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Exhibit 2(a)
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made on March 31, 2004, by NC ACQUISITION CORP.,
a
Michigan corporation ("PURCHASER") and
NEMATRON CORPORATION, a Michigan
corporation ("SELLER").
RECITALS
A.
Seller is indebted to North Coast Technology Investors,
L.P. ("NORTH COAST") pursuant to the terms
of a Promissory Note dated February
20, 2004 in the face amount of $2,500,000
(the "SENIOR NOTE").
B.
Seller is indebted to North Coast, Ralph Meisel, James A.
Nichols and The Stag Group (the "2001
SUBORDINATED NOTEHOLDERS") pursuant to the
terms of a series of Convertible
Subordinated Promissory Notes dated March 23,
2001 in the aggregate principal amount of
$1,200,000 (the "2001 SUBORDINATED
NOTES").
C.
Seller is indebted to Ronald C. Causley and Joseph J.
Fitzsimmons (the "2002 SUBORDINATED
NOTEHOLDERS") pursuant to the terms of a
series of Subordinated Promissory Notes
dated October 28, 2002 in the aggregate
principal amount of $200,000 (the "2002
SUBORDINATED NOTES").
D.
Seller is indebted to North Coast pursuant to the terms of a
Subordinated Promissory Note dated April
14, 2003 in the principal amount of
$3,000,000 (the "2003 SUBORDINATED
NOTE").
E.
Seller's indebtedness under the 2001 Subordinated Notes, 2002
Subordinated Notes, the 2003 Subordinated
Note and the Senior Note
(collectively, the "NOTES") includes unpaid
accrued interest (such indebtedness
is referred to in this Agreement as the
"INDEBTEDNESS").
F. To
secure Seller's obligations to repay the Indebtedness to
North Coast, pursuant to a Security
Agreement dated as of July 31, 2003, North
Coast holds a security interest in the
following property of Seller (the
"PERSONAL PROPERTY COLLATERAL"):
All personal property of the Seller, wherever located, and now
owned or hereafter acquired, including accounts; as-extracted
collateral; chattel paper (both tangible and electronic);
deposit
accounts; documents; equipment; fixtures; general intangibles,
including payment intangibles; goods; instruments, including
promissory
notes; inventory; investment property, including certificated
securities, uncertificated securities, security entitlements,
securities accounts, commodity contracts and commodity
accounts;
letters of credit; letter of credit rights; money; software;
supporting
obligations; and vehicles.
G.
Seller is also party to a Security Agreement dated March 28,
2001, to secure Seller's obligations to the
2001 Subordinated Noteholders, which
grants the 2001 Subordinated Noteholders a
security interest in the collateral
described therein. The 2002 and 2003
Subordinated Notes
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provide that as security for the payment of
the Notes, Seller grants to the
holders of such notes a continuing security
interest in all of the assets of the
Company.
H. To
secure Seller's obligations to repay the Indebtedness to
North Coast, Seller has granted North Coast
a mortgage on real property owned by
Seller located at 5840 Interface Drive in
Scio Township, Washtenaw County,
Michigan (the "REAL PROPERTY COLLATERAL")
pursuant to a Mortgage dated October
15, 2003 (the "MORTGAGE").
I.
Seller's board of directors has approved the sale of
substantially all of Seller's tangible and
intangible assets, including its real
estate, accounts, equipment, intellectual
property, inventory, goodwill and
other intangibles to Purchaser, in
consideration of Purchaser's assumption of
all of Seller's liabilities, including the
Notes (the "NET ASSET SALE").
J.
Seller's shareholders approved the Net Asset Sale at the
annual meeting of the shareholders held on
January 13, 2004.
K.
North Coast has made demand for payment of the Notes held by
it, which are due and payable on demand.
Seller is unable to make such payment,
and is in default.
AGREEMENT
Intending to be legally bound, Purchaser and Seller agree as
follows:
1.
ASSETS SOLD AND PURCHASED. At the Closing, Seller shall sell
and deliver to Purchaser all of the assets,
rights, and interests of every
conceivable kind or character whatsoever,
whether real or personal, tangible or
intangible, that on the Closing Date are
owned by Seller or in which Seller has
an interest of any kind, other than the
Excluded Assets (as defined below) (the
"Purchased Assets"). The Purchased Assets
include, without limitation, all of
the following, wherever situated:
(a) The real
property located in Scio Township, Washtenaw
County, Michigan, which is legally
described in EXHIBIT 1 (the "REAL PROPERTY").
(b) Equipment,
fixtures, goods, motor vehicles and all
other items of tangible personal
property.
(c) Inventory,
including finished goods, work in process
and raw materials.
(d) Investment
property, including certificated
securities, uncertificated securities,
security entitlements, security accounts,
commodity contracts and commodity accounts,
and including in particular Seller's
shares of capital stock in A-OK Controls
Engineering, Inc., Optimation, Inc,
Nematron Limited and Nematron Canada, Inc.
(the "Subsidiaries").
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(e)
As-extracted collateral.
(f) Accounts,
chattel paper (both tangible and
electronic), documents, instruments
(including promissory notes), letters of
credit and letter of credit rights, and
supporting obligations, including all
accrued interest receivable and also any
security Seller holds for the payment
thereof, general intangibles, including
payment intangibles and, to the extent
not otherwise constituting general
intangibles as defined above, any interest of
Seller in any and all claims by Seller
against any other person or entity,
whether now accrued or later to accrue,
contingent or otherwise, known or
unknown, including, but not limited to, all
rights under express or implied
warranties from suppliers, claims for
collection or indemnity, claims in
bankruptcy, and choses in action.
(g) Money,
cash, cash equivalents, and amounts held on
deposit in all deposit accounts and other
savings, checking, money market,
investment, and other similar accounts,
other than the money that is part of the
Excluded Assets.
(h) Seller's
right, title, benefit, and interest in and
to all intellectual property and
intellectual property rights owned by or
licensed by the Seller, including, but not
limited to, all inventions,
discoveries, improvements, designs,
prototypes, trade secrets, manufacturing and
engineering drawings, process sheets,
specifications, bills of material,
patents, patent applications, registered
and unregistered copyrights in both
published and unpublished works, registered
and unregistered trademarks, trade
names, formulae and secret and confidential
processes, know-how, technology,
customer lists, software, databases, data,
process technology, and other
industrial property (whether patentable or
unpatentable), and all goodwill of
Seller relating to any of the
foregoing.
(i) Rights
under contracts, including the full benefit of
(i) purchase orders placed with and
accepted by Seller in the ordinary course of
business on or before the Closing Date that
have not been completely performed
or filled before the Closing Date, covering
the purchase from Seller of products
to be supplied by Seller, or covering the
rendition by Seller of services, and
including all deposits, progress payments,
and credits; (ii) purchase orders
placed by Seller before the Closing Date
that have not been completely performed
before the Closing Date, covering Seller's
purchase of inventory, supplies, or
materials in the ordinary course of
business; (iv) leases of personal property
and other agreements; (v) employment
agreements, non-competition agreements,
non-disclosure agreements, invention rights
agreements and other similar
agreements between Seller and any other
person, including current and former
employees, and (vi) any and all policies of
insurance and rights to make claims
and other rights thereunder.
(j) Records
and lists that pertain directly or
indirectly, in whole or in part, to any one
or more of the following: Seller's
customers, suppliers, advertising,
promotional material, sales, services,
delivery, internal organization, employees,
and/or operations.
(k) Security
deposits, prepaid expenses, and similar
items.
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(l)
Transferable local, state, and federal franchises,
licenses, bonds, permits, and similar items
pertaining to the Seller's business
and/or the Purchased Assets (the
"Permits").
(m) The
business conducted by Seller as a going concern,
including any and all goodwill, telephone
and FAX numbers, yellow-page
advertisements, and Seller's right to use
the name "NEMATRON" and all related
names and derivations, and the entire
right, title, and interest in the United
States and throughout the world of all
Internet domain names registered by
Seller (the "Domain Names"), including but
not limited to the following domain
names registered by Seller with Network
Solutions: NEMATRON.COM (registered
November 10, 1994), CONTROLPOINTE.COM
(registered June 27, 2000),
CONTROLPOINTE.NET (registered September 6,
2000); CONTROLPOINTE.ORG (registered
September 19, 2002); A-OKCONTROLS.COM
(registered November 8, 2001);
NEMASOFT.COM (registered February 13,
1997).
However,
Purchaser will not acquire (a) any of the rights of Seller
with respect to the registration of its
securities with the U.S. Securities and
Exchange Commission or any state or foreign
securities regulator or the listing
of such securities with any securities
exchange or quotation system or (b)
$30,000 in cash to be retained by the
Company (collectively, the "EXCLUDED
ASSETS").
As used herein, the term "Personal Property" means all of the
Purchased
Assets other than the Real Property.
2.
CONSIDERATION FOR PURCHASE. In consideration of the sale and
conveyance of the Purchased Assets to
Purchaser, Purchaser shall assume all of
the liabilities of Seller of any kind,
fixed or contingent, known or unknown,
matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising
prior to the Effective Date, including,
without limitation, amounts owed to
employees, federal, state and local taxing
authorities, lenders, lessors,
utility companies, suppliers and other
service and product providers (each, an
"Assumed Liability" and, collectively, the
"Assumed Liabilities").
Notwithstanding the foregoing, from the Effective Date onward,
Seller
will remain responsible for all matters
with respect to the registration of its
securities with the United States
Securities and Exchange Commission and any
state or foreign securities regulator and
the listing of such securities with
any securities exchange or quotation
system, and Purchaser does not undertake
any responsibility with respect to
same.
The fair value of such consideration shall be determined by
mutual
agreement of the parties at or prior to the
Closing and in any event shall not
be less than the book amount of the
liabilities assumed by Purchaser. Such fair
value is the "Purchase Price." The Purchase
Price shall be allocated among the
Purchased Assets as reasonably determined
by Purchaser and Seller. Purchaser and
Seller agree to execute and deliver at
Closing duplicate IRS Forms 8594, with an
allocation of the Purchase Price in
accordance with this Section 2, and to file
all other returns and reports in a manner
consistent with the allocations in
this Section.
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3.
CLOSING. The closing of the transactions contemplated in this
Agree
