Municipal Solutions Group (TSX VENTURE:MSZ) announced that it has entered into a share purchase agreement and an asset purchase agreement with N. Harris Computer Corporation, a wholly owned subsidiary of Constellation Software Inc. (TSX:CSU).

Under the terms of the Acquisition Agreements, Municipal has agreed to sell substantially all of its assets, including the shares of its wholly-owned subsidiary, Municipal Software Corporation, (but excluding those assets which constitute Municipal's "Local Government Manager" product ("LGM") which is delivered in the form of Software-as-a-Service ("SaaS")) to Harris in return for up to $5,350,000 (the "Purchase Price"). The Purchase Price will be paid as follows:

(a) a total of $4,350,000 will be paid in cash at closing;

(b) a further $250,000 will be paid in cash on or about 90 days following the closing date ("Holdback 1"); and

(c) a further $750,000 will be paid in cash on or about 18 months following the closing date ("Holdback 2").

Holdback 1 and Holdback 2 are subject to reduction in the event there are claims under the Acquisition Agreements for breaches of those agreements or in the event that the net tangible assets of the business being sold are less than $(750,000) on the closing date.

Municipal proposes to use the proceeds of the sale of Municipal Software Corporation to retire a portion of the debts of the Company and to offer shareholders a choice of redeeming their shares or receiving a partial return of capital and retaining their shares. After the sale, Municipal plans to focus on the development and sale of Software-as-a-Service products.

The Acquisition Agreements contain a standard "superior proposal" provision which allows the board of directors of Municipal to terminate the Acquisition Agreements in the event Municipal receives an unsolicited superior proposal and provided that Municipal pays Harris a break fee of $114,000. In addition, Harris has the right to match any such superior proposal prior to any such termination.

The transactions contemplated by the Acquisition Agreements will require the approval of shareholders by way of a special resolution in which two-thirds of the votes cast on the matter vote in favour of the transaction. Such shareholder approval will be sought at an annual and special meeting of shareholders expected to be held in July 2008. In addition, at that meeting, shareholders will be asked to approve several other matters including:

(a) amendments to the articles of Municipal which will have the effect of permitting shareholders of Municipal to choose two options upon completion of the transactions contemplated by the Acquisition Agreements:

Option 1:

Redeem their existing shares of Municipal in return for an immediate cash payment estimated to be $0.144 per share and a right to receive a pro rata portion of amounts actually received by Municipal from Holdback 1 and Holdback 2. The total sum which will be received by shareholders who choose Option 1 is currently uncertain due to, among other things, the potential for reductions to Holdback 1 and Holdback 2 as a result of the terms of the Acquisition Agreements. However, Municipal currently estimates that the total amount to be received by each shareholder who chooses Option 1 will be approximately $0.175 per share.

Option 2:

Hold their existing shares of Municipal, which will continue to own, develop and sell its current LGM product and may acquire or develop additional SaaS products that are complementary to LGM. Subject to compliance with applicable law and the approval of its directors after completion of the transactions contemplated by the Acquisition Agreements, Municipal expects to return approximately $0.060 per share in capital to each holder who retains shares of Municipal, along with the right to receive a pro rata portion of amounts actually received by Municipal from Holdback 1 and Holdback 2. The total sum which will be received by shareholders who choose Option 2 is currently uncertain due to, among other things, the potential for reductions to Holdback 1 and Holdback 2 as a result of the terms of the Acquisition Agreements and the number of shareholders who choose Option 1. However, Municipal currently estimates that the total amount to be received by each shareholder who chooses Option 2 will be approximately $0.091 per share (and such shareholders will continue to hold their Municipal shares as well).

(b) an amendment to the terms of a total of $950,000 principal amount of 12% convertible debentures previously issued by Municipal to Pender Growth Fund (VCC) Inc. ("Pender Growth Fund") such that the conversion price of such debentures will be reduced from $0.250 per share to $0.175 per share. This resolution will require disinterested shareholder approval at the meeting. A company controlled by a director of Municipal, which holds $50,000 principal amount of these convertible debentures, intends to redeem its debentures and will therefore not benefit from the reduced conversion price.

Shareholders choosing Option 1 above will receive an amount that represents an approximate 112% premium over the average closing price of Municipal's common shares on the TSX Venture Exchange for the previous 20 trading days (before taking into account any additional amounts to be received in connection with Holdback 1 or Holdback 2).

The total amounts per share expected to be received by shareholders who choose Option 1 are currently estimated to be approximately equivalent to the sum of the total payments per share to be received by shareholders who choose Option 2 plus the estimated value of assets per share that will remain in Municipal following the asset sale.

Evans & Evans Inc., an investment banking firm, has provided the board of directors of Municipal with an opinion that the transaction, as structured, is fair from a financial point of view to the shareholders of Municipal. The board of directors has carefully considered all of the terms of the proposed transactions and unanimously resolved to recommend that shareholders approve all necessary resolutions to implement these transactions. Municipal will shortly issue a management proxy circular which will describe all proposed transactions in more detail.

Pender Growth Fund, which currently owns 9,705,106 shares of Municipal representing approximately 52.2% of the total number of issued and outstanding shares of Municipal, has entered into an agreement with Harris pursuant to which it has agreed to vote its shares in favour of the transactions contemplated by the Acquisition Agreements. The terms of the agreement provide that it will automatically terminate if Municipal pays the break fee to Harris as part of a termination of the Acquisition Agreements. In addition, Pender Growth Fund has advised Municipal that it intends to choose "Option 2" described above and will continue to hold its common shares of Municipal after completion of the transactions described herein.

"We're very pleased to announce this transaction with Harris Computer," said David Roberts, Chairman of Municipal. "Harris is a large, respected vendor of software solutions to the local government sector so this is an excellent fit for our customers and staff who will benefit from Harris's substantial resources and their long-term commitment to growth. This deal also offers our shareholders the flexibility of either redeeming their shares at fair value or receiving a partial return of capital and continuing as shareholders as we focus the Company on Software-as-a-Service."

Completion of all of these transactions is subject to a number of conditions, including receipt of all necessary shareholder,
stock exchange and regulatory approvals. Municipal expects that an annual and special meeting of shareholders will be held in mid-July, 2008 and, if all necessary approvals are received and conditions are satisfied, closing is expected to follow shortly thereafter.