-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IVtHWvqHy96qdAYa+Ee00IYfh3Ob0Y3zIZWuIqYUUAR3Vl8HUV99izWH3HlLVtUm KTZdokaY7+N8Zeg+UNlDYQ== 0000910647-97-000159.txt : 19970701 0000910647-97-000159.hdr.sgml : 19970701 ACCESSION NUMBER: 0000910647-97-000159 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970630 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTECH INC CENTRAL INDEX KEY: 0000354260 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042453033 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-30399 FILM NUMBER: 97633259 BUSINESS ADDRESS: STREET 1: 460 TOTTEN POND RD CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6178906900 MAIL ADDRESS: STREET 1: 460 POND ROAD CITY: WALTHAM STATE: MA ZIP: 02154 S-3 1 BODY OF FORM S-3 As filed with the Securities and Exchange Commission on June 30, 1997 Registration Statement No. 333-______ SECURITIES AND EXCHANGE COMMISSSION Washington, D.C. 20549 ------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- SOFTECH, INC. (Exact name of Registrant as specified in its charter) Massachusetts 04-2453033 (State of Incorporation) (I.R.S. Employer Identification Number) 3260 Eagle Park Drive, N.E. Grand Rapids, MI 49505 (616) 957-2330 (Name, address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Mark Sweetland President SofTech, Inc. 3260 Eagle Park Drive, N.E. Grand Rapids, MI 49505 (616) 957-2330 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------- Copy to: John B. Steele, Esq. Goodwin, Procter & Hoar LLP Exchange Place 53 State Street Boston, Massachusetts 02109-2881 (617) 570-1000 Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is to be used to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Registration Statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------- CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum Title of Shares Amount to be Aggregate Price Aggregate Amount of to be Registered Registered(1) Per Unit (2) Offering Price Registration Fee ---------------- ------------- ---------------- ---------------- ---------------- Common Stock, par value $0.10 per share 655,000 $ 2.281 $ 1,494,055 $ 515 - ------------------- Plus such additional number of shares as may be required in the event of a stock dividend, reverse stock split, split up, recapitalization or other similar event. This estimate is made pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the "Securities Act"), solely for the purpose of determining the amount of the registration fee and is based upon the market value of outstanding shares of SofTech, Inc.'s Common Stock on June 25, 1997, utilizing the average of the high and low sale prices reported on the NASDAQ National Market System on that date.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL NOR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED June 30, 1997 PRELIMINARY PROSPECTUS 655,000 Shares SofTech, Inc. Common Stock ------------------- See "Risk Factors" beginning on page 3 for certain factors relevant to an investment in the Common Stock ------------------- All of the shares (the "Shares") of common stock, $0.10 par value per share (the "Common Stock") of SofTech, Inc. ("SofTech" or the "Company"), offered hereby are being registered for the account of certain stockholders of SofTech named herein (the "Selling Stockholders"). The Company is registering the Shares to satisfy the Company's contractual obligations to the Selling Stockholders to use best efforts to register such Shares, but the registration of the Shares does not necessarily mean that any of the Shares will be offered or sold hereunder. See "Plan of Distribution" and "Selling Stockholders." The Selling Stockholders, directly or through agents, dealers or underwriters designated from time to time, may sell all or a portion of the Shares offered hereby from time to time on terms to be determined at the time of the sale. To the extent required, the specific Shares to be sold, the respective purchase prices and public offering prices, the names of any such agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in the accompanying Prospectus Supplement. See "Plan of Distribution." The Selling Stockholders reserve the sole right to accept and, together with such Selling Stockholders' agents, dealers or underwriters from time to time, to reject, in whole or in part, any proposed purchase of Shares to be made directly or through agents, dealers or underwriters. The aggregate proceeds to the Selling Stockholders from the sale of the Shares offered hereby (the "Offering") will be the purchase price of the Shares sold less the aggregate agents' commissions and underwriters' discounts, if any, and other expenses of issuance and distribution not borne by the Company. The Company will pay all of the Selling Stockholders' expenses of the Offering other than agents' commissions and underwriters' discounts with respect to the issuance and distribution of the Shares offered hereby and transfer taxes, if any. The Company will not receive any proceeds from the sale of the Shares offered hereby by the Selling Stockholders. The Selling Stockholders and any agents, dealers or underwriters that participate with the Selling Stockholders in the distribution of the Shares may be deemed to be underwriters within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in which case any commissions received by such agents, dealers or underwriters and any profit on the resale of the Shares purchased by them may be deemed underwriting commissions or discounts under the Securities Act. The Common Stock is listed on the NASDAQ National Market System under the symbol "SOFT." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------- The date of this Prospectus is June 30, 1997. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "SEC" or "Commission") a Registration Statement on Form S-3 under the Securities Act with respect to the Shares. This Prospectus, which constitutes part of the Registration Statement, omits certain of the information contained in the Registration Statement and the exhibits thereto on file with the Commission pursuant to the Securities Act and the rules and regulations of the Commission thereunder. The Registration Statement, including exhibits thereto, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New York, 10048, and Citicorp Center, 500 W. Madison Street, Suite 1400 Chicago, Illinois 60661-2511, and copies may be obtained at the prescribed rates from the Public Reference Section of the Commission at its principal office in Washington, D.C. Statements contained in this Prospectus as to the contents of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other documents filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the locations described above. Copies of such materials can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. In addition, the Company is required to file electronic versions of these documents with the Commission through the Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at http/www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The Company's Common Stock is quoted on the NASDAQ National Market under the symbol "SOFT". Reports, proxy statements and other information about the Company may also be inspected at the offices of the National Association of Securities Dealers, Inc. at 1735 K Street, Washington, D.C. 20006. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company hereby incorporates by reference the documents listed in (a) through (c) below, which have previously been filed with the Commission. (a) The Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1996; (b) All reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since May 31, 1996; and (c) The description of the Common Stock contained in the Company's registration statement on Form 8-A under the Securities Act dated September 14, 1982, and any amendments or reports filed for the purpose of updating such description. In addition, all documents subsequently filed with the Commission by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained herein or in any subsequently filed document which also is incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement. The Company will provide, without charge, to each person, including a beneficial owner to whom a copy of the Prospectus is delivered, at the written or oral request of such person, a copy of any or all of the documents incorporated herein by reference (other than exhibits thereto, unless such exhibits are specifically incorporated by reference into such documents). Written requests for such copies should be directed to Joseph P. Mullaney, the Vice President and Chief Financial Officer of the Company, 3260 Eagle Park Drive, N.E., Grand Rapids, Michigan 49505, (617) 890-8373. This Prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results may differ materially from the results discussed on the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below. RISK FACTORS An investment in the Company involves various risks. In addition to other matters referenced in the Company's documents which are filed with the Commission and which are incorporated by reference herein, prospective stockholders should consider the following risk factors: Liquidity and Capital Resources. Since fiscal year end May 31, 1996, various measures of the Company's liquidity and capital, including cash balance, working capital, stockholders' equity and the ratio of current assets to current liabilities, have diminished. The primary reason for this change was the cash distribution by the Company of $1.50 per share or approximately $6.3 million to shareholders on December 31, 1996. This distribution constituted the net cash proceeds and subsequent receivable collection resulting from the sale of the Company's Network Systems Group ("NSG") to Data Systems Network Corporation in September 1996. The following table compares these measures as of May 31, 1996 to February 28, 1997 (in thousands, except current ratio):
May 31, February 28, 1996 1997 -------- ------------ Cash $ 3,017 $ 319 Working capital 12,668 8,002 Short term borrowings 0 1,300 Stockholders' equity 14,957 11,582 Current ratio 7.09:1 2.60:1
The working capital and stockholders' equity values as of February 28, 1997 and the calculation of the current ratio at February 28, 1997 in the table include the market value of 540,000 shares of Data Systems Network Corporation ("DSN") as of that date, which totaled approximately $4.7 million. The DSN shares were received by the Company in connection with the sale of the NSG to DSN in September 1996. On May 13, 1997 the Company announced the distribution of the DSN shares to the shareholders of record on May 23, 1997. The distribution was completed on June 6, 1997. Dependence on Technology Providers. The Company's primary software offering is technology provided by Parametric Technology Corporation ("PTC"). The Company is authorized to market this technology through a Reseller Agreement that must be renewed annually and is subject to termination by either party with 30 days notice. In addition, the Company markets hardware and other software offerings through similar contractual relationships with various hardware and software technology providers. The loss of or significant change to the PTC Reseller Agreement would have a material adverse effect on the Company's business. There can be no assurance that the Company will continue to be an authorized reseller of the PTC technology or the other technology providers' hardware and software products. Managed Growth. An important component of the Company's growth strategy includes internal expansion and strategic acquisitions of complementary businesses. During the first nine months of fiscal 1997, the Company has completed three acquisitions and has opened four new offices. While it is critical to continue this growth in order to expand the revenue base, it is equally important that the Company properly integrate and assimilate the newly established offices and acquired companies into its operations. This dual focus of growth and assimilation will require a great deal of management time and attention in order to succeed. If the Company is unable to properly manage this dual focus, the Company's business, financial condition and results of operations may be materially adversely effected. Moreover, there can be no assurance that the Company will be able to locate suitable acquisition candidates or consummate acquisitions of any such candidates on acceptable terms. Finally, the devaluation of the Company's stock, whether resulting from potential or actual change in liquidity or a reduction in market value or otherwise, as an acquisition currency may limit or even eliminate acquisitions as a viable means for growth. Dependence on Key Personnel. The Company is highly dependent on the members of its management team, the loss of one or more of which could have a material adverse effect on the Company. In addition, the future success of the Company is dependent on its ability to attract and retain highly skilled technical, managerial and marketing personnel. The competition for such talented individuals is very intense. There can be no assurance that the Company will be successful in attracting and retaining the personnel it requires. The failure to attract and retain such personnel could materially adversely effect the business, financial condition and results of operations of the Company. Technology Changes. Over the last two years the primary software offering of the Company has changed dramatically. From 1989 through January 1995, the Company marketed, installed and supported a high-end CAD/CAM software solution that ran primarily on a UNIX platform and had an average sale price of approximately $50,000 per seat (hardware, software, installation and training solution for one engineer). In January 1995, PTC introduced a mid-range software offering that ran on a personal computer and had an average sale price per seat of approximately $18,000. From January 1995 to September 30, 1996, the Company marketed, installed and supported both the high-end and the mid-range solution. Beginning October 1, 1996 the Company was restricted from selling the high-end software solution and has focused its efforts on the mid-range software offering. While the market for such a mid-range offering is much larger than that of the high-end solution, there is intense competition from other technology providers whose software offerings are not marketed by the Company. This end of the market is more price sensitive relative to the high-end market which could result in margin deterioration for the Company. The margins expected from the hardware platform in the mid-range market are significantly lower than that of the UNIX platforms offered in the high-end market. There can be no assurance that the Company will be able to successfully compete and operate profitably in the mid-range marketplace. There can be no assurance that the software offering of PTC will not be eclipsed by the offering of a technology provider with which the Company is not associated. Potential for Delisting of Shares. The NASDAQ National Market currently requires that all issuers meet the following minimum standards to maintain the listing on the Exchange: a minimum bid price of $1.00 per share; net tangible assets of at least $2.0 million if the issuer has sustained losses from continuing operations and/or net losses in two of its most recent fiscal years (as has the Company); net tangible assets of $4.0 million if the issuer has sustained losses from continuing operations and/or net losses in three of its four most recent fiscal years; net tangible assets of $1.0 million regardless of historical results; 200,000 shares of public float; $1.0 million market value of public float; 400 shareholders; and at least two market makers. There is currently a NASDAQ proposal to increase the minimum net tangible assets to $4.0 million regardless of historical results, increase the shares of public float to 750,000, and increase the market value of the public float to $5.0 million. The required minimum bid of $1.00, the number of market makers and shareholders would remain the same under the new proposal. This proposal has been submitted to the Securities and Exchange Commission ("SEC") for approval. In the event that the Company failed to maintain the minimum requirements as detailed above, NASDAQ would institute proceedings to delist the shares. In the event the NASDAQ proposal is approved by the SEC, the Company will have six months following the approval of the rule changes to comply with the new standards. THE COMPANY SofTech, Inc. (the "Company" or "SofTech") is a Massachusetts corporation incorporated on June 10, 1969. The Company's principal executive office is located at 3260 Eagle Park Drive, N.E., Grand Rapids, Michigan 49505 and its telephone number at that location is (616)957-2330. SELLING STOCKHOLDERS The following table sets forth certain information with respect to the Selling Stockholders, including the number of shares of Common Stock beneficially owned by the Selling Stockholders, the number of shares registered hereby and the percentage of shares of Common Stock held by the Selling Stockholders. There can be no assurance that all or any of the Shares offered hereby will be sold. If any are sold, the Selling Stockholders will receive all of the net proceeds from the sale of its Shares offered hereby. The Company has been advised by the Selling Stockholders that, not withstanding the registration of its Shares pursuant to the Registration Statement of which this Prospectus is a part, the Selling Stockholders have no present intention to sell any of the Shares, but may in the future determine to do so.
Number of Shares of Common Stock Owned Number of Shares Selling Stockholders Before the Offering Being Registered John F. Davis 135,000 135,000 Matthew Elzea 135,000 135,000 Daniel Iaria 135,000 135,000 Roy Thrower 170,000 170,000 Michael Collins 70,000 70,000 Allen Carrico 10,000 10,000 ------- ------- 655,000 655,000
In recognition of the fact that Selling Stockholders may desire to sell their Shares when they consider appropriate, the Company has filed with the Commission a registration statement on Form S-3 (of which this Prospectus is a part) with respect to the sale of the Shares by the Selling Stockholders. The Company will prepare and file such amendments and supplements to the registration statement as may be necessary to keep it effective through December 31, 1997. The Selling Stockholders acquired their shares of Common Stock pursuant to one of two separate and unrelated acquisitions described below. Messrs. Davis, Elzea and Iaria received the Shares pursuant to a Stock Purchase Agreement dated December 31, 1996 by and among SofTech, Inc., Information Decisions, Inc. ("IDI"), a wholly-owned subsidiary of SofTech, Inc., Computer Graphics Corporation, an Indiana corporation, and John Davis, Matthew Elzea and Daniel Iaria. Messrs. Thrower, Collins and Carrico received the Shares pursuant to a Stock Purchase Agreement dated February 27, 1997 by and among SofTech, Inc., IDI, RAM Design & Graphics, a North Carolina corporation, and Roy Thrower, Michael Collins and Allen Carrico. All of the Selling Shareholders are currently employed by the Company. PLAN OF DISTRIBUTION The Company will not receive any of the proceeds from this Offering. The Shares offered hereby may be sold by the Selling Stockholders from time to time, on the NASDAQ National Market System on terms to be determined by the Selling Stockholders at the time of such sales. The Selling Stockholders may also make private sales directly or through a broker or brokers. Alternatively, the Selling Stockholders may from time to time offer shares to or through underwriters, dealers or agents, who may receive consideration in the form of discounts and commissions; such compensation; which may be in excess of ordinary brokerage commissions, may be paid by the Selling Stockholders and/or the purchasers of the Shares offered hereby for whom such underwriters, dealers or agents may act. The Selling Stockholders and any dealers or agents that participate in the distribution of the Shares offered hereby may be deemed to be "underwriters" as defined in the Securities Act, and any profit on the sale of such Shares offered hereby by them and any discounts, commissions or concessions received by any such dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. The aggregate proceeds to the Selling Stockholders from sales of the Shares offered by the Selling Stockholders hereby will be the purchase price of such Common Stock less any broker's commissions. To the extent required, the specific shares of Common Stock to be sold, the respective purchase prices and public offering prices, the names of any such agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying Prospectus Supplement. The Shares offered hereby may be sold from time to time, in one or more transactions at a fixed offering price, which may be changed, or at varying prices determined at the time of sale or at negotiated prices. In order to comply with the securities laws of certain states, if applicable, the Shares offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states, Shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Common Stock offered hereby may not simultaneously engage in market making activities with respect to the Common Stock for a period of one business day prior to the commencement of such distribution. Without limiting the foregoing, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which may limit the timing of purchases and sales of the Company's Common Stock by the Selling Stockholders. The Company will pay substantially all the expenses incurred by the Selling Stockholders and the Company incident to the Offering and sale of the Shares to the public, but excluding any underwriting discounts, commissions or transfer taxes. The Company has agreed to indemnify the Selling Stockholders against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. - ---------------------------------------- No person has been authorized in connection with the offering made hereby to give any information or make any representation not contained in this Prospectus, and if given or made, such information or representation must not be relied upon as having been authorized by the Company, any Selling Stockholder or any other person. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Shares offered hereby to any person or by anyone in any jurisdiction in which it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any date subsequent to the date hereof. - ---------------------------------------- - ------------------------------------------------------- TABLE OF CONTENTS Available Information............................... 5 Incorporation of Certain Documents by Reference..... 5 Risk Factors........................................ 7 The Company......................................... 9 Selling Stockholders ............................... 9 Plan of Distribution ............................... 10 Legal Matters ...................................... 20 Experts ............................................ 21 - ------------------------------------------------------- June 30, 1997 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The expenses in connection with the issuance and distribution of the securities being registered are set forth in the following table (all amounts except the registration fee are estimated): Registration fee $ 515 Blue Sky fees 0 Legal fees and expenses 2,000 Accountant's fees and expenses 500 Miscellaneous 1,000 ------- Total $ 4,015 =======
All expenses in connection with the issuance and distribution of the securities being offered will be borne by the Company. Item 15. Indemnification of Directors and Officers. Section 67 of Chapter 156B of the Massachusetts General Laws ("Section 67") provides that a corporation may indemnify its directors and officers to the extent specified in or authorized by (i) the articles of organization, (ii) a by-law adopted by the stockholders, or (iii) a vote adopted by the holders of the majority of the shares of stock entitled to vote on the election of directors. In all instances, the extent to which a corporation provides indemnification to its directors and officers under Section 67 is optional. In its By-laws the Company has elected to commit to provide indemnification to its directors and officers in specified circumstances. Generally, Section 9 of Article V of the Company's By-laws indemnifies directors and officers of the Company against liability and expenses arising out of legal proceedings brought against them by reason of their status or service as directors or officers or by reason of their agreeing to serve, at the request of the Company, as a director or officer of, or in a similar capacity with, another organization or in any capacity with respect to any employee benefit plan of the Company. Under this provision, a director or officer of the Company shall be indemnified by the Company for all expenses, judgments and amounts paid in settlement of such proceedings, even if he or she is not successful on the merits, if he or she acted in good faith and in a manner he or she reasonably believed to be in the best interests of the Company. The Company's By-laws establish the presumption that the director or officer has met the applicable standard of conduct required for indemnification. The indemnification above shall be made unless the Board of Directors or independent counsel determines that the applicable standard of conduct has not been met. Such a determination may be made by a majority of the directors or a committee thereof or independent legal counsel. The Board of Directors shall authorize advancing litigation expenses to a director or officer at his or her request upon receipt of an undertaking by such director or officer to repay such expenses if it is ultimately determined that he or she is not entitled to indemnification for such expenses. Article 6C of the Company's Articles of Organization, as amended, eliminates the personal liability of the Company's directors to the Company or its stockholders for monetary damages for breach of a director's fiduciary duty, except to the extent Chapter 156B of the Massachusetts General Laws prohibits the elimination or limitation of such liability. As permitted by Massachusetts law, the Company has purchased directors' and officers' liability insurance, which insures against certain losses arising from claims against directors or officers of the Company by reason of certain acts including a breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted or any of the foregoing so alleged by the claimant or any claim against an officer or director of the Company solely by reason of his being such officer or director. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Item 16. Exhibits. Exhibit No. Description 2.1 Stock Purchase Agreement dated as of December 31, 1996 by and among SofTech, Inc., Information Decisions, Inc., Computer Graphics Corporation, and John Davis, Matthew Elzea and Daniel Iaria. 2.2 Stock Purchase Agreement dated as of February 27, 1997 by and among SofTech, Inc., Information Decisions, Inc., RAM Design & Graphics, and Roy L. Thrower, Michael D. Collins and Allen Carrico. 5.1 Opinion of Goodwin, Procter & Hoar as to the legality of the securities being registered. 23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants. 23.2 Consent of Goodwin, Procter & Hoar (included in Exhibit 5.1 hereto). 24.1 Power of Attorney (included on page 17 of this registration statement). Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the undersigned registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement related to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The registrant hereby undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement related to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Grand Rapids, Michigan, on June 30, 1997. SOFTECH, INC. By: /s/ Mark R. Sweetland ----------------------------------- Mark R. Sweetland, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of SofTech, Inc. hereby severally constitute Mark R. Sweetland and Joseph P. Mullaney, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement filed herewith and any and all amendments to said registration statement, and generally to do all such things in our names and in our capacities as officers and directors to enable SofTech, Inc. to comply with the provisions of the Securities Act of 1933 and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said registration statement and any and all amendments thereto. Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date By: /s/ Mark R. Sweetland President, Chief Executive Officer June 30, 1997 Mark R. Sweetland and Director (principal executive officer) By: /s/ Joseph P. Mullaney Vice President, Treasurer and June 30, 1997 Joseph P. Mullaney Chief Financial Officer (principal financial and accounting officer) By: /s/ Timothy Weatherford Vice President and Director June 30, 1997 Timothy Weatherford By: /s/ Ronald Elenbaas Director June 30, 1997 Ronald Elenbaas By: /s/ William Johnston Director June 30, 1997 William Johnston By: /s/ Kenneth Ledeen Director June 30, 1997 Kenneth Ledeen By: /s/ Norman L. Rasmussen Director June 30, 1997 Norman L. Rasmussen By: /s/ Timothy L. Tyler Director June 30, 1997 Timothy L. Tyler
EXHIBIT INDEX Exhibit No. Description 2.1 Stock Purchase Agreement dated as of December 31, 1996 by and among SofTech, Inc., Information Decisions, Inc., Computer Graphics Corporation, and John Davis, Matthew Elzea and Daniel Iaria. 2.2 Stock Purchase Agreement dated as of February 27, 1997 by and among SofTech, Inc., Information Decisions, Inc., RAM Design & Graphics, and Roy L. Thrower, Michael D. Collins and Allen Carrico. 5.1 Opinion of Goodwin, Procter & Hoar as to the legality of the securities being registered. 23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants. 23.2 Consent of Goodwin, Procter & Hoar (included in Exhibit 5.1 hereto). 24.1 Power of Attorney (included on page 17 of this registration statement). EX-2 2 STOCK PURCHASE AGREEMENT -- DEC 31, 1996 STOCK PURCHASE AGREEMENT Stock Purchase Agreement (the "Agreement"), dated as of December 31, 1996, is by and among SofTech, Inc., a Massachusetts corporation ("SofTech"), Information Decisions, Inc. ("IDI"), a wholly-owned subsidiary of SofTech (collectively, the "Buyers"), Computer Graphics Corporation ("CGC"), an Indiana corporation, and John Davis, Matthew Elzea and Daniel Iaria, the stockholders of CGC (collectively, the "Stockholders"). WITNESSETH WHEREAS, the Stockholders own of record and beneficially all of the issued and outstanding capital stock of CGC, consisting of 300 shares of CGC's common stock, with a par value of -0- per share (the "Shares"), and WHEREAS, the Stockholders desire to sell all of the Shares to SofTech, and SofTech desires to acquire all of the Shares. NOW, THEREFORE, in order to consummate said purchase and sale and in consideration of the mutual agreements set forth herein, the parties hereto agree as follows: Section 1 PURCHASE OF STOCK 1.1 Transfer of Shares. At the Closing, at such time, not later than December 31, 1996, and at such place, as shall be determined by mutual agreement of the parties, the Stockholders shall deliver to SofTech, 100% of the Shares, duly endorsed in blank for transfer or the Shares shall be delivered to SofTech with stock powers duly executed in blank, together with all such documents as may be required to effect a valid transfer of such Shares by Stockholders to SofTech, free and clear of any and all liens, encumbrances, charges or claims, under Article 8 of the Uniform Commercial Code. 1.2 Consideration for the Shares. In reliance upon the representations and warranties of the Stockholders herein contained and made, and in full consideration of the Shares, and subject to the terms hereof, SofTech shall deliver the consideration set forth below ("Purchase Price"): (a) Initial Consideration: At the Closing, SofTech shall deliver to the Stockholders a total of 405,000 shares of SofTech common stock (the "SofTech Shares"), par value $.10 per share in three equal blocks of 135,000 shares to each of the Stockholders (the "Initial Consideration"). (b) Additional Consideration: In addition to the Initial Consideration, not later than 15 days after completion of the internal financial statements of CGC for the fiscal year ending on December 31, 1997 (the "Determination Period"), the Stockholders shall receive from SofTech additional SofTech Shares (the "Additional Consideration"), based on the performance of CGC during the Determination Period. Such Additional Consideration shall be computed as follows:
Total Income of CGC for 1997 Total PBT of CGC for 1997 Additional Shares to Each Stockholder - --------------------------------------- ----------------------------------------- ------------------------------------- If Total Income is less than $2,000,000 And, if Total PBT is less than $225,000 Then, no additional Shares If Total Income is greater than Or, if Total PBT is greater than $224,999 Then each Stockholder shall receive $1,999,999 and less than $3,000,000 and less than $337,500 35,000 additional shares If Total Income is greater than Or, if Total PBT is greater than $337,499 Then each Stockholder shall receive $2,999,999 and less than $3,200,000 and less than $360,000 60,000 additional shares If Total Income is greater than Or, if Total PBT is greater than $359,999 Then each Stockholder shall receive $3,199,999 and less than $3,600,000 and less than $405,000 65,000 additional shares If Total Income is greater than Or, if Total PBT is greater than $404,999 Then each Stockholder shall receive $3,599,999 70,000 additional shares
The following guidelines shall apply in computing the Additional Consideration: (1) The Total Income of CGC for 1997 and Total profit before tax, interest expense and corporate allocations ("PBT") of CGC for 1997 shall be computed in accordance with Exhibit "A" hereto. (2) In computing the Additional Consideration, if the Total Income of CGC for 1997 would result in the Stockholders receiving a different number of additional shares than Total PBT of CGC for 1997, then the Stockholders shall receive the greater number of shares. For example, if Total Income for CGC for 1997 is $3.3 million and Total PBT for CGC for 1997 is $350,000, then the Stockholders shall receive a total of 195,000 additional SofTech Shares as Additional Consideration -- 65,000 additional shares for each Stockholder. (3) In no case will Additional Consideration be paid if Total PBT of CGC for 1997 is less than $150,000, regardless of Total Income of CGC for 1997. (4) In the event that the additional SofTech Shares received are less than the maximum of 70,000 shares per Stockholder, then stock options shall be issued to each Stockholder for the shortfall. The exercise price of such stock options shall be the closing price on the date the options are issued. No stock options shall be issued if the Total PBT of CGC for 1997 is a loss. The right to receive the Additional Consideration is not assignable by any of the Stockholders, except by operation of law. 1.3 The Stockholders shall have the right to require SofTech to repurchase the SofTech Shares received by them hereunder (both the Initial Consideration and the Additional Consideration) if CGC generates both (i) Total Income in 1997 of at least $3,000,000, and (ii) Total PBT in 1997 of at least $300,000. The per share purchase price of such a repurchase shall be the greater of (a) $1.20 per share, or (b) 60% of the closing price for SofTech Shares as published by NASDAQ on the Closing Date. This right to require SofTech to repurchase such SofTech Shares shall be exercisable by the Stockholders on July 1, 1998, and shall extend for 45 days. This right is not transferable and terminates upon the sale of such SofTech Shares. 1.4 As a material inducement to Buyers to enter into this Agreement, each of the Stockholders will execute a Non-Competition Agreement in the form of Exhibit "B" hereto, that will serve to restrict them from competing with Buyers for a two year period following their departure from CGC. 1.5 The Buyers acknowledge to the following with regard to existing bank debt and amounts reflected on the balance sheet as "Due to" and "Due from" the Stockholders: (a) The Buyers will advance sufficient funds to CGC on the Closing Date to enable CGC to pay off all amounts due to the National Bank of Indianapolis by CGC in full on the Closing Date, and to cause the personal guarantees of each of the Stockholders to such lender to be released. CGC shall continue to make scheduled payments as required under this credit facility through the Closing Date. (b) It is understood that the account identified as "Due from Officers" in the amount of $69,179.32 as of October 31, 1996 is not a recoverable asset and will be written off prior to the Closing Date net of the $4,000 owed to the same Stockholder and included under the account identified as "Note Payable-Stockholders on the October 31, 1996 balance sheet. This $4,000 payable will be assumed by the Stockholders or forgiven prior to the Closing. (c) The account identified as "Note Payable-Stockholders" in the amount of $152,635 as of October 31, 1996 is composed of the following obligations:
Payee Amount Due Interest Rate ------------- ---------- ------------- Daniel Iaria $ 100,000 12% Matthew Elzea 2,635 12% David Davis 36,000 12% John Davis 4,000 12% Carolyn Iaria 10,000 12% --------- Total 152,635
Each of the above obligations except for the John Davis indebtedness as detailed in Section 1.5 (b) above and the $10,000 note due to Carolyn Iaria which was repaid in full in November 1996 shall continue to be paid by CGC when due. The repayment schedule of the Daniel Iaria note in the amount of $100,000 shall be as follows: $50,000 on the Closing Date and the remaining principal and interest paid on a monthly basis over the following 24 months. There will be no change in any of the other terms of note payable agreements. 1.6 The Buyers shall enter into a Severance Agreement with each of the Stockholders, in the form of Exhibit "C" hereto, which shall provide them with an agreed upon cash payment during the three year period following the Closing Date in the event their employment is terminated for any reason other than voluntary resignation or termination for fraud or theft. This Severance Agreement shall also define the minimum annual compensation for the three Stockholders during that three year time period while they are employed. The Severance Agreement is specifically not an Employment Agreement. Each of the Stockholders will be an employee at will. 1.7 SofTech shall loan John Davis the sum of $110,000 at the Closing. Such loan will be evidenced by a promissory note in the form of Exhibit "D" hereto. The note shall be for a four year term, and shall bear interest at the minimum rate required to avoid imputed interest from the IRS. Davis' SofTech Shares shall be pledged to secure this loan, and otherwise this loan shall be a non-recourse obligation. 1.8 Post Closing Adjustment. SofTech intends to dispose of the 540,000 shares of Data Systems Network Corporation ("DSN") either through distribution or sale as soon as possible following the registration of such shares with the Securities and Exchange Commission. Buyers and Stockholders agree that the transaction contemplated by this Agreement was negotiated with the assumption that the DSN shares would be distributed prior to the completion of this Agreement. In that this distribution of DSN shares or proceeds from the disposal of such shares to the SofTech shareholders will occur after the close of this Agreement, the Stockholders hereby agree as follows with regard to such distribution: (a) Upon the distribution to the SofTech shareholders of the DSN shares or the proceeds from the disposal of such shares, the Stockholders agree to execute a promissory, non-interest bearing, note to the Company in the amount equal to the net proceeds received by Stockholders from either their sale of such shares or from a cash distribution related to the Company's disposal of such shares. Such note shall be payable immediately upon receipt of such proceeds to Stockholders. Taxes or any other expenses which may arise related to the Stockholders receipt of such distribution will be borne by the Company so long as the net proceeds are remitted in accordance with this Section 1.8 (a). (b) In the event Stockholders sell, transfer or dispose of any or all of their SofTech shares prior to the distribution of DSN shares or proceeds from the Company's disposal of DSN shares, Stockholders shall remit to the Company the value of their pro rata share of the DSN shares that remain on the SofTech balance sheet on the day Stockholders sell, transfer or dispose of their SofTech shares. Such remittance shall be calculated as follows: Number of SofTech shares sold divided by number of SofTech shares outstanding times market value of the DSN shares. 1.9 Tax-Free Stock-for-Stock Exchange; Tax Returns. Each of the parties hereto shall use their best efforts to cause the transactions that are contemplated herein to be a treated as a tax-free "reorganization" within the meaning of Section 368(a)(1)(B) of the Internal revenue Code ("Code") and shall report the transactions as such in all federal, state and local tax returns filed after the Closing Date. Article 2 REPRESENTATIONS AND WARRANTIES OF CGC AND STOCKHOLDERS 2.1 Making of Representations and Warranties. As a material inducement to Buyers to enter into this Agreement and consummate the transactions contemplated hereby, CGC and the Stockholders hereby make to Buyers the representations and warranties contained in this Section 2. 2.2 Organization and Qualification of CGC. CGC is a corporation duly organized, validly existing and in good standing under the laws of the State of Indiana with full corporate power and authority to own or lease its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is currently conducted. The copies of CGC's Articles of Incorporation and Bylaws, as amended to date, that have been made available to Buyers are complete and correct, and no amendments are pending or contemplated. 2.3 Subsidiaries. CGC has no subsidiaries and does not own any securities issued by, and has not loaned any funds to, any other business organization or governmental authority. 2.4 Capital Stock of CGC. The authorized capital stock of CGC consists of 1,000 shares of common stock, of which 400 shares are duly and validly issued and 300 shares are outstanding, and such outstanding shares are free and clear of all claims, liens or encumbrances of any sort. The other 100 shares issued but not outstanding are treasury shares repurchased by the CGC. There are 600 shares unissued. None of the shares have been issued in violation of any state or federal law. There exists a Stockholder Agreement between the Stockholders, and a copy of such agreement is attached hereto as Schedule 2.4. There are no other voting trusts, voting agreements, proxies or other agreements, instruments or undertakings with respect to the Shares to which CGC or the Stockholders are a party. 2.5 Authority. The execution, delivery and performance of this Agreement by CGC does not and will not: (a) violate any provision of the Articles of Incorporation or bylaws; (b) violate any laws of the United States, or any state or other jurisdiction applicable to CGC or require CGC to obtain any approval, consent or waiver of, or make any filing with, any person or entity that has not been obtained or made; and (c) result in a breach of, constitute a default under, accelerate any obligation under, or give rise to a right of termination of any contract, agreement, or lease to which CGC is a party. 2.6 Status of Tangible Property. (a) No Real Property Owned. CGC does not currently, nor has CGC ever in the past, owned any real property. (b) Leased Real Property. All real property leased by CGC as tenant or lessee is listed on Schedule 2.6(b). Copies of all the leases have been made available to the Buyers and are complete, accurate, true and correct. Each of such leases is in full force and effect on the terms set forth therein and has not been modified, amended or altered, in writing or otherwise, except as noted on Schedule 2.6(b). (c) Personal Property. A complete list of machinery, equipment, furniture, fixtures, leasehold improvements and all other tangible personal property owned or leased by CGC is listed on Schedule 2.6(c). CGC has good and valid, legal title to all of the personal property owned by it and all of its equipment leases are valid and no default exists under any such lease. 2.7 Financial Statements. (a) The Buyers have received the following CGC financial statements, copies of which are attached hereto as part of Schedule 2.7: balance sheets as of December 31, 1995, October 31, 1996 and November 30, 1996; statements of income for the twelve months ended December 31, 1995, ten months ended October 31, 1996, and the month ended November 30, 1996. Said financial statements (i) are true, accurate and correct, in all material respects, (ii) have been prepared on a consistent basis during the periods covered thereby, and (iii) present fairly the financial condition of CGC at the dates of said statements and the results of its operations for the periods covered thereby, except for the exclusion of footnotes and subject to normal recurring year-end adjustments. The balance sheet of CGC as of December 31, 1995 is hereafter referred to as the "Base Balance Sheet". (b) All of the liabilities of CGC as of October 31, 1996 are reflected in the financial statements that have been provided to Buyers or in Schedules that have been furnished to Buyers hereunder, including, without limitation, Schedule 2.7(b). From October 31, 1996 through the close of this transaction no additional liabilities have arisen other than in the ordinary course of conducting the business. 2.8 Taxes. (a) CGC has paid or caused to be paid all federal, state, local, foreign and other taxes, including, without limitation, income taxes, estimated taxes, alternative taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes, capital stock taxes, franchise taxes, employment and payroll related taxes, withholding taxes, property taxes, whether or not measured in whole or part by net income, and all deficiencies, or other additions to tax, interest, fines and penalties owed by it (collectively, "Taxes") required to be paid by it through the date hereof, whether disputed or not. (b) CGC has, in accordance with applicable law, filed all federal, state, local and foreign tax returns required to be filed by it through the date hereof, and all such returns correctly and accurately set forth the amount of any Taxes relating to the applicable period. Schedule 2.8(b) lists all federal, state, local and foreign income tax returns filed by CGC for the fiscal year ended December 31, 1995 with notation as to those returns that have been audited or are currently being audited. CGC has made available to Buyers a complete and correct copy of each of those returns listed and all examination reports and statements of deficiencies assessed against or agreed to by CGC with respect to such returns. (c) CGC has been an S Corporation since its commencement of operations. 2.9 Accounts Receivable. To the knowledge of Stockholders, all of the accounts receivable of CGC are valid and enforceable claims, fully collectible and subject to no setoff or counterclaim; provided, however, that the Stockholders are not guaranteeing the collectibility of any of the accounts receivable of CGC. 2.10 Absence of Certain Changes. Since the date of the Base Balance Sheet, except as disclosed on Schedule 2.10, there has not been: (a) any material adverse change in the financial condition, properties, assets, liabilities, business or operations of CGC, taken as a whole; (b) any contingent liability incurred by CGC as guarantor or otherwise with respect to the obligations of others or any cancellation of any debt or claim owing to, or waiver of any right of CGC, other than in the ordinary course of business; (c) any obligation or liability of any nature incurred by CGC, whether accrued, absolute, contingent or otherwise, asserted or unasserted, other than obligations and liabilities incurred in the ordinary course of business; (d) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any assets of CGC other than in the ordinary course of business; (e) any direct or indirect redemption, purchase or other acquisition by CGC of its own capital stock; (f) any claim of unfair labor practices involving CGC; any change in compensation by CGC to any officers, employees, agents or independent contractors other than normal merit increases in accordance with its usual practices, or any bonus payment or arrangement made to or with any of such officers, employees, agents or independent contractors except for the 1996 year-end cash bonuses of $50,000 to each of the Stockholders, and 1996 year-end cash bonuses to the non-Stockholder employees of CGC in the approximate aggregate amount of $8,000; (g) any payment or discharge of a lien or liability of CGC which was not shown on the Base Balance Sheet or incurred in the ordinary course of business thereafter; (h) any change in accounting methods or practices, credit practices or collection policies used by CGC; or (i) any agreement or understanding, whether in writing or otherwise, for CGC to take any of the actions specified in paragraphs (a) through (h) above. 2.11 Contracts. CGC has made available to Buyers copies of all material contracts, commitments, agreements and licenses to which CGC is a party. To the knowledge of Stockholders, CGC is not in default under any of such contracts, commitments, agreements or licenses, and none of the Stockholders have any knowledge of conditions or facts which with notice or passage of time, or both, would constitute default. To the knowledge of Stockholders, no other party to any such contract, commitment, agreement or license is in default thereunder, and none of the Stockholders have any knowledge of conditions or facts which with the notice or passage of time, or both, would constitute a default. 2.12 Litigation. There is no litigation or governmental or administrative proceeding or, to the knowledge of Stockholders investigation, pending against CGC or threatened against CGC which would have a material adverse effect on CGC's assets, prospects, financial condition or business or which would prevent or hinder the consummation of the transactions contemplated by this Agreement. 2.13 Compliance with Laws. To the knowledge of Stockholders, CGC is in compliance in all material respects with all applicable statutes, ordinances, orders, rules and regulations promulgated by any federal, state, municipal or governmental authority which apply to the conduct of its business, and CGC has not received notice of a violation or alleged violation of any such statute, ordinance, order, rule or regulation which is currently pending. 2.14 Powers of Attorney. Neither CGC or the Stockholders (with respect to the Shares, and except for any durable power of attorney to become effective on such Stockholder's incapacity), has granted powers of attorney that are presently outstanding. 2.15 Corporate Records. The corporate record books of CGC record all material corporate action of CGC that have been taken by its Stockholders and board of directors and committees thereof. The copies of the CGC corporate records delivered or made available to Buyers are true and complete copies of the originals of such documents. 2.16 Employee Benefit Plans. Schedule 2.16 lists all Employee Benefit Plans that have been provided by CGC to its employees during the three year period ending on the Closing Date. CGC has made available to Buyers copies of all documents in the possession of CGC embodying or governing such Plans including Plan descriptions, IRS Forms and schedules, IRS determination letters. 2.17 Environmental Matters. CGC has never generated, transported, used, stored, treated, disposed of or managed any Hazardous Waste. No Hazardous Material has ever been or is threatened to be spilled, released or disposed of by or on behalf of CGC at any site presently or formerly owned, operated, leased or used by CGC, or has ever come to be located in the soil or groundwater at any such site. CGC has no liability under, nor has it ever violated, any Environmental Law. 2.18 Directors, Officers, Employees and Suppliers. (a) Schedule 2.18(a) is a true and complete list of all current directors and officers of CGC and includes current job title and aggregate annual compensation of each such individual for the year ended December 31, 1995 and for the period from January 1, 1996 to the Closing Date. True and complete copies of compensation plans and any other applicable agreements related to these individuals have also been provided to Buyers. (b) Schedule 2.18(b) is a true and complete list of the suppliers of CGC to whom CGC has made payment, or is expected to make payment, aggregating $5,000 or more during or with respect to the fiscal year ended December 31, 1995 showing with respect to each, the name, address and dollar volume involved. The Schedule also details the same information in comparative form for the period from January 1, 1996 to October 31, 1996. 2.19 Disclosure. The representations, warranties and statements contained in this Agreement and in the certificates, exhibits and schedules delivered by CGC and the Stockholders to Buyers pursuant to this Agreement do not contain any untrue statement of a material fact, and, when taken together, do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances in which they were made. 2.20 Employees and Labor Matters. (a) CGC employees 23 full-time employees and 2 part-time employee and generally enjoys a good employer-employee relationship. Schedule 2.20(a) sets forth the name, position, pay rate, full-time or part-time status, date of hire and exempt or non-exempt status of each of CGC's employees. (b) Schedule 2.20(b) is a list of all employees that have terminated employment with CGC over the last 24 months with a brief description of the circumstances of such termination. (c) CGC is not delinquent in payments to any of its employees, past or present, for any wages, salaries, commissions, bonuses or other direct compensation for any services provided or amounts required to be reimbursed. There are no workers' compensation or other similar claims filed against CGC, and none of the Stockholders knows of any injury or other event that may give rise to any such claim. There are no charges of employment discrimination or unfair labor practices that have been filed against or involving CGC. There are no grievances, complaints, or charges that have been filed against CGC. To the knowledge of the Stockholders, CGC is, and has been at all times since its effective date, in compliance with the requirements of the Immigration Reform Control Act of 1986. To the knowledge of Stockholders, CGC's payroll systems and classification of employees is and for 18 months prior to the Closing has been consistent with and in compliance with the requirements of the Fair Labor Standards Act, as amended, and any and all applicable state minimum wage and overtime laws. 2.21 Customers and Distributors. (a) Schedule 2.21(a) sets forth any representative, distributor or direct customer who accounts for more than $10,000 of revenue for each of fiscal year ended December 31, 1994, December 31, 1995 and the period from January 1, 1996 to the Closing Date. The Schedule shall include customer name, dollar amount purchased, and present status of the account. (b) Schedule 2.21(b) sets forth the customers for which CGC has performed ProEngineer related services over the last two year period. Article 3 REPRESENTATIONS AND WARRANTIES OF SOFTECH AND IDI Making of Representations and Warranties. As a material inducement to Stockholders and CGC to enter into and to consummate the transactions contemplated by this Agreement, SofTech and IDI hereby represent and warrant to Stockholders the following: 3.1 Organization and Standing; Articles and By-Laws. SofTech and IDI are duly organized, validly existing and in good standing under the Laws of the States of Massachusetts and Michigan, respectively, with full corporate power and authority to own or lease their respective properties and to conduct their respective businesses in the manner and in the places where such properties are owned or leased or such businesses are conducted by them. Each of Buyers is qualified to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary, except where failure so to be qualified would not have material adverse effect on Buyers. IDI is a wholly-owned subsidiary of SofTech. Complete and correct copies of the certificate and articles of incorporation and by-laws of SofTech have been delivered to Stockholders, and no changes therein will be made subsequent to the date hereof and prior to the Closing Date. 3.2 Corporate Power. SofTech and IDI have the full right, authority and power to enter into this Agreement and each agreement, document and instrument to be executed and delivered pursuant to this Agreement and to carry out the transactions contemplated hereby, including, without limitation, to issue and deliver to Stockholders the SofTech Shares pursuant to this Agreement. 3.3 Capitalization. The authorized capital stock of SofTech consists of (i) 10,000,000 shares of one class of Common Stock, of which 4,613,933 shares are issued and 4,170,776 are outstanding. All such issued and outstanding shares of stock have been duly authorized and validly issued, and are fully paid and nonassessable. SofTech has reserved (i) 405,000 shares of SofTech Common Stock for issuance to the Stockholders as Initial Consideration pursuant to this Agreement, and (ii) 210,000 shares of SofTech Common Stock for issuance to Stockholders as Additional Consideration pursuant to this Agreement. There are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of capital stock or other securities of SofTech that have not been disclosed in the Form 10-K filed with the Securities and Exchange Commission for the year ended May 31, 1996. 3.4 Authorization. All corporate action on the part of each of the Buyers, their respective directors and stockholders necessary for the authorization, execution, delivery and performance of this Agreement by the Buyers, the authorization, issuance and delivery of the Initial Consideration and the Additional Consideration to Stockholders and the performance of the Buyers' obligations hereunder has been taken. This Agreement, when executed and delivered by each of the Buyers, shall constitute a valid and binding obligation of each of the Buyers enforceable in accordance with its terms. 3.5 Stock. The SofTech Common Stock to be issued and delivered to Stockholders as Initial Consideration and Additional Consideration has been duly authorized and will be, when issued, duly authorized, validly issued, fully paid, non-assessable, and free and clear of all liens, encumbrances, charges or claims, under Article 8 of the Uniform Commercial Code or otherwise, subject to restrictions on resale under the Securities Act of 1933, as amended. 3.6 Financial Statements. The audited financial statements of SofTech for the twelve (12) months ended May 31, 1996 and the unaudited financial statements of SofTech for the six (6) months ended November 30, 1996, attached hereto as Exhibit "E", present fairly the financial condition of SofTech as of the dates thereof and the results of operations and cash flow of SofTech for the periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis through the entire period involved, except for the exclusion of footnotes and subject to normal recurring year-end adjustments. There has been no material change in the accounting policies of SofTech since January 1, 1994. 3.7 SofTech Reports. SofTech's Annual Report on Form 10-K for the fiscal year ended May 31, 1996 and its Quarterly Report of Form 10-Q for the fiscal quarter ended August 31, 1996 do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading. 3.8 No Material Adverse Change. Since May 31, 1996, (i) there has not been any material adverse change in the business, properties, business prospects, conditions (financial or otherwise) or results of operations of SofTech, taken as a whole, and (ii) SofTech has not incurred, nor will it incur prior to the Closing, any material liabilities or obligations, direct or contingent, nor has it entered into, nor will it enter into, any material transaction, other than in the ordinary course of business or pursuant to this Agreement and the transactions referred to herein except as disclosed in the Form 10-K filing with the Securities and Exchange Commission for the year ended May 31, 1996. 3.9 No Actions or Proceeding. There is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Buyers, threatened against SofTech or any of its subsidiaries or properties, or any of its officers or directors (in their capacities as such), that, individually or in the aggregate, could have a material adverse effect on SofTech. There is no judgment, decree or order against SofTech, or, to the knowledge of Buyers, any of its directors or officers (in their capacities as such), that could prevent, injure, alter or delay any of the transactions contemplated by this Agreement, or that could have a material adverse effect on SofTech. There is no agreement, judgment, injunction, order or decree binding upon SofTech which has or could have the effect of prohibiting or impairing any current business practice of SofTech, any acquisition of property by SofTech or the conduct of business by SofTech as currently conducted. 3.10 Governmental Licenses and Permits. To the knowledge of SofTech, SofTech has (i) all governmental licenses, permits, consents, orders, approvals and other authorizations necessary to carry on its business as presently conducted, (ii) complied in all material respects with all laws, regulations and orders applicable to it or its business, and (iii) performed all material obligations required to be performed by it and is not in default, under any contract or other instrument to which it is a party or by which its property is bound or affected where such default could reasonably be expected to have a material adverse effect on its business. To the knowledge of SofTech, no other party under any contract or other instrument to which SofTech is a party is in default in any respect thereunder where such default could reasonably be expected to have a material adverse effect on the business of SofTech. SofTech is not, nor at the Closing Date will it be, in violation of any provision of its articles of incorporation or by-laws. 3.11 No Consents or Approvals; No Conflicts. (a) No consent, approval authorization, license or order of, or any filing, registration or declaration or application with, any court or governmental agency or body is required for the consummation by SofTech of the transactions on its part herein contemplated, except such as have been obtained or shall be obtained prior to the Closing. (b) The performance of this Agreement and the consummation of the transactions contemplated hereby will not result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of SofTech pursuant to the terms or provisions of, or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, SofTech's articles of incorporation or by-laws, any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument to which SofTech is a party or by which it or any of its properties is bound or affected, or violate or conflict with any judgment, ruling, decree, order, application, filing, declaration, license, registration, statute, rule or regulation of any court or other governmental agency or body applicable to the business or properties of SofTech, in any such case where it would have a material adverse effect on SofTech. 3.12 Absence of Undisclosed Liabilities. SofTech has no obligations or liabilities of any nature (matured or unmatured, fixed or contingent) other than (i) those set forth or adequately provided for in the SofTech Balance Sheet dated May 31, 1996, a true, correct and complete copy of which has been provided to Stockholders (the "SofTech Balance Sheet"), (ii) those incurred in the ordinary course of business and not required to be set forth in the SofTech Balance Sheet under generally accepted accounting principles, and (iii) those incurred in the ordinary course of business since the SofTech Balance Sheet Date and consistent with past practice. 3.13 No Material Misstatement or Omission. None of the representations or warranties made by either of the Buyers herein or in any Schedule hereto, or certificate furnished by Buyers pursuant to this Agreement, when all such documents are read together in their entirety, contains or will contain at the Closing Date any untrue statement of a material fact, or omits or will omit at the Closing Date to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. Article 4 INDEMNIFICATION 4.1 Indemnification by the Stockholders. Each Stockholder jointly and severally agrees to indemnify and hold SofTech, IDI and CGC and their respective subsidiaries, officers, directors, partners or employees harmless from and against any damages, liabilities, losses, taxes or expenditures of any kind or nature whatsoever which may be sustained or suffered by any of them arising out of or based upon any of the following: (a) fraud, intentional misrepresentation or deliberate or wilful breach of any representations, warranties or covenants under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto; or (b) Any other breach of any representation, warranty or covenant under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto, or reason of any claim, action or proceeding asserted or instituted growing out of any matter or thing constituting a breach of such representation, warranty or covenant. 4.2 Indemnification by SofTech and IDI. SofTech and IDI jointly and severally agrees to indemnify and hold each of the Stockholders harmless from and against any damages, liabilities, losses, taxes or expenditures of any kind or nature whatsoever which may be sustained or suffered by any of them arising out of or based upon any of the following: (a) fraud, intentional misrepresentation or deliberate or wilful breach of any representations, warranties or covenants under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto; or (b) Any other breach of any representation, warranty or covenant under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto, or reason of any claim, action or proceeding asserted or instituted growing out of any matter or thing constituting a breach of such representation, warranty or covenant. 4.3 Notice and Defense of Claims. In the event of a claim arising under the indemnification provisions detailed above, the party making the claim shall do so in writing to the person or persons responsible for the indemnification. The party receiving such claim has 30 days to review written notification and either agree the claim is valid or to dispute such claim. In the event of agreement with the validity of such claim payment shall be made within 45 days of receipt of notification. In the event of a dispute with regard to the claim, the person or persons so disputing must do so in writing within 30 days of receipt of notification. 4.4 Liability Threshold. Anything in this Agreement to the contrary notwithstanding, the Buyers, CGC (and those persons and entities claiming through them under Section 4.1) shall not make any claim against the Stockholders for any breach of representations and warranties or of any covenant or agreement under this Agreement with respect to any such breaches, unless the amount of the loss for such breaches shall exceed in the aggregate the threshold amount of $50,000. 4.5 Exclusive remedy; No Personal Liability. Anything in this Agreement to the contrary notwithstanding, the exclusive remedy of the Buyers, CGC and any person or entity claiming through them with respect to any alleged breach of any representation, warranty or covenant made in this Agreement shall be to offset against the SofTech Shares that are distributed to the Stockholders as Initial Consideration and Additional Consideration, and the Stockholders shall not be personally liable for any amounts hereunder. 4.6 Dispute Resolution. To the extent feasible, the parties hereto desire to resolve any controversies or claims arising out of or relating to this Agreement and the agreements contemplated hereby through discussions and negotiations between each other. The parties initially shall attempt to resolve any disputes, controversies or claims arising out of or relating to this Agreement or any of the agreements contemplated hereby by face-to-face negotiation with the other parties. In the event that, after good faith discussions, such controversies or claims cannot be resolved solely between the parties, the parties shall refer such dispute, controversy or claim to a third party, who is mutually agreeable to the parties, for resolution by mediation. 4.7 Survival of Representations and Warranties. All representations, warranties, covenants and agreements of the parties contained in this Agreement or any certificate, document or other instrument delivered in connection herewith, shall survive for a period of twelve (12) months after the Closing Date. Article 5 REGISTRATION RIGHTS 5.1 Registration on Form S-3. Following the issuance of the SofTech shares pursuant to this Agreement, SofTech shall use its best efforts to cause a registration statement under the Securities Act of 1933, as amended, to be filed with the Securities and Exchange Commission on Form S-3 (or a substantially equivalent successor form) with respect to such SofTech shares. SofTech shall bear the expenses associated with registering such shares. 5.2 Registration Rights Agreement. At the Closing the Buyers and the Stockholders shall enter into a Registration Rights Agreement in the form of Exhibit "F"hereto. Article 6 OTHER INFORMATION 6.1 Governing Law. This Agreement shall be construed under and governed by the internal laws of the Commonwealth of Massachusetts. 6.2 Stockholders' Representative. (a) In order to efficiently administer the waiver of any condition or right of the Stockholders and the settlement of any dispute arising under the Agreement, or any other document or agreement executed in connection with the Closing or the transactions contemplated by this Agreement, the Stockholders hereby designate John Davis as the representative of the Stockholders (the "Representative"). (b) The Stockholders hereby authorize the Representative (i) to take all action necessary in connection with the waiver of any condition to the obligations of the Stockholders under this Agreement, the waiver of any right of the Stockholders hereunder, or the settlement of any dispute arising hereunder, (ii) to give and receive all notices required to be given under this Agreement and (iii) to take any and all action as is contemplated to be taken by or on behalf of the Stockholders by the terms of this legal proceedings on behalf of the Stockholders without their consent. (c) All decisions and actions by the Representative shall be binding upon all of the Stockholders, and no Stockholder shall have the right to object, dissent, protest or otherwise contest the same. In the event of the Representative's death or inability to perform the responsibilities hereunder, Daniel Iaria and Matthew Elzea shall fill such vacancy. 6.3 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date delivered, if delivered in person or by overnight courier service, or three (3) days after the date mailed, if mailed first-class, postage prepaid, or certified mail, return receipt requested, as follows (or at such other address as may be furnished in writing by the parties to the other parties by like notice): To SofTech and IDI: Information Decisions, Inc. 3260 Eagle Park Drive, N.E. Grand Rapids, MI 49505 Attn: President and CEO To the Stockholders: Computer Graphics Corporation 6666 East 75th Street Suite 110 Indianapolis, Indiana 46250 Attention: John Davis 6.4 Entire Agreement. This Agreement, including the Schedules and Exhibits referred to herein and the other writings specifically identified herein or contemplated hereby, is complete, reflects the entire agreement of the parties with respect to its subject matter, and supersedes all previous written of oral negotiations, commitments and writings. All inducements to the making of this Agreement relied upon by either party have been expressed herein. 6.5 Assignability. This Agreement may not be assigned by the Stockholders without the prior written consent of SofTech and IDI. This Agreement shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns. No right hereunder shall be created in any person or entity not a party to this Agreement, it being the express intention of the parties hereto that no third party beneficiary rights shall be created or implied by virtue of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. SOFTECH, INC. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO INFORMATION DECISIONS, INC. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO COMPUTER GRAPHICS CORPORATION By: /s/ John Davis John Davis President Stockholders: /s/ John Davis /s/ Daniel Iaria /s/ Matthew Elzea John Davis Daniel Iaria Matthew Elzea NONCOMPETITION AGREEMENT Agreement dated as of December 31, 1996, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and John Davis ("Employee"). RECITALS Whereas, following the acquisition of the stock of Computer Graphics Corp., ("CGC"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc.; and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in CGC are the significant asset the Company is acquiring in the purchase of the stock of CGC; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired stock and the proprietary information of CGC by entering into noncompetitiion and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the stock of CGC. In that CGC is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by CGC to the Company to complete the CGC acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with CGC or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of business administration. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field so long as his position with such new employer is not one which competes with the business of the Company. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ John Davis John Davis By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO NONCOMPETITION AGREEMENT Agreement dated as of December 31, 1996, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and Matthew Elzea ("Employee"). RECITALS Whereas, following the acquisition of the stock of Computer Graphics Corp., ("CGC"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc.; and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in CGC are the significant asset the Company is acquiring in the purchase of the stock of CGC; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired stock and the proprietary information of CGC by entering into noncompetitiion and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the stock of CGC. In that CGC is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by CGC to the Company to complete the CGC acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with CGC or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of mechanical engineering. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field so long as his position with such new employer is not one which competes with the business of the Company. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ Matthew Elzea Matthew Elzea By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO NONCOMPETITION AGREEMENT Agreement dated as of December 31, 1996, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and Daniel Iaria ("Employee"). RECITALS Whereas, following the acquisition of the stock of Computer Graphics Corp., ("CGC"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc.; and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in CGC are the significant asset the Company is acquiring in the purchase of the stock of CGC; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired stock and the proprietary information of CGC by entering into noncompetitiion and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the stock of CGC. In that CGC is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by CGC to the Company to complete the CGC acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with CGC or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of mechanical engineering. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field so long as his position with such new employer is not one which competes with the business of the Company. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ Daniel Iaria Daniel Iaria By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO STOCK PLEDGE AGREEMENT December 31, 1996 Stock Pledge Agreement ("Agreement") between John Davis ("Davis" or the "Debtor") and SofTech, Inc., a Massachusetts corporation ("SofTech" or the "Secured Party"). WHEREAS, the Debtor has today executed and delivered to the Secured Party his Non-Recourse Promissory Note (the "Note") in the original principal amount of $110,000; and WHEREAS, as a condition of making such loan, the Secured Party requires that the Debtor grant to the Secured Party a security interest in the 135,000 shares of SofTech stock received by the Debtor on December 31, 1996 in the sale of his shares of Computer Graphics Corporation, an Indiana corporation, to SofTech as described in Section 1.2 (a) of the Stock Purchase Agreement (the "Collateral"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby act and agree as follows: 1. Grant of Security Interest. As security for the full and timely satisfaction of the amounts due under the Non-Recourse Promissory Note, the Debtor hereby grants to the Secured Party a continuing interest in the Collateral. 2. Further Assurances. The Debtor will from time to time, upon the Secured Party's request, promptly execute and deliver all such further instruments and documents, and take all such further action, as may be necessary or that the Secured Party may reasonably request in order to protect the security interests granted or intended to be granted hereby or to enable the Secured Party to enforce its rights and remedies hereunder with respect to the Collateral. 3. Safekeeping of Collateral. After issuance of the Collateral to Debtor by SofTech, the Collateral shall be placed in a safe deposit box at a mutually agreed upon Indiana site which requires two keys to gain access. One key shall be held by the Debtor and one shall be held by the Secured Party. SofTech shall bear the cost of such safe deposit box. 4. Liens on Collateral. The Debtor shall not create or suffer to exist any lien in or on any of the Collateral except liens in favor of the Secured Party. 5. Sale of All or Part of the Collateral. In the event that the Debtor wishes to sell all or part of the Collateral, he shall inform the Secured Party of his intentions in writing. Such shares will be sold through an independent broker designated by the Debtor and approved by the Secured Party. All net proceeds shall first be applied against the outstanding balance owed under the Non-Recourse Promissory Note regardless of whether or not such monies are due under such Non-Recourse Promissory Note. The independent broker will be instructed in writing by Debtor as to the proper disbursement of net proceeds so as to accomplish this repayment and a copy of such instructions will be provided to the Secured Party. Such instructions shall inform independent broker of this Agreement, a copy of which shall also be attached to the broker instructions. Net proceeds received from the sale of the Collateral in excess of amounts due Secured Party shall be distributed directly from broker to Debtor. 6. Remedies. If the Debtor fails to comply with the repayment provisions of the Non-Recourse Promissory Note, the Secured Party can require, and Debtor shall be obligated to deliver to the Secured Party the Collateral with stock powers duly executed in blank, together with all such documents as may be required to effect a valid transfer of Collateral to Secured Party. Secured Party has no obligation whatsoever to sell such Collateral so delivered. The Secured Party can opt to retire such shares received in this manner or may elect to sell such shares at anytime. Any proceeds received by Secured Party from such a sale will belong entirely to the Secured Party regardless of amount. 7. Termination. This Agreement shall remain in full force and effect so long as any amounts are owed under the Non-Recourse Promissory Note. Upon repayment in full of all outstanding borrowings under such Note, this Agreement shall immediately terminate. Secured Party shall be obligated to take such actions as required to deliver Collateral to Debtor as reasonably requested by Debtor. 8. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts, except that the creation, perfection and enforcement of security interests in Collateral located in jurisdictions other than Massachusetts which will be governed by the laws of the respective jurisdictions in which such Collateral is located. IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. SOFTECH, INC. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO DEBTOR By: /s/ John Davis John Davis SEPARATION AGREEMENT In connection with the stock acquisition of Computer Graphics Corporation by Information Decisions, Inc., and SofTech, Inc. including all its subsidiaries (collectively the "Company"), and as a material inducement by the Company to John Davis ("Employee") to complete the transaction, the Company agrees to the following Separation Agreement. Following the acquisition of Computer Graphics by the Company, the Employee will be due a cash payment in the event his employment is terminated by the Company for any reason other than fraud or theft. The cash payment due will serve as severance and notice compensation. The cash payment due is as follows: Employment termination - ---------------------- Within 12 months of transaction $120,000 From 12 to 24 months of transaction 90,000 From 24 to 36 months of transaction 60,000 No payment is due in the event the Employee ends his employment. All other monies due the Employee for services performed or benefits earned would not be governed by this separation agreement in the event of termination but would be governed by Company policy and state and federal law dealing with such matters. This Agreement addresses severance and notice pay only with regard to this Employee. The Company also agrees that the minimum gross monthly compensation to the Employee during the 36 month period following the transaction will be $10,000 so long as he is employed. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. By: /s/ John Davis John Davis By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO SEPARATION AGREEMENT In connection with the stock acquisition of Computer Graphics Corporation by Information Decisions, Inc., and SofTech, Inc. including all its subsidiaries (collectively the "Company"), and as a material inducement by the Company to Matthew Elzea ("Employee") to complete the transaction, the Company agrees to the following Separation Agreement. Following the acquisition of Computer Graphics by the Company, the Employee will be due a cash payment in the event his employment is terminated by the Company for any reason other than fraud or theft. The cash payment due will serve as severance and notice compensation. The cash payment due is as follows: Employment termination - ---------------------- Within 12 months of transaction $60,000 From 12 to 24 months of transaction 45,000 From 24 to 36 months of transaction 30,000 No payment is due in the event the Employee ends his employment. All other monies due the Employee for services performed or benefits earned would not be governed by this separation agreement in the event of termination but would be governed by Company policy and state and federal law dealing with such matters. This Agreement addresses severance and notice pay only with regard to this Employee. The Company also agrees that the minimum gross monthly compensation to the Employee during the 36 month period following the transaction will be $5,000 so long as he is employed. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. By: /s/ Matthew Elzea Matthew Elzea By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO SEPARATION AGREEMENT In connection with the stock acquisition of Computer Graphics Corporation by Information Decisions, Inc., and SofTech, Inc. including all its subsidiaries (collectively the "Company"), and as a material inducement by the Company to Daniel Iaria ("Employee") to complete the transaction, the Company agrees to the following Separation Agreement. Following the acquisition of Computer Graphics by the Company, the Employee will be due a cash payment in the event his employment is terminated by the Company for any reason other than fraud or theft. The cash payment due will serve as severance and notice compensation. The cash payment due is as follows: Employment termination - ---------------------- Within 12 months of transaction $60,000 From 12 to 24 months of transaction 45,000 From 24 to 36 months of transaction 30,000 No payment is due in the event the Employee ends his employment. All other monies due the Employee for services performed or benefits earned would not be governed by this separation agreement in the event of termination but would be governed by Company policy and state and federal law dealing with such matters. This Agreement addresses severance and notice pay only with regard to this Employee. The Company also agrees that the minimum gross monthly compensation to the Employee during the 36 month period following the transaction will be $5,000 so long as he is employed. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. By: /s/ Daniel Iaria Daniel Iaria By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into as of December 31, 1996 by and among SofTech, Inc., a Massachusetts corporation ("SofTech" or the "Company") and John Davis, Matthew Elzea and Daniel Iaria, the principal stockholders of CGC (collectively, the "Stockholders"). WHEREAS, the Company is a party to a certain Stock Purchase Agreement (the "Agreement") dated December 31, 1996 with Stockholders; WHEREAS, as part of the purchase price for the stock to be acquired pursuant to the Stock Purchase Agreement, the Company will issue to the Stockholders 405,000 shares of its Common Stock as Initial Consideration and up to 210,000 shares of its Common Stock (collectively, the "Shares") as Additional Consideration in accordance with Sections 1.2 (a) and (b) of the Stock Purchase Agreement; WHEREAS, in order to induce the Stockholders to enter into the Stock Purchase Agreement, the Company has agreed to provide certain registration rights to the Stockholders with respect to the Shares; NOW, THEREFORE, the Company and the Stockholders agree as follows: 1.1 Registration on Form S-3. In accordance with Section 5.1 of the Stock Purchase Agreement, SofTech shall use its best efforts to cause a registration statement under the Securities Act of 1933, as amended, to be filed with the Securities and Exchange Commission on Form S-3 (or a substantially equivalent form) within 90 days of the close of the transaction and shall use its reasonable best efforts to cause such registration statement to be declared effective by the SEC as soon as reasonably practicable. 2.1 Period of Effectiveness. The Company agrees to use its reasonable best efforts to keep the registration statement continuously in effect under the Securities Act until such time that the required holding period restrictions for such Shares has elapsed. 3.1 Company's Obligations. The Company shall do the following during the period in which the registration statement is required to be kept effective: (a) Amendments. (i) Prepare and file with the SEC such amendments to the registration statement as may be required to keep the registration statement effective for the applicable period; and (ii) respond promptly to any comments received from the SEC with respect to the registration statement or any amendment, post-effective amendment or supplement relating thereto. (b) Copies of Prospectus. Furnish to Stockholders as many copies of each applicable Prospectus and such other documents as may reasonably be requested in order to facilitate the sale or disposition of the Shares. (c) State Securities Laws. Take such action as may be necessary to qualify or register the shares to be sold under the secutrities or "blue sky" laws of such jurisdictions of the United States as may be reasonably requested by the Stockholders. 4.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless the Stockholders against any and all loss, liability, claim, damage or expense whatsoever, other than negotiated settlements which must be approved by the Company beforehand, as incurred, arising out of any untrue statement of a material fact contained in the registration statement or omission of a material fact from the registration statement which results in expenditures on the part of the Stockholders. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of December __, 1996. SofTech, Inc. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO Stockholders By: /s/ John Davis John Davis President, CGC By: /s/ Daniel Iaria Daniel Iaria By: /s/ Matthew Elzea Matthew Elzea EX-2 3 STOCK PURCHASE AGREEMENT -- FEB 27, 1997 STOCK PURCHASE AGREEMENT Stock Purchase Agreement (the "Agreement") dated as of February 27, 1997, by and among SofTech, Inc., a Massachusetts corporation ("SofTech"), Information Decisions, Inc. ("IDI"), a wholly-owned subsidiary of SofTech (collectively, the "Buyer"), RAM Design & Graphics ("RAM"), a North Carolina corporation, and Roy L. Thrower, Jr., Michael D. Collins and Alan Carrico, the principal stockholders of RAM (collectively, the "Seller" or "Stockholders"). WITNESSETH WHEREAS, the Stockholders own of record and beneficially all of the issued and outstanding capital stock of RAM, consisting of 17,857 shares of RAM stock (the "Shares"); and WHEREAS, the Stockholders desire to sell all of the Shares to Buyer, and Buyer desire to acquire all of the Shares. NOW, THEREFORE, in order to consummate said purchase and sale and in consideration of the mutual agreements set forth herein, the parties hereto agree as follows: Section 1 PURCHASE OF STOCK 1.1 Sale and Purchase of Shares. Upon the execution of this Agreement, at such time and place as shall be determined by mutual agreement of the parties (the "Closing" or the "Closing Date"), the Stockholders shall deliver to Buyer, 100% of the Shares, duly endorsed in blank for transfer or the Shares shall be delivered to Buyer with stock powers duly executed in blank, together with all such documents as may be required to effect a valid transfer of such Shares by Stockholders to Buyer, free and clear of any and all liens, encumberances, charges or claims, under Article 8 of the Uniform Commercial Code. 1.2 Limited Assumption of Liabilities. Upon the sale and purchase of the Shares, Buyer shall assume and agree to pay or discharge when due in accordance with their respective terms, (i) those liabilities listed on Schedule 1.2, and (ii) Seller's liability and obligation for performance of the contractual obligations of Seller arising after the Closing Date under those contracts set forth on Schedule 2.11 (the "Assumed Contracts"). Further, Buyer agrees to indemnify the Seller from any claim which may arise from the assumed liabilities. Buyer shall not assume or be liable for any pre-Closing default under any Assumed Contracts or for any other liabilities or obligations of Seller arising at or prior to the Closing unless specifically identified on Schedule 1.2. Without limiting the foregoing, Buyer shall not assume and shall not pay any of the following liabilities or obligations: (a) liabilities incurred by Seller in connection with this Agreement and the transactions provided for herein, including, without limitation, counsel and accountant's fees, and expenses pertaining to the performance by Seller of its obligations hereunder; (b) Taxes (as defined in Section 2.8 hereof) of Seller, whether relating to periods before or after the transaction contemplated in this Agreement or incurred by Seller in connection with this Agreement and the transactions provided for herein. (c) liabilities of Seller with respect to any options, warrants, agreements or convertible or other rights to acquire any shares of its capital stock of any class; and (d) liabilities in connection with or relating to any actions, suits, claims, proceedings, demands, assessments and judgments, costs, losses, liabilities, damages, deficiencies and expenses (whether or not arising out of third-party claims), including, without limitation, interest, penalties, attorneys' and accountants' fees and all amounts paid in investigation, defense or settlement of any of the foregoing. The liabilities to be assumed by the Buyer under this Agreement are hereinafter sometimes referred to as the "Liabilities" and the liabilities which are not assumed by Buyer under this Agreement are hereinafter sometimes referred to as the "Excluded Liabilities". The assumption of said Liabilities by Buyer hereunder shall not enlarge any rights of third parties under contracts or arrangements with Buyer or Seller, and nothing herein shall prevent Buyer from contesting in any manner any of said Liabilities. 1.3 Base Purchase Price and Payment. In reliance upon the representations and warranties of the Stockholders herein contained and made at the Closing and in full consideration of the terms and conditions hereof and the sale by Seller to Buyer of the Shares, SofTech shall deliver (the "Base Purchase Price") to the Stockholders within 20 days of the Closing (i) a total of 250,000 shares of SofTech common stock (the "SofTech Shares"), par value $.10 per share to the Stockholders in accordance with Exhibit A attached hereto; and (ii) 50,000 stock options to purchase SofTech stock at a price equal to the closing price on the Transaction Day that vest in five equal increments on the anniversary date of the transaction over the five years immediately subsequent to the transaction and which terminate ten years after the issuance if not exercised. Such stock options will be issued to Stockholders and employees in accordance with Exhibit B attached hereto. A cash distribution equal to the Stockholders tax liability for the 1996 S-corporation earnings will be made to the Stockholders when taxes are due. 1.4 Additional Contingent Purchase Price. The Stockholders will earn an additional stock award of a total of 100,000 SofTech shares (the "Additional Shares") if the services group (including Computer Grachics Corp.) generates Service Group Revenue, as defined below, of at least $4,166,000 and Operating Profit, as defined below, of at least $583,000 in the twelve month period ended December 31, 1997. The Additional Shares, if earned, will be issued to the Stockholders on a pro rata basis in accordance with the distribution of the Base Purchase Price as detailed in Exhibit A. Service Group Revenue shall be defined as services earned through December 31, 1997 by the services group of the Buyer as presently composed of Computer Graphics, Corp. and the former Mechanical Design Synthesis Consulting group and RAM Design (collectively, the "Services Group"), with completion of this transaction. Revenue will be recognized based upon the revenue recognition policies of SofTech, Inc. in accordance with generally accepted accounting principals. Operating Profit shall be defined as revenue less the direct and indirect expenditures of the Services Group. Operating Profit does not include any allocation of corporate expenses of Information Decisions, Inc. or SofTech, Inc. for centrally provided functions such as management, accounting, human resources, cost of capital, etc. Operating Profit does include all expenses incurred by the Services Group such as depreciation, goodwill amortization, branch level administrative help, etc. Additional acquisitions of services-only companies subsequent to the transaction date that are added to the Services Group shall be included in determining goal attainment. 1.5 Non-Competition Agreement. As a material inducement to Buyer to enter into this Agreement, each of the Stockholders will execute a Non-Competition Agreement as shown in Exhibit C that will serve to restrict them from competing with Buyer for a two year period following their departure from the Company. Section 2 REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS 2.1 Making of Representations and Warranties. As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, Seller and the Stockholders hereby make to Buyer the representations and warranties contained in this Section 2. 2.2 Organization and Qualification of RAM. RAM is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina with full corporate power and authority to own or lease its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is currently conducted. The copies of RAM's Certificate of Incorporation and bylaws, as amended to date, certified by the Secretary of State of the State of North Carolina are complete and correct, and no amendments are pending or contemplated. RAM is not required to be licensed or qualified to conduct its business or own its property in any other jurisdiction in which it is not qualified. 2.3 Subsidiaries. RAM has no subsidiaries and does not own any securities issued by, and has not loaned any funds to, any other business organization or governmental authority. 2.4 Capital Stock of RAM. The authorized capital stock of RAM consists of 100,000 shares of common stock ("RAM Shares"), of which 17,857 shares are duly and validly issued and 17,857 shares are outstanding, and are free and clear of all claims, liens or encumbrances of any sort. There are 82,143 shares unissued. None of the shares have been issued in violation of any state or federal law. There are no other voting trusts, voting agreements, proxies or other agreements, instruments or undertakings with respect to the RAM Shares to which RAM or the Stockholders are a party. 2.5 Authority. The execution, delivery and performance of this Agreement by RAM does not and will not: (a) violate any provision of the Certificate of Incorporation or bylaws; (b) violate any laws of the United States, or any state or other jurisdiction applicable to RAM or require RAM to obtain any approval, consent or waiver of, or make any filing with, any person or entity that has not been obtained or made; and (c) result in a breach of, constitute a default under, accelerate any obligation under, or give rise to a right of termination of any contract, agreement, or lease to which RAM is a party. 2.6 Status of Tangible Property. (a) No Real Property Owned. RAM does not currently, nor has RAM ever in the past, owned any real property. (b) Leased Real Property. All real property leased by RAM as tenant or lessee is listed on Schedule 2.6(b). Copies of all the leases have been provided to IDI and are complete, accurate, true and correct. Each of the Leases is in full force and effect on the terms set forth therein and has not been modified, amended or altered, in writing or otherwise. (c) Personal Property. A complete list of machinery, equipment, furniture, fixtures, leasehold improvements and all other tangible personal property owned or leased by RAM is listed on Schedule 2.6(c). RAM has good and valid, legal title to all of the personal property owned by it and all of its equipment leases are valid and no default exists under any such lease. 2.7 Financial Statements. (a) IDI has received the following RAM financial statements, copies of which are attached hereto as part of Schedule 2.7: balance sheets as of December 31, 1996 and 1995, statements of income for the twelve months ended December 31, 1996 and 1995. Said financial statements are complete, true, accurate and correct, have been prepared in accordance with generally accepted accounting principles applied consistently during the periods covered thereby, and present fairly the financial condition of RAM at the dates of said statements and the results of its operations for the periods covered thereby. The balance sheet of RAM as of December 31, 1996 is hereafter referred to as the "Base Balance Sheet". (b) As of the date of the Base Balance Sheet, RAM had no liabilities of any nature that would be required to be disclosed in accordance with generally accepted accounting principles, whether accrued, absolute, contingent or otherwise, asserted or unasserted except liabilities (i) stated or adequately reserved against on the Base Balance Sheet, or (ii) specifically reflected on the Schedules furnished to Buyer hereunder as of the date hereof. (c) As of the date hereof, RAM has no liabilities of any nature which would be required to be disclosed in accordance with generally accepted accounting principles, whether accrued, absolute, contingent or otherwise, asserted or unasserted, except liabilities specifically reflected in Schedules furnished to Buyer hereunder on the date hereof. 2.8 Taxes. (a) RAM has paid or caused to be paid all federal, state, local, foreign and other taxes, including, without limitation, income taxes, estimated taxes, alternative taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes, capital stock taxes, franchise taxes, employment and payroll related taxes, withholding taxes, property taxes, whether or not measured in whole or part by net income, and all deficiencies, or other additions to tax, interest, fines and penalties owed by it (collectively, "Taxes") required to be paid by it through the date hereof whether disputed or not. (b) RAM has, in accordance with applicable law, filed all federal, state, local and foreign tax returns required to be filed by it through the date hereof, and all such returns correctly and accurately set forth the amount of any Taxes relating to the applicable period. Schedule 2.8(b) lists all federal, state, local and foreign income tax returns filed by RAM for the fiscal year ended December 31, 1995 with notation as to those returns that have been audited or are currently being audited. RAM has delivered to IDI a complete and correct copy of each of those returns listed and all examination reports and statements of deficiencies assessed against or agreed to by RAM with respect to such returns. 2.9 Collectibility of Accounts Receivable. All of the accounts receivable of RAM are valid and enforcable claims, fully collectible and subject to no setoff or counterclaim. 2.10 Absence of Certain Changes. Since the date of the Base Balance Sheet there has not been: (a) any material adverse change in the financial condition, properties, assets, liabilities, business or operations of RAM; (b) any contingent liability incurred by RAM as guarantor or otherwise with respect to the obligations of others or any cancellation of any debt or claim owing to, or waiver of any right of RAM; (c) any obligation or liability of any nature incurred by RAM, whether accrued, absolute, contingent or otherwise, asserted or unasserted, other than obligations and liabilities incurred in the ordinary course of business consistent with the terms of this Agreement; (d) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any assets of RAM other than in the ordinary course of business; (e) any declaration, setting aside or payment of any dividend by RAM, or making of any other distribution with respect to the capital stock of RAM, or any direct or indirect redemption, purchase or other acquisition by RAM of its own capital stock; (f) any labor trouble or claim of unfair labor practices involving RAM; any change in compensation by RAM to any officers, employees, agents or independent contractors other than normal merit increases in accordance with its usual practices, or any bonus payment or arrangement made to or with any of such officers, employees, agents or independent contractors; (g) any payment or discharge of a lien or liability of RAM which was not shown on the Base Balance Sheet or incurred in the ordinary course of business thereafter; (h) any change in accounting methods or practices, credit practices or collection policies used by RAM; or (i) any agreement or understanding, whether in writing or otherwise, for RAM to take any of the actions specified in paragraphs (a) through (h) above. 2.11 Contracts. Schedule 2.11 is a complete and accurate summary of all written and oral contracts, commitments, plans, agreements and licenses to which RAM is a party. RAM is not a party to any other contract, commitment, plan, agreement or license that is not described on Schedule 2.11. RAM is not in default under any such contracts, commitments, plans, agreements or licenses described on Schedule 2.11 and has no knowledge of conditions or facts which with notice or passage of time, or both, would constitute default. No other party to any such contract, commitment, plan, agreement or license is in default thereunder, and RAM has no knowledge of conditions or facts which with the notice or passage of time, or both, would constitute a default. 2.12 Litigation. There is no litigation or governmental or administrative proceeding or investigation pending against RAM or threatened against RAM which may have an adverse effect on RAM's assets, prospects, financial condition or business or which would prevent or hinder the consummation of the transactions contemplated by this Agreement. 2.13 Compliance with Laws. RAM is in compliance in all material respects with all applicable statutes, ordinances, orders, rules and regulations promulgated by any federal, state, municipal or governmental authority which apply to the conduct of its business, and RAM has not received notice of a violation or alleged violation of any such statute, ordinance, order, rule or regulation. 2.14 Powers of Attorney. Neither RAM nor the Stockholders (with respect to the Shares, and except for any durable power of attorney to become effective on such Stockholder's incapacity) has granted powers of attorney that are presently outstanding. 2.15 Corporate Records. The corporate record books of RAM record all material corporate action taken by its Stockholders and board of directors and committees thereof. The copies of the RAM corporate records delivered to Buyer are true and complete copies of the originals of such documents. Seller has provided Buyer with access to all tax and accounting records in order to perform its due diligence procedures. Buyer represents that such tax and accounting records are true and complete. 2.16 Employee Benefit Plans. (a) Schedule 2.16 lists and describes all Employee Benfit Plans that have been offered to employees since RAM inception through the Closing Date. RAM has provided Buyer with true and complete copies of all documents embodying or governing such Plans. 2.17 Environmental Matters. RAM has never generated, transported, used, stored, treated, disposed of or managed any Hazardous Waste. No Hazardous Material has ever been or is threatened to be spilled, released or disposed of by or on behalf of RAM at any site presently or formerly owned, operated, leased or used by RAM, or has ever come to be located in the soil or groundwater at any such site. RAM has no liability under, nor has it ever violated, any Environmental Law. 2.18 Directors, Officers, Employees and Suppliers. (a) Schedule 2.18(a) is a true and complete list of all current directors and officers of RAM and includes current job title and aggregate annual compensation of each such individual for the year ended December 31, 1996. True and complete copies of compensation plans and any other applicable agreements related to these individuals have also been provided to Buyer. (b) Schedule 2.18(b) is a true and complete list of the suppliers of RAM to whom RAM has made a payment, or is expected to make a payment, of $5,000 or more during or with respect to the fiscal year ended December 31, 1996 showing with respect to each, the name, address and dollar volume involved. 2.19 Disclosure. The representations, warranties and statements contained in this Agreement and in the certificates, exhibits and schedules delivered by RAM and the Stockholders to Buyer pursuant to this transaction do not contain any untrue statement of a material fact, and, when taken together, do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances in which they were made. There are no facts pertaining to past actions or past or current agreements of RAM or the Stockholders that could reasonably be expected to have a material adverse effect on the business, assets, prospects, operations or condition of RAM that have not been specifically disclosed herein or in a Schedule furnished herewith, other than general economic conditions affecting RAM's business. 2.20 Employees and Labor Matters. (a) RAM employees 8 full-time employees and 1 part-time employee and generally enjoys a good employer-employee relationship. Schedule 2.20(a) sets forth the name, position, pay rate, full-time or part-time status, date of hire, annual review date and exempt or non-exempt status of each of RAM's employees. (b) Schedule 2.20(b) is a list of all employees that have terminated employment with RAM over the last 24 months with a brief description of the circumstances of such termination. RAM is not delinquent in payments to any of its employees, past or present, for any wages, salaries, commissions, bonuses or other direct compensation for any services provided or amounts required to be reimbursed. There are no workers' compensation or other similar claims filed against RAM, and neither RAM or the Stockholders know of any injury or other event that may give rise to any such claim. There are no charges of employment discrimination or unfair labor practices that have been filed against or involving RAM. There are no grievances, complaints, or charges that have been filed against RAM. RAM is, and has been at all times since its effective date, in compliance with the requirements of the Immigration Reform Control Act of 1986. RAM's payroll systems and classification of employees is and for 18 months prior to the Closing has been consistent with and in compliance with the requirements of the Fair Labor Standards Act, as amended, and any and all applicable state minimum wage and overtime laws. 2.21 Customers and Distributors. (a) Schedule 2.21(a) sets forth any representative, distributor or direct customer who accounts for more than $10,000 of revenue for each of fiscal year ended December 31, 1996 and 1995. The Schedule shall include customer name, dollar amount purchased, and present status of the account. (b) Schedule 2.21(b) sets forth the customers for which RAM has performed ProEngineer related services over the last two year period. Section 3 REPRESENTATIONS AND WARRANTIES OF SOFTECH AND IDI 3.1 Making of Representations and Warranties. As a material inducement to Stockholders and RAM to enter into and to consummate the transactions contemplated by this Agreement, SofTech and IDI hereby represent and warrant the following: (a) SofTech and IDI are duly organized, validly existing and in good standing under the Laws of the States of Massachusetts and Michigan, respectively, with full corporate power and authority to own or lease its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is conducted by them. (b) SofTech and IDI have the full right, authority and power to enter into this Agreement and each agreement, document and instrument to be executed and delivered pursuant to this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance by SofTech and IDI of this Agreement has been duly authorized by all necessary action of SofTech and IDI, and no other action on the part of SofTech or IDI is required in connection therewith. 3.2 SofTech Reports. SofTech's Annual Report on Form 10-K for the fiscal year ended May 31, 1996 and its Quarterly Reports of Form 10-Q for the fiscal quarters ended August 31, 1996 and November 30, 1996 do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading. 3.3 Stock. The SofTech Shares issued to Stockholders pursuant to this Agreement will be, when issued, duly authorized, validly issued, fully paid, non-assessable, and free and clear of all liens, encumbrances, charges or claims, under Article 8 of the Uniform Commercial Code or otherwise, subject to restrictions on resale under the Securities Act of 1933, as amended (the "Act"). Following the registration of the SofTech Shares, the Seller will not be limited in any way from selling the SofTech Shares in their roles as contemplated by this Agreement and as currently promulgated by the Act. However, in the event that Seller becomes an officer or director of SofTech, Inc. such restrictions may be imposed by the Act. Further, SofTech makes no representation as to future restrictions that may be imposed by virtue of a change to the existing regulations. 3.4 Disclosure. The representations, warranties and statements contained in this Agreement and in the certificates, exhibits and schedules delivered by Buyer to Seller pursuant to this transaction do not contain any untrue statement of a material fact, and, when taken together, do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances in which they were made. There are no facts pertaining to past actions or past or current agreements of Buyer that could reasonably be expected to have a material adverse effect on the business, assets, prospects, operations or condition of Buyer that have not been specifically disclosed herein or in a Schedule furnished herewith, other than general economic conditions affecting Buyer's business. Section 4 INDEMNIFICATION 4.1 Indemnification by the Stockholders. Each Stockholder jointly and severally agrees to indemnify and hold SofTech, IDI and RAM and their respective subsidiaries, officers, directors, partners or employees harmless from and against any damages, liabilities, losses, taxes or expenditures of any kind or nature whatsoever which may be sustained or suffered by any of them arising out of or based upon any of the following: (a) fraud, intentional misrepresentation or deliberate or wilfull breach of any representations, warranties or covenants under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto; or (b) Any other breach of any representation, warranty or covenant under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto, or reason of any claim, action or proceeding asserted or instituted growing out of any matter or thing constituting a breach of such representation, warranty or covenant. 4.2 Indemnification by SofTech and IDI. SofTech and IDI jointly and severally agree to indemnify and hold Stockholders harmless from and against any damages, liabilities, losses, taxes for expenditures of any kind or nature whatsoever which may be sustained or suffered by any of them arising out of or based upon any of the following: (a) fraud, intentional misrepresentation or deliberate or wilfull breach of any representations, warranties or covenants under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto; or (b) Any other breach of any representation, warranty or covenant under this Agreement or in any agreement, certificate, schedule or exhibit delivered pursuant hereto, or reason of any claim, action or proceeding asserted or instituted growing out of any matter or thing constituting a breach of such representation, warranty or covenant. 4.3 Notice and Defense of Claims. In the event of a claim arising under the indemnification provisions detailed above, the party making the claim shall do so in writing to the person or persons responsible for the indemnification. The party receiving such claim has 30 days to review written notifiction and either agree the claim is valid or to dispute such claim. In the event of agreement with the validity of such claim payment shall be made within 45 days of receipt of notification. In the event of a dispute with regard to the claim, the person or persons so disputing must do so in writing within 30 days of receipt of notification. If the dispute can not be settled within 90 days of receipt of notification, upon election of either party, the dispute shall be referred to the American Arbitration Association to be settled in Raleigh, North Carolina in accordance with the commercial arbitration rules of said organization. Fees and expenses of such arbitration shall be shared equally. 4.4 Exclusive Remedy. The parties agree that the remedies provided in Section 4 shall be the exclusive remedies with respect to any alleged breach of any representation or warranty made in this Agreement. Section 5 REGISTRATION RIGHTS 5.1 Registration on Form S-3. Following the issuance of the SofTech Shares pursuant to this Agreement, SofTech shall cause a registration statement under the Securities Act of 1933, as amended, to be filed with the Securities and Exchange Commission on Form S-3 (or a substantially equivalent successor form) with respect to such SofTech Shares. SofTech shall bear the expenses associated with registering such shares. This registration document shall be filed within 90 days of the transaction date. Section 6 OTHER INFORMATION 6.1 Governing Law. This Agreement shall be construed under and governed by the internal laws of the Commonwealth of Massachusetts. 6.2 Stockholders' Representative. (a) In order to efficiently administer the waiver of any condition or right of the Stockholders and the settlement of any dispute arising under the Agreement, or any other document or agreement executed in connection with the Closing or the transactions contemplated by this Agreement, the Stockholders hereby designate Roy L. Thrower, Jr. as the representative of the Stockholders (the "Representative"). (b) The Stockholders hereby authorize the Representative (i) to take all action necessary in connection with the waiver of any condition to the obligations of the Stockholders under this Agreement, the waiver of any right of the Stockholders hereunder, or the settlement of any dispute arising hereunder, (ii) to give and receive all notices required to be given under this Agreement and (iii) to take any and all action as is contemplated to be taken by or on behalf of the Stockholders by the terms of this legal proceeding on behalf of the Stockholders without their consent. (c) All decisions and actions by the Representative shall be binding upon all of the Stockholders, and no Stockholder shall have the right to object, dissent, protest or otherwise contest the same. In the event of the Representative's death or inability to perform the reseponsibilities hereunder, Michael D. Collins shall fill such vacancy. 6.3 Notices. Any notice or communication required hereunder shall be in writing and shall be deemed to have been given if sent by facsimile transmission (with confirming copy by mail) upon receipt. All notices will be sent to the addresses set forth below: To SofTech and IDI: Information Decisions, Inc. 3260 Eagle Park Drive, N.E. Grand Rapids, MI 49505 Attention: Mark Sweetland To the Stockholders: RAM Design & Graphics 1511-206 Pinewinds Dr. Raleigh, NC 27603 Attention: Roy L. Thrower, Jr. To Stockholders' Legal Counsel: Carlton & Carlton 2840 Plaza Place, Suite 450 Raleigh, North Carolina 27612 Attention: Terry J. Carlton 6.4 Entire Agreement. This Agreement, including the Schedules and Exhibits referred to herein and the other writings specifically identified herein or contemplated hereby, is complete, reflects the entire agreement of the parties with respect to its subject matter, and supercedes all previous written of oral negotiations, commitments and writings. All inducements to the making of this Agreement relied upon by either party have been expressed herein. 6.5 Assignability. This Agreement may not be assigned by the Buyer or the Stockholders without the prior written consent of the other party. This Agreement shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns. No right hereunder shall be created in any person or entity not a party to this Agreement, it being the express intention of the parties hereto that no third party beneficiary rights shall be created or implied by virtue of this Agreement. STOCK PURCHASE AGREEMENT SIGNATURE PAGE IN WITNESS WHEREOF the parties hereto have executed or caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. SOFTECH, INC. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO Information Decisions, Inc. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO RAM Design & Graphics By: /s/ Roy L. Thrower, Jr. Roy L. Thrower, Jr. President Stockholders By: /s/ Roy L. Thrower, Jr. Roy L. Thrower, Jr. By: /s/ Michael D. Collins Michael D. Collins By: /s/ Alan Carrico Alan Carrico EXHIBIT A SOFTECH SHARE ALLOCATION TO SHAREHOLDERS The following is the allocation to the Stockholders of the 250,000 shares of SofTech stock:
Stockholder Number of SofTech Shares ------------------- ------------------------ Roy L. Thrower, Jr. 170,000 Michael D. Collins 70,000 Alan Carrico 10,000 ------- 250,000
EXHIBIT B SOFTECH STOCK OPTION ALLOCATION The Shareholders shall have the sole responsibility for allocating the 50,000 SofTech stock options (the "Initial Award") among the RAM employee group. Shareholders shall inform Buyer of the allocation by employee on or before March 31, 1997. In the event the Shareholders can not agree on an allocation, such decision will be made by Roy Thrower. Options forfeited by the RAM employees subsequent to the Initial Award shall revert to the general option pool controlled by the Board of Directors and the Compensation Committee of SofTech. EXHIBIT C NONCOMPETITION AGREEMENTS NONCOMPETITION AGREEMENT Agreement dated as of February 27, 1997, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and Roy L. Thrower, Jr. ("Employee"). RECITALS Whereas, following the acquisition of all of the outstanding shares of RAM Design & Graphics ("RAM"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc. (the "Company"); and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in RAM are the significant asset the Company is acquiring in the purchase of RAM; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired assets and the proprietary information of RAM by entering into noncompetition and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason other than termination without cause, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. In order for this Agreement to remain in full force and effect, the Company will be obligated to offer the Employee a position with the Company at least comparable with the position at Employee's initial date of hire and at a compensation level at least equal to the compensation level at initial date of hire. Termination for cause shall be defined as the Company's decision to end the employees employment with the Company based on performance below 50% of mutually established annual goals that can be objectively measured. Further, illegal acts committed by Shareholders shall be adequate grounds for termination for cause. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the assets of RAM. In that RAM is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by RAM to the Company to complete the RAM acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with RAM or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of engineering. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field as an employee of another company so long as his position with such new employer is not one which competes with the business of the Company. The Employee will also be allowed to work as an independent contractor for a staffing business in that SofTech views such a position as more like that of an employee of the staffing business than one of an independent contractor. The Company's business is one of providing engineers to customers in the CAD/CAM industry on assignment basis generally of a duration of 1 to 12 months and paid on an hourly basis. Section 9 shall supercede all other conflicting provisions of this Agreement. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ Roy L. Thrower Roy L. Thrower By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO NONCOMPETITION AGREEMENT Agreement dated as of February 27, 1997, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and Michael D. Collins ("Employee"). RECITALS Whereas, following the acquisition of all of the outstanding shares of RAM Design & Graphics ("RAM"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc. (the "Company"); and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in RAM are the significant asset the Company is acquiring in the purchase of RAM; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired assets and the proprietary information of RAM by entering into noncompetition and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason other than termination without cause, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. In order for this Agreement to remain in full force and effect, the Company will be obligated to offer the Employee a position with the Company at least comparable with the position at Employee's initial date of hire and at a compensation level at least equal to the compensation level at initial date of hire. Termination for cause shall be defined as the Company's decision to end the employees employment with the Company based on performance below 50% of mutually established annual goals that can be objectively measured. Further, illegal acts committed by Shareholders shall be adequate grounds for termination for cause. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the assets of RAM. In that RAM is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by RAM to the Company to complete the RAM acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with RAM or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of engineering. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field as an employee of another company so long as his position with such new employer is not one which competes with the business of the Company. The Employee will also be allowed to work as an independent contractor for a staffing business in that SofTech views such a position as more like that of an employee of the staffing business than one of an independent contractor. The Company's business is one of providing engineers to customers in the CAD/CAM industry on assignment basis generally of a duration of 1 to 12 months and paid on an hourly basis. Section 9 shall supercede all other conflicting provisions of this Agreement. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ Michael D. Collins Michael D. Collins By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO NONCOMPETITION AGREEMENT Agreement dated as of February 27, 1997, between Information Decisions, Inc. ("IDI"), SofTech, Inc., including all its subsidiaries ( collectively the "Company") and Alan Carrico ("Employee"). RECITALS Whereas, following the acquisition of all of the outstanding shares of RAM Design & Graphics ("RAM"), the Employee will be a key person responsible for implementing a growth plan that is meant to significantly enhance the value of SofTech, Inc. (the "Company"); and Whereas, the Employee understands that his specific talents and capabilities along with those of his fellow shareholders in RAM are the significant asset the Company is acquiring in the purchase of RAM; and Whereas, the Employee acknowledges he will have access to valuable confidential and proprietary information; and Whereas, the Employee recognizes that the Company has a legitimate interest in preserving the value of the acquired assets and the proprietary information of RAM by entering into noncompetition and confidentiality agreements with key employees. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. Covenant Not to Compete. For two years from the date the Employee ceases to be employed by the Company for any reason other than termination without cause, the Employee will not, within the areas covered by this Noncompetition Agreement, without the express written consent of the Company: (a) become involved with or associated with, either as employee, principal, partner, officer, director, agent, consultant, or otherwise, any person, partnership, corporation or other entity engaged in designing, manufacturing, distributing, offering for sale or selling any products or services which compete with or are similar to any products or services designed, manufactured, distributed, offered for sale or sold by the Company (a "Competitor"); (b) acquire any interest in a Competitor of the Company (except for wholly passive investments in the equity securities of publicly traded companies) not in excess of 2% of the outstanding equity securities of such company; (c) employ or solicit for employment by someone other than the Company any person who was an officer or employee of the Company immediately as of the date hereof or is an officer or employee of the Company as of the date of the solicitation; (d) induce or attempt to induce any officer or employee of the Company to leave the employment of the Company. In order for this Agreement to remain in full force and effect, the Company will be obligated to offer the Employee a position with the Company at least comparable with the position at Employee's initial date of hire and at a compensation level at least equal to the compensation level at initial date of hire. Termination for cause shall be defined as the Company's decision to end the employees employment with the Company based on performance below 50% of mutually established annual goals that can be objectively measured. Further, illegal acts committed by Shareholders shall be adequate grounds for termination for cause. 2. Areas Covered by this Agreement. The areas covered by this Noncompetition Agreement include the States of Michigan, Indiana, Texas, Louisiana, Ohio, Pennsylvania, North Carolina, Virginia, New York, New Jersey, Delaware, Maryland and Kentucky. 3. Consideration. This Agreement is entered into in connection with the Company's acquisition of the assets of RAM. In that RAM is a services-only operation and the Employee is a shareholder and a key member of the entity, this Agreement is a material inducement by RAM to the Company to complete the RAM acquisition. 4. Remedies. The parties agree that no adequate remedy at law exists for the violation of any provision contained in Section 1 hereof and that such provisions shall be enforceable by specific performance and or other injunctive relief in addition to any other remedies that may be available. In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, any invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary so that it shall be valid, legal, and enforceable, or if it shall not be possible to so limit such invalid or illegal or unenforceable provisions or part of a provision, this Agreement shall be construed as if such invalid or illegal or unenforceable provisions or part of a provision had never been contained herein. 5. Binding Effect. This Agreement shall be binding upon the Employee, and shall inure to the benefit of and be enforceable by the Company and its respective successors and assigns. 6. Modification; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (or their successors). No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Massachusetts. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement. 9. Exception. The purpose of this Agreement is to protect the value of the business acquired and to ensure that, in the event the Employee ceases to be employed by the Company, he does not attempt to solicit employees, customers, and vendors, or use confidential information obtained during his employment with RAM or the Company to, in any way, devalue the Company. It is specifically not meant to restrict the Employee from earning a living in his chosen field of engineering. Therefore, in the event the Employee ceases to be employed by the Company he will not be restricted in any way from obtaining employment in his chosen field as an employee of another company so long as his position with such new employer is not one which competes with the business of the Company. The Employee will also be allowed to work as an independent contractor for a staffing business in that SofTech views such a position as more like that of an employee of the staffing business than one of an independent contractor. The Company's business is one of providing engineers to customers in the CAD/CAM industry on assignment basis generally of a duration of 1 to 12 months and paid on an hourly basis. Section 9 shall supercede all other conflicting provisions of this Agreement. The Employee acknowledges that this does not, in any way, constitute an employment agreement and that the Company reserves the right to terminate his employment at any time with cause or without cause. IN WITNESS HEREOF, the parties have executed this Agreement on the date first set forth above. By: /s/ Alan Carrico Alan Carrico By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO Index of Schedules Schedule 1.2 Liabilities Schedule 2.6(b) Leased Properties Schedule 2.6(c) Personal Property Schedule 2.7 Financial Statements - Balance sheets as of December 31, 1996 and 1995 - Statements of Income for the twelve months ended December 31, 1996 and 1995 Schedule 2.8(b) Tax Returns Schedule 2.11 Assumed Contracts Schedule 2.16 Employee Benefit Plans Schedule 2.18(a) Current Directors and Officers Schedule 2.18(b) RAM Suppliers: Aggregate Payments Greater than $5,000 in Fiscal 1996 Schedule 2.20 (a) Current RAM Employees Schedule 2.20(b) Terminated RAM Employees Schedule 2.21(a) Revenue by Customer Greater than $10,000 for Fiscal Years 1996 and 1995 Schedule 2.21(b) ProEngineer Services for Fiscal 1996 and 1995 SCHEDULE 1.2 LIABILITIES Liabilities * Roy's credit cards used for business - American Express - Visa Card * Scott Shackleton, - Year end work - Sale of business * Terry Carlton, Attorney - Sale of business * Utilities, including telephone service * Group insurance, American Medical * Business insurance * Freight companies, Federal Express, Airborne * IBM AIX Technical Support * PTC maintenance * All existing lease agreements as presented on the 12/31/96 balance sheet of RAM whether in the name of East Coast Design Services, RAM Design and Graphics, Roy Thrower and/or Michael Collins SCHEDULE 2.6(b) LEASED PROPERTIES SCHEDULE 2.6(c) PERSONAL PROPERTY SCHEDULE 2.7 FINANCIAL STATEMENTS SCHEDULE 2.8(b) TAX RETURNS SCHEDULE 2.11 ASSUMED CONTRACTS SCHEDULE 2.16 EMPLOYEE BENEFIT PLANS SCHEDULE 2.18(a) CURRENT DIRECTORS AND OFFICERS SCHEDULE 2.18(b) RAM SUPPLIERS: FY96 PAYMENTS IN EXCESS OF $5,000 SCHEDULE 2.20(a) CURRENT RAM EMPLOYEES SCHEDULE 2.20(b) TERMINATED RAM EMPLOYEES SCHEDULE 2.21(a) REVENUE BY CUSTOMER GREATER THAN $10,000 FOR FISCAL YEARS 1996 AND 1995 SCHEDULE 2.21(b) PRO/ENGINEER SERVICES FOR FISCAL 1996 & 1995 STOCK PLEDGE AGREEMENT March 21, 1997 Stock Pledge Agreement ("Agreement") between Roy Thrower ("Thrower" or the "Debtor") and SofTech, Inc., a Massachusetts corporation ("SofTech" or the "Secured Party"). WHEREAS, the Debtor has today executed and delivered to the Secured Party his Non-Recourse Promissory Note (the "Note") in the original principal amount of $30,000; and WHEREAS, as a condition of making such loan, the Secured Party requires that the Debtor grant to the Secured Party a security interest in the 50,000 shares of SofTech stock to be received by the Debtor on or about March 25, 1997 in the sale of his shares of RAM Design & Graphics, a North Carolina corporation, to SofTech. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby act and agree as follows: 1. Grant of Security Interest. As security for the full and timely satisfaction of the amounts due under the Non-Recourse Promissory Note, the Debtor hereby grants to the Secured Party a continuing interest in the Collateral. 2. Further Assurances. The Debtor will from time to time, upon the Secured Party's request, promptly execute and deliver all such further instruments and documents, and take all such further action, as may be necessary or that the Secured Party may reasonably request in order to protect the security interests granted or intended to be granted hereby or to enable the Secured Party to enforce its rights and remedies hereunder with respect to the Collateral. 3. Safekeeping of Collateral. After issuance of the Collateral to Debtor by SofTech, the Collateral shall be placed in a safe deposit box at a mutually agreed upon North Carolina site which requires two keys to gain access. One key shall be held by the Debtor and one shall be held by the Secured Party. SofTech shall bear the cost of such safe deposit box. 4. Liens on Collateral. The Debtor shall not create or suffer to exist any lien in or on any of the Collateral except liens in favor of the Secured Party. 5. Sale of All or Part of the Collateral. In the event that the Debtor wishes to sell all or part of the Collateral, he shall inform the Secured Party of his intentions in writing. Such shares will be sold through an independent broker designated by the Debtor and approved by the Secured Party. All net proceeds shall first be applied against the outstanding balance owed under the Non-Recourse Promissory Note regardless of whether or not such monies are due under such Non-Recourse Promissory Note. The independent broker will be instructed in writing by Debtor as to the proper disbursement of net proceeds so as to accomplish this repayment and a copy of such instructions will be provided to the Secured Party. Such instructions shall inform independent broker of this Agreement, a copy of which shall also be attached to the broker instructions. Net proceeds received from the sale of the Collateral in excess of amounts due Secured Party shall be distributed directly from broker to Debtor. 6. Remedies. If the Debtor fails to comply with the repayment provisions of the Non-Recourse Promissory Note, the Secured Party can require, and Debtor shall be obligated to deliver to the Secured Party the Collateral with stock powers duly executed in blank, together with all such documents as may be required to effect a valid transfer of Collateral to Secured Party. Secured Party has no obligation whatsoever to sell such Collateral so delivered. The Secured Party can opt to retire such shares received in this manner or may elect to sell such shares at anytime. Any proceeds received by Secured Party from such a sale will belong entirely to the Secured Party regardless of amount. 7. Termination. This Agreement shall remain in full force and effect so long as any amounts are owed under the Non-Recourse Promissory Note. Upon repayment in full of all outstanding borrowings under such Note, this Agreement shall immediately terminate. Secured Party shall be obligated to take such actions as required to deliver Collateral to Debtor as reasonably requested by Debtor. 8. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts, except that the creation, perfection and enforcement of security interests in Collateral located in jurisdictions other than Massachusetts which will be governed by the laws of the respective jurisdictions in which such Collateral is located. IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. SOFTECH, INC. By: /s/ Mark R. Sweetland Mark R. Sweetland President and CEO DEBTOR By: /s/ Roy Thrower Roy Thrower EX-5 4 OPINION OF GOODWIN PROCTOR & HOAR June 27, 1997 SofTech, Inc. 3260 Eagle Park Drive, N.E. Grand Rapids, MI 49505 Re: SofTech, Inc. Registration on Form S-3 of 655,000 Additional Shares of Common Stock Ladies and Gentlemen: We have assisted in the preparation and filing with the Securities and Exchange Commission (the "Commission") of a Registration Statement on Form S-3, (the "Registration Statement"), relating to the sale by certain stockholders of up to 655,000 shares of Common Stock, $0.10 par value per share (the "Shares") of SofTech, Inc.(the "Company"), a Massachusetts corporation. We have examined the Articles of Organization and By-laws of the Company, and have examined and relied upon the originals, or copies certified to our satisfaction, of such records of meetings of directors and stockholders of the Company, documents and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion rendered below. In our examination of the foregoing documents, we have assumed the genuineness of all signatures and authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents. We assume that the appropriate action will be taken, prior to the offer and sale of the Shares, to register and qualify the Shares for sale under all applicable state securities or "blue sky" laws. Based upon the foregoing, we are of the opinion that the issuance of the Shares was duly authorized, and that such Shares were validly issued and are fully paid and non-assessable. We hereby consent to the use of our name in the Registration Statement and consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Goodwin, Procter & Hoar LLP Goodwin, Procter & Hoar LLP EX-23 5 CONSENT OF COOPERS & LYBRAND LLP CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Registration Statement on Form S-3 of our reports which include an explanatory paragraph related to the Company's ability to continue as a going concern, dated August 28, 1996, on our audits of the consolidated financial statements and financial statement schedule of SofTech, Inc. as of May 31, 1996 and 1995, and for the three years in the period ended May 31, 1996. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Boston, Massachusetts June 26, 1997 -----END PRIVACY-ENHANCED MESSAGE-----