<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MANATRON, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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<PAGE>
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement no.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[MANATRON LOGO]
2970 South 9th Street
Kalamazoo, Michigan 49009
September 8, 1998
To Our Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Manatron, Inc. The meeting will be held at the Holiday
Inn-West, in Kalamazoo, Michigan, on Thursday, October 8, 1998, at
4:00 p.m., local time.
On the following pages, you will find the Notice of Annual Meeting of
Shareholders and the Proxy Statement. The Proxy Statement and enclosed
form of proxy are being furnished to shareholders on or about September 8,
1998. A report on Manatron's activities and its outlook for the future
also will be presented at the meeting.
It is important that your shares be represented and voted at the
annual meeting, regardless of the size of your holdings. Whether or not
you plan to attend the annual meeting, we urge you to SIGN, DATE, AND
RETURN AS SOON AS POSSIBLE the enclosed proxy card. Sending a proxy will
not affect your right to vote in person in the event you attend the
meeting.
Respectfully,
/s/ Randall L. Peat
Randall L. Peat
Chairman of the Board of Directors
- ---------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY.
- ---------------------------------------------------------------------------
<PAGE>
[MANATRON LOGO]
2970 South 9th Street
Kalamazoo, Michigan 49009
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
The Annual Meeting of Shareholders of Manatron, Inc., will be held at
the Holiday Inn-West, in Kalamazoo, Michigan, on Thursday, October 8, 1998,
at 4:00 p.m., local time, for the following purposes:
(i) To elect one director for a two-year term expiring in 2000 and
three directors for three-year terms expiring in 2001.
(ii) To approve the Restricted Stock Plan of 1998.
(iii) To approve the Employee Stock Purchase Plan of 1998.
(iv) To transact any other business that may properly come before
the meeting.
Only shareholders of record as of the close of business on August 28,
1998, are entitled to notice of and to vote at the annual meeting.
A copy of the Annual Report to Shareholders for the fiscal year ended
April 30, 1998, is enclosed with this Notice. The following Proxy
Statement and enclosed proxy are being furnished to shareholders on or
about September 8, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jane M. Rix
Kalamazoo, Michigan Jane M. Rix
September 8, 1998 Secretary
<PAGE>
MANATRON, INC.
2970 SOUTH 9TH STREET
KALAMAZOO, MICHIGAN 49009
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 8, 1998
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are being furnished to
shareholders of common stock of Manatron, Inc. (the "Company") on or about
September 8, 1998, in connection with the solicitation of proxies by the
Board of Directors to be voted at the 1998 Annual Meeting of Shareholders
to be held on Thursday, October 8, 1998, at 4:00 p.m., local time, and at
an adjournment of that meeting, if any. The annual meeting will be held at
the Holiday Inn-West, in Kalamazoo, Michigan.
The purpose of the annual meeting is to consider and vote upon (i) the
election of one director for a two-year term expiring in 2000 and three
directors for three-year terms expiring in 2001; (ii) the approval of the
Company's Restricted Stock Plan of 1998; and (iii) the approval of the
Company's Employee Stock Purchase Plan of 1998. Proxies in the
accompanying form, if properly executed, duly returned to the Company, and
not revoked, will be voted at the annual meeting. If a shareholder
specifies a choice, the shares represented by proxy will be voted as
specified. If no choice is specified, the shares represented by proxy will
be voted for the election of all nominees named in this Proxy Statement,
for approval of the Company's Restricted Stock Plan of 1998, for approval
of the Company's Employee Stock Purchase Plan, and in accordance with the
discretion of the persons named as proxies on any other matters that may
come before the meeting or any adjournment of the meeting. For purposes of
determining the presence or absence of a quorum for the transaction of
business at the meeting, all shares for which a proxy or vote is received,
including abstentions and shares represented by a broker vote on any
matter, will be counted as present and represented at the meeting.
Any shareholder executing and returning the enclosed form of proxy may
revoke it at any time before it is exercised by delivering a written notice
of revocation to the Secretary of the Company at the address set forth
above or by attending and voting at the annual meeting.
The Company has no knowledge of any matter to be presented for
consideration at the annual meeting other than that stated in the Notice of
Annual Meeting of Shareholders. If any other matter should properly come
before the meeting, the persons named in the proxy will have discretionary
authority to vote in accordance with their judgment.
<PAGE>
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YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY.
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ELECTION OF DIRECTORS
The Board of Directors proposes that the following four individuals be
elected as directors for the terms set forth below:
TERM EXPIRING IN 2000
Harry C. Vorys
TERMS EXPIRING IN 2001
Gene Bledsoe
Jane M. Rix
Allen F. Peat
Incumbent director Mr. Vorys has been nominated to occupy the seat
previously held by Mr. Melvin J. Trumble who passed away on May 7, 1998.
This Proxy Statement contains more information about the director
nominees. All nominees presently are directors of the Company whose terms
will expire at the 1998 annual meeting. Unless otherwise directed by a
shareholder's proxy, the persons named as proxies intend to vote for the
nominees identified above. Each of the nominees has consented to being
named in this Proxy Statement and to serve if elected. In the event that
any nominee is unable to serve or is otherwise unavailable for election,
which is not now anticipated, the Board of Directors may or may not select
a substitute nominee. If a substitute nominee is selected, all proxies
will be voted for the election of the substitute nominee designated by the
Board of Directors. If a substitute nominee is not selected, all proxies
will be voted for the election of the remaining nominees. Proxies will not
be voted for a greater number of persons than the number of nominees named
in this Proxy Statement.
A plurality of the shares present in person or represented by proxy
and voting on the election of directors is required to elect directors.
For the purpose of counting votes on this proposal, abstentions, broker
non-votes, and other shares not voted will not be counted as shares voted
on the election, and the number of shares for which a plurality is required
will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS
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<PAGE>
APPROVAL OF THE COMPANY'S RESTRICTED STOCK PLAN OF 1998
On March 26, 1998, the Board of Directors adopted, subject to
shareholder approval, the Restricted Stock Plan of 1998 (the "Restricted
Plan") to be effective as of April 1, 1998. The Board of Directors firmly
believes that the Company's long-term interests are best advanced by giving
certain employees additional incentive to make significant contributions to
the long-term performance and growth of the Company. The Restricted Plan
is intended to join the interest of the Company's employees with the
interest of the Company's shareholders and to assist the Company in
attracting, rewarding, and retaining certain employees by providing them
with an opportunity to acquire shares of Common Stock of the Company. The
Board of Directors believes that the adoption and implementation of the
Restricted Plan is in the best interests of the Company and its
shareholders and desires to make additional shares available for restricted
stock awards.
A maximum of 100,000 shares of Common Stock (subject to certain
antidilution adjustments) will be available for awards of restricted stock
under the Restricted Plan. Shares to be issued under the Restricted Plan
are expected to be authorized but unissued shares. In July 1998, the
Company granted 2,000 restricted shares to 21 non-executive employees. The
market value of the restricted shares on the grant date was $9,250. The
restricted shares vest with respect to 20% of the shares on the first
anniversary of the grant date, with respect to 30% of the shares on the
second anniversary of the grant date and with respect to 50% of the shares
on the third anniversary of the grant date. Because the specific
participants and the market value of Common Stock on the grant date
presently cannot be determined (other than as described in the immediately
preceding sentence), the benefits or amounts that would be received by
participants under the Restricted Plan in the future are not determinable.
Similarly, the benefits or amounts that would have been received by
participants (other than those listed above) had the Restricted Plan been
in effect during the last completed fiscal year are not determinable.
The Restricted Plan will not be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and will not be
subject to the Employee Retirement Income Security Act of 1974. The
Company intends to register shares covered by the Restricted Plan under the
Securities Act of 1933, as amended.
The following is a summary of the principal features of the Restricted
Plan. The summary is qualified in its entirety by reference to the terms
of the Restricted Plan, the complete text of which is attached as Appendix
A to this Proxy Statement.
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<PAGE>
PARTICIPANTS IN THE RESTRICTED PLAN
Under the Restricted Plan, employees eligible to receive restricted
stock awards include software development employees and other technical-
related employees (currently approximately 25 individuals). Other
individuals eligible to participate in the Restricted Plan may join the
Company in the future. Officers of the Company will not receive awards of
restricted stock under the Restricted Plan.
ADMINISTRATION OF THE RESTRICTED PLAN
The Restricted Plan will be administered by the Stock Option Committee
of the Board of Directors (the "Committee"). This Committee consists of
three directors who are "non-employee directors" as defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended and "outside
directors" as defined in the rules issued under Section 162(m) of the
Internal Revenue Code of 1986, as amended.
The Committee will make determinations, subject to the terms of the
Restricted Plan and based on recommendations of the Company's Chief
Executive Officer, as to the persons to receive restricted stock awards,
the amount of restricted stock to be granted to each person, the terms of
each grant, and all other determinations necessary or advisable for
administration of the Restricted Plan. The Committee can amend the terms of
restricted stock granted under the Restricted Plan from time to time in a
manner consistent with the Restricted Plan; provided, that no amendment
will be effective relating to a particular award of restricted stock
without the consent of the relevant participant, except to the extent the
amendment operates solely to the benefit of the participant. The Committee
will have full authority and discretion to interpret the Restricted Plan.
RESTRICTED STOCK AWARDS
RESTRICTED STOCK GRANTS. The Committee can grant restricted stock at
any time before termination of the Restricted Plan according to its terms.
The Committee can grant restricted stock for any amount of consideration,
or no consideration, as determined by the Committee. In general, the
Committee expects that the Company will receive no consideration upon the
award of restricted stock other than the services of the recipient. The
Committee will set forth the terms of individual grants of restricted stock
in restricted stock agreements. These restricted stock agreements will
contain such terms, conditions, and restrictions consistent with the
provisions of the Restricted Plan, as the Committee determines to be
appropriate. The restrictions will include vesting requirements to
encourage long-term contribution to the Company.
The Company will not grant any participant in the Restricted Plan,
with respect to any calendar year, awards representing more than 50% of the
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<PAGE>
total number of shares of Common Stock available for awards under the
Restricted Plan.
TERMINATION OF EMPLOYMENT. The Committee will award restricted stock
on the condition that the participant remains an employee of the Company
during the restricted period set forth in the restricted stock agreement.
If a Participant ceases to be employed by the Company for any reason other
than the participant's death, Total Disability (as defined in the
Restricted Plan), or any other additional provisions as determined by the
Committee pursuant to the Restricted Plan, then the participant will
forfeit and return to the Company any shares of restricted stock that
remain subject to restrictions on the date of the participant's
termination.
If a participant terminates employment with the Company because of
death or Total Disability during the applicable restricted period, the
restrictions applicable to the shares of restricted stock automatically
will terminate and the restricted stock will vest as of the date of
termination, unless the terms of a restricted stock agreement provide
otherwise.
In addition, the Committee may, based upon recommendations of the
Chief Executive Officer, include provisions in any restricted stock
agreement that permit all or part of any restricted stock award to vest
upon the Participant's termination if such termination was by Early
Retirement, Normal Retirement, or Consensual Severance (all as defined in
the Restricted Plan).
RIGHTS OF HOLDERS OF RESTRICTED STOCK
Unless the Committee otherwise consents or unless the terms in the
restricted stock agreement provide otherwise, a participant will not be
permitted to sell, exchange, transfer, pledge, or otherwise dispose of any
restricted stock during the applicable restricted period other than to the
Company or by will or the laws of descent and distribution. In addition,
the Committee could impose other restrictions on shares of restricted
stock. Holders of restricted stock will enjoy all other rights of a
shareholder with respect to restricted stock, including the right to vote
restricted shares at shareholders' meetings and the right to receive all
dividends paid with respect to shares of Common Stock. Any securities
received by a holder of restricted stock pursuant to a stock dividend,
stock split, recapitalization, merger, consolidation, combination, or
exchange of shares will be subject to the same terms, conditions, and
restrictions that are applicable to the restricted stock for which the
shares are received.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Generally, a participant will not recognize income upon the award of
restricted stock. However, a participant will be required to recognize
compensation income on the value of restricted stock at the time the
restricted stock vests (when the restrictions lapse). At the time the
participant recognizes compensation income, the Company will be entitled to
a corresponding deduction for federal income tax purposes. If restricted
stock is forfeited by a participant, the participant will not recognize
income and the Company will not receive a deduction. Before the lapse of
restrictions, dividends paid on restricted stock, if any, will be reported
as compensation income to the participant and the Company will receive a
corresponding deduction.
A participant can, within 30 days after the date of an award of
restricted stock, elect to report compensation income for the tax year in
which the award of restricted stock occurs. If the participant makes such
an election, the amount of compensation income would be the value of the
restricted stock at the time of the award. Any later appreciation in the
value of the restricted stock will be treated as capital gain and realized
only upon the sale of the restricted stock. Dividends received after such
an election will be taxable as dividends and not treated as additional
compensation income. If, however, restricted stock is forfeited after the
participant makes such an election, the participant will not be allowed any
deduction for the amount earlier taken into income. Upon the sale of
restricted stock, a participant will realize capital gain (or loss) in the
amount of the difference between the sale price and the value of the stock
previously reported by the participant as compensation income.
The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy and voting on this proposal is
required to approve the Restricted Plan. For purposes of counting votes on
this proposal, abstentions, broker non-votes, and other shares not voted
will not be counted as shares voted on the proposal, and the number of
shares for which a majority is required will be reduced by the number of
shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE RESTRICTED STOCK PLAN OF 1998
APPROVAL OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN OF 1998
On March 26, 1998, the Board of Directors adopted, subject to
shareholder approval, the Employee Stock Purchase Plan of 1998 (the
"Purchase Plan") to be effective as of April 1, 1998. The Board of
Directors firmly believes that the Company's interests are best advanced by
securing for the Company and its shareholders the benefits of the incentive
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<PAGE>
inherent in the ownership of the Company's Common Stock by employees of the
Company. The Purchase Plan is intended to supplement and continue forward
the Company's Employee Stock Purchase Plan of 1992 (the "1992 Purchase
Plan"), which expired by its terms on March 31, 1998. The Purchase Plan is
substantially similar to the 1992 Purchase Plan. The Board of Directors
believes that the adoption and implementation of the Purchase Plan is in
the best interests of the Company and its shareholders and desires to make
additional shares available for purchase by employees.
A maximum of 100,000 shares of Common Stock (subject to certain
antidilution adjustments) will be available for purchase under the Purchase
Plan. Shares to be issued under the Purchase Plan are expected to be
authorized but unissued shares. Of the shares available under the Purchase
Plan, 5,000 shares will be available for purchase under the Purchase Plan
on the last working day of the third month in each plan quarter (the
"Investment Date"). If less than all of the shares available for purchase
on an Investment Date are purchased on that Investment Date, the surplus
shares will remain available for purchase on later Investment Dates.
The Purchase Plan is intended to comply with the provisions of
Sections 421, 423, and 425 of the Code and the Purchase Plan will be
administered, interpreted, and construed in accordance with such
provisions. The Company intends to register shares covered by the Purchase
Plan under the Securities Act of 1933, as amended.
The following is a summary of the principal features of the Purchase
Plan. The summary is qualified in its entirety by reference to the terms
of the Purchase Plan, the complete text of which is attached as Appendix B
to this Proxy Statement.
PARTICIPANTS IN THE PURCHASE PLAN
Except as otherwise provided in the Purchase Plan, all present and
future employees of the Company will be eligible to participate in the
Purchase Plan unless any of the following apply to an employee: (i) the
individual is employed less than 20 hours per week or is employed less than
five months in any calendar year; (ii) immediately after participating in
the Purchase Plan, the individual will own 5% or more of the total combined
voting power or value of all classes of stock of the Company; (iii) at the
time of participating in the Purchase Plan, the individual is no longer an
employee of the Company; or (iv) the individual is a member of a collective
bargaining unit.
In determining stock ownership, the rules of Section 425(d) of the
Code will apply, and stock which the employee could purchase currently or
subsequently under outstanding options will be treated as stock owned by
the employee.
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<PAGE>
No employee will acquire the right to purchase shares of Common Stock
which would permit that employee to purchase shares under all of the
Company's employee stock purchase plans at a rate exceeding $25,000 of the
Fair Market Value (as defined below) of the Common Stock (determined at the
time the right is granted) in each calendar year as provided in Section
423(b)(8) of the Code.
Officers and key employees of the Company may be deemed to have an
interest in the Purchase Plan because they may be eligible to participate
in the Purchase Plan. Directors who are not employees of the Company will
not be eligible to participate.
ADMINISTRATION OF THE PURCHASE PLAN
The Purchase Plan will be administered by the Committee. Subject to
the express provisions of the Purchase Plan and based on recommendations of
the Chief Executive Officer, the Committee will have authority to interpret
the Purchase Plan, to prescribe, amend, and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable
in administering the Purchase Plan. All determinations under the Purchase
Plan will be final and binding upon all persons unless otherwise determined
by the Board of Directors.
The Board of Directors can amend the Purchase Plan in any respect,
except that, without the approval of the shareholders, no amendment can (i)
increase or decrease the number of shares to be reserved under the Purchase
Plan (other than as provided in the Purchase Plan), (ii) change the
percentage of the Fair Market Value used to determine the purchase price
for shares of Common Stock, or (iii) withdraw the administration of the
Purchase Plan from the Committee. Further, the Purchase Plan could not,
without approval of the shareholders, be amended to cause the Purchase Plan
to fail to meet the requirements of Section 423 of the Code.
PARTICIPATION IN THE PURCHASE PLAN
The Purchase Plan enables eligible employees of the Company to
purchase from the Company shares of Company Common Stock through payroll
deductions. Each eligible employee could participate in the Purchase Plan
by filing with the Committee an Election to Purchase Form authorizing
specified regular payroll deductions from the eligible employee's periodic
compensation. Regular payroll deductions will be subject to a minimum
deduction of $5 per pay period and a maximum deduction of 10% of base
compensation including sales commissions (not including overtime, bonuses,
etc.). Payroll deductions will be credited to a participant's Payroll
Deduction Account. The Company could, in lieu of payroll deductions,
approve equivalent direct payments by a participant for deposit in his or
her Payroll Deduction Account. All funds in Payroll Deduction Accounts may
be used by the Company for any corporate purpose. All shares purchased for
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a participant from the funds held in the participant's Payroll Deduction
Account will be maintained in a separate Investment Sharebuilder Account.
WITHDRAWAL FROM THE PURCHASE PLAN
A participant will be entitled to withdraw the balance accumulated in
his or her Payroll Deduction Account and cease to be a participant in the
Purchase Plan. If a participant ceases to be eligible to participate in
the Purchase Plan, no further payroll deductions will be made on the
employee's behalf and the accumulated balance in his or her Payroll
Deduction Account will be refunded.
TERMINATION OF EMPLOYMENT
An employee will be deemed to have withdrawn from the Purchase Plan as
of the date of termination of employment unless the reason for termination
is death or Permanent Disability (as defined in the Purchase Plan).
If a participant dies, retires, or incurs a Permanent Disability
during a plan quarter, no further contributions on behalf of the
participant can be made, and unless the participant or executor or
administrator of the deceased participant's estate elects to withdraw the
balance in the participant's Payroll Deduction Account, the balance
accumulated in the participant's Payroll Deduction Account will be used to
purchase shares of Common Stock in accordance with the provisions of the
Purchase Plan. Any whole shares in a participant's Investment Sharebuilder
Account (as defined in the Purchase Plan) will be delivered upon request to
the participant or the deceased participant's beneficiary or such other
person designated on the Election to Purchase Form.
PURCHASE PRICE
The purchase price for each share of Common Stock will be 85% of the
closing price reported on The Nasdaq SmallCap Market (or such other market
that the Company's Common Stock is listed or quoted for trading on) on the
investment date (the "Fair Market Value").
TRANSFER AND ASSIGNMENT
Rights under the Purchase Plan are not transferable by a participant
other than by will or the laws of descent and distribution, and are
exercisable during the participant's lifetime only by the participant.
RECENT ACCOUNTING PRONOUNCEMENT
A recent interpretation of generally accepted accounting principles
requires the Company to record a charge to earnings if certain conditions
apply to the Purchase Plan. The Emerging Issues Task Force issued an
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interpretation in September 1997 entitled "Accounting for Increased Share
Authorizations" in IRS Section 423 Employee Stock Purchase Plan under APB
Opinion No. 25, "Accounting for Stock Issued to Employees" (Issue No. 97-12)
("EITF 97-12"). Generally, if (i) at the beginning of an offering
period, the shares reserved for issuance under an employee stock purchase
plan are insufficient to cover all shares issuable throughout the offering
period, (ii) shareholders subsequently approve additional shares allocable
to an offering period which commenced before the shareholder approval date
and (iii) the fair market value for the stock subject to the employee stock
purchase plan on the subsequent shareholder approval date is higher than
the fair market value on the date when the offering period commenced, then
a company would be required to record a charge to earnings to reflect the
theoretical compensatory element of the difference in fair market value.
The Company currently does not intend to issue a greater number of
shares than those currently reserved under the Purchase Plan. Accordingly
the Company does not expect EITF 97-12 to adversely affect the Company.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan, and the right of eligible employees to make
purchases under the Purchase Plan, is intended to qualify under the
provisions of Sections 421 and 423 of the Code. Under current federal
income tax rules, there will be no tax to employees at the time stock is
purchased under the Purchase Plan. If shares are held less than two years
after purchase, any gain on subsequent sale or other disposition will be
taxed as follows: the lesser of (i) the excess of the Fair Market Value of
the shares at the time of disposition over the purchase price of the
shares, or (ii) the excess of the Fair Market Value of the shares on the
Investment Date over the purchase price. The lesser of (i) or (ii) above
will be taxed as compensation income, and any proceeds in excess of (ii)
will be taxed as capital gain, long-term or short-term depending upon the
holding period. Any gain or loss on subsequent sale after two years from
the purchase will be treated as long-term capital gain or loss.
Payroll deductions under the Purchase Plan will be taxable to a
participant as compensation for the year in which such amounts would
otherwise have been paid to the participant. The Company is not entitled to
a deduction for amounts taxed as ordinary income or capital gain to a
participant except to the extent ordinary income is recognized by the
participant upon a sale or disposition of shares before the expiration of
the holding period noted above.
The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy and voting on this proposal is
required to approve the Purchase Plan. For purposes of counting votes on
this proposal, abstentions, broker non-votes, and other shares not voted
will not be counted as shares voted on the proposal, and the number of
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shares for which a majority is required will be reduced by the number of
shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN OF 1998
VOTING SECURITIES
Holders of record of common stock at the close of business on August
28, 1998, are entitled to notice of and to vote at the Annual Meeting of
Shareholders and at any adjournment of the meeting. As of July 31, 1998,
2,888,083 shares of the Company's common stock, no par value ("Common
Stock"), were issued and outstanding. Shareholders are entitled to one
vote on each matter presented for shareholder action for each share of
Common Stock registered in their names at the close of business on the
record date. Shares cannot be voted unless the shareholder is present at
the annual meeting or represented by proxy.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as to each person known to
the Company to have been the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock as of July 31, 1998:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK<F1>
-----------------------------
SOLE VOTING
AND PERCENT
NAME AND ADDRESS OF DISPOSITIVE OF
BENEFICIAL OWNER POWER<F2> CLASS<F3>
- -------------------- ----------------------------- ---------
<S> <C> <C>
Randall L. Peat
47801 - 45th Street
Paw Paw, Michigan 49079 571,562 16.99%
Allen F. Peat
3640 Bal Harbor Blvd., Apt. 513
Punta Gorda, Florida 33950 489,210 14.54%
Douglas A. Peat
1084 Josiane
Kalamazoo, Michigan 49009 200,088 5.95%
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Richard J. Holloman
816 Wild Turkey Place
Wilmington, North Carolina 28405 175,202 5.21%
- ------------------
<FN>
<F1> Based on information provided by each person listed.
<F2> These numbers include shares subject to options that are exercisable
within 60 days after July 31, 1998, granted under the Company's 1986
Incentive Stock Option Plan, 1989 Stock Option Plan, and 1994 and 1995
Long-Term Incentive Plans.
<F3> These percentages represent the number of shares owned by each
beneficial owner as of July 31, 1998, plus the shares allocated to a
person's ESOP account, if any, plus the shares that may be acquired by
each beneficial owner through the exercise of outstanding stock
options within 60 days by each after July 31, 1998, as a percentage of
the total of all outstanding shares as of July 31, 1998, plus the
total of all shares that may be acquired through the exercise of
outstanding stock options within 60 days after July 31, 1998.
</FN>
</TABLE>
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of July 31, 1998, by each of the Company's directors
and nominees for director, each officer whose salary and bonus equaled
$100,000 or more ("named executive officers"), and all of the Company's
directors and officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK<F1>
-----------------------------
SOLE VOTING
AND
NAME OF DISPOSITIVE PERCENT OF
BENEFICIAL OWNER POWER<F2> CLASS<F3>
- -------------------- ----------------------------- ----------
<S> <C> <C>
Gene Bledsoe<F4> 21,001 <F*>
Richard J. Holloman 175,202 5.21%
Allen F. Peat 489,210 14.54%
Douglas A. Peat 200,088 5.95%
-12-
<PAGE>
Randall L. Peat<F4> 571,562 16.99%
Jane M. Rix 12,272 <F*>
James W. Sanderbeck 44,576 1.32%
Early L. Stephens 17,537 <F*>
Paul R. Sylvester<F4> 114,405 3.40%
Melvin J. Trumble<F5> -- --
Harry C. Vorys 20,265 <F*>
Stephen C. Waterbury 18,222 <F*>
All directors and executive
officers as a group 1,730,692 51.43%
- ------------------
<FN>
<F*> Less than 1%.
<F1> The number of shares stated is based on information provided by each
person listed and includes shares personally owned of record by the
person and shares which, under applicable regulations, are considered
to be otherwise beneficially owned by the person.
<F2> These numbers include shares held directly and shares subject to
options which are exercisable within 60 days after July 31, 1998, that
were awarded under the Company's 1986 Incentive Stock Option Plan,
1989 Stock Option Plan, and 1994 and 1995 Long-Term Incentive Plans.
The number of shares subject to options which are exercisable within
60 days after July 31, 1998, for each listed person is as follows:
Gene Bledsoe 4,050
Richard J. Holloman 23,750
Allen F. Peat 10,500
Douglas A. Peat 10,500
Randall L. Peat 30,000
Jane M. Rix 10,000
James W. Sanderbeck 30,000
Early L. Stephens 17,000
Paul R. Sylvester 60,000
Melvin J. Trumble --
Harry C. Vorys 12,041
Stephen C. Waterbury 6,254
All directors and executive 241,095
officers as a group
<F3> These percentages represent the number of shares owned by each
beneficial owner as of July 31, 1998, plus the shares allocated to a
person's ESOP account, plus the shares that may be acquired by each
beneficial owner through the exercise of outstanding stock options
within 60 days by each after July 31, 1998, as a percentage of the
total of all outstanding shares as of July 31, 1998, plus the total of
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<PAGE>
all shares that may be acquired through the exercise of outstanding
stock options within 60 days after July 31, 1998.
<F4> Messrs. Bledsoe, Randall Peat, and Sylvester are members of the
Administrative Committee of the Manatron, Inc. Salary Deferral and
Employee Stock Ownership Plan (the "Plan"). Mr. Sylvester, President,
Chief Executive Officer, Chief Financial Officer, Treasurer, and a
director of the Company, is the trustee of the ESOP portion of the
Plan and holds the shares of Common Stock for the ESOP. The Committee
has the power to direct the trustee as to the voting of the shares
held by the ESOP trust that have not been allocated to individual
accounts. Each of the members of the Committee disclaims beneficial
ownership of shares held by the ESOP (except any shares allocated to
the person's individual account under the ESOP), and the ESOP shares
are not reported as beneficially owned by the members of the Committee
as individuals unless the shares have been allocated to the person's
account under the ESOP. As of July 31, 1998, 95,151 shares have been
allocated to participants and 71,438 shares have not yet been
allocated under the ESOP.
<F5> Melvin J. Trumble, the Company's Senior Vice President of the
Appraisal Division and a director of the Company, passed away on May
7, 1998.
</FN>
</TABLE>
BOARD OF DIRECTORS
By Board resolution the Company's Board of Directors is set at 10
members. The Company's Board of Directors currently consists of nine
directors, four of whom are standing for reelection. Mr. Melvin J.
Trumble, Senior Vice President of the Company's Appraisal Division and a
director of the Company, served as a director from 1995 until his death on
May 7, 1998. The Company intends to fill the vacancy left by Mr. Trumble's
death in the future. The Board of Directors is divided into three classes,
with each class to be as nearly equal in number as possible. Each class of
directors serves a term of office of three years, with the term of each
class expiring at the annual meeting of shareholders in each successive
year.
Biographical information is presented below for each person who either
is nominated for election as a director at the 1998 annual meeting or is
continuing as an incumbent director. Unless otherwise noted, each director
and nominee for director has had the same principal employment for the last
five years.
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<PAGE>
NOMINEE FOR ELECTION TO TERM EXPIRING IN 2000
HARRY C. VORYS (age 73) has been a director since 1986. Before his
retirement in July 1990, Mr. Vorys was an Executive Vice President and
Director of Citizens Trust and Savings Bank of South Haven, Michigan, which
later merged into Shoreline Bank. Mr. Vorys served as a director of
Shoreline Financial Corporation, the holding company of Shoreline Bank,
until May 1997.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2001
GENE BLEDSOE (age 53) has been a director since 1993. Mr. Bledsoe has
been the Managing Partner of the Casal Group Corporation since 1985, a
computer industry marketing services and management consulting firm based
in Dallas, Texas. Mr. Bledsoe also served as the Company's interim
President and Chief Executive Officer from October 1995 through February
1996.
JANE M. RIX (age 50) has been a director and the Company's Secretary
since 1993. Ms. Rix, who has been with the Company since 1977, primarily
is responsible for purchasing in addition to her Corporate Secretary
duties.
ALLEN F. PEAT (age 62) has been a director since 1972. Mr. Allen
Peat, a cofounder of the Company, served as the Company's Chairman of the
Board, President, and Chief Executive Officer until he retired in October
1995. Mr. Allen Peat is the brother of Mr. Randall Peat, Chairman of the
Board of Directors of the Company, and is the father of Mr. Douglas Peat,
Regional Vice President and a director of the Company.
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 1999
RANDALL L. PEAT (age 50) has been a director since 1972. Mr. Randall
Peat, a cofounder of the Company, became Chairman of the Board of Directors
in October 1995. Mr. Randall Peat previously held the position of
President of the Company's Judicial Information Systems Division. Mr.
Randall Peat is the brother of Mr. Allen Peat, a director of the Company,
and is the uncle of Mr. Douglas Peat, Regional Vice President and a
director of the Company.
PAUL R. SYLVESTER (age 39) has been a director since 1987.
Mr. Sylvester became President and Chief Executive Officer of the Company
in March 1996, and has served as its Vice President-Finance and Chief
Financial Officer since 1987. Mr. Sylvester also has been the Company's
Treasurer since 1993.
STEPHEN C. WATERBURY (age 48) has been a director since 1991.
Mr. Waterbury is a partner at the law firm of Warner Norcross & Judd LLP
located in Grand Rapids, Michigan.
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<PAGE>
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 2000
DOUGLAS A. PEAT (age 36) has been a director since 1991. Mr. Douglas
Peat currently is a Regional Vice President and is responsible primarily
for sales and customer service in the state of Michigan. Mr. Douglas Peat
was appointed Executive Vice President in October 1994 and held that
position until October 1995 and has been employed by the Company in various
other sales and marketing positions since 1985. Mr. Douglas Peat is the
son of Mr. Allen Peat, a director of the Company, and is the nephew of Mr.
Randall Peat, Chairman of the Board of Directors of the Company.
RICHARD J. HOLLOMAN (age 44) has been a director since 1992.
Mr. Holloman founded Specialized Data Systems, Inc. ("SDS") in 1980 and
served as its President until June 1995. The Company acquired SDS in March
1992. Mr. Holloman is currently President and Chief Executive Officer of
Vision Software, Inc., located in Wilmington, North Carolina, which
designs, develops, and distributes Emergency 911 and public safety software
and related services to local governments nationwide.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors, which is responsible for the overall
management of the business and affairs of the Company, held four meetings
since the last annual meeting of shareholders. Each director attended 75%
or more of the aggregate of the total number of Board of Directors meetings
and the total number of committee meetings of which they were members. The
Board of Directors has five standing committees: the Audit Committee, the
Compensation Committee, the Stock Option Committee, the Nominating
Committee, and the Executive Committee. The members of each committee are
appointed by the Board of Directors.
AUDIT COMMITTEE. The Audit Committee is responsible for (i)
recommending to the Board of Directors the selection of independent
auditors; (ii) reviewing and approving the scope of the yearly audit plan
and proposed budget for audit fees; (iii) reviewing the results of the
annual audit with the independent auditors; (iv) reviewing the Company's
internal controls with the independent auditors; (v) reviewing the
recommendations of independent auditors for accounting or operational
improvements; (vi) reviewing nonaudit services and special engagements to
be performed by the independent auditors; and (vii) reporting to the Board
of Directors on the Audit Committee's activities and findings and making
recommendations to the Board of Directors on these findings. Messrs. Vorys
(Chairman), Bledsoe and Waterbury are members of the Audit Committee. The
Audit Committee met once since the last annual meeting of shareholders.
COMPENSATION COMMITTEE. The responsibilities of the Compensation
Committee include (i) recommending the cash and other incentive
-16-
<PAGE>
compensation, if any, to be paid to the Company's executive officers; and
(ii) reviewing awards under stock-based compensation plans approved by the
Stock Option Committee. The Compensation Committee consists of Messrs.
Vorys (Chairman), Bledsoe, and Waterbury. The Compensation Committee met
twice since the last annual meeting of shareholders.
STOCK OPTION COMMITTEE. The Stock Option Committee is responsible for
(i) the administration and award of stock options and restricted stock
under the Company's stock plans; and (ii) the review of all material
proposed option plan changes. In addition, the Stock Option Committee
determines the key employees to whom options and restricted stock will be
granted, the number of shares covered by each option or award, the exercise
price of each option, and other matters associated with option and
restricted stock awards. Messrs. Vorys, Bledsoe, and Holloman are members
of the Stock Option Committee. The Stock Option Committee met twice since
the last annual meeting of shareholders.
NOMINATING COMMITTEE. The Nominating Committee considers and
evaluates the qualifications of potential candidates for the Board of
Directors and recommends appropriate candidates to the full Board of
Directors. The Nominating Committee consists of Messrs. Bledsoe, Vorys,
and Waterbury. The Nominating Committee met once since the last annual
meeting of shareholders.
A shareholder of record of shares of a class entitled to vote at any
meeting of shareholders called for the election of directors (an "Election
Meeting") may make a nomination at the Election Meeting if, and only if,
that shareholder first has delivered, not less than 120 days prior to the
date of the Election Meeting in the case of an annual meeting, and not more
than seven days following the date of notice of the Election Meeting in the
case of a special meeting, a notice to the Secretary of the Company setting
forth with respect to each proposed nominee: (i) the name, age, business
address, and residence address of the nominee; (ii) the principal
occupation or employment of the nominee; (iii) the number of shares of
capital stock of the Company that are beneficially owned by the nominee;
(iv) a statement that the nominee is willing to be nominated and to serve;
and (v) such other information concerning the nominee as would be required
under the rules of the Securities and Exchange Commission to be included in
a proxy statement soliciting proxies for the election of the nominee.
EXECUTIVE COMMITTEE. The Executive Committee has the authority to
exercise the powers of the Board of Directors in managing the Company's
business affairs and property during intervals between meetings of the
Board of Directors. The Executive Committee consists of Messrs. Bledsoe,
Randall Peat, and Sylvester. The Executive Committee met did not meet
since the last annual meeting of shareholders.
-17-
<PAGE>
COMPENSATION OF DIRECTORS
Nonemployee directors receive a $5,000 annual retainer fee plus
compensation in accordance with the following: $500 for attendance at each
meeting of the Board of Directors and $250 for attendance at each committee
meeting. Directors who are also employees of the Company or its
subsidiaries receive no annual retainer and are not compensated for
attendance at board or committee meetings.
Each nonemployee director who has served a full year of service as a
member of the Board of Directors is granted an option on the date of each
annual meeting of shareholders to purchase 1,000 shares of Common Stock.
The per share exercise price of options granted to directors is 100% of the
fair market value of the Common Stock on the date each option is granted,
except that the per share exercise price of incentive stock options granted
to directors who are employees of the Company and who own 10% or more of
the Company's Common Stock is 110% of the fair market value. The term of
each option may not exceed 10 years.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation earned during each of the last three fiscal years ended April
30, 1998, 1997, and 1996, by the Company's Chief Executive Officer and the
named executive officers:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
NUMBER OF
SHARES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION<F1>
- ---------------------- ---- -------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Paul R. Sylvester 1998 $120,000 $60,000 70,000 $2,275
President, Chief 1997 120,000 24,300 70,000 $3,184
Executive Officer, and 1996<F2> 99,167 15,000 70,000 9,016
Chief Financial Officer
Melvin J. Trumble<F3> 1998 105,000 40,000 30,000 1,449
Senior Vice President 1997 105,000 29,000<F4> 30,000 2,351
of Appraisal Operations 1996 105,000 -- 30,000 2,335
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<PAGE>
Randall L. Peat 1998 97,000 48,500 30,000 14,450
Chairman of the 1997 97,000 19,000 30,000 2,713
Board 1996 97,000 -- 30,000 14,976
James W. Sanderbeck 1998 95,200 38,000 30,000 1,464
Chief Operating 1997 95,200 19,000 30,000 2,122
Officer 1996 95,200 -- 30,000 2,164
Early L. Stephens 1998 69,163 32,800 20,000 108
Chief Technology 1997<F5> 55,000 2,200 10,000 --
Officer
- -----------------------
<FN>
<F1> All other compensation for the year ended April 30, 1998, includes:
(i) Company matching contributions under the Company's 401(k) plan of
$1,803 for Mr. Sylvester, $1,449 for Mr. Trumble, $1,450 for Mr. Peat,
$1,464 for Mr. Sanderbeck, and $108 for Mr. Stephens; and (ii) amounts
paid by the Company for life insurance of $472 for Mr. Sylvester and
$13,000 for Mr. Peat. In addition, 991 shares were contributed by the
Company to Mr. Sylvester's ESOP account, 791 shares were contributed
to Mr. Trumble's ESOP account, 749 shares were contributed to Mr.
Peat's ESOP account, 758 shares were contributed to Mr. Sanderbeck's
ESOP account, and 437 shares were contributed to Mr. Stephen's ESOP
account. The market value of the Company's Common Stock on April 30,
1998 was $3.88.
<F2> The information listed for Mr. Sylvester for fiscal year 1996 covers
compensation paid to him by the Company for service as Chief Financial
Officer from May 1, 1995 to February 29, 1996, and amounts for service
as President, Chief Executive Officer, and Chief Financial Officer
from March 1, 1996, to April 30, 1996.
<F3> Mr. Trumble passed away on May 7, 1998.
<F4> This amount includes $19,000 paid to Mr. Trumble under the Company's
1997 Executive Incentive Plan and $10,000 paid to Mr. Trumble as a
one-time bonus related to certain sales activities.
<F5> The information listed for Mr. Stephens for fiscal year 1997 covers
compensation paid to him by the Company for service as Chief
Technology Officer from his hire date of June 3, 1996 through April
30, 1997.
</FN>
</TABLE>
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<PAGE>
The following table sets forth information regarding stock options
granted to the named executive officer during the fiscal year ended April
30, 1998. Other than listed below, no stock options were granted to the
Chief Executive Officer or other named executive officers:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------------
NAME GRANTED<F1> YEAR SHARE DATE 0% 5% 10%
- ----------------- ----------- --------- --------- ---------- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Early L. Stephens 10,000 15.63% $ 2.00 July 16, 2007 $0 $12,600 $31,900
- ---------------
<FN>
<F1> On July 17, 1997, the Company granted options to Mr. Stephens to
purchase shares of the Company's Common Stock over a 10-year period.
Mr. Stephens is entitled to exercise his options at a price determined
by the Stock Option Committee, which was at least 100% of the fair
market value of Common Stock on July 17, 1997. Options terminate,
subject to certain limited exercise provisions, in the event of death
or termination of employment or directorship.
</FN>
</TABLE>
The following table sets forth the total number of securities
underlying unexercised options as of April 30, 1998. Neither the Chief
Executive Officer nor any named executive officer exercised any stock
options during the same period.
-20-
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS AT
FISCAL YEAR-END
-----------------------------------
NAME EXERCISABLE UNEXERCISABLE
----------------- ----------- -------------
<S> <C> <C> <C>
Paul R. Sylvester 70,000<F1> --
Melvin J. Trumble 30,000<F2> --
Randall L. Peat 30,000 --
James W. Sanderbeck 30,000 --
Early L. Stephens 17,000 3,000
- ---------------
<FN>
<F1> Mr. Sylvester exercised 10,000 of the reported options on July 21,
1998.
<F2> Mr. Trumble's estate exercised all of Mr. Trumble's options on July
31, 1998.
</FN>
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee develops compensation policies for the Company and evaluates
annual salaries and incentive compensation plans for the executive
officers. The Committee also reviews awards under certain stock-based
compensation plans as approved by the Stock Option Committee. The
Committee submits its recommendations on such matters to the full Board of
Directors for ratification. The Committee consists of three directors,
none of whom is a current or former employee of the Company.
COMPENSATION PHILOSOPHY
The Committee's executive compensation philosophy is to provide
competitive levels of compensation as well as incentives to achieve
superior financial performance. The Committee's policies are designed to
achieve four primary objectives: (i) align management's compensation with
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<PAGE>
the Company's achievement of annual and long-term performance goals; (ii)
reward above-average performance by the Company; (iii) recognize individual
initiative and achievement; and (iv) assist the Company in attracting and
retaining quality executive officers. The Committee believes that a
significant portion of the annual compensation of each officer must relate
to, and be contingent upon, the performance of the Company.
The Company's basic compensation policies are designed to enhance
shareholder value by rewarding executive officers for profitable growth of
the Company and increases in the value of its Common Stock. The Company's
executive compensation policies also seek to align the interests of
executive officers and other key employees with the interests of
shareholders through stock ownership. The Committee believes that it is in
the Company's best interest to generate rewards for senior executives and
key employees, which may result in above-average performance measured in
terms of profit growth and total shareholder return.
Executive officer compensation is comprised of three primary
components: base salary and benefits, annual performance bonus, and
participation in stock option and restricted stock plans. Each component
of compensation is designed to accomplish one or more of the compensation
objectives. Benefits offered to executive officers include participation
in the Manatron, Inc. Salary Deferral and Employee Stock Ownership Plan,
which covers substantially all employees, the Employee Stock Purchase Plan,
and the Company's various health, life, and disability insurance benefit
plans.
Congress has amended the Internal Revenue Code of 1986 to add
Section 162(m) which provides that publicly held corporations may not
deduct compensation paid to certain executive officers in excess of $1
million annually, with certain exemptions. The Company has examined its
executive compensation policies in light of Section 162(m) and the
regulations adopted by the Internal Revenue Service to implement this
section. It is not expected that any portion of the Company's deduction
for employee remuneration will be disallowed in fiscal year 1999 or in
future years by reason of awards granted in fiscal year 1999.
BASE SALARY
The Company seeks to attract and retain well-qualified executives by
providing base salaries and benefit packages at levels that are considered
to be competitive. In setting the base salaries of the Company's executive
officers, the Committee considers the skill and experience required by an
individual's position, job performance, accountability, and tenure.
Although the Committee refers to base salaries at other comparable
companies to help establish guidelines, the Company's current operating
performance is considered most important in determining the base salaries
of management.
-22-
<PAGE>
The Committee believes current base salaries for executive officers of
the Company have not kept pace with and are below average for executives in
similar positions. It is the Committee's intention to increase base
salaries of executive officers to more competitive levels as profits
improve. Nonetheless, incentive compensation based upon criteria designed
to reward executives for performance which enhances shareholder value will
continue to represent a significant percentage of potential executive
compensation.
In general, the Company adjusts executive officer salaries on an
annual basis. The annual adjustments are determined by considering the
Company's performance, each officer's performance, any increased
responsibilities of the officer, and current economic conditions. The base
salaries paid to the Company's executive officers during fiscal 1998
remained at the same levels as fiscal 1997.
ANNUAL BONUS PLAN
Annual bonuses under the Company's short-term executive incentive
compensation plan are intended to reward executives for achieving specific
goals, motivate executives to work more effectively, and focus executives'
attention on specific areas of major importance.
Under the 1998 Executive Incentive Plan (the "1998 Plan") bonuses were
based on the Company's after-tax earnings, which could result in awards up
to 25% of a participant's base salary, depending upon the amount of
earnings that were reported. In addition, the 1998 Plan was based upon the
following six variables: (i) reduction in the Company's line of credit
balance; (ii) increase in the Company's invested cash balances; (iii)
reduction in the Company's past-due account receivables; (iv) achievement
of the Company's sales forecasts; (v) improvement in the level of the
Company's average overall customer satisfaction rating; and (vi)
improvement in the Company's employee turnover percent. Awards based
on the preceding six variables could not exceed 25% of a participant's base
salary and were conditioned on achieving "threshold" goals. The amount of
a participant's award based on the six variables was paid as follows:
(i) 65% of the total amount earned was paid to participants pro rata based
on each participant's base salary; and (ii) the remaining 35% of the total
amount earned was paid to participants based on performance objectives,
criteria, and/or ratings for individual participants as determined by the
Chief Executive Officer and the Committee. Total bonuses paid under the
1998 Plan to any participant were limited to 50% of that participant's base
salary. Awards paid to participants ranged from the maximum limit (50% of
a participant's base salary) to approximately 40% of a participant's base
salary in fiscal 1998.
-23-
<PAGE>
STOCK OPTIONS AND RESTRICTED STOCK
The Stock Option Committee of the Board of Directors periodically
grants stock options and restricted stock to executive officers of the
Company. Stock options provide the recipient the right to acquire shares
of the Company's Common Stock at fair market value on the date of grant.
The options generally become exercisable immediately after the date of
grant and expire 10 years following the date of grant. The number of
shares covered by each grant is designed to provide the executive officers
a substantial incentive to operate the Company from the perspective of an
owner, thereby closely aligning their interests to those of the Company's
shareholders.
Although the Committee believes that stock ownership by executive
officers and other key employees is beneficial, the Company currently has
no target ownership level for Common Stock holdings by officers. The Stock
Option Committee generally does not take into account in its decisions the
amount and value of options and restricted stock currently held by an
officer.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation is based upon the policies
and objectives discussed above. The Committee considers current operating
performance to be a key determinant in establishing the base salary of the
Chief Executive Officer and also considers the Chief Executive Officer's
performance, skill and experience, accountability, and length of service,
and current economic conditions. The Committee believes that incentive
compensation, designed to reward performance, should represent a
significant percentage of the Chief Executive Officer's potential
compensation.
On October 10, 1996, the Company executed an employment agreement with
Mr. Sylvester which provides for his continued service to the Company as
President and Chief Executive Officer until termination of the employment
agreement. The employment agreement also is described on page 22 of this
Proxy Statement under the heading "Employment Agreements, Termination of
Employment and Change in Control Arrangements."
Under the employment agreement, Mr. Sylvester (i) will receive an
annual base salary of at least $120,000; (ii) is entitled to participate in
the Company's executive incentive bonus plan; and (iii) is entitled to
receive fringe benefits available to all employees. Mr. Sylvester received
an annual bonus of $60,000 for fiscal year 1998.
All recommendations of the Committee attributable to compensation in
the 1998 fiscal year were unanimous and were approved and adopted by the
Board of Directors without modification.
-24-
<PAGE>
The Committee welcomes written comment from the Company's shareholders
concerning its compensation programs. Comments should be marked "personal
and confidential" and addressed to the Compensation Committee of the Board
of Directors, Manatron, Inc., 2970 South 9th Street, Kalamazoo, Michigan
49009.
Respectfully submitted,
Harry C. Vorys (Chairman)
Gene Bledsoe
Stephen C. Waterbury
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
ALLEN PEAT'S AGREEMENT. Effective October 17, 1995, the Company and
Mr. Allen Peat entered into an agreement setting forth the terms pursuant
to which Mr. Peat retired as Chairman, President, and Chief Executive
Officer (the "Peat Agreement"). The Peat Agreement provides for severance
compensation, deferred compensation, and other payments totaling
approximately $1.3 million to be paid through December 1999. In fiscal
1998, under the Peat Agreement the Company paid to Mr. Peat approximately
$245,000. Mr. Peat retains all rights of a retired employee under the
Company's existing 401(k) plan, employee stock plan, and other qualified
benefit plans, if any.
The Peat Agreement contains standstill provisions restricting
Mr. Peat's ability to (i) acquire the Company's Common Stock; (ii) acquire
control of the Company; (iii) solicit proxies for particular purposes;
(iv) subject his shares to a voting trust or similar agreement; and
(v) participate in or encourage a group which seeks to acquire, hold, or
dispose of the Company's Common Stock. Notwithstanding the above
standstill provisions, Mr. Peat is free to vote his existing shares as he
determines and to dispose of any of the existing shares. Any transferee of
Mr. Peat's shares shall take such shares free of the restriction imposed by
the Peat Agreement.
EMPLOYMENT AGREEMENTS OF PAUL SYLVESTER, MELVIN TRUMBLE, AND JAMES
SANDERBECK. On October 10, 1996, the Company entered into an employment
agreement with each of Messrs. Sylvester, Trumble, and Sanderbeck (the
"Employment Agreements"). The Employment Agreements provide for employment
for each listed individual until terminated as provided in the Employment
Agreements. Under the Employment Agreements, each individual is paid a
minimum salary ($120,000 for Mr. Sylvester, $105,000 for Mr. Trumble, and
$95,200 for Mr. Sanderbeck). Under the Employment Agreements,
Messrs. Sylvester, Trumble, and Sanderbeck also are entitled to receive
(i) paid vacation in accordance with the Company's vacation policies;
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<PAGE>
(ii) standard benefits offered to all employees; and (iii) reimbursement of
reasonable expenses in connection with the performance of job duties. In
addition, each individual may be entitled to a Company automobile or a car
allowance for business purposes and each participates in the 1998 Plan.
Upon Mr. Trumble's death on May 7, 1998, the Company's obligations under
Mr. Trumble's employment agreement terminated.
If the employment of Messrs. Sylvester, Trumble, or Sanderbeck is
terminated other than for Cause or if they resign from employment With
Cause (each as defined in the Employment Agreements), the Employment
Agreements require the Company to pay to the terminated employee six
months' severance pay of an amount equal to the employee's base salary and
any and all benefits in effect at the time of termination. Under
Mr. Sylvester's Employment Agreement, if Mr. Sylvester receives the
severance pay described above, the outstanding loans made to him by the
Company for the purpose of acquiring shares of the Company's Common Stock
will be canceled in exchange for the Common Stock purchased by Mr.
Sylvester. Effective May 1, 1998, the Company amended Mr. Sylvester's
Employment Agreement to extend the period of severance payment to two
years.
RANDALL PEAT'S EMPLOYMENT AGREEMENT. On July 17, 1986, the Company
entered into an employment agreement with Randall Peat, which provides for,
among other things, a monthly salary (approximately $8,083 a month), annual
bonus, and other fringe benefits, as determined from time to time by the
Board of Directors. For any given year, it is intended that Mr. Peat's
monthly salary and fringe benefits not be less than those received in the
prior year. Mr. Peat's annual bonus is determined in accordance with the
1998 Plan. The term of Mr. Peat's employment agreement is a rolling five-
year term, which is extended an additional year in December of each year
unless the Board of Directors determines otherwise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is composed of Messrs. Vorys,
Bledsoe, and Waterbury. Mr. Waterbury is a partner in the law firm of
Warner Norcross & Judd LLP, and Mr. Bledsoe is the Managing Partner of the
Casal Group, a computer industry marketing services and management
consulting firm. The services of these firms were utilized by the Company
in fiscal year 1998 and the Company intends to continue to use these firms
in fiscal year 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is leasing its office in Greenville, North Carolina under
a five-year agreement expiring on July 31, 1999, consisting of
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approximately 4,700 square feet, from HBH Partnership, of which Mr.
Holloman, former President of SDS and a director of the Company, is a one-
third owner, for approximately $4,300 per month. HBH Partnership is
responsible for taxes, maintenance, and insurance on the leased property.
The term of this lease was not negotiated at arm's length and may be deemed
to involve a conflict of interest. However, in the opinion of management,
the terms are at least as favorable to the Company as the terms which would
be available to the Company in an arm's-length transaction.
On June 29, 1995, the Company's ESOP purchased 142,858 shares of
Common Stock from Mr. Allen Peat, former Chairman of the Board, President,
and Chief Executive Officer, for $3.50 per share, which approximated market
value on that date. The ESOP borrowed $500,000 from a bank to finance the
stock purchase. The Company has guaranteed the ESOP's loan and is
obligated to make contributions sufficient to enable the ESOP to repay the
loan, including interest. The loan is repayable in quarterly installments
of $25,000, plus interest at the bank's prime rate. As of April 30, 1998,
$225,000 remained outstanding under the loan agreement.
The Company has made two loans to Mr. Sylvester, President, Chief
Executive Officer, and Chief Financial Officer, totaling $111,250, two
loans to Mr. Douglas Peat, Regional Vice President, totaling $111,250 and
one loan to Mr. Holloman, a director, of $50,000. The proceeds of the
loans for each individual were used to purchase shares of Company Common
Stock. Messrs. Sylvester and Peat are obligated to repay the full amount
of their respective loans without interest beginning on March 1, 1999 and
September 1, 1999, unless the loans become due earlier. Mr. Holloman is
obligated to repay the full amount of his loan without interest beginning
on March 1, 1999, unless the loan becomes due earlier. The loans become
due before their respective repayment dates if Messrs. Sylvester, Peat or
Holloman sell the Common Stock purchased with the proceeds of the
respective loan.
During fiscal year 1998, the Company retained the law firm of Warner
Norcross & Judd LLP to perform certain legal services for the Company.
Stephen C. Waterbury, a director of the Company, is a partner in Warner
Norcross & Judd LLP. The Company plans to continue to retain Warner
Norcross & Judd LLP in the future for certain legal matters.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on the Company's Common Stock to the Standard & Poor's 500 Stock Index and
an industry index comprised of the common stock of nine companies in the
computer software industry (the "Peer Group"), assuming an investment of
$100 over a five-year period ended April 30, 1998, using 1993 as a base
period. The Standard & Poor's 500 Stock Index is a broad equity market
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index published by Standard & Poor's. The Peer Group was selected by the
Company and includes the companies listed in the footnote to the graph
below. Cumulative total return is measured by dividing (i) the sum of (a)
the cumulative amount of dividends for the measurement period, assuming
dividend reinvestment, and (b) the difference between the share price at
the end and the beginning of the measurement period; by (ii) the share
price at the beginning of the measurement period.
The dollar values for total shareholder return plotted in the graph
below are shown in the following table:
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Manatron $100.00 $167.08 $130.31 $ 65.16 $ 70.17 $155.37
S & P 500 100.00 105.32 123.72 161.09 201.58 284.36
Peer Group 100.00 155.22 206.60 186.49 161.28 320.49
</TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
[STOCK PERFORMANCE GRAPH]
- ------------------------
<F*> The Peer Group includes Barrister Information Systems Corp.; Business
Records Corporation; Cerner Corp.; Computrac, Inc.; Microlog Corp.; Symix
Systems I; Alpha Technologies, Inc.; and Systems & Computer Technology
Corp.
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers to file reports of ownership
and changes in ownership of shares of Common Stock with the Securities and
Exchange Commission. Directors and officers are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based on its review of the copies of such
reports received by it, or written representations from certain reporting
persons that no reports on Forms 5 were required for those persons for the
1998 fiscal year, the Company believes that its directors and officers
complied with all applicable reporting and filing requirements during the
Company's last fiscal year.
SELECTION OF AUDITORS
The Company selected Arthur Andersen LLP, independent auditors, as its
principal auditors for fiscal year 1998. Representatives of Arthur
Andersen LLP are expected to be present at the 1998 Annual Meeting of
Shareholders, will be provided with the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual
meeting of shareholders must be received by the Company no later than May
11, 1998, to be considered for inclusion in the proxy statement and form of
proxy relating to that meeting. Shareholder proposals should be made in
accordance with Rule 14a-8 issued under the Securities Exchange Act of
1934, as amended, and should be addressed to Secretary of Manatron, Inc.,
2970 South 9th Street, Kalamazoo, Michigan 49009.
SOLICITATION OF PROXIES
The Company will bear all costs of the preparation and solicitation of
proxies, including the charges and expenses of brokerage firms, banks,
trustees, or other nominees for forwarding proxy materials to beneficial
owners. Solicitation of proxies will be made initially by mail. In
addition, directors, officers, and employees of the Company and its
subsidiaries may solicit proxies personally or by telephone or facsimile
without additional compensation. Proxies may be solicited by nominees and
other fiduciaries who may mail materials or otherwise communicate with
beneficial owners of shares held by them. The Company has retained
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Corporate Investor Communications, Inc. at an estimated cost of $3,500,
plus expenses and disbursements, to assist in the solicitation of proxies.
By Order of the Board of Directors
/s/ Jane M. Rix
Kalamazoo, Michigan Jane M. Rix
September 8, 1998 Secretary
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APPENDIX A
MANATRON, INC.
RESTRICTED STOCK PLAN OF 1998
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 ESTABLISHMENT OF PLAN. The Company hereby establishes the
Restricted Stock Plan of 1998 for certain of its employees, including
software development employees and other technical-related employees.
1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide an
opportunity for certain employees of the Company and its Subsidiaries to
acquire shares of Common Stock of the Company thereby giving such persons
an additional incentive to make significant contributions to the long-term
performance and growth of the Company and its Subsidiaries, to join the
interests of employees with the interests of the Company's shareholders
through the opportunity for increased stock ownership and to assist the
Company in attracting, rewarding and retaining employees. The Plan further
is intended to provide flexibility to the Company in structuring long-term
incentive compensation to best promote the foregoing objectives.
SECTION 2
DEFINITIONS
The following words have the following meanings unless a
different meaning is plainly required by the context:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended.
2.3 "Committee" means the Stock Option Committee of the Board who
shall administer the Plan. The Committee shall consist of at least two
members of the Board, all of whom shall be "Non-Employee Directors" (as
defined below). The Board, in its discretion, also may require that
members of the Committee be "outside directors" as defined in the rules
issued under Section 162(m) of the Code.
2.4 "Common Stock" means the common stock, without par value, of the
Company.
<PAGE>
2.5 "Company" means Manatron, Inc., a Michigan corporation, and its
subsidiaries.
2.6 "Consensual Severance" means the voluntary termination of all
employment by the Participant with the Company or any Subsidiary that the
Committee determines to be in the best interests of the Company.
2.7 "Early Retirement" means the voluntary termination of all
employment by a Participant with the written consent of the Committee after
the Participant has attained 55 years of age and completed 10 years of
service with the Company or any Subsidiary.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.9 "Normal Retirement" means the voluntary termination of all
employment by a Participant after the Participant has attained 62 years of
age, or such other age as shall be determined by the Committee in its sole
discretion or as otherwise may be set forth in a Restricted Stock
Agreement.
2.10 "Participant" means the employees of the Company and its
Subsidiaries who are granted Restricted Stock under the Plan.
2.11 "Restricted Period" means a period of time following the date of
the award of the Restricted Stock during which the Restricted Stock is
subject to restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to shares
of Common Stock covered by the same award of Restricted Stock.
2.12 "Restricted Stock" means Common Stock awarded to a Participant
under Section 5 of the Plan.
2.13 "Restricted Stock Agreement" means an agreement between the
Company and a Participant that sets forth the terms and conditions of an
individual award of Restricted Stock.
2.14 "Subsidiary" means a corporation or other entity of which a
majority of the outstanding voting stock or voting ownership interest is
directly or indirectly owned or controlled by the Company or one or more
Subsidiaries.
2.15 "Total Disability" means that the Participant, for physical or
mental reasons, is unable to perform the essential functions of his or her
duties for the Company for 120 consecutive days, or 180 days during any 12-
month period.
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2.16 "Vest" or "vesting" means the time when the restrictions on
transfer of the Restricted Stock lapse or are removed.
SECTION 3
ADMINISTRATION
3.1 POWER AND AUTHORITY. The Committee shall administer the Plan.
Except as limited in this Plan, the Committee shall have full power and
authority to interpret the provisions of the Plan and Restricted Stock
granted under the Plan, to supervise the administration of the Plan and
the Restricted Stock granted under the Plan and to make all other
determinations considered necessary or advisable under the Plan. All
determinations, interpretations and decisions made by the Committee
regarding the Plan shall be final and conclusive, but shall be based on
recommendations of the Company's Chief Executive Officer. The Committee
shall hold its meetings at such times and places as it deems advisable.
Action may be taken by a written instrument signed by all of the members of
the Committee, and any action so taken shall be as effective as if it had
been taken at a meeting duly called and held. The Committee may delegate
recordkeeping, calculation, payment and other ministerial administrative
functions to individuals designated by the Committee, who may be employees
of the Company or its Subsidiaries.
3.2 GRANTS OR AWARDS TO PARTICIPANTS. In accordance with and
subject to the provisions of the Plan, the Committee shall, based upon
recommendations of the Chief Executive Officer, have the authority to
determine all provisions of awards of Restricted Stock as the Committee may
deem necessary or desirable and as are consistent with the terms of the
Plan, including, without limitation, the authority to: (a) determine
whether and when Restricted Stock will be granted, the persons to be
granted Restricted Stock, the amount of Restricted Stock to be granted to
each person and the terms of the Restricted Stock to be granted; (b)
determine and amend vesting schedules, if any; (c) permit delivery or
withholding of stock in payment of the exercise price or to satisfy tax
withholding obligations; and (d) waive any restrictions or conditions
applicable to any Restricted Stock. Restricted Stock shall be granted or
awarded by the Committee, and Restricted Stock may be amended by the
Committee consistent with the Plan, provided that no such amendment may
become effective without the consent of the Participant, except to the
extent that the amendment operates solely to the benefit of the
Participant.
3.3 INDEMNIFICATION OF COMMITTEE MEMBERS. Neither any current or
former member of the Committee nor any individual to whom authority is or
has been delegated shall be personally responsible or liable for any act or
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omission in connection with the performance of powers or duties or the
exercise of discretion or judgment in the administration and implementation
of the Plan. Each person who is or shall have been a member of the
Committee shall be indemnified and held harmless by the Company from and
against any cost, liability or expense imposed or incurred in connection
with such person's or the Committee's taking or failing to take any action
under the Plan. Each such person shall be justified in relying on
information furnished in connection with the Plan's administration by any
appropriate person or persons.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment, a maximum of 100,000
shares of authorized Common Stock may be available for awards of Restricted
Stock under the Plan. Such shares may be authorized but unissued shares.
If any such shares are forfeited through termination of employment or
otherwise before lapse of restrictions, such shares may be reissued in
subsequent grants of Restricted Stock under the Plan.
4.2 LIMITATION UPON AWARDS OF RESTRICTED STOCK. No Participant shall
be granted, during any calendar year, Restricted Stock with respect to more
than 50% of the total number of shares of Common Stock available for awards
of Restricted Stock under the Plan set forth in Section 4.1 of the Plan,
subject to adjustment as provided in Section 4.3 of the Plan.
4.3 ADJUSTMENTS. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or any other change
in the corporate structure or shares of the Company, the aggregate number
and class of shares available for grants or awards under the Plan, together
with award limits and other appropriate terms of this Plan, shall be
appropriately adjusted. No fractional shares shall be issued pursuant to
the Plan, and any fractional shares resulting from adjustments shall be
eliminated from the respective award of Restricted Stock, with an
appropriate cash adjustment for the value of any Restricted Stock
eliminated. If an award of Restricted Stock is canceled, surrendered,
modified, expires or is terminated during the term of the Plan but before
the exercise or vesting of the Restricted Stock in full, the shares subject
to but not purchased or retained by the Participant under the Restricted
Stock shall be available for other awards of Restricted Stock.
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<PAGE>
SECTION 5
RESTRICTED STOCK
5.1 GRANT. A Participant may be granted Restricted Stock under the
Plan. Restricted Stock shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by
the Committee and based on the recommendations of the Company's Chief
Executive Officer. Restricted Stock shall be awarded on the condition that
the Participant remain in the employ of the Company or one of its
Subsidiaries during the Restricted Period. Such condition shall have no
effect on the right of the Company or any Subsidiary to terminate the
Participant's employment at any time. No payment is required from a
Participant for an award of Restricted Stock.
5.2 RESTRICTED STOCK AGREEMENTS. Each award of Restricted Stock
under the Plan shall be evidenced by a Restricted Stock Agreement
containing such terms and conditions, consistent with the provisions of the
Plan, as the Committee and the Chief Executive Officer may deem
appropriate.
5.3 TERMINATION OF EMPLOYMENT.
(a) GENERAL. If a Participant ceases to be employed by the
Company or one of its Subsidiaries for any reason other than the
Participant's death, Total Disability or any other additional
provisions as determined by the Committee pursuant to Section 5.3(c),
then any shares of Restricted Stock still subject to restrictions on
the date of such termination automatically shall be forfeited to the
Company. For purposes of the Plan, the following shall not be deemed
a termination of employment: (i) a transfer of employment among the
Company and its Subsidiaries; (ii) a leave of absence, duly authorized
in writing by the Company, for military service or for any other
purpose approved by the Company if the period of such leave does not
exceed 90 days; or (iii) a leave of absence in excess of 90 days, duly
authorized in writing by the Company, provided the employee's right to
reemployment is guaranteed either by statute or contract. For
purposes of the Plan, termination of employment shall be considered to
occur on the date on which the employee is no longer obligated to
perform services for the Company or any of its Subsidiaries and the
employee's right to reemployment is not guaranteed either by statute
or contract, regardless of whether the employee continues to receive
compensation from the Company or any of its Subsidiaries after such
date.
(b) DEATH OR TOTAL DISABILITY. Unless the terms of a Restricted
Stock Agreement or grant provide otherwise, in the event a Participant
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terminates employment with the Company or one of its Subsidiaries
because of death or Total Disability during the Restricted Period, the
restrictions applicable to the shares of Restricted Stock
automatically shall terminate and the Restricted Stock shall vest as
of the date of termination.
(c) ADDITIONAL PROVISIONS AS DETERMINED BY COMMITTEE. The
Committee may, based upon recommendations of the Chief Executive
Officer, provide provisions in any Restricted Stock Agreement
permitting, or by resolution approve, vesting of all or part of any
Restricted Stock awarded to a Participant upon termination due to
Early Retirement, Normal Retirement or Consensual Severance.
5.4 RESTRICTIONS ON TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents or unless
the terms of a Restricted Stock Agreement provide otherwise, shares of
Restricted Stock shall not be sold, exchanged, transferred, pledged or
otherwise disposed of by a Participant during the Restricted Period
other than to the Company pursuant to subsection 5.3 or 5.4(b) or by
will or the laws of descent and distribution.
(b) FORFEITURE TO THE COMPANY. If any sale, exchange, transfer,
pledge or other disposition, voluntary or involuntary, of Restricted
Stock that has not vested shall be made or attempted during the
Restricted Period, except as provided above in subsections 5.3 and
5.4(a), the Participant's right to the Restricted Stock immediately
shall cease and terminate and the Participant promptly shall forfeit
to the Company any Restricted Stock granted to the Participant that is
still subject to restrictions.
(c) OTHER RESTRICTIONS. The Committee may impose other
restrictions on any Restricted Stock as the Committee deems advisable.
5.5 RIGHTS AS A SHAREHOLDER. During the Restricted Period, a
Participant shall have all rights of a shareholder with respect to his or
her Restricted Stock, including (a) the right to vote any shares at
shareholders' meetings; (b) the right to receive, without restriction, all
cash dividends paid with respect to such Restricted Stock; and (c) the
right to participate with respect to such Restricted Stock in any stock
dividend, stock split, recapitalization or other adjustment in the Common
Stock of the Company or any merger, consolidation or other reorganization
involving an increase or decrease or adjustment in the Common Stock of the
Company. Any new, additional or different shares or other security
received by the Participant pursuant to any such stock dividend, stock
split, recapitalization or reorganization shall be subject to the same
terms, conditions and restrictions as those relating to the Restricted
Stock for which such shares were received.
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5.6 DEPOSIT OF CERTIFICATES; LEGENDING OF RESTRICTED STOCK.
(a) DEPOSIT OF CERTIFICATES. Any certificates evidencing shares
of Restricted Stock awarded pursuant to the Plan shall be registered
in the name of the relevant Participant and deposited, together with a
stock power endorsed in blank, with the Company. Certificates for
shares of Restricted Stock that have vested shall be delivered to the
Participant upon written request within a reasonable period of time.
The Participant shall sign all documents necessary or appropriate to
facilitate such delivery.
(b) LEGEND. Any certificates evidencing shares of Restricted
Stock awarded pursuant to the Plan shall bear the following legend:
This certificate is held subject to the terms and
conditions contained in a restricted stock agreement
that includes a prohibition against the sale or
transfer of the stock represented by this certificate
except in compliance with that agreement, and that
provides for forfeiture upon certain events. A copy of
that agreement is on file in the office of the
Corporation.
After the applicable Restricted Period has expired with respect to an award
of Restricted Stock and the shares of Restricted Stock have vested, a
Participant may request in writing that the restrictive legend be removed
from any certificate delivered to such Participant.
5.7 RESALE. The Participant shall agree not to resell or
redistribute such Restricted Stock after the Restricted Period except upon
such conditions as the Company reasonably may specify to ensure compliance
with federal and state securities laws.
SECTION 6
GENERAL PROVISIONS
6.1 NO RIGHTS TO AWARDS. No Participant or other person shall have
any claim to be granted any Restricted Stock, and there is no obligation of
uniformity of treatment of employees, Participants or holders or
beneficiaries of Restricted Stock. The terms and conditions of the
Restricted Stock of the same type and the determination of the Committee to
grant a waiver or modification of any Restricted Stock and the terms and
conditions thereof need not be the same with respect to each Participant.
6.2 WITHHOLDING. The Company or a Subsidiary shall be entitled to
(a) withhold and deduct from future wages of a Participant (or from other
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amounts that may be due and owing to a Participant from the Company or a
Subsidiary), or make other arrangements for the collection of, all amounts
deemed necessary to satisfy any and all federal, state and local
withholding and employment-related tax requirements attributable to
Restricted Stock, including, without limitation, the grant or vesting of,
or payment of dividends with respect to, Restricted Stock; or (b) require a
Participant promptly to remit the amount of such withholding to the Company
before taking any action with respect to Restricted Stock.
6.3 COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF SHARES. All
Restricted Stock granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to applicable laws,
rules and regulations, and to the requirement that if at any time the
Committee determines that the listing, registration or qualification of the
shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with,
the granting of such Restricted Stock or the issue or purchase of shares
thereunder, such Restricted Stock may not be exercised in whole or in part,
or the restrictions on such Restricted Stock shall not lapse, unless and
until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
6.4 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Subsidiary from adopting or
continuing in effect other or additional compensation arrangements,
including the grant of options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in
specific cases.
6.5 NO RIGHT TO EMPLOYMENT. The grant of Restricted Stock shall not
be construed as giving a Participant the right to be retained in the employ
of the Company or any Subsidiary. The Company or any Subsidiary may at any
time dismiss a Participant from employment, free from any liability or any
claim under the Plan, unless otherwise expressly provided in the Plan or in
any written agreement with a Participant.
6.6 GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the state of Michigan and applicable federal
law, without regard to conflict of law principles.
6.7 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
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SECTION 7
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect April 1, 1998, which is the effective date
of approval by the Board of Directors, provided that Restricted Stock
granted before shareholder approval shall be subject to approval of the
Plan by the Company's shareholders at a regular or special meeting. Unless
earlier terminated by the Board of Directors, no Restricted Stock shall be
granted under this Plan after March 31, 2008.
SECTION 8
TERMINATION AND AMENDMENT
The Board may terminate the Plan at any time, or may from time to time
amend the Plan, provided that no such amendment may impair any outstanding
Restricted Stock without the consent of the Participant, except according
to the terms of the Restricted Stock. No termination, amendment or
modification of the Plan shall become effective with respect to any
Restricted Stock previously granted under the Plan without the prior
written consent of the Participant holding such Restricted Stock unless
such amendment or modification operates solely to the benefit of the
Participant.
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APPENDIX B
MANATRON, INC.
EMPLOYEE STOCK PURCHASE PLAN OF 1998
ARTICLE I
PURPOSE AND COMMENCEMENT
1.1 PURPOSE. The purpose of the Manatron, Inc. Employee Stock
Purchase Plan (the "PLAN") is to secure for Manatron, Inc., a Michigan
corporation (the "COMPANY"), and its shareholders the benefits of the
incentive inherent in the ownership of the Company's capital stock by
present and future employees of the Company and its subsidiaries. The Plan
is intended to comply with the provisions of Sections 421, 423 and 425 of
the Code, and the Plan shall be administered, interpreted and construed in
accordance with such provisions.
1.2 COMMENCEMENT. The Plan shall become effective on April 1, 1998;
PROVIDED, HOWEVER, that in no event shall the Plan become effective unless
within 12 months of the date of its adoption by the Board of Directors it
has been approved by the Company's shareholders.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used in the Plan, the following terms shall have
the following meanings:
(a) "Available Shares" means the shares of Common Stock
available for purchase under the Plan.
(b) "Board of Directors" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code as of 1986, as
amended.
(d) "Committee" means the Stock Option Committee of the Board
of Directors, which will consist of not less than two members of the
Board of Directors.
(e) "Common Stock" means the common stock of the Company,
without par value.
(f) "Company" means Manatron, Inc., a Michigan corporation, and
each of its subsidiaries.
<PAGE>
(g) "Election to Purchase Form" means such form as shall be
approved by the Committee for distribution to Eligible Employees in
connection with participation in the Plan.
(h) "Eligible Employees" means the employees of the Company who
meet the eligibility requirements set forth in Section 5.1 below.
(i) "Fair Market Value" means the closing price reported on The
Nasdaq SmallCap Market (or such other market that the Company's Common
Stock is listed or quoted for trading on) on the Investment Date.
(j) "Investment Date" means the last working day of the third
month in each Plan Quarter.
(k) "Investment Sharebuilder Account" means the account
established on behalf of a Participating Employee pursuant to Section
6.2, in which shares of Common Stock purchased under the Plan are
held.
(l) "Participating Employee" means any Eligible Employee of the
Company who has completed an Election to Purchase Form.
(m) "Payroll Deduction Account" means the account established on
behalf of a Participating Employee pursuant to Section 5.3 below, to
which his or her contributions shall be credited.
(n) "Permanent Disability" means an illness, injury or other
physical or mental condition continuing for at least 180 consecutive
days which results in a Participating Employee's inability to perform
in all material respects the duties he or she customarily performed in
his or her capacity as an employee of the Company.
(o) "Plan" means the Manatron, Inc. Employee Stock Purchase Plan
of 1998 as set forth herein, as it may be amended from time to time.
(p) "Plan Quarter" means each calendar quarter ending on June
30, September 30, December 31 and March 31 of each year. The first
Plan Quarter shall be the Plan Quarter commencing on April 1, 1998 and
ending on June 30, 1998, or such later Plan Quarter as may be
determined by the Board of Directors.
(q) "Purchase Price" means the purchase price for a share of
Common Stock to be paid by a Participating Employee on an Investment
Date, as determined under Section 6.1 below.
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<PAGE>
ARTICLE III
SHARES RESERVED FOR THE PLAN
3.1 NUMBER OF SHARES. There shall be reserved for issuance and
purchase by Eligible Employees under the Plan an aggregate of 100,000
shares of Common Stock, subject to adjustment as provided in Section 7.4.
Of the 100,000 shares of Common Stock available under the Plan, 5,000
shares shall be available for purchase under this Plan on each Investment
Date. If less than all of the shares available for purchase on an
Investment Date are purchased on that Investment Date, the surplus shares
shall remain available for purchase on later Investment Dates.
3.2 AVAILABLE SHARES. Shares of Common Stock available under the
Plan may be shares now or hereafter authorized but unissued, or shares that
were once issued and subsequently reacquired by the Company. If any right
to purchase reserved shares shall not be exercised by any Eligible Employee
for any reason or if such right to purchase shall terminate as provided in
this Plan, such shares which have not been so purchased under the Plan
shall become available under the Plan unless the Plan shall have been
terminated, but such unpurchased shares shall not be deemed to increase the
aggregate number of shares specified above to be reserved for the Plan
(subject to adjustment as provided in Section 7.4).
ARTICLE IV
ADMINISTRATION OF THE PLAN
The Plan shall be administered, at the expense of the Company, by the
Committee. The Committee shall select one of its members as chairman and
shall hold meetings at such times and places as it may determine. The
Committee may request advice or assistance or employ such other persons as
are necessary for proper administration of the Plan. Subject to the
express provisions of the Plan and based on recommendations of the Chief
Executive Officer, the Committee shall have authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it,
and to make all other determinations necessary or advisable in
administering the Plan. All determinations under the Plan shall be final
and binding upon all persons unless otherwise determined by the Board of
Directors.
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<PAGE>
ARTICLE V
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBLE EMPLOYEES. Except as otherwise provided in this Plan,
all present and future employees of the Company shall be eligible to
participate in the Plan; PROVIDED, HOWEVER, no person shall be eligible to
participate in the Plan if:
(a) that person's customary employment by the Company:
(i) is 20 hours or less per week, or
(ii) is not more than five months in any calendar year;
(b) immediately after such participation that person would own
5% or more of the total combined voting power or value of all classes
of stock of the Company;
(c) at the time of such participation the person is not an
employee of the Company; or
(d) that person is a member of a collective bargaining unit.
In determining stock ownership under this Section 5.1, the rules of
Section 425(d) of the Code shall apply, and stock which the employee may
purchase under outstanding options shall be treated as stock owned by the
employee.
5.2 LIMITATIONS. No employee shall acquire the right to purchase
shares of Common Stock which would permit that employee to purchase shares
under all of the Company's employee stock purchase plans at a rate which
exceeds $25,000 of the fair market value of the Common Stock (determined at
the time the right is granted) in each calendar year. For purposes of this
Section 5.2:
(a) the right to purchase stock under an option accrues when the
option (or any portion thereof) first becomes exercisable during the
calendar year;
(b) the right to purchase stock under an option accrues at the
rate provided in the option, but in no case may such rate exceed
$25,000 of the fair market value of such stock (determined at the time
such option is granted) for any one calendar year; and
(c) a right to purchase stock which has accrued during any Plan
Quarter pursuant to the Plan may not be carried over to any other Plan
Quarter.
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<PAGE>
5.3 ELECTION TO PARTICIPATE.
(a) Each Eligible Employee may participate in the Plan by filing
with the Committee an Election to Purchase Form authorizing specified
regular payroll deductions from the Eligible Employee's periodic
compensation. Regular payroll deductions shall be subject to a
minimum deduction of $5 per pay period and a maximum deduction of 10%
of base compensation including sales commissions (not including overtime,
bonuses, etc.). Payroll deductions shall be credited to the
Participating Employee's Payroll Deduction Account. The Company may,
in lieu of payroll deductions, approve equivalent direct payments by a
Participating Employee for deposit in his or her Payroll Deduction
Account. All funds in Payroll Deduction Accounts may be used by the
Company for any corporate purpose.
(b) A Participating Employee may at any time withdraw the
balance accumulated in his or her Payroll Deduction Account and
thereby cease to be a Participating Employee in the Plan. If a
Participating Employee ceases to be an Eligible Employee, no further
payroll deductions shall be made on his or her behalf and the
accumulated balance in his or her Payroll Deduction Account promptly
shall be refunded. A certificate for the full shares of Common Stock
credited to the Participating Employee's Investment Sharebuilder
Account will be forwarded to the Participating Employee. A
Participating Employee may at any time, but not more than once during
any period of 12 months, increase or decrease his or her payroll
deductions by filing a new Election to Purchase Form which shall
become effective on the following payroll date.
5.4 DEATH, RETIREMENT OR PERMANENT DISABILITY.
(a) If a Participating Employee dies during a Plan Quarter, no
further contributions on behalf of the deceased Participating Employee
shall be made. The executor or administrator of the deceased
Participating Employee's estate may elect to withdraw the balance in
the Participating Employee's Payroll Deduction Account by notifying
the Company in writing at least 15 days before the Investment Date in
respect of such Plan Quarter. If no election to withdraw has been
made, the balance accumulated in the deceased Participating Employee's
Payroll Deduction Account shall be used to purchase shares of Common
Stock in accordance with Article VI of this Plan. Any whole shares in
an Investment Sharebuilder Account will be delivered upon request to
the deceased Participating Employee's beneficiary or such other person
designated on the Election to Purchase Form.
(b) If, during a Plan Quarter, a Participating Employee (i)
retires or (ii) incurs a Permanent Disability, no further
B-5
<PAGE>
contributions on behalf of the retired or disabled Participating
Employee shall be made. A retired or disabled Participating Employee
may elect to withdraw the balance in his or her Payroll Deduction
Account by notifying the Company in writing at least 15 days before
the Investment Date. If the event no election to withdraw has been
made, the balance accumulated in the retired or disabled Participating
Employee's Payroll Deduction Account shall be used to purchase shares
of Common Stock in accordance with Article VI of this Plan.
Certificates for shares credited to the Participating Employee's
Investment Sharebuilder Account will be forwarded to the Participating
Employee upon request. If a retired or disabled Participating
Employee dies during the Plan Quarter of such Participating Employee's
retirement or disability and such Participating Employee shall not
have notified the Company of his or her desire to withdraw the balance
in his or her Payroll Deduction Account, the executor or administrator
of such Participating Employee's estate or other legal title holder
shall have all the rights provided pursuant to Section 5.4(a) hereof.
ARTICLE VI
PURCHASES OF COMMON STOCK
6.1 PURCHASE PRICE. The Purchase Price for each share of Common
Stock shall be 85% of the Fair Market Value of such share on the Investment
Date.
6.2 METHOD OF PURCHASE AND INVESTMENT SHAREBUILDER ACCOUNTS.
(a) Except as otherwise provided in this Plan, each
Participating Employee having funds in his or her Payroll Deduction
Account on an Investment Date shall be deemed, without any further
action, to have been granted and to have exercised the right to
purchase the number of whole shares which the funds in his or her
Payroll Deduction Account could purchase at the Purchase Price on the
Investment Date. If the number of Available Shares on an Investment
Date is not sufficient to exhaust all Payroll Deduction Accounts, the
Available Shares shall be allocated in proportion to the funds
available in each Payroll Deduction Account and the surplus in each
Payroll Deduction Account shall be carried forward until the next
Investment Date.
(b) All whole shares purchased (rounded to the nearest dollar)
shall be maintained in separate Investment Sharebuilder Accounts for
Participating Employees. Unless the Participating Employee otherwise
directs, any dividends paid with respect to the whole shares in a
Participating Employee's Investment Sharebuilder Account shall be, in
B-6
<PAGE>
the discretion of the Committee, either distributed to the
Participating Employee or applied to the Payroll Deduction Account for
the purchase of whole shares and shares so purchased shall be added to
the shares held for a Participating Employee in his or her Investment
Sharebuilder Account. Participating Employees will be notified not
less than annually as to the amount and status of their Payroll
Deduction Accounts and Investment Shareholder Accounts.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 TITLE OF ACCOUNTS. Each Investment Sharebuilder Account may be
in the name of the Participating Employee or, if so indicated on the
Election to Purchase Form, in his or her name jointly with a member of the
Participating Employee's family, with right of survivorship. An employee
who is a resident of a jurisdiction which does not recognize such a joint
tenancy may have an Investment Sharebuilder Account in his or her name as
tenant in common with a member of the Participating Employee's family,
without regard of survivorship. With the Committee's consent, a
Participating Employee may be permitted to designate a beneficiary to
receive the Common Stock held in the Participating Employee's Investment
Sharebuilder Account upon death or to transfer the Common Stock held in the
Investment Sharebuilder Account to a revocable trust for the benefit of the
Participating Employee.
7.2 RIGHTS AS A SHAREHOLDER. After a Participating Employee's
Payroll Deduction Account has been charged with the amount of the Purchase
Price, the Participating Employee shall have all of the rights and
privileges of a shareholder of the Company with respect to shares purchased
under the Plan whether or not certificates representing the shares shall
have been issued.
7.3 RIGHTS NOT TRANSFERABLE. Rights under the Plan are not
transferable by a Participating Employee other than by will or the laws of
descent and distribution, and are exercisable during his or her lifetime
only by the Participating Employee.
7.4 ADJUSTMENT. In the event of a subdivision of shares, or the
payment of a stock dividend thereon, the number of shares reserved or
authorized to be reserved under this Plan shall be adjusted proportionately
and such other adjustment shall be made as may be deemed necessary or
equitable by the Board of Directors. In the event of any other change
affecting the shares, such adjustments shall be made as may be deemed
equitable by the Board of Directors to give proper effect to such event,
subject to the limitations of Section 423 of the Code.
B-7
<PAGE>
7.5 AMENDMENT OF THE PLAN. The Board of Directors may at any time,
or from time to time, amend the Plan in any respect, except that, without
the approval of the shareholders, no amendment shall be made (a) increasing
or decreasing the number of shares to be reserved under the Plan (other
than as provided in Section 7.4), (b) changing the percentage of the Fair
Market Value used to determine the Purchase Price, or (c) withdrawing the
administration of the Plan from the Committee. Furthermore, the Plan may
not, without approval of the shareholders, be amended in any way that will
cause the Plan to fail to meet the requirements of Section 423 of the Code.
7.6 TERMINATION OF THE PLAN. The Plan and all rights of Eligible
Employees under the Plan shall terminate:
(a) on March 31, 2003; or
(b) at any time, at the discretion of the Board of Directors,
after the completion of any Plan Quarter.
All funds remaining in a Participating Employee's Payroll Deduction
Account and all Common Stock held in the Participating Employee's
Investment Sharebuilder Account upon termination of the Plan promptly shall
be returned to the Participating Employee.
7.7 GOVERNING LAW; COMPLIANCE WITH LAW. The Plan shall be construed
in accordance with the laws of the state of Michigan, without regard to
conflicts of law principles. The Company's obligation to sell and deliver
shares of Common Stock hereunder shall be subject to all applicable federal
and state laws, rules and regulations and to such approvals by any
regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes or payment of any taxes which
it determines may be required to withhold or pay in connection with a
Participating Employee's participation in the Plan.
7.8 NO ASSIGNMENT. The purchase rights granted under the Plan are
not assignable or transferable by a Participating Employee, other than by
will or the laws of descent and distribution, and are exercisable during
the Participating Employee's lifetime only by the Participating Employee.
Any attempted assignment, transfer or alienation not in compliance with the
terms of the Plan shall be null and void for all purposes and respects.
7.9 INDEMNIFICATION OF COMMITTEE MEMBERS. Each person who is or was
a member of the Committee shall be indemnified and held harmless by the
Company from and against any cost, liability or expense imposed or incurred
in connection with such person's or the Committee's taking or failing to
take any action under the Plan. Each such person shall be justified in
relying upon information furnished in connection with the Plan's
administration by any appropriate person or persons.
B-8
<PAGE>
7.10 NOT AN EMPLOYMENT CONTRACT. This Plan shall not be deemed to
constitute a contract of employment between the Company and any Eligible
Employee or Participating Employee or to be consideration or inducement for
the employment of any Eligible Employee or Participating Employee. This
Plan shall not be deemed to give any Participating Employee or Eligible
Employee the right to be retained as an employee or in any other service of
the Company, or to interfere with the right of the Company to discharge any
Participating Employee or Eligible Employee at any time regardless of the
effect that such discharge shall have upon such person as a participant in
this Plan.
B-9<PAGE>
<PAGE>
APPENDIX C
[FRONT]
PROXY PROXY
MANATRON, INC.
2970 SOUTH 9TH STREET
KALAMAZOO, MICHIGAN 49009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED SHAREHOLDER HEREBY APPOINTS RANDALL L. PEAT AND PAUL
R. SYLVESTER, AND EACH OF THEM, EACH WITH FULL POWER OF SUBSTITUTION,
PROXIES TO REPRESENT THE SHAREHOLDER LISTED ON THE REVERSE SIDE OF THIS
PROXY AND TO VOTE ALL SHARES OF COMMON STOCK OF MANATRON, INC. THAT THE
SHAREHOLDER WOULD BE ENTITLED TO VOTE ON ALL MATTERS WHICH COME BEFORE THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AT THE HOLIDAY INN-WEST, IN
KALAMAZOO, MICHIGAN, ON THURSDAY, OCTOBER 8, 1998, AT 4:00 P.M., AND ANY
ADJOURNMENT OF THAT MEETING.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR APPROVAL OF ALL OF THE
PROPOSALS CONTAINED IN THIS PROXY STATEMENT. THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY COME BEFORE THE MEETING.
PLEASE SIGN, DATE, AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[BACK]
MANATRON, INC.
PLEASE MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. ELECTION OF DIRECTORS
NOMINEES: HARRY C. VORYS, GENE BLEDSOE, FOR ALL
JANE M. RIX AND ALLEN F. PEAT EXCEPT FOR WITHHELD
[ ] [ ] [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY
TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE THROUGH THAT NOMINEE'S NAME
IN THE LIST ABOVE.)
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR ALL NOMINEES
2. APPROVAL OF RESTRICTED STOCK PLAN OF 1998 FOR WITHHELD
[ ] [ ]
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE
RESTRICTED STOCK PLAN
3. APPROVAL OF EMPLOYEE STOCK PURCHASE
PLAN OF 1998 FOR WITHHELD
[ ] [ ]
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE
EMPLOYEE STOCK PURCHASE PLAN
DATED: ________________, 1998
_________________________________
_________________________________
SIGNATURE OF SHAREHOLDER(S)
IMPORTANT -- PLEASE SIGN EXACTLY
AS YOUR NAME(S) APPEARS ON THIS
PROXY. WHEN SIGNING ON BEHALF OF
A CORPORATION, PARTNERSHIP,
ESTATE OR TRUST INDICATE TITLE OR
CAPACITY OF PERSON SIGNING IF
SHARES ARE HELD JOINTLY EACH
HOLDER SHOULD SIGN
C-2
