeting, votes may be cast pursuant to proxies in respect
to any such business in the best judgment of the person or persons acting under
the proxies.
12
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SHAREHOLDER PROPOSALS
Under Rule 14a-8 promulgated under the Securities and Exchange Act of 1933,
shareholders of the Company may present proper proposals for inclusion in the
Company's proxy statement and for consideration at the next annual meeting of
shareholders by submitting their proposals to the Company in a timely manner. In
order to be considered for inclusion in the proxy statement distributed to
shareholders prior to the annual meeting in the year 2000, a shareholder
proposal must have been received by the Company no later than January 27, 2001
and must otherwise comply with the requirements of Rule 14a-8. In order to be
considered for presentation at the annual meeting of shareholders in the year
2001, although not included in the proxy statement, a stockholder proposal must
comply with the requirements of the Company's by-laws and be received by the
Company no later than April 12, 2001. Shareholder proposals should be delivered
in writing to Irwin J. Gruverman, Secretary, MFIC Corporation, 30 Ossipee Road,
Newton, Massachusetts 02464-9101.
ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1999 (OTHER THAN EXHIBITS THERETO) FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT THE COMPANY, IS
AVAILABLE TO BENEFICIAL OWNERS OF THE COMMON STOCK WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE SECRETARY, MFIC CORPORATION, 30 OSSIPEE ROAD, NEWTON,
MASSACHUSETTS 02464-9101.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. Proxies
will be solicited principally through the mails. Further solicitation of proxies
from some shareholders may be made by directors, officers and regular employees
of the Company personally, by telephone, telegraph or special letter. No
additional compensation, except for reimbursement of reasonable out-of-pocket
expenses, will be paid for any such further solicitation. In addition, the
Company may request banks, brokers, and other custodians, nominees and
fiduciaries to solicit customers of theirs who have shares of the Company
registered in the name of the nominee. The Company will reimburse any such
persons for their reasonable out-of-pocket expenses.
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<PAGE>
DETACH HERE
PROXY
MFIC CORPORATION
THIS PROXY IS BEING SOLICITED BY MFIC CORPORATION BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated May 26,
2000, in connection with the Annual Meeting to be held at 10:00 a.m., on
Tuesday, June 27, 2000, at the offices of the Company located at 30 Ossipee
Road, Newton, MA, 02464-9101 and hereby appoints Dennis Riordan, Controller of
the Company and Jack M. Swig, General Counsel of the Company, and each of them
(with full power to act alone), the attorneys and proxies of the undersigned,
with power of substitution to each, to vote all shares of the Common Stock of
MFIC Corporation registered in the name provided herein which the undersigned is
entitled to vote at the 2000 Annual Meeting of Stockholders, and at any
adjournments thereof, with all the powers the undersigned would have if
personally present. Without limiting the general authorization hereby given,
said proxies are, and each of them is, instructed to vote or act as follows on
the proposals set forth in said Proxy.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSAL 2.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
ELECTION OF DIRECTORS (OR IF ANY NOMINEE IS NOT AVAILABLE FOR ELECTION,
SUCH SUBSTITUTE AS THE BOARD OF DIRECTORS MAY DESIGNATE)
NOMINEES: (01) IRWIN J. GRUVERMAN, (02) JAMES N. LITTLE, (03) VINCENT B.
CORTINA, (04) EDWARD T. PASLAWSKI AND (05) LEO PIERRE ROY.
If you wish to vote in accordance with the Board of Directors'
recommendations, just sign the reverse side.
- ------------- -------------
SEE REVERSE You need not mark any boxes. SEE REVERSE
SIDE SEE REVERSE SIDE FOR OTHER PROPOSALS. SIDE
- ------------- -------------
<PAGE>
DETACH HERE
[X] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. Election of Directors.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
Nominees: (see reverse) 2. Proposal to Ratify the Appointment of [_] [_] [_]
Deloitte & Touche LLP as the Company's
independent public accountants for the
fiscal year ending December 31, 2000.
FOR WITHHELD
[_] [_]
[_] ______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [_]
Please sign exactly as name(s) appear(s) hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
Signature:________________________ Date:_____________ Signature:_________________________________ Date:____________
</TABLE>
