Document:

Manatron, Inc. Exhibit 10.1 to Form 8-K - 11-03-05

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

          THIS AGREEMENT is made as of the 1st day of November 2005.

BETWEEN:

MANATRON, INC., a corporation incorporated under the laws of the State of Michigan, (the "Purchaser");

PLEXIS GROUP, L.L.C., a wholly owned subsidiary of Beam, Longest & Neff, LLC, an Indiana limited liability company (hereinafter referred to as the "Vendor") 

- and -

BEAM, LONGEST & NEFF, LLC, an Indiana limited liability company (the "Shareholder").

          WHEREAS the Vendor carries on the business of software development, sales and marketing and support of property tax and assessment systems for counties in the State of Indiana; 

          WHEREAS the Vendor desires to sell and the Purchaser desires to purchase certain of the assets and assume certain of the liabilities of the Vendor pertaining to the Business (as hereafter defined), upon and subject to the terms and conditions hereinafter set forth;

          AND WHEREAS, Shareholder owns all of the issued and outstanding equity interests of Vendor and joins in this Agreement to make certain covenants and to guaranty the prompt performance of Vendor's obligations under this Agreement.

          NOW THEREFORE, in consideration of the premises and the covenants and agreements herein contained, the parties hereto agree as follows:

	
1.0
	
INTERPRETATION

	
 
	
1.1
	
Definitions.  In this Agreement, unless something in the subject matter or context is inconsistent therewith:

	 	 	
(a)
	
"Accounts Receivable" has the meaning set out in Section 3.1(s).

	 	 	 	 
	 	 	
(b)
	
"Agreement" means this agreement and all Schedules hereto and all amendments made hereto and thereto by written agreement between the Vendor and the Purchaser.

	 	 	 	 
	 	 	
(c)
	
"Assets" means the assets referred to or described in Section 2.1 other than any Excluded Assets described in Section 2.2.

	 	 	
(d)
	
"Assumed Liabilities" has the meaning set out in Section 2.6.

	 	 	 	 
	 	 	
(e)
	
"Business" means the business of developing, selling and supporting all of the Software products of the Vendor, including without limitation any products that are in the development stage or currently being supported by the Vendor.  The Business includes all versions and modules of the Software.

	 	 	 	 
	 	 	
(f)
	
"Business Day" means a day other than a Saturday, Sunday or statutory holiday in Michigan or Indiana.

	 	 	 	 
	 	 	
(g)
	
"Claims" means all losses, damages, expenses, liabilities, claims and demands of whatever nature or kind including, without limitation, all reasonable legal fees and costs.

	 	 	 	 
	 	 	
(h)
	
"Closing Date" means the date of this Agreement.

	 	 	 	 
	 	 	
(i)
	
"Contracts" means any contract, lease (whether for personal property, real property or both), agreement, entitlement, commitment or license by which the Business is bound or pursuant to which the Vendor has any rights with respect to the Assets including, without limitation, all licenses, support and maintenance contracts applicable to the Software as outlined on Schedule C.

	 	 	 	 
	 	 	
(j)
	
"Excluded Liabilities" has the meaning set out in Section 2.7.

	 	 	 	 
	 	 	
(k)
	
"Intellectual Property" has the meaning set out in Section 2.1(a).

	 	 	 	 
	 	 	
(l)
	
"Interim Date" means May 1, 2005 (six months prior to closing date).

	 	 	 	 
	 	 	
(m)
	
"knowledge" means, with respect to Vendor, the actual knowledge of James Longest, Thomas Longest or Scott Stephens.

	 	 	 	 
	 	 	
(n)
	
"Lien" means any security interest, mortgage, encumbrance, option, lien or charge of any kind created or suffered by Vendor.

	 	 	 	 
	 	 	
(o)
	
"Net Tangible Assets(Liabilities)" are defined as the value of Tangible Assets less the value of Tangible Liabilities as of the close of business on the Closing Date and are set out in Schedule A.

	 	 	 	 
	 	 	
(p)
	
"Note" has the meaning set out in Section 2.4.

	 	 	 	 
	 	 	
(q)
	
"Purchase Price" has the meaning set out in Section 2.3.

	 	 	 	 
	 	 	
(r)
	
"Retained Contracts" has the meaning set out in Section 2.8(a)

	 	 	 	 
	 	 	
(s)
	
"Schedules" means those schedules listed in Section 1.5.

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(t)
	
"Software" means all software and computer programs owned by or licensed to Vendor and used in connection with providing property tax, CAMA and GIS systems to governmental units, including all versions thereof, and all related documentation, manuals, source code and object code, program files, data files, computer related data, field and data definitions and relationships, data definition specifications, data models, program and system logic, interfaces, program modules, routines, sub-routines, algorithms, program architecture, design concepts, system designs, program structure, sequence and organization, screen displays and report layouts related to the Business, and all other material related to the said computer programs, all as they exist at the Time of Closing, whether or not under development or as currently being marketed by the Vendor specifically with respect to the Business.

	 	 	 	 
	 	 	
(u)
	
"Tangible Assets" means tangible assets of Vendor, including without limitation all equipment and other fixed assets, amounts prepaid or deposited with any third parties and accounts receivable other than the Bracken Foster receivable (which relates to the Bio Sentinel investment of Vendor).

	 	 	 	 
	 	 	
(v)
	
"Tangible Liabilities" means tangible liabilities of Vendor, including without limitation all deferred maintenance and costs to complete accruals.

	 	 	 	 
	 	 	
(w)
	
"Time of Closing" means 1:00 p.m. E.S.T. on the Closing Date.

	
 
	
1.2
	
Extended Meanings.  In this Agreement words importing any gender include all genders, words importing the singular number include the plural and vice versa, and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations.

	 	 	 
	 	
1.3
	
Accounting Principles.  Wherever in this Agreement reference is made to a calculation to be made or an action to be taken in accordance with generally accepted accounting principles, such reference will relate to the generally accepted accounting principles from time to time approved by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, or any successor institute, applicable as at the date on which such calculation or action is made or taken or required to be made or taken in accordance with generally accepted accounting principles.

	 	 	 
	 	
1.4
	
Currency.  All references to currency herein are to lawful money of the United States.

	 	 	 
	 	
1.5
	
Schedules.  The following are the Schedules attached hereto and incorporated by reference and deemed to be part hereof:

	 	 	 
	 	 	
Schedule A - Net Tangible Assets(Liabilities);

Schedule B - Software and Intellectual Property;

Schedule C - Customer Listing and Contracts;

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Schedule D - Hired Employees and Employment Agreement; and

Schedule E - Promissory Note

	
2.0
	
SALE AND PURCHASE

	
 
	
2.1
	
Purchase and Sale of Software and Intellectual Property and Other Assets

	 	 	
(a)
	
Upon and subject to the terms and conditions hereof, the Vendor will sell,  convey, assign and transfer in perpetuity to the Purchaser free and clear of all Liens, and Purchaser will purchase from the Vendor, as of and with effect from the Time of Closing, all of Vendor's right, title and interest in and to the following assets (the "Intellectual Property"), other than the Excluded Assets (as defined below):

	 	 	 	
(i)
	
All Software and all intellectual property rights in and to the Software, including without limitation the Software listed on Schedule B; provided that, Purchaser will not purchase the intellectual property rights in and to the Software related to Bio Sentinel;

	 	 	 	 	 
	 	 	 	
(ii)
	
All intellectual property listed on Schedule B;

	 	 	 	 	 
	 	 	 	
(iii)
	
All other intellectual property of the Vendor relating primarily to the Business existing as of the Time of Closing and used or currently being developed for use by the Vendor primarily in connection with the Business, whether registered or unregistered, including without limitation:

	 	 	 	 	
a)
	
Copyrights.  All copyrights in the Software owned by the Vendor and used primarily in connection with the Business, including without limitation, all copyrights in and to the Software and all applications and registrations of such copyrights;

	 	 	 	 	 	 
	 	 	 	 	
b)
	
Trademarks.  All trade-marks, trade-names, service marks, brand names, logos or the like owned by the Vendor and used primarily in connection with the Business, including, without limitation, those listed on Schedule B, whether used in association with wares or services, and all associated goodwill and all applications, registrations, renewals, modifications and extensions of such trade-marks; provided, however, that Vendor shall have up to sixty (60) days after the Closing Date to change its name to a name not involving the word "Plexis";

	 	 	 	 	 	 
	 	 	 	 	
c)
	
Patents.  All patents, patent applications and other patent rights, if any, of the Vendor that are used primarily in connection with the Business, including, without limitation,

4

	 	 	 	 	 	
those listed on Schedule B, including without limitation divisional and continuation patents;

	 	 	 	 	 	 
	 	 	 	 	
d)
	
Name.  All of the Vendor's rights in the names associated with the products listed on Schedule B;

	 	 	 	 	 	 
	 	 	 	 	
e)
	
Technology.  All technology created, developed or acquired by the Vendor in connection with the Software that is used primarily in connection with the Business whether or not patented or patentable and whether or not fixed in any medium whatsoever, including without limitation, all inventions, know how, techniques, processes, procedures, methods, trade secrets, research and technical data, records, formulae, designs, sketches, patterns, specifications, schematics, blue prints, flow charts or sheets, equipment and parts lists and descriptions, samples, reports, studies, findings, algorithms, instructions, guides, manuals, and plans for new or revised products and/or services; and

	 	 	 	 	 	 
	 	 	 	 	
f)
	
Licenses.  All licenses, sub-licenses and franchises related to the Vendor and the Business in which the Vendor and the Business is a licensee or a licensor of intellectual property of a nature described in paragraphs (a)-(e) above;  and

	 	 	 	 	 	 
	 	 	 	 	
iv)
	
For greater certainty, all of the Vendor's rights to develop, modify, market, sell, distribute, license and install the current and any future releases of the Software and Intellectual Property as outlined in Schedule B.

	 	 	
(b)
	
In addition to the assets set forth in Section 2.1(a), upon and subject to the terms and conditions hereof, the Vendor will sell, convey, assign and transfer to the Purchaser, free and clear of all Liens, and the Purchaser will purchase from the Vendor, as of and with effect from the Time of Closing, all of Vendor's right, title and interest in and to the other assets of the Business (other than the Excluded Assets), including but not limited to the following:

	 	 	 	
(i)
	
Net Tangible Assets(Liabilities). The Tangible Assets included in Net Tangible Assets(Liabilities), the details and specifics of which are included in Schedule A;

	 	 	 	 	 
	 	 	 	
(ii)
	
Contracts.  The right, title and interest of the Vendor to and under all Contracts and all other agreements, engagements, commitments and other rights of or pertaining to the Business or to customers of the Vendor, whether written or oral, including without limitation

5

	 	 	 	 	
those Contracts, agreements, engagements, commitments and rights detailed in Schedule C;

	 	 	 	 	 
	 	 	 	
(iii)
	
Warranty Rights.  The full benefit of all representations, warranties, guarantees, indemnities, undertakings, certificates, covenants, agreements and the like and all security therefor received by the Vendor on the purchase or other acquisition of any part of the Assets purchased under this Agreement;

	 	 	 	 	 
	 	 	 	
(iv)
	
Records.  Photocopies of all books, records or files relating to the Business including, without limitation all financial, production, personnel (where allowed under Michigan State law), sales and customer records, exclusive of vendor's tax returns; and

	 	 	
(c)
	
Vendor hereby acknowledges that the Purchase Price payable by Purchaser to Vendor in accordance with the provisions of this Article 2 represents the full and final payment due to Vendor from Purchaser in respect of the purchase of the Assets.  From and after the Time of Closing the Vendor hereby:

	 	 	 	
(i)
	
surrenders all its right, title and interest in and to the Assets;

	 	 	 	 	 
	 	 	 	
(ii)
	
waives all moral rights in the Software and Intellectual Property; and

	 	 	 	 	 
	 	 	 	
(iii)
	
releases the Purchaser from any and all claims which the Vendor now or in the future may have with respect to the Assets.

	 	
2.2
	
Excluded Assets.  Vendor shall not sell, transfer or assign, and Purchaser shall not purchase, the following assets (the "Excluded Assets"):

	 	 	
(a)
	
Vendor's property rights with respect to any software related to Bio Sentinel;

	 	 	 	 
	 	 	
(b)
	
Vendor's accounts receivable from Bracken Foster;

	 	 	 	 
	 	 	
(c)
	
Cash; and

	 	 	 	 
	 	 	
(d)
	
The charter, minute book, any qualifications to conduct business as a foreign entity, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, entity ownership records and tax returns of Vendor and other similar books and records originals of which Vendor is required to maintain under applicable law and copies of records that are reasonably required by Vendor or any of its affiliates to permit the preparation of financial statements, tax returns or other filings or reports to be made after the closing or to otherwise comply with any applicable law.

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2.3
	
Purchase Price and Allocation Thereof.  The purchase price payable by the Purchaser to the Vendor for the Assets (such amount being hereinafter referred to as the "Purchase Price") will be $1.0 million.  Vendor and Purchase shall cooperate to determine an appropriate allocation of the Purchase Price for tax purposes consistent with the principle that all of the Purchase Price other than amounts clearly allocable to accounts receivable will be allocated to the value of assets eligible for capital gains treatment.

	 	 	 
	 	
2.4
	
Payment of Purchase Price.  A certified check, bank draft or wire transfer in the amount of $600,000 shall be payable to the order of the Vendor at the Time of Closing and shall be applied against the Purchase Price.  Purchaser shall deliver a promissory note (the "Note") for the remaining purchase price of $400,000 in the form of Schedule E.  The Note will provide for payment of principal in $200,000 instalments on November 1, 2006 and 2007.  Simple interest provided in the Note will accrue at a floating rate equal to 2% over the rate quoted and announced from time to time by National City Bank as its "prime rate" and shall be paid quarterly in arrears on each February 1, May 1, August 1 and November 1 until the entire principal balance is paid, beginning February 1, 2006.  The Purchaser shall have the option in the Note to prepay unpaid principal and accrued interest with no related penalty.  Amounts due to Vendor under the Note will not be subject to any setoff by Purchaser with respect to any obligation or alleged obligation of Vendor under this Agreement or otherwise.

	 	 	 
	 	
2.5
	
Determination of Amounts; Elections.  The Vendor and the Purchaser covenant and agree with each other that the Purchase Price shall be allocated among the Assets in accordance with the provisions of Section 2.3.  The Vendor and the Purchaser agree to cooperate in the filing of such elections under the Internal Revenue Code and similar tax statutes in the United States or any other jurisdiction as may be necessary or mutually desirable to give effect to such allocation for tax purposes.  The Vendor and the Purchaser agree to prepare and file their respective tax returns in a manner consistent with the aforesaid allocations and elections.

	 	 	 
	 	
2.6
	
Assumption of Obligations and Liabilities.  Except as otherwise expressly provided herein, the Purchaser will assume, fulfill and perform only those executory obligations  and liabilities of the Vendor that arise under the Contracts and other commitments specifically described in Schedule C (or pursuant to which Vendor has possession of any leased assets conveyed to Purchaser by Vendor and shown on Schedule A) and that arise or are to be performed after the Time of Closing (the "Assumed Liabilities").

	 	 	 
	 	
2.7
	
Obligations and Liabilities Not Assumed.

	 	 	
(a)
	
Except for the Assumed Liabilities, Purchaser will not assume or become liable for any obligations, commitments, or liabilities of Vendor whether known or unknown, absolute, fixed, or contingent, whether or not disclosed to Purchaser in this Agreement, the Schedules, or otherwise,

7

	 	 	 	
whether or not imposed upon Purchaser as a successor under applicable law, and whether or not related to the Assets (the obligations and liabilities not expressly assumed by Purchaser hereunder will be retained by Vendor or an affiliate of Vendor, as applicable, and are referred to in this Agreement as the "Excluded Liabilities").  For greater certainty and without limiting the foregoing, the Purchaser will not assume any obligation or liabilities of the Vendor (i) to the IRS or any taxing authority, withholding taxes, claims for overtime, insurance, income taxes, earned but unpaid vacation, pre-closing accounts payable or other accrued expenses, (ii) associated with the Asset Purchase Agreement dated May 7, 2003 by and between Vendor and Resource Information Associates, Inc. or (iii) with respect to the Lease dated January 3, 2000 between Shareholder and Vendor (except for the obligation to reimburse and indemnify Vendor undertaken in Section 7.1).

	 	 	 	 
	 	 	
(b)
	
Purchaser will not be hiring all employees of Vendor.  Those employees who will be hired by Purchaser are outlined in Schedule D.  Vendor will continue to be responsible for and will discharge all obligations and liabilities for wages, severance or termination of employment including without limitation  vacation pay, accrued to the Closing Date in respect of all employees of the Business.  With respect to those employees listed in Schedule D hereof, the Purchaser assumes and will discharge all such obligations and liabilities accruing after the Closing Date.  Upon request by Purchaser, Vendor shall release those employees listed in Schedule D hereof from any noncompete obligation they have to Vendor which would prevent them from being employed by Purchaser.

	
 
	
2.8
	
Restrictions on Assignment and Retained Contracts.

	 	 	
(a)
	
Nothing contained in this Agreement shall be construed as an assignment or an attempt to assign:

	 	 	 	
(i)
	
any permit to be assigned to Purchaser hereunder which, as a matter of law, is not assignable without the approval of the granting body unless such approval shall have been given;

	 	 	 	 	 
	 	 	 	
(ii)
	
any Contract to be assigned to Purchaser hereunder which, as a matter of law, is not assignable without the consent of the other party or parties thereto unless such consent shall have been given (a "Retained Contract"); or

	 	 	 	 	 
	 	 	 	
(iii)
	
any claim or demand thereunder or under any right of action or chose in action as to which all the remedies for the enforcement thereof enjoyed by the Vendor, would not, as a matter of law, pass to Purchaser as an incident of the transfers to be made under this Agreement.

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(b)
	
With respect to any Retained Contract, Vendor shall cooperate with Purchaser to cause such Retained Contracts to be cancelled by Vendor or performed indirectly or directly by Purchaser on behalf of Vendor or take such other action with respect to such Retained Contracts as Purchaser shall reasonably request.

	
 
	
2.9
	
Substitution and Subrogation.  To the extent not otherwise prohibited the conveyance of the Assets to Purchaser, its successors and permitted assigns, hereunder is with full rights of substitution and subrogation of Purchaser, its successors and permitted assigns, in and to all covenants and warranties by others heretofore given or made in respect of the Assets or any part thereof.

	
3.0
	
REPRESENTATIONS AND WARRANTIES

	 	
3.1
	
Vendor's Representations and Warranties.  Vendor represents and warrants to the Purchaser that:

	 	 	
(a)
	
Existence.  Vendor is duly organized and existing under the laws of its jurisdiction of organization.

	 	 	 	 
	 	 	
(b)
	
Authority.  The Vendor has good and sufficient power, authority and right to enter into and deliver this Agreement and to transfer the legal and beneficial title and ownership of the Assets to the Purchaser, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated under this Agreement have been duly and validly authorized and approved by all necessary legal action on the part of the Vendor.

	 	 	 	 
	 	 	
(c)
	
Binding Agreement.  This Agreement and all other agreements, documents and instruments to be executed by the Vendor constitute a valid and legally binding obligation of the Vendor.

	 	 	 	 
	 	 	
(d)
	
No Options.  There is no contract, option or any other right of another binding upon the Vendor to sell, transfer, assign, pledge, charge, mortgage or in any other way dispose of or encumber any of the Assets other than pursuant to the provisions of this Agreement.

	 	 	 	 
	 	 	
(e)
	
No Conflict.  Neither the entering into nor the delivery of this Agreement nor the completion of the transactions contemplated hereby by the Vendor will result in the violation of:

	 	 	 	
(i)
	
any of the provisions of the Vendor's articles of organization or operating agreement;

	 	 	 	 	 
	 	 	 	
(ii)
	
subject to obtaining any required consent or approval, any agreement or other instrument to which the Vendor is a party or by which the Vendor is bound, or

9

	 	 	 	
(iii)
	
any applicable law, rule or regulation.

	 	 	
(f)
	
Interim Period.  Since May 1, 2005, the Business has been carried on in its usual and ordinary course and the Vendor has not entered into any transaction (including without limitation any transfer or sale of assets) out of the usual and ordinary course of the Business - such transactions being defined as transactions involving amounts in excess of $100,000 individually or in the aggregate.

	 	 	 	 
	 	 	
(g)
	
Intellectual Property.  Schedule B sets forth a full, complete and true list of the Intellectual Property.  The Vendor is the sole and exclusive owner of, with all right, title and interest in and to (free and clear of any Liens), the Intellectual Property, and has sole and exclusive rights (and is not contractually obligated to pay any compensation to any third party in respect thereof) to the use thereof.  To the Vendor's knowledge, there is no and has not been any unauthorized use, infringement or misappropriation of any of the Intellectual Property by any person, current or former employee or other third party.

	 	 	 	 
	 	 	
(h)
	
Software.

	 	 	 	
(i)
	
To the knowledge of the Vendor, the Software was written and otherwise created only by persons who at the time they wrote and created the Software, were either employees of the Vendor or of a company that the Vendor later acquired, or they were contractors who assigned their intellectual property rights in the Software to the Vendor or any company acquired by the Vendor pursuant to written agreements;

	 	 	 	 	 
	 	 	 	
(ii)
	
Except as detailed in Schedule B, the Software neither contains nor embodies nor uses nor requires any third party software, including without limitation development tools and utilities, and the Software, together with any  third party programs, contains all materials necessary for the continued maintenance and development of the Software in the manner the Vendor conducted the Business through the Time of Closing;

	 	 	 	 	 
	 	 	 	
(iii)
	
Copies of any and all license, distribution and maintenance agreements for the third party programs identified on Schedule C have been provided by the Vendor to the Purchaser, except in respect of third party programs that are shrinkwrapped software and that were purchased off-the-shelf by the Vendor in order to be passed through to the Vendor's customers or to be used by the Vendor;

	 	 	 	 	 
	 	 	 	
(iv)
	
To the knowledge of the Vendor, the source code for the Software has not been delivered or made available to any person and the

10

	 	 	 	 	
Vendor has not agreed to or undertaken to or in any other way promised to provide such source code to any person.  The source code is currently stored only in the Vendor's premises.  The sale of the Assets of the Vendor resulting from the transactions contemplated by this Agreement will not entitle any customer to obtain a copy of the source code for the Software;

	 	 	 	 	 
	 	 	 	
(v)
	
To the knowledge of Vendor, there are no material problems or defects in the Software including without limitation bugs, logic errors or failures of the Software that prevent the Software from operating as described in their related documentation or specifications, and, except for such disclosed problems or defects, the Software operates in accordance with its documentation and specifications and has no other known problems or defects; and

	 	 	 	 	 
	 	 	 	
(vi)
	
Vendor has made no commitments to enhance or improve the Software, although Vendor has communicated to customers that additional versions of the Software are in development.

	 	 	
(i)
	
Third Party and Customer Contracts.  The Contracts represent in each case the entire agreement of the Vendor and the respective parties to such contracts.  To the knowledge of Vendor, all Contracts (including without limitation the related RFP's and proposals) are not in default or breach and there exists no condition, event or act that, with the giving of notice or lapse of time or both, would constitute such a default or breach.  All Contracts are in full force and effect without amendment thereto and the Vendor is entitled to all benefits thereunder, and, to the knowledge of the Vendor, the Vendor has performed all obligations required to be performed by it under the Contracts.  The Vendor does not know and has not received notice of the intention of any customer to make any warranty claims in respect of the Software or to terminate any customer.  The Vendor has made no commitments to release or develop any updates, versions or releases of the Software except as may be provided in such customer Contracts, although Vendor has communicated to customers that additional versions of the Software are in development.

	 	 	 	 
	 	 	
(j)
	
Infringement.  To Vendor's knowledge, the Intellectual Property does not infringe upon or violate any intellectual property right, including without limitation copyrights, patents, trade secrets or other proprietary rights, of any third party.  Vendor has not received notice of any actions, suits, proceedings or judgments (whether or not purportedly on behalf of the Vendor) and, to the knowledge of the Vendor, no such actions, suits, proceedings or judgments are threatened, adversely affecting the Software or Intellectual Property, including without limitation any claims that the registrations and marks of Vendor are invalid or unenforceable.

	 	 	 	 
	 	 	
(k)
	
Litigation.  There are no actions, suits, proceedings or judgments (whether  or not  purportedly on  behalf of  the Vendor)  pending or, to the

11

	 	 	 	
knowledge of the Vendor, threatened against or adversely affecting, or which could adversely affect the Business or the Assets or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality, domestic or foreign, whether or not insured, and which might involve the possibility of any lien, charge, encumbrance or any other right of another against the Assets, except that Vendor has been threatened with a lawsuit by DoxTek over an alleged violation of a noncompetition obligation.

	 	 	 	 
	 	 	
(l)
	
Orders.  To the knowledge of Vendor, there are no outstanding orders, notices or similar requirements  directed specifically to the Business or to the Assets issued by any building, environmental, fire, health, labor or police authorities or from any other federal, state or municipal authority including without limitation, occupational health and safety authorities and there are no matters under discussion with any such authorities relating to such orders, notices or similar requirements.

	 	 	 	 
	 	 	
(m)
	
Title; No Encumbrances.  The Vendor owns good and marketable title to the Assets and is transferring to Purchaser pursuant to this Agreement such title as Vendor has to the Assets free and clear of all Liens and any other rights of others created by or known to Vendor (subject in both respects in the case of leased or licensed Assets to the terms of the applicable leases or licenses pursuant to which Vendor holds such Assets).

	 	 	 	 
	 	 	
(n)
	
Guarantees.  The Vendor is not a party to or bound by any guarantee, indemnification, surety or similar obligation pertaining specifically to the Business.

	 	 	 	 
	 	 	
(o)
	
No Royalties.  The Vendor is not a party to or bound by any contract or any commitment to pay any royalty, licence fee or management fee pertaining to the Business, other than with respect to Autodesk's Map Guide software to the extent it is used in connection with the "effiniti" Software.

	 	 	 	 
	 	 	
(p)
	
Compliance With Rules.  To the knowledge of Vendor, the Business has been and is conducted in compliance with all applicable laws, rules, regulations, notices, approvals and orders of the United States and each state in which the Vendor conducts business.  The Vendor is duly licensed, registered, qualified or incorporated in such states, to carry on its business as now conducted and to own its Assets, and all such licenses, registrations and qualifications are valid and subsisting and in good standing and, to the knowledge of Vendor, none of the same contains any term, provision, condition or limitation which has or may have an adverse effect on the operation of the Business or which may be affected by the completion of the transactions contemplated hereby.

12

	 	 	
(q)
	
Internal Software Use Compliance.  The Vendor has full and proper licenses for any and all third party software products used and installed on its employee systems and network hardware.  The Vendor will provide actual licensing documents to the Purchaser upon closing.

	 	 	 	 
	 	 	
(r)
	
No Brokers.  The Vendor has not engaged any broker or finder in connection with the transactions contemplated by this Agreement, and no such person or entity is entitled to any fee or other compensation with respect to this Agreement or the transactions it contemplates.

	 	 	 	 
	 	 	
(s)
	
Accounts Receivable.  All accounts receivable of Vendor reflected in Schedule A (collectively, the "Accounts Receivable") represent valid obligations arising from sales actually made or services actually performed or to be performed by Vendor.  Vendor will use its best efforts to assist Purchaser to collect any account receivable that Purchaser is unable to collect after reasonable efforts, provided that Vendor shall not be required to incur any cost or expense in rendering such assistance.

	 	 	 	 
	 	 	
(t)
	
Full Disclosure.  No representation or warranty of the Vendor in this Agreement contains  any untrue statement of a material fact or omits  any material fact necessary to make the statements contained herein, in light of the circumstances under which made, not misleading.  The Vendor has disclosed to the Purchaser all events, conditions or facts related to the Business and known to the Vendor which materially affect the condition (financial or otherwise) or business of the Business.

	 	 	 	 
	 	 	
(u)
	
Product and Service Warranties and Liabilities.  There are no claims outstanding to return products by reason of alleged overshipments, defective merchandise, or otherwise, and there is no proceeding pending or to Vendor's knowledge threatened against the Business under any product warranty nor is there any basis upon which any claim could validly be made.

	 	 	 	 
	 	 	
(v)
	
Customers and Suppliers; Certain Relationships.  To the knowledge of Vendor, the relationships with the customers of the Business are commercially sound, there has not been any adverse change or development in the business relationship with such customer or supplier, and such an adverse change or development could not reasonably be anticipated as a result of the consummation of the transactions contemplated by this Agreement.  Except for the landlord for the leased premises currently occupied by Vendor or the ownership of less than 5% of publicly-held companies that supply goods or services to the Business, neither Vendor nor any of its affiliates is an owner, shareholder, creditor or agent of, or consultant or lender to, any person engaged in a business that acts as a supplier of any goods or services to the Business or any part of which is in actual or potential competition with the Business.

13

	 	
3.2
	
Purchaser's Representations and Warranties.  The Purchaser represents and warrants to the Vendor that:

	 	 	
(a)
	
Purchaser is a public corporation, duly incorporated, organized and existing under the laws of its jurisdiction of incorporation;

	 	 	 	 
	 	 	
(b)
	
Purchaser has good and sufficient power, authority and right to enter into and deliver this Agreement and to complete the transactions to be completed by it contemplated hereunder, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated under this Agreement have been duly and validly authorized and approved by all necessary legal action;

	 	 	 	 
	 	 	
(c)
	
This Agreement constitutes a valid and legally binding obligation of the Purchaser,  enforceable to the extent of the rights, interests and obligations as set forth herein, in accordance with its terms; and

	 	 	 	 
	 	 	
(d)
	
Neither the entering into nor the delivery of this Agreement nor the completion of the transactions contemplated hereby by the Purchaser will result in the violation of:

	 	 	 	
(i)
	
any of the provisions of its charter documents or by-laws,

	 	 	 	 	 
	 	 	 	
(ii)
	
any agreement or other instrument to which it is a party or by which it is bound, or

	 	 	 	 	 
	 	 	 	
(iii)
	
any applicable law, rule or regulation.

	 	
3.3
	
Survival of Representations, Warranties and Covenants.  The representations and warranties of each of Vendor and Purchaser set forth in this Agreement will survive the completion of the sale of the Assets herein provided for and, notwithstanding such completion, will continue in full force and effect for the benefit of the other party for one (1) year after the Closing Date.  No investigations made by or on behalf of a party at any time, nor any disclosure of information made to a party (except as set out in this Agreement and the Schedules hereto), shall have the effect of waiving, diminishing the scope or otherwise affecting any representation or warranty made by the other party.

	
4.0
	
INDEMNIFICATION

	 	
4.1
	
Indemnification by Vendor.  Vendor shall indemnify, save, hold harmless, discharge and release the Purchaser from and against any and all Claims arising from or based on:

	 	 	
(a)
	
subject to Section 3.3, any inaccuracy or breach in any representation or warranty made by the Vendor in this Agreement;

	 	 	 	 
	 	 	
(b)
	
any Excluded Liabilities;

14

	 	 	
(c)
	
any claims against Purchaser by creditors of Vendor or of any affiliate of Vendor (except with respect to the Assumed Liabilities);

	 	 	 	 
	 	 	
(d)
	
any use of the Assets or ownership or operation of the Business before the Time of Closing;

	 	 	 	 
	 	 	
(e)
	
any Claims of any employees for unpaid wages or compensation or accrued and unpaid vacation pay, or Claims respecting unpaid employer contributions (if any) including without limitation to worker's safety insurance, pension premiums and other source deductions or employment benefits respecting the employment of such employees by the Vendor prior to the Time of Closing and any and all costs incurred by Purchaser in the event of a determination by any governmental authority or court that,  the Purchaser is responsible for employer obligations prior to the Time of Closing; or

	 	 	 	 
	 	 	
(f)
	
the enforcement of indemnification rights under this Section 4.1.

	 	
4.2
	
Indemnification by Purchaser.  Purchaser shall indemnify, save, hold harmless, discharge and release the Vendor from and against any and all Claims arising from or based on:

	 	 	
(a)
	
subject to Section 3.3, any breach in any representation or warranty made by the Purchaser in this Agreement;

	 	 	 	 
	 	 	
(b)
	
any breach of any covenant of the Purchaser set forth in this Agreement;

	 	 	 	 
	 	 	
(c)
	
any Assumed Liabilities;

	 	 	 	 
	 	 	
(d)
	
any Retained Contracts, and any failure to obtain from the parties to all Contracts any required consent to the assignment of the Vendor's interest in such Contracts to the Purchaser as of the Time of Closing;

	 	 	 	 
	 	 	
(e)
	
any use of the Assets or ownership or operation of the Business on or after the Time of Closing; and

	 	 	 	 
	 	 	
(f)
	
the enforcement of indemnification rights under this Section 4.2.

	 	
4.3
	
Limitation on Indemnification.  The following limitation will apply with regard to the Claims for which the Vendor or the Purchaser would otherwise have indemnification obligations under this Agreement: except as otherwise specified herein, the indemnities set forth in this Agreement with respect to a party shall not apply until the aggregate of all Claims respecting such party total more than $25,000, in which event the indemnities under this Agreement shall apply to all Claims brought under this Agreement respecting such party and not only those Claims which in the aggregate are in excess of $25,000.  Notwithstanding the foregoing, the limitation set out above does not apply to Claims of any amount arising from fraud or fraudulent misrepresentation.

15

	 	
4.4
	
Notice; Right to Defend.  Each party shall give prompt written notice to the other of the assertion or commencement of any Claim in respect of which indemnity is or may be sought hereunder, other than Claims in which the parties are litigating claims against each other.  The indemnifying party shall have the right and obligation to assume the defense or settlement of any third-party Claim in respect of which it is obligated to provide indemnity hereunder; provided, however, that the indemnifying party shall not settle or compromise any such Claim without the indemnified party's prior written consent thereto, unless the terms of such settlement or compromise discharge and release the indemnified party from any and all liabilities and obligations thereunder.  Notwithstanding the foregoing: (i) the indemnified party at all times shall have the right, at its option and expense, to participate fully in the defense or settlement of such Claim; and (ii) if the indemnifying party does not proceed diligently to defend or settle such Claim within 20 days after its receipt of notice of the assertion or commencement thereof, then (a) the indemnified party shall have the right, but not the obligation, to undertake the defense or settlement of such Claim for the account and at the risk of the indemnifying party, and (b) the indemnifying party shall be bound by any defense or settlement that the indemnified party may make as to such Claim.  Each party shall cooperate fully in defending or settling any third-party Claim, and the defending or settling party shall have reasonable access to the books and records and personnel of the other party that are relevant to such Claim.

	 	 	 
	 	
4.5
	
Resolution of Disputes.

	 	 	
(a)
	
Other than with regard to Article 6.0 hereof or with regard to the Note, with respect to any other dispute or disagreement hereunder, either party may initiate negotiations by providing written notice to the other party, setting forth the subject of the dispute and the relief requested.  The recipient shall respond in writing within seven (7) days of receipt with its position and recommended solution to the dispute.  If the dispute is not resolved by this exchange of correspondence, then representatives of each party with full settlement authority shall meet at a mutually agreeable time and place within thirty (30) days of the date of the initial notice, to attempt to resolve the dispute.  If the dispute has not been resolved by negotiation as provided herein within thirty (30) days from receipt of the initial notice, the parties shall attempt to settle the dispute through mediation under the Commercial Mediation Rules of the American Arbitration Association, or its successor, in effect on the date of this Agreement.  The parties shall jointly appoint a mutually acceptable mediator.  If the dispute is not resolved by mediation within sixty (60) days after the filing of this request for mediation, either party may request arbitration as set forth herein.

	 	 	 	 
	 	 	
(b)
	
Subject to clause (j) hereof, any controversy or claim arising out of or relating to this Agreement or the breach hereof involving only a claim as between the parties hereto, shall be settled by arbitration in accordance with commercial rules of the American Arbitration Association ("AAA").  Arbitration proceedings conducted pursuant to this Section 4.4 shall be

16

	 	 	 	
held in Grand Rapids, Michigan if arbitration is requested by Vendor, or in Indianapolis, Indiana if arbitration is requested by Purchaser, or in such other location as the parties may agree.

	 	 	 	 
	 	 	
(c)
	
Arbitrations shall be conducted by a single arbitrator (the "Arbitrator") selected at random from a list of arbitrators maintained in the office of the AAA in Michigan or Indiana, as applicable.  The Arbitrator must be a person experienced in corporate law or the law of mergers and acquisitions and must have served as an arbitrator in at least one prior commercial arbitration involving primarily questions of commercial or corporate law conducted under the AAA rules.  The Arbitrator may not be a person who ever has been an affiliate of or attorney for any party or for any of their respective affiliates.

	 	 	 	 
	 	 	
(d)
	
The parties shall allow and participate in discovery in accordance with the Federal Rules of Civil Procedure for a period of 90 days after the filing of an answer or other responsive pleading.  Unresolved discovery disputes may be brought to the attention of the Arbitrator for resolution.

	 	 	 	 
	 	 	
(e)
	
Any provisional remedy that would be available from a court of law shall be available from the Arbitrator to the parties pending arbitration.  Any party may, without inconsistency with the Agreement, apply to any court of proper jurisdiction and seek injunctive relief to maintain the status quo until the arbitration award is rendered or the controversy is otherwise resolved.

	 	 	 	 
	 	 	
(f)
	
The Arbitrator's award shall be made in writing and shall make written findings of fact and conclusions of law.  The Arbitrator shall have no authority to award punitive or other damages not measured by the prevailing party's actual damages and may not, in any event, make any ruling, finding, or award that does not conform to the terms and conditions of this Agreement.  Judgment on any arbitration award may be entered by the Arbitrator or by any party in any court having jurisdiction thereof.  No party or Arbitrator may disclose the existence, content, or results of any arbitration or arbitration award without the prior written consent of both parties except to the extent necessary to enter and enforce a judgment based upon such an award.

	 	 	 	 
	 	 	
(g)
	
The award of the Arbitrator shall be final and not subject to appeal.  Each party hereby waives the benefit of any applicable law which would permit it to appeal the decision of the Arbitrator to any court or other authority.

	 	 	 	 
	 	 	
(h)
	
All fees and expenses of the arbitration shall be borne by the parties equally.  However, each party shall bear the expense of its own counsel, experts, witnesses, and preparation and presentation of proofs.  Notwithstanding the foregoing, the Arbitrator shall be entitled to tax and assess costs against any party (including the fees of attorneys and

17

	 	 	 	
arbitrators) to the extent that the Arbitrator finds that such party's claim or any portion thereof was unreasonable, speculative or primarily for the purpose of delaying the exercise of rights by the prevailing party.

	 	 	 	 
	 	 	
(i)
	
The Arbitrator may apportion the costs of the arbitration, including the reasonable fees and disbursements of the Arbitrator and the legal costs and disbursements of the parties, between or among the parties in such manner as the Arbitrator considers reasonable.  In determining the allocation of these costs, the Arbitrator will invite submissions as to costs and may consider, among other things, any offer of settlement made by any party during the course of the arbitration.

	 	 	 	 
	 	 	
(j)
	
The provisions of this Section 4.5 shall survive termination of this Agreement.  Any dispute regarding the applicability of this Section 4.5 to a particular claim or controversy shall be arbitrated as provided in this Section 4.5.

	 	 	 	 
	 	 	
(k)
	
The provisions of this Section 4.5 shall not apply to matters relating, in whole or in part to Article 6.0.

	
5.0
	
CLOSING

	 	
5.1
	
Transfer of Possession.  This Agreement shall operate, without further act or formality, as a transfer to Purchaser for all purposes as at the Time of Closing of the Assets transferred and acquired hereunder and as an assumption by Purchaser of the Assumed Liabilities.  The Vendor shall forthwith and from time to time hereafter execute and deliver to Purchaser all deeds, transfers, assignments and other instruments in writing and further assurances as Purchaser or its counsel shall reasonably require from the Vendor to effectuate such acquisition and transfer.  The Purchaser shall forthwith and from time to time hereafter execute and deliver to Vendor all instruments in writing and further assurances as Vendor or its counsel shall reasonably require from the Purchaser to effectuate such assumption.

	 	 	 
	 	
5.2
	
Deliveries by Vendor.  Vendor shall deliver the following to Purchaser:

	 	 	
(a)
	
an assignment and bill of sale that is sufficient to transfer to Purchaser title to the Assets in accordance with this Agreement, and releases and assignments of Software and Intellectual Property in favor of the Purchaser in a form reasonably satisfactory to the Purchaser;

	 	 	 	 
	 	 	
(b)
	
any written consents of third parties and governmental entities obtained by Vendor with respect to the transfer of the Assets to the Purchaser;

	 	 	 	 
	 	 	
(c)
	
employment agreements entered into with Thomas Longest and Scott Stephens, substantially in the form attached as Schedule D; and

18

	 	 	
(d)
	
a certificate signed by the Vendor attesting that the Vendor no longer retains any copies of the Software, except for copies required to complete and discharge the obligations of the Vendor as expressly permitted in this Agreement or in writing by Purchaser.

	 	
5.3
	
Deliveries by Purchaser.

	 	 	
(a)
	
an assumption agreement that is sufficient for the Purchaser to assume the Assumed Liabilities;

	 	 	 	 
	 	 	
(b)
	
employment agreements entered into with Thomas Longest and Scott Stephens, substantially in the form attached as Schedule D; and

	 	 	 	 
	 	 	
(c)
	
the Note.

	 	
5.4
	
Non-Fulfilment of Conditions.  If either Vendor or Purchaser fails to deliver any item that is required by Sections 5.2 or 5.3 at the Time of Closing but the other party elects to sign and close this Agreement, then the party so electing to sign and close this Agreement may not make a claim for indemnification based upon the other party's failure to deliver any item required by Sections 5.2 or 5.3.

	
6.0
	
NON-COMPETITION; NON-DISCLOSURE

	 	
6.1
	
Noncompetition.  Vendor and Shareholder each agree that for a period of five (5) years from the Closing Date:

	 	 	
(a)
	
Vendor and Shareholder, respectively, will not, directly or indirectly, engage or invest in, own, manage, operate, finance, control, or participate in the ownership, management, operation, financing, or control of (exclusive of holding 5% or less of the shares of a publicly traded company with which the Vendor is otherwise not associated), be associated with, or in any manner connected with, or render services or advice to, any business whose products or activities compete in whole or in part with the products or activities of the Business or the Assets purchased by Purchaser, anywhere within North America.  Vendor and Shareholder each agree that this covenant is reasonable with respect to its duration, geographical area, and scope.

	 	 	 	 
	 	 	
(b)
	
In the event of a breach by Vendor or Shareholder of any covenant set forth in Section 6.1(a) of this Agreement, the term of such covenant will be extended by the period of the duration of such breach; and

	 	 	 	 
	 	 	
(c)
	
Vendor and Shareholder, respectively, will not, at any time during or after the five year period, disparage Purchaser or any of its subsidiaries, shareholders, directors, officers, employees, or agents.

19

	 	
6.2
	
Non-Disclosure by Vendor or Shareholder.

	 	 	
(a)
	
Vendor acknowledges and agrees that all Confidential Information known or obtained by Vendor, whether before or after the Closing Date, is the property of Purchaser or the property of Vendor that was sold to Purchaser as part of the Assets.  Shareholder hereby waives all of its rights to all Confidential Information known or obtained by Shareholder, whether before or after the Closing Date, and to the extent it still has any rights (ownership rights or others) in any Confidential Information, hereby transfers such rights to Purchaser in consideration for Purchaser entering into this Agreement. Therefore, Vendor and Shareholder each agrees that it will not, at any time, disclose to any unauthorized persons or use for its own account or for the benefit of any third party any Confidential Information, without Purchaser's written consent, unless and to the extent that the Confidential Information is or becomes generally known to and available for use by the public other than as a result of Vendor's fault, Shareholder's fault or the fault of any other person bound by a duty of confidentiality to Purchaser, Vendor or Shareholder.

	 	 	 	 
	 	 	
(b)
	
For purposes of this Section 6.2, "Confidential Information" includes each of the following:

	 	 	 	
(i)
	
any and all versions of the software and related documentation owned or marketed by the Business or used internally by the Business, including without limitation all related algorithms, concepts, data, designs, flowcharts, ideas, programming techniques, specifications and source code listings;

	 	 	 	 	 
	 	 	 	
(ii)
	
all Developments (as defined below);

	 	 	 	 	 
	 	 	 	
(iii)
	
information regarding the Business' or Purchaser's business operations, methods and practices, including without limitation marketing strategies, product pricing, margins and hourly rates for staff and information regarding the financial affairs of the Business or Purchaser;

	 	 	 	 	 
	 	 	 	
(iv)
	
the names of the Business' and Purchaser's clients and the names of the suppliers of computer services and software to the Business or Purchaser, and the nature of the Business' or Purchaser's relationships with these clients and suppliers; provided, however, that confidential information shall not include any such names and the nature of these relationships with respect to clients and/or suppliers of the Business that also are clients and/or suppliers of Vendor or of Shareholder or Beam, Longest & Neff, Inc. following the Closing Date;

20

	 	 	 	
(v)
	
technical and business information of or regarding the clients of the Business or Purchaser obtained in order for the Business or Purchaser to provide such clients with software products and services, including without limitation information regarding the data processing requirements and the business operations, methods and practices and product plans of such clients; and

	 	 	 	 	 
	 	 	 	
(vi)
	
any other trade secret or confidential or proprietary information in the possession or control of the Business or Purchaser, but Confidential Information does not include information which is or becomes generally available to the public without such Vendor's fault or which such Vendor can establish, through written records, was in its possession prior to its disclosure to such Vendor as a result of such Vendor's involvement with the Business or Purchaser.

	 	 	
(c)
	
For purposes of this Section 6.2, "Developments" include each of the following:

	 	 	 	
(i)
	
software, documentation, data, designs, reports, flowcharts, trade-marks, specifications and source code listings, and any related works, including without limitation any enhancements, modifications, or additions to the Software;

	 	 	 	 	 
	 	 	 	
(ii)
	
inventions, devices, discoveries, concepts, ideas, algorithms, formulae, know-how, processes, techniques, systems and improvements, whether patentable or not, developed, created, generated or reduced to practice by the Vendor, alone or jointly with others, during its involvement with the Business or Purchaser; and

	 	 	 	 	 
	 	 	 	
(iii)
	
Notwithstanding the foregoing, the Vendor may retain copies of programming tools, if any, and the related source code that it has developed (collectively the "Tools") and shall have the personal, non-transferable right to use the Tools in the United States to develop other software; provided, however, that the Vendor shall not (i) use the Tools to develop any fund accounting, payroll or utility billing software for federal, state and local governments; and/or (ii) use the Tools to develop any product or service that competes with the current tax products or services provided by the Business.

	
 
	
6.3
	
Non-Disclosure by Purchaser.  The Purchaser agrees that it will not, directly or indirectly, disclose, divulge or communicate orally, in writing or otherwise any confidential information of Vendor (other than any confidential information that relates primarily to the Business) disclosed in conjunction with the entering into of this Agreement and the transactions hereunder.

21

	 	
6.4
	
Exclusions.  Notwithstanding anything to the contrary, Sections 6.2 and 6.3 of this Agreement shall not apply to any confidential information that (a) is or becomes generally available to the public other than as a result of an unauthorized disclosure by the receiving party; (b) is independently developed by the receiving party without reliance in any way on the confidential information provided by the disclosing party; (c) is disclosed to the receiving party by a third party who is not bound by any duty of confidentiality owed to the disclosing party; or (d) is required to be disclosed by law, or governmental, judicial or legal process.

	 	 	 
	 	
6.5
	
Non-Solicitation of Employees.  For a period of three years after the Closing Date, the Vendor shall not solicit or offer employment to or retain as an independent contractor any of the employees or independent contractors of the Purchaser.

	 	 	 
	 	
6.6
	
Non-Solicitation of Customers.  For a period of three years after the Closing Date, neither the Vendor nor the Shareholder shall solicit, approach or sell to entities that were customers of the Business as of the Closing Date other than for the direct benefit of Purchaser.  Notwithstanding the immediately preceding sentence, Shareholder may solicit, approach and sell to such entities with respect to engineering-related GIS products and services and any other products and services other than (a) CAMA, property tax and assessment systems and related services and (b) any other products, services  or activities in whole or in part provided by Purchaser in the ordinary course of its business.

	 	 	 
	 	
6.7
	
Termination of Existing Confidentiality Agreement.  Effective as of the Time of Closing, the existing Confidentiality Agreement between Vendor and Purchaser is terminated.

	
7.0
	
GENERAL

	 	
7.1
	
Temporary Premises.  Purchaser shall have the right to occupy Vendor's current leased premises at 8136 Castleton Road, Indianapolis, Indiana through December 1, 2005.  Purchaser shall reimburse Vendor in the amount of $4,000.00 for rent under the lease from the Closing Date through December 1, 2005.

	 	 	 
	 	
7.2
	
Guaranty by Shareholder.  By joining in this Agreement, the Shareholder guarantees to Purchaser the full and prompt performance (not just collection) by Vendor of all of Vendor's covenants, obligations and indemnities under this Agreement and any ancillary agreements.  If Vendor does not perform a covenant or obligation under this Agreement or any ancillary agreement, the Shareholder shall promptly perform the covenant or obligation.  This guaranty of the Shareholder is an absolute, irrevocable, primary, continuing, unconditional, and unlimited guaranty of performance and payment, and is not a guaranty of collection.  This guaranty shall remain in full force and effect (and shall remain in effect notwithstanding any amendment to this Agreement) until all of Vendor's obligations have been paid, observed, performed, or discharged in full.  Shareholder has full capacity, power, and authority to enter into this Agreement

22

	 	 	
and to carry out the covenants and agreements specifically made by the Shareholder in this Agreement, and this Agreement is binding on the Shareholder and enforceable against the Shareholder in accordance with the terms of this Agreement.

	 	 	 
	 	
7.3
	
Further Assurances.  The Vendor and the Purchaser will from time to time execute and deliver all such further documents and instruments and do all acts and things as the other party may, either before or after the Closing Date, reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.

	 	 	 
	 	
7.4
	
Time of the Essence.  Time is of the essence of this Agreement.

	 	 	 
	 	
7.5
	
Fees.  Each party hereto shall bear its own legal, accounting, due diligence, taxes and out-of-pocket costs and expenses incurred by each party hereto in connection with the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant hereto.

	 	 	 
	 	
7.6
	
Benefit of the Agreement.  This Agreement will inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties hereto.  Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement, this Agreement being for the exclusive benefit of the parties and their respective successors and assigns

	 	 	 
	 	
7.7
	
Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto.  There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the parties other than as expressly set forth in this Agreement.

	 	 	 
	 	
7.8
	
Amendments and Waivers.  No amendment to this Agreement will be valid or binding unless set forth in writing and duly executed by all of the parties hereto.  No waiver of any breach of any provision of this Agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived.  If so assigned, Purchaser hereby guarantees the prompt payment and performance of all obligations that have been assigned.

	 	 	 
	 	
7.9
	
Assignment.  This Agreement may not be assigned by the Vendor without the written consent of the Purchaser but may be assigned by the Purchaser without the consent of the other parties to an affiliate of the Purchaser provided that (i) such affiliate enters into a written agreement with the other parties to be bound by the provisions of this Agreement in all respects and to the same extent as the Purchaser is bound and (ii) the Purchaser remains liable for its obligations under this Agreement and the Note.

23

	 	
7.10
	
Notices.  Any demand, notice or other communication to be given in connection with this Agreement will be given in writing and will be given by personal delivery, by registered mail or by electronic means of communication addressed to the recipient as follows:

	 	 	
To the Purchaser:

	 	 	 	
c/o Manatron, Inc.

510 East Milham

Portage, MI 49002

Attention:  Paul Sylvester, President

	 	 	
To the Vendor:

	 	 	 	
c/o Beam, Longest and Neff

Castleton Road

Indianapolis, Indiana 46250

Attention:  Jim Longest, President

	 	 	
or to such other address, individual or electronic communication number as may be designated by notice given by either party to the other.  Any demand, notice or other communication given by personal delivery will be conclusively deemed to have been given on the day of actual delivery thereof and, if given by registered mail, on the fifth Business Day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the Business Day during which such normal business hours next occur if not given during such hours on any day.  If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such demand, notice or other communication may not be mailed but must be given by personal delivery or by electronic communication.

	 	 	 
	 	
7.11
	
Counterparts.  This Agreement may be executed by the parties in separate counterparts each of which when so executed and delivered (by facsimile transmission or otherwise) shall be an original, but all such counterparts shall together constitute one and the same instrument.

	 	 	 
	 	
7.12
	
Announcements.  All announcements, public notices and any other communication regarding this Agreement and the transactions contemplated hereby to be made by the Vendor must be reviewed in advance by the Purchaser and approved by the Purchaser.

24

	 	
7.13
	
Governing Law.  This Agreement is governed by and will be construed in accordance with the laws of the State of Michigan applicable therein without regard to its laws of conflict of laws.

* * *

25

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written above.

	 	
MANATRON, INC.
	 
	 	 	 
	 	
By:
	/s/ Paul Sylvester
	 
	 	
Name:  Paul Sylvester

Title:  President/CEO
	 
	 	 	 
	 	
PLEXIS GROUP, L.L.C
	 
	 	 	 
	 	
By:
	/s/ Thomas Longest
	 
	 	
Name:  Thomas Longest

Title:    President
	 
	 	 	 
	 	 	 
	 	
By:
	/s/ James Longest
	 
	 	
Name:  James Longest

Title:    CEO
	 
	 	 	 
	 	
BEAM, LONGEST & NEFF, LLC
	 
	 	 	 
	 	
By:
	/s/ Thomas Longest
	 
	 	
Name:  Thomas Longest

Title:    Secretary/Treasurer
	 
	 	 	 
	 	 	 
	 	
By:
	/s/ James Longest
	 
	 	
Name:  James Longest

Title:    President
	 
	 	 	 

	
SIGNED, SEALED AND DELIVERED
	 	
)
	 	 
	
in the presence of:
	 	
)
	 	 
	 	 	
)
	 	 
	 
	 	
)
	 
	 
	
Witness
	 	
)
	 	 
	 	 	
)
	 	 
	 
	 	
)
	 
	 
	
Witness
	 	
)
	 	 
	 	 	
)
	 	 

26exv10w1

 

Exhibit 10.1

 

PROXY AGREEMENT

WITH RESPECT TO CAPITAL STOCK OF

NORTEL GOVERNMENT SOLUTIONS INC.

 

 

 

Table of Contents

PROXY AGREEMENT

WITH RESPECT TO CAPITAL STOCK OF

NORTEL GOVERNMENT SOLUTIONS INC.

	 	 	 	 	 
	Topic 	 	Page	 
	 
	RECITALS
	 	 	1	 
	 
	 	 	 	 
	ORGANIZATION
	 	 	2	 
	 
	 	 	 	 
	ARTICLE I — Establishment of Agreement
	 	 	2	 
	ARTICLE II — Appointment of Proxy Holders
	 	 	3	 
	ARTICLE III — Acknowledgment of Obligations
	 	 	5	 
	ARTICLE IV — Indemnification and Compensation of Proxy Holders
	 	 	6	 
	ARTICLE V — Restrictions Binding on Subsidiaries of the Corporation
	 	 	7	 
	 
	 	 	 	 
	OPERATIONS
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VI — Actions by the Proxy Holders
	 	 	7	 
	ARTICLE VII — Voting Discretion
	 	 	8	 
	ARTICLE VIII — Government Security Committee
	 	 	9	 
	ARTICLE IX — Annual Review and Certification
	 	 	11	 
	ARTICLE X — Duty to Report Violations of the Agreement
	 	 	13	 
	 
	 	 	 	 
	CONTACTS AND VISITS
	 	 	13	 
	 
	 	 	 	 
	ARTICLE XI — Regulated Meetings, Visits and Communications
	 	 	13	 
	ARTICLE XII — DoD Remedies
	 	 	14	 
	 
	 	 	 	 
	ADMINISTRATION
	 	 	15	 
	 
	 	 	 	 
	ARTICLE XIII – Grant of Proxy, Restrictive Legend and Sale of Stock
	 	 	15	 
	ARTICLE XIV — Dividends
	 	 	16	 
	ARTICLE XV — Notices
	 	 	16	 
	ARTICLE XVI — Inconsistencies with Other Documents
	 	 	17	 
	ARTICLE XVII — Governing Law; Construction
	 	 	17	 
	 
	 	 	 	 
	TERMINATION
	 	 	17	 
	 
	 	 	 	 
	ARTICLE XVIII — Termination, Amendment and Interpretation of Agreement
	 	 	17	 
	ARTICLE XIX — Actions Upon Termination of Agreement
	 	 	18	 
	ARTICLE XX — Place of Filing
	 	 	19	 
	 
	 	 	 	 
	EXECUTION
	 	 	20	 

 

 

PROXY AGREEMENT

WITH RESPECT TO CAPITAL STOCK OF

NORTEL GOVERNMENT SOLUTIONS INC.

     This Proxy Agreement (“Agreement”) is made this 29th day of July, 2005, by and among Nortel
Networks Corporation (“NNC”), a Canadian corporation; Nortel Networks Limited (“NNL”), a Canadian
corporation; Nortel Networks Inc. (“NNI”), a Delaware corporation; Nortel Government Solutions Inc.
(the “Corporation”), a Delaware corporation; James Frey; Thomas McInerney; and Gregory Newbold; and
their respective successors appointed as provided in this Agreement (each individually, a “Proxy
Holder,” and collectively, the “Proxy Holders”); and the United States Department of Defense
(“DoD”) (all of the above, collectively, the “Parties”).

RECITALS

     WHEREAS, the Corporation is duly organized and existing under the laws of Delaware, and has an
authorized capital of 100 shares, all of which are shares of common stock entitled to one vote for
each share at all meetings and without par value, and of which 100 shares are issued and
outstanding (the “Shares”); and

     WHEREAS, NNI owns all the Shares; and

     WHEREAS, NNL owns all the issued and outstanding shares of NNI; and

     WHEREAS, NNC owns all the issued and outstanding voting shares of NNL; and

     WHEREAS, the Corporation’s business consists of providing professional services and technology
solutions for various departments and agencies1 of the U.S. Government, including,
without limitation, the DoD; and

     WHEREAS, the offices and facilities of the Corporation require facility security
clearances2 issued under the National Industrial Security Program (“NISP”) to conduct

 

			
	1	 	The Office of the Secretary of Defense
(including all boards, councils, staffs, and commands), DoD agencies, and the
Departments of Army, Navy, and Air Force (including all of their activities);
the Departments of State, Commerce, Treasury, Transportation, Interior,
Agriculture, Labor, Justice, Education, Health and Human Services and Homeland
Security; National Aeronautics and Space Administration; General Services
Administration; Small Business Administration; National Science Foundation;
Environmental Protection Agency; Federal Reserve System; International Trade
Commission; United States Trade Representative; United States Agency for
International Development; Nuclear Regulatory Commission; and the Government
Accountability Office (the “User Agencies”).
	 
	2	 	An administrative determination that a
facility is eligible for access to classified information of a certain
category.

1

 

their business and the NISP requires that a corporation maintaining a facility security
clearance be effectively insulated from foreign ownership, control or influence (“FOCI”); and

     WHEREAS, the Under Secretary of Defense for Intelligence has determined that the provisions of
this Agreement are necessary to enable the United States to protect itself against the unauthorized
disclosure of information relating to U.S. national security; and

     WHEREAS, the DoD has agreed to grant or continue the Corporation’s facility security clearance
from and after the effective date of this Agreement in consideration for, inter alia, the Parties’
execution and compliance with the provisions of this Agreement, the purpose of which is to
reasonably and effectively exclude NNC, NNL, NNI and all entities controlled by the aforementioned
companies (collectively, the “Affiliates”) from unauthorized access to classified3 and
controlled unclassified information,4 and from influence over the Corporation’s business
or management; and

     WHEREAS, the Defense Security Service (“DSS”) has oversight responsibility for the NISP on
behalf of DoD, and since the NISP requires that a corporation maintaining a facility security
clearance be effectively insulated from FOCI, this Agreement is entered into between the Parties in
order to negate FOCI at the Corporation, and it shall be submitted to DSS for approval as required
by applicable DoD regulations and policy; and

     WHEREAS, in order to comply fully with the NISP, the Parties have agreed that voting control
of the Shares should be vested in citizens of the United States; and

     NOW THEREFORE, in consideration of the premises and of the mutual undertakings of the Parties
hereinafter set forth, this Agreement in respect of the Shares is hereby created and established,
subject to the following terms and conditions, to each of which the Parties expressly assent and
agree.

ORGANIZATION

ARTICLE I — Establishment of Agreement

1.01. The establishment of this Agreement shall involve the selection of no less than three Proxy
Holders with the qualifications set forth in Section 2.01. below. Pursuant to

 

			
	3	 	Any information that has been determined
pursuant to Executive Order 12958 or any predecessor order to require
protection against unauthorized disclosure and is so designated. The
classifications TOP SECRET, SECRET, and CONFIDENTIAL are used to designate such
information.
	 
	4	 	Unclassified information, the export of
which is controlled by the International Traffic in Arms Regulations
(“ITAR”) and/or the Export Administration Regulations
(“EAR”). The export of technical data, which is inherently
military in nature, is controlled by the ITAR. The export of technical data,
which has both military and commercial uses, is controlled by the EAR.

2

 

Article XIII below, the Corporation shall grant proxies to the Proxy Holders in accordance with
this Agreement. DoD shall determine that all of the requirements set forth in this Agreement have
been satisfied, including the necessary independence and separation of operation, lack of
interdependence between the Affiliates on the one hand, and on the other, the Corporation and/or
its subsidiaries, and the requisite financial self-reliance and business viability of the
Corporation.

ARTICLE II — Appointment of Proxy Holders

2.01. The initial Proxy Holder nominees shall be chosen by NNI. The initial and successor Proxy
Holders shall be (i) resident citizens of the United States; (ii) have had no prior contractual,
financial, or employment relationships with the Affiliates or the Corporation; (iii) certify their
willingness to accept their security responsibilities; and (iv) be eligible for the requisite
personnel security clearances.5 The appointment of initial and successor Proxy Holders
shall not become effective until approved by DSS.

2.02. Except as authorized by Section 2.03. below, NNI may not remove a Proxy Holder except for
acts of gross negligence or willful misconduct while in office. NNI may remove a Proxy Holder for
such acts by an instrument signed by or on behalf of NNI and filed with the Corporation at its
principal office in Fairfax, Virginia. NNI shall provide notice to DSS, in accordance with Section
15.01. below, at least twenty (20) days prior to filing such instrument. Such an instrument of
removal shall not be effective until a successor Proxy Holder who is qualified to serve hereunder
has accepted appointment. However, if such removal would result in only one remaining Proxy
Holder, then such an instrument of removal shall not be effective until a successor Proxy Holder
who is qualified to serve hereunder has accepted appointment.

2.03. With the approval of DSS, NNI may remove a Proxy Holder for acts in violation of this
Agreement, including the inability to protect the legitimate economic interests of NNI pursuant to
Section 6.05. below. NNI must petition DSS for permission to remove a Proxy Holder for acts in
violation of this Agreement. However, DSS has the right to determine, in its sole discretion,
whether to grant such petition.

2.04. A Proxy Holder may at any time resign by submitting to the Corporation at its principal
office in Fairfax, Virginia, a resignation in writing, with notice to NNI and DSS pursuant to
Section 15.01. below. Such resignation shall be effective on the date of resignation stated by the
Proxy Holder. No formal acceptance of resignation by the Corporation shall be necessary to make
the resignation effective. Upon resignation, a Proxy Holder’s obligations and responsibilities
under this Agreement are completed. However, if such resignation would result in only one
remaining Proxy Holder, then the resignation shall not be effective until a successor Proxy Holder
who is qualified to serve hereunder has accepted appointment.

 

			
	5	 	An administrative determination that an
individual is eligible for access to classified information of a certain
category.

3

 

2.05. Nomination and appointment of successor Proxy Holders shall be accomplished as follows:

     a. In the event of the death, resignation, removal or inability to act of any Proxy Holder,
the Corporation shall give prompt written notice to DSS and NNI. The remaining Proxy Holders shall
nominate a successor Proxy Holder using their best efforts6 and diligence, and shall
notify NNI and DSS of the nominee. In the event that a nominee is vetoed by NNI pursuant to
Section 2.05.(b) below, the remaining Proxy Holders shall use their best efforts and diligence to
nominate an alternate successor Proxy Holder.

     b. NNI shall not have the right to nominate or suggest any person for the position of a
successor Proxy Holder. NNI shall have the right to veto without cause a nominee for the position
of successor Proxy Holder. Absent a veto by NNI of a nominee, and upon approval by DSS, the nominee
may be appointed by the remaining Proxy Holders. NNI shall notify the remaining Proxy Holders and
DSS of acceptance or veto within twenty (20) days of receipt of the nomination of a successor Proxy
Holder. Failure by NNI to notify the Proxy Holders within twenty (20) days of notification of
nomination shall be deemed to constitute acceptance.

     c. If NNI has vetoed three successive nominees proposed by the remaining Proxy Holders, the
third nominee, upon approval by DSS, shall be accepted absent an appeal submitted by NNI to DSS for
reasonable cause.

     d. Any nomination and appointment of a successor Proxy Holder shall be made by an instrument
in writing signed by the remaining Proxy Holders. Counterparts of such instrument shall be
delivered to the Corporation, DSS and NNI as provided in Section 15.01.

2.06. Acceptance of appointment for all initial or successor Proxy Holders as provided above may
only be accomplished by their agreement to be bound by the terms of this Agreement, as evidenced by
their signature on the counterpart of this Agreement on file at Corporation’s principal office in
Fairfax, Virginia, with copies to any incumbent Proxy Holder, NNI and DSS. Upon acceptance of
such appointment, and approval by DSS, the initial and successor Proxy Holders shall be vested with
all the rights, powers, authority and immunities herein conferred upon the Proxy Holders by this
Agreement.

2.07. On the death, resignation, removal or disability of a Proxy Holder, the remaining Proxy
Holders may exercise all of the rights, powers and privileges of the Proxy Holders as set forth in
this Agreement until a successor accepts appointment. If no Proxy Holders

 

			
	6	 	For purposes of this Agreement, the term
“best efforts” signifies performance of duties reasonably in good
faith, in the manner believed to be in the best interests of Corporation but
consistent with the national security concerns of the United States, and with
such care, including reasonable inquiry, as an ordinarily prudent person in a
like position would use under similar circumstances.

4

 

remain, the Chairman or Acting Chairman of the Board of Directors of the Corporation shall, upon
written notice to DSS, be automatically vested with all rights, powers, authorities and immunities
of the Proxy Holders for an interim period not to exceed thirty (30) days, except that NNI shall,
under such circumstances, have the right to appoint two new Proxy Holders pursuant to Section 2.01.
The two new Proxy Holders shall nominate the third Proxy Holder pursuant to Section 2.05.

ARTICLE III — Acknowledgment of Obligations

3.01. All Proxy Holders shall become Directors of the Corporation. Proxy Holders may appoint or
remove other Directors in their sole discretion. The Board of Directors shall elect a Chairman,
who may be one of the Proxy Holders.

3.02. The terms of compensation, including any and all benefits for the Proxy Holders, shall be
negotiated between the Proxy Holders and NNI, and shall be paid by the Corporation. Said terms
shall not be changed during the Proxy Holders’ tenure as Proxy Holders and shall be provided to
DSS.

3.03. The Proxy Holders agree to perform the duties set forth in, and be bound by all provisions
of, this Agreement. The Proxy Holders shall exercise the powers bestowed upon them by, and perform
the duties set forth in, this Agreement according to their best efforts.

3.04. Each Proxy Holder agrees as follows:

     a. in order to be qualified under this Agreement, he must have had no prior or existing
contractual, financial or employment relationship with either the Corporation or the Affiliates
prior to his appointment; and

     b. in order to maintain his qualification as a Proxy Holder, he shall not establish any
relationship of any kind with NNI, the Affiliates or the Corporation except as may be required or
permitted by this Agreement; and

     c. in order to be processed for and remain eligible for a U.S. Government personnel security
clearance, he must reside within the United States during the term of his service as a Proxy
Holder under this Agreement.

3.05. In recognition of their obligations under this Agreement, the Proxy Holders individually and
collectively acknowledge and agree as follows:

     a. The Shares are being placed under proxy in accordance with this Agreement as a security
measure designed to insulate the Corporation from any foreign control or influence that may arise
from NNI’s ownership of the Shares.

     b. The U.S. Government is placing its reliance upon them as U.S. citizens to exercise
independently all prerogatives of ownership of the Corporation.

5

 

     c. One year from the effective date of this Agreement, and annually thereafter, they shall
ensure that a report is submitted to DSS in accordance with Section 9.02. below.

     d. Upon acceptance of appointment, each Proxy Holder shall be briefed by a representative of
DSS on his responsibilities under the NISP and this Agreement.

     e. One year from the effective date of this Agreement, and annually thereafter, they shall
meet with representatives of DSS in accordance with Section 9.01. below.

     f. Upon acceptance of appointment, and annually thereafter, each Proxy Holder shall execute
for delivery to DSS a certificate affirming his agreement to be bound by, and the acceptance of his
responsibilities under, this Agreement.

     g. They shall not accept direction from NNI on any matter before them or before the Board of
Directors of the Corporation, and they shall not permit NNI to exercise any control or influence
over the business or management of the Corporation, except as provided in this Agreement.

     h. They shall ensure that the management appointed by them fully understands their
responsibility as Proxy Holders to exercise all prerogatives of management with complete
independence from any foreign influence or control.

     i. They shall ensure that each principal officer of the Corporation is furnished with a
policy statement on FOCI, stating that management has complete independence from NNI, that
management and the principal officers are barred from taking any action that would countermand this
Agreement, and that any suspected violation of this Agreement shall be reported immediately to the
Chairman of the Government Security Committee (see Section 8.01. below).

     j. They shall ensure that records, journals and minutes of meetings and copies of all
communications sent or received by them in the execution of their duties as Proxy Holders are
properly maintained. Such data and copies of all information furnished to NNI by the Corporation
or the Proxy Holders shall be made available upon request for review by DSS at the offices of the
Proxy Holders or the office of the Corporation.

3.06. The Proxy Holders shall appoint an independent financial auditor to conduct an annual audit
of the Corporation’s books and records. The Proxy Holders shall advise DSS and NNI of their
action. Upon completion of the audit and review by the Proxy Holders, and subject to the removal
of any information not releasable under this Agreement, the audit report shall be forwarded to NNI.

ARTICLE IV — Indemnification and Compensation of Proxy Holders

4.01. In voting the Shares and in their capacity as Directors of the Corporation, the Proxy
Holders shall vote and act on all matters in accordance with their best efforts.

6

 

4.02. The Corporation and NNI, jointly and severally, shall indemnify and hold each Proxy Holder
harmless from any and all claims arising from, or in any way connected to, his performance as a
Proxy Holder or Director of the Corporation under this Agreement, except for his own individual
gross negligence or willful misconduct. The Corporation and NNI shall advance fees and costs
incurred by any Proxy Holder in connection with the defense of any such claim.

4.03. The compensation of the Proxy Holders, as well as any reasonable and necessary travel or
other expense paid or incurred by the Proxy Holders in the administration of their duties under
this Agreement, shall be borne and promptly paid by the Corporation upon submission of reasonably
detailed documentation, as appropriate, to the Corporation by or on behalf of the Proxy Holders.

ARTICLE V — Restrictions Binding on Subsidiaries of the Corporation

5.01. The Parties agree that the provisions of this Agreement shall apply to, and shall be made to
be binding upon, all present and future subsidiaries of the Corporation. The Corporation hereby
agrees to undertake any and all measures, and provide such authorizations, as may be necessary to
effectuate this requirement. The sale of, or termination of the Corporation’s control over, any
subsidiary shall terminate the applicability of this Agreement to such subsidiary.

5.02. If the Corporation proposes to form a subsidiary, or to acquire ownership or control of
another company, it shall give notice of such proposed action to DSS and shall advise DSS again
immediately upon consummation of such formation or acquisition.

OPERATIONS

ARTICLE VI — Actions by the Proxy Holders

6.01. The Proxy Holders shall adopt written standard operating procedures (“Operating Procedures”)
which shall be followed by the Proxy Holders in discharging their responsibilities under this
Agreement. The Operating Procedures shall be maintained by the Proxy Holders for review by DSS.
NNI may review the Operating Procedures only with the advanced written approval of DSS. NNI
appeals of any provision of the Operating Procedures shall be forwarded to DSS. DSS reserves the
right to determine, in its sole discretion, whether such appeal should be favorably considered.

6.02. The Proxy Holders shall hold regularly scheduled meetings. These meetings may be held at
such time and at such place within the United States as shall be decided, from time to time, by a
majority of the Proxy Holders. At least four meetings shall be held each year. Minutes of such
meetings shall be prepared and retained by the Proxy Holders for review by DSS.

6.03. For the purpose of conducting the Corporation’s business, a majority of the Proxy Holders
shall be required to be present, either in person or by written proxy, at an official meeting.
Each Proxy Holder who is present shall have the right to cast one vote on each

7

 

question. In lieu of a meeting, action may also be taken on the business of the Corporation by a
writing signed by all the Proxy Holders. Each Proxy Holder agrees to attend, except for good cause
shown, not less than fifty (50) percent of all official meetings held in one year’s time at which
his attendance is formally requested pursuant to the Proxy Holders procedures.

6.04. No proxy to vote the Shares may be given to, or voted by, any person other than one of the
Proxy Holders.

6.05. Subject at all times to the responsibility to ensure compliance by the Corporation with the
NISP’s requirements and this Agreement, the Proxy Holders shall act in good faith as reasonably
prudent persons to protect the legitimate economic interests of NNI in the Corporation as an
ongoing business concern.

6.06. The Government Security Committee (see Section 8.01. below) shall establish written policies
and procedures and maintain oversight to provide assurance to itself and DSS that electronic
communications between the Corporation and its subsidiaries and the Affiliates do not disclose
classified or export-controlled unclassified information without proper authorization. (Note: As
used in this Agreement, the term “electronic communications” means the transfer of information via,
including but not limited to, telephone conversations, facsimiles, teleconferences,
videoconferences or electronic mail.) Policies and procedures shall also provide assurance that
electronic communications are not used by the Parent(s) and/or Affiliates to exert influence or
control over the Corporation’s business or management in a manner which could adversely affect the
performance of classified contracts.

ARTICLE VII — Voting Discretion

7.01. Except as otherwise provided in this Agreement, the Proxy Holders shall possess and shall be
entitled to exercise in their sole and absolute discretion, with respect to any and all of the
Shares at any time covered by this Agreement, the right to vote the same or to consent to any and
every act of the Corporation in the same manner and to the same extent as if they were the absolute
owners of such Shares in their own right. All decisions and actions by the Proxy Holders pursuant
to this Agreement shall be based on their independent judgment. All decisions and actions by the
Proxy Holders shall be free of any control or influence from NNI in any manner whatsoever except as
specifically permitted in this Agreement. Any communication of any nature, and by any means, from
NNI deemed by the Proxy Holders to be an attempt to assert any influence or control precluded by
this Agreement shall be reported immediately by the Proxy Holders to DSS.

7.02. In addition to the general authorities conferred by Section 7.01. above, the Proxy Holders
are specifically authorized in the exercise of their sole and absolute discretion with respect to
any and all of the Shares to vote for or consent to:

     a. the election of directors of the Corporation;

8

 

     b. any increase, reduction or reclassification of the capital stock of the Corporation;

     c. any changes or amendments to the Articles of Incorporation or bylaws of the
Corporation7 other than those necessary pursuant to Section 7.04. below;

     d. the sale or disposition of the property, assets or business of the Corporation other than
that prohibited in Section 7.03. below;

     e. the pledging, mortgaging or encumbering of any assets of the Corporation, except as
described in Section 7.03. below, which NNI might lawfully exercise; or

     f. any action with respect to the foregoing or any other matter affecting the Corporation and
not specifically described in Section 7.03. below which NNI might lawfully exercise.

7.03. The Proxy Holders shall not be authorized to take any of the following actions without the
express written approval of NNI:

     a. the sale or disposal, in any manner, of capital assets or business of the Corporation;

     b. the pledging, mortgaging or encumbering of the assets of the Corporation for purposes
other than obtaining working capital or funds for capital improvements;

     c. any merger, consolidation, reorganization or dissolution of the Corporation; or

     d. the filing or making of any petition under the federal bankruptcy laws or any similar law
or statute of any state or any foreign country.

7.04. The Proxy Holders agree that they shall, upon written request by NNI, take such action or
actions as are necessary to recommend, authorize or approve the actions specified in Section 7.03.
above. The Proxy Holders shall consult with NNI concerning such action so that NNI may have
sufficient information to ensure that all such actions will be taken in accordance with applicable
U.S. laws and regulations. Any action by the Proxy Holders with respect to the matters specified
in Section 7.03. above which is taken without the approval of NNI shall be void and shall have no
effect.

ARTICLE VIII – Government Security Committee

8.01. There shall be established a permanent committee of the Corporation’s Board of Directors, to
be known as the Government Security Committee (“GSC”), consisting of all Proxy Holders/Directors
and those officers of the Corporation who are also directors and

 

			
	7	 	The bylaws and Articles of Incorporation of
the Corporation shall be reviewed by DSS at the time of the establishment of
this Agreement and at least annually thereafter.

9

 

who hold personnel security clearances at the level of the Corporation’s facility security
clearance. The members of the GSC shall exercise their best efforts to ensure that the Corporation
maintains policies and procedures to safeguard the classified information in the possession of the
Corporation and to ensure that the Corporation complies with this Agreement, the ITAR, the EAR, and
the National Industrial Security Program Operating Manual (“NISPOM”).

8.02. The members of the GSC shall exercise their best efforts to ensure the implementation within
the Corporation of all procedures, organizational matters and other aspects pertaining to the
security and safeguarding of classified and controlled unclassified information called for by this
Agreement, including the exercise of appropriate oversight and monitoring of the Corporation’s
operations to ensure that the protective measures contained in this Agreement are effectively
maintained and implemented through its duration.

8.03. The GSC shall designate one of the Proxy Holder members to serve as Chairman of the GSC.

8.04. The Chairman of the GSC shall designate a member of the GSC to be Secretary of the GSC. The
Secretary’s responsibility shall include ensuring that all records, journals, and minutes of GSC
meetings and other documents sent to or received by the GSC are prepared and retained for review by
DSS.

8.05. A Facility Security Officer (“FSO”) shall be appointed by the Corporation and shall be the
principal advisor to the GSC concerning the safeguarding of classified information. The FSO’s
responsibility includes the operational oversight of the Corporation’s compliance with the
requirements of the NISP.

8.06. The members of the GSC shall exercise their best efforts to ensure that the Corporation
develops and implements a Technology Control Plan (“TCP”), which shall be subject to approval by
DSS. The GSC shall have authority to establish the policy for the Corporation’s TCP. The TCP
shall prescribe measures to prevent unauthorized disclosure or export of controlled unclassified
information consistent with applicable U.S. laws and regulations.

8.07. A Technology Control Officer (“TCO”) shall be appointed by the Corporation and shall be the
principal advisor to the GSC concerning the protection of controlled unclassified information and
other proprietary technology and data subject to regulatory or contractual control by the U.S.
Government. The TCO’s responsibilities shall include the establishment and administration of all
intracompany procedures, including employee training programs, to prevent the unauthorized
disclosure or export of controlled unclassified information and to ensure that the Corporation
otherwise complies with the requirements of the ITAR and EAR.

8.08. The GSC shall ensure that any administrative services provided by NNI or any of the
Affiliates to the Corporation do not circumvent the requirements of this Agreement.

10

 

The Corporation shall notify DSS and the GSC of the proposed administrative services to be provided
to the Corporation (including its subsidiaries and affiliates) by NNI or any of the Affiliates.
Upon DSS’ confirmation that the identified administrative services are acceptable, DSS shall issue
an interim approval for those services. Thereafter, the GSC shall certify in writing that it is
effectively monitoring the administrative services being provided, and that said administrative
services do not allow NNI or any of the Affiliates to control or influence the management or
business of the Corporation in violation of this Agreement. The initial GSC certification
referenced in this Section 8.08. shall be provided to DSS within forty-five (45) calendar days of
the execution of this Agreement, or in the case of an existing Proxy Agreement, within forty-five
(45) calendar days of the DSS interim approval referenced above, and subsequent annual GSC
certifications shall be included in the Corporation’s annual report as provided in Section 9.02.
below. NNI or any of the Affiliates shall not provide any administrative services to the
Corporation that have not been reviewed and approved by DSS in accordance with this Section 8.08.

8.09. Discussions of classified and controlled unclassified information by the GSC shall be held
in closed sessions and accurate minutes of such meetings shall be kept and shall be made available
only to such authorized individuals as are so designated by the GSC.

8.10. Upon taking office, the GSC members, the FSO and the TCO shall be briefed by a DSS
representative on their responsibilities under the NISP and this Agreement.

8.11. Each member of the GSC shall exercise his best efforts to ensure that all provisions of this
Agreement are carried out, that the Corporation’s directors, officers, and employees comply with
the provisions of this Agreement, and that DSS is advised of any known violation of, or known
attempt to violate, any provision of this Agreement, appropriate contract provisions regarding
security, U.S. export control laws and regulations, and the NISPOM.

8.12. Each member of the GSC shall execute for delivery to DSS, upon accepting his appointment and
thereafter at each annual meeting of the Corporation with DSS as established by this Agreement, a
certificate acknowledging the protective security measures taken by the Corporation to implement
this Agreement, and further acknowledging his agreement to be bound by, and acceptance of his
responsibilities under, this Agreement, and acknowledging that the U.S. Government has placed its
reliance on him as a U.S. citizen and as the holder of a personnel security clearance to exercise
his best efforts to ensure the matters set forth herein.

ARTICLE IX — Annual Review and Certification

9.01. Representatives of DSS, the Proxy Holders, other members of the GSC, the FSO, the
Corporation’s President and NNI shall meet annually to review the purpose and effectiveness of this
Agreement and to establish a common understanding of the operating requirements and how they will
be implemented. These meetings shall include a discussion of the following:

     a. whether this Agreement is working in a satisfactory manner;

11

 

     b. compliance or acts of noncompliance with this Agreement, the NISPOM, or other applicable
laws and regulations;

     c. necessary guidance or assistance regarding problems or impediment associated with the
practical application or utility of this Agreement; and

     d. whether security controls, practices or procedures warrant adjustment.

9.02. The President of the Corporation and the Chairman of the GSC shall jointly submit to DSS one
year from the effective date of this Agreement and annually thereafter an implementation and
compliance report. Such reports shall include the following information:

     a. a detailed description of the manner in which the Corporation is carrying out its
obligation under this Agreement;

     b. any changes to security procedures, implemented or proposed, and the reasons for those
changes;

     c. a detailed description of any acts of noncompliance, whether inadvertent or intentional,
with a discussion of what steps were taken to prevent such acts from occurring in the future;

     d. any changes or impending changes to any of the Corporation’s management, including the
reasons for such changes;

     e. a statement, as appropriate, that a review of the records concerning all visits and
communications between representatives of the Corporation and the Affiliates has been accomplished
and the records are in order;

     f. a detailed chronological summary of all transfers of classified and/or controlled
unclassified information, if any, from the Corporation to the Affiliates, complete with an
explanation of the U.S. Government authorization relied upon to effect such transfers. Copies of
approved export licenses covering the reporting period shall be appended to the report;

     g. a list of the Corporation’s (including its cleared divisions and cleared subsidiaries)
current classified contracts, and the percentage of income derived from each such classified
contract; and

     h. any other issues that could have a bearing on the effectiveness or implementation of this
Agreement.

12

 

ARTICLE X — Duty to Report Violations of the Agreement

10.01. Except DoD, the Parties agree to report promptly to DSS all instances in which the material
terms and obligations of this Agreement may have been violated.

CONTACTS AND VISITS

ARTICLE XI — Regulated Meetings, Visits and Communications

11.01. The Parties agree to abide by the following procedures regarding meetings, visits, and
communications between the Corporation (including its subsidiaries and divisions) and the
Affiliates.

     a. The Proxy Holders shall schedule a meeting once each year, or more frequently if all Proxy
Holders agree, with NNI. Representatives of the Corporation may attend these meetings if requested
by the Proxy Holders. The Proxy Holders may convene a meeting with NNI at any time as long as the
agenda is limited to the matters described in Section 7.03. above. For any such meetings to be
attended by NNI, a written agenda shall be prepared and submitted in advance to DSS for approval.
The meeting shall not be consummated until the Proxy Holders receive the approval of DSS.
Classified and controlled unclassified information shall not be disclosed to NNI except as
specifically authorized by applicable law or regulation. Suggestions or requests by NNI or other
Affiliate representatives present at these meetings shall not be binding on the Proxy Holders or
the Corporation. Minutes of meetings in which Parent or other Affiliate representatives are in
attendance shall be prepared and retained by the GSC for review by DSS.

     b. All proposed visits to the Corporation and its subsidiaries by any person who represents
the Affiliates (including all of the directors, officers, officers, representatives, and agents of
each) and all proposed visits to the Affiliates by any person who represents the Corporation or its
subsidiaries (including all directors, officers, employees, representatives, and agents of each),
as well as visits between such persons at other locations, must be approved in advance by a Proxy
Holder designated to act on such requests. All requests for such approval shall be submitted in
writing to the Corporation’s FSO for routing to the designated Proxy Holder. Although strictly
social contacts at other locations between the Corporation’s personnel and any individual
representing the Affiliates are not prohibited, written reports of such visits shall be submitted
after the fact to the FSO for filing with, and review by, the designated Proxy Holder.

     c. A written request for approval of a visit must be submitted to the FSO not less than seven
(7) calendar days prior to the date of the proposed visit. If any unforeseen exigency precludes
compliance with this requirement, such request may be communicated via telephone or other
electronic means to the FSO and promptly confirmed in writing. The exact purpose and justification
for the visit shall be set forth in detail sufficient to make a reasonable and prudent evaluation
of the proposed visit. Each proposed visit shall be individually justified and separate approval
request shall be

13

 

submitted for each. Representatives of DoD shall have the right to be present and to monitor all
visits described in Section 11.01.(b) above, no matter where they occur.

     d. Upon receipt of a written request for approval of a visit, the FSO shall promptly relay
the information to the designated Proxy Holder, who, as soon as possible after being so advised,
shall indicate approval or disapproval of the request telephonically or by other expeditious means
to the visiting parties. Such approval or disapproval shall be promptly confirmed in writing. The
GSC shall review periodically the records of any proposed and consummated visits that have occurred
since the last review to ensure proper adherence to approved procedures and to verify that
sufficient and proper justification was furnished.

11.02. Visits and other communications between the Corporation and its subsidiaries and the
Affiliates on such commercial matters as proposed contracts, subcontracts, joint ventures,
partnerships, and teaming arrangements shall be approved in advance by a majority of the Proxy
Holders.

11.03. Nothing in this Agreement shall be construed to prevent the Corporation from supplying to
NNI financial data relating to the financial condition and financial operations of the Corporation.
The Corporation shall also respond in writing through the Proxy Holders to written questions that
NNI may have concerning information contained in such reports. The Proxy Holders and NNI shall
engage in discussions to determine the format of such reporting. The format must be acceptable to
DSS.

11.04. A chronological file of all documentation associated with meetings, visitations and
communications, together with appropriate approvals or disapprovals and reports, required pursuant
to this Article XI, shall be maintained by the GSC for review by DSS.

ARTICLE XII – DoD Remedies

12.01. DoD reserves the right to impose any security safeguard not expressly contained in this
Agreement that it believes is necessary to ensure that unauthorized access by the Affiliates to
classified and controlled unclassified information is effectively precluded.

12.02. Nothing contained in this Agreement shall limit or affect the authority of the head of a
U.S. Government agency8 to deny or revoke the Corporation’s access to classified and
controlled unclassified information under said Agency’s jurisdiction if it is determined by said
Agency that the national security so requires.

12.03. The Parties hereby assent and agree that the U.S. Government has the right, obligation and
authority to require any or all of the following remedies in the event of a material breach of this
Agreement:

 

			
	8	 	The term “agency” has the meaning
provided at 5 United States Code 552(f).

14

 

     a. the novation of the Corporation’s classified contracts to another contractor, the costs of
which shall be allocated in accordance with the terms of such classified contracts and the Federal
Acquisition Regulations included in such classified contracts; and

     b. the termination of any classified contracts being performed by the Corporation and the
denial of new classified contracts for the Corporation; and

     c. the revocation of the Corporation’s facility security clearance; and

     d. the suspension or debarment of the Corporation from participation in all Federal
government contracts, in accordance with the provisions of the Federal Acquisition Regulations.

12.04. Nothing in this Agreement limits the right of the U.S. Government to pursue criminal
sanctions against the Corporation, or NNI, or any Affiliates, or any director, officer, employee,
representative, or agent of any of these companies, for violations of the criminal laws of the
United States in connection with their performance of any of the obligations imposed by this
Agreement, including but not limited to any violations of the False Statements Act, 18 U.S.C. 287,
or of federal criminal statutes pertaining to the unauthorized disclosure of classified
information.

ADMINISTRATION

ARTICLE XIII – Grant of Proxy, Restrictive Legend and Sale of Stock

13.01. NNI hereby appoints the Proxy Holders as its proxies, to have all rights, powers and
authority to exercise all voting rights with respect to the Shares, subject to the terms and
conditions set forth in this Agreement.

13.02. It is the essence of this Agreement that none of the rights, powers and authority which
this Agreement confers on the Proxy Holders may be terminated at any time or in any manner other
than as provided in this Agreement.

13.03. Concurrently with the execution and delivery of this Agreement, NNI shall annotate all
certificates representing the Shares with the legend set out below to reflect that the Shares are
subject to a proxy which is terminable only at such time or times, and in such manners, as are
provided in this Agreement:

The shares represented by this certificate are subject to a Proxy Agreement
dated July 29, 2005, under which the owner of these Shares has granted to the Proxy
Holders named therein, and to their successors, those voting rights with respect to the
Shares represented hereby that are set forth in said Agreement, which rights are
terminable only at such time or times, and in such manner as are provided in said
Agreement. The purpose of said Agreement is to meet the requirements of the Department of
Defense so that the facility security clearances of the Corporation will be continued.

15

 

13.04. All certificates representing the Shares shall be deposited with the Proxy Holders in trust
for NNI, and available for review by DSS and NNI. Receipts for such certificates shall be provided
to NNI.

13.05. If additional Shares are issued to NNI, it shall be a condition of such issuance that NNI
execute a supplemental Proxy Agreement, containing the same terms and conditions set forth in this
Agreement, appointing the Proxy Holders as its proxies to exercise all voting rights with respect
to such shares; and the certificates for such shares shall be annotated in the same manner as
provided in Section 13.03. above.

13.06. Nothing in this Agreement shall restrict the right of NNI or any successor owner of the
Shares from selling, transferring, pledging or otherwise encumbering, all or a portion thereof,
subject to the terms and conditions of this Agreement, as appropriate, and the aforementioned
restrictive legend shall not purport nor be construed to limit any owner’s ability to effect any
such sale, transfer or encumbrance. However, DSS shall be advised in writing of any proposed sale
of the Shares or assets of the Corporation prior to the execution of any sales agreement.
Conversely, the Proxy Holders shall not have the power to sell or otherwise transfer or pledge or
otherwise encumber the Shares.

ARTICLE XIV — Dividends

14.01. During the term of this Agreement, NNI, or its successor, shall be entitled from time to
time to receive from the Proxy Holders payments equal to cash dividends, if any, collected by or
for the account of the Proxy Holders upon the Shares.

14.02. In the event the Proxy Holders receive any shares as a dividend upon the Shares, the Proxy
Holders shall accept such shares.

ARTICLE XV — Notices

15.01. All notices required or permitted to be given to the Parties shall be given by mailing the
same in a sealed, post-paid envelope, via registered or certified mail, or sending the same by
courier or facsimile, addressed to the addresses shown below, or to such other addresses as the
Parties may designate from time to time pursuant to this Section 15.01.:

	 	 	 
	For the Corporation

	 	Nortel Government Solutions Inc.
	 

	 	12730 Fairlakes Circle
	 

	 	Fairfax, VA 22033
	 
	 	 
	For the Parent Corporation:

	 	Nortel Networks Inc.
	 

	 	4008 E. Chapel Hill — Nelson Highway
	 

	 	Research Triangle Park, NC 27709

16

 

	 	 	 
	For the Intermediate Parent:

	 	Nortel Networks Limited
	 

	 	8200 Dixie Road, Suite 100
	 

	 	Brampton, Ontario A6 L6T 5P6
	 

	 	Canada
	 
	 	 
	For the Ultimate Parent:

	 	Nortel Networks Corporation
	 

	 	8200 Dixie Road, Suite 100
	 

	 	Brampton, Ontario A6 L6T 5P6
	 

	 	Canada
	 
	 	 
	For DSS:

	 	Defense Security Service
	 

	 	Deputy Director for Industrial Security
	 

	 	1340 Braddock Place
	 

	 	Alexandria, VA 22314

ARTICLE
XVI — Inconsistencies with Other Documents

16.01. In the event that any resolution, regulation or bylaw of any of the Parties is found to be
inconsistent with any provisions hereof, the terms of this Agreement shall control.

ARTICLE XVII — Governing Law; Construction

17.01. This Agreement shall be construed so as to comply with all applicable U.S. laws,
regulations, and Executive Orders except that, to the extent not inconsistent with the rights of
the United States hereunder, the laws of the State of Delaware shall apply to questions concerning
the rights, powers, and duties of the Corporation, NNI, NNL and NNC under, or by virtue of, this
Agreement.

17.02. In all instances consistent with the context, nouns and pronouns of any gender shall be
construed to include the other gender.

TERMINATION

ARTICLE XVIII — Termination, Amendment and Interpretation of Agreement

18.01. Unless terminated earlier pursuant to Section 18.02. below, this Agreement shall expire ten
(10) years from the date of its execution by DoD without any action being required of any of the
Parties. However, if NNI and Corporation together request that DSS continue this Agreement past
its expiration, DSS may extend the term of this Agreement while a new agreement is being
negotiated. Any request to extend the term of this Agreement pursuant to this Section 18.01. shall
be submitted to DSS no later than ninety (90) days prior to the expiration date of this Agreement.

18.02. This Agreement may only be terminated by DSS as follows:

     a. in the event of a sale of the business or all of the Shares to a company or person not
under FOCI; or

17

 

     b. when the existence of this Agreement is no longer necessary to maintain a facility
security clearance for the Corporation; or

     c. when continuation of a facility security clearance for the Corporation is no longer
necessary; or

     d. when there has been a breach of this Agreement that requires it to be terminated, or when
DoD otherwise determines that termination is in the national interest; or

     e. when NNI and the Corporation for any reason and at any time petition DSS to terminate this
Agreement; however, DSS has the right to receive full disclosure of the reason or reasons therefor,
and has the right to determine, in its sole discretion, whether such petition should be granted.

18.03. If DoD determines that this Agreement should be terminated for any reason, DSS shall
provide Corporation and NNI with thirty (30) days’ written advance notice of its intent and the
reasons therefor.

18.04. DoD may only refuse to terminate this Agreement when its continuation is necessary in the
interest of U.S. national security.

18.05. This Agreement may be amended by an agreement in writing executed by the Parties.

18.06. The Proxy Holders are authorized to consult with NNI concerning any proposed amendments to,
or termination of, this Agreement. Documentation concerning such consultations shall be prepared
and retained by the Proxy Holders for review by DSS.

18.07. The Parties agree that any question concerning the interpretation of this Agreement, or
whether a proposed activity is permitted hereunder, shall be referred to DSS, and that DoD shall
serve as final arbiter/interpreter of such matters.

ARTICLE XIX — Actions Upon Termination of Agreement

19.01. Upon termination of this Agreement in any manner provided herein, the restrictive legend
affixed to the certificates representing the Shares will be removed.

19.02. DSS shall furnish the Corporation and NNI with written notice of the termination of this
Agreement.

19.03. Upon termination of this Agreement, all further obligations or duties of the Proxy Holders
under this Agreement shall cease.

18

 

ARTICLE XX — Place of Filing

20.01. Upon execution, and until the termination, of this Agreement, one original counterpart
shall be filed at the principal office of the Corporation, located in Fairfax, Virginia.

19

 

EXECUTION

This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original, and all of such counterparts shall together constitute but one and the same instrument.
The Parties are entitled to retain an executed counterpart of this Agreement.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement which shall not become effective
until duly executed by DoD.

	 	 	 	 	 	 	 	 	 
	/s/   Stephen Szeremeta 7/14/05

	 	 	 	By
	 	/s/   Charles R. Saffell 7/14/05
	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Charles Saffell, Chief Executive Officer
	 	 	 	 	For Nortel Government Solutions Inc.
	 
	 	 	 	 	 	 	 	 
	/s/   Lisa B. Purvis 07-19-05

	 	 	 	By
	 	/s/   Mary Cross 07/19/05	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Mary Cross, President
	 	 	 	 	For Nortel Networks Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/   Stephen Szeremeta 7/14/05

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/   William Owens
	 	 	 	 	 	 	 
	 	 	 	 	William Owens, Vice Chairman and Chief Executive Officer
	 	 	 	 	For Nortel Networks Limited
	 
	 	 	 	 	 	 	 	 
	/s/   Joanne Krauel 07/18/05
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/   Gordon Davies
	 	 	 	 	 	 	 
	 	 	 	 	Gordon Davies
	 	 	 	 	Asst General Counsel-Securities and Corporate Secretary
	 	 	 	 	For Nortel Networks Limited

20

 

	 	 	 	 	 	 	 	 	 
	/s/   Stephen Szeremeta 7/14/05

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/    William Owens
	 	 	 	 	 	 	 
	 	 	 	 	William Owens, Vice Chairman and Chief Executive Officer
	 	 	 	 	For Nortel Networks Corporation
	 
	 	 	 	 	 	 	 	 
	/s/    Joanne Krauel 07/18/05

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Signature and Date
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/    Gordon Davies
	 	 	 	 	 	 	 
	 	 	 	 	Gordon Davies
	 	 	 	 	Asst General Counsel-Securities and Corporate Secretary
	 	 	 	 	For Nortel Networks Corporation
	 
	 	 	 	 	 	 	 	 
	/s/    Stephen Szeremeta 7/14/05	 	 	 	/s/    James Frey
	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	James Frey, Proxy Holder
	 
	 	 	 	 	 	 	 	 
	/s/    Stephen Szeremeta 7/14/05	 	 	 	/s/    Thomas McInerney
	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Thomas McInerney, Proxy Holder
	 
	 	 	 	 	 	 	 	 
	/s/    Stephen Szeremeta 7/14/05	 	 	 	/s/  
 Gregory S. Newbold
	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Gregory Newbold, Proxy Holder
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/    Mary H. Griggs
	 	 	 	 	 	 	 
	Signature of Witness/Date	 	 	 	Mary H. Griggs
	 	 	 	 	Deputy Director for Industrial Security
	 	 	 	 	Defense Security Service
	 	 	 	 	For the Department of Defense

	 	 	 
	 

	 	Effective Date 7/29/05
	 

	 	(Date of DSS signature)

21

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