<PAGE>
                                                                   EXHIBIT 10.20


                        THIRD LOAN MODIFICATION AGREEMENT

         THIS THIRD LOAN MODIFICATION AGREEMENT (this "Agreement") is entered
into as of March 27, 2003 by and between SILICON VALLEY BANK ("Bank"), whose
address is 3003 Tasman Drive, Santa Clara, California 95054 and having a loan
production office at One North Clematis Street, Suite 510, West Palm Beach,
Florida 33401 and THE ULTIMATE SOFTWARE GROUP, INC., a corporation organized and
in good standing in the State of Delaware ("Borrower"), whose address is 2000
Ultimate Way, Weston, Florida 33326.

1. DESCRIPTION OF EXISTING OBLIGATIONS: Among other Obligations which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Loan and Security Agreement, dated November 29, 2001 (as may
be amended from time to time, the "Loan Agreement"). The Loan Agreement provides
for, among other things, a Committed Revolving Line, with a sublimit for
Equipment Advances (the "Equipment Advance Sublimit"). Hereinafter, all
obligations owing by Borrower to Lender shall be referred to as the
"Obligations."

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement. Hereinafter, the Loan Agreement,
together with all other documents evidencing or securing the Obligations shall
be referred to as the "Existing Loan Documents".

3. DESCRIPTION OF CHANGE IN TERMS.

         A.       The definition of "Revolving Maturity Date" set forth in
                  Section 13.1 of the Loan Agreement is amended and restated in
                  its entirety as follows:

                           "REVOLVING MATURITY DATE" is May 28, 2004.

         B.       Unless otherwise extended, the unpaid principal amount of all
                  Credit Extensions, including, without limitation, all Advances
                  and Equipment Advances, shall be due and payable in full on
                  the Revolving Maturity Date.

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

5. PAYMENT OF LOAN FEE. In consideration of Lender's agreement to extend the
Revolving Maturity Date of the Committed Line of Credit, the Borrower shall pay
to Lender on the date hereof a loan fee in the amount of Twelve Thousand Five
Hundred Dollars ($12,500) (the "Loan Fee") plus all out-of-pocket expenses,
including, without limitation, Lender's attorneys' fees. The Loan Fee is
considered earned when paid and is not refundable.

6. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses against the
obligations to pay any amounts under the Obligations.

7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Lender's agreement to
modifications to the existing Obligations pursuant to this Agreement in no way
shall obligate Lender to
<PAGE>

make any future modifications to the Obligations. Nothing in this Agreement
shall constitute a satisfaction of the Obligations. It is the intention of
Lender and Borrower 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
Agreement. The terms of this paragraph apply not only to this Agreement, but
also to all subsequent loan modification agreements.

8. CONDITIONS. The effectiveness of this Agreement is conditioned upon the
following:

         A. Borrower's payment of the Loan Fee;

         B. the Lender receives an Amended and Restated Revolving Promissory
Note issued and delivered by the Borrower in the form of EXHIBIT A attached
hereto and incorporated herein by this reference payable to the order of Bank in
the maximum principal amount of Five Million Dollars ($5,000,000) (which Amended
and Restated Revolving Promissory Note is sometimes referred to herein as the
"Replacement Promissory Note");

         C. the Lender receives an Amended and Restated Equipment Term Note
issued and delivered by the Borrower in the form of EXHIBIT B attached hereto
and incorporated herein by this reference payable to the order of Bank in the
maximum principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000) (which Amended and Restated Equipment Term Note is sometimes
referred to herein as the "Replacement Term Note").

9. REPLACEMENT PROMISSORY NOTES.

         (a) The Borrower shall execute and deliver to the Lender on the date
hereof the Replacement Promissory Note in substitution for and not satisfaction
of, the issued and outstanding Revolving Promissory Note and the Replacement
Promissory Note shall be the "Revolving Promissory Note" for all purposes of the
Loan Documents. The Replacement Promissory Note shall not operate as a novation
of the Obligations of the Borrower, or nullify, discharge, or release any such
Obligations or the continuing contractual relationship of the Borrower in
accordance with the provisions of the Loan Documents. All references in the Loan
Documents to the "Revolving Promissory Note" shall be deemed to refer to the
Replacement Promissory Note.

         (b) The Borrower shall execute and deliver to the Lender on the date
hereof the Replacement Term Note in substitution for and not satisfaction of,
the issued and outstanding Equipment Term Note and the Replacement Term Note
shall be the "Equipment Term Note" for all purposes of the Loan Documents. The
Replacement Term Note shall not operate as a novation of the Obligations of the
Borrower, or nullify, discharge, or release any such Obligations or the
continuing contractual relationship of the Borrower in accordance with the
provisions of the Loan Documents. All references in the Loan Documents to the
"Equipment Term Note" shall be deemed to refer to the Replacement Term Note.

                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

                                       2
<PAGE>


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

BORROWER:                                       LENDER:

THE ULTIMATE SOFTWARE GROUP, INC.               SILICON VALLEY BANK


By:      /s/ Mitchell K. Dauerman               By:  /s/ Christopher L. Jones
   -----------------------------------------       -----------------------------
Name:        Mitchell K. Dauerman               Name:   Christopher L. Jones
     ----------------------------------------        ---------------------------
Title: Chief Financial Officer and Treasurer    Title:  Senior Vice President
      ---------------------------------------         --------------------------

                                       3

<PAGE>


                    AMENDED AND RESTATED EQUIPMENT TERM NOTE

$2,500,000                                                      Atlanta, Georgia
                                                                  March 27, 2003

         FOR VALUE RECEIVED, the undersigned, THE ULTIMATE SOFTWARE GROUP, INC.,
a Delaware corporation ("Borrower") promises to pay to the order of SILICON
VALLEY BANK, a California-chartered bank ("Bank"), at such place as the holder
hereof may designate, in lawful money of the United States of America, the
aggregate unpaid principal amount of all equipment advances ("Equipment
Advances") made by Bank to Borrower in accordance with the terms and conditions
of the Loan and Security Agreement between Borrower and Bank dated November 29,
2001 (as amended from time to time the "Loan Agreement"), up to a maximum
principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000)
("Principal Sum"), or so much thereof as may be advanced and remains unpaid.
Borrower may request Equipment Advances under this Note from and until the
Revolving Maturity Date. The unpaid Principal Sum, together with interest
thereon at the rate or rates provided in the Loan Agreement, shall accrue and be
payable as set forth in the Loan Agreement.

         Borrower further agrees that, if any payment made by Borrower or any
other person is applied to this Note and is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of any property hereafter
securing this Note is required to be returned by Bank to Borrower, its estate,
trustee, receiver or any other party, including, without limitation, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, Borrower's liability hereunder (and any
lien, security interest or other collateral securing such liability) shall be
and remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral
hereafter securing Borrower's liability hereunder shall have been released or
terminated by virtue of such cancellation or surrender, this Note (and such
lien, security interest or other collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of Borrower in
respect of the amount of such payment (or any lien, security interest or other
collateral securing such obligation).

         This Note is the "Replacement Term Note" described in that certain
Third Loan Modification Agreement of even date herewith by and between the
Borrower and the Bank, which Loan Modification Agreement amends the Loan
Agreement, to which reference is hereby made for a more complete statement of
the terms and conditions under which the Advances evidenced hereby are made.
This Note is secured as provided in the Loan Agreement. This Note amends and
restates in its entirety that certain Equipment Term Note dated November 29,
2001 from Borrower in favor of the Bank in the maximum principal amount of Two
Million Five Hundred Thousand Dollars ($2,500,000) (the "Prior Note"). It is
expressly agreed that the indebtedness evidenced by the Prior Note has not been
extinguished or discharged by this Note. All capitalized terms used herein and
not otherwise defined shall have the meanings given to such terms in the Loan
Agreement.

         Borrower irrevocably waives the right to direct the application of any
and all payments at any time hereafter received by Bank from or on behalf of
Borrower and Borrower irrevocably agrees that Bank shall have the continuing
exclusive right to apply any and all such payments against the then due and
owing obligations of Borrower as Bank may deem advisable. In the absence of a
specific determination by Bank with respect thereto, all payments shall be
applied in the following order: (a) then due and payable fees and expenses; (b)
then due and payable interest payments and mandatory prepayments; and (c) then
due and payable principal payments and optional prepayments.
<PAGE>

         Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any error in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.

                  The occurrence of any one or more of the following events
shall constitute an event of default (individually, an "Event of Default" and
collectively, the "Events of Default") under the terms of this Note:

                  (a) The failure of Borrower to pay to Bank when due any and
all amounts payable by Borrower to Bank under the terms of this Note; or

                  (b) The occurrence of an event of default (as defined therein)
under the terms and conditions of any of the other Loan Documents.

         Upon the occurrence of an Event of Default, at the option of Bank, all
amounts payable by Borrower to Bank under the terms of this Note shall
immediately become due and payable by Borrower to Bank without notice to
Borrower or any other person, and Bank shall have all of the rights, powers, and
remedies available under the terms of this Note, any of the other Loan Documents
and all applicable laws. Borrower and all endorsers, guarantors, and other
parties who may now or in the future be primarily or secondarily liable for the
payment of the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of demand and of
dishonor and non-payment of this Note and expressly agree that this Note or any
payment hereunder may be extended from time to time without in any way affecting
the liability of Borrower, guarantors and endorsers.

         Borrower promises to pay all costs and expense of collection of this
Note and to pay all reasonable attorneys' fees incurred in such collection,
whether or not there is a suit or action, or in any suit or action to collect
this Note or in any appeal thereof. No delay by Bank in exercising any power or
right hereunder shall operate as a waiver of any power or right. Time is of the
essence as to all obligations hereunder.

         This Note is issued pursuant to the Loan Agreement, which shall govern
the rights and obligations of Borrower with respect to all obligations
hereunder.

         Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Florida, excluding conflicts of laws principles, even
though for the convenience and at the request of Borrower, this Note may be
executed elsewhere.

         BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF FLORIDA IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF FLORIDA, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN
SANTA CLARA COUNTY, CALIFORNIA. BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR

                                       2
<PAGE>

ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS
AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.


                     [SIGNATURES ARE ON THE FOLLOWING PAGE]

                                       3
<PAGE>



         IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.

WITNESS/ATTEST:                   THE ULTIMATE SOFTWARE GROUP, INC.


/s/ Craig Vaughan                 By:      /s/ Mitchell K. Dauerman       (SEAL)
----------------------------          ------------------------------------------
                                  Name:     Mitchell K. Dauerman
                                        ----------------------------------------
                                  Title:  Chief Financial Officer and Treasurer
                                         ---------------------------------------

                                       4
<PAGE>


                 AMENDED AND RESTATED REVOLVING PROMISSORY NOTE

$5,000,000                                                      Atlanta, Georgia
                                                                  March 27, 2003

         FOR VALUE RECEIVED, the undersigned, THE ULTIMATE SOFTWARE GROUP, INC.,
a Delaware corporation ("Borrower") promises to pay to the order of SILICON
VALLEY BANK, a California-chartered bank ("Bank"), at such place as the holder
hereof may designate, in lawful money of the United States of America, the
aggregate unpaid principal amount of all advances ("Advances") made by Bank to
Borrower in accordance with the terms and conditions of the Loan and Security
Agreement between Borrower and Bank dated November 29, 2001 (as amended from
time to time, the "Loan Agreement"), up to a maximum principal amount of Five
Million Dollars ($5,000,000) ("Principal Sum"), or so much thereof as may be
advanced or readvanced and remains unpaid. Borrower shall also pay interest on
the aggregate unpaid principal amount of such Advances, as follows:

         Commencing as of the date hereof and continuing until repayment in full
of all sums due hereunder, the unpaid Principal Sum shall bear interest at the
variable rate of interest, per annum, most recently announced by Bank as its
"prime rate," whether or not such announced rate is the lowest rate available
from Bank (the "Prime Rate"), plus one (1.0) percentage point above the Prime
Rate, provided however, if at any time Borrower has a net profit for two (2)
consecutive fiscal quarters, the Principal Sum will, so long as Borrower
continues to have a net profit, thereafter accrue interest on the outstanding
principal balance at a per annum rate equal to the Prime Rate, plus one-half
(.5) percentage point above the Prime Rate. The rate of interest charged under
this Note shall change immediately and contemporaneously with any change in the
Prime Rate. All interest payable under the terms of this Note shall be
calculated on the basis of a 360-day year and the actual number of days elapsed.

         The unpaid Principal Sum, together with interest thereon at the rate or
rates provided above, shall be payable as follows:

                  (a) Interest only on the unpaid principal amount shall be due
and payable monthly in arrears, commencing April 5, 2003, and continuing on the
fifth (5th) day of each calendar month thereafter to maturity; and

                  (b) Unless sooner paid, the unpaid Principal Sum, together
with interest accrued and unpaid thereon, shall be due and payable in full on
the Revolving Maturity Date.

         The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Loan Agreement will not affect the continuing validity of
this Note or the Loan Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.

         Borrower further agrees that, if any payment made by Borrower or any
other person is applied to this Note and is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of any property hereafter
securing this Note is required to be returned by Bank to Borrower, its estate,
trustee, receiver or any other party, including, without limitation, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, Borrower's liability hereunder (and any
lien, security interest or other collateral securing such liability) shall be
and remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral
hereafter securing Borrower's liability hereunder shall have been released or
terminated by virtue of such cancellation or surrender, this Note (and such
<PAGE>

lien, security interest or other collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of Borrower in
respect of the amount of such payment (or any lien, security interest or other
collateral securing such obligation).

         This Note is the "Replacement Promissory Note" described in that
certain Third Loan Modification Agreement of even date herewith by and between
the Borrower and the Bank, which Loan Modification Agreement amends the Loan
Agreement, to which reference is hereby made for a more complete statement of
the terms and conditions under which the Advances evidenced hereby are made.
This Note is secured as provided in the Loan Agreement. This Note amends and
restates in its entirety that certain Revolving Promissory Note dated November
29, 2001 from Borrower in favor of the Bank in the maximum principal amount of
Five Million Dollars ($5,000,000) (the "Prior Note"). It is expressly agreed
that the indebtedness evidenced by the Prior Note has not been extinguished or
discharged by this Note. All capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Loan Agreement.

         Borrower irrevocably waives the right to direct the application of any
and all payments at any time hereafter received by Bank from or on behalf of
Borrower and Borrower irrevocably agrees that Bank shall have the continuing
exclusive right to apply any and all such payments against the then due and
owing obligations of Borrower as Bank may deem advisable. In the absence of a
specific determination by Bank with respect thereto, all payments shall be
applied in the following order: (a) then due and payable fees and expenses; (b)
then due and payable interest payments and mandatory prepayments; and (c) then
due and payable principal payments and optional prepayments.

         Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any error in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.

         The occurrence of any one or more of the following events shall
constitute an event of default (individually, an "Event of Default" and
collectively, the "Events of Default") under the terms of this Note:

                  (a) The failure of Borrower to pay to Bank when due any and
all amounts payable by Borrower to Bank under the terms of this Note; or

                  (b) The occurrence of an event of default (as defined therein)
under the terms and conditions of any of the other Loan Documents.

         Upon the occurrence of an Event of Default, at the option of Bank, all
amounts payable by Borrower to Bank under the terms of this Note shall
immediately become due and payable by Borrower to Bank without notice to
Borrower or any other person, and Bank shall have all of the rights, powers, and
remedies available under the terms of this Note, any of the other Loan Documents
and all applicable laws. Borrower and all endorsers, guarantors, and other
parties who may now or in the future be primarily or secondarily liable for the
payment of the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of demand and of
dishonor and non-payment of this Note and expressly agree that this Note or any
payment hereunder may be extended from time to time without in any way affecting
the liability of Borrower, guarantors and endorsers.

                                       2
<PAGE>

         Borrower promises to pay all costs and expense of collection of this
Note and to pay all reasonable attorneys' fees incurred in such collection,
whether or not there is a suit or action, or in any suit or action to collect
this Note or in any appeal thereof. Borrower waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and any
and all other notices and demands in connection with the delivery, acceptance,
performance default or enforcement of this Note, as well as any applicable
statutes of limitations. No delay by Bank in exercising any power or right
hereunder shall operate as a waiver of any power or right. Time is of the
essence as to all obligations hereunder.

         This Note is issued pursuant to the Loan Agreement, which shall govern
the rights and obligations of Borrower with respect to all obligations
hereunder.

         Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Florida, excluding conflicts of laws principles, even
though for the convenience and at the request of Borrower, this Note may be
executed elsewhere.

         BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF FLORIDA IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF FLORIDA, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN
SANTA CLARA COUNTY, CALIFORNIA. BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.


                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

                                       3
<PAGE>



         IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.

WITNESS/ATTEST:                   THE ULTIMATE SOFTWARE GROUP, INC.


/s/ Craig Vaughan                 By:     /s/ Mitchell K. Dauerman      (SEAL)
-------------------                   ------------------------------------------
                                  Name:        Mitchell K. Dauerman
                                        ----------------------------------------
                                  Title:  Chief Financial Officer and Treasurer
                                         ---------------------------------------

                                        4