EXHIBIT 10.1

REVOLVING CREDIT LOAN AGREEMENT

(UNSECURED)

          THIS REVOLVING CREDIT LOAN AGREEMENT made and delivered this 14th day
of January 2005, by and between MANATRON, INC. and COMERICA BANK.

WITNESSETH

          WHEREAS, the Borrower desires to borrow up to Six Million Dollars
($6,000,000) from the Bank from time to time to renew the existing debt of the
Borrower to the Bank and for the working capital needs of the Borrower; and

          WHEREAS, the Bank is willing to supply such financing subject to the
terms and conditions set forth in this Agreement;

          NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower, the Subsidiaries and the Bank agree as
follows:

SECTION 1. DEFINITIONS

          1.1          Defined Terms. As used in this Agreement, the following
terms shall have the following respective meanings:

          "Accounts Receivable" shall mean and include all Accounts, Chattel
Paper and General Intangibles (including, but not limited to Tax Refunds, trade
names, trade styles and goodwill, trade marks, copyrights and patents, and
applications therefor, trade and proprietary secrets, formulae, designs,
blueprints and plans, customer lists, literary rights, licenses and permits,
receivables, insurance proceeds, beneficial interests in trusts and minute books
and other books and records) now owned or hereafter acquired by the Borrower or
any of the Subsidiaries.

          "Affiliate" shall mean, when used with respect to any person, any
other person which, directly or indirectly, controls or is controlled by or is
under common control with such person. For purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.

          "Agreement" shall mean this Revolving Credit Loan Agreement.

          "Bank" shall mean Comerica Bank, a Michigan banking corporation.

          "Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.

--------------------------------------------------------------------------------

          "Borrower" shall mean Manatron, Inc., a Michigan corporation.

          "Business Day" shall mean a day on which the Bank is open to carry on
its normal commercial lending business.

          "Commitment Amount" shall mean $6,000,000.

          "Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to "consolidated" financial statements or data of the Borrower
include consolidation with the Subsidiaries in accordance with GAAP.

          "Contract Rate" shall mean, as of any applicable date of
determination, the interest rate determined in accordance with Section 2.4 of
this Agreement.

          "Current Assets" shall mean for any applicable Persons and as of any
applicable date of determination, all cash, investments, non-affiliated customer
receivables, inventories, unbilled retainages, notes receivable, revenues earned
in excess of billings, deferred tax assets and other assets classified as
current in accordance with GAAP.

          "Current Liabilities" shall mean for any applicable Persons and as of
any applicable date of determination, (i) all liabilities that should be
classified as current in accordance with GAAP, including without limitation any
portion of the outstanding principal of the Note classified as current, plus
(ii) to the extent not otherwise included, all liabilities of such Persons to
any of its Affiliates whether or not classified as current in accordance with
GAAP and all outstanding principal of the Note which is not classified as
current.

          "Debt" shall mean, for any applicable Person(s) and as of any
applicable time of determination thereof, the total liabilities of such
Person(s) at such time, as determined in accordance with GAAP.

          "Debt-to-Tangible Net Worth Ratio" shall mean, for any applicable
Person(s) and as of any applicable time of determination thereof, the ratio of
(i) the total Debt of such Person(s) at such time to (ii) the Tangible Net Worth
of such Person(s) at such time.

          "Default" shall mean a condition or event which, with the giving of
notice or the passage of time, or both, would become an Event of Default.

          "Disbursement Date" shall mean each date upon which the Bank makes the
loan to the Borrower under Section 2.1 of this Agreement.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code.

          "Event of Default" shall mean any of those conditions or events listed
in Section 8.1 of this Agreement.

- 2 -

--------------------------------------------------------------------------------

          "Financial Statements" shall mean all those balance sheets, earnings
statements and other financial data (whether of the Borrower, any of the
Subsidiaries, or otherwise) which have been and are hereafter furnished to the
Bank for the purposes of, or in connection with, this Agreement and the
transactions contemplated hereby, including without limit the following: Balance
Sheet and Earnings Statement dated April 30, 2004.

          "GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied.

          "Indebtedness" shall mean all loans, advances, indebtedness,
obligations and liabilities of the Borrower and each of the Subsidiaries to the
Bank under this Agreement, together with all other indebtedness, obligations and
liabilities whatsoever of the Borrower and each of the Subsidiaries to the Bank,
whether matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, joint or several, due or to become due, now existing or
hereafter arising.

          "Legal Rate" shall mean the maximum interest rate permitted to be paid
by the Borrower or received by the Bank with respect to the Indebtedness
represented by the Note under applicable law.

          "Note" or "Revolving Credit Note" shall mean the $6,000,000 promissory
note of even date from the Borrower conforming to Section 2.3 of this Agreement.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
person succeeding to the present powers and functions of the Pension Benefit
Guaranty Corporation.

          "Permitted Liens" shall mean:

          (i)          liens, mortgages, security interests and encumbrances to
or in favor of Bank;

          (ii)          liens for taxes, assessments or other governmental
charges incurred in the ordinary course of business and for which no interest,
late charge or penalty is attaching or which is being contested in good faith by
appropriate proceedings diligently pursued and, if requested by Bank, bonded in
an amount and manner satisfactory to Bank;

          (iii)          liens, not delinquent, created by statute in connection
with workers' compensation, unemployment insurance, social security, and similar
statutory obligations;

          (iv)          liens in favor of mechanics, materialmen, carriers,
warehousemen or other like statutory or common law liens securing obligations
incurred in good faith in the ordinary course of business that are not yet due
and payable;

          (v)          minor encumbrances or imperfections of title consisting
of existing or future zoning restrictions, existing recorded rights-of-way,
existing recorded easements, existing recorded private restriction or existing
or future public restrictions on the use of real property, none of which
(individually or in the aggregate) materially impairs, or

- 3 -

--------------------------------------------------------------------------------

would materially impair, the present or future use of such property in the
operation of the business for which it is used, or would be violated in any
material respect by any existing or proposed structure or land use or would have
a material adverse effect on the sale or lease of such property, or render title
thereto unmarketable; and

          (vi)          purchase money security interests and liens arising out
of "capitalized leases" securing obligations (including, without limit, all loan
and lease installment payments) not to exceed Two Hundred Fifty Thousand Dollars
($250,000.00), in aggregate, at any time, so long as such security interests and
liens arise substantially contemporaneously with the incurrence of the purchase
money indebtedness or capitalized lease obligation to which it relates, secures
only the respective purchase money indebtedness or capitalized lease obligation
to which it relates, and no other Debt, and covers and extends only to the
respective property and assets to which it relates, and no other property or
assets.

          "Person" or "person" shall mean any individual, corporation,
partnership, joint venture, association, trust, unincorporated association,
joint stock company, government, municipality, political subdivision or agency,
or other entity.

          "Prime Rate" shall mean that annual rate of interest designated by the
Bank as its prime rate, which rate may not be the lowest rate of interest
charged by the Bank to any of its customers, and which rate is changed by the
Bank from time to time.

          "Revolving Loan" shall mean an advance made by the Bank to the
Borrower under Section 2.1 of this Agreement on a Disbursement Date.

          "Subsidiary" shall mean any corporation, association, limited
liability company, partnership or other business entity of which more than fifty
percent (50%) of the outstanding voting stock or other equity interests is owned
or controlled either directly or indirectly by the Borrower or one or more of
its other Subsidiaries, or any combination thereof, or the management of which
is controlled, either directly or indirectly by the Borrower or one or more of
its other Subsidiaries, or any combination thereof.

          "Tangible Net Worth" shall mean, as of any applicable date of
determination: (i) the net book value of all assets of a person (excluding
patents, patent rights, trademarks, trade names, franchises, copyrights,
licenses, goodwill, all other intangible assets, amounts due from employees and
shareholders and prepaid expenses), after all appropriate deductions in
accordance with GAAP (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization), less (ii) all Debt of
such person.

          "Tax Refunds" shall mean refunds or claims for refunds of any taxes at
any time paid by Borrower to the United States of America or any state, city,
county or other governmental entity.

          "Termination Date" shall mean August 1, 2007.

          "UCC" shall mean Public Act 174 of 1962 of the State of Michigan, as
amended.

- 4 -

--------------------------------------------------------------------------------

          1.2          Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with GAAP.

          1.3          Singular and Plural. Where the context herein requires,
the singular number shall be deemed to include the plural, the masculine gender
shall include the feminine and neuter genders, and vice versa.

SECTION 2. COMMITMENT, INTEREST AND FEES

          2.1          Revolving Credit Commitment. Subject to the terms and
conditions of this Agreement, the Bank agrees to make loans to the Borrower on a
revolving basis in such amount as the Borrower shall request pursuant to
Section 2.2 of this Agreement at any time from the date of this Agreement until
the Termination Date, up to an aggregate principal amount outstanding at any
time not to exceed the Commitment Amount, provided that each Disbursement Date
under this Agreement must be a Business Day and provided that the principal
amount of each Revolving Loan must be in the minimum amount of $5,000.

          2.2          Borrowing Procedures.

          2.2.1 Notice. The Borrower shall by telephone (1-800-444-4555, until
the Bank notifies the Borrower of a different number) give the Bank notice of
the Borrower's desire for a Revolving Loan no later than 1:00 p.m. Detroit,
Michigan time in order to have the date of notice be the Disbursement Date,
otherwise the following Business Day shall be the Disbursement Date. Such notice
shall specify the principal amount of the proposed advance for such Revolving
Loan. Prior to such telephone notice, Borrower shall have executed and delivered
to the Bank a telephone notice authorization form satisfactory to the Bank.

          2.2.2 Bank Obligations. The Bank agrees to make the Revolving Loan on
the Disbursement Date established by notice to the Bank from the Borrower
conforming to the requirements of Section 2.2.1 by crediting any deposit account
of the Borrower with the Bank (as specified by the Borrower from time to time)
in the amount of such Revolving Loan, provided, however, that the Bank shall not
be obligated if:

          (a)          Any of the conditions precedent set forth in Section 4 of
this Agreement shall not have been satisfied or waived by the Bank in accordance
with Section 9.3 of this Agreement, or

          (b)          Such proposed Revolving Loan would cause the aggregate
unpaid principal amount of the Revolving Loans outstanding under this Agreement
to exceed the Commitment Amount on the Disbursement Date.

          2.3          Revolving Credit Note. The Revolving Loans shall be
evidenced by the Revolving Credit Note, executed by the Borrower, dated the date
of this Agreement, payable to the Bank on the Termination Date (unless sooner
accelerated pursuant to the terms of this Agreement), and in the principal
amount of the original Commitment Amount. The date and amount of each Revolving
Loan made by the Bank and of each repayment of principal thereon

- 5 -

--------------------------------------------------------------------------------

received by the Bank shall be recorded by the Bank in its records. The aggregate
unpaid principal amount so recorded by the Bank shall constitute the best
evidence of the principal amount owing and unpaid on the Revolving Credit Note,
absent fraud or obvious error, provided, however, that the failure by the Bank
so to record any such amount or any error in so recording any such amount shall
not limit or otherwise affect the obligations of the Borrower under this
Agreement or the Note to repay the principal amount of all the Revolving Loans
together with all interest accrued or accruing thereon.

          2.4          Interest. The Revolving Credit Note shall bear interest
on the principal balance from time to time outstanding under the Revolving
Credit Note at a rate equal to the Prime Rate of the Bank minus .50% until
maturity, whether by acceleration or otherwise, and thereafter at a rate equal
to three percent (3%) per annum plus the rate otherwise prevailing hereunder,
but in no event to exceed the Legal Rate. Interest shall be payable to the
extent then accrued on the first day of each consecutive calendar month,
beginning February 1, 2005, until maturity (whether by acceleration or
otherwise) and from and after such maturity, on demand. The rate of interest
applicable to the Note shall change as and when the Bank's Prime Rate changes.

          2.5          Maximum Rate. At no time shall the Contract Rate payable
on the Revolving Credit Note be deemed to exceed the Legal Rate. In the event
any interest is charged or received by the Bank in excess of the Legal Rate, the
Borrower acknowledges that any such excess interest shall be the result of an
accidental and bona fide error, and such excess shall first be applied to reduce
the principal then unpaid hereunder (in inverse order of their maturities if
principal amounts are due in installments); second, applied to reduce any
obligation for other indebtedness of the Borrower to the Bank; and third, any
remaining excess returned to the Borrower.

          2.6          Fees.

          2.6.1 Commitment Fee. On August 1, 2005 and on August 1, 2006, the
Borrower shall pay to the Bank a commitment fee of $5,000.

          2.6.2 Preparation Fees. Upon demand of the Bank from time to time, the
Borrower shall pay to the Bank the amount of the expenses (including without
limit attorneys' fees, whether of inside or outside counsel, and disbursements)
incurred by the Bank from time to time in connection with the preparation of
this Agreement and related instruments and/or the making (or preparation for the
making) of advances hereunder.

          2.7          Basis of Computation. The amount of all interest and fees
hereunder shall be computed for the actual number of days elapsed on the basis
of a year consisting of three hundred sixty (360) days.

          2.8          Prepayments.

          2.8.1 Mandatory Payments. The Borrower shall pay to the Bank the
amount, if any, by which the aggregate unpaid principal amount of all Revolving
Loans from time to time exceeds the Commitment Amount, together with all
interest accrued and unpaid on the amount of such excess. Such payment shall be
immediately due and owing without

- 6 -

--------------------------------------------------------------------------------

notice or demand upon the occurrence of any such excess, provided, however, that
any mandatory payment made under this Section 2.8.1 shall not reduce the
Commitment Amount.

          2.8.2 Optional Prepayments. The Borrower, at any time and from time to
time, may prepay the unpaid principal amount of the Revolving Loans in whole or
in part without premium.

          2.9          Basis of Payments. All sums payable by the Borrower to
the Bank under this Agreement or the other documents contemplated hereby shall
be paid directly to the Bank at its office set forth in Section 9.10 hereof in
immediately available United States funds, without set off, deduction or
counterclaim. In its sole discretion, the Bank may charge any and all deposit or
other accounts (including without limit an account evidenced by a certificate of
deposit) of the Borrower with the Bank for all or a part of any Indebtedness
then due; provided, however, that this authorization shall not affect the
Borrower's obligation to pay, when due, any Indebtedness whether or not account
balances are sufficient to pay amounts due.

          2.10          Receipt of Payments. Any payment of the Indebtedness
made by mail will be deemed tendered and received only upon actual receipt by
the Bank at the address designated for such payment, whether or not the Bank has
authorized payment by mail or any other manner, and shall not be deemed to have
been made in a timely manner unless received on the date due for such payment,
time being of the essence. The Borrower expressly assumes all risks of loss or
liability resulting from non-delivery or delay of delivery of any item of
payment transmitted by mail or in any other manner. Acceptance by the Bank of
any payment in an amount less than the amount then due shall be deemed an
acceptance on account only, and the failure to pay the entire amount then due
shall be and continue to be an Event of Default, and at any time thereafter and
until the entire amount then due has been paid, the Bank shall be entitled to
exercise any and all rights conferred upon it herein upon the occurrence of an
Event of Default. Upon occurrence of an Event of Default, the Borrower waives
the right to direct the application of any and all payments at any time or times
thereafter received by the Bank from or on behalf of the Borrower. The Borrower
agrees that the Bank shall have the continuing exclusive right to apply and to
reapply any and all payments received at any time or times hereafter against the
Indebtedness in such manner as the Bank may deem advisable, notwithstanding any
entry by the Bank upon any of its books and records. The Borrower expressly
agrees that to the extent that the Bank receives any payment or benefit and such
payment or benefit, or any part thereof, is subsequently invalidated, declared
to be fraudulent or preferential, set aside or is required to be repaid to a
trustee, receiver, or any other party under any bankruptcy act, state or federal
law, common law or equitable cause, then to the extent of such payment or
benefit, the Indebtedness or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or benefit had
not been made and, further, any such repayment by the Bank, to the extent that
the Bank did not directly receive a corresponding cash payment, shall be added
to and be additional Indebtedness payable upon demand by the Bank.

SECTION 3. REFERENCES TO SUBSIDIARIES

          On the date of this Agreement, the Borrower has no Subsidiaries. All
references in this Agreement to Subsidiaries is for convenience only in the
event that the Borrower acquires any

- 7 -

--------------------------------------------------------------------------------

Subsidiaries after the date hereof in accordance with the terms and conditions
of this Agreement. Any reference to "Subsidiaries" in this Agreement shall not
be deemed a consent or waiver by the Bank of any term or condition of this
Agreement which would be violated by the Borrower upon creation or acquisition
of a Subsidiary.

SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK

          4.1          Conditions to First Disbursement. The obligations of the
Bank under this Agreement are subject to the occurrence, prior to or
simultaneously with the Disbursement Date first occurring, of each of the
following conditions:

          4.1.1 Note. The Borrower shall have executed and delivered the Note to
the Bank.

          4.1.2 Certified Resolutions. The Borrower shall have furnished to the
Bank a copy of resolutions of its Board of Directors authorizing (as
appropriate) the execution, delivery and performance of this Agreement, the
borrowing hereunder, the Revolving Credit Note, and any other documents
contemplated by this Agreement, which shall have been certified by its Secretary
or Assistant Secretary as of the Disbursement Date first occurring as being
complete, accurate and in effect.

          4.1.3 Certified Articles. The Borrower shall have furnished to the
Bank a copy of its Articles of Incorporation including all amendments thereto
and restatements thereof, and all other charter documents, all of which shall
have been certified by the appropriate department of the state of its
incorporation as of a date within thirty days of the Disbursement Date first
occurring.

          4.1.4 Certified Bylaws. The Borrower shall have furnished to the Bank
a copy of its Bylaws, including all amendments thereto and restatements thereof,
which shall have been certified by its Secretary or Assistant Secretary as of
the Disbursement Date first occurring as being complete, accurate and in effect.

          4.1.5 Certificate of Good Standing. The Borrower shall have furnished
to the Bank a certificate of good standing with respect to it, which shall have
been certified by the appropriate department of its state of incorporation as of
a date within thirty days of the Disbursement Date first occurring.

          4.1.6 Certificate of Incumbency. The Borrower shall have furnished to
the Bank a certificate of its Secretary or Assistant Secretary, certified as of
the Disbursement Date first occurring, as of the incumbency and signatures of
its officers signing this Agreement, the Revolving Credit Note, and any
documents contemplated or delivered under this Agreement.

          4.1.7 Opinion of Borrower's Counsel. The Borrower shall have furnished
to the Bank the favorable written opinion of legal counsel to the Borrower,
dated as of the Disbursement Date first occurring, in form and content as may be
requested by the Bank.

- 8 -

--------------------------------------------------------------------------------

          4.1.8 UCC Lien Search. The Bank shall have received UCC record and
copy searches disclosing no notice of any liens or encumbrances filed against
any of the Borrower's assets other than the Permitted Liens.

          4.1.9 Casualty Insurance. The Borrower shall have furnished to the
Bank, in form, content and amounts and with companies satisfactory to the Bank,
casualty insurance policies with loss payable clauses in favor of the Bank,
relating to the assets and properties of the Borrower.

          4.1.10 Approval of Bank Counsel. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by legal counsel for the Bank, and said
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as they shall have
reasonably requested.

          4.2          Conditions to All Disbursements. The obligations of the
Bank to make any Revolving Loan on any Disbursement Date, including, but not
limited to, the Disbursement Date first occurring, are subject to the
occurrence, prior to or on the Disbursement Date related to such Revolving Loan,
of each of the following conditions:

          4.2.1 Certificate. If requested by the Bank, the Bank shall have
received a certificate, executed by the chief executive or chief financial
officer of the Borrower, certified as of such Disbursement Date, and confirming
that, as of such Disbursement Date:

          (a)          No Default or Event of Default has occurred and is
continuing; and

          (b)          The warranties and representations set forth in Section 5
of this Agreement are true and correct on and as of such Disbursement Date.

          4.2.2 Bank Satisfaction. The Bank shall not know or have any reason to
believe that, as of such Disbursement Date:

          (a)          Any Default or Event of Default has occurred and is
continuing:

          (b)          Any warranty or representation set forth in Section 5 of
this Agreement shall not be true and correct; or

          (c)          Any provision of law, any order of any court or other
agency of government or any regulation, rule or interpretation thereof shall
have had any material adverse effect on the validity or enforceability of this
Agreement, the Revolving Credit Note or the other documents contemplated hereby.

          4.2.3 Approval of Bank Counsel. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by legal counsel for the Bank, and said
counsel shall have been furnished with

- 9 -

--------------------------------------------------------------------------------

such certified copies of actions and proceedings and such other instruments and
documents as they shall have reasonably requested.

SECTION 5. WARRANTIES AND REPRESENTATIONS

          On a continuing basis from the date of this Agreement until the later
of the Termination Date or when the Indebtedness is paid in full and the
Borrower has performed all of its other obligations hereunder, the Borrower and
each of the Subsidiaries represent and warrant to the Bank that:

          5.1          Corporate Existence and Power. (a) the Borrower and the
Subsidiaries each is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, (b) the Borrower and
the Subsidiaries each has the power and authority to own its properties and
assets and to carry out its business as now being conducted and is qualified to
do business and is in good standing in every jurisdiction wherein such
qualification is necessary and where the failure to be so qualified would have a
material adverse effect on the properties, businesses, prospects or condition
(financial or otherwise) of the Borrower or of the Borrower and the Subsidiaries
taken as a whole, and (c) the Borrower and the Subsidiaries each has the power
and authority to execute, deliver and perform this Agreement, to borrow money in
accordance with its terms, to execute, deliver and perform the Revolving Credit
Note and other documents contemplated hereby and to do any and all other things
required of each hereunder.

          5.2          Authorization and Approvals. The execution, delivery and
performance of this Agreement, the borrowings hereunder and the execution,
delivery and performance of the Revolving Credit Note and other documents
contemplated hereby (a) have been duly authorized by all requisite corporate
action of the Borrower and each of the Subsidiaries, (b) do not require
registration with or consent or approval of, or other action by, any federal,
state or other governmental authority or regulatory body, or, if such
registration, consent or approval is required, the same has been obtained and
disclosed in writing to the Bank, (c) will not violate any provision of law, any
order of any court or other agency of government, the Articles of Incorporation
or Bylaws of the Borrower or any of the Subsidiaries, any provision of any
indenture, note, agreement or other instrument to which the Borrower or any of
the Subsidiaries is a party, or by which any of them or any of their properties
or assets are bound, (d) will not be in conflict with, result in a breach of or
constitute (with or without notice or passage of time) a default under any such
indenture, note, agreement or other instrument, and (e) will not result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Borrower or any of the
Subsidiaries other than in favor of the Bank and as contemplated hereby.

          5.3          Valid and Binding Agreement. This Agreement, the
Revolving Credit Note and all other documents contemplated hereby have been
appropriately executed and delivered, and are valid and binding obligations of
the Borrower and the Subsidiaries in accordance with their terms (as to the
documents executed by each of them).

          5.4          Actions, Suits or Proceedings. There are no actions,
suits or proceedings, at law or in equity, and no proceedings before any
arbitrator or by or before any governmental

- 10 -

--------------------------------------------------------------------------------

commission, board, bureau, or other administrative agency, pending, or, to the
best knowledge of the Borrower, threatened against or affecting the Borrower or
any of the Subsidiaries or any properties or rights of the Borrower, or any of
the Subsidiaries, which, if adversely determined, could materially impair the
right of the Borrower or any of the Subsidiaries to carry on business
substantially as now conducted or could have a material adverse effect upon the
financial condition of the Borrower and the Subsidiaries taken as a whole.

          5.5          No Liens, Pledges, Mortgages or Security Interests.
Except for Permitted Liens, none of the Borrower's or any of the Subsidiaries'
assets and properties are subject to any mortgage, pledge, lien, security
interest or other encumbrance of any kind or character.

          5.6          Accounting Principles. All consolidated and consolidating
balance sheets, earnings statements and other financial data furnished or to be
furnished to the Bank for the purposes of, or in connection with, this Agreement
and the transactions contemplated by this Agreement, have been prepared in
accordance with GAAP, and do or will fairly present the financial condition of
the Borrower and the Subsidiaries, as of the dates, and the results of their
operations for the periods, for which the same are furnished to the Bank.
Without limiting the generality of the foregoing, the Financial Statements have
been prepared in accordance with GAAP (except as disclosed therein) and fairly
present the financial condition of the Borrower and the Subsidiaries, as of the
dates, and the results of their operations for the fiscal periods, for which the
same are furnished to the Bank. Neither the Borrower nor any of the Subsidiaries
has any material contingent obligations, liabilities for taxes, long-term leases
or unusual forward or long-term commitments not disclosed by, or reserved
against in, the Financial Statements.

          5.7          Financial Condition. On a consolidated basis: the
Borrower is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and has assets the fair market value of
which exceeds its liabilities; and the Borrower will not be rendered insolvent,
undercapitalized or unable to pay maturing debts by the execution or performance
of this Agreement or the other documents contemplated hereby. There has been no
material adverse change in the business, properties or condition (financial or
otherwise) of the Borrower or any of the Subsidiaries since the date of the
latest of the Financial Statements.

          5.8          Conditions Precedent. As of each Disbursement Date, all
appropriate conditions precedent referred to in Section 4 hereof shall have been
satisfied or waived in writing by the Bank.

          5.9          Taxes. The Borrower and the Subsidiaries each has filed
by the due date therefor all federal, state and local tax returns and other
reports it is required by law to file, has paid or caused to be paid all taxes,
assessments and other governmental charges that are shown to be due and payable
under such returns (except to the extent being contested in good faith and
reserved for or bonded in a manner satisfactory to the Bank), and has made
adequate provision for the payment of such taxes, assessments or other
governmental charges which have accrued but are not yet payable. On the date
hereof, the Borrower and the Subsidiaries have no knowledge of any deficiency or
assessment in connection with any taxes, assessments or other governmental
charges not adequately disclosed in the Financial Statements.

- 11 -

--------------------------------------------------------------------------------

          5.10          Compliance with Laws. The Borrower and the Subsidiaries
each has complied with all applicable laws, to the extent that failure to comply
would materially interfere with the conduct of the business of the Borrower or
any of the Subsidiaries.

          5.11          Indebtedness. On the date hereof, except as disclosed on
Schedule 5.11 attached hereto, neither the Borrower nor any of the Subsidiaries
has any indebtedness for money borrowed or any direct or indirect obligations
under any leases (whether or not required to be capitalized under GAAP) or any
agreements of guarantee or surety except for the endorsement of negotiable
instruments in the ordinary course of business for deposit or collection.

          5.12          Material Agreements. All material leases, contracts or
commitments of any kind of the Borrower or any of the Subsidiaries (including,
without limitation, employment agreements, collective bargaining agreements,
powers of attorney, distribution contracts, patent or trademark licenses,
contracts for future purchase or delivery of goods or rendering of services,
bonus, pension and retirement plans, or accrued vacation pay, insurance and
welfare agreements) necessary for the conduct of any of their businesses are in
full force and effect; to the best knowledge of the Borrower and each of the
Subsidiaries, all parties to such agreements have complied with the material
provisions of such leases, contracts or commitments; and to the best knowledge
of the Borrower and each of the Subsidiaries, no party to such agreements is in
material default thereunder, nor has there occurred any event which with notice
or the passage of time, or both, would constitute such a material default.

          5.13          Margin Stock. Neither the Borrower nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, and no part of the proceeds of any loan hereunder
will be used, directly or indirectly, to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying any margin
stock or for any other purpose which might violate the provisions of Regulation
G, T, U or X of the said Board of Governors. Neither the Borrower nor any of the
Subsidiaries own any margin stock.

          5.14          Pension Funding. Neither the Borrower nor any of the
Subsidiaries has incurred any material accumulated funding deficiency within the
meaning of ERISA or incurred any material liability to the PBGC in connection
with any employee benefit plan established or maintained by the Borrower or any
of the Subsidiaries and no reportable event or prohibited transaction, as
defined in ERISA, has occurred with respect to such plans.

          5.15          Misrepresentation. Except for projections provided by
the Borrower to the Bank prior to the date hereof which constitute good faith
estimates of the Borrower, if any, no warranty or representation by the Borrower
or any of the Subsidiaries contained herein or in any certificate or other
document furnished by the Borrower or any of the Subsidiaries pursuant hereto
contains any untrue statement of material fact or omits to state a material fact
necessary to make such warranty or representation not misleading in light of the
circumstances under which it was made. There is no fact which the Borrower or
any of the Subsidiaries has not disclosed to the Bank in writing which
materially and adversely affects nor, so far as the Borrower or any of the
Subsidiaries can now foresee, is likely to prove to affect materially and
adversely the business, operations, properties, prospects, profits or condition
(financial or otherwise) of the

- 12 -

--------------------------------------------------------------------------------

Borrower or any of the Subsidiaries or ability of the Borrower or any of the
Subsidiaries to perform this Agreement or the Guarantys.

          5.17          Subsidiaries Shares and Shareholders. The Borrower has
no Subsidiaries and there are no outstanding options, warrants or rights to
purchase, nor any agreement for the subscription, purchase or acquisition of,
any shares of the capital stock of, or interests in, any Person, which if
exercised or consummated would result in such Person becoming a Subsidiary of
the Borrower.

          5.18          No Conflicting Agreements. Neither the Borrower nor any
of the Subsidiaries is in default under any agreement to which it is a party or
by which it or any of its property is bound, the effect of which might have a
material adverse effect on the business or operations of the Borrower or any of
the Subsidiaries. No provision of the Certificate of Incorporation, By-Laws or
preferred stock, if any, of the Borrower or any of the Subsidiaries, and no
provision of any existing mortgage, indenture, note, contract, agreement,
statute (including, without limitation, any applicable usury or similar law),
rule, regulation, judgment, decree or order binding on the Borrower or any of
the Subsidiaries or affecting the property of the Borrower or any of the
Subsidiaries conflicts with, or requires any consent under, or would in any way
prevent the execution, delivery or carrying out of the terms of, this Agreement
and the documents contemplated hereby, and the taking of any such action will
not constitute a default under, or result in the creation or imposition of, or
obligation to create any lien upon the property of the Borrower or any of the
Subsidiaries pursuant to the terms of any such mortgage, indenture, note,
contract or agreement.

          5.19          Hazardous Materials.

          (a)          Neither the Borrower nor any of the Subsidiaries has used
Hazardous Materials (as defined hereinafter) on or affecting the premises at
which any of them has a place of business (collectively and singly the
"premises") in any manner which violates federal, state or local laws,
ordinances, statutes, rules, regulations or judgments governing the use,
storage, treatment, handling, manufacture, transportation, or disposal of
Hazardous Materials ("Environmental Laws"), and that, to the best of the
Borrower's knowledge, no prior owner of the premises or any current or prior
occupant has used Hazardous Materials on or affecting the premises in any manner
which violates Environmental Laws. The Borrower and the Subsidiaries each
covenants and agrees that neither it nor any occupant shall use, introduce or
maintain Hazardous Materials on the premises in any manner unless done in strict
compliance with all Environmental Laws.

          (b)          The Borrower and the Subsidiaries shall conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions necessary to clean up and remove all Hazardous
Materials on or affecting the premises, whether caused by them or a third party,
in accordance with all Environmental Laws to the satisfaction of the Bank, and
in accordance with the orders and directives of all federal, state, and local
governmental authorities. Additionally, the Borrower and the Subsidiaries shall
defend, indemnify and hold harmless the Bank, its employees, agents, officers
and directors, from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses of whatever kind or nature
arising out

- 13 -

--------------------------------------------------------------------------------

of or related to (1) the presence, disposal, release or threatened release of
any Hazardous Materials on, from or affecting the premises or the soil, water,
vegetation, buildings, personal property, persons or animals thereon, (2) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Materials, (3) any lawsuit brought
or threatened, settlement reached or governmental order relating to such
Hazardous Materials, (4) the cost of removal of all such Hazardous Materials
from all or any portions of the premises, (5) taking necessary precautions to
protect against the release of Hazardous Materials on or affecting the premises,
(6) complying with all Environmental Laws and/or (7) any violation of
Environmental Laws or requirements of the Bank, which are based upon or in any
way related to such Hazardous Materials including, without limitation,
attorneys' and consultants' fees (said attorneys and consultants to be selected
by the Bank), investigation and laboratory fees, environmental studies required
by the Bank (whether prior to foreclosure or otherwise), court costs and
litigation expenses. Upon request of the Bank, the Borrower and the Subsidiaries
shall execute a separate indemnity covering these same matters.

          (c)          Neither the Borrower nor any of the Subsidiaries has ever
received any notice ("Environmental Complaint") of any violations of
Environmental Laws (and, within five days of receipt of any Environmental
Complaint the Borrower shall give the Bank a copy thereof), and to the best of
each of their knowledge, there have been no actions commenced or threatened by
any party for noncompliance with any Environmental Laws.

          (d)          The provisions of this section shall be in addition to
any and all other obligations and liabilities the Borrower may have to the Bank
at common law or pursuant to any other agreement and, notwithstanding anything
in Section 9.13 hereof to the contrary, shall survive (i) the repayment of all
sums due under the Revolving Credit Note and the other loan documents executed
in connection herewith and the repayment of all other Indebtedness, and (ii) the
satisfaction of all of the other obligations of the Borrower hereunder and under
the other loan documents.

          (e)          "Hazardous Materials" includes, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local governmental law, ordinance, rule, or regulation.

          5.20          Chief Executive Office.

          The mailing address and location of the chief executive office of: the
Borrower is 510 East Milham, Portage, Michigan 49002. The address of each office
or other place of

- 14 -

--------------------------------------------------------------------------------

business of the Borrower and each of the Subsidiaries is set forth on Schedule
5.20 attached hereto.

          5.21          Copyrights and Patents.

          Neither the Borrower nor any of the Subsidiaries owns or holds any
registered trademarks, copyrights or patents which are material to any of their
businesses, except such registered trademarks, copyrights and patents in which
the Bank has been granted a perfected lien by instruments recorded with the
appropriate office of registration thereof.

SECTION 6. AFFIRMATIVE COVENANTS

          On a continuing basis from the date of this Agreement until the later
of the Termination Date or when the Indebtedness is paid in full and the
Borrower has performed all of its other obligations hereunder, the Borrower and
the Subsidiaries each covenants and agrees that it will:

          6.1          Financial and Other Information.

          6.1.1 Annual Financial Reports. Furnish to the Bank, in form and
reporting basis satisfactory to the Bank, not later than ninety (90) days after
the close of each fiscal year of the Borrower, beginning with the fiscal year
ending April, 2005: financial statements of the Borrower on a consolidated basis
containing the balance sheet of the Borrower as of the close of each such fiscal
year, statements of income and retained earnings and a statement of cash flows
for each such fiscal year, and such other comments and financial details as are
usually included in similar reports. Such reports shall be prepared in
accordance with GAAP and audited by independent certified public accountants of
recognized standing selected by the Borrower and acceptable to the Bank and
shall contain unqualified opinions (except for qualifications as to application
of changes in accounting principles to prior years) as to the fairness of the
statements therein contained.

          6.1.2 Quarterly Financial Statements. Furnish to the Bank not later
than forty-five (45) days after the close of each quarter of each fiscal year of
the Borrower, beginning with the fiscal quarter ending January 31, 2005,
financial statements on a consolidated and consolidating basis containing the
balance sheet of the Borrower as of the end of each such period, statements of
income and retained earnings of the Borrower and a statement of cash flows of
the Borrower for the portion of the fiscal year up to the end of such period,
and such other comments and financial details as are usually included in similar
reports. These statements shall be prepared on the same accounting basis as the
statements required in Section 6.1.1 of this Agreement and shall be in such
detail as the Bank may reasonably require, and the accuracy of the statements
shall be certified by the chief executive or financial officer of the Borrower.

          6.1.3 No Default Certificate. Together with each delivery of the
financial statements required by Sections 6.1.1 and 6.1.2 of this Agreement,
furnish to the Bank a certificate of its chief executive or financial officer,
certified as of such date, and confirming that, as of such date to the best of
such officer's knowledge:

- 15 -

--------------------------------------------------------------------------------

          (a)          No Default or Event of Default has occurred and is
continuing; and

          (b)          The warranties and representations set forth in Section 5
of this Agreement are true and correct on and as of such date.

          6.1.4 Adverse Events. Promptly inform the Bank of the occurrence of
any Default or Event of Default, or of any other occurrence which has or could
reasonably be expected to have a materially adverse effect upon the Borrower's
or any of the Subsidiaries' business, properties, or financial condition or upon
the Borrower's ability to comply with its obligations hereunder.

          6.1.5 Shareholder Reports. Promptly furnish to the Bank upon becoming
available a copy of all financial statements, reports, notices, proxy statements
and other communications sent by the Borrower or any of the Subsidiaries to
their stockholders, and all regular and periodic reports filed by the Borrower
or any of the Subsidiaries with any securities exchange, the Securities and
Exchange Commission (including, but not limited to, Form 10-K's and 10-Q's), the
Bureau of Commercial Services of the Department of Labor & Economic Growth of
the State of Michigan or any governmental authorities succeeding to any or all
of the functions of said Commission or Bureau.

          6.1.6 Management Letters. Furnish to the Bank, promptly upon receipt
thereof, copies of all management letters and other reports of substance
submitted to the Borrower or any of the Subsidiaries by independent certified
public accountants in connection with any annual or interim audit of the books
of the Borrower or any of the Subsidiaries.

          6.1.7 Other Information As Requested. Promptly furnish to the Bank
such other information regarding the operations, business affairs and financial
condition of the Borrower and the Subsidiaries as the Bank may reasonably
request from time to time and permit the Bank, its employees, attorneys and
agents, to inspect all of the books, records and properties of the Borrower and
the Subsidiaries at any reasonable time.

          6.2          Insurance. Keep its insurable properties (including but
not limited to the Collateral) and the insurable properties of the Subsidiaries
adequately insured and maintain (a) insurance against fire and other risks
customarily insured against under an "all-risk" policy and such additional risks
customarily insured against by companies engaged in the same or a similar
business to that of the Borrower or the Subsidiaries, as the case may be,
(b) necessary worker's compensation insurance, (c) public liability and product
liability insurance, and (d) such other insurance as may be required by law or
as may be reasonably required in writing by the Bank, all of which insurance
shall be in such amounts, containing such terms, in such form, for such
purposes, prepaid for such time period, and written by such companies as may be
satisfactory to the Bank. All such policies shall contain a provision whereby
they may not be canceled or amended except upon thirty (30) days' prior written
notice to the Bank. The Borrower will promptly deliver to the Bank, at the
Bank's request, evidence satisfactory to the Bank that such insurance has been
so procured. If the Borrower fails to maintain satisfactory insurance as herein
provided, the Bank shall have the option to do so, and the Borrower agrees to
repay the Bank upon demand, with interest at the Contract Rate, all amounts so
expended by the Bank.

- 16 -

--------------------------------------------------------------------------------

          6.3          Taxes. Pay promptly and within the time that they can be
paid without late charge, penalty or interest all taxes, assessments and similar
imposts and charges of every kind and nature lawfully levied, assessed or
imposed upon the Borrower or any of the Subsidiaries, and their property, except
to the extent being contested in good faith and, if requested by the Bank,
reserved in an amount and manner satisfactory to the Bank. If the Borrower or
any of the Subsidiaries shall fail to pay such taxes and assessments within the
time they can be paid without penalty, late charge or interest, the Bank shall
have the option to do so, and the Borrower agrees to repay the Bank upon demand,
with interest at the Contract Rate, all amounts so expended by the Bank.

          6.4          Maintain Corporation and Business. Do or cause to be done
all things necessary to preserve and keep in full force and effect the
Borrower's and each of the Subsidiaries' corporate existence, rights and
franchises and comply with all applicable laws; continue to conduct and operate
its and each of the Subsidiaries' business substantially as conducted and
operated during the present and preceding calendar year; at all times maintain,
preserve and protect all franchises and trade names and preserve all the
remainder of its and the Subsidiaries' property and keep the same in good
repair, working order and condition; and from time to time make, or cause to be
made, all needed and proper repairs, renewals, replacements, betterments and
improvements thereto so that business carried on in connection therewith may be
properly and advantageously conducted at all times.

          6.5          Maintain Tangible Net Worth. On a consolidated basis,
maintain a Tangible Net Worth for the Borrower of not less than $10,600,000 at
all times.

          6.6          Maintain Current Ratio. On a consolidated basis, maintain
the ratio of the Borrower's Current Assets to Current Liabilities of not less
than 1.10 to 1.00 at all times.

          6.7          Maintain Debt to Tangible Net Worth. On a consolidated
basis, maintain the ratio of the Borrower's Debt to Tangible Net Worth of not
more than 1.20 to 1.00 at all times.

          6.8          ERISA. (a) At all times meet and cause each of the
Subsidiaries to meet the minimum funding requirements of ERISA with respect to
the Borrower's and Subsidiaries' employee benefit plans subject to ERISA; (b)
promptly after the Borrower knows or has reason to know (i) of the occurrence of
any event which would constitute a reportable event or prohibited transaction
under ERISA, or (ii) that the PBGC or the Borrower has instituted or will
institute proceedings to terminate an employee pension plan, deliver to the Bank
a certificate of the chief financial officer of the Borrower setting forth
details as to such event or proceedings and the action which the Borrower
proposes to take with respect thereto, together with a copy of any notice of
such event which may be required to be filed with the PBGC; and (c) furnish to
the Bank (or cause the plan administrator to furnish to the Bank) a copy of the
annual return (including all schedules and attachments) for each plan covered by
ERISA, and filed with the Internal Revenue Service by the Borrower not later
than ten (10) days after such report has been so filed.

          6.9          Use of Loan Proceeds. Use the proceeds of the loan
hereunder only for the purposes set forth in the recitals to this Agreement.

- 17 -

--------------------------------------------------------------------------------

          6.10           Compliance with Laws. The Borrower and the Subsidiaries
shall each comply with all applicable federal, state and local laws, ordinances,
rules and regulations (including, but not limited to, all environmental laws,
all applicable federal, state and local laws, ordinances, rules and regulations
concerning wage payments, minimum wages, overtime laws and payment of
withholding taxes), obtain and keep in effect all permits, authorizations and
consents necessary to conduct its current and future business operations, and
deliver to the Bank such reports and information in form satisfactory to the
Bank, as the Bank may request from time to time, to establish compliance with
such laws and permit requirements.

SECTION 7. NEGATIVE COVENANTS

          On a continuing basis from the date of this Agreement until the later
of the Termination Date or when the Indebtedness is paid in full and the
Borrower has performed all of its other obligations hereunder, the Borrower and
the Subsidiaries each covenant and agree that it will not:

          7.1          Dividends. Declare or pay any dividends on, or make any
other distribution (whether by reduction of capital or otherwise) with respect
to any shares of its capital stock.

          7.2          Stock Acquisition. Purchase, redeem, retire or otherwise
acquire any of the shares of its capital stock, or make any commitment to do so,
except for acquisitions of its capital stock solely in exchange for the issuance
of other capital stock upon the exercise of options under any existing or future
stock option plan of the Borrower and except for repurchases not exceeding
$500,000 in the aggregate in any fiscal year of the Borrower.

          7.3          Liens and Encumbrances. Create, incur, assume or suffer
to exist any mortgage, pledge, encumbrance, security interest, lien or charge of
any kind upon any of its property or assets (including without limit any charge
upon property purchased or acquired under a conditional sales or other title
retaining agreement or lease required to be capitalized under GAAP) whether now
owned or hereafter acquired other than Permitted Liens.

          7.4          Indebtedness. Incur, create, assume or permit to exist
any indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, or any
other indebtedness whatsoever, except for (a) the Indebtedness, (b) indebtedness
subordinated to the prior payment in full of the Indebtedness upon terms and
conditions approved in writing by the Bank, (c) existing indebtedness to the
extent set forth on attached Schedule 5.11, (d) trade indebtedness incurred and
paid in the ordinary course of business, (e) contingent indebtedness to the
extent permitted by Section 7.6 of this Agreement, (f) indebtedness secured by
Permitted Liens, and (g) seller financed indebtedness related to acquisitions
permitted by Section 7.8 of this Agreement.

          7.5          Extension of Credit. Make loans, advances or extensions
of credit to any Person, except for (a) sales on open account and otherwise in
the ordinary course of business, (b) loans and advances to employees existing on
the date of this Agreement, and (c) loans and advances to employees (in addition
to the advances and loans existing on the date of this Agreement) not exceeding
$100,000 per employee or an aggregate of $1,000,000 outstanding at any one time.

- 18 -

--------------------------------------------------------------------------------

          7.6          Guarantee Obligations. Guarantee or otherwise, directly
or indirectly, in any way be or become responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person,
agreement for the furnishing of funds to any other Person through the furnishing
of goods, supplies or services, by way of stock purchase, capital contribution,
advance or loan, for the purpose of paying or discharging (or causing the
payment or discharge of) the indebtedness of any other Person, or otherwise,
except for the endorsement of negotiable instruments by the Borrower in the
ordinary course of business for deposit or collection.

          7.7          Subordinate Indebtedness. Subordinate any indebtedness
due to it from a Person to indebtedness of other creditors of such Person.

          7.8          Property Transfer, Merger or Lease-Back. (a) Sell, lease,
transfer or otherwise dispose of properties and assets having an aggregate book
value of more than $2,000,000 (whether in one transaction or in a series of
transactions) except as to the sale of inventory in the ordinary course of
business; (b) change its name, enter into a share exchange with or merge into
any other corporation, permit another corporation to merge into it, acquire all
or substantially all the properties or assets of any other Person, enter into
any reorganization or recapitalization or reclassify its capital stock, (except
for acquisitions of all or substantially all of the capital stock, properties or
assets of any other Person for amounts aggregating less than $2,000,000 in any
fiscal year of the Borrower and except for other acquisitions approved by the
Bank in writing, which approval shall be in the sole discretion of the Bank), or
(c) enter into any sale-leaseback transaction.

          7.9          Acquire Securities. Purchase or hold beneficially any
stock or other securities of, or make any investment or acquire any interest
whatsoever in, any other Person, except for: certificates of deposit with
maturities of three years or less of United States commercial banks with
capital, surplus and undivided profits in excess of $100,000,000; direct
obligations of the United States Government maturing within three years from the
date of acquisition thereof; and acquisitions of capital stock allowed by
section 7.8 above.

          7.10          Acquire Fixed Assets. Acquire or expend for, or commit
itself to acquire or expend for fixed assets by lease, purchase or otherwise in
an aggregate amount that exceeds $2,000,000 in any fiscal year, which amount
shall be in addition to the $2,000,000 of acquisitions allowed by section 7.8
above.

          7.11          Pension Plan. (a) Allow any fact, condition or event to
occur or exist with respect to any employee pension or profit sharing plans
established or maintained by it which might constitute grounds for termination
of any such plan or for the court appointment of a trustee to administer any
such plan, or (b) permit any such plan to be the subject of termination
proceedings (whether voluntary or involuntary) from which termination
proceedings there may result a liability of the Borrower or any of the
Subsidiaries to the PBGC which, in the opinion of the Bank, will have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of the Borrower or any of its Subsidiaries.

          7.13          Misrepresentation. Furnish the Bank with any certificate
or other document that contains any untrue statement of a material fact or omits
to state a material fact necessary to

- 19 -

--------------------------------------------------------------------------------

make such certificate or document not misleading in light of the circumstances
under which it was furnished.

          7.14          Margin Stock. Apply any of the proceeds of the Note to
the purchase or carrying of any "margin stock" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.

SECTION 8. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS.

          8.1          Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:

          8.1.1 Failure to Pay Monies. If the Borrower shall fail to pay, when
due, any principal or interest under the Revolving Credit Note or any taxes,
insurance or other amount payable by the Borrower under this Agreement or if the
Borrower or any of the Subsidiaries shall fail to pay, when due, any
indebtedness, obligation or liability whatsoever of the Borrower or any of the
Subsidiaries to the Bank.

          8.1.2 Misrepresentation. If any warranty or representation of the
Borrower in connection with or contained in this Agreement, or if any financial
data or other information now or hereafter furnished to the Bank by or on behalf
of the Borrower or any of the Subsidiaries, shall prove to be false or
misleading in any material respect.

          8.1.3 Noncompliance with Bank Agreement. If the Borrower or any of the
Subsidiaries shall fail to perform in the time and manner required any of its
obligations or covenants under, or shall fail to comply with any of the
provisions of, this Agreement or any other agreement with the Bank to which it
may be a party, which does not involve the failure to make a payment when due
(be it principal, interest, taxes, insurance or otherwise) and which is not
cured by the Borrower or the Subsidiaries within thirty (30) days after the
earlier of the date of notice to the Borrower by the Bank of such Default or the
date the Bank is notified, or should have been notified pursuant to the
Borrower's obligation under Section 6.1.4 hereof, of such Default.

          8.1.4 Other Defaults. If the Borrower or any of the Subsidiaries shall
default in the payment when due of any of its indebtedness (other than to the
Bank) or in the observance or performance of any term, covenant or condition in
any agreement or instrument evidencing, securing or relating to such
indebtedness, and such default be continued for a period sufficient to permit
acceleration of the indebtedness, irrespective of whether any such default shall
be forgiven or waived or there has been acceleration by the holder thereof.

          8.1.5 Judgments. If there shall be rendered against the Borrower or
any of the Subsidiaries one or more judgments or decrees involving an aggregate
liability of $500,000 or more, which has or have become non-appealable and shall
remain undischarged, unsatisfied by insurance and unstayed for more than thirty
(30) days, whether or not consecutive; or if a writ of attachment or garnishment
against the property

- 20 -

--------------------------------------------------------------------------------

of the Borrower or any of the Subsidiaries shall be issued and levied in an
action claiming $500,000 or more and not released or appealed and bonded in an
amount and manner satisfactory to the Bank within thirty (30) days after such
issuance and levy.

          8.1.6 Business Suspension, Bankruptcy, Etc. If the Borrower or any of
the Subsidiaries shall voluntarily suspend transaction of its business; or if
the Borrower or any of the Subsidiaries shall not pay its debts as they mature
or shall make a general assignment for the benefit of creditors; or proceedings
in bankruptcy, or for reorganization or liquidation of the Borrower or any of
the Subsidiaries under the Bankruptcy Code or under any other state or federal
law for the relief of debtors shall be commenced or shall be commenced against
the Borrower or any of the Subsidiaries and shall not be discharged within
thirty (30) days of commencement; or a receiver, trustee or custodian shall be
appointed for the Borrower or any of the Subsidiaries or for any substantial
portion of their respective properties or assets.

          8.1.7 Section 8.1.7 has been intentionally omitted.

          8.1.8 Inadequate Funding or Termination of Employee Benefit Plan(s).
If the Borrower or any of the Subsidiaries shall fail to meet its minimum
funding requirements under ERISA with respect to any employee benefit plan
established or maintained by it, or if any such plan shall be the subject of
termination proceedings (whether voluntary or involuntary) and there shall
result from such termination proceedings a liability of Borrower or any of the
Subsidiaries to the PBGC which in the opinion of the Bank will have a materially
adverse effect upon the operations, business, property, assets, financial
condition or credit of the Borrower or any of the Subsidiaries, as the case may
be.

          8.1.9 Occurrence of Certain Reportable Events. If there shall occur,
with respect to any pension plan maintained by the Borrower or any of the
Subsidiaries any reportable event (within the meaning of Section 4043(b) of
ERISA) which the Bank shall determine constitutes a ground for the termination
of any such plan, and if such event continues for thirty (30) days after the
Bank gives written notice to the Borrower, provided that termination of such
plan or appointment of such trustee would, in the opinion of the Bank, have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of the Borrower or any of the Subsidiaries, as the
case may be.

          8.1.10 Material Loss or Adverse Change. The Bank reasonably believes
that Borrower or any of the Subsidiaries has incurred, or circumstances have
occurred which, with the passage of time, will result in Borrower or any of the
Subsidiaries incurring: (i) a material casualty as to any asset or assets used
in the conduct of the businesses of the Borrower or any of the Subsidiaries
which is not, except for deductibles acceptable to the Bank, fully covered by
insurance conforming to the requirements of section 6.2 hereof; (ii) any
material tax lien or other lien or encumbrance against its properties and
assets; (iii) any material liability under any applicable Environmental Laws; or
(iv) default under or institution of foreclosure proceedings regarding any
material lien of any kind against any property of Borrower or any of the
subsidiaries. For purposes of this section 8.1.10, the term "material" shall
mean a casualty, lien, or liability in excess of $1,000,000.

- 21 -

--------------------------------------------------------------------------------

          8.1.11 RICO. Any action, suit or proceeding is initiated against
Borrower or any of the subsidiaries under any federal or state controlled
substance, gambling or racketeering statute (including, without limit, the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit
or proceeding could result in the confiscation or forfeiture of any portion of
the assets of Borrower or any of the subsidiaries.

          8.2 Acceleration of Indebtedness; Remedies. Upon the occurrence of an
Event of Default, all Indebtedness shall be due and payable in full immediately
at the option of the Bank without presentation, demand, protest, notice of
dishonor or other notice of any kind, all of which are hereby expressly waived.
Unless all of the Indebtedness is then immediately fully paid, the Bank shall
have and may exercise any one or more of its rights and remedies provided by law
or in equity, including, without limitation, the right to set off against the
Indebtedness any amount owing by the Bank to the Borrower or any of the
Subsidiaries and/or any property of the Borrower or any of the Subsidiaries in
possession of the Bank.

          8.3          Cumulative Remedies. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as provided by
law, in equity or by any other document contemplated hereby. Nothing herein
contained is intended, nor shall it be construed, to preclude the Bank from
pursuing any other remedy for the recovery of any other sum to which the Bank
may be or become entitled for the breach of this Agreement by the Borrower.

SECTION 9. MISCELLANEOUS.

          9.1          Independent Rights. No single or partial exercise of any
right, power or privilege hereunder, or any delay in the exercise thereof, shall
preclude other or further exercise of the rights of the parties to this
Agreement.

          9.2          Covenant Independence. Each covenant in this Agreement
shall be deemed to be independent of any other covenant, and an exception or
illegality in one covenant shall not create an exception or illegality in
another covenant.

          9.3          Waivers and Amendments. No forbearance on the part of the
Bank in enforcing any of the its rights under this Agreement, nor any renewal,
extension or rearrangement of any payment or covenant to be made or performed by
the Borrower hereunder, shall constitute a waiver of any of the terms of this
Agreement or of any such right. No Default or Event of Default shall be waived
by the Bank except in a writing signed and delivered by an officer of the Bank,
and no waiver of any other Default or Event of Default shall operate as a waiver
of any Default or Event of Default or of the same Default or Event of Default on
a future occasion. No other amendment, modification or waiver of, or consent
with respect to, any provision of this Agreement or the Note or other documents
contemplated hereby shall be effective unless the same shall be in writing and
signed and delivered by an officer of the Bank.

          9.4          Governing Law. This Agreement, and each and every term
and provision hereof, shall be governed by and construed in accordance with the
internal law of the State of Michigan. If any provisions of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement

- 22 -

--------------------------------------------------------------------------------

shall be construed as if such invalid or unenforceable provisions had never been
contained herein.

          9.5          Survival of Warranties, Etc. All of the Borrower's and
each of the Subsidiaries' covenants, agreements, representations and warranties
made in connection with this Agreement and any document contemplated hereby
shall survive the borrowing and the delivery of the Revolving Credit Note
hereunder and shall be deemed to have been relied upon by the Bank,
notwithstanding any investigation heretofore or hereafter made by the Bank. All
statements contained in any certificate or other document delivered to the Bank
at any time by or on behalf of the Borrower pursuant hereto or in connection
with the transactions contemplated hereby shall constitute representations and
warranties by the Borrower in connection with this Agreement.

          9.6          Costs and Expenses. The Borrower and the Subsidiaries
each agrees that it will reimburse the Bank, upon demand, for all costs and
expenses incurred by the Bank in connection with (i) collecting or attempting to
collect the Indebtedness or any part thereof, (ii) the enforcement of the Bank's
rights or remedies under this Agreement or the other documents contemplated
hereby, (iii) the preparation or making of any amendments, modifications,
waivers or consents with respect to this Agreement or the other documents
contemplated hereby, and/or (v) any other matters or proceedings arising out of
or in connection with any lending arrangement between the Bank and the Borrower,
which costs and expenses include without limit payments made by the Bank for
taxes, insurance, assessments, or other costs or expenses which the Borrower is
required to pay under this Agreement or the other documents contemplated hereby;
audit expenses; court costs and reasonable attorneys' fees (whether in-house or
outside counsel is used, whether legal assistants are used, and whether such
costs are incurred in formal or informal collection actions, federal bankruptcy
proceedings, probate proceedings, on appeal or otherwise); and all other costs
and expenses of the Bank incurred in connection with any of the foregoing.

          9.7          Payments on Saturdays, Etc. Whenever any payment to be
made hereunder shall be stated to be due on a Saturday, Sunday or any other day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension, if any, shall be included in computing
interest in connection with such payment.

          9.8          Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective successors
and assigns; provided, however, that the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the Bank.

          9.9          Maintenance of Records. The Borrower will keep all of its
records concerning its business operations and accounting at its principal place
of business in Portage, Michigan. The Borrower will give the Bank prompt written
notice of any change in its principal place of business, or in the location of
its records.

          9.10          Notices. All notices and communications provided for
herein or in any document contemplated hereby or required by law to be given
shall be in writing (unless expressly provided to the contrary) and, if
personally delivered, effective when delivered at the address below or, in the
case of mailing, effective two (2) days after sending by first class mail,
postage

- 23 -

--------------------------------------------------------------------------------

prepaid, addressed as follows: (a) If to the Borrower, to: Manatron, Inc., 510
East Milham Road, Portage, Michigan 49002. Attention: Paul R. Sylvester and (b)
if to the Bank, to: Comerica Bank, 151 South Rose Street, Kalamazoo, Michigan
49007, Attention: Corporate Banking Department, or to such other address as a
party shall have designated to the other in writing in accordance with this
section.

          9.11          Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures were upon the same
instrument.

          9.12          Headings. Article and section headings in this Agreement
are included for the convenience of reference only and shall not constitute a
part of this Agreement for any purpose.

          9.13          Release and Discharge. Upon full payment of the
Indebtedness and performance by the Borrower of all its other obligations
hereunder, except as provided in Section 5.19 (d) hereof the parties shall
thereupon automatically each be fully, finally and forever released and
discharged from any claim, liability or obligation in connection with this
Agreement and the other documents contemplated hereby.

          9.14          Cumulative Rights; Loan Agreement Controls. The rights
and remedies of the Bank and the duties and obligations of the Borrower and each
of the Subsidiaries under this Agreement and the other documents contemplated
hereby shall be cumulative; provided that in the event of an express conflict
between the provisions of this Agreement and the provisions of any such other
documents, the provisions of this Agreement shall control.

          9.15          Supersede Prior Agreement. This Agreement supersedes and
replaces a letter agreement between the Borrower and the Bank dated May 17,2002.

          9.16          Waiver of Jury Trial. The Borrower, the Subsidiaries and
the Bank hereby irrevocably waive the right to trial by jury with respect to any
and all actions or proceedings at any time in which the Borrower and/or the
Subsidiaries and the Bank are parties arising out of this Agreement or the other
documents contemplated hereby.

          IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first written above.

- 24 -

--------------------------------------------------------------------------------

 

MANATRON, INC.

 

 

 

 

 

By:

/s/ Paul R. Sylvester

--------------------------------------------------------------------------------

 

 

Paul R. Sylvester

 

Its:

President and Chief Executive Officer

 

 

 

 

 

 

 

COMERICA BANK

 

 

 

 

 

By:

/s/ James E. Higgins

--------------------------------------------------------------------------------

 

 

James E. Higgins

 

Its:

Vice President

- 25 -

--------------------------------------------------------------------------------