As filed with the Securities and Exchange Commission on November 12, 1996
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NEMATRON CORPORATION
(Exact name of Registrant as specified in its charter)
Michigan 38-2483796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5840 Interface Drive
Ann Arbor, Michigan 48103
(313) 994-0591
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
David P. Gienapp
Nematron Corporation
5840 Interface Drive
Ann Arbor, Michigan 48103
(313) 994-0591
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
copies to:
Aleksandra A. Miziolek, Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Approximate date of commencement of proposed sale to public: From
time to time after this Registration Statement is declared effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or investment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Shares To Be Aggregate Price Aggregate Registration
To Be Registered Registered Per Unit Offering Price Fee
Common Stock 506,330 $6.9375 $3,512,664.30 $1,064.44
(1) Estimated solely for purposes of computing the registration
fee, based upon the average of the high and low prices
reported on the Nasdaq Stock Market's National Market on
November 8, 1996 in accordance with Rule 457.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1996
NEMATRON CORPORATION
506,330 SHARES
COMMON STOCK
The 506,330 shares of Common Stock of Nematron Corporation (the
"Company") offered by this Prospectus are presently outstanding shares that
may be sold from time to time in the market or in other transactions by the
selling shareholders identified in the Prospectus (the "Selling
Shareholders"). See "Plan of Distribution" for methods by which the Common
Stock offered hereby may be sold and "Selling Shareholders and Certain
Transactions" for the names of the Selling Shareholders and a description of
the transactions in which the shares of Common Stock were received by such
holders. This offering is not underwritten. The Company's principal
executive offices are located at 5840 Interface Drive, Ann Arbor, Michigan
48103 and its telephone number at that address is (313) 994-0591.
The Common Stock is traded on The Nasdaq Stock Market National
Market (the "National Market"). The average of the high and low sales
prices of the Common Stock on November 8, 1996, on the National Market was
$6.9375.
See "Risk Factors" on page 3 for certain information which should be
carefully considered before purchasing shares of Common Stock offered
hereby.
The shares of Common Stock offered hereby by the Selling
Shareholders will be sold at market prices prevailing from time to time or
otherwise at prices then obtainable. The Company will not receive any of
the proceeds from the sale of Common Stock offered hereby. See "Use of
Proceeds". The Company will pay estimated expenses (including those
incurred by the Selling Shareholders) relating to this offering of
approximately $17,644.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering described herein and, if given or
made, such information or representation must not be relied upon as having
been authorized by the Company or any of the Selling Shareholders. The
delivery of this Prospectus at any time does not imply that the information
herein is correct as of any time subsequent to the date hereof or that there
has been no change in the affairs of the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is
unlawful.
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following regional offices of the
Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511. The Commission also maintains
a Web site at http://www.sec.gov. that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. In addition, copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus is a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus omits certain of the information
included in such Registration Statement. The Registration Statement may be
inspected by anyone at the office of the Commission without charge, and
copies of all or any part of it may be obtained upon payment of the
Commission's charge for copying. For further information about the Company
and its securities, reference is hereby made to such Registration Statement,
and to the exhibits and financial schedules filed as part thereof or
otherwise incorporated herein. Each summary herein of additional
information included in the Registration Statement or any exhibit thereto is
qualified in its entirety by reference to such information or exhibit.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (and the amendments thereto) filed by the
Company with the Commission are hereby incorporated by reference and made a
part hereof:
(a) The description of the Company's Common Stock contained in
the Registration Statement on Form 10, No. 0-21142, filed
under the Exchange Act.
(b) Annual Report on Form 10-KSB, for the year ended September
30, 1995, as amended by Form 10-KSB/A filed February 2, 1996
and Form 10-KSB/A2 filed May 20, 1996.
(c) Quarterly Reports on Form 10-QSB, for the quarters ended
December 31, 1995, March 31, 1996 and June 30, 1996.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
securities covered by this Prospectus shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective date of
filing of each such document. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
To the extent the foregoing documents are incorporated by reference
herein, copies may be obtained without charge (other than for exhibits to
such documents) upon written request communicated to the Company's Secretary
at the Company's principal executive offices, located at 5840 Interface
Drive, Ann Arbor, Michigan 48103 (telephone number: (313) 994-0591).
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating the Company
and its business before purchasing the shares of Common Stock offered by
this Prospectus.
Unprofitable History
The Company generated net income in fiscal year ended September 30,
1995 and the first nine months of fiscal 1996 after incurring net losses of
approximately $2,797,000 and $1,409,000 for the fiscal years ended September
30, 1994 and 1993, respectively. For the nine months ended June 30, 1996,
the Company generated net income of $234,177, as compared to $134,564 over
the same period in 1995.
The Company's financial statements for the year ended September 30,
1994 indicated that the Company's continuation as a going concern was
dependent upon the Company's ability to generate sufficient cash flow to
meet its obligations on a timely basis, to comply with the terms and
covenants of its short-term borrowing agreement, to renew its bank credit
agreement or obtain alternative financing and, ultimately, to attain
profitability. Although the Company has recently been profitable, is
currently in compliance with the covenants in its loan documents, and has
obtained a significant amount of additional debt and equity financing to
address its short term cash needs, there can be no assurance that the
Company will continue to be profitable, will continue to be in compliance
with the covenants in its loan documents or will be able to generate
sufficient cash flow in the future.
Fluctuations in Operating Results
The Company may in the future experience fluctuations in revenue and
operating results from period to period as a result of several factors
including, without limitation, the demand for the Company's existing
products; the mix of products sold; the ability to develop, introduce and
ship new products; market acceptance of or defects in the Company's
existing, new or enhanced products; new product introductions and
announcements by the Company, the Company's competitors or the Company's
customers; accounting charges due to obsolete products or inventory; changes
in Company strategy; increased competition and pricing pressures; and
changes in economic conditions generally. In addition, because the Company
receives a substantial amount of its net revenues from a limited number of
relatively significant purchase orders, the size, timing and recognition of
revenue from such orders may materially affect the Company's results of
operations in a given period. As a result of these factors, there can be no
assurance that the Company will be profitable in the future on a quarterly
or annual basis. It is possible that in some future quarter the Company's
operating results will be below the expectations of public market analysts
and investors. In such event, or in the event that adverse conditions
prevail or are perceived to prevail generally or with respect to the
Company's business, the price of the Common Stock would likely be materially
adversely affected.
Dependence on Proprietary Technology; Pending Litigation
The Company has one patent and relies principally on copyright,
trade secret and other common law protection of its intellectual property.
There is no assurance that the Company will be able to protect its
proprietary technology or that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's proprietary technology. There is no assurance
that foreign intellectual property laws will protect the Company's
intellectual property rights with respect to its products sold abroad. In
addition, the computer industry is characterized by frequent litigation
regarding patent and other intellectual property rights. Litigation may be
necessary to enforce the Company's proprietary rights, to determine the
validity and scope of the proprietary rights of others or to defend against
the claims of patent infringement. If an infringement claim is asserted
against the Company, the Company may seek to obtain a license under the
<PAGE>
other party's intellectual property rights. There is no assurance that a
license would be available on reasonable terms or at all.
The Company is currently involved in certain litigation with Xycom,
Inc. relating to the merger of Universal Automation, Inc., with Nemasoft,
the Company's wholly-owned subsidiary, and the ownership of the FloPro
patent. While the Company believes that Xycom's claims are without merit
and intends to defend its position vigorously, there can be no assurance
that such litigation will not have a material adverse effect on the
Company's business or financial position. In addition, this litigation as
well as any other litigation with respect to patents or other intellectual
property matters could result in substantial costs and diversion of
management and other resources and could have a material adverse effect on
the Company's business, financial condition and results of operations.
New Products and Technological Change
The industrial operator workstation and industrial software markets
in which the Company competes are characterized by rapid and significant
technological advances, evolving industry standards, changes in customer
requirements and the introduction of new products and services using new
technologies. The Company's future success will depend on, among others,
its ability to anticipate and adapt to its customers' changing needs and to
provide, on a continuing basis, the most effective solutions permitted by
the available technology. In addition, new and enhanced products and
solutions affecting the Company's markets are continually being introduced
by the Company's competitors which may have a material adverse effect on the
Company's ability to sell its products. There can be no assurance that the
Company will be able to bring sufficient funds and talent to bear to meet
the changes faced by the firms competing in markets driven by high
technology. The Company's failure to successfully keep pace with
technological advances may have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
failure of the Company's software products to achieve and sustain market
acceptance, and the increased pace at which the Company may be required to
introduce new products in response to technological advances, evolving
industry standards, changing customer requirements and introductions and
enhancements of competitive products, could result in the write-off of
capitalized software costs, which could have a material adverse effect on
the Company's results of operations.
Software products as internally complex as those offered by the
Company frequently contain errors or defects, especially when first
introduced or when new versions or enhancements are released. Despite
extensive product testing by the Company and by current and potential
customers, there can be no assurance that defects or errors will not be
found in the Company's new software products or in new versions or
enhancements after commencement of commercial shipments. Such defects or
errors could result in damage to the Company's reputation, loss of revenue,
delay in market acceptance, diversion of resources and increased warranty
costs, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
The success of the Company's business strategy depends primarily on
the continued progression of the trend away from PLCs to PC-based solutions
for discrete logic control applications in the industrial automation
industry. If the marketplace progression is slower than expected by the
Company or fails to occur as the Company expects, or if the Company's
estimate of the market size is smaller than anticipated, the Company's
business, financial condition and results of operations could be materially
and adversely affected.
Effect of Recent Acquisitions on Operations
On March 3, 1995, the Company consummated a merger with Imagination
Systems, Inc. and, on September 20, 1995, consummated a merger with
Universal Automation, Inc. The Company believes that these mergers will
result in more efficient new product development and contribute to its
efforts to achieve consistent profitability. There can be no assurance that
<PAGE>
these mergers can assist the Company in achieving consistently profitable
operations.
Competition
The industrial operator workstation and industrial software markets
are highly competitive. The Company competes directly with many firms that
supply industrial automation equipment, systems and software that are
alternatives to those of the Company. Many of these competitors have
substantially greater resources than the Company. As a result, they may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the development,
promotion and sale of products than can the Company. There can be no
assurance that the Company will be able to compete successfully against
current and future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, results of
operations and financial condition.
Dependence on Third Party Suppliers
The Company is dependent on third parties for a continuing supply of
the components it uses for the manufacture of its hardware products. As
part of the Company's turnaround plan initiated in fiscal 1995, the Company
altered its purchasing practices and purchased raw materials and components
in smaller quantities and more on a "just in time" basis than in previous
years. Although substantially all of the components used in the Company's
products are available from multiple sources, the Company may experience
shortages in supply from its suppliers due to various factors, including
increases in market demand for certain components which occur from time to
time and the limited capacity of certain suppliers. While the Company
believes that it has arranged for an adequate supply of components to meet
its requirements, the Company has no long-term contract with any suppliers
of components and there is no assurance that the Company will continue to be
able to obtain all of the components it requires. The Company believes that
the partial or complete loss of one or more suppliers is not likely to have
a material long-term impact on its operations but, due to the Company's
purchasing practices and attempts to minimize the inventory it maintains,
such a loss could cause significant production delays which could have a
material adverse effect on the Company's business, financial condition and
results of operations in the short term.
Exposure to Foreign Currency Exchange Risk
The Company's international operations expose the Company to
constantly fluctuating currency rates. Currency fluctuations have in the
past adversely affected, and may in the future adversely affect, the
Company's reported revenue, expenses and stockholders' equity. A majority
of the Company's international sales are denominated in foreign currencies.
As a result, an increase in the value of the U.S. dollar relative to foreign
currencies may have the effect of reducing the Company's reported revenue
and profits from international sales denominated in such currencies. If the
Company were to increase its prices in certain markets in response to such
fluctuations, its products may be less competitive in those markets. As the
Company increases emphasis on foreign sales, it may increase the amount of
foreign sales denominated in currencies other than U.S. dollars. While the
Company intends to enter into forward exchange contracts to hedge exposures
related to foreign currency fluctuations, there can be no assurance that the
Company will not incur losses as a result of such fluctuations which could
have a material adverse effect on the Company's financial condition and
results of operations.
Dependence on Key Personnel
The Company's future performance will depend to a significant degree
upon the continuing contributions of its key management, sales, marketing,
customer support and product development personnel. Competition for such
personnel is intense and there can be no assurance that the Company will be
able to retain such personnel or that it will be able to attract, assimilate
or retain such highly qualified personnel as may be required in the future.
If the Company is unable to retain its key management, sales and technical
<PAGE>
personnel, or attract, assimilate and retain additional qualified personnel
as needed, or if a significant number of its sales, marketing, customer
service or product development personnel should no longer be active in the
Company's business, the Company's business, financial condition and results
of operations could be materially and adversely affected.
Substantial Influence by Existing Shareholders
The Company's officers, directors, principal shareholders and their
affiliates own approximately 28.7% of the outstanding Common Stock of the
Company. As a result, they are able to control substantially all matters
requiring approval by the shareholders of the Company, including the
election of directors.
Possible Adverse Effect on Market Price from Sales by Existing Shareholders
As of September 30, 1996, there are 4,558,248 shares of Common Stock
outstanding, of which 3,877,918 are tradeable without restriction. As a
result of this Prospectus, 506,330 additional shares will be tradeable
without restriction, unless they are held by an "affiliate" of the Company
(as that term is defined in Rule 144 under the Securities Act). If the
holders of such shares, by utilizing this Prospectus, cause a large number
of shares to be sold in the public market, such sales might have an adverse
effect on the market price for the Common Stock.
Stock Price Volatility
The trading price of the Company's Common Stock has been, and in the
future could be, subject to wide fluctuations in response to public
announcements of technological innovations or new products by the Company or
its competitors, the Company reporting results of operations below the
expectations of public market analysts and investors, changes in earnings
estimates by securities analysts, general conditions in the software and
industrial workstation industries and other events or factors. In addition,
the stock market has from time to time experienced extreme price and volume
fluctuations that have particularly affected the market price of the stock
of many high technology companies and that have often been unrelated or
disproportionate to the operating results of these companies. These broad
market fluctuations may adversely affect the market price of the Company's
Common Stock. There can be no assurance that the trading price of the Common
Stock will remain at or near its current level.
Restrictions on Ability to Pay Dividends
Substantially all of the assets of the Company are pledged as
collateral under the Company's credit facilities. The Company is prohibited
by these credit facilities and its mortgage agreement from declaring or
paying cash dividends. Accordingly, the Company's shareholders should not
anticipate dividend income from shares of the Company's Common Stock.
Anti-takeover Provisions
Certain provisions of the Company's Articles of Incorporation and
Bylaws may have the effect of preventing, discouraging or delaying any
change in control of the Company. These provisions include a classified
board of directors, a requirement that shareholders provide advance notice
of nominations to be made and business to be proposed at meetings of
shareholders, and a vote of the directors or a super-majority vote of the
shareholders to amend the Company's Bylaws.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
the shares of Common Stock offered hereby.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they may from
time to time offer and sell the shares of Common Stock offered hereby on the
National Market or otherwise at market prices then prevailing or at prices
and upon terms then obtainable. Sales may be made in ordinary brokerage
transactions, in block transactions, in privately negotiated transactions or
otherwise. The Company will not receive any of the proceeds of the sales of
the Selling Shareholders. The Company will bear the costs of the offering,
including those incurred by the Selling Shareholders; except that the
Selling Shareholders will pay all applicable broker-dealer fees and charges,
as well as the fees and expenses of their counsel, if any.
SELLING SHAREHOLDERS AND CERTAIN TRANSACTIONS
General
The following table sets forth the name of each Selling Shareholder
for whose account shares of Common Stock are offered by this Prospectus, the
number of shares of Common Stock currently held for the account of such
Selling Shareholder the number of shares of Common Stock being sold for the
account of such Selling Shareholder in this Offering and the number of
shares of Common Stock that will be held for the account of such Selling
Shareholder following this Offering (assuming that the Selling Shareholder
utilizes this Registration Statement to sell all such shares).
<TABLE>
<CAPTION>
Shares Held Shares to Shares to be
for Account be Sold Held for
Prior to in the Account After
Name Offering Offering the Offering
---- ------------ --------- -------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
J. Eric May 471,172 10.3% 157,057 314,115 6.9%
Frank G. Logan, III(1) 313,361 6.8% 97,108 216,253 4.8%
Stockton N. Smith 277,821 6.1% 92,607 185,214 4.1%
Henry B. duPont Smith 78,462 1.7% 26,154 52,308 1.1%
Sallie N. Smith 77,991 1.7% 25,997 51,994 1.1%
Thomas C. Peacock 72,500 1.6% 26,000 46,500 1.0%
Lumber Industries, Inc. 70,912 1.6% 23,637 47,275 1.0%
E. Newbold Smith & Co. 25,558 0.6% 8,519 17,039 0.4%
Jeffrey Achesinski 20,866 0.5% 3,585 17,281 0.4%
Michael L. Hershey 18,270 0.4% 4,090 14,180 0.3%
Perter Dalke 17,040 0.4% 5,680 11,360 0.2%
Charles Keiger 15,334 0.3% 5,111 10,223 0.2%
Sally S. Logan 15,334 0.3% 5,111 10,223 0.2%
Dawn Snell White 15,016 0.3% 5,005 10,011 0.2%
Teddy Davis 11,901 0.3% 3,967 7,934 0.2%
David M. Bentz 11,076 0.2% 3,692 7,384 0.2%
Thomas M. Walsh 8,520 0.2% 2,840 5,680 0.1%
StockCross & Co. 7,101 0.2% 2,367 4,734 0.1%
Danny White 5,043 0.1% 1,681 3,362 0.1%
Alfred B. duPont 2,956 0.1% 985 1,971 0.0%
E. Bradford duPont, Jr. 2,956 0.1% 985 1,971 0.0%
M. Lynne duPont 2,956 0.1% 985 1,971 0.0%
- --------------------
(1) Includes 15,000 shares owned by E. M. Logan, J. D. Logan and M. C. Logan, members of Mr. Logan's
immediate family, and held by Mr. Logan, as custodian. Of such 15,000 shares, 5,964 shares in the aggregate
(1,988 shares on behalf of each of J. D. Logan, E. M. Logan and M. C. Logan) are offered hereby. Mr. Logan
has voting and investment power over such shares and expressly disclaims beneficial ownership thereof. Mr.
Logan is President and Chief Executive Officer and a Director of the Company.
(2) Includes 25,558 shares owned by E. N. Smith & Co., a corporation wholly owned by Mr. Smith.
<PAGE>
(3) Mr. Hershey has been a director of the Company since March 1995 when the Company merged with Imagination
Systems, Inc.
</TABLE>
<TABLE>
<CAPTION>
Shares Held Shares to Shares to be
for Account be Sold Held for
Prior to in the Account After
Name Offering Offering the Offering
---- ----------- --------- -------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Edwin Moore 1,803 0.0% 601 1,202 0.0%
Joe Bland 1,803 0.0% 601 1,202 0.0%
Michelle Nemes 1,803 0.0% 601 1,202 0.0%
Barbara Harrigan 1,146 0.0% 382 764 0.0%
Thomas Brown 1,146 0.0% 382 764 0.0%
Brian Domino 300 0.0% 100 200 0.0%
Kurt Crisman 300 0.0% 100 200 0.0%
Laurel Swanson 300 0.0% 100 200 0.0%
Lloyd Thatcher 300 0.0% 100 200 0.0%
Michael Arrington 300 0.0% 100 200 0.0%
Rhonda Wilson 300 0.0% 100 200 0.0%
--------- ----- ------- --------- -----
1,551,647 34.0% 506,330 1,045,317 22.9%
========= ==== ======= ========= =====
</TABLE>
ISI Merger
Of the 506,330 shares offered hereby by the Selling Shareholders,
480,330 shares were acquired by the Selling Shareholders upon exercise of
warrants received as part of the consideration paid by the Company in
connection with the Company's merger with Imagination Systems, Inc. (the
"ISI Merger"). In connection with the ISI Merger, the Company agreed to
register the shares received by the Selling Shareholders, upon exercise of
the warrants and the satisfaction of certain other conditions, with the
Securities and Exchange Commission and applicable state securities
commissions and to pay the expenses associated with such registration,
except for any fees and expenses of their counsel, if any.
Employment and Noncompetition Agreement
The 26,000 shares offered hereby by Thomas Peacock, one of the
Selling Shareholders, were acquired by Mr. Peacock in connection with an
Employment and Noncompetition Agreement among the Company, Nemasoft, Inc., a
wholly owned subsidiary of the Company, and Mr. Peacock, entered into at the
time of the merger of Universal Automation, Inc. with and into NemaSoft,
Inc. (the "UAI Merger"). In connection with the UAI Merger, the Company
agreed to register such shares with the Securities and Exchange Commission
and applicable state securities commissions and to pay the expenses
associated with such registration, except for any fees and expenses of his
counsel, if any.
LEGAL MATTERS
The validity under Michigan law of the authorization and issuance of
the shares offered hereby will be passed upon for the Company by Dykema
Gossett PLLC, Detroit, Michigan.
<PAGE>
EXPERTS
The consolidated balance sheet as of September 30, 1995, the
consolidated statements of operations, shareholders' equity and cash flows
for the year ended September 30, 1995, all as included in the Company's
Annual Report on Form 10-KSB, as amended, for the year ended September 30,
1995, have been audited by KPMG Peat Marwick LLP, independent certified
<PAGE>
public accountants, and incorporated herein upon authority of said firm as
experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and
cash flows for the year ended September 30, 1994, incorporated in this
prospectus by reference, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which expresses an
unqualified opinion and includes an explanatory paragraph relating to
substantial doubt about the Company's ability to continue as a going
concern), which is incorporated herein by reference upon their authority as
experts in accounting and auditing.
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses
to be borne by the Company in connection with the distribution of the Common
Stock offered hereby:
Securities and Exchange Commission Registration Fee ....... $ 1,644
Accounting Fees and Expenses .............................. * 5,000
Legal Fees and Expenses ................................... *10,000
Miscellaneous Expenses .................................... * 1,000
------
Total Expenses ............................................ $17,644
======
-----------------
* Estimated.
The Company will pay certain expenses of the Selling Shareholders
incurred in connection with the distribution of the Common Stock offered
hereby, which are included above.
Item 15. Indemnification of Directors and Officers
Sections 561 through 571 of the Michigan Business Corporation Act
(the "MBCA") govern the indemnification of officers, directors and other
persons. In this regard, the MBCA provides for indemnification of directors
and officers acting in good faith and in a manner they reasonably believe to
be in, or not opposed to, the best interest of the Company or its
shareholders (and, with respect to a criminal proceeding, if they have no
reasonable cause to believe their conduct to be unlawful). Such
indemnification may be made against (a) expenses (including attorney's
fees), judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred in connection with any threatened, pending or
completed action, suit or proceeding (other than an action by, or in the
right of, the Company) arising by reason of the fact that they were serving
as a director, officer, employee or agent of the Company (or some other
entity at the Company's request), and (b) expenses (including attorney's
fees) and amounts paid in settlement actually and reasonably incurred in
connection with a threatened, pending or completed action or suit by, or in
the right of, the Company, unless the director or officer is found liable to
the Company and an appropriate court does not determine that he or she is
nevertheless fairly and reasonably entitled to indemnification. The MBCA
requires indemnification for expenses to the extent that a director or
officer is successful in defending against any such action, suit or
proceeding, and otherwise requires in general that the indemnification
provided for in (a) and (b) above be made only on a determination by a
majority vote of a quorum of the Board of Directors comprised of members who
were not parties to or threatened to be made parties to such action. In
certain circumstances, the MBCA further permits advances to cover such
expenses before a final determination that indemnification is permissible,
upon receipt of (i) a written affirmation by the director or officer of his
or her good faith belief that he or she has met the applicable standard of
conduct set forth in the MBCA, and (ii) a written undertaking by or on
behalf of the director or officer to repay such amounts unless it shall
ultimately be determined that he or she is entitled to indemnification and a
determination that the facts then known to those making the advance would
not preclude indemnification. The Company's Articles of Incorporation
provide the same indemnification rights as the MBCA.
Subject to the exceptions recited in the following sentence, the
Company's Articles of Incorporation provide that no director shall be
personally liable to the Company or its shareholders for damages for breach
of his or her duty as a director. Such exculpatory language does not,
however, eliminate or limit the liability of a director for (a) breach of
the duty of loyalty, (b) acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of law, (c) certain
other violations of the Michigan Business Corporation Act, or (d)
<PAGE>
responsibility in respect of any transaction from which the director has
derived an improper personal benefit.
The MBCA permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions
with the Company, whether or not such liabilities would be within the
indemnification provisions of the MBCA. Under an insurance policy
maintained by the Company, the directors and officers of the Company are
insured, within the limits and subject to the limitations of the policy,
against certain expenses in connection with the defense of certain claims,
actions, suits or proceedings, and certain liabilities which might be
imposed as a result of such claims, actions, suits or proceedings, which may
be brought against them by reason of being or having served as directors and
officers of the Company or certain other entities.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to officers and directors pursuant to the
foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 16. Exhibits
A list of exhibits included as part of this Registration Statement
is set forth in the Exhibit Index which immediately precedes such exhibits
and is incorporated herein by reference.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
1. That for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
2. Except to the extent that the information is contained in
periodic reports filed by the Company pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 and incorporated by reference into this
registration statement, to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933 and (ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement.
3. (a) To file, during any period in which offers or sales are
being made, a post effective amendment to this registration statement to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement, (b) that, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof, and (c) to remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the termination of
the offering.
4. That insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
<PAGE>
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Ann
Arbor, State of Michigan on the 12th day of November, 1996.
NEMATRON CORPORATION
By: /s/ Frank G. Logan, III
---------------------------------
Frank G. Logan, III, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 12, 1996.
Signature Title
/s/ Frank G. Logan, III
- ---------------------------------
Frank G. Logan, III Chairman of the Board
President, Chief Executive Officer
and Director (Principal Executive
Officer)
/s/ David P. Gienapp
- ---------------------------------
David P. Gienapp Vice President-Finance and
Administration and Director
(Principal Financial and
Accounting Officer)
/s/ Hugo Braun
- ---------------------------------
Hugo Braun Director
/s/ Gregory J. Chandler
- ---------------------------------
Gregory J. Chandler Vice President - Design
Engineering and Director
/s/ Garnel F. Graber
- ---------------------------------
Garnel F. Graber Director
/s/ Harry A. Sundblad
- ---------------------------------
Harry A. Sundblad Director
/s/ Michael L. Hershey
- ---------------------------------
Michael L. Hershey Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibits
4.1 Employment and Noncompetition Agreement dated September 20,
1995 among Thomas Peacock, Nematron Corporation, a Michigan
Corporation, and NemaSoft, Inc., a Michigan corporation and
wholly owned subsidiary of Nematron Corporation.
4.2 Form of Stock Purchase Warrant ("Warrant") between Nematron
Corporation, a Michigan corporation and Warrant holders,
with schedule A identifying holders of substantially
identical warrants (including certain of the Selling
Shareholders).
5.1 Opinion of Dykema Gossett PLLC.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Dykema Gossett PLLC (included in Exhibit 5.1
hereto).
Exhibit 4.1
EXECUTION COPY
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Agreement is dated as of September 20, 1995, and is among
THOMAS PEACOCK (the "Employee"), NEMASOFT, INC., a Michigan corporation (the
"Company") and NEMATRON CORPORATION, a Michigan corporation ("Nematron").
In consideration of the premises herein contained, the parties agree
as follows:
1. Employment. The Company employs the Employee as Vice
President-Machine Control Software of the Company, and the Employee accepts
such employment, upon the terms and conditions set forth in this Agreement.
Employee acknowledges and agrees that (a) his title may be changed as the
parties agree, but his duties shall remain in software and not sales or
marketing, (b) his office shall be located in New Hampshire throughout the
term of this Agreement, and (c) reasonable periods of travel will be
required in connection with the performance of the Employee's duties,
primarily to the Company's offices in Virginia Beach, Virginia and Ann
Arbor, Michigan.
2. Duties During Employment Period. The Employee shall perform and
discharge well and faithfully such duties for the Company as may be assigned
to the Employee from time to time by the Board of Directors of the Company
and/or the President of the Company and, in the absence of such assignment,
such services customary to such office as are necessary to the operations of
the Company. The Employee shall devote all of his business time, attention
and energies to the business of the Company.
3. Term. The Employee's employment under Sections 1 and 2 of this
Agreement shall be for a period (the "Employment Period") commencing on the
date hereof and ending two years after the date hereof, unless sooner
terminated in accordance with Section 9 below.
4. Employment Period Compensation.
(a) Base Salary. For all services to be rendered by the Employee
hereunder (including services as officer, employee, member of any committee
of the Company or any subsidiary or division or otherwise), the Company
shall pay an annual salary to the Employee during the Employment period of
$100,000 (payable in bi-weekly installments). The Board of Directors may,
at its option, make such additional salary determination as it deems
appropriate in light of the performance of the Employee and the Company.
However, Employee agrees and acknowledges that such increases or bonuses
have not been promised and may not occur at all. All payments shall be
subject to all applicable taxes required to be withheld by the Company
pursuant to federal, state or local law.
(b) Additional Compensation. In addition to the compensation set
forth in Section 4(a), Employee will be entitled to the following
compensation:
(i) At the execution of this Agreement (receipt of which is
hereby acknowledged), Employee shall receive 26,000 shares of Common
Stock of Nematron ("Nematron Shares"). Nematron agrees to use all
reasonable efforts to register the Nematron Shares on a Form S-8
Registration Statement or a Form S-3 Registration Statement as
Nematron deems appropriate. Nematron agrees to file such
Registration Statement with the Securities and Exchange Commission
on or before January 31, 1996.
(ii) On January 2, 1996 the Employee shall receive $6,500 in
cash;
(iii) In accordance with Section 3(e) of the Merger
Agreement among the Employee, the parent of the Company and Ron
Lavallee dated August 30, 1995 (the "Merger Agreement") the Employee
is entitled to receive up to $6,500 in cash and up to 21,000
warrants to acquire Nematron Common Stock ("Warrants"). The
determination of the amount of compensation payable under this
Section 4(b)(iii) and the timing of the payment thereof will be
determined in accordance with Section 3(e) of the Merger Agreement
provided, however, that in no event shall the cash compensation
under this Section 4 (b)(iii) be payable until after January 2,
1996;
(iv) Within 30 days after the end of each fiscal quarter,
the Employee will be entitled to receive two percent (2%) of the
royalties relating solely to United States Patent No. 4,852,047 (the
"Patent") collected by the Company from any current or future
licensees (unaffiliated with the Company) until such time as the
Patent expires or the Company determines that the Patent is not
valid and enforceable, whichever occurs earlier.
(c) Other Benefits. The Company shall provide Employee with the
fringe benefits, prerequisites, and other benefits of employment provided to
salaried executives of the Company or of its parent, Nematron, serving in a
capacity similar to Employee, from time to time during the Employment
Period. These benefits will be adjusted from time to time as determined by
the Board of Directors of the Company. Reasonable travel expenses of
Employee will be paid by the Company. If permitted by the Employee
Retirement Income Security Act of 1974, as amended and the Internal Revenue
Code of 1986, as amended (i) the duration of Employee's employment with
Universal Automation, Inc. ("Universal") will be counted as employment by
the Company or its parent in calculating fringe benefits whenever relevant,
(ii) Employee will be entitled to four weeks of paid vacation through
December 31, 1995 and may carry over any unused weeks to the next calendar
year, and (iii) Employee will also be offered a paid health insurance plan
in New Hampshire equivalent or better than currently provided by Universal.
5. Covenant Not To Compete.
(a) Noncompetition. The Employee acknowledges that the
services to be provided hereunder are unique and that their loss would cause
irreparable injury to the Company. The Employee also hereby acknowledges
and recognizes the highly competitive nature of the Company's business and,
accordingly, in consideration of the employment of the Employee by the
Company, the Employee agrees to the following:
(i) That during the Restricted Period (hereinafter
defined), he will not, directly or indirectly (other than on behalf
of the Company or its parent, subsidiaries or other affiliates
(collectively, " Affiliates"), engage in the design, development,
manufacture, sale, marketing or servicing of products or provision
of services which at any time during the Employee's employment with
the Company, including with its predecessor Universal, were
designed, developed, manufactured, sold, marketed, serviced or
provided by either (A) the Company (including Universal) or (B) its
Affiliates; or engage in any activity which is in competition with
the activities of the Company or its Affiliates (the "Business
Activities") whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of
less than 2% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent or otherwise, in any
geographic area in which at any time during the Employee's
employment with the Company (including with Universal) the products
or services of the Company (including Universal) or its Affiliates
were distributed or provided or in which the Company (including
Universal) or its Affiliates has competed.
(ii) That during the Restricted Period, he will not,
directly or indirectly, engage in any Business Activities (other
than on behalf of the Company or its Affiliates) by supplying
products or providing services which at any time during the
Employee's employment with the Company (including with Universal)
were supplied or provided by the Company (including Universal) or
the Company's Affiliates to any customer with whom the Company
(including Universal) or its Affiliates at any time during the
Employee's employment with the Company (including Universal) has
done any business, whether as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than 2%
of the outstanding capital stock of a publicly traded corporation),
consultant, advisor, agent or otherwise.
(iii) During the Restricted Period the Employee will not
directly or indirectly solicit, induce or influence any customer,
supplier, lender, lessor or any other person which has a business
relationship with the Company or its Affiliates at any time during
the Restricted Period to discontinue or reduce the extent of such
relationship with the Company or its Affiliates.
(iv) During the Restricted Period, the Employee will not
(A) directly or indirectly recruit, solicit or otherwise induce or
influence any employee or sales agent of the Company or its
Affiliates to discontinue such employment or agency relationship
with the Company or its Affiliates, or (B) employ or seek to employ,
or cause or permit any business which competes directly or
indirectly with the Business Activities (the "Competitive Business")
to employ or seek to employ for any Competitive Business, any person
who is then (or was at any time within six months prior to the date
the Employee or the Competitive Business employs or seeks to employ
such person) employed by the Company or its Affiliates.
(b) Restricted Period. As used herein, the term "Restricted
Period" shall mean the period commencing with the date hereof and ending on
the date that is one year after the termination of the Employee's employment
with the Company, irrespective of the reason for any termination of
employment provided, however, that if such termination occurs prior to three
years from the date hereof the Restricted Period shall end on two years
after such termination.
6. Disclosure of Information. The Employee acknowledges that
the Company's and its Affiliate's trade secrets, private or secret processes
as they exist from time to time and information concerning products,
development, technical information, procurement and sales activities and
procedures, promotion and pricing techniques and credit and financial data
concerning customers disclosed to the Employee (the "Proprietary
Information") are valuable, special and unique assets of the Company and its
Affiliates, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. In light of the highly
competitive nature of the industry in which the Company's businesses are
conducted, the Employee agrees that all Proprietary Information heretofore
or in the future obtained by the Employee as a result of the Employee's
association with the Company, including its predecessor Universal, shall be
considered confidential. In recognition of this fact, the Employee agrees
that he will not during the Restricted Period or at any time thereafter,
disclose any of such Proprietary Information for his own purposes or for the
benefit of any person or other entity (except the Company or its Affiliates)
under any circumstances unless such Proprietary Information has been
publicly disclosed or, upon written advice of legal counsel reasonably
satisfactory to the Company, that the Employee is legally required to
disclose such Proprietary Information. Records prepared by the Employee or
that come into his possession during his employment by the Company
(including Universal) are and remain the property of the Company, and when
his employment with the Company terminates, such records shall be left with
the Company.
7. Company Right to Inventions. The Employee shall promptly
disclose, grant and assign to the Company for its sole use and benefit any
and all inventions, improvements, technical information and suggestions
relating in any way to the products, services or other Business Activities
from time to time engaged in by the Company or its Affiliates which the
Employee has conceived, developed or acquired prior to his employment with
the Company, or may conceive, develop or acquire during the Employee's
employment by the Company (whether or not during usual working hours),
together with all patent applications, letters patent, copyrights and
reissues thereof that may at any time be granted for or upon any such
invention, improvement or technical information.
At the request of the Company at any time, the Employee shall
execute documents assigning to it, or its designee, any invention,
improvement, discovery, technical information, suggestion, idea, or any
patent application or patents, copyrights and reissues thereof referred to
above, and shall execute any papers requested relating thereto and perform
such other lawful acts as may be necessary or advantageous in the opinion of
the Company or its counsel to vest title to any such invention, discovery,
improvement, technical information, suggestion, idea, patent application,
patent, copyright or reissues thereof in the Company or its designee.
8. Remedies.
(a) The Employee acknowledges and agrees that the
Company's remedy at law for a breach or threatened breach of any of the
provisions of Sections 5, 6 or 7 would be inadequate. In recognition of
this fact, in the event of a breach by the Employee of any of the provisions
of Sections 5, 6 or 7, as determined by the Company in its sole discretion
acting in good faith, the Employee agrees that, in addition to its remedy at
law, all rights of the Employee to employment and payment or otherwise under
Section 4 hereof and the Employee's employment and all amounts then or
thereafter due to the Employee from the Company under this Agreement may be
terminated and the Company to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
(b) The Employee acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction
merely prohibiting the use of Proprietary Information would not be an
adequate remedy upon breach or threatened breach of Sections 5, 6, or 7 and
consequently agrees, upon proof of any such breach, to the granting of
injunctive relief prohibiting the designing, development, manufacture,
marketing or sale or products and providing of services of the kind
designed, developed, manufactured, marketed, sold or provided by the Company
or any other form of competition with the Company. Nothing herein contained
shall be construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach.
9. Termination.
(a) The Employee's employment under this Agreement may
be terminated by the Company for dishonesty, willful misconduct, failure to
materially perform his duties and responsibilities consistent with the
provisions of paragraphs 1 and 2 hereof, or breach of any of the provisions
of paragraph 5, 6 or 7 of this Agreement. The Company shall not terminate
the Employee's employment solely for failure to materially perform his
duties without first giving the Employee thirty (30) days prior written
notice of such a failure and an opportunity to cure such failure within such
30 day period.
(b) If the Employee's employment under this Agreement
is terminated by the Company for any reason set forth in clause (a) of this
paragraph 9, the Company shall continue to be liable only for the Base
Salary set forth in Section 4 of this Agreement, if any, with respect to
periods of time prior to the date of such termination.
10. Securities Matters. The Employee acknowledges and agrees to
the following in connection with the Nematron Shares, the Warrants and the
shares of Nematron Common Stock underlying the Warrants (the "Warrant
Shares"):
(a) Shares, Warrants and Warrant Shares Entirely for
Employee's Own Account. The Employee confirms that the Shares, Warrants and
Warrants Shares to be received by him will be acquired for investment for
his own account, not as an nominee or agent, and not with a view to the sale
or distribution of any part thereof, and that he has no present intention of
selling, granting participations in or otherwise distributing the same
except as provided in Section (4)(b)(i) above.
(b) Shares, Warrants and Warrant Shares Not Registered.
The Employee understands that the Shares, Warrants and Warrant Shares will
not be registered under the Securities Act of 1933, as amended (the
"Securities Act'), or any state securities law at the time of issuance.
(c) Receipt of Information. The Employee represents
that he fully understands the transactions contemplated by this Agreement.
The Employee has had the opportunity to ask all questions Employee has
deemed relevant to making the decision to accept the Shares, and the
Warrants proposed to be issued pursuant to Section 4, as consideration for
his duties and covenants set forth in this Agreement.
(d) Restricted Securities. The Employee understands that the
Shares, Warrants and Warrant Shares may not be sold, transferred or
otherwise disposed of without compliance with state securities laws and
without registration under the Securities Act or an exemption therefrom, and
that in the absence of an effective registration statement covering such
securities or an available exemption from registration under the Securities
Act and applicable state securities laws, the Employee will hold such
securities indefinitely, unless the subsequent disposition of such
securities is registered under the Securities Act and the applicable state
securities laws or is exempt from registration thereunder.
(e) Legend; Transfer. The certificates for the Shares and
Warrant Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
UNLESS THE SAME ARE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND APPLICABLE STATE
SECURITIES LAWS, OR NEMATRON RECEIVES AN OPINION OF COUNSEL
THAT REGISTRATION UNDER THE ACT AND SUCH LAWS IS NOT
REQUIRED FOR SALE OR TRANSFER.
In addition, Nematron or Nematron's transfer agent, as the case may be,
shall make a notation regarding the restrictions on transfer of the Shares,
Warrants and Warrant Shares in its stock transfer records.
11. Notices. Any notice required or permitted to be given under
this Agreement shall be deemed properly given if in writing and if mailed by
registered or certified mail, postage prepaid with return receipt requested
or sent by express courier service, charges prepaid by shipper, to his
residence in the case of notices to the Employee, and to the principal
offices of the Company in Ann Arbor, Michigan to the attention of the
President in the case of notices to the Company (or to such other address as
a party is directed pursuant to written notice from the other party). Any
notice given by the Company to the Employee at his last directed address
shall be effective to bind any other person who shall acquire rights
hereunder.
12. Assignment. This Agreement may not be assigned by the
Employee but may be assigned by the Company. This Agreement will be deemed
to be assigned by the Company to any business successor of the Company,
whether or not formally assigned.
13. Entire Agreement; Waiver. This instrument contains the
entire Agreement of the parties relating to the subject matter hereof,
supersedes and replaces in its entirety any existing employment agreement of
the Employee, whether oral or in writing, and may not be waived, changed,
modified, extended or discharged orally but only by Agreement in writing
signed by the Employee and an officer of the Company. The waiver by the
Company of a breach of any provision of this Agreement by the Employee shall
not operate or be construed as a wavier of a breach of any other provision
of this Agreement or of any subsequent breach by the Employee.
14. Survival of Terms. Any termination of this Agreement shall
not, however, affect the ongoing provisions of this Agreement, which shall
survive such termination in accordance with their terms.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan without
regard to its rules regarding choice of law.
16. Headings. The headings of the sections are for convenience
only and shall not control or affect the meaning or construction or limit
the scope or intent of any of the provisions of this Agreement.
17. Validity. If for any reason any provision hereof shall be
determined to be invalid or unenforceable, the validity and effect of the
other provisions hereof shall not be affected thereby.
18. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained
herein. If any court determines that any provision of Section 5 hereof is
unenforceable because of the duration or scope of such provision, such court
shall have the power to reduce the scope or duration of such provision, as
the case may be, and, in its reduced form, such provision shall then be
enforceable.
19. Arbitration. Except as expressly set forth in Section 8 of
this Agreement, it is mutually agreed between the parties that arbitration
shall be the sole and exclusive remedy to redress any dispute, claim or
controversy (hereinafter referred to as "grievance") involving the
negotiation, execution, performance or termination of this Agreement. It is
the intention of the parties that the arbitration award will be final and
binding and that judgment on the award may be entered in any court of
competent jurisdiction and enforcement may be had according to its terms.
The arbitrator shall be chosen in accordance with the Voluntary
Labor Arbitration rules of the American Arbitration Association and the
expenses of the arbitration shall be shared equally by the Company and
Employee. The place of the arbitration shall be the offices of the American
Arbitration Association in Detroit, Michigan.
The arbitrator shall not have jurisdiction or authority to change
any of the provisions of this Agreement by alterations, additions to or
subtractions from the terms thereof. The arbitrator's sole authority shall
be to interpret or apply any clause or clauses of this Agreement.
The parties stipulate that the provisions hereof, and the decision
of the arbitrator with respect to any grievance, shall be the sole and
exclusive remedy for any alleged breach of this Agreement, except as
expressly set forth in Section 8 of this Agreement. The parties hereby
acknowledge that since arbitration is the exclusive remedy, other than as
expressly set forth in Section 8 of this Agreement, neither party has the
right to resort to any federal, state or local court or administrative
agency concerning breaches of this Agreement and that the decision of the
arbitrator shall be a complete defense to any suit, action or proceeding
instituted in any federal, state or local court or before any administrative
agency with respect to any grievance which is arbitrable as herein set
forth. The arbitration provisions hereof shall, with respect to any
grievance, survive the termination or expiration of this Employment
Agreement.
The Employee agrees not to commence any cause of action relating to
his employment or the termination thereof or the arbitration of any
grievance under this Agreement more than six (6) months after the event
complained of (except for any mandatory counterclaim permitted by this
Agreement) and agrees to waive any statute of limitations to the contrary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
/S/ Thomas Peacock
-----------------------------
Thomas Peacock
NEMASOFT, INC.,
a Michigan corporation
By: /S/ Frank G. Logan, III
---------------------------
Frank G. Logan, III
Its: President
NEMATRON, INC.,
a Michigan corporation
By: /S/ Frank G. Logan, III
-------------------------
Frank G. Logan, III
Its: President
Exhibit 4.2
THE SECURITIES REPRESENTED BY THIS STOCK PURCHASE WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES
MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO THE RESTRICTIONS ON TRANSFER
AND ASSIGNABILITY SET FORTH IN SECTION 7 HEREOF.
STOCK PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE SHARES
OF COMMON STOCK, NO PAR VALUE OF
NEMATRON CORPORATION
, 199
THIS STOCK PURCHASE WARRANT ("Warrant") CERTIFIES THAT, for value
received, subject to the provisions hereinafter set forth, (the
"Holder") is entitled to purchase from Nematron Corporation, a Michigan
corporation, and its successors and assigns (the "Company")
shares of common stock of the Company, no par value (the "Common Stock"), at
the price of $2.50 per share (the "Per Share Warrant Price"), at any time
and from time to time after the date hereof and until , subject to
the provisions and adjustments and on the terms and conditions hereinafter
set forth. The Per Share Warrant Price, when multiplied by the number of
shares purchasable hereunder shall be referred to as the "Aggregate Warrant
Price," and the number of shares purchasable hereunder and the Per Share
Warrant Price are subject to adjustment, as hereinafter provided.
This Warrant is one of several warrants issued by the Company for
the purchase of an aggregate of 485,263 shares of Common Stock issued to the
persons listed on Schedule A to this Warrant. The Company has issued such
warrants pursuant to the terms of an Agreement and Plan of Merger between
the Company and Imagination Systems, Inc. dated February 2, 1995 (the
"Merger Agreement").
The following is a statement of the rights of the Holder of this
Warrant and the terms and conditions to which this Warrant is subject, to
which terms the Holder hereof, by acceptance of this Warrant, assents.
1. EXERCISE OF WARRANT
Subject to the conditions set forth herein, this Warrant may be
exercised in whole at any time or in part from time to time by the Holder
hereof, by the surrender of this Warrant at the principal office of the
Company within the period above named and upon payment to the Company of the
Aggregate Warrant Price (or the proportionate part thereof if exercised in
part) for the shares so purchased. Such payment may be made by the Holder
in the form of a certified or cashier's check. If this Warrant is exercised
with respect to less than all of the shares at the time purchasable
hereunder, the Holder hereof shall be entitled to receive a new warrant
covering the number of shares in respect of which this Warrant shall not
have been exercised and setting forth the Aggregate Warrant Price applicable
to such shares.
The Company shall keep a warrant registry book of the names of all
the holders of its registered warrants (including the Holder) and their
registered assigns.
2. RESERVATION OF SHARES OF COMMON STOCK
The Company agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and hold in reserve for issuance upon exercise of this
Warrant, a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
3. ADJUSTMENTS FOR DILUTING ISSUES
The number of shares of Common Stock deliverable upon exercise of
this Warrant shall be subject to adjustment from time to time as follows:
(a) In the event the Company shall (i) take a record of the
holders of Common Stock for the purpose of entitling them to receive a
dividend payable in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of its Common Stock any shares of the Company of
any class or series, the holder of this Warrant shall thereafter be entitled
to receive upon the exercise of this Warrant the number of shares of Common
Stock which he would have owned or have been entitled to receive had the
Warrant been exercised immediately prior to the happening of such event,
such adjustment to become effective immediately after the opening of
business on the day following such record date or the day upon which such
subdivision, combination or reclassification becomes effective.
(b) In the event that the Company takes a record of holders of
Common Stock for the purpose of entitling them to receive a dividend payable
in any security convertible into Common Stock and the holder of this Warrant
thereafter exercises the purchase rights hereunder, such holder shall be
entitled to receive upon such exercise, in addition to the shares of Common
Stock deliverable to him in accordance with the provisions hereof, the
number of shares or principal amount of such security convertible into
Common Stock as he would have been entitled to receive if he had converted
immediately prior to the taking of such record.
(c) No adjustment in the number of shares purchasable upon
exercise of this Warrant shall be required unless such adjustment would
require an increase or decrease of at least one-tenth of a share in the
number of shares for which this Warrant is exercisable; provided, however,
that any adjustment which by reason hereof is not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
(d) No fractional shares of Common Stock shall be issued upon
exercise of this Warrant, but, instead, to the extent that any fraction of a
share would otherwise be issuable, the Purchase Price shall be
proportionately reduced.
4. FULLY PAID STOCK; TAXES
The Company agrees that the shares of stock represented by each and
every certificate for its Common Stock to be delivered on the exercise of
this Warrant as herein provided shall, at the time of such delivery, be
fully paid and non-assessable, and free from all liens and charges with
respect to the purchase thereof. Each and every certificate for the
Company's Common Stock to be delivered on the exercise of this Warrant shall
bear an appropriate legend regarding restrictions on transferability. The
Company further agrees that it will pay when due and payable any and all
federal and state taxes which may be payable by the Company in respect of
the issue of this Warrant, or any Common Stock or certificates therefor upon
the exercise of this Warrant, pursuant to the provisions thereof. The
Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer, in whole or in part, of this Warrant (including
the issuance of new warrants in connection therewith) or the delivery of
stock certificates in a name other than that of the Holder of this Warrant
presented for exercise, and any such tax shall be paid by such Holder at the
time of presentation.
5. CLOSING OF TRANSFER BOOKS
The right to exercise this Warrant shall not be suspended during any
period while the stock transfer books of the Company for its Common Stock
may be closed. The Company shall not be required, however, to deliver
certificates of its Common Stock upon the exercise of this Warrant while
such books are duly closed for any purpose, but the Company may postpone the
delivery of the certificates for such Common Stock until the opening of such
books, and they shall, in such case, be delivered forthwith upon the opening
thereof, or as soon as practicable thereafter.
6. LOST OR STOLEN WARRANTS
In case any Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall issue a new Warrant of like date, tenor, and denomination
and deliver the same in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or in lieu of any Warrant lost,
stolen or destroyed, upon an indemnity agreement or bond reasonably
satisfactory to the Company.
7. ASSIGNMENT
This Warrant is not assignable or transferable except to the
successors, heirs or legal representatives of the Holder hereof. The
Company may deem and treat the registered holder hereof as the absolute
owner of this Warrant (notwithstanding any notations of ownership or writing
hereon made by anyone other than the Company) for all purposes and shall not
be affected by any notice to the contrary.
8. SECURITIES MATTERS; REGISTRATION RIGHTS FOR WARRANT SHARES
(a) Neither this Warrant nor the shares issuable upon exercise
of this Warrant (the "Warrant Shares") have been registered under the
Securities Act of 1933 (the "Act"), as amended, or any applicable "Blue Sky"
laws. By acceptance of this Warrant, the Holder represents and warrants to
the Company that Holder will not offer, distribute, sell, transfer or
otherwise dispose of the Warrant Shares except pursuant to (i) an effective
registration statement under the Act and any applicable Blue Sky laws with
respect thereto, (ii) an opinion, satisfactory to the Company, addressed to
the Company, of counsel satisfactory to the Company, that such offering,
distribution, sale, transfer or disposition is exempt from registration
under the Act and any applicable Blue Sky laws, or (iii) a letter from the
staff of the Securities and Exchange Commission or any state securities
commissioner, as the case may be, to the effect that it will recommend that
no action be taken with respect to such transaction. The Holder agrees, by
acceptance of this Warrant, to execute any and all documents deemed
necessary by the Company and required by the regulatory authority of any
state in connection with any public offering by the Company of the Warrant
Shares.
(b) If, at any time, (i) the Common Stock is trading at a price
of 10% or more above the Per Share Warrant Price, and either (ii) there is a
request by holders representing the right to purchase not less than 50% of
the Common Stock purchasable upon the exercise of all warrants issued
pursuant to the Merger Agreement, or (iii) holders with a right to purchase
not less than 25% of the Common Stock purchasable upon exercise of all
warrants issued pursuant to the Merger Agreement have exercised their
warrants, the Company agrees to use its best efforts to effect registration
of the warrant shares underlying all warrants issued pursuant to the Merger
Agreement under the Act and any applicable "Blue Sky" laws; provided,
however, that in no event will the Company be required to act more than once
in connection herewith, or to have its financial statements audited for the
purpose of effecting such registration at a time other than the time the
Company's fiscal year-end audit is regularly scheduled. The Company agrees
to pay all costs and expenses of such registration.
10. MISCELLANEOUS
(a) Successors and Assigns. All convenants and agreements in
this Warrant shall be binding upon the Company and its successors and
assigns.
(b) Governing Law. This Warrant shall be construed and enforced
in accordance with the laws of the State of Michigan.
(c) Amendments. The Company may, with the consent of the
holders of warrants representing the right to purchase not less than 66-2/3%
of the aggregate number of shares of Common Stock purchasable upon the
exercise of all warrants issued pursuant to the Merger Agreement, add any
provision to, change in any manner or eliminate any provision from this
Warrant.
(d) Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and sent by
registered mail, postage prepaid, and if to the Holder, addressed to the
Holder at the Holder's address appearing on the warrant registry book of the
Company, and if to the Company, addressed to it at 5840 Interface Drive, Ann
Arbor, Michigan 48103, Attention: President, or to such other address or
attention as shall be furnished in writing by the Company or the Holder, and
any such notice shall be deemed to have been given as of the date received.
IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
signed by a duly authorized officer and this Warrant to be dated the date
set forth above.
NEMATRON CORPORATION
By:
------------------------------
Its:
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SCHEDULE A
HOLDERS OF NEMATRON CORPORATION WARRANTS
The following schedule sets forth the names of the holders of
Nematron Corporation ("Nematron") warrants issued in connection with the
merger of Nematron and Imagination Systems, Inc. All warrants are
identical, except for the names of the warrant holders and the number of
shares for which the warrant is exercisable.
Name
J. Eric May
Frank G. Logan, III
Stockton N. Smith
Henry B. duPont Smith
Sallie N. Smith
Lumber Industries, Inc.
E.N. Smith & Co.
Jeffrey Achesinski
Michael L. Hershey
Perter Dalke
Charles Keiger
Sally S. Logan
Dawn Snell White
Teddy Davis
David M. Bentz
Thomas M. Walsh
StockCross & Co.
Danny White
Frank G. Logan, III,
Custodian for E.M. Logan
Frank G. Logan, III,
Custodian for J.D. Logan
Frank G. Logan, III,
Custodian for M.C. Logan
Alfred B. duPont
E. Bradford duPont, Jr.
M. Lynne duPont
Edwin Moore
Joe Bland
Michelle Nemes
Barbara Harrigan
Thomas Brown
Brian Domino
Kurt Crisman
Laurel Swanson
Lloyd Thatcher
Michael Arrington
Rhonda Wilson
Exhibit 5.1
November 11, 1996
Nematron Corporation
5840 Interface Drive
Ann Arbor, Michigan 48103
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Nematron Corporation, a Michigan
corporation (the "Company"), in connection with the preparation and filing
with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a Registration Statement on Form S-3 (the "Registration
Statement") relating to the registration of 506,330 shares of the Company's
common stock ("Common Stock") by the Company on behalf of certain
shareholders in the manner described in the Registration Statement.
In so acting, we have examined and relied upon the originals, or
copies certified or otherwise identified to our satisfaction, of such
corporate records, documents, certificates and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion
expressed below.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is in good
standing under the laws of the State of Michigan.
2. The shares of Common Stock to which the Registration
Statement relates are validly issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement. We further consent to the reference to our firm
under the heading "Legal Matters" in the Registration Statement.
Very truly yours,
DYKEMA GOSSETT PLLC
/S/ Joaquim D. Barros
-------------------------
J. Darrel Barros
Exhibit 23.1
Board of Directors
Nematron Corporation
We consent to the use of our report incorporated herein by reference from
Form 10-KSB, as amended by Form 10-KSB/A filed February 2, 1996, and as
amended by Form 10-KSB/A-2 filed May 20, 1996 for the year ended September
30, 1995.
/S/ KPMG Peat Marwick LLP
Detroit, Michigan
November 8, 1996
Exhibit 23.2
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement
of Nematron Corporation on Form S-3 of our report dated December 9, 1994
(which expresses an unqualified opinion and includes an explanatory
paragraph relating to substantial doubt about the Company's ability to
continue as a going concern), appearing in this Annual Report on Form 10-KSB
of Nematron Corporation for the year ended September 30, 1994 and included
and incorporated by reference in the Annual Report on Form 10-KSB of
Nematron Corporation for the year ended September 30, 1995, as amended by
Form 10-KSB/A filed on February 2, 1996 and Form 10-KSB/A-2 filed on May 20,
1996.
/S/ Deloitte & Touche LLP
Ann Arbor, Michigan
November 8, 1996
