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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
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NEMATRON CORPORATION
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(Exact name of registrant as specified in its charter)
MICHIGAN 0-21142 38-2483796
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
5840 INTERFACE DRIVE, ANN ARBOR, MICHIGAN 48103
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(Address of principal executive offices) (Zip Code)
(313) 994-0501
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(Registrant's telephone number)
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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.
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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
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(Registrant)
April 10, 1997 /S/ DAVID P. GIENAPP
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Secretary,
Treasurer and
Executive Vice
President, Finance
and Administration
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Exhibit Index
Exhibit Number Description
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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