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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended SEPTEMBER 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________________
Commission File Number: 0-21142
NEMATRON CORPORATION
(Name of small business issuer in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-2483796
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
5840 INTERFACE DRIVE, ANN ARBOR, MICHIGAN 48103
(Address of principal executive offices) (Zip Code)
(734) 994-0501
(Issuer's telephone number)
Securities registered under Section 12(b) of
the Exchange Act: NONE
Securities registered
under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. [X] Yes [ ] No
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $20,875,397
The aggregate market value of the voting stock held by non-affiliates
as of December 20, 1997, computed by reference to the closing price of such
stock on such date as quoted on the Nasdaq Stock Market National Market, was
approximately $17,220,000. For purposes of this computation only, all executive
officers, directors and beneficial owners of more than 5% of the outstanding
Common Stock are assumed to be affiliates.
The number of shares outstanding of the issuer's Common Stock
on December 20, 1997 was 5,339,538.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT [ ] Yes [ X ] No
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The Registrant hereby amends its Form 10-KSB for the fiscal year ended September
30, 1997 to add Items 9, 10, 11 and 12 as set forth below:
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information relating to the persons who are the directors and executive
officers of the Company is set forth below.
<TABLE>
<CAPTION>
Director Term
Name Age Principal Occupation Since Expires
---- --- -------------------- ------- -------
<S> <C> <C> <C> <C>
Garnel F. Graber 66 Chairman of the Board of Directors of Applied 1993 1998
Dynamics International, a computer
manufacturing Company, and of Interface
Systems, Inc., a manufacturer of printers and
computer interfaces, and a Director
Michael L. Hershey 59 President and Chairman of the Board of Directors 1995 1998
of Landis Associates, Inc., an investment
management company, and a Director
Frank G. Logan, III 41 Chairman of the Board of Directors, President 1995 2000
and CEO of the Company, and a Director
Douglas B. Juanarena 44 President and Chief Executive Officer of Pressure 1996 2000
Systems, Inc., an electronics manufacturer, and
a Director
Joseph J. Fitzsimmons 63 Retired Executive of Bell & Howell Company and 1997 2000
its subsidiary, University Microfilms International,
a provider of technology services to libraries and
other organizations, and a Director
David P. Gienapp 49 Secretary, Treasurer and Vice President - Finance 1995 1999
and Administration of the Company, and a Director
Hugo E. Braun 39 Partner with Access Ventures, an investment fund 1995 1999
manager, and a Director
</TABLE>
Garnel F. Graber, 66, became a director in February 1993 at the time
of the Company's spin-off from Interface Systems, Inc. and served as Chairman
of the Board of Nematron until March 1996. Mr. Graber is a retired executive
of, and the current Chairman of the Board of Directors of, Applied Dynamics
International, a computer firm specializing in high speed simulation. Mr.
Graber also serves as Chairman of the Board of Interface Systems, Inc.
Michael L. Hershey, 59, became a director in March 1995. Mr. Hershey
had served as a member of the Board of Directors and Secretary of Imagination
Systems, Inc. Mr. Hershey has been the President and Chairman of the Board of
Directors of Landis Associates, Inc., an investment management company, since
its formation in 1986.
Frank G. Logan III, 41, has been President, Chief Executive Officer and
a director of the Company since joining the Company in March 1995 in connection
with its merger with Imagination Systems, Inc. Mr. Logan has been the Chairman
of the Board since March 1996. Prior to joining the Company in March
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1995, Mr. Logan was the President and Chief Executive Officer of Imagination
Systems, Inc., which was a privately held Virginia-based software development
company which he founded in 1983.
Douglas B. Juanarena, 44, became a director on December 16, 1996, as a
result of his election by the other members of the Board of Directors, to fill
the Board seat vacated when Mr. Albert W. Lowery resigned from the Board on
August 12, 1996. Mr. Juanarena is the President and Chief Executive Officer of
Pressure Systems, Inc., an electronics manufacturer specializing in designing
and producing advanced pressure measurement instrumentation for aeronautical
design and research. Pressure Systems, Inc. is a wholly-owned subsidiary of
Roxboro PLC, a public company headquartered in the United Kingdom. Prior to
forming Pressure Systems, Inc. in 1978, Mr. Juanarena worked in the Instrument
Research Division of the NASA Langley Research Center.
Joseph J. Fitzsimmons, 63, is a retired executive of Bell & Howell
Company and University Microfilms International ("UMI"), a subsidiary of Bell &
Howell. From January 1994 through June 1995 when he retired, Mr. Fitzsimmons was
Corporate Vice President of Bell & Howell and Chairman of UMI. From March 1987
through December 1993, Mr. Fitzsimmons was Corporate Vice President of Bell &
Howell and President and Chief Executive Officer of UMI, a leading provider of
technology services to libraries and other organizations regarding acquiring,
preserving and distributing literature. Mr. Fitzsimmons is a member of the Board
of Directors of First of America Bank Corporation, a leading Midwest bank
holding company. Mr. Fitzsimmons is a past Chairman of the Information Industry
Association and was the Vice Chairman of the White House Conference on Libraries
and Information Services in 1991.
David P. Gienapp, 49, became a director in March 1995. Mr. Gienapp has
been the Executive Vice President - Finance and Administration and Treasurer of
the Company since joining the Company in September 1994 and has served as
Secretary since March 1996. Prior to joining the Company, Mr. Gienapp spent over
20 years with Deloitte & Touche LLP, a certified public accounting firm.
Hugo E. Braun, 39, has been a director since March 1996. Mr. Braun is
a Partner with Access Ventures, an investment fund manager, where he has been
employed since 1989.
The executive officers of the Company serve at the pleasure of the
Board of Directors.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board met four times during the year ended September 30, 1997. No
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board and of the committees of the Board on which he served.
Standing committees of the Board include an Audit Committee, an
Executive Committee, a Nominating Committee and an Organization and Compensation
Committee.
The Audit Committee met two times in fiscal 1997. The Audit Committee
meets with the Company's independent accountants to review the adequacy of the
Company's internal control systems and financial reporting procedures; reviews
the general scope of the Company's annual audit and the fees charged by the
independent accountants; and reviews and monitors the performance of non-audit
services by the Company's auditors. The members of the Audit Committee are
Messrs. Braun (Chairman), Fitzsimmons, Graber and Hershey.
The Executive Committee met five times during the of fiscal 1997. The
Executive Committee discusses current operating and strategic matters that arise
between scheduled or special Board meetings. The members of the Executive
Committee are Messrs. Logan (Chairman), Fitzsimmons, Gienapp and Graber.
The Nominating Committee met two times during fiscal 1997. The
Nominating Committee identifies and reviews potential members of the Board and
nominates persons to the Board to serve as
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Board members. The members of the Nominating Committee are Messrs. Hershey
(Chairman), Juanarena and Logan.
The Organization and Compensation Committee met three times during
fiscal 1997. The Organization and Compensation Committee administers the
Company's Restricted Stock Plan and the 1993 Stock Option Plan, determines
compensation issues for officers, and determines compensation issues for
non-employee directors that do not involve the Company's equity securities. The
members of the Organization and Compensation Committee are Messrs. Graber
(Chairman), Braun, Fitzsimmons and Juanarena.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Act of 1934 requires all Company
executive officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of their
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. Specific due dates for these reports have been established and the Company
is required to report any delinquent filings and failures to file such reports.
Based solely on its review of the copies of such reports received by it
and written representations of its executive officers and incumbent directors,
the Company believes that during the year ended September 30, 1997, all filing
reports applicable to its executive officers, directors and greater than ten
percent beneficial owners were complied with, except that Mr. Juanarena, a
director, did not timely file a three Form 4 reports disclosing four
transactions.
ITEM 10 EXECUTIVE COMPENSATION
SUMMARY
The following table sets forth information concerning the aggregate
compensation paid by the Company and its subsidiaries to the Company's President
and Chief Executive Officer and to its Executive Vice President - Finance and
Administration, the Company's only other executive officer whose salary and
bonus exceeded $100,000 in fiscal 1997 (the "Named Executives") for the periods
indicated.
SUMMARY COMPENSATION TABLE (1)
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------ COMPENSATION
----------------------------
AWARDS PAYOUTS
------------ --------------- ALL OTHER
NAME AND PRINCIPAL FISCAL OPTIONS LTIP COMPEN-
POSITION YEAR SALARY ($) BONUS ($) (#) PAYOUTS SATION ($) (2)
- -------------------- ---- ----------- --------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank G. Logan, III 1997 $168,043 $200,000 120,000 $ -0- $5,113
President and Chief 1996 $154,531 $25,000 50,000 $ -0- $4,305
Executive Officer(3) 1995 $70,088 $-0- 50,000 $ -0- $1,588
- ---------------------------------------------------------------------------------------------------
David P. Gienapp, 1997 $103,005 $50,000 36,000 $ -0- $5,746
Exec. VP - Finance 1996 $95,384 $15,000 20,000 $ -0- $2,286
and Administration 1995 $77,035 $-0- 25,000 $ -0- $395
</TABLE>
(1) The amounts reflected in the table do not include other compensation or
personal benefits which did not exceed in the aggregate the lesser of
either $50,000 or 10% of the total of annual salary and bonus for the
Named Executives. No "Other Annual Cash Compensation" or "Long Term
Incentive Plan Payouts" were paid in any of the fiscal years shown.
(2) All Other Compensation shown for Mr. Logan represents amounts paid by
the Company for life insurance for Mr. Logan of $1,560, $956 and $956
for 1997, 1996 and 1995, respectively, and
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401(k) Plan contributions by the Company of $3,553, $3,349 and $632 for
1997, 1996 and 1995, respectively. All Other Compensation shown for
Mr. Gienapp represents 401(k) Plan contributions by the Company.
(3) Mr. Logan assumed the office of President on March 3, 1995 and was
named Chief Executive Officer on March 27, 1995.
Management compensation is established on an annual basis by the
Organization and Compensation Committee of the Board of Directors.
OPTIONS
The following table sets forth information concerning options granted
to the Named Executives in the year ended September 30, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
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<TABLE>
<CAPTION>
PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED TO
GRANTED EMPLOYEES IN FISCAL EXERCISE PRICE EXPIRATION
NAME (#) (1) YEAR ($/SHARE) DATE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank G. Logan, III 120,000 29.6% $5.78/Share May 1, 2007
David P. Gienapp 36,000 8.9% $5.78/Share May 1, 2007
</TABLE>
(1) All of these options, which were granted pursuant to the Company's 1993
Stock Option Plan, were granted at an exercise price per share of 110% of
market value of the Company's Common Stock on the date of the grant and have a
term of ten years. The Compensation Committee of the Board of Directors
determines the exercise provisions of each option award. The options granted to
each of the Named Executives in fiscal 1997 become exercisable annually in
increments of 33 1/3% beginning on the date of the grant. The exercisability of
these options may be accelerated in the event of a change in control of the
Company. See "Change in Control Arrangements." In March 1997, the Compensation
Committee determined that the Company's Executive officers may earn a fixed
number of premium-priced options (options priced at 110% of fair market value
of the Common Stock on the date of the grant) under the 1993 Stock Option
Plan that vary by executive in accordance with a competitive relationship to
peer group (market) average, performance and contribution. The use of
premium-priced options emphasizes a positive linkage between shareholder value
creation and executive interests, and it ensures a minimum total shareholder
return before the executives are rewarded.
The Named Executives did not exercise any options in the year ended
September 30, 1997. The following table provides information with respect to
unexercised options held by the Named Executives as of September 30, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
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<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END (#) FY-END ($)
ACQUIRED ON
EXERCISE (#) VALUE EXERCISABLE/ EXERCISABLE/
NAME REALIZED UNEXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank G. Logan, III None N/A 83,332 / 136,668 $193,500 / $-0-
David P. Gienapp None N/A 43,332 / 42,668 $75,000 / $-0-
</TABLE>
5
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COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives
for his services as such a fee of $1,000 per meeting attended, $500 for each
committee meeting attended, and an additional $250 for each committee meeting
attended by the chairman of the committee. Directors who are officers or
employees of the Company receive no additional compensation for their service as
a director, although they are reimbursed for their reasonable travel expenses
when meetings are held in a location other than the metropolitan area in which
they reside.
The Directors Plan provides for the grant of automatic non-qualified
stock options to non-employee directors of the Company. Each such director is
automatically granted an option to purchase 4,500 shares of Common Stock (4,664
shares in fiscal 1997) on: (a) the date on which such person first becomes a
director and (b) the date of the third Annual Meeting of Shareholders occurring
thereafter during the term of the plan if the participant shall have been a
director for the six months immediately preceding such Annual Meeting. The
exercise price of automatic options granted under the Directors Plan is 110% of
the fair market value of the Company's Common Stock on the date the option is
granted. Each automatic option under the Directors Plan becomes exercisable in
three equal annual one-third installments beginning on the grant date and
remains exercisable until the fifth anniversary of the date of the grant unless
earlier terminated in accordance with the terms of the plan. In the fiscal year
ended September 30, 1997, Messrs. Braun, Fitzsimmons, Graber, Hershey and
Juanarena each received an automatic option to purchase 4,664 shares of Common
Stock under the Directors Plan at an exercise price of $5.37 per share.
On July 28, 1997, the Board of Directors granted each of Messrs. Braun,
Fitzsimmons, Graber, Hershey and Juanarena a discretionary option to purchase
12,000 shares of Common Stock at an exercise price of $7.08 per share, subject
to shareholder approval of an amendment to the Directors Plan to permit the
grant of discretionary options. The amendment will be voted upon at the
Company's 1998 Annual Meeting to be held March 13, 1998. If the amendment is
approved, such options will become exercisable in three equal annual one-third
installments beginning on the first anniversary of the date of the grant and
remain exercisable until the tenth anniversary of the date of the grant unless
earlier terminated in accordance with the terms of the plan.
On April 17, 1997, the Company granted Mr. Harry Sundblad, a former
director, an option to purchase 4,750 shares of the Company's Common Stock at an
exercise price of $4.75 per share, the average of the fair market value of the
Common Stock during the period in which Mr. Sundblad performed consulting
services for the Company. The option was granted in consideration for Mr.
Sundblad's services as a consultant to the Company from August, 1995 to January,
1996. The option was immediately exercisable and will expire April 17, 1998.
CHANGE IN CONTROL ARRANGEMENTS
The Company granted the options disclosed in the tables above pursuant
to the 1993 Stock Option Plan. The Organization and Compensation Committee of
the Board of Directors determines the exercise provisions of each option award.
All shares subject to an option grant become immediately exercisable upon a
change in control of the Company. A "change in control" is defined as the
acquisition of 20% or more of the voting power of the Company or sale of all or
substantially all of the Company's assets, or a merger, consolidation or similar
transaction in which the Company is a constituent corporation, or a change in
the identity of a majority of the members of the Company's Board of Directors in
any twelve-month period, which change or changes were not recommended by the
incumbent directors immediately prior to such change or changes.
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ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The Common Stock is the only voting security of the Company. The
following table sets forth information as of January 27, 1998, for all
shareholders known by the Company to be the beneficial owners of more than 5% of
its outstanding Common Stock. Except as noted below, each shareholder exercises
sole voting and investment power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP CLASS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michael L. Hershey (includes shares of J. Eric May, below) 511,097(1) 9.55%
Landis Associates, Inc.
400 West Ninth Street, Suite 100
Wilmington, DE 19801
J. Eric May, Trustee Under Declaration of Trust 471,172 8.82%
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890
Frank G. Logan, III 416,217(2) 7.68%
5840 Interface Drive
Ann Arbor, MI 48103
</TABLE>
(1) The shares represented in the table include (i) the 471,172 shares
owned by J. Eric May, Trustee Under Declaration of Trust, over which
Mr. Hershey may exercise voting and investment power; (ii) 25,371
shares of Common Stock owned outright; (iii) options to purchase 14,554
shares of Common Stock under the Directors Option Plan which are
currently exercisable or are exercisable within sixty days of January
27, 1998.
(2) The shares represented in the table include (i) 307,421 shares of
Common Stock owned outright; (ii) 2,000 shares owned by Mr. Logan's
wife; (iii) 25,964 shares of Common Stock owned by Mr. Logan as
custodian of certain trusts for his children; and (iv) options to
purchase 83,332 shares of Common Stock under the 1993 Stock Option Plan
which are currently exercisable or are exercisable within sixty days of
January 27, 1998.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of January 27, 1998 by each of the
Company's directors and Named Executives and by all executive officers and
directors of the Company as a group. Except as noted below, each shareholder
exercises sole voting and investment power with respect to the shares
beneficially owned.
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michael L. Hershey, Director 511,097 (1) 9.55%
Landis Associates, Inc.
400 West Ninth Street, Suite 100
Wilmington, DE 19801
Frank G. Logan, III, Director and Officer 416,217 (2) 7.68%
5840 Interface Drive
Ann Arbor, MI 48103
Hugo E. Braun, Director 145,339 (3) 2.65%
313 North First Street
Ann Arbor, MI 48103
David P. Gienapp, Director and Officer 72,792 (4) 1.35%
5840 Interface Drive
Ann Arbor, MI 48103
Garnel F. Graber, Director 61,706 (5) 1.15%
600 Adrian
Manchester, MI 48158
Douglas B. Juanarena 34,554 (6) 0.65%
34 Research Drive
Hampton, VA 23666
Joseph J. Fitzsimmons 16,554 (7) 0.31%
101 North Main Street
Ann Arbor, MI 48104
All Directors and Executive Officers as Group (7 persons) 1,258,259 (8) 22.07%
</TABLE>
(1) Mr. Hershey. See footnote 1 to Principal Shareholder table.
(2) Mr. Logan. See footnote 2 to Principal Shareholder table.
(3) Mr. Braun. The shares represented in the table include (i) options to
purchase 13,554 shares of Common Stock under the Directors Stock Option
Plan which are currently exercisable or are exercisable within sixty
days of February 13, 1998; and (ii) currently exercisable warrants to
purchase 131,785 shares of Common Stock pursuant to a Term Loan and
Warrant Purchase Agreement dated November 7, 1995 between the Company
and Onset BIDCO, Inc., of which Mr. Braun is an officer, The Capital
Fund, Inc., and others in connection with a private placement of
subordinated notes in the amount of $1,800,000. If such warrants were
exercised, Mr. Braun would have sole voting rights and shared
investment power with respect to the underlying shares.
(4) Mr. Gienapp. The shares represented in the table include (i) 29,460
shares of Common Stock owned outright; and (ii) options to purchase
43,332 shares of Common Stock under the 1993 Stock Option Plan which
are currently exercisable or are exercisable within sixty days of
February 13, 1998.
(5) Mr. Graber. The shares represented in the table include (i) 14,152
shares of Common Stock owned outright; (ii) options to purchase 17,554
shares of Common Stock under the Directors Stock Option Plan which are
currently exercisable or are exercisable within sixty days of February
13, 1998; and (iii) options to purchase 30,000 shares of Common Stock
under special option awards which are currently exercisable or are
exercisable within sixty days of February 13, 1998.
(6) Mr. Juanarena. The shares in the table include (i) 20,000 shares of
Common Stock owned outright; (ii) options to purchase 14,554 shares of
Common Stock under the Directors Stock Option Plan which are currently
exercisable or are exercisable within sixty days of February 13, 1998.
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(7) Mr. Fitzsimmons. The shares in the table include (i) 3,000 shares of
Common Stock owned outright; (ii) options to purchase 13,554 shares of
Common Stock under the Directors Stock Option Plan which are currently
exercisable or are exercisable within sixty days of February 13, 1998.
(8) All Directors and Executive Officers as Group. The shares represented
in the table include (i) 424,868 shares of Common Stock owned outright;
(ii) 471,172 shares of Common Stock beneficially owned by J. Eric May,
Trustee Under Declaration of Trust but also reported as beneficially
owned by Mr. Hershey and over which Mr. Hershey may exercise voting and
investment power; (iii) options to purchase 126,664 shares of Common
Stock under the 1993 Stock Option Plan which are currently exercisable
or are exercisable within sixty days of February 13, 1998: (iv) options
to purchase 73,770 shares of Common Stock under the Directors Stock
Option Plan which are currently exercisable or are exercisable within
sixty days of February 13, 1998; (v) options to purchase 30,000 shares
of Common Stock under special option awards which are currently
exercisable or are exercisable within sixty days of February 13, 1998;
and (vi) warrants to purchase 131,785 shares of Common Stock.
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its two-story office building in Virginia Beach,
Virginia, which the Company uses for its software development and applied
systems businesses, from LPS Management, a partnership of which Mr. Logan is a
partner. The lease term extends to February 1998 and requires lease payments of
$6,633 per month. Total lease expense for the office building was approximately
$79,600 and $77,600 for fiscal 1997 and fiscal 1996, respectively. The lease is
expected to be renewed in March 1998 on substantially the same terms and
conditions as the current lease.
The Organization and Compensation Committee of the Board of Directors
authorized a loan to Mr. Logan in the principal amount of $94,900 as of April,
1996 to pay federal and state taxes with respect to the 120,000 shares of
Company common stock issued to Mr. Logan in consideration for a Non-Competition
Agreement dated March 3, 1995. Mr. Logan delivered to the Company a promissory
note which was payable in full on the earlier of April 15, 1997 or 90 days after
termination employment with the Company. The note bore interest at 8.25% per
annum; accrued interest was payable at the maturity date of the note. The note
and accrued interest thereon were repaid in their entirety in fiscal 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NEMATRON CORPORATION
By: /S/ DAVID P. GIENAPP Dated: January 28, 1997
----------------------------------
David P. Gienapp,
Executive Vice President - Finance and
Administration, Secretary and Treasurer
9
