AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement is entered into by and between NBD
Bank, N.A., a national banking association (the "Bank") whose address is ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, has approved the uncommitted credit
authorization(s) and Term Loan(s) listed below (collectively, the "Credit
Facilities", and, individually as designated below) to MADE2MANAGE SYSTEMS, INC.
(the "Borrower"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
subject to the terms and conditions set forth in this agreement and the Bank's
continuing satisfaction with the Borrower's managerial and financial status.
Disbursements under the Credit Facilities are solely at the Bank's discretion.
Any disbursement on one or more occasions shall not commit the Bank to make any
subsequent disbursement.
WHEREAS, Borrower and the Bank entered into a Credit Agreement dated as of June
9, 1995, as amended by First Amendment dated September 27, 1995, as amended by
Second Amendment dated March 27, 1996, as amended by Third Amendment dated June
25, 1996, as amended by Fourth Amendment dated May 14, 1997 ("Original Credit
Agreement") pursuant to which the Bank agreed to extend uncommitted credit
facilities to Borrower upon the terms and conditions set forth therein (the
"Original Credit Facility"); and
WHEREAS, Borrower and the Bank wish to (a) restate the Original Credit Agreement
and any amendments to restructure the Original Credit Facilities and (b)to amend
various other provisions of the Original Credit Agreement; and
WHEREAS, pursuant to the terms of this Amended and Restated Credit Agreement (i)
the Original Credit Agreement shall be replaced by this Amended and Restated
Credit Agreement, (ii) all obligations of the Borrower, under the Original
Credit Agreement, to the extent not repaid, shall be deemed to be obligations of
the Borrower under this Agreement and all provisions of this Agreement shall be
effective;
NOW THEREFORE, in consideration of the above recitals and the terms and
conditions contained herein the Borrower agrees that (a) the Original Credit
Facilities arc restated as contained herein and (b) the Original Credit
Agreement is hereby amended and restated as follows:
1. Credit Facilities.
1.1 Facility A. The Bank has approved an uncommitted Credit
Authorization to the Borrower in the principal sum not to exceed $1,000,000.00
in the aggregate at any one time outstanding ("Facility A"). Credit under
Facility A shall be in the form of disbursements evidenced by credits to the
Borrower's account and shall be repayable as set forth in a Master Demand
Business Loan Note executed concurrently (referred to in this agreement both
singularly and together with any other promissory notes referenced in this
Section as the "Notes"). The proceeds of Facility A shall be used for the
following purpose: working capital. Facility A shall expire on July 1, 1999
unless earlier withdrawn.
1.2 Facility B (Purchase Money Term Loans). The Bank has approved an
uncommitted Credit Authorization to the Borrower in the principal sum not to
exceed $100,000.00 in the aggregate at any one time outstanding ("Facility B").
Facility B shall be in the form of loans evidenced by the Borrower's notes on
the Bank's form (referred to in this agreement both singularly and together with
any other promissory notes referenced in this Section as the "Notes"), the
proceeds of which shall be used to purchase the following: equipment: interest
on each loan shall accrue at a rate to be agreed upon by the Bank and the
Borrower at the time the loan is made. The maturity of each Note shall not
exceed 60 months from the Note date. Notwithstanding the aggregate amount of
Facility B stated above, the original principal amount of each loan shall not
exceed the lesser of 75% of the cost of the equipment purchased with loan
proceeds or $100,000.00. Facility B shall expire on July l, 1999 unless earlier
withdrawn.
2. Conditions Precedent.
2.1 Conditions Precedent to Initial Extension of Credit. Before the first
extension of credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the Borrower shall deliver to the
Bank, in form and substance satisfactory to the Bank:
A. Loan Documents. The Notes; and any other loan documents which
the Bank may reasonably require to give effect to the transaction contemplated
by this agreement
B. Evidence of Due Organization and Good Standing. Evidence
satisfactory to the Bank of the due organization and good standing of the
Borrower and every other business entity that is a party to this agreement
and/or other loan documents required by this agreement. That evidence shall
include, in the case of a corporation, articles of incorporation, bylaws, and a
certificate of existence, in the case of a partnership, the partnership
agreement, and in the case of a limited liability company, the articles of
organization, the operating agreement and a certificate of existence; and
C. Evidence of Authority to Enter into Loan Documents. Evidence
satisfactory to the Bank that (i) each party to this agreement and/or the other
loan documents required by this agreement is authorized to enter into the
transactions contemplated by this agreement and the other loan documents, and
(ii) the person signing on behalf of each such party is authorized to do so.
2.2 Conditions Precedent to Each Extension of Credit. Before any
extension of credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the following conditions shall
have been satisfied:
A. Representations. The representations contained in Section 10
shall be true on and as of the date of the extension of credit;
B. No Event of Default. No event of default shall have occurred
and be continuing or would result from the extension of credit;
C. Continued Satisfaction. The Bank shall have remained satisfied
with the Borrower's managerial and financial status; and
D. Additional Approvals, Opinions, and Documents. The Bank shall
have received such other approvals, opinions and documents as it may reasonably
request.
3. Requests to Borrow.
3.1 Requests to Borrow. The Borrower may authorize certain of its
officers and/or other agents to request advances by telephone or other means of
communication. That authorization shall be on the Bank's form.
4. Fees and Expenses.
4.1 Fees. Upon execution of this agreement, the Borrower shall pay the
Bank the following fees, all of which the Borrower acknowledges have been earned
by the Bank: Closing Fee of $500 .00.
4.2 Out-of-Pocket Expenses. In addition to any fee set forth above,
the Borrower shall reimburse the Bank for its out-of pocket expenses (if any),
and reasonable attorneys' fees allocated to the Credit Facilities.
5. Collateral/Setoff. To secure payment of the borrowings under the Credit
Facilities and all of the Borrower's other liabilities to the Bank, the Borrower
grants to the Bank a continuing security interest in: (i) all securities and
other property of the Borrower in the custody, possession or control of the Bank
(other than property held by the Bank solely in a fiduciary capacity) and (ii)
all balances of deposit accounts of the Borrower with the Bank. The Bank shall
have the right at any time to apply its own debt or liability to the Borrowers
or to any other party liable for payment of the Credit Facilities, in whole or
partial payment of those Credit Facilities or other present or future
liabilities, without any requirement of mutual maturity.
6. Cross-Lien. Any of the Borrower's other property in which the Bank has a
security interest to secure payment of any other debt, whether absolute,
contingent, direct or indirect, including the Borrower's guaranties of the debts
of others, shall also secure payment of and be part of the Collateral for the
Credit Facilities.
7. Affirmative Covenants. So long as any debt remains outstanding under the
Credit Facilities, the Borrower, and each of its subsidiaries, if any, shall:
7.1 Insurance. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties and
contingencies and in the types and amounts as shall be in accordance with sound
business and industry practices.
7.2 Existence. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms, and pay on or before
their due date all taxes, assessments, fees and other governmental monetary
obligations, except as they may be contested in good faith if they have been
properly reflected on its books and, at the Bank's request, adequate fluids or
security has been pledged to insure payment
7.3 Financial Records. Maintain proper books and records of account,
in accordance with generally accepted accounting principles where applicable,
and consistent with financial statements previously submitted to the Bank.
7.4 Management. Maintain ▇▇▇▇▇ IL ▇▇▇▇▇▇▇ as Chief Executive Officer,
unless Borrower has prior Written approval of the Band.
7.5 Financial Reports. Furnish to the Bank whatever information,
books, and records the Bank may reasonably request, including at a minimum: If
the Borrower has subsidiaries, all financial statements required will be
provided on a consolidated and on a separate basis.
A. Within 45 days after each quarterly period' a balance sheet as
of the end of that period and a statement of profit, loss and surplus, from the
beginning of that fiscal year to the end of that period, certified as correct by
one of its authorized agents.
B. Within 90 days after, and as of the end of, each of its fiscal
years, a detailed audit including a balance sheet and statement of profit, loss
and surplus, certified by an independent certified public accountant of
recognized standing.
8. Negative Covenants.
8.1 Definitions. As used in this agreement, the following terms shall
have the following respective meanings:
A. "Subordinated Debt" shall mean debt subordinated to the Bank in
manner and by agreement satisfactory to the Bank.
B. "Working Capital" shall mean current assets less the sum of
current liabilities and due from Affiliates.
C. "Tangible Net Worth" shall mean total assets less the sum of
intangible assets, due from Affiliates, and total liabilities. Intangible
assets include goodwill, patents, copyrights, mailing lists, catalogs,
trademarks, bond discount and underwriting expenses, organization expenses, and
all other intangibles.
D. "Affiliate" shall mean shareholder, partners, owners, and
subsidiaries, and entities owned or controlled by such parties.
E. "Cash Flow Coverage" shall mean earnings before interest and
taxes plus depreciation and amortization less taxes less dividends less unfunded
capital expenditures plus extraordinary losses less extraordinary gains divided
by interest plus scheduled principal payments.
8.2 Unless otherwise noted, the financial requirements set forth in
this Section shall be computed in accordance with generally accepted accounting
principles applied on a basis consistent with financial statements previously
submitted by the Borrower to the Bank.
8.3 Without the written consent of the Bank, so long as any debt
remains outstanding under the Credit Facilities, the Borrower will not: (where
appropriate, covenants shall apply on a consolidated basis)
A. Debt. Incur, or permit to remain outstanding, debt for
borrowed money or installment obligations, except debt reflected in the latest
financial statement of the Borrower furnished to the Bank prior to execution of
this agreement and not to be paid with proceeds of borrowings under the Credit
Facilities. For purposes of this covenant, the sale of any accounts receivable
shall be deemed the incurring of debt for borrowed money.
B. Guaranties. Guarantee or otherwise become or remain
secondarily liable on the undertaking of another, except for endorsement of
drafts for deposit and collection in the ordinary course of business.
C. Liens. Create or permit to exist any lien on any of its
property, real or personal, except: existing liens known to the Bank; liens to
the Bank; liens incurred in the ordinary course of business securing current
nondelinquent liabilities for taxes, worker's compensation, unemployment
insurance, social security and pension liabilities; and liens for taxes being
contested in good faith.
D. Advances and Investments. Purchase or acquire any securities
of; or make any loans or advances to, or investments in, any person, firm or
corporation, except as listed on the attached Exhibit A.
E. Use of Proceeds. Use, or permit any proceeds of the Credit
Facilities to be used, directly or indirectly, for the purpose of "purchasing or
carrying any margin stock" within the meaning of Federal Reserve Board's
Regulation U. At the Bank's request, the Borrower will furnish a completed
Federal Reserve Board's Form U-l.
F. Current Ratio. Permit the ratio of its current assets to its
current liabilities to be less than 1.0 to 1.00.
G. Cash Flow Coverage Ratio. Permit the ratio of its Cash Flow
Coverage to be less than 2.00 to 1.00.
H. Debt and Leases. Permit the aggregate amount of debt and\or
lease obligations, except debt owed to the Bank, exceed $500,000.00 in any one
fiscal year.
9. Representations by Borrower. Each Borrower represents that: (a) the
execution and delivery ,of this Agreement and the Notes and the performance of
the obligations they impose do not violate any law, conflict with any agreement
by which it is bound, or require the consent or approval of any governmental
authority or ether third party; (b)this agreement and the Notes are valid and
binding agreements, enforceable according to their terms; and (c) all balance
sheets, profit and loss statements, and other financial statements furnished to
the Bank arc accurate and fairly reflect the financial condition of the
organizations and persons to which they apply on their effective dates,
including contingent liabilities of every type, which financial condition has
not changed materially and adversely since those dates. Each Borrower also
represents that this agreement evidences a business loan exempt from the Federal
Truth In Lending Act (15 USC 1601. et seq), the Federal Reserve Bank's
Regulation Z (12 CFR 226, et seq), and the Indiana Uniform Consumer Credit Code
(IC 24-4.5-1-101, et seq). Each Borrower, other than a natal person, further
represents that: (a) it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) the execution and
delivery of this agreement and the Notes and the performance of the obligations
they impose (i) are within its powers and have been duly authorized by all
necessary action of its governing body, and (ii) do not contravene the terms of
its articles of incorporation or organization, its by-laws, or any partnership,
operating or other agreement governing its affairs.
10. Default/Acceleration.
10.1 Events of Default Acceleration. The Credit Facilities shall
terminate and all borrowings under them shall become due immediately, without
notice, at the Bank's option, if any of the following events occurs:
A. The Borrower of any of the Credit Facilities falls to pay when
due any amount payable under the Credit Facilities or under any agreement or
instrument evidencing debt to any creditor.
B. The Borrower (a) falls to observe or perform any other term of
this agreement or the Notes; (b)makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any materially
incorrect or misleading representation in any financial statement or other
information delivered to the Bank; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money (other than
borrowings under the Credit Facilities) such that the creditor declares the debt
due before its maturity.
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed as part of the
Credit Facilities.
D. A "reportable event" (as defined in the Employee Retirement
Income Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of the
Borrower or any affiliate of the Borrower.
E. The Borrower becomes insolvent or unable to pay its debts as
they become due.
F. The Borrower (a) makes an assignment for the benefit of
creditors; (b) consents to the appointment of a custodian, receiver or trustee
for it or a substantial part of its assets; or (c) commences any proceeding
under any bankruptcy, reorganization, liquidation or similar laws of any
jurisdiction.
G. A custodian, receiver or trustee is appointed for the Borrower
or for a substantial part of its assets without its consent and is not removed
within 60 days after the appointment.
H. Proceedings are commenced against the Borrower under any
bankruptcy, reorganization, liquidation, or similar laws of any jurisdiction,
and those proceedings remain undismissed for 60 days after commencement; or the
Borrower consents to the commencement of such proceedings.
I. Any judgment is entered against the Borrower or any attachment,
levy or garnishment is issued against any property of the Borrower.
J. The Borrower dies.
K. The Borrower without the Bank's written consent, which shall
not be unreasonably withheld, (a) is dissolved, (b)merges or consolidates with
any third party, (c) leases, sells or otherwise conveys a material part of its
assets or business outside the ordinary course of business, (d) leases,
purchases, or otherwise acquires a material part of the assets of any other
corporation or business entity, except in the ordinary course of business, (e)
agrees to do any of the foregoing, (notwithstanding the foregoing, any
subsidiary may merge or consolidate with any other subsidiary, or with the
Borrower, so long as the Borrower is the survivor).
L. The loan-to-value ratio of any pledged securities at any time
exceeds the Bank's limit for securities of the type pledged, and that excess
continues for five (5) days after notice from the Bank to the Borrower.
M. There is a substantial change in the existing or prospective
financial condition, of the Borrower which the Bank in good faith determines to
be materially adverse.
N. The Bank in good faith shall deem itself insecure.
10.2 Remedies. If the borrowings under the Credit Facilities are not paid
at maturity, whether by demand, accelerated or otherwise, the Bank shall have
all of the rights and-remedies provided by any law or agreement Any requirement
of reasonable notice shall be met if the Bank sends the notice to tie Borrower
at least seven (7) days prior to the date of sale, disposition or other event
giving rise to the required notice. The Bank is authorized to cause all or any
part of any collateral to be transferred to or registered in its name or in the
name of any other person, or business entity, with or without designation of
the capacity of that nominee. The Borrower is liable for any deficiency
remaining after disposition of any collateral. The Borrower is liable to the
Bank for all reasonable costs and expenses of every kind incurred in the making
or collection of the Credit Facilities, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses shall
include, without limitation, any costs or expenses incurred by the Bank in any
bankruptcy, reorganization, insolvency or other similar proceeding.
11. Miscellaneous.
11.1 Notice from one party to another relating to this agreement shall
be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number set forth
under its name below by any of the following means: (a) hand delivery,
(b)registered or certified mail, postage prepaid, with return receipt requested,
(c) Federal Express or-like overnight courier service or (d) fax, telex or other
wire transmission with request for assurance of receipt in a manner typical with
respect to communication of that type. Notice made in accordance with this
section shall be deemed delivered upon receipt if delivered by hand or wire
transmission, 3 business days after mailing if mailed by first class, registered
or certified mail, or one business day after mailing or deposit with an
overnight courier service if delivered by express mail or overnight courier.
11.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No single or partial exercise by the Bank of
any right or remedy shall preclude any other future exercise of it or the
exercise of any other right or remedy. No waiver or indulgence by the Bank of
any default shall be effective unless in writing and signed by the Bank, nor
shall a waiver on one occasion be construed as a bar to or waiver of that right
on any future occasion.
11.3 This agreement, the Notes, and any related loan documents embody
the entire agreement and understanding between the Borrower and the Bank and
supersede all prior agreements and understandings relating to their subject
matter. If any one or more of the obligations of the Borrower under this
agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrower shall not in any way be affected or impaired, and
such validity, illegality or unenforceability in one jurisdiction shall not
affect the validity, legality or enforceability of the obligations of the
Borrower under this agreement or the Notes in any other jurisdiction.
11.4 The Borrower, if more than one, shall be jointly and severally
liable.
11.5 This agreement is delivered in the State of Indiana and governed
by Indiana law. This agreement is binding on the Borrower and its successors,
and shall inure to the benefit of the Bank, its successors and assigns.
11.6 Section headings are for convenience of reference only and shall
not affect the interpretation of this agreement.
12. Waiver of Jury Trial. The Bank and the Borrower, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this agreement or any related
instrument or agreement or any of the transactions contemplated by this
agreement or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Borrower shall
seek to consolidate, by counter-claim or otherwise, any action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by either the Bank or the Borrower except by a
written instrument executed by both of them.
Executed by the parties as of: May 29, 1998.
"BANK" "BORROWER":
NBD Bank, N.A. MADE2MANAGE SYSTEMS, INC.
By: _________________________ By: ______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
__________________________________
Printed Name Title
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
NBD Bank, N.A. MADE2MANAGE SYSTEMS, INC.
One Indiana Square ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile/Telex No. (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile/Telex No. ____________________
EXHIBIT A
MADE2MANAGE SYSTEMS, INC
INVESTMENT POLICY AND INVESTMENT GUIDELINES
INVESTMENT POLICY
The excess fluids of Made2Manage Systems, Inc. (the Company) will be managed to
safeguard these corporate assets while concurrently generating a rate of return.
The investment portfolio will be diversified as required to address short-term
liquidity needs and conform with concentration limits established in the
following investment Guidelines. investments will be deployed in a manner
designed to enhance the corporation's long-term, strategic banking
relationships.
The Vice President, Finance and Treasurer is charged with the oversight of the
investment program. This includes authority as necessary to direct the program
including the authority to open accounts with investment institutions, to
establish safekeeping accounts or other arrangements for the custody of
securities, and to execute such documents as may be necessary. Vice President,
Finance and Treasurer also has the authority to delegate the daily investment
activities to the Controller. The Controller will be responsible for the
implementation of and continued compliance with this Investment Policy and the
investment Guidelines.
The primary objectives of the Company's investments are:
I. Portfolio Structure and Maturity Parameters
A. Internally Managed investments
A liquidity portfolio is maintained by Finance Department personnel
and is the primary source of cash for operations and unexpected requirements.
The liquidity portfolio is described as follows:
1. Purpose: To provide immediate liquidity
2. Horizon: Invested maturities of up to one month
B. Externally Managed Investments
The externally managed portfolios are maintained by outside investment
professionals and are the secondary source of cash. These investment Managers
are bound to these investment guidelines:
1. Purpose: To provide short term investment maturities.
2. Horizon: Average portfolio maturity of one year or less
with individual investment maturities of one (I) year or less from the
current fiscal quarter end
II. Investment Institutions
Investment instruments may only be purchased from one of the approved
investment institutions listed in Appendix A. An investment institution is
defined as a bank or market dealer/brokerThe Board of Directors must approve any
additions to this list.
III. Investment Instruments
At the time of purchase of the investment instrument the investment
Instrument must meet or exceed all of the published short term investment
criteria listed below. These investment criteria assess the credit risk of the
investment instrument.- They do not assess the interest rate risk and
reinvestment risk of the investment instrument.
The currently approved investment instruments are listed below. The
maturities of these investment instruments must meet the maturity guidelines
listed in Section III - PORTFOLIO STRUCTURE AND MATURITY PARAMETERS. The
maturities of any investment can be based on a reset of the interest rate if
there is a put within the maturity guidelines that maintains the par value of
the investment. Any additions, deletions or modifications to this list must be
approved in writing by Vice President, Finance and Treasurer.
A. U.S. TREASURY SECURITIES - may invest in bills, notes, and bonds
that are direct obligations of the United States Treasury, or those for which
the full faith and credit of the United States is pledged for the payment of
principal and interest thereon.
B. U.S. GOVERNMENT AGENCY SECURITIES - may invest in bonds, notes,
debentures, or other obligations or securities issued by a specified U.S.
Federal Government Agency or a government-sponsored agency that have a line of
credit with the United States Treasury The specified Agencies are FNMA, FHLB,
FHLMC, and SLMC.
C. REPURCHASE AGREEMENTS - may invest in repurchase agreements that are
at least 100% collateralized by securities listed in Sections III.A. or III.B.
The securities collateralizing the repurchase agreement must be indicated a the
time of purchase as well as on the confirmation.
D. CERTIFICATES OF DEPOSIT - may invest in time certificates of
deposit, savings, or deposit accounts with the Company's commercial banks,
provided such deposits at any one institution total less than the dollar limit
for qualification for FDIC insurance ($100,000 as of June 1998).
E. MONEY MARKET FUNDS - may invest in a Money Market Fund having assets
of at least $100 million, short-term ratings of A-1/P-1, and whose investment
policies are consistent with the criteria outlined herein.
F. MUNICIPAL BONDS/NOTES - may invest in Municipal Bonds or Notes
issued by counties, cities, states, or governmental entities or by a financial
intermediary which are:
1. rated in accordance with the following guidelines,
2. otherwise secured by letters of credit issued by the Company's
commercial banks, or
3. prerefunded or escrowed to maturity using U.S. Treasury
Securities or approved U.S. Government Agency Securities.
Short Term Long Term
Rating Agency Taxable Exempt Taxable Exempt
Standard & Poor A-I SP-I ▇ ▇
▇▇▇▇▇ P-I MIG-I A A
If these criteria are not met after purchase and if there is no
penalty for selling before maturity, then the Investment Instrument must be
sold. If these criteria are not met after purchase and if there is a penalty
for selling before maturity, then the Investment instrument may be either sold
or held to maturity based upon the written approval of the Vice President,
Finance and Treasurer.
G. AUCTION RATE MUNICIPAL BONDS - may invest in Auction Rate Municipal
Bonds in accordance with the ratings guidelines described in section F.
H. COMMERCIAL PAPER - may invest in Commercial Paper with short-term
ratings described in section F
I. AUCTION RATE PREFERRED STOCK - may invest in an Auction Rate
Preferred Stock issued by a domestic corporation or financial intermediary that
is over 100% collateralized by securities listed in Sections III.A. or III.B.
IV. Diversification
In order to minimize risk through effective diversification, the investment
portfolio must be maintained according to the parameters listed below:
A. Investment Managers are limited to $11,000,000 or 33% of the total
portfolio, whichever is greater.
B. Investment instruments are limited to $1,000,000 with any one
issuer, except for U.S. Treasuries or U.S. Government Agencies which are limited
to $1,000,000 on any one issue.
V. Foreign Currency Hedging
Foreign currency financial instruments may be used for the purpose of
hedging, including the use of cash advances. The primary objective of such
hedge instruments or cash advances to a foreign currency is to manage foreign
exchange risk.
The Vice President, Finance and Treasurer shall have the short-term
(tactical) responsibility for execution of hedge instruments. The Vice
President, Finance and Treasurer also has ongoing responsibility to identify
alternative hedge instruments and minimize investment risk.
VI. Performance Measurement
Within practical limitations, the performances of the Company's portfolio
will be measured against one or more indices which reflect comparable
investments with respect to quality, liquidity, and diversification.
VII. Distribution
A copy of this Investment Policy and Investment Guidelines shall be
distributed to each of the approved Investment institutions. It shall be the
responsibility of each Investment institution to certify to the Company that
they have received both the Investment Policy and-the Investment Guidelines.
The form of certification is shown in Appendix B.
VIII. Reporting Requirements
At the end of each month (and more frequently if requested), the Controller
will provide the Vice President, Finance and Treasurer with a summary report of
investments. The report shall include the type of Investment Instrument, the
name of the Investment institution, the agent or broker, the yield to maturity,
the term, the principal, and the market value. In addition, the Controller
shall be prepared to present and discuss investment transactions for the month,
including the names of investment institutions, agents, or brokers involved in
each transaction, and with regard to sales, the gain or loss on each
transaction.
To the extent that the investment portfolio exceeds 25% of the company's
net equity position, the Controller's then current monthly report will be
included in quarterly information supplied to the Board of Directors as a
regular review item.
IX. Review of Taxability
At least once every quarter, the Company's expected future tax position
will be assessed. Based upon the assessment, the investment guidelines will be
modified as appropriate to reflect the Company's expected tax position width
respect to tax exempt instruments. The Vice President, Finance and Treasurer
and Controller will participate in this assessment.
X. Method of Accounting
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. In accordance
with Statement of Financial Accounting Standards No. 115 (FAS 115), "Accounting
for Certain Investments in Debt and Equity Securities", the Company will
classify its investments among three categories: held-to-maturity securities,
which are reported at amortized cost; trading securities, which are reported at
&ir value, with unrealized gains and losses included ill- earnings; and
available-for-sale securities, which are reported at fair value, with unrealized
gains and losses excluded from earnings and reported in a separate component of
stockholders' equity. If the Company has the ability, and management intends,
to retain all investments held to their stated maturities such investments will
be classified as held-to-maturity.
XI. Safekeeping
The Company will not take delivery of Investment instruments. The Company
does require a timely confirmation of sale and/or safekeeping receipt giving
11111 particulars of the transaction and security purchased. Where a
confirmation is accepted in lieu of a safekeeping receipt, such confirmation
must clearly state that the securities are held in safekeeping and the location
held if different from the bank, agent, or broker issuing the confirmation.
Appendix A
MADE2MANAGE SYSTEMS, INC.
INVESTMENT INSTITUTIONS
Current Approved Advisors: NBD Bank
First Albany Corporation
Additional Approved Advisors: ▇▇▇ ▇▇▇▇▇▇ Advisors
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
Appendix B
MADE2MANAGE SYSTEMS, INC
INVESTMENT INSTITUTION CERTIFICATION
I hereby certify that I have received the Investment Policy and the Investment
Guidelines of Made2Manage Systems, Inc. and that we will comply with the
Investment Guidelines when making investment recommendations.
Signature __________________________
Printed Name __________________________
Company __________________________
Date __________________________