THIRD AMENDMENT TO LOAN AGREEMENT

     This Third Amendment to Loan Agreement is entered into as of March 31, 2004
by and among SILICON VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive,
Santa Clara, California 95054 and having a loan production office at 1660
International Drive, Suite 600, McLean, Virginia 22102 and MANUGISTICS GROUP,
INC., a corporation organized under the laws of the State of Delaware whose
address is 9715 Key West Avenue, Rockville, Maryland 20850 (the “Company”),
MANUGISTICS, INC., a corporation organized under the laws of the State of
Delaware whose address is 9715 Key West Avenue, Rockville, Maryland 20850, and
any Persons who are now or hereafter made parties to the Loan Agreement (as
hereinafter defined) (each a “Borrower” and collectively, “Borrowers”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrowers to Lender, Borrowers are indebted to Lender pursuant to,
among other documents, a Loan Agreement dated January 14, 2003, (as may be
amended from time to time, the “Loan Agreement”). The Loan Agreement provides
for, among other things, a Committed Revolving Line in the original principal
amount of Twenty Million Dollars ($20,000,000) (the “Revolving Facility”). In
addition, pursuant to that certain Loan Agreement dated April 12, 2002 by and
among the Company, Manugistics, Inc. and Bank, Bank agreed to make an equipment
line of credit (the “Equipment Facility”) to the Company, and Manugistics, Inc.
in the maximum principal amount of Five Million Dollars ($5,000,000), and
pursuant to that certain Loan Agreement dated of even date herewith by and among
the Company, Manugistics, Inc. and Bank, Bank has agreed to make an additional
equipment line of credit (the “Equipment Facility”) to the Company, and
Manugistics, Inc. in the maximum principal amount of Five Million Dollars
($5,000,000). Hereinafter, all indebtedness owing by Borrowers to Lender under
the Revolving Facility shall be referred to as the “Indebtedness.” Capitalized
terms used herein and not otherwise defined herein shall have the meaning
attributed to such terms in the Loan Agreement.

2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness shall be secured by
the Collateral upon the occurrence of a Financial Covenant Default as described
in Section 4 of the Loan Agreement. Hereinafter, the Loan Agreement, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the “Existing Loan Documents”.

3. MODIFICATIONS TO LOAN AGREEMENT.

     (a) Section 6.3 of the Loan Agreement is amended and restated in its
entirety as follows:

6.3 Financial Covenants.

Borrowers will maintain as of the last day of each fiscal quarter:

          (a) Quick Ratio. A ratio of (i) Quick Assets to (ii) Current
Liabilities, plus long term Indebtedness to Bank and outstanding letters of
credit under the Committed Revolving Line minus deferred revenue of at least
1.75 to 1.00.

          (b) Tangible Net Worth. A Tangible Net Worth of at least $130,000,000
as of the quarter ending May 31, 2004, $140,000,000 as of the quarters ending
August 31, 2004 and November 30, 2004, and $150,000,000 for the quarter ending
February 28, 2005, and thereafter at such levels as agreed to by Bank based upon
the Company’s projections.”

 

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     (b) Section 6.6 of the Loan Agreement is amended and restated in its
entirety as follows:

6.6 Deposit Accounts.

     Borrowers will at all times, maintain not less than $50,000,000 in cash
and/or investments with Bank and/or its Affiliates. Funds may be maintained in
investment vehicles or operating accounts at the Borrower’s discretion.
Borrowers agree that in the event that Borrowers request that any such amounts
required to be maintained herein be held in an investment or other account with
any Affiliate of Bank, Borrowers shall promptly execute and deliver an Account
Control Agreement to Bank in Bank’s standard form.

     (c) Section 7.3(ii)(d) is amended and restated in its entirety as follows:

(ii) The net cash consideration (after adding any cash and cash equivalents to
be acquired through the acquisition of the Target) for any single Permitted
Acquisition does not exceed Fifteen Million Dollars ($15,000,000) and the
aggregate net cash consideration of all Permitted Acquisitions within a single
fiscal year does not exceed Thirty Million Dollars ($30,000,000) (the
“Acquisition Cap”);

     (d) Section 7.8 of the Loan Agreement is amended and restated in its
entirety as follows:

7.8 Subordinated Debt.

(a) Make any Material Subordinated Debt Modification to any document relating to
the Subordinated Debt without Bank’s prior written consent or (b) make any
payment on the Subordinated Debt, provided, however, that (i) Borrowers are
permitted to make payments (“Permitted Conversion Payments”) of up to Ten
Million Dollars ($10,000,000) in the aggregate in any twelve-month period in
connection with the conversion of Subordinated Debt into equity so long as such
payments are not payments of principal or interest, but are additional
consideration paid to the holders of the Subordinated Debt in connection with
such conversion, and provided, further, that Permitted Conversion Payments may
only be made if such Permitted Conversion Payments are approved by the Board of
Directors of the Company, and further provided that at the time of and on a pro
forma basis after giving effect to such Permitted Conversion Payments, no Event
of Default shall have occurred or would thereby occur under any Loan Document,
and (ii) Borrowers are permitted to make payments on the Subordinated Debt from
proceeds of sales of the Company’s capital stock from and after the date hereof,
provided that at the time of and on a pro forma basis after giving effect to
such payments, no Event of Default shall have occurred or would thereby occur
under any Loan Document.

     (e) The definition of “Committed Revolving Line” set forth in Section 13.1
of the Loan Agreement is amended and restated in its entirety as follows:

“Committed Revolving Line” is a Credit Extension of up to Fifteen Million
Dollars ($15,000,000).

     (f) The definitions of “Permitted Investments”, “Revolving Maturity Date”
and “Tangible Net Worth” set forth in Section 13.1 of the Loan Agreement are
amended and restated in their entirety as follows:

“Permitted Investments” are:

     (a) Investments shown on the Schedule and existing on the Closing Date;

 

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     (b) (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any State maturing within 2 years from its
acquisition, (ii) commercial paper maturing no more than 2 years after its
creation and having the highest rating from either Standard & Poor’s Corporation
or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit
issued maturing no more than 2 years after issue;

     (c) Investments made in accordance with any investment policy approved by
the Company’s Board of Directors; and

     (d) Investments in any Subsidiary of Borrower which is not a Borrower under
this Agreement, provided that (a) all such Investments in the aggregate do not
exceed $10,000,000 in any 12-month period and (b) no Event of Default exists at
the time of any such Investment or would exist after giving effect to any such
Investment.

“Revolving Maturity Date” is March 30, 2005.

“Tangible Net Worth” is on any date, the total assets of the Company and its
consolidated Subsidiaries minus (i) any amounts attributable to (a) goodwill
and, (b) other intangible assets such as acquired technology, customer
relationships, patents, trade and service marks and names, copyrights and
capitalized software costs, and (ii) Total Liabilities.

     (g) The following definition is hereby added to Section 13.1 of the Loan
Agreement:

“Material Subordinated Debt Modification” means any amendment or modification to
any instrument, agreement or other document relating to the Subordinated Debt or
any other action in connection with the Subordinated Debt that, individually or
in combination with other amendments, modifications or actions, (a) increases
the interest rate, fees or expenses due under the Subordinated Debt,
(b) increases the maximum principal amount of the Subordinated Debt,
(c) accelerates the due date or maturity date of all or part of the Subordinated
Debt, (d) changes the collateral, if any, for the Subordinated Debt or
(e) otherwise has a material adverse effect on Borrower’s ability to pay and
perform its obligations in favor of Bank or the validity or priority of Bank’s
security interest in the Collateral.

4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

5. NO DEFENSES OF BORROWERS. Borrowers agree that they have no defenses against
the obligations to pay any amounts under the Indebtedness.

6. CONTINUING VALIDITY. Each Borrower understands and agrees that in modifying
the existing Indebtedness, Lender is relying upon Borrowers’ representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Lender’s agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Lender to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Lender and Borrowers to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Lender in writing. No maker, endorser, or guarantor will be released by virtue
of this Loan Modification Agreement. The terms of this paragraph apply not only
to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

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     This Loan Modification Agreement is executed as of the date first written
above.

      BORROWERS:
 
    MANUGISTICS GROUP, INC.
 
   
By:
  /s/ Raghavan Rajaji

 

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  Name: Raghavan Rajaji Title: Executive Vice President and Chief Financial
Officer
 
    MANUGISTICS, INC.
 
   
By:
  /s/ Raghavan Rajaji

 

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  Name: Raghavan Rajaji Title: Executive Vice President and Chief Financial
Officer
 
    LENDER:
 
    SILICON VALLEY BANK
 
   
By:
  /s/ Megan Scheffel

 

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  Name: Megan Scheffel Title: Vice President