EXHIBIT 10.3

AGREEMENT

                      THIS IS AN AGREEMENT dated as of July 17, 1986 (the
"Agreement"), between MANATRON, INC., a Michigan corporation, maintaining its
principal executive offices in Kalamazoo, Michigan ("Manatron"), and RANDALL L.
PEAT ("Employee"), who resides at 47801 - 45th Street North, Paw Paw, Michigan
49079.

                      In view of Employee's substantial experience, knowledge
and reputation, the Board of Directors of Manatron believes the interests of the
corporation are best served by the continued employment of Employee, and desires
to provide Employee additional financial and job security.

                      Accordingly, the parties hereto, intending to be legally
bound, hereby agree as follows:

          1.          Employment. Manatron hereby employs Employee, and Employee
hereby accepts this employment, on the terms and subject to the conditions set
forth herein.

          2.          Term of Employment. The term of Employee's employment
under this Agreement shall commence as of July 17, 1986, and shall continue for
a period of five (5) years; provided, however, that during December of each
year, the board of Directors of Manatron shall consider and vote upon whether or
not the term of Employee's employment should be extended for an additional one
(1) year beyond the term then in effect. If the Board of Directors votes to
extend the term of Employee's employment or fails to vote upon such extension
during each such December, then such term shall be increased by one additional
year beyond the term then in effect.

          3.          Compensation. In consideration for his services, Employee
shall be paid a monthly salary, annual bonuses and other fringe benefits, as
determined from time to time by the Board of Directors. For any given year,
Employee's monthly salary and fringe benefits shall in no event be less than
those received by Employee during the prior year; provided, however, that in the
event of a significant decline in the business and profitability of Manatron for
a sustained period of time, such monthly salary and fringe benefits need not be
maintained at then current levels if, after reasonable notice to Employee, at
least two thirds (2/3) of the entire Board of Directors reasonably determine
that it would not be in the best interests of Manatron to continue such monthly
salary and fringe benefits at then current levels. Employee's annual bonuses
shall be determined in accordance with a formula which shall in no event be less
favorable to Employee than the formula used during the one-year period prior to
the date hereof; provided, however, that the amount of Employee's annual bonus
for any given year shall not exceed sixty percent (60%) of the total salary paid
to Employee during the one-year period immediately preceding payment of such
bonus. Employee shall be considered for an increase in compensation no less
frequently than once during each one-year period.

          4.          Early Termination.

(a)          Death. If Employee, while in the employ of Manatron, shall die
prior to the expiration of the term of employment, this Agreement shall
terminate upon his death, which for purposes of this Agreement shall be deemed
to have occurred on the last day of the month in which his death shall occur.
Manatron shall continue to pay compensation at the rate then in effect pursuant
to paragraph 3 above for a period of twelve (12) months following the date of
death.

(b)          Disability. If Employee shall be unable to substantially perform
the duties described in Paragraph 6 below for a period of nine (9) successive
months by reason of illness or other similar incapacity or disability, this
Agreement may be terminated as of the end of any calendar month following such
nine (9) months: (i) by Manatron based upon a determination that Employee is
disabled and by notice in writing to that effect to Employee; or (ii) by
Employee by his resignation in writing to Manatron. Any determination as to
whether Employee is disabled shall be made by a licensed physician selected by
agreement of Manatron and Employee or, if they cannot agree upon a physician,
then by a majority of a panel of three licensed physicians, one selected by
Manatron, one selected by Employee, and the third selected by the first two. If
this Agreement is terminated pursuant to this subparagraph 4(b) all of the
rights of Employee to compensation shall cease at the end of the sixth month
following such termination.

(c)          Termination for Cause. Manatron shall have the right to terminate
Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall
be limited to (i) the willful and continued failure by Employee to substantially
perform the duties described in paragraph 6 below (other than any failure
resulting from an illness or other similar incapacity or disability), after a
demand for substantial performance is delivered to Employee on behalf of the
board of directors of Manatron which specifically identifies the manner in which
it is alleged that Employee has not substantially performed his duties, or (ii)
the willful engaging by Employee in misconduct which is materially injurious to
Manatron monetarily or otherwise. For purposes of this subparagraph, no act, or
failure to act on Employee's part shall be considered "willful" unless done, or
omitted to be done, by Employee not in good faith and without reasonable belief
that his action or omission was in the best interests of Manatron.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a notice of termination on behalf of the board of directors of Manatron
after reasonable notice to him and an opportunity for him, together with
counsel, to be heard before the board, finding that in the reasonable opinion of
at least two-thirds (2/3) of the entire board of directors, Employee was guilty
of conduct set forth above in clauses (i) or (ii) of the second sentence of this
subparagraph 4(c) and specifying the particulars thereof in detail.

(d)          Termination by Employee for Good Reason. Employee shall have the
right to terminate his employment for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:

(i)          without Employee's expressed written consent, the assignment to
Employee of any duties inconsistent with Employee's present positions, duties,
responsibilities and status with Manatron or a change in Employee's reporting
responsibilities, titles or offices as presently in effect, or any removal of
Employee from or any failure to reelect Employee to any of such positions,
except in connection with the termination of Employee's employment by Manatron
due to the death of Employee, the disability of Employee as determined under
subparagraph 4(b) above, or Cause as determined under subparagraph 4(c) above,
or by Employee other than for Good Reason;

(ii)          a reduction by Manatron in Employee's monthly salary as in effect
on the date hereof or as the same may be increased from time to time; or the
failure by Manatron to increase such monthly salary each year by a percentage
which at least equals the average percentage which at least equals the average
percentage increase in monthly salary for all other executive officers for the
then current calendar year;

(iii)          a reduction or termination by Manatron of Employee's bonus
compensation formula;

(iv)          the relocation of Manatron's principal executive offices to a
location outside Kalamazoo County, Michigan, or Manatron's requiring Employee to
be based anywhere other than Manatron's principal executive offices except for
required travel on Manatron's business to an extent substantially consistent
with Employee's present business travel obligations;

(v)          the failure by Manatron to continue in effect any benefit or
compensation plan, pension plan, life insurance plan, health and accident plan
or disability plan in which Employee is participating (or plans providing
Employee with benefits which are at least as favorable as the benefits of the
discontinued plan or plans), the taking of any action by Manatron which would
adversely affect Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any material fringe
benefit enjoyed by Employee, or the failure by Manatron to provide Employee with
the number of paid vacation days to which Employee is then entitled on the basis
of years of service with Manatron in accordance with Manatron's normal vacation
policy in effect on the date hereof;

(vi)          the failure of Manatron to obtain the agreement of any successor
to assume and perform this Agreement as contemplated in paragraph 8 hereof; or

(vii)          the failure of Manatron to fulfill any of its obligations under
this Agreement.

          5.          Severance Pay. If the Employee's employment under this
Agreement shall be terminated prior to the expiration of the term of employment
by Employee for Good Reason, or by Manatron for any reason other than the death
of Employee, the disability of Employee as determined under subparagraph 4(b)
above, or Cause as determined under subparagraph 4(c) above, Employee shall be
entitled to receive the following during the remainder of the term of employment
(the "compensation period");

                      (a)          Monthly severance payments which shall
continue for the term of the compensation period. The amount of each monthly
payment shall be equal to Employee's monthly salary for the last full month
immediately preceding his termination plus one-twelfth (1/12) of the lesser of:

          (i)          his average annual bonus for the two (2) calendar years
immediately preceding his termination; or

          (ii)          sixty percent (60%) of the total salary paid to Employee
during the one-year period immediately preceding his termination.

                      (b)          continued treatment as an "employee" under
any stock option, employee benefit or other long-term compensation arrangement
for the term of the compensation period. In the event Employee's participation
in any such plan or program is barred or otherwise prevented, Manatron-shall
provide Employee with benefits substantially similar to and not less favorable
than the benefits which Employee would otherwise be entitled to receive under
such plan or program;

                      (c)          out-placement services selected by Employee;

                      (d)          during the compensation period, Manatron
shall maintain in full force and effect for the continued benefit of Employee -
each employee welfare benefit plan (as such term is defined in the Employment
Retirement Income Security Act of 1974, as amended) in which Employee was
entitled to participate immediately prior to the date of his termination. In the
event Employee's participation in any such plan is barred or otherwise
prevented, Manatron shall provide Employee with benefits substantially similar
to and not less favorable than the benefits which Employee would otherwise be
entitled to receive under such plan;

                      (e)          in addition to the retirement benefits to
which Employee is entitled under the Manatron, Inc. Pension Plan, as amended
from time to time or any successor or predecessor plan (the "Pension Plan"),
Manatron shall pay a supplemental retirement benefit hereunder (the
"Supplemental; Benefit"). The Supplemental Benefit, subject to the reduction
described below, shall be determined in accordance with and payable in the form
and at the times provided in the Pension Plan, assuming Employee is fully vested
under the Pension Plan and has credited service under the Pension Plan for
full-time employment for the remainder of the compensation period. The amount of
the benefit shall be based upon the greater of Employee's average monthly
compensation under the Pension Plan at the time of termination or Employee's
average monthly compensation determined by including subparagraph 5(a) above.
The Supplemental Benefit shall be reduced by the amount of the retirement
benefit actually payable from the Pension Plan. For purposes of this
subparagraph, the term "retirement benefit" shall include any benefit payable
under the Pension Plan including any death benefit, disability benefit,
survivors benefit or other benefit payable to Employee or with respect to
Employee's participation in the Pension Plan;

                      (f)          a reimbursement for all legal fees and
expenses incurred by Employee as a result of termination (including all such
fees, if any, incurred in contesting or disputing any such termination or in
seeking to enforce any right or benefit provided by this Agreement); and

                      (g)          Manatron shall enable Employee to immediately
exercise in full all stock options, stock appreciation rights, or similar rights
or options, notwithstanding the fact that such options might not be exercisable
in full at that time under their terms, or under the terms of any plan,
agreement or similar arrangement under which they were granted.

                      Employee shall not be required to mitigate the amount of
any payments of severance benefits provided in this paragraph 5 by seeking other
employment or otherwise, nor shall the amount of any payment provided in this
paragraph 5 be reduced by any compensation earned by Employee as a result of his
employment with another employer after termination, or otherwise.

          6.          Duties. Employee shall be employed as the Vice President
and Secretary of Manatron. If by reason of a consolidation, merger, combination
or other reorganization of Magnetron the business of Manatron is continued under
some other corporate entity, Employee shall be employed in substantially the
same capacity with such other entity with the same authority and responsibility
as he enjoyed at the time of such transaction. During the period of his
employment by Manatron, Employee shall devote substantially his entire business
time and energy to the business and affairs of Manatron and will use his
reasonable best efforts to perform his duties as an executive officer of
Manatron.

          7.          No Parachute Payments. Notwithstanding any contrary
provision of this Agreement, Manatron shall not make any payment to Employee
which would be a "parachute payment" as defined in Section 28OG(b)(2) of the
Internal Revenue Code, and which would cause any payments made to Employee to be
subject to an excise tax payable by Employee. If any "parachute payment" would
otherwise be made under this Agreement, the remaining payments due to Employee
shall be adjusted to reduce the present value of such payments to the extent
that no "parachute payment" will be made. In Employee's sole discretion, such
reduction may be effected by eliminating any payments, by reducing the amount of
any payments, or by extending the date upon which any payments would otherwise
be due. In the event a dispute over whether any payment provided for under this
Agreement would be a "parachute payment," the opinion of Employee's attorneys or
certified public accountants shall be conclusive and binding upon the parties.

          8.          Loyalty, Inventions and Secrecy.

                      (a)          Employee agrees that during the term of this
Agreement and thereafter for a period of two years, without prior approval of
the board of directors:

          (i)          Employee shall not, either for himself or on behalf of
any other person, firm or corporation directly or indirectly, divert or attempt
to divert from the Manatron any business whatsoever or attempt to so influence
any customers with whom Employee may have dealings.

          (ii)          Employee shall not solicit or approach any employee of
the Manatron for the purpose of inducing such employee to terminate his
employment.

          (iii)          All inventions, improvements and developments made or
conceived by Employee, either solely or in collaboration with others, during his
employment by Manatron whether or not during working hours, and relating to any
methods, apparatus, products or components thereof, which, prior to the end of
his employment, are manufactured, sold, leased, used, or developed by or pertain
to the business of the Manatron, shall become and remain the property of
Manatron, its successors and assigns unless expressly released by Manatron as
hereinafter provided.

          (iv)          Employee shall disclose promptly in writing to Manatron
all said inventions, improvements and developments.

          (v)          At the request of the Manatron and without expense to
him, Employee shall make, execute, and deliver all application papers,
assignments or instruments, and perform or cause to be performed, such other
lawful acts as Manatron may deem necessary or desirable in making or prosecuting
applications, domestic -or foreign, for patents, re-issues, and extensions
thereof, and assist and cooperate with Manatron or its representative in any
controversy or legal proceedings relating to said inventions, improvements and
developments, or to the patents which may be procured thereon.

           (vi)          At the time of leaving the employ of Manatron, Employee
shall deliver to Manatron , and not keep or deliver to anyone else, any and all
materials relating to Manatron's business including without limitation all
customer lists, drawings, blueprints, notes, memoranda, specifications, devices
and documents.

                      (b)          Employee agrees that during the term of this
Agreement and forever thereafter, Employee shall hold in strictest confidence,
and not disclose to any person, firm, or corporation any information,
manufacturing technique, process, formula, development or experimental work,
work in process, business, trade secret, or any other secret or confidential
matter relating to the products, sales or business of Manatron except as such
disclosure or use may be required in connection with his work for Manatron.

                      (c)          Manatron will consider each disclosure
submitted by Employee. The election of whether or not to file a patent
application on such disclosure and the manner of preparation and prosecution of
any patent application or applications filed in the United States of America or
in foreign countries shall be wholly within the discretion of Manatron, and at
its expense.

                      (d)          If Employee petitions Manatron in writing to
release any of his rights to any inventions or improvements which by this
Agreement are assigned to Manatron, the Manatron will promptly consider and act
on such petition, but is not obligated to release any of its rights.

                      (e)          Employee warrants that all unpatented
inventions, improvements and developments which he made, invented, or conceived
prior to entering the employ of Manatron, to which he now claims title, and
which are to be specifically excluded from this Agreement, are completely
described on an attached sheet.

                      (f)          Remedies. Employee recognizes and
acknowledges that in the event of any default in, or breach of any of, the
terms, conditions and provisions of this paragraph 8 of this Agreement (either
actual or threatened) by Employee, Manatron's remedies at law shall be
inadequate. Accordingly, Employee agrees that in such event, the Manatron shall
have the right to specific performance and/or injunctive relief in addition to
any and all other remedies and rights at law or in equity, and such rights and
remedies shall be cumulative.

          9.          Successors; Binding Agreement.

          (a)          Manatron shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Manatron, by agreement in
form and substance satisfactory to Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Manatron
would be required to perform it if no such succession had taken place. Failure
of Manatron to obtain such agreement prior to the effectiveness of any
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from Manatron in the same amount and on the same terms as Employee
would be entitled hereunder if Employee terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. As used in this Agreement, "Manatron" shall mean Manatron and any
successor to Manatron's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Paragraph 8 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.

          (b)          This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to live, all such amount, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.

          9.          Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
State's registered mail, return receipt requested, postage prepaid, addressed to
Employee at the address set forth on the first page of this Agreement, or to
Manatron at its principal executive offices to the attention of the Chief
Executive Officer of Manatron with a copy to the Secretary of Manatron, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon request.

          10.          Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and such officer as may be specifically
designated by the board of directors of Manatron. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
specific subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Michigan.

          11.          Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

          IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.

 

MANATRON, INC.

         

By

 /s/Paul R. Sylvester

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          Paul R. Sylvester  

     Its

 President

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       /s/Randall L. Peat

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Randall L. Peat

 

"Employee"