<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of Earliest Event Reported): MARCH 31, 1997
----------------
NEMATRON CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MICHIGAN 0-21142 38-2483796
- -------------------------------------------------- ------------------------ ------------------------------------
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
</TABLE>
5840 INTERFACE DRIVE, ANN ARBOR, MICHIGAN 48103
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(313) 994-0501
-------------------------------
(Registrant's telephone number)
<PAGE> 2
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS.
On March 31, 1997, Nematron Corporation ("Nematron" or the "Company") completed
the merger of its wholly-owned subsidiary, NemaSoft, Inc., a Michigan
corporation ("NemaSoft"), with Intec Controls Corp. ("Intec") pursuant to an
Agreement and Plan of Merger, dated as of February 20, 1997, by and among the
Company, NemaSoft, Intec, Thomas W. Kraus and Robert O. Mick (the "Merger
Agreement"). The Merger Agreement is incorporated herein by reference to
Exhibit 2.1 to this Report. Intec is a Walpole, Massachusetts-based developer
and supplier of high performance regulatory control software products which
execute on personal computers. Intec's software products, sold under the brand
name "Paragon," are marketed to a wide variety of process industries including
biotechnological, chemical, food and beverage, energy and building management,
pharmaceutical, textile and water treatment.
Under the terms of the Merger Agreement, Intec was merged into NemaSoft, with
NemaSoft as the surviving corporation (the "Merger"), and the Company agreed to
issue a formula-based number of shares of Nematron Common Stock to the former
Intec shareholders. The number of shares of Nematron Common Stock which will
be issued is based on the Average Share Price of Nematron Common Stock, but
such amount will not be less than 400,000 shares nor more than 600,000 shares.
The "Average Share Price" is defined as the average of the last reported sale
prices per share of Nematron Common Stock as reported by the Nasdaq National
Market for each of the days on which Nematron Common Stock is traded on the
Nasdaq National Market during the 60 calendar day period beginning on February
20, 1997. If the Average Share Price is not less than $7.25 and not greater
than $9.25, then the number of shares of Nematron Common Stock to be issued
will be 500,000. If the Average Share Price is less than $7.25, then the
number of shares of Nematron Common Stock to be issued will be a number
determined by dividing 3,625,000 by the Average Share Price, provided that such
amount shall not exceed 600,000. If the Average Share Price is greater than
$9.75, then the number of shares of Nematron Common Stock to be issued will be
a number determined by dividing 4,875,000 by the Average Share Price, provided
that such amount shall not be less than 400,000.
In addition to the Nematron Common Stock to be issued, as described above, the
Company issued, as part of the consideration in the Merger, warrants to
purchase 125,000 shares of Nematron Common Stock at $6.73 per share. The
warrants will expire February 20, 2000. A value has not been ascribed to the
warrants. The Company has granted stock options to certain employees of Intec.
The Merger was negotiated on an arm's length basis between the parties. The
consideration paid by the Company was based upon a number of factors, including
estimated fair values of net assets acquired; estimated future revenues, income
and cash flows; estimated values of identified intangible assets, including
Intec's workforce, trademarks, products, customer base, locations, and
distribution channel, and the market price for the Company's Common Stock.
The Company will account for the merger as a purchase in accordance with the
accounting standards promulgated under Accounting Principles Board No. 16,
"Business Combinations" ("APB-16") and relevant AICPA Interpretations,
Accounting Research Bulletins, FASB Statements, Interpretations and Technical
Bulletins which serve as amendments to APB-16.
In connection with the Merger, NemaSoft also entered into two-year employment
and non-competition agreements with Intec's president and vice-president who
became president and vice-president of NemaSoft as a result of the merger.
2
<PAGE> 3
NemaSoft will continue to operate Intec's software development and software
sales businesses from its Walpole, Massachusetts and Chichester, W. Sussex,
England offices.
Prior to the acquisition of Intec by NemaSoft, there were no agreements or
business relationships between Nematron or its affiliates, directors or
officers and Intec or its affiliates, directors or officers.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibits are filed herewith as a part of this report:
Exhibit 2.1 Agreement and Plan of Merger, dated as of
February 20, 1997, by and among the Company,
NemaSoft, Intec, Thomas W. Kraus and Robert O.
Mick, as amended March 28, 1997
Exhibit 4.1 Form of Warrant issued as of March 31, 1997 to
Intec shareholders
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
NEMATRON CORPORATION
---------------------
(Registrant)
April 10, 1997 /S/ DAVID P. GIENAPP
---------------------
Secretary,
Treasurer and
Executive Vice
President, Finance
and Administration
3
<PAGE> 4
Exhibit Index
Exhibit Number Description
- -------------- -----------
2.1 Agreement and Plan of Merger, dated as of
February 20, 1997, by and among the Company, NemaSoft,
Intec, Thomas W. Kraus and Robert O. Mick, as amended
March 28, 1997
4.1 Form of Warrant issued as of March 31, 1997 to Intec
shareholders
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made as of
February 20, 1997, by and among Nematron Corporation, a Michigan corporation
("Nematron"), NemaSoft, Inc., a Michigan corporation ("NemaSoft"), Intec
Controls Corp., a Massachusetts corporation ("Intec"), and Thomas W. Kraus and
Robert O. Mick (collectively, the "Shareholders"). Nematron, NemaSoft, Intec
and the Shareholders may be referred to individually as a "Party" or
collectively as the "Parties".
W I T N E S S E T H
WHEREAS, NemaSoft, a wholly owned subsidiary of Nematron, Intec and
Nematron desire that Intec merge with and into NemaSoft (the "Merger"), with
NemaSoft being the surviving corporation of the Merger;
WHEREAS, Shareholders own, in the aggregate, 50.5% of the outstanding
shares of Intec Common Stock; and
WHEREAS, the Merger is intended to constitute a reorganization as
described in Section 368(a) of the Code.
NOW, THEREFORE, subject to the terms and conditions of this Agreement
and the Certificate of Merger and Articles of Merger to be filed in the State of
Michigan and The Commonwealth of Massachusetts, respectively, in order to
effectuate the Merger, and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following capitalized
terms will have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Articles of Merger" means the Articles of Merger to be filed with the
Secretary of State of The Commonwealth of Massachusetts setting forth the terms
of the Merger.
"Certificate" has the meaning set forth in Section 3.1(a).
"Certificate of Merger" means the Certificate of Merger to be filed with
the Michigan Department of Consumer and Industry Services setting forth the
terms of the Merger.
<PAGE> 2
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constituent Corporations" has the meaning set forth in Section 2.1(b).
"Dissenters' Shares" has the meaning set forth in Section 3.1(f).
"Effective Time" has the meaning set forth in Section 2.2(a).
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(b) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan, including medical,
dental, disability and other welfare benefits plan, and material fringe benefit
plan or program, (e) employee, severance and termination agreements and
arrangements, and (f) all plans, programs and arrangements with respect to
stock options, restricted stock, phantom stock and other stock-based or
stock-related compensation.
"Employee Pension Benefit Plan" has the meaning set forth in Section 3(2)
ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section 3(1)
of ERISA.
"Employment and Noncompetition Agreements" means the employment and
noncompetition agreements between Nematron and each of Thomas Kraus and Robert
Mick in the form attached hereto as Exhibit 8.2(a)(v).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
2
<PAGE> 3
"ERISA" means the Employee Retirement Income Security Act of 1974
(including any amendments thereof, and the regulations and published
interpretations thereunder).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" has the meaning set forth in Section 4.1(f).
"GAAP" means United States generally accepted accounting principles, as in
effect from time to time.
"Intec" has the meaning set forth in the Preamble to this Agreement.
"Intec Common Stock" means the common stock, $.01 par value, of Intec.
"Intec Preferred Stock" means the preferred stock, no par value, of Intec.
"Intec Share" means any share of Intec Common Stock or Intec Preferred
Stock.
"Intec Subsidiaries" has the meaning set forth in Section 4.1(b)(ii).
"Intellectual Property Rights" means all of the right, title and interest
of Intec and the Intec Subsidiaries in and to (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Investment Representation Letter" means a letter in the form attached as
Exhibit 8.2(b)(ix).
"January 1997 Balance Sheet" has the meaning set forth in Section 4.1(h).
"Knowledge" means actual knowledge after reasonable investigation.
3
<PAGE> 4
"Liability" means any liability (whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"MABCL" means the Massachusetts Business Corporation Law.
"MBCA" means the Michigan Business Corporation Act, Act 284 of the Public
Acts of 1972 of the State of Michigan, as amended, being Sections 450.1101
through 450.2098 of the Michigan Compiled Laws.
"Merger" has the meaning set forth in the first recital to this Agreement.
"Merger Consideration" has the meaning set forth in Section 3.1(a).
"Most Recent Financial Statements" has the meaning set forth in Section
4.1(f).
"Multiemployer Plan" has the meaning set forth in Section 3(37) of ERISA.
"NemaSoft" has the meaning set forth in the preamble to this Agreement.
"NemaSoft Shares" means any share of NemaSoft Common Stock.
"Nematron" has the meaning set forth in the preamble to this Agreement.
"Nematron Common Stock" means the common stock, no par value, of Nematron.
"Nematron Share" means any share of Nematron Common Stock.
"Nematron Warrant" means a warrant in the form of Exhibit 3.1(a).
"Ordinary Course of Business" means the ordinary course of business
consistent with current and past custom and practice (including with respect to
quantity and frequency).
"Party" and "Parties" have the meaning set forth in the preamble of this
Agreement.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or association, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Registration Rights Agreement" means an agreement among Nematron and the
recipients of the Merger Consideration in the form attached as Exhibit
8.2(a)(vi).
4
<PAGE> 5
"Related Agreements" means any agreements being delivered in connection
with or ancillary to this Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Shareholders" has the meaning set forth in the preamble to this
Agreement.
"Surviving Corporation" has the meaning set forth in Section 2.1(a).
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
2. MERGER.
2.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, the
Certificate of Merger and Articles of Merger, the MBCA and the MABCL, at the
Effective Time (as defined in Section 2.2(a) below) (i) Intec will be merged
with and into NemaSoft and (ii) the separate existence of Intec will cease and
NemaSoft will continue as the "Surviving Corporation".
(b) At the Effective Time (i) the Surviving Corporation will continue
its corporate existence under the laws of the State of Michigan and will possess
all of the rights, privileges, immunities, powers, franchises and purposes of
Intec and NemaSoft immediately prior to the Merger (Intec and NemaSoft will be
referred to in this Agreement as the "Constituent Corporations"), (ii) all
property of the Constituent Corporations will be the property of the Surviving
Corporation and (iii) the Surviving Corporation will, by operation of law,
assume all of the liabilities and obligations of the Constituent Corporations.
5
<PAGE> 6
(c) The Amended and Restated Articles of Incorporation of NemaSoft in
effect at and as of the Effective Time will remain the Amended and Restated
Articles of Incorporation of the Surviving Corporation without any modification
or amendment in the Merger. The Amended and Restated Bylaws of NemaSoft will
remain the Amended and Restated Bylaws of the Surviving Corporation.
(d) The existing directors and officers of NemaSoft in office
immediately prior to the Effective Time will remain the directors and officers
of the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified.
2.2 Effectiveness of the Merger.
(a) The Certificate of Merger will be filed with the Michigan
Department of Consumer and Industry Services and the Articles of Merger will be
filed with the Secretary of State of The Commonwealth of Massachusetts on the
day of the Closing or as soon thereafter as is practicable. The Merger will
become effective at the time at which the Certificate of Merger and the Articles
of Merger are so filed (the "Effective Time").
(b) If, at any time after the Effective Time, the Surviving
Corporation will consider or be advised that any further deeds, assignments or
other things are necessary or desirable to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, the title to any property or rights
of the Constituent Corporations acquired or to be acquired by reason or as a
result of, the Merger, the Constituent Corporations and the officers and
directors, on behalf of the Constituent Corporations, to the extent permitted by
law, will execute and deliver all such deeds and assignments and do all things
necessary or desirable to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and the officers and directors of the Surviving Corporation are
fully authorized in the name of the Constituent Corporations or otherwise to
take any and all such actions.
3. MERGER CONSIDERATION.
3.1 Merger Consideration and Conversion of Shares. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder
thereof:
(a) Each Intec Share issued and outstanding at the Effective Time,
other than Dissenters' Shares (as defined in Section 3.1(f)), shall be converted
into the right to receive shares of Nematron Common Stock (the "Merger
Shares"), the number of which shall be determined as provided below, and a
number of Nematron Warrants determined by dividing 125,000 by the number of
Intec Shares issued and outstanding at the Effective Time, all in accordance
with Section 3.1(d) hereof ("Merger Consideration"), shall cease to be
outstanding,
6
<PAGE> 7
shall automatically be canceled and retired and shall cease to exist; and each
holder of a stock certificate (a "Certificate") formerly representing Intec
Shares shall cease to have any rights with respect thereto except the right to
receive, without interest, the Merger Consideration upon the surrender of such
Certificate in accordance with Section 3.1(d). The number of "Merger Shares"
shall be determined as follows:
(i) If the Average Share Price (as defined below) is not less
than $7.25 and not greater than $9.75, then the number of Merger Shares shall be
determined by dividing 500,000 by the total number of Intec Shares outstanding
at the Effective Time.
(ii) If the Average Share Price is less than $7.25 or greater
than $9.75, then the number of Merger Shares shall be determined by dividing the
Applicable Aggregate Merger Share Amount (as defined below) by the total number
of Intec Shares outstanding at the Effective Time.
(A) If the Average Share Price is less than $7.25, the
"Applicable Aggregate Merger Share Amount" shall be determined by dividing
3,625,000 by the Average Share Price; provided, that such amount shall not
exceed 600,000.
(B) If the Average Share Price is greater than $9.75, the
"Applicable Aggregate Merger Share Amount" shall be determined by dividing
4,875,000 by the Average Share Price; provided, that such amount shall not be
less than 400,000.
The "Average Share Price" shall mean the average of the last reported sale
prices per share of Nematron Common Stock as reported by the Nasdaq National
Market for each of the days on which Nematron Shares are traded on the Nasdaq
National Market during the 60 calendar day period beginning on the date hereof.
The Merger Consideration shall be subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split, or similar
recapitalization that Nematron shall declare or pay that occurs prior to the
Effective Time.
(b) Each Intec Share issued and held by Intec or any Intec Subsidiary
immediately prior to the Effective Time shall cease to be outstanding, shall
automatically be cancelled and retired without payment of any consideration
therefor and shall cease to exist.
(c) The shares of NemaSoft Common Stock issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall be
converted into and thereafter constitute all of the issued and outstanding
shares of the capital stock of the Surviving Corporation. Outstanding
certificates representing NemaSoft Shares will continue to represent the number
of shares of common stock of the Surviving Corporation into which they have been
converted, and need not be exchanged for new certificates of the Surviving
Corporation by any holders thereof.
7
<PAGE> 8
(d) Following the Effective Time, each holder of a Certificate or
Certificates surrendering such Certificate or Certificates to Nematron shall be
entitled to receive in exchange therefor the Merger Consideration. Nematron
shall mark all Certificates delivered pursuant to this Section as cancelled. If
a Certificate is lost or destroyed, the registered owner thereof shall be
entitled to receive the Merger Consideration to which such registered owner
would otherwise be entitled on the surrender of such Certificate by presenting
an affidavit to Nematron attesting to the loss or destruction of such
Certificate. Nematron may require such registered owner, as a condition
precedent to receiving the Merger Consideration, to furnish Nematron with a bond
or agreement of indemnity, in such form and amount and with such sureties, or
without sureties, as Nematron may direct or approve.
(e) Nematron Common Stock issued to shareholders of Intec in the
Merger will 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 THE
COMPANY RECEIVES AN OPINION OF COUNSEL THAT
REGISTRATION UNDER THE ACT AND SUCH LAWS IS
NOT REQUIRED FOR SALE OR TRANSFER. TRANSFER
OF THESE SECURITIES IS ALSO SUBJECT TO A
LETTER AGREEMENT DATED , 1997, A
COPY OF WHICH IS ON FILE AT THE REGISTERED
OFFICE OF NEMATRON CORPORATION.
(f) Notwithstanding anything in this Agreement to the contrary, the
Intec Shares which are issued and outstanding immediately prior to the Effective
Time and which are held by shareholders who do not vote in favor of the approval
and adoption of this Agreement and who comply with all of the relevant
provisions of Sections 85 through 97 of the MABCL (the "Dissenters' Shares")
shall not be converted into or be exchangeable for the right to receive the
Merger Consideration. Dissenters' Shares shall, from and after the Effective
Time, no longer be outstanding and shall be cancelled and retired and shall
cease to exist, and each holder of Dissenters' Shares shall thereafter cease to
have any rights with respect to such Shares except the right, if any, to receive
payment pursuant to Sections 85 through 97 of the MABCL. If any holder of Intec
Shares shall fail to perfect or shall have effectively withdrawn or lost the
right to dissent, the Intec Shares held thereby shall thereupon be treated as
though converted into the Merger Consideration pursuant to Section 3.1(a), such
shares shall be deemed not to be Dissenters' Shares
8
<PAGE> 9
and the holder of such shares shall execute and deliver an Investment
Representation Letter to Nematron. Any Merger Consideration otherwise to
have been paid to holders of Dissenters' Shares shall be retained by
Nematron and NemaSoft.
(g) No transfers of the Intec Shares shall be made on the stock
transfer books of Intec at or after the Effective Time.
4. REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of Intec and the Shareholders.
Intec and each of the Shareholders, jointly and severally, represents and
warrants to Nematron and NemaSoft as follows:
(a) Authorization of Transaction. Intec has full corporate power and
authority to execute and deliver this Agreement and each Related Agreement being
executed and delivered by Intec and, subject to obtaining the necessary approval
of its shareholders, to consummate the transactions contemplated hereby and
thereby and perform its obligations hereunder and thereunder. This Agreement
and each Related Agreement to which Intec is a party constitutes the valid and
legally binding obligation of Intec enforceable in accordance with its terms and
conditions. Except for the filing of the Articles of Merger with the Secretary
of State of The Commonwealth of Massachusetts and as set forth on Schedule
4.1(a), Intec is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
(b) Organization, Qualification, and Corporate Power. (i) Intec is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts. Intec is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
authorization or qualification are required, except where the failure to do so
would not have a material adverse effect on the conduct of Intec's business.
Such jurisdictions are listed on Schedule 4.1(b)(i). Intec has all licenses,
permits, and authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it. Schedule
4.1(b)(i) lists the directors and officers of Intec. Intec has delivered to
Nematron correct and complete copies of the Articles of Organization and Bylaws
of Intec (as amended to date). Intec is not in violation of any provision of
its Articles of Organization or Bylaws.
(ii) Schedule 4.1(b)(ii) sets forth the name and jurisdiction of
incorporation of each corporation or other entity in which Intec directly or
indirectly owns a 50% or greater interest in the outstanding voting securities
thereof (the "Intec Subsidiaries"). Intec owns all of the issued and
outstanding securities of each Intec Subsidiary free and clear of all liens,
charges, encumbrances and other rights of third parties, and all such securities
have been
9
<PAGE> 10
duly and validly issued and are fully paid and non-assessable. Each Intec
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its respective state or jurisdiction of
incorporation, each has the corporate power to own or lease its properties
and to carry on its business as presently conducted, and each is duly
authorized to do business as a foreign corporation and is in good standing
in all jurisdictions in which such authorization or qualification are
required. Such jurisdictions are listed in Schedule 4.1(b)(ii). Intec has
delivered to Nematron correct and complete copies of the Charter and Bylaws
of each of the Intec Subsidiaries (as amended to date). None of the Intec
Subsidiaries is in violation of any provision of its Charter or Bylaws.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Intec or an Intec Subsidiary is subject
or any provision of the Articles of Organization or Bylaws of Intec or an Intec
Subsidiary, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Intec or an Intec Subsidiary is a party or by which it is bound or to which any
of its assets is subject or (iii) result in the imposition of any Security
Interest upon any of Intec's or an Intec Subsidiary's assets.
(d) Capitalization. The entire authorized capital stock of Intec
consists of 1,300,000 shares of Intec Common Stock, $.01 par value, of which
1,143,600 shares are issued and outstanding, and 50,000 shares of Intec
Preferred Stock, 11,000 of which shares are issued and outstanding. Each of the
holders of Intec Shares owns the Intec Shares free and clear of any restrictions
on transfer (other than any restrictions under the Securities Act and state
securities laws). All of the issued and outstanding Intec Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the shareholders and in the amounts listed in Schedule 4.1(d) to this
Agreement. Neither Intec nor any Intec Subsidiary has any outstanding
subscriptions, warrants, options or other agreements or commitments obligating
it to issue any additional shares other than as listed and described on Schedule
4.1(d). Intec holds in treasury none of its own authorized shares.
(e) Equity Interests. Except for Intec's equity interest in the Intec
Subsidiaries, neither Intec nor any Intec Subsidiary controls, directly or
indirectly, or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association.
(f) Financial Statements. Intec has previously delivered to Nematron
the following financial statements (collectively the "Financial Statements"):
(i) audited consolidated balance sheets and the related consolidated statements
of operations and retained earnings and cash flows, and schedules of general and
administrative expenses as of and for the fiscal years ended October 31, 1995
and 1996 for Intec and the Intec Subsidiaries, and (ii) an unaudited
consolidated balance sheet as of January 31, 1997 and consolidated statements of
operations and
10
<PAGE> 11
cash flows for the months of November and December 1996 and January 1997
(such unaudited balance sheet and statements of operations and cash flows
are the "Most Recent Financial Statements") for Intec prepared on a basis
consistent with the preparation of such October 31, 1995 and 1996 audited
statements. The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP and present fairly the financial
condition of Intec and the Intec Subsidiaries as of such dates and the
results of operations and cash flows of Intec and the Intec Subsidiaries for
such periods. The Financial Statements (including the notes thereto) are
correct and complete and are consistent with the books and records of Intec
and the Intec Subsidiaries (which books and records are correct and
complete); provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material
individually or in the aggregate) and lack footnotes and other presentation
items.
(g) Subsequent Events. Except as set forth in Schedule 4.1(g), since
October 31, 1996, neither Intec nor any Intec Subsidiary has:
(i) issued, sold, purchased or redeemed any shares of its
capital stock; granted any stock options or made any other commitment to issue
or sell shares of its capital stock; otherwise amended its Articles of
Organization or Bylaws; or declared, set aside or made any payment or
distribution upon its capital stock;
(ii) to the best of its Knowledge, incurred any liability or
obligation under agreements or otherwise, except current liabilities entered
into or incurred in the Ordinary Course of Business or in connection with the
execution and performance of this Agreement; issued any notes or other corporate
debt securities; or waived any of its rights;
(iii) mortgaged, pledged or subjected to any lien any asset; or,
except in the Ordinary Course of Business, entered into any lease of real
property, machinery, equipment or buildings, or sold or transferred any
intangible asset;
(iv) effected any increases in salary, wage or other
compensation of any kind, whether current or deferred, to any officer, employee,
agent, broker or consultant, other than routine increases in the Ordinary Course
of Business; entered into any salary, wage or other compensation agreement with
a term of one year or longer with any employee or made any contribution to any
trust or plan for the benefit of employees except as required by the terms
thereof as now in effect;
(v) entered into any material transaction other than in the
Ordinary Course of Business, except in connection with the execution and
performance of this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby;
(vi) suffered any damage, destruction or loss to any of its
properties or assets (whether or not covered by insurance) which has had or is
reasonably likely to have a material adverse effect on the business, financial
condition or prospects of Intec and the Intec
11
<PAGE> 12
Subsidiaries, taken as a whole; or
(vii) suffered any adverse changes which in the aggregate have
had or are reasonably likely to have a material adverse effect on the business,
financial condition or prospects of Intec and the Intec Subsidiaries, taken as a
whole.
(h) Undisclosed Liabilities. Neither Intec nor any Intec Subsidiary
has any Liability, except for (i) Liabilities set forth on the consolidated
balance sheet of Intec and the Intec Subsidiaries as of January 31, 1997 (the
"January 1997 Balance Sheet") and (ii) Liabilities which have arisen after
January 31, 1997 in the Ordinary Course of Business (none of which liabilities
resulted from, arose out of, relate to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, violation of law
or provisions in the charter or bylaws of Intec or any Intec Subsidiary
providing for indemnification of directors, officers or employees).
(i) Legal Compliance; Licenses and Authorizations.
(i) Intec and the Intec Subsidiaries have complied in all
material respects with all applicable laws, statutes, rules, regulations and
orders of federal, state, local, and foreign governments (and all agencies
thereof), including, without limitation, all Environmental, Health and Safety
Laws, and, to the best of their knowledge no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
(ii) To the best of their Knowledge, Intec and the Intec
Subsidiaries hold all material licenses and other permits and authorizations
necessary for the operation of the business of Intec and the Intec Subsidiaries
as presently conducted and such licenses, permits and authorizations will be in
full force and effect for the entire duration of their respective unexpired
license terms, unimpaired by any acts or omissions of Intec or the Intec
Subsidiaries. There is not now pending or threatened any action by the grantor
of any such license, permit or authorization to revoke, cancel or refuse to
renew any such license, permit or authorization.
(j) Tax Returns and Taxes. Intec and the Intec Subsidiaries have (i)
filed all federal, state, local and other Tax returns and reports which are
required to be filed; and (ii) paid all Taxes, interest, penalties, assessments
and deficiencies due or assessed pursuant to such returns. Neither Intec nor any
Intec Subsidiary has received any notice of assessment of additional Taxes or
has executed or filed with any taxing authority any agreement extending the
period of assessment of any Taxes. There are no claims, examinations,
proceedings or proposed deficiencies for Taxes pending or, to the Knowledge of
Intec, threatened against Intec or any Intec Subsidiary. Each of Intec and the
Intec Subsidiaries is current in the payment of all withholding and other
employee taxes which are due and payable. There are no Tax liens on any of the
assets or properties of Intec or the Intec Subsidiaries. The accruals for Taxes
contained in the January 1997 Balance Sheet are adequate to cover all
liabilities for Taxes of Intec and the Intec Subsidiaries for all periods ending
on or before the date of such statement. All Taxes for periods
12
<PAGE> 13
beginning after the date of such statement up to the Closing have been paid
or are adequately reserved against on the books of Intec and the Intec
Subsidiaries. Neither Intec nor any Intec Subsidiary has been audited by
the Internal Revenue Service since the fiscal 1992 tax return, has received
any notice of an audit or has been threatened with an audit.
(k) Real Property. Neither Intec nor any Intec Subsidiary owns, or
has the obligation to purchase, any real property. Neither Intec nor any Intec
Subsidiary is a party to any lease of real property other than as set forth on
Schedule 4.1(k). Neither Intec nor any Intec Subsidiary is under any obligation
to become a party to any lease of real property.
(l) Intellectual Property. Set forth on Schedule 4.1(l) is a correct
and complete list of: (i) all domestic and foreign (A) patents and registered
trademarks, tradenames and service marks held, owned or used by Intec or any
Intec Subsidiary, and (B) patent, trademark, tradename and service mark
applications filed in connection with the business of Intec and the Intec
Subsidiaries ((A) and (B) collectively referred to herein as the "Issued Rights
and Applications"), (ii) all license and other agreements allowing Intec to use
intellectual property rights of third parties in the United States or foreign
countries entered into by Intec or affecting the business of Intec and the Intec
Subsidiaries (the "License Agreements"), and (iii) all other Intellectual
Property Rights which are material to the conduct of the business of Intec and
the Intec Subsidiaries. Except as set forth on Schedule 4.1(l), (x) no other
Intellectual Property Rights are required or necessary for Intec and the Intec
Subsidiaries to conduct their business in the normal course in accordance with
past practice, (y) Intec and the Intec Subsidiaries have and own all right,
title and interest in and to all of the Intellectual Property Rights (including
the exclusive right to use, sell, license or dispose of such rights and to bring
actions for infringement thereof) free and clear of any claims, liens, licenses
or encumbrances and (z) no person or entity has a right to receive a royalty or
similar payment in respect of any of the Intellectual Property Rights. Intec and
the Intec Subsidiaries have taken all appropriate actions and made all
applications and filings pursuant to applicable federal and state law to
perfect, protect and maintain their interests in the Issued Rights and
Applications. Neither Intec nor any Intec Subsidiary has any Knowledge of or
has received any notice of any infringements of, or claims or assertions of
infringement of, any of the Intellectual Property Rights, and neither Intec nor
any Intec Subsidiary has taken or omitted to take any action which would have
the effect of waiving any of its rights relating to any of the Intellectual
Property Rights. There have been no claims and, to the best of Intec's
Knowledge, there is no basis for any claim challenging the scope, validity or
enforceability of any of the Intellectual Property Rights. The manufacture,
sale or use of any products now or heretofore manufactured or sold by Intec or
an Intec Subsidiary did not and does not infringe (nor has any claim been made
that any such action infringes) the intellectual property rights of others.
Each of the License Agreements is in full force and effect and there has
occurred no default which is continuing in respect of any License Agreement.
(m) Tangible Assets. Intec and the Intec Subsidiaries own or lease
all buildings, machinery, equipment, and other tangible assets used in the
conduct of their business as presently conducted, free and clear of all liens
and encumbrances except as set forth on Schedule 4.1(m). Each such tangible
asset is in good operating condition and repair (subject to normal wear and
13
<PAGE> 14
tear) and is suitable for the purposes for which it presently is used.
(n) Contracts. Except as set forth on Schedule 4.1(n), neither Intec
nor any Intec Subsidiary is a party to any outstanding:
(i) written contract (or collective bargaining agreement) with
any labor union or representative of employees;
(ii) written or oral commitment, contract, or agreement
involving an obligation or liability on the part of Intec or any Intec
Subsidiary of more than $10,000 (excluding orders for the purchase of standard
products from Intec accepted in the Ordinary Course of Business and providing
for prevailing prices and customary conditions of sale);
(iii) written or oral lease of real property or personal
property;
(iv) written or oral agreement, contract or commitment
containing any covenant limiting the freedom of Intec or any Intec Subsidiary to
engage in any line of business or compete with any person or entity;
(v) written or oral employment, consulting, sales
representative, agency or distributor agreement that is not cancelable by Intec
or an Intec Subsidiary pursuant to its stated terms on notice of not longer than
three months and without liability, penalty or premium;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other plan or arrangement for
the benefit of its current or former directors, officers and employees;
(vii) written or oral agreement or contract relating to any
indebtedness or the mortgaging, pledging or the placing of a lien on any of the
properties or assets of Intec or an Intec Subsidiary which is not reflected in
the Financial Statements;
(viii) guaranty of any obligation;
(ix) loans to or from officers, directors or affiliates;
(x) any agreement with any shareholder of Intec or any of its
affiliates; or
(xi) any other written or oral agreement which is material to
the operations or business prospects of Intec and the Intec Subsidiaries, taken
as a whole.
Intec has delivered to Nematron a correct and complete copy of each written
agreement listed in Schedule 4.1(n) (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement
referred to in Schedule 4.1(n). With respect to each such agreement: (A)
14
<PAGE> 15
the agreement is legal, valid, binding, enforceable, and in full force and
effect, (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated by this Agreement and the
Related Agreements; (C) no party is in breach or default, and no event has
occurred which with notice or lapse of time could constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement and (D) no party has repudiated any provision of the agreement.
Except as set forth in Schedule 4.1(n), no contract or agreement described
in Schedule 4.1(n) requires the consent of any party to the execution of
this Agreement or the consummation of the transactions contemplated by this
Agreement.
(o) Notes and Accounts Receivable. To the best of Intec's Knowledge,
all notes and accounts receivable of Intec and the Intec Subsidiaries are
reflected properly on its books and records, are subject to no known setoffs or
counterclaims, are current and collectible, subject only to the reserve for bad
debts set forth on the face of the January 1997 Balance Sheet (rather than in
any notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Intec.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Intec or any Intec Subsidiary.
(q) Insurance. Set forth on Schedule 4.1(q) is a complete and
correct list of all policies of insurance of Intec or any Intec Subsidiary,
indicating for each policy the carrier, risks insured against, coverage limits,
deductible amounts, premium rate, expiration date, all outstanding claims
thereunder and whether the terms of such policy provide for retrospective
premium adjustments. All such policies are outstanding and in full force and
effect.
(r) Litigation. Neither Intec nor any Intec Subsidiary is (i)
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) a party or, to the Knowledge of Intec, threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. No director,
officer, or employee of Intec or an Intec Subsidiary has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against Intec.
(s) Employees. No employee has notified Intec or an Intec Subsidiary
of any plans to terminate employment with Intec or an Intec Subsidiary. Neither
Intec nor any Intec Subsidiary is or has been a party to or bound by any labor
or collective bargaining agreement.
(t) Employee Benefits.
(i) Schedule 4.1(t) to this Agreement lists each Employee
Benefit Plan that Intec or an Intec Subsidiary maintains or to which it
contributes.
15
<PAGE> 16
(A) To the best of Intec's Knowledge, each such Employee
Benefit Plan (and each related trust, insurance contract, or fund) complies in
form and in operation in all respects with its underlying documents, the
applicable requirements of ERISA, the Code, and other applicable laws.
(B) To the best of Intec's Knowledge, all applicable
disclosure and filing requirements have been timely satisfied with respect to
each such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Section 4980B have been met with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(C) All premiums or other payments for all periods ending on
or before the Closing Date have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(D) With respect to each such Employee Benefit Plan, Intec
has delivered to Nematron correct and complete copies of the plan documents and
summary plan descriptions, the most recent Form 5500 Annual Report, if
applicable, and all related insurance contracts, or trust or other funding
agreements which, if applicable, implement each such Employee Benefit Plan.
(ii) Neither Intec nor any Intec Subsidiary contributes to, has
ever contributed to, or has ever been required to contribute to any
Multiemployer Plan, and has no Liability (including withdrawal Liability) under
any Multiemployer Plan.
(iii) Neither Intec nor any Intec Subsidiary maintains, has ever
maintained, contributes, has ever contributed, or has ever been required to
contribute to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
(iv) There is no litigation, disputed claim (other than routine
claims for benefits), governmental proceeding, audit, inquiry or investigation
pending or, to the Knowledge of Intec, threatened with respect to any such
Employee Benefit Plan, its related assets or trusts, or any fiduciary,
administrator or sponsor of such Employee Benefit Plan.
(v) Except as disclosed in Schedule 4.1(t), with respect to
each Employee Pension Benefit Plan:
(A) each such plan which is intended to qualify as a
tax-qualified retirement plan under Code Section 401(a) has received a favorable
determination letter(s) from the Internal Revenue Service (copies of which have
been delivered to Nematron) as to qualification of such plan covering the period
from its adoption through the Closing Date; all
16
<PAGE> 17
amendments required to maintain such qualification have been timely adopted;
nothing has occurred, whether by action or failure to act, which has
resulted in or could cause the loss of such qualification (whether or not
eligible for review under the Internal Revenue Service's Closing Agreement
Program, Voluntary Compliance Resolution program or any similar governmental
agency program); and each trust thereunder is exempt from tax pursuant to
Code Section 501(a);
(B) to the best of Intec's Knowledge, no event has occurred
and no condition exists relating to any such plan that would subject Intec, any
Intec Subsidiary, Nematron or NemaSoft to any tax under Code Sections 4972 or
4979, or to any Liability under ERISA Section 502; and
(C) neither any such plan nor any other person or entity has
engaged in a "prohibited transaction" (as defined in ERISA Section 406 or Code
Section 4975) with respect to such Plan, for which no individual or class
exemption exists.
(u) Inventories.
(i) All inventory of Intec and the Intec Subsidiaries, including,
without limitation, raw materials, work in process, finished goods, returned
products, goods in transit and all other materials used or consumed in their
business and reflected on the January 1997 Balance Sheet: (A) was acquired and
has been maintained in the Ordinary Course of Business; (B) is of good and
merchantable quality; (C) consists substantially of a quality, quantity and
condition usable, leasable or saleable in the Ordinary Course of Business; (D)
is valued at reasonable amounts based on the Ordinary Course of Business during
the past six months; and (E) is not subject to any write-down or write-off.
(ii) Neither Intec nor any Intec Subsidiary is under any liability or obligation
with respect to the return of inventory in the possession of wholesalers,
retailers or other customers. (iii) All inventory has been valued on the
January 1997 Balance Sheet and on Intec's records and books of account at the
lower of cost (determined on a first in, first out basis) or market value on a
basis consistent with that reflected in the Financial Statements. (iv) Obsolete
inventory and inventory of below-standard quality has been written down to
amounts not in excess of realizable market value. (v) All of the
work-in-process, raw materials and supplies inventory can be used or consumed in
the Ordinary Course of Business and are not in amounts in excess of normal
requirements. (vi) Since the date of the January 1997 Balance Sheet, there has
been no change in the amount of inventory except changes as a result of the
purchase and sale of, or adjustment to, inventory in the Ordinary Course of
Business, including, but not limited to, established seasonal patterns.
(v) Insider Interests. Except as set forth on Schedule 4.1(v), (i)
no officer or director of Intec or an Intec Subsidiary, nor any shareholder of
Intec, has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of Intec or the Intec
Subsidiaries, and (ii) no such person has any business relationship with Intec
or an Intec Subsidiary, except as an officer, employee, director or shareholder
thereof.
17
<PAGE> 18
(w) Payments. Neither Intec nor the Intec Subsidiaries has directly
or indirectly, nor has any agent, representative or employee of any of them,
directly or indirectly, paid or delivered any fee, commission or other sum of
money or item or property, however characterized, to any finder, agent,
government official or other party, in the United States or any other country,
which is in any manner related to the operations of Intec or the Intec
Subsidiaries and which is, or may be with the passage of time or discovery,
illegal under any federal, state or local law (including, without limitation,
the U.S. Foreign Corrupt Practices Act) or any other country having
jurisdiction. Neither Intec nor the Intec Subsidiaries have participated,
directly or indirectly, in any boycotts or other similar practices affecting any
of its actual or potential customers and Intec and the Intec Subsidiaries have
at all times done business in an open and ethical manner.
(x) Brokers' Fees. Neither Intec nor any Intec Subsidiary has any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement, other
than to Heinemann & Co., Inc. under a Letter of Agreement dated February 2,
1995.
4.2 Representations and Warranties of Nematron and NemaSoft. Nematron
represents on behalf of itself and NemaSoft as follows:
(a) Authorization of Transaction. Nematron and NemaSoft each has full
corporate power and authority to execute and deliver this Agreement and each
Related Agreement being executed and delivered by Nematron or NemaSoft, and to
consummate the transactions contemplated hereby and thereby and perform their
respective obligations hereunder and thereunder. This Agreement constitutes the
valid and legally binding obligation of Nematron and NemaSoft each enforceable
in accordance with its terms and conditions. Except for the filing of the
Certificate of Merger with the Michigan Department of Consumer and Industry
Services and any required blue sky securities filings, neither Nematron nor
NemaSoft is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
(b) Organization and Qualification. Nematron and NemaSoft each is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Michigan. Each of Nematron and NemaSoft is duly authorized
to conduct its business and is in good standing in each jurisdiction where the
failure to so qualify would have a material adverse effect on the business of
Nematron or NemaSoft. The entire authorized capital stock of NemaSoft consists
of 10,000,000 shares of common stock, of which one share is authorized and
outstanding.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Nematron or NemaSoft is subject or any
provision of its articles of incorporation or bylaws or (ii) result in a breach
of, constitute a default
18
<PAGE> 19
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which Nematron or NemaSoft is a party or by which either is bound or to
which any of their assets is subject.
(d) Nematron SEC Documents. Nematron has delivered to Intec true and
complete copies of its Form 10-KSB, as amended, for the year ended September 30,
1996 and all other documents that Nematron has filed with the SEC since December
31, 1996 pursuant to the Exchange Act (the "Nematron SEC Documents").
(e) Merger Consideration. The shares of Nematron Common Stock to be
issued and delivered pursuant to this Agreement and the Merger and the shares of
Nematron Common Stock to be issued upon exercise of the Warrants are duly
authorized and, when issued and delivered as contemplated herein, will be duly
and validly issued, fully paid and non-assessable.
(f) Brokers' Fees. Nematron has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(g) Events Subsequent to September 30, 1996. Except as set forth in
Schedule 4.2(g) or as otherwise contemplated by this Agreement, since September
30, 1996, Nematron has not:
(i) amended its Amended and Restated Articles of Incorporation
or Amended and Restated Bylaws;
(ii) incurred any liability or obligation under agreements or
otherwise, except current liabilities entered into or incurred in the ordinary
course of business or in connection with the execution and performance of this
Agreement;
(iii) entered into any material transaction other than in the
ordinary course of its business, except in connection with the execution and
performance of this Agreement;
(iv) entered into any agreement or arrangement that will need to
be filed as an exhibit to a report to be filed pursuant to the Exchange Act in
accordance with the requirements of Regulation S-B promulgated under the
Securities Act;
(v) become (A) subject to any outstanding injunction, judgment,
order, decree, ruling or charge or (B) a party or, to the Knowledge of Nematron,
is threatened to be made a party, to any action, suit, proceeding, hearing, or
investigation of, in or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction of before any
arbitrator, which, with respect to (a) or (b), would be required to be disclosed
in a report filed by Nematron under the Exchange Act;
19
<PAGE> 20
(vi) suffered any damage, destruction or loss to any of the
properties or assets (whether or not covered by insurance) that in the aggregate
are reasonably likely to have a material adverse effect on Nematron's business
or financial condition; or
(vii) suffered any adverse changes that in the aggregate have had
or are reasonably likely to have a material adverse effect on Nematron's
business or financial condition.
(h) Nasdaq Compliance. Nematron complies with each of the
quantitative and non-quantitative maintenance criteria necessary to continue to
be listed as a Nasdaq National Market security.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
5.1 General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section 7 below).
5.2 Shareholders' Meeting. In order to consummate the Merger, Intec,
acting through its Board of Directors, shall in accordance with its Articles
of Organization and Bylaws and applicable law duly call, give notice of,
convene and hold a special meeting of its shareholders as soon as
practicable following the date hereof (and in no event less than 30 days
after the date hereof) for the purpose of approving and adopting this
Agreement and the transactions contemplated hereby and, subject to its
fiduciary duties under applicable law (as determined following consultation
with counsel), include in the proxy materials distributed to holders of
Intec Shares entitled to vote at such meeting the recommendation of its
Board of Directors that shareholders of Intec vote in favor of the approval
and use its best efforts to solicit votes and proxies in favor of the
approval and adoption of this Agreement and the transactions contemplated
hereby.
5.3 Notices and Consents. Nematron, NemaSoft and Intec will give any
notices to third parties, and use their best efforts to obtain any
third-party authorizations, consents, or approvals required in order to
consummate the transactions contemplated by this Agreement.
5.4 Operation of Business. From the date of this Agreement until the
Effective Time, Intec will operate its business and cause each Intec
Subsidiary to operate its business in the Ordinary Course of Business.
Intec will use its best efforts to preserve intact the present business
organizations of Intec and the Intec Subsidiaries, maintain in effect all
material licenses, permits and approvals of governmental authorities
necessary for the conduct of its present business and maintain its present
operations, physical facilities, working conditions and relationships with
lessors, suppliers, customers, clients and employees. Neither Intec nor any
Intec Subsidiary will
20
<PAGE> 21
engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business without the prior written consent of
Nematron and NemaSoft. Without limiting the generality of the foregoing,
from the date of this Agreement until the Effective Time, Intec and the
Intec Subsidiaries will not, without the prior written consent of Nematron:
(a) amend its Articles of Incorporation or Bylaws;
(b) pay or declare any cash dividend, or other dividend or
distribution with respect to its capital stock;
(c) issue, transfer, sell or deliver, or commit to issue, transfer,
sell or deliver, any shares of its capital stock (or any options, warrants or
any rights thereto including, without limitation, any securities convertible
into or exchangeable, with or without additional consideration, for such capital
stock), except the issuance of shares of Intec Common Stock upon exercise of
employee stock options which are outstanding on the date hereof and disclosed in
Schedule 4.1;
(d) increase or reduce the number of shares of its capital stock by
split-up, reverse split, reclassification or distribution of stock dividends;
(e) purchase or otherwise acquire for any consideration any
outstanding shares of its capital stock or securities carrying the right to
acquire, or convertible into or exchangeable for such stock, with or without
additional consideration;
(f) acquire by merger or consolidation with, or merge or consolidate
with, or purchase substantially all of the assets of, or otherwise acquire any
business of any corporation, partnership, association or other business
organization or division thereof, or make any investment of a capital nature
either by purchase of stock or securities, contributions to capital, property
transfer or otherwise, or by the purchase of any property or assets of any other
individual, partnership, firm or corporation;
(g) incur additional indebtedness for borrowed money in excess of
$10,000 in the aggregate;
(h) adopt or materially modify any bonus, pension, profit-sharing or
other compensation plan or enter into any contract of employment with any
employee which is not terminable at will without cost or other liability;
(i) adopt, enter into or amend in any material respect any collective
bargaining, employment, severance or termination agreement or arrangement with
any person or make any change in its key management structure, including, but
not limited to, the hiring of additional employees or the termination of
existing employees;
21
<PAGE> 22
(j) discharge or satisfy any lien or encumbrance or pay any obligation
or liability (whether accrued, absolute, contingent or otherwise), except
current liabilities incurred in the Ordinary Course of Business;
(k) mortgage, pledge or subject to lien, charge, security interest or
any other encumbrance any of its assets or property;
(l) transfer or lease any of its assets or property except in the
Ordinary Course of Business;
(m) cancel or compromise any debt or claim other than in the Ordinary
Course of Business in an aggregate amount in excess of $10,000;
(n) waive or release any rights, or settle any claim, in an aggregate
amount which is in excess of $10,000;
(o) transfer or grant any rights under any leases, licenses or other
agreements, other than in the Ordinary Course of Business;
(p) make or grant any general or individual wage or salary increase;
(q) fail to pay or discharge its accounts payable, debts or
liabilities when due;
(r) make or enter into any contract, commitment or transaction which
involves an expenditure in excess of $10,000, or renew, extend, amend or modify
any contract, commitment or transaction involving in excess of $10,000, provided
that Intec may renew or replace, in the Ordinary Course of Business, insurance
contracts scheduled to expire prior to the Effective Time;
(s) enter into or amend any contract, agreement or other transaction
with any officer, director or shareholder of Intec or an Intec Subsidiary, or
any affiliate of such an officer, director or shareholder, on terms that are
less favorable than could be obtained from an unrelated third party on an arm's
length basis.
5.5 Full Access to and Provision of Information. Intec will permit
Nematron and NemaSoft and their designees to have full and complete access
upon reasonable notice and during normal business hours, to all premises,
properties, personnel, books, records (including Tax records), contracts,
and documents of or pertaining to Intec. Intec will deliver to Nematron or
NemaSoft such other documentation and information which is reasonably
requested. Except as required by law or regulation, all information so
obtained not otherwise public will be held in confidence.
5.6 Notice of Developments. Upon becoming aware of such facts or
circumstances,
22
<PAGE> 23
each Party will give prompt written notice to the other Parties of (a) the
occurrence or failure to occur of any event the effect of which is that any
representation and warranty made by such Party herein is untrue and (b) the
receipt of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection
with the transactions contemplated by this Agreement. To the extent such
facts or circumstances would cause a Schedule to this Agreement to become
incorrect or incomplete, such Schedule shall be amended and delivered
promptly to the other parties (and in any event prior to the Closing). No
disclosure by any Party pursuant to this Section 5.6, however, will be
deemed to amend or supplement this Agreement or the Schedules (except for
notification of increases in the outstanding number of shares of Intec
Common Stock due to the exercise of employee stock options outstanding on
the date hereof and disclosed in Schedule 4.1), or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant, unless such
misrepresentation or breach is waived in accordance with Section 10.11.
5.7 Exclusivity. Intec and the Shareholders agree, and Intec shall use
its best efforts to cause its officers, directors, agents and shareholders,
not to solicit, encourage or participate, directly or indirectly, in any
manner in any discussion with, or furnish or caused to be furnished any
information to, any person other than Nematron or NemaSoft in connection
with, or negotiate for or otherwise pursue, the sale of Intec Shares or any
rights thereto, the sale of the capital stock of any Intec Subsidiary, the
sale of all or substantially all of the assets of Intec or an Intec
Subsidiary or any portion of their business, or any business combination or
merger of Intec with any other party prior to the termination of this
Agreement pursuant to Section 9.1. Intec shall promptly inform Nematron and
NemaSoft of any inquiries or proposals with respect to any of the foregoing.
In the event that the agreements in this paragraph are violated by Intec,
the Shareholders or Intec's officers, directors, employees, agents or
shareholders, and Intec does not consummate the Merger, then, in addition to
other remedies available to Nematron, Nematron shall be entitled to receive
from Intec all costs and out-of-pocket expenses (including reasonable
attorneys' fees and expenses related to the Merger and any related
financing) which Nematron and NemaSoft may have incurred.
5.8 WARN Act. Intec agrees that, if requested by Nematron, it shall,
on behalf of Nematron and NemaSoft, issue such notices as are required under
the Worker Adjustment and Retraining Notification Act of 1988 ("WARN Act")
or any similarly applicable state or local law. No such notices shall be
given without the prior approval of Nematron.
5.9 Press Releases and Public Announcements. Neither Intec nor the
Shareholders will issue any press release or make any public announcement
relating to the subject matter of this Agreement or any Related Agreement
without the prior written approval of Nematron.
5.10 Employee Benefits. Nematron and Intec shall cooperate in
effecting the following treatment of the Intec Employee Benefit Plans,
except as may be otherwise mutually agreed by Nematron and Intec prior to
Closing.
23
<PAGE> 24
(a) 401(k) Plan. Immediately prior to Closing, Intec shall terminate
the Intec Controls Corp. 401(k) Plan. Not later than April 1, 1997, former
Intec employees who satisfy the eligibility requirements, shall be covered under
the Nematron 401(k) plan with past service credit from Intec for eligibility and
vesting purposes. Former Intec employees may elect to roll over their Intec
401(k) account balance into the Nematron 401(k) Plan.
(b) Short and Long-Term Disability. Subject to insurer approval, if
required, Nematron shall maintain Intec's short and long-term disability plans
through December 31, 1997. Effective January 1, 1998, former Intec employees
who satisfy the eligibility requirements, shall be covered under Nematron's
short and long-term disability plans.
(c) Cafeteria Plan - Medical, Dental and Flexible Spending Account.
Nematron shall maintain Intec's cafeteria plan and underlying medical plan,
dental plan and flexible spending account through December 31, 1997. Effective
January 1, 1998, former Intec employees who satisfy the eligibility
requirements, shall be covered under Nematron's cafeteria plan and underlying
medical plan, dental plan and flexible spending account.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
6.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement or any
Related Agreement, each of the Parties will, to the extent permitted by law,
take such further action (including the execution and delivery of such
further instruments and documents and obtaining such further consents) as
any other Party may request, all at the sole cost and expense of the
requesting Party. Intec acknowledges and agrees that from and after the
Closing, Nematron will be entitled to possession of all documents, books,
records (including Tax records), agreements and financial data in Intec's
possession of any sort relating to Intec or the Intec Subsidiaries.
6.2 Indemnification. From and after the Effective Time, to the extent
legally permissible, Nematron shall indemnify, defend and hold harmless each
person who is now or who becomes, prior to the Effective Time, a director of
Intec against any and all liabilities and expenses, including amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees, reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, in which he may be involved or with which he may be threatened, by
reason of his having been a director of Intec (including, without
limitation, any claim that is based upon or arises out of the Merger or the
transactions contemplated by this Agreement or the Related Agreements, and
in connection with, arising out of or relating to the enforcement of the
obligations of Nematron in this Section 6.2) (collectively, "Claims"),
except with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interests of Intec. Except to the extent
prohibited by law, expenses, including counsel fees, reasonably incurred by
any such director in connection with the defense or
24
<PAGE> 25
disposition of any such action, suit or proceeding shall be paid from time
to time by Nematron in advance of the final disposition thereof upon receipt
of an undertaking by such director to repay the amounts so paid to Nematron
if it is ultimately determined that indemnification is not required or
permitted under this Section 6.2.
(b) From and after the Effective Time, to the fullest extent permitted
by law, the Surviving Corporation shall honor any obligation of Intec existing
at the Effective Time with respect to the indemnification of any director,
officer or employee of Intec (including such persons who serve or who have
served at the request of Intec as a director, officer or trustee of another
organization in which Intec has an interest) (collectively, the "indemnitees")
arising out of Intec's Articles of Organization or Bylaws as if such obligations
were pursuant to a contract or arrangement between the Surviving Corporation and
such indemnitees.
(c) In the event Nematron or any of its successors or assigns (i)
reorganizes or consolidates with or merges into or enters into another business
combination transaction with any other person or entity and is not the
resulting, continuing or surviving corporation or entity of such consolidation,
merger or transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties or assets to any person or entity, then, and
in each such case, proper provision shall be made so that the successors and
assigns of Nematron assume the obligations of Nematron set forth above in this
Section 6.2.
(d) This Section 6.2 shall be construed as an agreement between
Nematron and the directors of Intec and the other indemnitees described in this
Section 6.2 as unaffiliated third parties, as to which agreement such persons
are intended to be third-party beneficiaries of the respective benefits
conferred upon such persons by this Section 6.2.
6.3 Option Grants. Nematron agrees to grant or cause to be granted
pursuant to its 1993 Stock Option Plan, as of the date of the Effective
Time, incentive stock options to purchase Nematron Shares to the persons and
in the amounts listed on Schedule 6.3 at an exercise price determined in
accordance with such plan.
7. CONDITIONS TO OBLIGATIONS TO CLOSE THE MERGER.
7.1 Conditions to Obligation of Nematron and NemaSoft to Close the
Merger. The obligation of Nematron and NemaSoft to consummate the
transactions to be performed by them in connection with the Closing is
subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties set forth in Section 4.1 shall
be true and correct at and as of the Closing Date.
(b) Intec and the Shareholders shall have performed and complied with
all of their covenants under this Agreement in all material respects through the
Closing.
25
<PAGE> 26
(c) This Agreement and the transactions contemplated hereby
(including, without limitation, the Merger) shall have been duly approved by the
holders of the requisite number of the Intec Shares in accordance with
applicable law and Intec's Articles of Organization and Bylaws.
(d) The number of Intec Shares not voted in favor of the Merger and
this Agreement and as to which notice has been given by the holders thereof as
provided in Section 86 of the MABCL shall not constitute more than 5% of the
total number of Intec Shares outstanding on the Closing Date.
(e) Intec shall have delivered to Nematron or NemaSoft an unaudited
balance sheet and related statements of operations and cash flow for the months
subsequent to January 31, 1997 to the Closing Date.
(f) Intec shall have procured all of the third party consents required
in order for it to consummate the transactions contemplated by this Agreement
and the Related Agreements.
(g) All required governmental and regulatory approvals for the Merger,
including any approvals required under federal or state securities laws, shall
have been received.
(h) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or any Related Agreement, (ii) cause any of the transactions as set forth in
this Agreement or any Related Agreement to be rescinded following consummation,
or (iii) affect adversely the right of Intec to own its assets and to operate
its business as it currently operates, and no such injunction, judgment, order,
decree, ruling, or charge described in (i), (ii) and (iii) shall be in effect.
(i) All actions to be taken by Intec and the Shareholders in
connection with the consummation of the Merger and all certificates, opinions,
instruments, and other documents delivered at the Closing or required to effect
the Merger shall be satisfactory in form and substance to Nematron and its
counsel.
(j) Intec and the Shareholders shall have made, or caused to be made,
all of the deliveries required by Section 8.2(b).
(k) There shall not have occurred since the date hereof any material
adverse change in the condition (financial or otherwise), assets, liabilities,
results of operations or prospects of Intec or the Intec Subsidiaries.
7.2 Conditions to Obligation of Intec to Close the Merger. The
obligation of Intec to consummate the transactions to be performed by it in
connection with the Closing is subject to
26
<PAGE> 27
satisfaction or waiver of the following conditions:
(a) The representations and warranties set forth in Section 4.2 shall
be true and correct at and as of the Closing Date.
(b) Nematron and NemaSoft shall have performed and complied with all
of their covenants under this Agreement in all material respects through the
Closing.
(c) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or any Related Agreement, or (ii) cause any of the transactions contemplated by
this Agreement or any Related Agreement to be rescinded following consummation,
and no such injunction, judgment, order, decree, ruling, or charge described in
(i) and (ii) shall be in effect.
(d) Nematron and NemaSoft shall have made all of the deliveries
required by Section 8.2(a).
8. CLOSING.
8.1 Time and Place. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement
(the "Closing") will take place at such location, on such date and at such
time as the Parties mutually agree at the earliest practicable time after
the satisfaction or waiver of all conditions to the Merger set forth in
Article 7 herein, but in no event shall it occur later than 3 business days
after the date of the meeting of Intec shareholders required to be held
pursuant to Section 5.2 (the "Closing Date").
8.2 Deliveries at the Closing.
(a) At the Closing, Nematron or NemaSoft will deliver or cause to be
delivered to Intec and the Shareholders the following:
(i) Certified resolutions of Nematron's and NemaSoft's Board of
Directors, and of Nematron as NemaSoft's sole shareholder, authorizing the
execution and delivery of this Agreement, the Related Agreements to which
Nematron or NemaSoft is a party and the consummation of the Merger;
(ii) A certificate of Nematron, dated the Closing Date, signed by
the President and a Vice President of Nematron, to the effect that the
conditions of Section 7.2 have been fulfilled.
27
<PAGE> 28
(iii) The written opinion of Dykema Gossett PLLC, counsel to
Nematron and NemaSoft, dated the Closing Date, in the form attached as Exhibit
8.2(a)(iii);
(iv) The Employment and Noncompetition Agreements executed by
Nematron or NemaSoft;
(v) The Certificate of Merger and Articles of Merger executed
by NemaSoft; and
(vi) The Registration Rights Agreement executed by Nematron.
(b) At the Closing, Intec and the Shareholders will deliver or cause
to be delivered to Nematron and NemaSoft the following:
(i) A certificate in the form attached as Exhibit 8.2(b)(i) as
to the (A) resolutions of Intec's Board of Directors and shareholders
authorizing the execution and delivery of this Agreement, the Related Agreements
to which Intec or the Shareholders are parties and the consummation of the
Merger, (B) the authenticity of the bylaws of Intec, and (C) the incumbency of
certain Intec officers;
(ii) A certificate of Intec, dated the Closing Date, signed by
the President and a Vice President of Intec and by the Shareholders, to the
effect that the conditions of Section 7.1 have been fulfilled.
(iii) The opinion of Choate, Hall & Stewart, dated the Closing
Date, in the form attached as Exhibit 8.2(b)(iii);
(iv) A copy of the Articles of Organization of Intec (certified
by the Massachusetts Secretary of State) and certificates of good standing from
the appropriate governmental officials stating that Intec is in good standing in
Massachusetts, that each Intec Subsidiary is in good standing in its
jurisdiction of incorporation, that Intec is in good standing as a foreign
corporation in each jurisdiction listed in Schedule 4.1(b)(i) and that the Intec
Subsidiaries are in good standing as foreign corporations in the jurisdictions
listed in Schedule 4.1(b)(ii);
(v) The Employment and Noncompetition Agreements executed by
each Shareholder;
(vi) The written resignations of all such officers and directors
of Intec as may be requested by Nematron prior to Closing, effective as of the
Effective Time;
(vii) The Certificate of Merger and Articles of Merger;
28
<PAGE> 29
(viii) The minute books of Intec and the Intec Subsidiaries;
(ix) An Investment Representation Letter from each holder of
Intec Shares other than holders of Intec Shares not voted in favor of the Merger
and this Agreement and as to which notice has been given by the holders thereof
as provided in Section 86 of the MABCL;
(x) Written assignments in recordable form of all Issued
Rights and Applications;
(xi) An agreement executed by each holder of an option, warrant
or other right to acquire Intec Shares which terminates each such option,
warrant or right effective immediately prior to the Effective Time;
(xii) The Registration Rights Agreement executed by each holder
of Intec Shares as of the Closing Date; and
(xiii) Such other information, documents or instruments from
Intec or the Shareholders as Nematron or NemaSoft may reasonably request for the
purpose of effectuating the transactions contemplated by the Agreement and the
Related Agreements.
9. TERMINATION.
9.1 Termination. Notwithstanding the adoption of this Agreement by the
Board of Directors of Nematron, NemaSoft and Intec and the shareholders of
NemaSoft and Intec, this Agreement may be terminated, and the Merger
abandoned, at any time before the Effective Time in any of the following
ways:
(a) by the mutual written agreement of the Parties;
(b) by Nematron or NemaSoft if any of the conditions set forth in
Section 7.1 have not been satisfied at Closing and have not been waived by
Nematron or NemaSoft;
(c) by Intec if any of the conditions set forth in Section 7.2 have
not been satisfied at Closing and have not been waived by Intec; or
(d) by Intec or Nematron if the Closing Date does not occur on or
before March 28, 1997; provided, that the right to terminate this Agreement
under this paragraph (d) shall not be available to any party whose failure to
fulfill any obligations under this Agreement has been the cause of or resulted
in the failure of the consummation of the Merger to occur on or before such
date.
A Party desiring to terminate this Agreement must give written notice of
such termination to the
29
<PAGE> 30
other Parties, specifying the paragraph of this Section 9.1 pursuant to
which such termination is made and the reason(s) therefor.
9.2 Effect of Termination. Upon termination of this Agreement (and the
Merger) pursuant to Section 9.1 above, this Agreement will become void, each
Party will be responsible for its out-of-pocket expenses (including
professional fees and expenses) and the right to terminate shall be the sole
remedy for any failure of any condition of this Agreement except for a
breach of Sections 5.7 or 5.9.
10. MISCELLANEOUS.
10.1 Representations and Warranties. The representations and
warranties of the Parties shall survive until the date which is one year
after the Closing.
10.2 Complete Agreement; Amendment. This Agreement and the Related
Agreements, including the Exhibits, the Schedules and other writings
referred to in or delivered pursuant to or simultaneously with this
Agreement, contain the entire understanding of the Parties with respect to
the transactions contemplated by this Agreement. No representation,
inducement, agreement, promise or understanding altering, modifying, taking
from or adding to the terms and conditions hereof will have any force and
effect unless the same is in writing and validly executed by the Parties
hereto.
10.3 Notices. All notices or other communications required or
permitted hereunder will be in writing and will be deemed to have been duly
given if sent by registered or certified mail, postage prepaid and return
receipt requested, addressed as follows:
(a) if to Nematron or NemaSoft, to:
Mr. Frank G. Logan, III, President
Nematron Corporation
5840 Interface Drive
Ann Arbor, Michigan 48103
with a copy to:
Mark A. Metz, Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
(b) If to Intec, to:
30
<PAGE> 31
Thomas W. Kraus, President
Intec Controls Corp.
55 West Street
Walpole, Massachusetts 02081
with a copy to:
William C. Rogers, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
(c) If to the Shareholders, to:
Thomas W. Kraus
9 Baker Street
Foxboro, Massachusetts 02035; and
Robert O. Mick
50 Desert Brook Road
Wrentham, Massachusetts 02093
or to such other address as will be furnished in writing by any Party, and
any such notice or communication will be deemed to have been given as of the
date so mailed. Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication
will be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein
set forth.
10.4 Expenses. Each Party will be responsible for the payment of the
fees and expenses which he or it incurs for counsel, accountants, brokers
and otherwise in connection with this Agreement.
10.5 Assignment. This Agreement will be binding upon and inure to the
benefit of, and be enforceable by, the Parties hereto and their respective
successors and assigns, provided that neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned by
Intec or the Shareholders without the prior written consent of Nematron; and
further provided, that Nematron and/or NemaSoft may assign, in their sole
discretion, any or all of their rights, interests and obligations under this
Agreement to each other or to any direct or indirect
31
<PAGE> 32
wholly owned subsidiary of Nematron.
10.6 Counterparts. This Agreement may be executed in counterparts, all
of which together will be deemed an original of this Agreement.
10.7 Governing Law. This Agreement will be governed by the laws of the
State of Michigan without regard to its rules regarding choice of law.
10.8 Interpretation. The titles of the Sections have been inserted as
a matter of convenience and reference only and will not control or affect
the meaning or construction of this Agreement. References to Sections refer
to Sections of this Agreement unless otherwise stated. Words such as
"herein", "hereof", "hereby" and "hereunder", and words of similar import,
unless the context requires otherwise, refer to this Agreement. As used in
this Agreement, the masculine feminine and neuter genders shall be deemed to
include the others if the context requires.
10.9 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof. References to this Agreement herein shall be
construed as references to the Agreement with all Exhibits and Schedules.
10.10 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the Parties and no presumption or burden
of proof will arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
10.11 Waivers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence. Any waiver of any obligation contained in this Agreement
is freely, knowingly and voluntarily given by each Party, without any duress
or coercion, after each Party has had opportunity to consult with its
counsel and has carefully and completely read all of the terms and
provisions of this Agreement. No Party will be deemed to have made any
waiver unless it has been made in writing and signed by the Party to be
charged with having made such waiver.
32
<PAGE> 33
IN WITNESS WHEREOF, the Shareholders and the duly authorized officers
of Nematron, NemaSoft and Intec have hereunto set their hands and delivered
this Agreement as of the date and year first above written.
NEMATRON CORPORATION
By: /s/ Frank G. Logan
-------------------------
Frank G. Logan, III
Its: President
NEMASOFT, INC.
By: /s/ Frank G. Logan
-------------------------
Its: CEO
-------------------------
INTEC CONTROLS CORP.
By: /s/ Thomas W. Kraus
-------------------------
Its: President
-------------------------
THOMAS W. KRAUS
/s/ Thomas W. Kraus
-------------------------
ROBERT O. MICK
/s/ Robert O. Mick
-------------------------
33
<PAGE> 34
Schedules to the Agreement:
4.1(a) Governmental notices, consents, approvals
4.1(b)(i) List of jurisdictions in which qualified as a
foreign corporation and list of officers and directors
4.1(b)(ii) List of Intec Subsidiaries and jurisdictions where
qualified as a foreign corporation
4.1(d) Shareholders, holdings and outstanding options,
warrants and other rights
4.1(f) Audited and unaudited financial statements
4.1(g) Subsequent Events
4.1(k) Leases
4.1(l) Intellectual property
4.1(m) Exceptions to tangible assets owned
4.1(n) Contracts
4.1(q) Insurance
4.1(t) Employee benefits
4.1(v) Insider interests
4.2(g) Nematron subsequent events
6.3 Option recipients
Exhibits to the Agreement:
3.1(a) Form of Warrant
8.2(a)(iii) Form of Opinion of Dykema Gossett PLLC
8.2(a)(v) Form of Employment and Noncompetition Agreement
8.2(a)(vi) Form of Registration Rights Agreement
8.2(b)(i) Form of Intec Certificate re: Bylaws, Resolution and
Incumbency
8.2(b)(iii) Form of Opinion of Choate Hall & Stewart
8.2(b)(ix) Form of Investment Representation Letter
34
<PAGE> 35
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER,
DATED AS OF FEBRUARY 20, 1997,
BY AND AMONG NEMATRON CORPORATION, NEMASOFT, INC., INTEC
CONTROLS CORP., THOMAS W. KRAUS AND ROBERT O. MICK
This Amendment No. 1 to the Agreement and Plan of Merger, dated as of
February 20, 1997, by and among Nematron Corporation, NemaSoft, Inc., Intec
Controls Corp., Thomas W. Kraus and Robert O. Mick (the "Merger Agreement") is
made as of this 28th day of March, 1997.
WHEREAS, each of the parties desires to amend Section 9.1(d) of the
Merger Agreement to change the date therein from March 28, 1997 to March 31,
1997; and
WHEREAS, Section 10.2 of the Merger Agreement provides that an
amendment thereof must be in writing and signed by each of the parties thereto;
NOW THEREFORE, the parties to the Merger Agreement hereby amend
Section 9.1(d) of the Merger Agreement to change the date therein from March 28,
1997 to March 31, 1997.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
delivered this Amendment as of the date and year first above written.
NEMATRON CORPORATION
By: /s/ Frank G. Logan
----------------------------
Frank G. Logan, III
Its: President
NEMASOFT, INC.
By: /s/Frank G. Logan
----------------------------
Its: CEO
----------------------------
35
<PAGE> 36
INTEC CONTROLS CORP.
By: /s/ Thomas W. Kraus
---------------------------
Its: President
---------------------------
THOMAS W. KRAUS
/s/ Thomas W. Kraus
---------------------------
ROBERT O. MICK
/s/ Robert O. Mick
---------------------------
36
<PAGE> 1
EXHIBIT 4.1
NEITHER THIS STOCK PURCHASE WARRANT NOR THE SECURITIES
WHICH MAY BE PURCHASED PURSUANT HERETO HAVE 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. THIS STOCK PURCHASE
WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED
PURSUANT HERETO 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
March 31, 1997
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") up to
shares (the "Warrant Shares") of common stock of the Company,
no par value (the "Common Stock"), at the price of $6.73 per share (the
"Per Share Warrant Price") at any time and from time to time after the date
hereof and until February 20, 2000 (the "Expiration Date") 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." The number of shares purchasable hereunder and the Per Share
Warrant Price are subject to adjustment, as hereinafter provided.
The Company has issued the Warrants pursuant to the terms of an
Agreement and Plan of Merger among the Company, NemaSoft, Inc., Intec
Controls Corp., Thomas W. Kraus and Robert O. Mick, dated as of February
20, 1997 (the "Merger Agreement"). This Warrant is one of several warrants
issued by the Company for the purchase of an aggregate of 125,000 shares of
Common Stock issued to the persons listed on Schedule A to this Warrant as
part of the consideration paid by the Company pursuant to the Merger
Agreement.
<PAGE> 2
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
(a) 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 on or before the Expiration Date 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 shall 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 Warrant 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.
(b) Notwithstanding anything to the contrary contained in this Section
1, the holder of this Warrant may elect to receive Warrant Shares on a "net
exercise" basis in an amount equal to the value of the Warrant by surrender
of the Warrant at the principal office of the Company together with notice
of such election, in which event the Company shall issue to the holder of
this Warrant a number of shares of Common Stock computed using the
following formula:
X = Y(A-B)
------
A
Where: X = the number of Warrant Shares to be
issued to the Holder;
Y = the number of Warrant Shares issuable
upon exercise of the Warrant;
A = the Fair Market Value of one share of
Common Stock; and
B = Per Share Warrant Price.
As used herein, "Fair Market Value" shall mean the average of the last
reported sale prices per share of the Common Stock on the Nasdaq Stock
Market (or, if the Common Stock is then listed for trading on a national
securities exchange, such exchange) for the ten consecutive trading day
period ending on the trading day immediately preceding the date on which
the Warrant is exercised, or, if there have been no reported sales on any
such day, the average of the reported highest bid and lowest asked prices
at the end of such day, or, if on any day the
2
<PAGE> 3
Common Stock is not listed for trading on the Nasdaq Stock Market or a
national securities exchange, the average of the highest bid and lowest
asked price on such day in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any similar successor
organization. If at any time the Common Stock is not listed on a national
securities exchange or the Nasdaq Stock Market or quoted in the
over-the-counter market, the "Fair Market Value" shall be the highest price
per share which the Company could obtain from a willing buyer (other than a
current employee or director) for shares of Common Stock sold by the
Company from authorized but unissued shares, as determined in good faith by
the Board of Directors of the Company, unless the Company shall become
subject to a merger, acquisition or other consolidation pursuant to which
the Company is not the surviving party, in which case the "Fair Market
Value" shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock in such merger,
acquisition or other consolidation.
(c) 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 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 this Warrant.
3. ADJUSTMENTS
The number and kind of Warrant Shares 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 (or other class or series of capital stock of the Company) which he
would have owned immediately after such event had the Warrant been
exercised immediately prior to the happening of such event. Such
adjustment shall 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
3
<PAGE> 4
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 Warrant Shares shall be required
unless such adjustment would require an increase or decrease of at least
one-tenth of a share in the number of Warrant Shares; 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 Aggregate Warrant Price shall be
proportionately reduced.
(e) The Company shall not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the carrying out
of all of the provisions of this Section 3 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
(f) Whenever the Per Share Warrant Price or the number of Warrant
Shares shall be adjusted pursuant to the provisions hereof, the Company
shall within thirty (30) days of such adjustment deliver a certificate
signed by its chief financial officer to the registered holder hereof
setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the Per Share Warrant Price after giving effect to such
adjustment.
(g) In the event of any taking by the Company of a record of its
shareholders for the purpose of determining shareholders who are entitled
to receive payment of any dividend or other distribution, the Company shall
mail to the holder of this Warrant, at least ten (10) days prior to such
record date a notice specifying such record date and the amount and
character of such dividend or distribution.
4. FULLY PAID STOCK; TAXES
The Company agrees that the Warrant Shares delivered upon 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 representing
Warrant Shares to be delivered upon exercise of this Warrant shall bear
4
<PAGE> 5
the legend regarding restrictions on transferability set forth in Section
3(e) of the Merger Agreement. 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 attempted
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 by will or the
laws of descent and distribution and any such attempted assignment or
transfer shall be null and void. 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
Neither this Warrant nor 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 (a) is receiving this Warrant and, upon
exercise, is acquiring the Warrant Shares for Holder's own account and not
on behalf of others, and is not taking this Warrant or any of the Warrant
Shares
5
<PAGE> 6
with a view to the "distribution" thereof (as that term is defined in the
Act and the rules and regulations of the Securities and Exchange Commission
thereunder) and (b) 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 or required by the regulatory authority of any
state in connection with any public offering by the Company of the Warrant
Shares.
10. MISCELLANEOUS
(a) Successors and Assigns. All covenants and agreements of the
Company in this Warrant shall be binding upon the Company's 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 a majority 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;
provided, that no such amendment shall change the number of Warrant Shares
issuable upon the exercise of any Warrant or the amount of any payment due
upon exercise without the prior written consent of the Holder.
(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.
6
<PAGE> 7
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:
--------------------------
Frank G. Logan, III
President
7
