Exhibit 4.01
                                                                  ------------


                         LOAN MODIFICATION AGREEMENT AND
                           AMENDMENT TO LOAN DOCUMENTS


         THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into as of the 3rd day of October, 2003, by and
between COMPASS BANK, an Alabama state banking corporation (the "Bank") and
OPTIMATION, INC., an Alabama corporation (the "Borrower"), and NEMATRON
CORPORATION, a Michigan corporation.

                                 P R E A M B L E
                                 ---------------
         The Borrower is the maker of a certain Revolving Credit Commercial Note
in the original principal amount of $450,000.00 dated June 26, 1998, as amended
by that certain Revolving Credit Commercial Note from Borrower to Compass Bank
in the original principal amount of $650,000.00 dated July 9, 1999, as amended
by that certain Revolving Credit Commercial Note from Borrower to Compass Bank
in the original principal amount of $650,000.00 dated July 19, 2000, as amended
by that certain Revolving Credit Commercial Note from Borrower to Compass Bank
in the original principal amount of $620,000.00 dated June 8, 2001, as amended
by that certain Revolving Credit Commercial Note from Borrower to Compass Bank
in the original principal amount of $465,000.00 dated November 27, 2001, as
amended by that certain extension and amendment to promissory note from Borrower
to Compass Bank in the original principal amount of $405,000.00 dated February
25, 2002, as amended by that certain Extension and Amendment to Promissory Note
from Borrower to Compass Bank in the original principal amount of $385,000.00
dated May 5, 2002, as amended by that certain Extension and Amendment to
Promissory Note from Borrower to Compass Bank in the original principal amount
of $385,000.00 dated July 5, 2002, as amended by that certain Amended and
Restated Promissory Note from Borrower to Compass Bank in the original principal
amount of $335,000.00 dated October 4, 2002, as amended by that certain Amended
and Restated Promissory Note from Borrower to Compass Bank in the original
principal amount of $270,000.00 dated as of January 3, 2003, as amended by that
certain Amended and Restated Promissory Note from Borrower to Compass Bank in
the original principal amount of $225,000.00 dated as April 3, 2003, as amended
by that certain Amended and Restated Promissory Note in the original principal
amount of $108,750.00 dated as of the date hereof (as amended from time to time,
the "Note"), which evidences a certain term loan from the Bank to the Borrower
(the "Loan"). The Loan was extended pursuant to that certain Revolving Credit
and Security Agreement executed between Borrower and Lender dated June 26, 1998,
as amended by that certain Modification Agreement and Amendment to Loan
Documents dated December 15, 1998, as amended by that certain Revolving Credit
and Security Agreement dated July 9, 1999, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated July 19, 2000, as
amended by that certain Modification Agreement and Amendment to Loan Documents
dated June 8, 2001, as amended by that certain Modification Agreement and
Amendment to Loan Documents dated November 27, 2001, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated February 25, 2002,
as amended by that certain Modification Agreement and Amendment to Loan
Documents dated May 5, 2002, as amended by that certain Modification Agreement
and Amendment to Loan Documents dated July 5, 2002, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated October 4, 2002, as
amended by that certain Modification Agreement and Amendment to Loan Documents
dated as of January 3, 2003, as amended by that certain Modification Agreement
and Amendment to Loan Documents dated as of April 3, 2003 (as amended, the "Loan
Agreement"), and is secured by, among other things, the Loan Agreement,
Continuing Guaranty Agreement executed by Nematron Corporation dated as of March
20, 2001, and UCC-1 financing statements executed by Borrower in favor of
Lender.

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<PAGE>

         The Bank and the Borrower have agreed to renew and modify the Loan, and
to amend the documents and instruments evidencing, securing, relating to,
guaranteeing or executed or delivered in connection with the Loan (collectively,
the "Loan Documents").
         Accordingly, the Bank and the Borrower have agreed that the Loan shall
be modified and renewed, and that the Loan Documents shall be amended as set
forth below.

                                A G R E E M E N T
                                -----------------
     NOW, THEREFORE, in consideration of the premises, the mutual agreements
of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
to induce Bank to renew and modify the Loan, the parties, intending to be
legally bound hereby, agree as follows:
A.   Modification  Fee. The Borrower shall pay to Bank in  consideration  of the
     Bank's commitment to modify the Loan, a non-refundable  modification fee in
     the  amount of  $250.00,  which  shall be  deemed  earned as of the date of
     Bank's commitment, and shall be paid on or before the date hereof.

B.   Modification  of  Loan.  The  amount  of  the  Loan  shall  be  changed  to
     $108,750.00.  The  Maturity  Date of the Loan shall be changed to April 30,
     2004.

C.   Amendment  of Loan  Agreement.  The  Loan  Agreement  shall be and the same
     hereby is  amended  as  follows:
(i)  Section  3.1  shall  be and  hereby  is  deleted  in its  entirety  and the
     following inserted in place thereof:
"3.1 At no time shall the  outstanding  principal  amount of the Loan exceed the
     Borrowing Base. In the event the outstanding  principal balance of the Loan
     exceeds the Borrowing  Base,  Borrower  shall  promptly make such principal
     reduction  payment in immediately  available funds as is necessary to bring
     the outstanding  principal  balance of the Loan to an amount which is equal
     to or  less  than  the  Borrowing  Base.  The  "Borrowing  Base"  shall  be
     calculated  pursuant to the  following  formula:  eighty  percent  (80%) of
     Borrower's Eligible Accounts  Receivable,  not to exceed $108,750.00 at any
     one time  outstanding,  plus fifty percent (50%) of the value of Borrower's
     Eligible Inventory,  not to exceed the amount of $50,000.00 at any one time
     outstanding.  Notwithstanding the foregoing,  advances under the Loan shall
     not be revolving and no future advances of principal will be allowed."

(ii) Section  7.4  shall  be and  hereby  is  deleted  in its  entirety  and the
     following inserted in place thereof:
"7.4 Borrower  shall  maintain  a  minimum  Tangible  Net Worth of not less than
     $965,000.00  between the date hereof and  December 30, 2003 and to increase
     by fifty percent (50%) of Borrower's  net profit on and after  December 31,
     2003."

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<PAGE>

(iii) Section 8.7 is hereby deleted in its entirety and the following inserted
in place thereof:
"8.7 Borrower  shall not make any payments or  distribute  any funds to Nematron
     Corporation,  Nematron,  Ltd.,  or any  other  subsidiaries  or  affiliates
     thereof,  in excess of One Thousand Dollars ($1,000.00) per month, with the
     exception of the following:
(a)  Payment to Nematron  Corporation  for Dennis Sierk's salary and benefits in
     monthly  payments  not to exceed the  aggregate  amount of  $11,343.00  per
     month;
(b)  Payment to Nematron  Corporation for Charles Garrett's salary and benefits,
     in monthly  payments not to exceed the  aggregate  amount of $9,578.00  per
     month."

(iv) Section 8 is hereby  amended by inserting  the  following  provisions  8.9,
     8.10, 8.11, 8.12 and 8.13:
"8.9 Borrower  shall  maintain,  serve and invoice  directly  all of  Borrower's
     customers, with the exceptions, however of:
(a)  with respect to that certain  product known as "Pointe  Controller,"  which
     may be sold and invoiced by Nematron Corporation;  provided,  however, that
     Borrower  shall be paid by  Nematron  Corporation  for at least  Borrower's
     direct material costs for such product,  plus twenty percent (20%),  within
     ten (10) days from the date Nematron  Corporation,  Nematron,  Ltd., or any
     other  subsidiaries or affiliates  thereof receive payment for such product
     from their  respective  customers,  and in no event later than 45 days from
     the date of  invoice  from  Borrower,  which  invoice  Borrower  agrees  to
     promptly issue; and
(b)  with respect to those  certain  products  known as the  "Legacy"  products,
     orders for which may be received and invoiced by Nematron  Corporation  for
     joint customers of Nematron  Corporation and Borrower;  provided,  however,
     that Borrower shall be paid by Nematron Corporation for at least Borrower's
     bill of material costs plus  unreimbursed  shipping costs for such product,
     plus  twenty  percent  (20%),  within ten (10) days from the date  Nematron
     Corporation,  Nematron,  Ltd.,  or any  other  subsidiaries  or  affiliates
     thereof  receive  payment for such  product from the  customers,  and in no
     event  later than 45 days from the date of  invoice  from  Borrower,  which
     invoice Borrower agrees to promptly issue.

8.10 There shall be no co-mingling of any assets,  including without limitation,
     cash, Accounts Receivables,  Inventory and equipment,  between Borrower and
     Nematron  Corporation,   Nematron,  Ltd.,  or  any  other  subsidiaries  or
     affiliates thereof.

8.11 All of the Collateral  shall remain at 2800 Bob Wallace Avenue,  Suite L-3,
     Huntsville, Alabama 35805.

8.12 Borrower  shall  provide to Bank any and all  amendments to its Articles of
     Organization and/or Bylaws within ten (10) days of the execution thereof.

8.13 Borrower shall furnish weekly to Bank its invoice register, sales register,
     and cash receipts register for the immediately preceding week."

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<PAGE>

D.   Effect  on Loan  Documents.  Each of the Loan  Documents  shall  be  deemed
     amended as set forth  hereinabove and to the extent  necessary to carry out
     the  intent of this  Agreement.  Without  limiting  the  generality  of the
     foregoing,  each reference in the Loan  Documents to the "Note",  the "Loan
     Agreement",  or any other "Loan Documents" shall be deemed to be references
     to said documents,  as amended hereby,  each reference to the amount of the
     Loan shall be changed to  $108,750.00  and each  reference  to the Maturity
     Date shall be changed to April 30, 2004.  Except as is expressly  set forth
     herein,  all of the Loan Documents shall remain in full force and effect in
     accordance  with their  respective  terms and shall  continue to  evidence,
     secure, guarantee or relate to, as the case may be, the Loan.

E.   Representations and Warranties.  Each representation and warranty contained
     in the Loan  Documents  is hereby  reaffirmed  as of the date  hereof.  The
     Borrower hereby represents, warrants and certifies to Bank that no Event of
     Default  nor any  condition  or event that with  notice or lapse of time or
     both would  constitute an Event of Default,  has occurred and is continuing
     under any of the Loan  Documents  or the  Loan,  and that  Borrower  has no
     offsets or claims against Bank arising under, related to, or connected with
     the Loan, the Loan Agreement or any of the other Loan  Documents.  Borrower
     expressly  understands  and  agrees  that  this  Agreement  is  subject  to
     Borrower's  strict and literal  compliance  with the terms,  covenants  and
     provisions set forth herein, and further,  Borrower  expressly  understands
     and agrees  that this  Agreement  shall not estop  Lender  from  taking any
     action  permitted  under  the  Note in the  event  of  default,  which  may
     hereafter occur or exist under the terms of said Note, Loan Agreement or by
     reason of failure of  Borrower to pay to Lender any one or more of payments
     on said Note.  Each  individual  executing  this  Agreement  represents and
     warrants  that he or she is duly  authorized  to execute and  deliver  this
     Agreement.

F.   Additional Documentation;  Expenses.  Borrower shall provide to Bank (i) if
     Borrower or any Guarantor is a business organization, certified resolutions
     properly authorizing the transactions contemplated hereby and the execution
     of this Agreement and all other documents and instruments being executed in
     connection herewith;  and (ii) all other documents and instruments required
     by Bank; all in form and substance satisfactory to Bank. Borrower shall pay
     any  recording  and all other  expenses  incurred  by Bank and  Borrower in
     connection  with the  modification  of the Loan and any other  transactions
     contemplated hereby, including without limitation, title or other insurance
     premiums, survey costs, legal expenses, recording fees and taxes.

G.   Execution by Guarantor.  Guarantor has executed this  Agreement to evidence
     its consent to the modification and amendments as described herein,  and to
     acknowledge  the  continuing  effect of its  Guaranty  and the  obligations
     contained therein.

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<PAGE>


         IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed as of the date first set forth above.

                                       BORROWER:

ATTEST:                                OPTIMATION, INC., an Alabama corporation


By: /s/ John H. Dunlap                 By: /s/ Dennis A. Sierk
   ------------------------                --------------------------
   John Dunlap                             Dennis A. Sierk
   Its: Secretary                          Its:  President

[CORPORATE SEAL]

                                       BANK:

WITNESS:                               COMPASS BANK


/s/Tina M. Raiford                     By: /s/ Arlene Stackhouse
--------------------------                 --------------------------
                                           Arlene Stackhouse
                                           Its:  Senior Vice President



                                       GUARANTOR:

ATTEST:                                NEMATRON CORPORATION, a Michigan
                                       corporation


By: /s/ John H. Dunlap                 By: /s/ Matthew S. Galvez
    -----------------------                --------------------------
    John Dunlap                            Matthew S. Galvez
    Its: Secretary                         Its:  President

[CORPORATE SEAL]



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