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                                                                     EXHIBIT 4.2


                               FIRST AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

         THIS FIRST AMENDMENT (this "First Amendment"), dated as of March 1,
2001, to that certain Loan and Security Agreement dated as of June 30, 2000 (the
"Agreement"), is entered into by A-OK CONTROLS ENGINEERING, INC., a Michigan
corporation ("Borrower"), and LASALLE BUSINESS CREDIT, INC., a Delaware
corporation ("Lender"). Capitalized terms used but not otherwise defined herein
shall have the meanings assigned thereto in the Agreement.

                                    RECITALS

         A. Borrower and Lender are party to the Agreement, pursuant to which
Lender has agreed to make, and has made, certain loans, advances and credit
accommodations to Borrower pursuant to the terms and conditions set forth in the
Agreement.

         B. Nematron and Lender are party to the Nematron Loan Agreement,
pursuant to which Lender has agreed to make, and has made, certain loans,
advances and credit accommodations to Nematron pursuant to the terms and
conditions set forth in the Nematron Loan Agreement.

         C. Borrower is a wholly-owned Subsidiary of Nematron and has materially
benefited, and will materially benefit, from the loans, advances and credit
accommodations made, and to be made, to Nematron pursuant to the Nematron Loan
Agreement.

         D. Pursuant to paragraph 14(m)(i) of the Nematron Loan Agreement,
Nematron and its Subsidiaries (including, without limitation, Borrower), on a
consolidated basis, were required at all times to maintain a Tangible Net Worth
plus Subordinated Indebtedness of not less than $1,250,000 during Fiscal Year
ending December 31, 2000.

         E. The Tangible Net Worth plus Subordinated Indebtedness of Nematron
and its Subsidiaries, on a consolidated basis, as of June 30, 2000 was $958,274,
according to the financial covenant calculations accompanying Nematron's
Officer's Certificate for the month ended July 31, 2000, thus constituting a
breach and violation of paragraph 14(m)(i) of the Nematron Loan Agreement.

         F. Pursuant to paragraph 14(m)(ii) of the Nematron Loan Agreement,
Nematron and its Subsidiaries (including, without limitation, Borrower), on a
consolidated basis, were required to maintain an Interest Coverage Ratio as of
the end of each fiscal quarter for that portion of the Fiscal Year then ended,
commencing with the fiscal quarter ending December 31, 2000, of not less than
1.50 to 1.00.

         G. The Interest Coverage Ratio of Nematron and its Subsidiaries, on a
consolidated basis, for the full Fiscal Year ended December 31, 2000 was 0.44 to
1.00, according to the financial covenant calculations accompanying an Officer's
Certificate of Nematron, thus constituting a breach and violation of paragraph
14(m)(ii) of the Nematron Loan Agreement.

         H. Pursuant to paragraph 14(m)(iii) of the Nematron Loan Agreement,
Nematron and its Subsidiaries (including, without limitation, Borrower), on a
consolidated basis, were required to maintain a Debt Service Coverage Ratio, as
of the end of each fiscal quarter for that portion of the Fiscal Year then
ended, commencing with the fiscal quarter ending December 31, 2000, of not less
than 0.75 to 1.00.

         I. The Debt Service Coverage Ratio of Nematron and its Subsidiaries, on
a consolidated basis, for the full Fiscal Year ended December 31, 2000 was
(1.48) to 1.00, according to the financial covenant calculations accompanying an
Officer's Certificate of Nematron, thus constituting a breach and violation of
paragraph 14(m)(iii) of the Nematron Loan Agreement.

         J. Each breach or violation described in Recitals E, G and I above, and
the lapse of thirty (30) days from the occurrence thereof, constitutes an Event
of Default under paragraph 16(o) of the Agreement (each is a "Subject Default").


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         K. Pursuant to paragraph 2 of the Agreement, following the occurrence
and during continuation of an Event of Default, Lender may cease making any
further Loans, in addition to Lender's other remedies under the Agreement.

         L. Borrower has requested that Lender continue to make available Loans
to Borrower at the present time pursuant to the terms of the Agreement, and
Lender is willing to do so subject to the terms and conditions set forth in this
First Amendment.


                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender agree as follows:

1.       AMENDMENTS TO THE AGREEMENT.

         1.1 Definition of Loan Commitment. The definition of "Loan Commitment"
appearing in paragraph 1 of the Agreement is hereby amended by deleting the
phrase "Three Million Dollars ($3,000,000)" in its entirety and inserting the
phrase "Two Million Dollars ($2,000,000)" in lieu thereof.

         1.2 Rates of Interest. The second sentence of paragraph 5(a) of the
Agreement is hereby amended and restated to read, in its entirety, as follows:

         Interest shall accrue on the principal amount of the Loans made to
Borrower outstanding at the end of each day at a fluctuating rate per annum
equal to the sum of (x) the Reference Rate, plus (y) (i) at all times prior to
repayment in full of the "Special Accommodation Advance" (as defined in the
Nematron Loan Agreement), two and one-half percent (2.50%), and (ii) at all time
following the repayment in full of the Special Accommodation Advance, two
percent (2.00%) (in each case, the amount described in this clause (y) is the
"LOAN MARGIN").

2.       CONTINUATION OF LOAN AVAILABILITY. Subject to Section 4.3 below, Lender
agrees to temporarily continue to make available Loans under paragraph 2 of the
Agreement notwithstanding the occurrence and continuation of the Subject
Defaults.

3.       REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
First Amendment and to temporarily continue to make available Loans pursuant to
Section 2 above, Borrower represents and warrants to Lender that:

         3.1 Organization and Existence. Borrower is duly organized and validly
existing under the laws of the State of Michigan. Borrower has filed all annual
reports required to be filed on or before the date hereof with the Secretary of
State of Michigan. Borrower has not filed nor authorized the filing of, articles
of dissolution with the Secretary of State of Michigan.

         3.2 Authority, Authorization and Enforceability. Borrower has the
requisite power and authority to execute and deliver this First Amendment and to
perform its obligations hereunder and under the Agreement as amended hereby.
Borrower has duly authorized the execution and deliver of this First Amendment
and the performance of its obligations hereunder and under the Agreement as
amended hereby. This First Amendment and the Agreement as amended hereby are the
legal, valid and binding obligations of Borrower and are enforceable against
Borrower in accordance with their respective terms.

         3.3 No Violation of Law or Contract. Borrower's execution and delivery
of this First Amendment, and Borrower's performance of its obligations hereunder
and under the Agreement as amended hereby, does not and shall not conflict with
the provisions of any statutes, regulation, ordinance or rule of law, or any
agreement, contract or other document binding on Borrower.

         3.4 No Default, Event of Default or Material Adverse Effect. Other than
the Subject Defaults, (a) no Default or Event of Default has occurred or is
continuing, and (b) no Material Adverse Effect has occurred since the Closing
Date.



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         3.5 General Representations and Warranties Remade. Except as expressly
identified herein, all representations, warranties and covenants made as of the
Closing Date pursuant to the Agreement are hereby remade as of the date of this
First Amendment.

4.       GENERAL.

         4.1 Expenses. Borrower agrees to pay Lender, on the date hereof and
from time to time hereafter upon demand, all expenses, including reasonable
attorneys' and legal assistants' fees, incurred by Lender in connection with the
preparation, negotiation and execution of this First Amendment and any document
required to be furnished herewith.

         4.2 Entire Agreement. This First Amendment, the Agreement as amended
hereby, and all of the Other Agreements constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all other
understandings, oral or written, with respect to the subject matter hereof.

         4.3 Effect of Amendment; No Waiver. Except as expressly amended
pursuant to Section 1 hereof, the Agreement and the Other Agreements shall
remain in full force and effect and are hereby ratified and confirmed in all
respects. THIS FIRST AMENDMENT SHALL NOT OPERATE AS A WAIVER OF ANY RIGHT, POWER
OR REMEDY OF LENDER UNDER THE AGREEMENT OR ANY OF THE OTHER AGREEMENTS, AND
LENDER RESERVES ALL RIGHTS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, RIGHTS
AND REMEDIES ACCRUING OR EXISTING BY REASON OF THE SUBJECT DEFAULTS).

         4.4 Miscellaneous Provisions. THIS FIRST AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF
WISCONSIN. Section headings in this First Amendment are included for the
convenience of reference only and shall not constitute a part of this First
Amendment for any other purpose. Whenever possible, each provision of this First
Amendment shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this First Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
First Amendment. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one instrument. This First Amendment
shall be binding upon, and inure to the benefit of, Borrower and Lender and
their respective successors and assigns.

                            [Execution Page Follows]


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         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.



                               LENDER

                               LASALLE BUSINESS CREDIT, INC.


                               By:  /s/ Dale P. Grzenia
                                    ---------------------------------------
                                        Dale P. Grzenia, Vice President


                               BORROWER

                               A-OK CONTROLS ENGINEERING, INC.


                               By:  /s/ David P. Gienapp
                                    ---------------------------------------
                               Name:  David P. Gienapp
                                      -------------------------------------
                               Its:
                                    ---------------------------------------