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                                                                    EXHIBIT 4.12






                               REPAYMENT AGREEMENT

         This Repayment Agreement is made as of this 28th day of September, 1998
by and among KeyBank National Association, f/k/a Society Bank, Michigan, a
national banking association located at 127 Public Square, Cleveland, Ohio 44114
("KeyBank" or "Bank"), Nematron Corporation, a Michigan corporation located at
5840 Interface Drive, Ann Arbor, Michigan 48103 ("Borrower") and NemaSoft, Inc.,
a Michigan corporation located at 5840 Interface Drive, Ann Arbor, Michigan
48103 ("Guarantor"; Borrower and Guarantor together referred to as "Interested
Parties").

                                    RECITALS

                               Loan Documentation

         WHEREAS, Bank has from time to time made loans to Borrower, including
pursuant to a line of credit to Borrower, originally evidenced by, among other
documents, a Loan Agreement dated January 21, 1993; and

         WHEREAS, the line of credit was extended and the documentation thereof
amended and restated, including pursuant to a Loan Agreement dated September 30,
1996, which Borrower executed and delivered to Bank, as amended by a First
Amendment to Loan Agreement and related Addendum to First Amendment to Loan
Agreement ("First Amendment") both dated February 12, 1997 and a Second
Amendment to Loan Agreement, First Amendment to Revolving Credit Note and First
Amendment to Term Note ("Second Amendment") dated February 28, 1998
(collectively, the "Loan Agreement"); and

         WHEREAS, pursuant to the Loan Agreement, Borrower executed and
delivered to Bank a certain Business Loan Note Floating Rate in the original
principal amount of Six Million Dollars ($6,000,000) dated September 27, 1996,
as such note was amended and restated by a Revolving Credit Note in the original
principal amount of Six Million Dollars ($6,000,000) dated February 12, 1997,
which note was further amended by the Second Amendment (the "Line Note"); and

         WHEREAS, pursuant to the Loan Agreement, Borrower executed and
delivered to Bank a certain Term Note in the original principal amount of One
Million Eight Hundred Thousand Dollars ($1,800,000) dated February 12, 1997,
which note was amended and restated by the Second Amendment (the "Term Note";
the Line Note and Term Note hereafter collectively referred to as the "Original
Notes"); and

         WHEREAS, Guarantor guaranteed payment of the Original Notes by
executing and delivering to Bank a certain Continuing Guaranty dated October 6,
1995, which guaranty was 

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affirmed in Affirmations of Continuing Guaranty dated March 29, 1996, September
27, 1996 and February 12, 1997 (the "Guaranty"); and

         WHEREAS, Borrower's obligation to repay the indebtedness to Bank under
the Original Notes, together with all other amounts owed by Borrower to Bank
from time to time, is secured by perfected security interests in all of
Borrower's Personal Property (as hereinafter defined) including all of
Borrower's Accounts, Accounts Receivable, Inventory, General Intangibles,
machinery, Equipment, furniture and fixtures, including Proceeds of the
foregoing, which security interest Borrower granted to Bank in various security
agreements, including (i) a Security Agreement General Assignment of Accounts
Receivable dated January 21, 1993, (ii) a Security Agreement for Lien on
Inventory dated January 21, 1993, (iii) a Security Agreement dated December 27,
1994, and (iv) a Security Agreement dated February 28, 1998, each executed by
Borrower in favor of Bank (the "Nematron Security Agreements"); and

         WHEREAS, Borrower's obligation to repay the indebtedness to Bank under
the Original Notes, together with all other amounts owed by Borrower and/or
Guarantor to Bank from time to time, is secured by perfected security interests
in all of Guarantor's Personal Property (as hereinafter defined) including all
of Guarantor's Accounts, Accounts Receivable, Inventory, General Intangibles,
machinery, and Equipment, including Proceeds of the foregoing, which security
interest Guarantor granted to Bank in various security agreements, including (i)
a Security Agreement dated October 6, 1995, and (ii) a Security Agreement dated
February 28, 1998, each executed by Guarantor in favor of Bank (the "NemaSoft
Security Agreements," and together with the Nematron Security Agreements, the
"Security Agreements"); and

         WHEREAS, Borrower's obligation to repay the indebtedness under the Line
Note is also secured by a mortgage lien on certain real property located at 5840
Interface Drive, Ann Arbor, Washtenaw County, Michigan (the "Mortgaged
Property"), which Borrower granted to Bank in a Mortgage and Security Agreement
dated December 27, 1994 and filed with the Washtenaw County Recorder on February
7, 1995 in Liber 3078, Pages 519-523 (the "Mortgage"); and

         WHEREAS, Bank executed and delivered certain Subordination Agreements
dated August 8, 1995 and September 16, 1996, subordinating its mortgage lien on
the Mortgaged Property to a mortgage lien granted in a real estate mortgage from
Borrower to Chelsea State Bank, a Michigan Banking Corporation, in the amount of
$1,900,000, which mortgage amount was subsequently increased to $2,300,000; and

         WHEREAS, Action Instruments, Inc. executed and delivered to Bank
certain Subordination Agreements dated February 14, 1994 and May 2, 1995
subordinating its right to repayment of all loans, including but not limited to
a certain $167,000 Convertible Subordinated Note dated October 29, 1993, a
$215,000 Convertible Subordinated Note dated August 29, 1994, and a $62,000
Convertible Subordinated Note dated October 1, 1994, to the rights of the Bank;
and

         WHEREAS, Imagination Systems, Inc. executed and delivered to Bank a
certain Subordination Agreement dated September 13, 1994, subordinating its
right to repayment of all



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loans, including but not limited to a certain $295,000 Convertible Subordinated
Note dated June 30, 1994, to the rights of the Bank; and

         WHEREAS, G. Paul Horst executed and delivered to Bank a certain
Subordination Agreement dated December 8, 1994, subordinating its right to
repayment of all loans, including but not limited to a certain $200,000
Convertible Subordinated Note dated December 8, 1994, to the rights of the Bank;
and

         WHEREAS, the Joseph Krinsky Trust, u/a DTD 6/20/91 executed and
delivered to Bank a certain Subordination Agreement dated November 7, 1995,
subordinating its right to repayment of all loans and any security interests
granted by Borrower to the Joseph Krinsky Trust, u/a DTD 6/20/91, including but
not limited to a certain $150,000 note dated November 7, 1995, to the rights of
the Bank, though with Bank's consent, all indebtedness of Borrower to such
creditor was repaid with the proceeds of the Term Note; and

         WHEREAS, Onset BIDCO executed and delivered to Bank a certain
Subordination Agreement dated November 7, 1995, subordinating its right to
repayment of all loans and any security interests granted by Borrower to Onset
BIDCO, including but not limited to a certain $1,000,000 note dated November 7,
1995, to the rights of the Bank, though with Bank's consent, all indebtedness of
Borrower to such creditor was repaid with the proceeds of the Term Note; and

         WHEREAS, Urban A. MacDonald executed and delivered to Bank a certain
Subordination Agreement dated November 7, 1995, subordinating his right to
repayment of all loans and any security interests granted by Borrower to Urban
A. MacDonald, including but not limited to a certain $50,000 note dated November
7, 1995, to the rights of the Bank, though with Bank's consent, all indebtedness
of Borrower to such creditor was repaid with the proceeds of the Term Note; and

         WHEREAS, the Emily Krinsky Trust, u/a DTD 6/20/91 executed and
delivered to Bank a certain Subordination Agreement dated November 7, 1995,
subordinating its right to repayment of all loans and any security interests
granted by Borrower to the Emily Krinsky Trust, u/a DTD 6/20/91, including but
not limited to a certain $100,000 note dated November 7, 1995, to the rights of
the Bank, though with Bank's consent, all indebtedness of Borrower to such
creditor was repaid with the proceeds of the Term Note; and

         WHEREAS, The Capital Fund, Inc. executed and delivered to Bank a
certain Subordination Agreement dated November 7, 1995, subordinating its right
to repayment of all loans and any security interests granted by Borrower to The
Capital Fund, Inc., including but not limited to a certain $500,000 note dated
November 7, 1995, to the rights of the Bank, though with Bank's consent, all
indebtedness of Borrower to such creditor was repaid with the proceeds of the
Term Note; and

                                    Defaults


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         WHEREAS, pursuant to the Second Amendment, the maturity date of each of
the Original Notes was May 29, 1998, on which date all Obligations (as
hereinafter defined) were to be repaid, but to date Borrower has failed to do
so; and

         WHEREAS, in addition to not repaying the Original Notes at maturity,
Borrower has incurred Obligations in excess of those permitted under the
Borrowing Formula set forth in Section 1.1.1 of the Loan Agreement, and has
violated certain other covenants set forth in the Loan Agreement; and

                            Desired Course of Action

         WHEREAS, Borrower has requested that Bank restructure the Obligations
of Borrower to Bank under the Original Loan Documents and refrain from
exercising its various rights and remedies under applicable law in response to
the defaults, and Bank, subject to the terms and conditions of this Repayment
Agreement, has acquiesced to Borrower's request.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of the premises and of the mutual
promises, covenants and agreements herein contained, and for other valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the Bank and the Interested Parties agree as follows:

1.       Definitions.  As used in this Repayment Agreement (including the 
         foregoing Recitals), the following terms, which are in addition to the
         terms defined elsewhere in this Repayment Agreement, shall have the
         indicated meanings. Any inconsistency between terms or definitions
         contained in this Repayment Agreement and the Loan Documents shall be
         resolved in favor of the definitions and terms contained in this
         Repayment Agreement. All the terms defined in this Repayment Agreement
         in the singular shall have comparable meanings when used in the plural
         and vice-versa. The words "hereof," "herein" and "hereunder" and words
         of similar import when used in this Repayment Agreement shall refer to
         this Repayment Agreement as a whole and not to any particular provision
         of this Repayment Agreement. WHENEVER ANY AGREEMENT, INSTRUMENT OR
         DOCUMENT IS DEFINED IN THIS REPAYMENT AGREEMENT, SUCH DEFINITION SHALL
         BE DEEMED TO MEAN AND INCLUDE ANY AMENDMENT, RESTATEMENT, OR
         MODIFICATION THEREOF.

                           "ACCOUNT(S)", "CHATTEL PAPER", "CONSUMER GOODS",
                  "DEPOSIT ACCOUNT", "DOCUMENT", "FARM PRODUCTS", "GENERAL
                  INTANGIBLE", "GOODS" and "INSTRUMENT" shall have the meanings
                  set forth in Ohio Revised Code Sections 1309.01-1309.50
                  inclusive, including any amendments thereof and any
                  substitutions therefor, which definitions are hereby
                  incorporated by reference as though fully rewritten herein.


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                           "ACCOUNT DEBTOR" shall mean a person obligated for
                  payment of an Account or an Account Receivable.

                           "ACCOUNT(S) RECEIVABLE" shall mean:

                           (a)      any Account, and

                           (b)      any other indebtedness owed to or receivable
                                    owned, acquired, or received by a Person of
                                    whatever kind and however evidenced, and

                           (c)      any right, title, and interest in a Person's
                                    Goods which were sold, leased, or furnished
                                    by that Person and gave rise to either (a)
                                    or (b) above, or both of them. This
                                    includes, without limitation: 
                                    (1)     any rights of stoppage in transit of
                                            a Person's sold, leased, or
                                            furnished Goods,
                                    (2)     any rights to reclaim a Person's
                                            sold, leased, or furnished Goods,
                                            and
                                    (3)     any rights a Person has in such
                                            sold, leased, or furnished Goods
                                            that have been returned to or
                                            repossessed by that Person.

                           "AFFILIATE" means

                           (a)      an entity that directly or indirectly owns,
                                    controls or holds with power to vote, twenty
                                    percent (20%) or more of the outstanding
                                    voting securities of a Person;

                           (b)      a corporation twenty percent (20%) or more
                                    of whose outstanding voting securities are
                                    directly or indirectly owned, controlled or
                                    held with power to vote, by a Person or by
                                    an entity that directly or indirectly owns,
                                    controls or holds with power to vote, twenty
                                    percent (20%) or more of the outstanding
                                    voting securities of a Person;

                           (c)      a Person whose business is operated under a
                                    lease or operating agreement by another
                                    Person, or Person substantially all of whose
                                    property is operated under an operating
                                    agreement with another Person; or

                           (d)      an entity that operates the business or
                                    substantially all of the property of a
                                    Person under a lease or operating agreement.

                           "AMENDED AND RESTATED LINE NOTE" shall mean the
                  Amended and Restated Revolving Credit Note referred to in
                  subsection 3(a) of this Repayment Agreement and attached
                  hereto as Exhibit B.

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                           "AMENDED AND RESTATED TERM NOTE" shall mean the
                  Amended and Restated Term Note referred to in subsection 3(c)
                  of this Repayment Agreement and attached hereto as Exhibit C.

                           "AMENDED NOTES" means the Amended and Restated Line
         Note and the Amended and Restated Term Note.

                           "CASH COLLATERAL  ACCOUNT" shall have the meaning 
                  given to it in subsection 5(c).

                                    "CLOSING DATE" means the date on which this
                  Repayment Agreement is executed by all parties hereto.

                           "COLLATERAL" shall mean all of the Mortgaged Property
                  and Personal Property.

                           "EQUIPMENT" means:

                           (a)      any equipment, including without limitation,
                                    machinery, office furniture and furnishings,
                                    tools, dies, jigs, and molds,
                           (b)      all Goods that are used or bought for use
                                    primarily in a Person's business,
                           (c)      all Goods that are not Consumer Goods, Farm
                                    Products, or Inventory, and
                           (d)      all substitutes or replacements for, and all
                                    parts, accessories, additions, attachments,
                                    or accessions to (a) to (c) above.

                           "GAAP" shall mean generally accepted accounting
                  principles consistently applied.

                           "INDEBTEDNESS" as applied to any Person, including
                  any of the Borrowers and/or Guarantors, shall mean:

                                    (a) All items (except items of paid-in
                                    capital or capital surplus, or of
                                    contingency reserves, reserves or allowances
                                    for deferred and currently payable income
                                    tax, or reserves or allowances for pension
                                    contributions, or reserves or allowances for
                                    unearned revenues, trade accounts payable
                                    and accrued expenses for goods or services
                                    purchased in the ordinary course of business
                                    and that are not the subject of a
                                    conditional sales contract or capitalized
                                    lease) which in accordance with GAAP would
                                    be included in determining total liabilities
                                    as shown on the liability side of a balance
                                    sheet of any such Person as of the date on
                                    which Indebtedness is to be determined,
                                    regardless whether such indebtedness shall
                                    be recourse indebtedness or otherwise; and

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                                    (b) All indebtedness of others within the
                                    meaning of (a) above which any such Person
                                    has directly or indirectly guaranteed,
                                    endorsed (otherwise than for collection or
                                    deposit in the ordinary course of business),
                                    discounted with recourse or agreed
                                    (contingently or otherwise) to purchase or
                                    repurchase or otherwise acquire or become
                                    liable for, or in respect of which such
                                    Person has entered into any agreement for
                                    the purchase or other acquisition of any
                                    product, materials, or supplies, or for the
                                    making of shipments, or for the payment for
                                    services, if in any such case payment
                                    therefore is to be made regardless of the
                                    nondelivery of the product, materials, or
                                    supplies or the nonfurnishing of the
                                    transportation or services.

                           "INVENTORY" means:

                           (a)      any inventory,
                           (b)      all Goods that are raw materials,
                           (c)      all Goods that are work in process,
                           (d)      all Goods that are materials used or 
                                    consumed in the ordinary course of a
                                    Person's business,
                           (e)      all Goods that are, in the ordinary course
                                    of a Person's business, held for sale or
                                    lease or furnished or to be furnished under
                                    contracts of service, and
                           (f)      all substitutes and replacements for, and
                                    parts, accessories, additions, attachments,
                                    or accessions to (a) to (e) above.

                           "KEYBANK PRIME RATE" shall mean, at any time, the
                  rate of interest, whether or not publicly announced,
                  determined by the Bank to be its prime or base rate (the prime
                  rate of the Bank is not necessarily intended to be the lowest
                  rate of interest charged by the Bank in connection with
                  extensions of credit). Changes in the Bank's prime rate shall
                  immediately and automatically change the KeyBank Prime Rate
                  applicable to the Loan.

                           "LAWS" shall have the meaning ascribed to it in
                  subsection 2(r).

                           "LOAN DOCUMENTS" shall have the meaning ascribed to
                  it in the definition of Original Loan Documents.

                           "LOCKBOX" shall have the meaning given to it in
                  subsection 5(c).

                           "MORTGAGE" shall have the meaning given to it in the
                  recitals hereto.

                           "MORTGAGED PROPERTY" shall mean the real property
                  together with any fixtures or Goods thereon which is the
                  subject of the Mortgage.



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                           "OBLIGATIONS" shall mean every liability now or
                  hereafter owing by Interested Parties to Bank whether owing by
                  Borrower alone or by one or more others in a several, joint or
                  joint and several capacity, whether owing absolutely or
                  contingently, whether created by loan, overdraft, guaranty of
                  payment or other contract or by quasi contract, tort, statute
                  or other operation of law, whether incurred directly to the
                  Bank or acquired by Bank by purchase, assignment, pledge or
                  otherwise and whether participated to or from Bank in whole or
                  in part and specifically includes all debt created or
                  evidenced by the Loan Documents.

                           "ORGANIZATION" shall mean a corporation, government
                  or government subdivision or agency, business trust, estate,
                  trust, limited liability company, partnership, association,
                  two or more Persons having a joint or common interest, and any
                  other legal or commercial entity.

                           "ORIGINAL LOAN DOCUMENTS" means all documents
                  heretofore executed in connection with the Original Notes, and
                  "LOAN DOCUMENTS" means this Repayment Agreement and each of
                  the documents required to be executed and delivered to Bank
                  pursuant to the provisions of this Repayment Agreement,
                  together with all of the Original Loan Documents.

                           "PERSON" shall mean an individual or an Organization.

                           "PERSONAL PROPERTY" shall mean all of the Interested
                  Parties' personal property including their respective
                  Accounts, Chattel Paper, Deposit Accounts, General
                  Intangibles, Goods, Instruments and Accounts Receivable in
                  which the Interested Parties have granted to Bank a security
                  interest pursuant to the Security Agreements or any other of
                  the Loan Documents.

                           "PROCEEDS" shall mean any proceeds as that term is
                  defined in Article 9 of the Uniform Commercial Code as enacted
                  in the state of Ohio, in any form whatsoever received and
                  further includes all rents received, expense recovery
                  receipts, proceeds of Accounts, proceeds of contract rights,
                  tax refunds, insurance proceeds, proceeds of the sale of any
                  or all of the Collateral.

                           "RENTS" shall mean the Proceeds, products, offspring,
                  rents or profits of the Mortgaged Property owned by the
                  mortgagor of such property.

                           "REPAYMENT AGREEMENT" means this Repayment Agreement
                  and all amendments and supplements hereto which may from time
                  to time become effective hereafter.

                           "SECURITY AGREEMENTS" shall have the meaning given to
                  it in the Recitals hereto.


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                           "SUBORDINATED DEBT" shall mean all debt owed by
                  Borrower to any Person, with respect to which a subordination
                  agreement has been executed in favor of Bank.

                           "TAXES" unless otherwise designated shall mean all
                  federal, state and local or foreign income, payroll,
                  withholding, excise, sales, use, real and personal property,
                  use and occupancy, business and occupation, mercantile, real
                  estate, capital stock and franchise or other taxes, including
                  interest and penalties thereon, and including estimated taxes
                  thereof.

2.       Representations, Acknowledgments and Covenants. The Interested Parties
         represent, acknowledge and covenant that each of the following is true
         on the date of execution and shall remain true until the Obligations
         are satisfied:

         a)       True and Correct Statement. The above Recitals are true and
                  accurate in all respects, and incorporated within this
                  Repayment Agreement as if fully rewritten. As a condition to
                  the signing of this Repayment Agreement, all parties are
                  relying on the truth, completeness, and correctness of the
                  statements and representations made herein, including the
                  Recitals, and all parties represent for themselves that this
                  Repayment Agreement contains no material misrepresentations or
                  omissions by any party to this Repayment Agreement.

         b)       Indebtedness.  As of September 24, 1998, Borrower is indebted,
                  and the Guarantor is liable, to Bank for the following amounts
                  (i) under the Line Note, in the principal amount of Three
                  Million Five Hundred Fourteen Thousand and Dollars
                  ($3,514,000) together with the interest as of September 24 of
                  $21,907.60 as reflected in the Bank's records, which interest
                  will continue to accrue; and (ii) under the Term Note, in the
                  principal amount of One Million Two Hundred Thirty Thousand
                  and Dollars ($1,230,000) together with the interest as of
                  September 24 of $6,777.81 as reflected in the Bank's records,
                  which interest will continue to accrue. Borrower is further
                  responsible for late charges and other fees in the aggregate
                  amount of $25,000 as of September 24, 1998.

         c)       Default Acknowledgment. As of the date of this Repayment
                  Agreement, the Interested Parties are in default under the
                  Original Loan Documents, and as a result of such default, Bank
                  is entitled to exercise its rights and remedies as provided in
                  the Original Loan Documents.

         d)       No Obligation to Restructure. Before execution and delivery of
                  this Repayment Agreement by all parties, the Bank had no
                  obligation to modify, extend, or otherwise amend the terms and
                  conditions of the Original Loan Documents or to negotiate with
                  the Interested Parties or any other person or entity
                  concerning any of the foregoing. The Interested Parties agree
                  that the Bank's execution of this Repayment Agreement does not
                  create any such obligations other than as expressly set forth
                  herein.


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         e)       Claims or Setoff. As of the date of this Repayment Agreement,
                  none of the Interested Parties have any claims or set-offs
                  against the Obligations, nor do they have any defenses to, or
                  counterclaims respecting, the enforcement or administration of
                  their respective obligations evidenced by the Original Loan
                  Documents and under applicable law. The Interested Parties
                  shall not assert or seek to assert any claim, set-off, defense
                  or counterclaim of any kind or nature whatsoever with respect
                  to the Original Loan Documents.

         f)       Liens and Encumbrances. No liens or encumbrances other than
                  Bank's attach to any of the Collateral other than those listed
                  on Exhibit A, and no litigation is pending against Interested
                  Parties other than that listed on Exhibit A hereto. Borrower
                  has no assets other than those pledged to Bank to secure
                  repayment of the Original Loan Documents. Interested Parties
                  will keep the Collateral and all rights with respect thereto
                  and proceeds of same both free from any adverse lien, except
                  those of Bank and those listed on Exhibit A, and in good
                  condition, normal wear and tear excepted, and will not waste
                  or destroy any of the same except in the ordinary course of
                  business. Interested Parties will not use the Collateral in
                  violation of any applicable statute or ordinance except to the
                  extent that such use will not have a material adverse affect
                  upon the Collateral or the operations of Borrower.

         g)       Taxes. Borrower has promptly paid when due, all taxes, 
                  assessments, and governmental charges of every kind and nature
                  that have been lawfully levied, assessed or imposed upon
                  Borrower, or its properties (including the use thereof), or
                  any obligations which, if unpaid would become liens against
                  its assets including, without limitation, all sums due and
                  owing any taxing authority for income and other taxes withheld
                  from the wages and salaries of its employees. All federal,
                  state and other tax returns and reports required by law to be
                  filed by the Interested Parties have been duly filed (or
                  proper extensions for filing have been filed).

         h)       Business Decisions. Borrower has made its own decisions
                  regarding its business operations and its incurrence and
                  payment of third party debt.

         i)       Principal Place of Business. Borrower's principal place of 
                  business is located at 5840 Interface Drive, Ann Arbor,
                  Michigan 48103.

         j)       Taxpayer Identification Number. Borrower's taxpayer 
                  identification number is 38-2483796; Guarantor's taxpayer
                  identification number is 38-3255068.

         k)       Good faith. As of the date of this Repayment Agreement,
                  Bank and Bank's agents have acted at all times in a fair and
                  reasonable manner, and in good faith, in connection with their
                  administration and enforcement of the Original Loan 


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<PAGE>   11

                  Documents, their dealings with the Interested Parties with
                  respect to the Loan Documents, and their negotiations in
                  connection with this Repayment Agreement and any other
                  transactions related to the Loan Documents and/or this
                  Repayment Agreement. The execution and delivery of this
                  Repayment Agreement by the Interested Parties was and is their
                  free and voluntary act and deed, without any misapprehension
                  as to the effect thereof, and without any coercion, duress,
                  overreaching or any other misconduct by Bank or any agent of
                  Bank.

         l)       Legal Counsel. The Interested Parties have had the benefit of,
                  or the opportunity to obtain, legal counsel throughout their
                  dealings with the Bank and Bank's agents in connection with
                  the administration and enforcement of the Original Loan
                  Documents by Bank and Bank's agents and the execution and
                  delivery of this Repayment Agreement and the Loan Documents.

         m)       No Interference with Other Agreements or Contracts. Neither
                  the execution of this Repayment Agreement nor the consummation
                  of the transactions contemplated hereby will constitute a
                  violation of, be in conflict with or constitute a default
                  under (or with the passage of time or delivery of notice, or
                  both, would constitute a default under) any material term or
                  provision of any other agreement, contract, lease or
                  instrument to which any Interested Party is a party or by
                  which any Interested Party (or the assets of any Interested
                  Party) is bound, or which affects or relates to the Collateral
                  or any part thereof.

         n)       Organizational Status. Borrower is a Michigan corporation duly
                  formed and validly existing under the laws of the State of
                  Michigan and is duly qualified and authorized to do business
                  in any other state where Borrower is required to qualify to do
                  business in such state except where the failure to so qualify
                  would have a material adverse effect upon the Collateral or
                  the operations of Borrower.

         o)       Authority of Interested Parties to Execute Loan Documents.

                  (i)      The execution, delivery, and performance by
                           Interested Parties of each of the Repayment Agreement
                           and the other documents referred to herein which are
                           required to be executed and delivered by Interested
                           Parties:

                           (1)      are within each respective Interested 
                                    Party's powers and authority;
                           (2)      do not contravene each respective Interested
                                    Party's Articles of Incorporation, by-laws,
                                    or any amendments thereto;
                           (3)      do not, to the best of any Interested 
                                    Party's knowledge contravene any Laws;
                           (4)      except as provided herein, do not result in
                                    or require the creation of any lien,
                                    security interest, or other charge or
                                    encumbrance upon or with respect to any of
                                    the assets of any Interested Party; and
                           (5)      will not cause any money owing on any other
                                    indebtedness of any Interested Party to be
                                    due and payable.


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                  (ii)     No authorization or approval or action by, and no
                           notice to or filing with, any governmental authority
                           or regulatory body is required for the due execution,
                           delivery, and performance by the Borrower or the
                           other Interested Parties of this Repayment Agreement
                           or any of the agreements or documents referred to
                           herein, except for the recording thereof, where
                           necessary, to evidence or perfect the liens or
                           security interests granted Bank or conveyances made
                           to Bank in connection herewith.

                  (iii)    This Repayment Agreement and the other Loan Documents
                           create and constitute legal, valid, enforceable and
                           binding obligations of the Interested Parties, as
                           appropriate, in accordance with their respective
                           terms.

         p)       Sole Right to Assets. No Interested Party has (i) made a
                  general assignment for the benefit of creditors; (ii) filed
                  any voluntary petition in bankruptcy or suffered the filing of
                  any involuntary petition by its creditors; (iii) suffered the
                  appointment of a receiver to take possession of all, or
                  substantially all, of its assets; or (iv) suffered the
                  attachment or other judicial seizure of all, or substantially
                  all, of its assets.

         q)       Solvency. After giving effect to the transactions contemplated
                  hereby, Borrower will not have incurred, and does not intend
                  to incur, debts beyond its ability to pay as they become due
                  and has sufficient capital with which to conduct its business
                  affairs.

         r)       No Violation of Laws. The Borrower's business and the
                  operation thereof conform and have conformed in all material
                  respects with all applicable laws, ordinances, rules,
                  regulations and directives of governmental or
                  quasi-governmental agencies or authorities, including, but not
                  limited to, all existing zoning, land use, building, fire,
                  health, labor, environmental, tax and safety laws, ordinances,
                  rules, regulations and directives (collectively, "Laws"). No
                  notice, citation or special assessment for the violation of
                  any Laws has been received by any Interested Party nor does
                  any Interested Party have knowledge of any fact or condition
                  which may result in the issuance of any such notice, citation
                  or assessment.

         s)       Environmental Concerns. Borrower is in material compliance
                  with all environmental Laws and regulations and there are (i)
                  no gas wells or other wells, whether capped or uncapped, on or
                  about the Mortgaged Property; (ii) no toxic or hazardous
                  waste, substance or material, nor any other waste covered by
                  any Laws (all such waste, substances, materials, products and
                  compounds being collectively defined herein as "Hazardous
                  Materials") of any kind or nature has been stored at, disposed
                  of or are located in, on or about the Mortgaged Property
                  except as heretofore disclosed in writing to Bank; (iii) no
                  underground tanks of any type are 


                                       12
<PAGE>   13

                  located at the Mortgaged Property; (iv) no asbestos or
                  asbestos containing materials, or any polychlorinated
                  biphenyls, is located in, on or about the Mortgaged Property
                  except as heretofore disclosed in writing to Bank; (v) to the
                  best of Borrower's knowledge and belief there are no surface
                  or subsurface conditions on or about the Mortgaged Property
                  which constitute or with the passage of time may constitute a
                  public or private nuisance; (vi) no portion of the Mortgaged
                  Property is "wetlands" or a similarly protected area under any
                  Laws; (vii) no clean-up or other remediation activity has
                  occurred or is in process at the Mortgaged Property; (viii) no
                  notice, citation or other action by any local, state or
                  federal environmental or other agency is pending or, to the
                  knowledge of the Interested Parties, threatened against the
                  Mortgaged Property; (ix) no notice, report or corrective
                  action plan has been filed with any local, state or federal
                  environmental or other agency with respect to the Mortgaged
                  Property; except such plans as have been heretofore completed,
                  and the completion of which has been acknowledged by the
                  appropriate local, state or federal environmental agency; and
                  (x) no permit is required or has been issued from any local,
                  state or federal environmental agency for the use or
                  maintenance of any improvement or facility on or about the
                  Mortgaged Property.

         t)       Financial Information. Any financial and operating statements
                  of the Interested Parties furnished to Bank in connection with
                  or pursuant to this Repayment Agreement or otherwise are true
                  and correct in all material respects, accurately reflect the
                  financial position of the parties described therein, and do
                  not omit to state any material liability, contingent or
                  otherwise, or any facts necessary thereto, the omission of
                  which would be misleading.

         u)       Bank Accounts. All of Borrower's banking accounts are held
                  at Bank, and shall be at all times hereafter.

         v)       Closing Costs. All out-of-pocket costs, expenses and fees
                  (collectively, "Closing Costs") incurred by Bank in connection
                  with or to consummate the transactions described herein,
                  including, without limitation, legal fees, conveyance fees,
                  escrow fees, survey and title costs and fees payable to any
                  engineering and environmental consultants, shall be paid by
                  the Interested Parties to Bank within ten (10) days of a
                  request from Bank.

         w)       Capitalized terms. Capitalized terms used herein but not
                  defined herein shall have the meanings ascribed to them in the
                  Loan Documents.

         x)       Continuous Nature of Loan Documents. The terms of the Loan
                  Documents, not specifically altered herein, shall continue
                  unchanged.

         y)       Notice of Change. The Borrower agrees to give prompt
                  written notice to the Bank of: (a) any Event of Default; (b)
                  any occurrence which might mature into an Event of Default
                  (whether by the passage of time, giving of notice or
                  otherwise); 

                                       13

<PAGE>   14

                  (c) any default under any material agreement to which the
                  Borrower is a party or by which the Collateral is bound or the
                  acceleration of the maturity of any indebtedness owing by the
                  Borrower; (d) all litigation affecting the Borrower or the
                  Collateral which represents a potential liability in excess of
                  Twenty-Five Thousand Dollars ($25,000.00); and (e) any other
                  matter which might result in a material adverse change in the
                  financial condition of the Borrower or the value of the
                  Collateral. Such notice will describe the foregoing matters
                  with particularity and the actions which the Borrower is
                  taking or proposes to take with respect thereto.

3.       Restructure and Amendment of Loan Documents. The Obligations evidenced
         by the Original Notes shall be restructured pursuant to the terms of
         the Amended and Restated Line Note and the Amended and Restated Term
         Note. The Amended Notes do not constitute repayment or cancellation of
         all or any portion of the Indebtedness evidenced by the Original Notes.
         The Original Notes shall remain in full force and effect only for the
         purpose of evidencing any amounts due in connection with the Original
         Notes and any of the Loan Documents which for any reason in fact or in
         law, do not become Obligations of Borrower under the Amended Notes, as
         intended by the parties hereto. In connection with the restructure of
         the Obligations, the following amendments are hereby made to the Loan
         Agreement:

         a)       Subsection 1.1.1 of the Loan Agreement is deleted in its
                  entirety, and the following inserted in lieu thereof:

                           "1.1.1 Upon the request of Borrower, made at any time
                  or from time to time between September 28, 1998 and October
                  31, 1998, inclusive, and so long as no Event of Default under
                  this Agreement has occurred or is continuing, Bank shall make
                  cash advances to Borrower in an amount up to:

                           (a)      eighty percent (80%) of the aggregate 
                                    outstanding amount of Eligible Domestic
                                    Accounts;

                                    PLUS

                           (b)      at Borrower's option, eighty percent (80%)
                                    of the aggregate outstanding amount of
                                    Eligible Foreign Accounts;

                                    PLUS

                           (c)      thirty five percent (35%) of the aggregate
                                    sum (not to exceed $2,500,000) of (i)
                                    Eligible Raw Inventory (valued at the lower
                                    of Borrower's and NemaSoft's cost, or
                                    market) and (ii) Eligible Finished Inventory
                                    (valued at Borrower's and NemaSoft's cost of
                                    production):

                                       14
<PAGE>   15

                                    PLUS

                           (d)      the Permitted Overadvance;

                                    LESS

                           (e)      the aggregate outstanding amount of any 
                                    issued and outstanding Letters of Credit;

                           PROVIDED, HOWEVER, that in no event shall the
                           aggregate amount of outstanding cash advances made
                           pursuant to this Section 1.1.1 ("BORROWING FORMULA")
                           be, at any time, greater than the sum of Six Million
                           and 00/100 Dollars ($6,000,000.00). The amount
                           outstanding under the Line of Credit shall be
                           evidenced by an Amended and Restated Revolving Credit
                           Note dated as of September 28, 1998 ("NOTE"). The
                           terms of the Note, and all renewals, modifications
                           and amendments thereto, are hereby incorporated
                           herein specifically by reference. Subject to the
                           foregoing limitations Borrower may borrow, repay and
                           reborrow under the Line of Credit."

         b)       The Loan Agreement is amended by renumbering existing
                  subsection 1.2.8 as subsection 1.2.9, and adding new
                  subsections 1.2.8 and 1.2.10 as follows:

                           "1.2.8 "Permitted Overadvance" means an amount of up
                  to $753,345 during the period between September 28, 1998 and
                  October 31, 1998, and shall mean Zero Dollars ($0) thereafter.

                           1.2.10 "Repayment Agreement" means an agreement, so
                  called, among Borrower, NemaSoft and Bank dated September 28,
                  1998."

         c)       Subsection 1.7 of the Loan Agreement is deleted and the
                  following inserted in lieu thereof:

                           "1.7 Term Loan. Bank agrees to lend Borrower the sum
                  of One Million Two Hundred Thirty Thousand and 00/100 Dollars
                  ($1,230,000.00) ("Term Loan"). The Term Loan shall be
                  evidenced by an Amended and Restated Term Note dated as of
                  September 28, 1998("Term Note") maturing on October 31, 1998
                  payable in monthly installments and bearing a variable
                  interest rate as set forth in the Term Note."

         d)       Subsection 1.8 of the Loan Agreement is deleted in its
                  entirety.

         e)       Article VI of the Loan Agreement is amended by adding a new 
                  subsection 6.9 as follows:


                                       15
<PAGE>   16


                           "6.9     An Event of Default shall occur under the 
                                    Repayment Agreement."

4.       Conditions Precedent to Restructure. The following conditions precedent
         shall be fulfilled on or before the Closing Date, and subsection 4(c)
         shall be true on the Closing Date.

         a)       Execution of Loan Documents. The terms and conditions of the
                  Restructure as set forth herein shall not become effective or
                  enforceable against the Bank until the Interested Parties
                  shall have executed and delivered to Bank each of the
                  documents referred to in this Repayment Agreement (including,
                  but not limited to those set forth in Section 5), together
                  with the Repayment Agreement.

         b)       Interest Payment/Restructure Fee. Borrowers shall pay to Bank,
                  in immediately available funds, on the Closing Date, the
                  amount of all outstanding interest due with respect to the
                  Original Notes, which sum is $28,685.41 as of September 24,
                  1998 together with all then accrued late fees. Additionally
                  Borrower shall pay, in immediately available funds, to Bank,
                  on or before execution and delivery of the Repayment Agreement
                  to Bank, an extension fee of Ten Thousand Dollars
                  ($10,000.00).

         c)       Adverse Change. Prior to the Closing Date, there shall occur
                  no further material adverse change in the financial condition
                  or prospects of Borrower from that disclosed in writing to
                  Bank on or before May 31, 1998.

5.       Documentation.  All of the following documents shall be executed on or
         before the Closing Date.

         a)       Amended Notes. On or before the Closing Date, Borrower shall
                  execute and deliver to Bank the Amended and Restated Line Note
                  in the form of Exhibit B attached hereto and incorporated
                  herein, and the Amended and Restated Term Note in the form of
                  Exhibit C attached hereto and incorporated herein.

         b)       Amendment to Mortgage. On or before the Closing Date, in order
                  to maintain Bank's priority, Borrower shall execute and
                  deliver to Bank an Amendment to Mortgage in the form of
                  Exhibit D attached hereto.

         c)       Cash Collateral Agreement and Lockbox Agreement. On or before
                  the Closing Date, Borrower shall execute and deliver to Bank a
                  Master Agreement Cash Management Services ("Cash Collateral
                  Agreement") in the form of Exhibit E attached hereto, and
                  associated Wholesale Lockbox Service Agreement ("Lockbox
                  Agreement") in the form of Appendix 1 thereto, providing for
                  the delivery of proceeds of Borrower's Accounts Receivable and
                  all other cash and receivables directly to a lockbox (the
                  "Lockbox") and/or blocked access account at Bank (the "Cash
                  Collateral Account") as set forth in such agreements.


                                       16
<PAGE>   17


         d)       Assignment of Patents and Trademarks. On or before the Closing
                  Date, Borrower and Guarantor shall each execute and deliver to
                  Bank Security Agreements relating to certain patents and
                  trademarks, in the forms of Exhibits F1 through F4 attached
                  hereto.

         e)       Landlord's Waiver. In order to insure Bank that its security
                  interests in the Personal Property will not be adversely
                  affected, Interested Parties will use their best efforts to
                  cause their respective landlords to execute a Landlord's
                  Waiver and Estoppel substantially in the form of Exhibit G
                  attached hereto.

         f)       Reaffirmation of Subordination Agreements. On or before the
                  Closing Date, Borrower shall cause to be executed and
                  delivered to Bank a Reaffirmation of Subordination Agreement,
                  substantially in the form of Exhibit H attached hereto, from
                  each of the Subordinated Debt holders.

         g)       Release of Liens on Mortgaged Property. On or before the
                  Closing Date, Borrower shall obtain a release of the $500,000
                  mortgage lien on the Mortgaged Property which Borrower granted
                  to The Capital Fund, Inc. in a mortgage dated November 16,
                  1995, and a release of a $9,260.68 lien on the Mortgaged
                  Property by Ajax Materials Corporation against Interface
                  Systems, Inc. dated June 2, 1995.

         h)       Corporate Resolutions. On or before the Closing Date, Borrower
                  and Guarantor shall each cause to be delivered to Bank a
                  Corporate Resolution authorizing the execution and delivery of
                  this Repayment Agreement, including all of the Loan Documents
                  required to be delivered in connection herewith.

6.       Default. The occurrence of any one or more of the following events
         constitutes a default by all of the Interested Parties under this
         Repayment Agreement (herein called "Event of Default"):

         a)       Borrower fails to pay when due, any principal, interest, fees,
                  charges or Obligations required by the Loan Documents, or

         b)       Borrower fails to furnish to Bank within thirty (30) days of
                  each calendar month end its financial statement for the prior
                  calendar months and year to date, and within ninety (90) days
                  after the end of each calendar year complete financial
                  statements with all applicable notes and detail and supporting
                  documents certified to be true and correct by Borrower and
                  within thirty (30) days after filing with the government, a
                  copy of all of Borrower's federal, state and local tax
                  returns, or

         c)       Borrower fails to make available for inspection to duly
                  authorized representatives or agents of Bank any of its books,
                  records, or properties when requested to do so or fails to
                  furnish Bank any information regarding its business affairs
                  and financial condition within a reasonable time after written
                  request therefor, or


                                       17
<PAGE>   18

         d)       Any Interested Party creates or permits the creation or
                  continuance of, any lien upon any of the Collateral other than
                  those liens referred to in subsection 2(f) and listed on
                  Exhibit A hereto, including, but not limited to, mortgages,
                  judgments, security interests, pledges, and liens for taxes,
                  assessments, or other governmental charges of any kind, other
                  than any lien for taxes, assessments, or governmental charges
                  which are not yet payable, or

         e)       Any garnishment, levy or attachment is made or attempted to
                  be made upon any assets of any Interested Party, or

         f)       Any Interested Party fails (i) to maintain insurance upon
                  the Collateral acceptable to Bank in its sole discretion
                  reasonably exercised, or (ii) to furnish to Bank, upon
                  request, a copy of any policy of insurance requested by Bank,
                  or (iii) to obtain other or additional insurance promptly upon
                  the reasonable request of Bank to the extent that such
                  insurance may be available, (iv) upon reasonable request of
                  Bank to assign to Bank as security for its Obligations the
                  proceeds of any property insurance, or (v) to cause Bank to be
                  named on a lender's loss payable clause in a manner acceptable
                  to Bank on any policy of casualty insurance maintained by
                  Borrower, or

         g)       Any representation or warranty made by any Interested Party
                  herein or in any written statement, certificate or other
                  document now or later furnished by or for any Interested Party
                  in connection herewith, shall prove untrue in any material
                  respect as of the date upon which it was made, or

         h)       Any Interested Party breaches any material provision,
                  condition, representation, warranty or covenant or any
                  obligation of any Interested Party to Bank including, without
                  limitation, any set forth or contained in or evidenced by this
                  Repayment Agreement, the Loan Documents, or in any other
                  instrument, document, or writing given as or evidencing
                  security for the Obligations or any other present or future
                  indebtedness, obligation, or liability of Interested Parties
                  owed to Bank, or

         i)       The Interested Parties or any of them become insolvent or
                  bankrupt, or cease, are unable, or admit in writing the
                  inability, to pay debts as they mature, or make a general
                  assignment for the benefit of, or enter into any composition
                  or arrangement with, creditors, or

         j)       Proceedings for the appointment of a receiver, trustee or
                  liquidator of any Interested Party or of a substantial part of
                  any of the Interested Parties' assets, are authorized or
                  instituted by or against the Interested Parties or any of
                  them, or

         k)       Proceedings under any bankruptcy, reorganization, readjustment
                  of debt, insolvency, dissolution, liquidation or other similar
                  law of any jurisdiction are authorized or any instituted by or
                  against Interested Parties or any of them.

                                       18
<PAGE>   19


         If there shall occur any Event of Default set forth in (a) through (h)
         above Bank may, without notice, declare the unpaid Indebtedness owing
         upon any note or any of the Obligations of the Interested Parties to
         Bank to be immediately due and payable and upon any such declaration,
         such Indebtedness shall become and be forthwith due and payable without
         presentment, or demand of any kind, all of which are hereby expressly
         waived by the Interested Parties. If there shall occur any Event of
         Default set forth in subparagraphs (i) through (k), the indebtedness
         owing upon any note and all other Obligations of the Interested Parties
         to Bank shall become immediately due and payable without declaration,
         demand, presentment, or notice of any kind, all of which are hereby
         expressly waived by the Interested Parties.

7.       Bank's Remedies. Upon the occurrence of any Event of Default and
         continuing thereafter, the Interested Parties hereby agree that they
         will give their full cooperation and assistance to the Bank in its
         exercise of all or any combination of its remedies afforded by
         applicable law or described herein including, without limitation, those
         remedies set forth below:

         a)       Appointment of a Receiver. Without notice to any Interested
                  Party or any party claiming under them (such notice being
                  hereby expressly waived) and without reference to the value of
                  the assets of Borrower, to the solvency or insolvency of the
                  person(s) liable for all or any part of the Obligations
                  referred to in this Repayment Agreement, Borrower and all
                  other Interested Parties consent to the immediate appointment,
                  whether by the Bank or pursuant to the order of any Court, of
                  a receiver for all or any of the Collateral which secures all
                  or part of the Obligations, and further agrees to take all
                  necessary steps to immediately, completely and effectively
                  transfer all of its right, title and interest in the
                  Collateral to any such receiver, including, without
                  limitation, transfer or assignment of all Personal Property,
                  subscriber lists, Accounts, General Intangibles, any licenses
                  or franchises and deeds for all real property. The appointment
                  of a receiver shall be for the benefit of Bank and such
                  receiver shall be vested with the power to take immediate
                  possession of the Collateral, to manage the assets and
                  business of Borrower, and to collect any and all rents,
                  issues, profits, accounts or Proceeds of the assets of
                  Borrower, and any and all such rents, issues, profits,
                  accounts or Proceeds when collected, may be applied toward the
                  payment of the Obligations, and the costs, attorneys fees,
                  taxes, insurance or other items necessary for the protection
                  and preservation of the Collateral, including the expenses of
                  such receivership. Such receiver shall be directed to sell the
                  Collateral as promptly as is commercially reasonable, subject
                  to court approval, and shall apply the Proceeds of sale
                  against the Borrower's Obligations owed to the Bank in such
                  order and by such division as Bank shall elect.

         b)       Other Remedies. The Bank may exercise all or any other
                  remedies to which it is entitled under the Loan Documents
                  and/or otherwise in law or equity.


                                       19
<PAGE>   20

8.       Inspection. Any of Bank's officers, employees or agents shall have the
         right, at any time or times hereafter, in Bank's name or in the name of
         Interested Parties to verify the validity, amount or any other matter
         relating to the Collateral by mail, telephone, telegraph or otherwise.
         Bank (by any of its officers, employees and/or agents) shall have the
         right, at any time or times during usual business hours, to inspect the
         Collateral and all records related thereto (and to make extracts from
         such records) and the premises upon which any of such Collateral is
         located, to discuss Interested Parties' affairs and finances with any
         attorney, accountant, Account Debtor or creditor of Interested Parties
         and to verify the amount, quality, quantity, value and condition of, or
         any other matter relating to the said Collateral. The Interested
         Parties shall reimburse Bank upon demand for all costs, expenses and
         charges incurred in connection with any of the foregoing, whether
         charged by Bank's in-house auditors or outside professionals.

9.       Federal Accounts. Upon Bank's request Borrower shall, if any Accounts
         or Accounts Receivable arise out of contracts with the United States of
         America or any department, agency or instrumentality thereof,
         immediately notify Bank thereof in writing and execute any and all
         instruments and take all steps required by Bank in order that all
         monies due and to become due under such contracts shall be assigned to
         Bank and notice thereof given to the Government under the Federal
         Assignment of Claims Act, as amended.

10.      Attorneys' Fees and Expenses; Bank's Out-of-Pocket Expenses. If, at any
         time or times, whether prior or subsequent to the date hereof, and
         regardless of the existence of an Event of Default under the Loan
         Documents, Bank employs in-house or outside counsel for advice or other
         representation or incurs legal and/or other costs and expenses in
         connection with:

         a)       The preparation, negotiation and/or execution of this
                  Repayment Agreement and related Loan Documents or any
                  amendment of or modification to same; or

         b)       Any litigation, contest, dispute, suit, proceeding or action,
                  whether instituted by Bank, any Interested Party or any other
                  entity in any way relating to the Repayment Agreement, any
                  Loan Document, the administration thereof or any of Interested
                  Parties affairs;

         c)       Any attempt to enforce any rights of Bank against any
                  Interested Party or any other entity which may be obligated to
                  Bank by virtue of the Repayment Agreement or any Loan
                  Document, including, without limitation, the Borrower's
                  debtors;

         d)       Any attempt to inspect, verify, protect, collect, sell,
                  liquidate or otherwise dispose of the Collateral;

         then, in any such event, the reasonable attorneys' fees (including
         those of Bank's outside counsel and/or Bank's in-house counsel) arising
         from such services and all reasonably 


                                       20
<PAGE>   21

         incurred expenses, costs, charges and other fees of such counsel or of
         Bank in any way or respect arising in connection with or relating to
         any of the events or actions described in this Section 10 shall be
         payable, on demand, by Interested Parties, jointly and severally, to
         Bank and shall be additional Obligations of the Interested Parties
         secured by the Collateral. Without limiting the generality of the
         foregoing, such expenses, costs, charges and fees may include
         paralegals' fees, costs and expenses; accountants' fees, costs and
         expenses; appraisers' and/or auditors' fees, costs and expenses; court
         costs, fees and expenses; photocopying and duplicating expenses; court
         reporter fees, costs and expenses; long distance telephone charges; air
         express charges; telegram charges; Westlaw/Lexis charges; secretarial
         over-time charges; and expenses for travel, lodging and food paid or
         incurred in connection with the performance of such legal services.

11.      Guarantor's Confirmation and Waiver. Guarantor, by executing this
         Agreement, hereby assents to the terms and conditions of this Repayment
         Agreement and ratifies and reaffirms the terms and conditions of the
         Guaranty, which Guaranty shall remain in full force and effect.
         Guarantor hereby waives any defense to its obligations under the
         Guaranty based upon or arising out of (i) the modifications to the
         Original Loan Documents as herein provided, (ii) the taking of any
         additional security for repayment of the Obligations, and (iii) any act
         or omission of any Bank Party (as such term is defined in Section 14
         below) occurring on or before the Closing Date. Notwithstanding any
         language contained in the Guaranty, Guarantor, to the extent permitted
         by law, waives any claim or other right which Guarantor might now have
         or hereafter may acquire against Borrower or any other obligor of the
         Obligations, which arises from the existence or performance of
         Guarantor's liability or other obligations under the Guaranty and any
         other guaranties which the Guarantor has executed in favor of Bank,
         including, without limitation, any right of subrogation, reimbursement,
         exoneration, contribution, indemnification, and any right to
         participate in any claim or remedy of Bank against Borrower or any of
         the Collateral, whether or not such claim, remedy, or right arises in
         equity, or under contract, statute, or common law.

12.      Time is of the Essence. The Interested Parties further acknowledge that
         TIME IS OF THE ESSENCE with respect to the time for performance of the
         terms and provisions of this Repayment Agreement. None of the
         Interested Parties shall be given any grace period within which to cure
         any default or breach under this Repayment Agreement.

13.      No Duress; Each Party Advised by Counsel; Traditional Rule of
         Construction Not Applicable. The Interested Parties stipulate and agree
         that the Loan Documents and this Repayment Agreement have been executed
         voluntarily after due deliberation and negotiation and that neither
         Bank nor any other person has exerted or attempted to exert improper or
         unlawful pressure or has in any way induced or attempted to induce,
         through threats or otherwise, any conduct on the part of the Interested
         Parties including the execution or delivery of this Repayment Agreement
         or any of the Loan documents or any other document or instrument.
         Without in any way limiting the foregoing, each of the parties hereto
         stipulate and agree that at all times during the course of the
         negotiations resulting in the execution and delivery of this Repayment
         Agreement, they have, to the 


                                       21
<PAGE>   22

         extent deemed necessary or advisable in their sole discretion, been
         advised and assisted by competent counsel of their own choosing.
         Because this Repayment Agreement was negotiated at length with counsel,
         the parties agree that the traditional rules calling for a document to
         be construed against its draftsman shall not apply or be followed.

14.      RELEASE. EFFECTIVE AS OF THE DATE OF THE EXECUTION AND DELIVERY OF
         THIS REPAYMENT AGREEMENT, THE INTERESTED PARTIES JOINTLY AND SEVERALLY
         AGREE TO RELEASE AND HEREBY DO RELEASE AND DISCHARGE, BANK, ITS
         SHAREHOLDERS, AGENTS, SERVANTS, EMPLOYEES, DIRECTORS, OFFICERS,
         ATTORNEYS, AFFILIATES, SUBSIDIARIES, PREDECESSORS, SUCCESSORS AND
         ASSIGNS AND ALL PERSONS, FIRMS, CORPORATIONS, AND ORGANIZATIONS ACTING
         ON THEIR BEHALF (COLLECTIVELY THE "BANK PARTIES") OF AND FROM ALL
         DAMAGES, LOSSES, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, ACTIONS AND
         CAUSES OF ACTION WHATSOEVER THAT EACH INTERESTED PARTY HAS OR CLAIMS TO
         HAVE AGAINST ANY BANK PARTY AS OF THE DATE HEREOF AND WHETHER KNOWN OR
         UNKNOWN AT THE TIME OF THIS RELEASE, AND OF EVERY NATURE AND EXTENT
         WHATSOEVER ON ACCOUNT OF OR IN ANY WAY, DIRECTLY OR INDIRECTLY,
         TOUCHING, CONCERNING, ARISING OUT OF OR FOUNDED UPON THE LOAN DOCUMENTS
         OR THE LENDING RELATIONSHIP RESPECTING THE OBLIGATIONS BETWEEN ANY
         INTERESTED PARTY AND ANY BANK PARTY. THIS RELEASE WILL NOT EXTEND TO
         ANY CLAIM ARISING AFTER THE DATE OF THIS AGREEMENT TO THE EXTENT SUCH
         CLAIM IS BASED ON ACTS OR OMISSIONS OF THE BANK OCCURRING AFTER THE
         DATE OF THIS REPAYMENT AGREEMENT EXCEPT THAT SUCH RELEASE IS
         SPECIFICALLY INTENDED BY THE PARTIES TO INCLUDE THE TRANSACTIONS
         CONTEMPLATED BY THIS REPAYMENT AGREEMENT. Bank would not agree to enter
         into this Repayment Agreement but for the provisions set forth in this
         Section 14. The Interested Parties confirm that they have agreed to the
         provisions of this Section 14 of their own volition, with full
         knowledge of the extent and effect of the various releases and waivers
         granted by this Section 14 and of the importance to Bank of these
         waivers and releases and after having had the opportunity to discuss
         this matter with counsel of their own choice.

15.      JURY TRIAL. THE PARTIES TO THIS REPAYMENT AGREEMENT HEREBY WAIVE TRIAL
         BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY
         AGAINST ANOTHER ON ANY MATTERS WHATSOEVER ARISING UNDER OR IN
         CONNECTION WITH THIS REPAYMENT AGREEMENT OR THE LOAN DOCUMENTS OR ANY
         ANCILLARY AGREEMENT AND SHALL TAKE ALL APPROPRIATE STEPS TO IMPLEMENT
         THAT WAIVER, INCLUDING PROVIDING FURTHER WRITTEN CONSENT IN COURT.

16.      Loan Documents. Except as herein specifically provided otherwise, the
         Original Loan Documents shall remain in full force and effect and be
         unaffected hereby. In the event of 


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<PAGE>   23

         a conflict between the terms of this Repayment Agreement, the Loan
         Documents and any other agreement between the Bank and the Borrower or
         any other Interested Party, then this Repayment Agreement shall be
         controlling. The within Repayment Agreement and all writings delivered
         in connection herewith shall constitute a part of the Loan Documents.

17.      Notices. Any notice, demand or communication required or permitted to
         be given by any provision of this Repayment Agreement will be in
         writing and will be deemed to have been given when delivered personally
         or by facsimile, receipt confirmed, to the party designated to receive
         such notice, or on the date following the day sent by overnight
         courier, or on the third (3rd) business day after the same is sent by
         certified mail, postage and charges prepaid, directed to the following
         addresses or to such other or additional addresses as any party might
         designate by written notice to the other party:



                                       23
<PAGE>   24


                  If to Bank:

                                    KeyBank National Association
                                    202 S. Michigan Street
                                    P.O. Box 6
                                    South Bend, Indiana  46601
                                    Cleveland, Ohio 44114-1306
                                    Attn:   Richard Rozenboom, Vice President
                                            Mailcode IN-09-01-0402
                                    Phone:  (219) 237-5407
                                    Fax:    (219) 282-8815

                           With a copy to :

                                    Robert J. Burns, Esq.
                                    KeyBank National Association
                                    Law Department: OH-01-27-0200
                                    127 Public Square, 2nd Floor
                                    Cleveland, Ohio 44114-1306
                                    Phone:  (216) 689-4970
                                    Fax:    (216) 689-5681

                  If to Borrower:

                                    Nematron Corporation
                                    5840 Interface Drive
                                    Ann Arbor, Michigan  48103
                                    Attn:  David Gienapp, Executive Vice 
                                             President
                                    Finance/Administration
                                    Phone:  (734) 214-2128
                                    Fax:  (734) 994-8170

                           With a copy to :

                                    Aleksandra Miziolek
                                    Dykema Gossett PLLC
                                    400 Renaissance Center
                                    Detroit, MI 48243
                                    Phone:  (313) 568-6762
                                    Fax:  (313) 568-6832


                                       24
<PAGE>   25


                  If to Guarantor:

                                    NemaSoft, Inc.
                                    5840 Interface Drive
                                    Ann Arbor, Michigan  48103
                                    Attn:  Mr. Matthew S. Galvez, President
                                    Phone: 734-214-2000
                                    Fax:     734-994-8170

                           With a copy to :

                                    Aleksandra Miziolek
                                    Dykema Gossett PLLC
                                    400 Renaissance Center
                                    Detroit, MI 48243
                                    Phone:  (313) 568-6762
                                    Fax:  (313) 568-6832

18.      Waiver, Amendment, and Entirety of Agreement. No waiver of or
         consent to any departure from any provision hereof shall be effective
         unless in writing and signed by the authorized representative of the
         party against whom such a waiver or consent is asserted and shall be
         effective only in the specific instance and for the purpose for which
         given and to the extent specified in such writing. No delay or omission
         by any party hereto to exercise any right or remedy upon the happening
         of any Event of Default hereunder shall impair such right or remedy or
         be deemed to be a waiver of such Event of Default. This Repayment
         Agreement embodies the entire agreement and understanding between the
         parties hereto with respect to the subject matter of this Repayment
         Agreement and supersedes all prior and contemporaneous negotiations,
         agreements and understandings relative to such subject matter.

19.      Third-Party Beneficiaries. All of the conditions and obligations
         hereunder are imposed solely and exclusively for the benefit of the
         parties hereto and their successors and assigns. No other person or
         entities shall obtain any interest herein or require satisfaction of
         such conditions in accordance with the terms hereof or be entitled to
         assume that any of the parties hereto will enforce such conditions and
         obligations and no other person shall, under any circumstances, be
         beneficiary of such conditions.

20.      No Assignment by Borrower. The Interested Parties shall not assign this
         Repayment Agreement or any of their respective rights or obligations
         under the Repayment Agreement without prior written consent of the
         Bank, and any attempted assignment made without such consent shall be
         void and of no effect.

21.      Severability. In the event that any one or more of the provisions
         contained in this Repayment Agreement shall for any reason be held to
         be invalid, illegal or unenforceable in any respect, such invalidity,
         illegality or unenforceability shall not affect any other


                                       25
<PAGE>   26
         provision of the Repayment Agreement, and the Repayment Agreement shall
         be construed as if such invalid or unenforceable provisions had never
         been contained in this Repayment Agreement.

22.      Further Assurances. The Interested Parties shall execute any and all
         agreements, instruments, and documents, and shall take such further
         actions as may be necessary to fully effectuate this Repayment
         Agreement.

23.      Facsimile. This Repayment Agreement together with any document
         contemplated to be executed in connection herewith may be executed by
         facsimile signature, and any such facsimile document shall be deemed to
         be of the same force and effect as a manually signed original.

24.      Counterparts, Governing Law, and Miscellaneous. This Repayment
         Agreement may be executed in multiple counterparts, each of which shall
         contain an original, and all of which taken together shall constitute
         one and the same agreement; provided, however, that the Repayment
         Agreement shall be of no force or effect until signed by all parties
         hereto. This Repayment Agreement shall be construed in accordance with
         and governed by the laws of the State of Ohio. Courts within the State
         of Ohio shall have jurisdiction over any and all disputes arising under
         or pertaining to this Repayment Agreement and venue in any such dispute
         shall lie exclusively in Cuyahoga County, Ohio.

<TABLE>

<S>                                         <C>
Address:                                    NEMATRON CORPORATION
5840 Interface Drive                        By: /s/ David P. Gienapp
Ann Arbor, Michigan  48103                      --------------------------------------------

                                            Its: Vice President - Finance and Administration
                                                 -------------------------------------------

Address:                                    NEMASOFT, INC., Guarantor

5840 Interface Drive                        By: s/ David P. Gienapp
Ann Arbor, Michigan  48103                      --------------------------------------------

                                            Its: Chief Financial Officer
                                                 -------------------------------------------

Address:                                    KEYBANK NATIONAL ASSOCIATION

202 S. Michigan Street                      By: s/ Richard Rozenboom
P.O. Box 6                                      --------------------------------------------
South Bend, Indiana  46601                  Its: Vice President
                                                 -------------------------------------------
</TABLE>



                                       26
<PAGE>   27


                                LIST OF EXHIBITS


Exhibit A                  Liens and Encumbrances

Exhibit B                  Amended and Restated Revolving Credit Note

Exhibit C                  Amended and Restated Term Note

Exhibit D                  Amendment to Mortgage

Exhibit E                  Master Agreement Cash Management Services

Exhibit F-1 to F-4         Assignment of Patents and Trademarks

Exhibit G                  Landlord's Waiver and Estoppel




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