**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 TasmanDrive, Santa Clara, California 95054 and having a loan production office at1660 International Drive, Suite 600, McLean, Virginia 22102 and **MANUGISTICSGROUP, INC.**, a corporation organized under the laws of the State of Delawarewhose address is 9715 Key West Avenue, Rockville, Maryland 20850 (the“Company”), **MANUGISTICS, INC.**, a corporation organized under the laws of theState of Delaware whose address is 9715 Key West Avenue, Rockville, Maryland20850, and any Persons who are now or hereafter made parties to the LoanAgreement (as hereinafter defined) (each a “Borrower” and collectively,“Borrowers”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may beowing by Borrowers to Lender, Borrowers are indebted to Lender pursuant to,among other documents, a Loan Agreement dated January 14, 2003, (as may beamended from time to time, the “Loan Agreement”). The Loan Agreement providesfor, among other things, a Committed Revolving Line in the original principalamount of Twenty Million Dollars ($20,000,000) (the “Revolving Facility”). Inaddition, pursuant to that certain Loan Agreement dated April 12, 2002 by andamong the Company, Manugistics, Inc. and Bank, Bank agreed to make an equipmentline of credit (the “Equipment Facility”) to the Company, and Manugistics, Inc.in the maximum principal amount of Five Million Dollars ($5,000,000), andpursuant to that certain Loan Agreement dated of even date herewith by andamong the Company, Manugistics, Inc. and Bank, Bank has agreed to make anadditional 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 underthe Revolving Facility shall be referred to as the “Indebtedness.” Capitalizedterms used herein and not otherwise defined herein shall have the meaningattributed to such terms in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness shall be securedby the Collateral upon the occurrence of a Financial Covenant Default asdescribed in Section 4 of the Loan Agreement. Hereinafter, the Loan Agreement,together with all other documents securing repayment of the Indebtedness shallbe 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 itsentirety 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) CurrentLiabilities, plus long term Indebtedness to Bank and outstandingletters of credit under the Committed Revolving Line minus deferredrevenue 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 asof the quarters ending August 31, 2004 and November 30, 2004, and$150,000,000 for the quarter ending February 28, 2005, andthereafter at such levels as agreed to by Bank based upon theCompany’s projections.”
 

 

     (b) Section 6.6 of the Loan Agreement is amended and restated in itsentirety 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 itsAffiliates. Funds may be maintained in investment vehicles oroperating accounts at the Borrower’s discretion. Borrowers agreethat in the event that Borrowers request that any such amountsrequired to be maintained herein be held in an investment or otheraccount with any Affiliate of Bank, Borrowers shall promptlyexecute and deliver an Account Control Agreement to Bank in Bank’sstandard form.
     (c) Section 7.3(ii)(d) is amended and restated in its entirety asfollows:
(ii) The net cash consideration (after adding any cash and cashequivalents to be acquired through the acquisition of the Target)for any single Permitted Acquisition does not exceed FifteenMillion Dollars ($15,000,000) and the aggregate net cashconsideration of all Permitted Acquisitions within a single fiscalyear 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 itsentirety as follows:
7.8 Subordinated Debt.
(a) Make any Material Subordinated Debt Modification to anydocument relating to the Subordinated Debt without Bank’s priorwritten consent or (b) make any payment on the Subordinated Debt,provided, however, that (i) Borrowers are permitted to makepayments (“Permitted Conversion Payments”) of up to Ten MillionDollars ($10,000,000) in the aggregate in any twelve-month periodin connection with the conversion of Subordinated Debt into equityso long as such payments are not payments of principal or interest,but are additional consideration paid to the holders of theSubordinated Debt in connection with such conversion, and provided,further, that Permitted Conversion Payments may only be made ifsuch Permitted Conversion Payments are approved by the Board ofDirectors of the Company, and further provided that at the time ofand on a pro forma basis after giving effect to such PermittedConversion Payments, no Event of Default shall have occurred orwould thereby occur under any Loan Document, and (ii) Borrowers arepermitted to make payments on the Subordinated Debt from proceedsof sales of the Company’s capital stock from and after the datehereof, provided that at the time of and on a pro forma basis aftergiving effect to such payments, no Event of Default shall haveoccurred or would thereby occur under any Loan Document.
     (e) The definition of “Committed Revolving Line” set forth in Section 13.1of the Loan Agreement is amended and restated in its entirety as follows:
“Committed Revolving Line” is a Credit Extension of up to FifteenMillion 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 areamended and restated in their entirety as follows:
“Permitted Investments” are:
     (a) Investments shown on the Schedule and existing on theClosing Date;
 

 

     (b) (i) marketable direct obligations issued orunconditionally guaranteed by the United States or its agency orany State maturing within 2 years from its acquisition, (ii)commercial paper maturing no more than 2 years after its creationand having the highest rating from either Standard & Poor’sCorporation or Moody’s Investors Service, Inc., and (iii) Bank’scertificates of deposit issued maturing no more than 2 years afterissue;
     (c) Investments made in accordance with any investment policyapproved by the Company’s Board of Directors; and
     (d) Investments in any Subsidiary of Borrower which is not aBorrower under this Agreement, provided that (a) all suchInvestments in the aggregate do not exceed $10,000,000 in any12-month period and (b) no Event of Default exists at the time ofany such Investment or would exist after giving effect to any suchInvestment.
“Revolving Maturity Date” is March 30, 2005.
“Tangible Net Worth” is on any date, the total assets of theCompany and its consolidated Subsidiaries minus (i) any amountsattributable to (a) goodwill and, (b) other intangible assets suchas acquired technology, customer relationships, patents, trade andservice 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 LoanAgreement:
“Material Subordinated Debt Modification” means any amendment ormodification to any instrument, agreement or other documentrelating to the Subordinated Debt or any other action in connectionwith the Subordinated Debt that, individually or in combinationwith other amendments, modifications or actions, (a) increases theinterest rate, fees or expenses due under the Subordinated Debt,(b) increases the maximum principal amount of the SubordinatedDebt, (c) accelerates the due date or maturity date of all or partof the Subordinated Debt, (d) changes the collateral, if any, forthe Subordinated Debt or (e) otherwise has a material adverseeffect on Borrower’s ability to pay and perform its obligations infavor of Bank or the validity or priority of Bank’s securityinterest in the Collateral.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherevernecessary to reflect the changes described above.
5. NO DEFENSES OF BORROWERS. Borrowers agree that they have no defensesagainst the obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Each Borrower understands and agrees that in modifyingthe 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, theterms of the Existing Loan Documents remain unchanged and in full force andeffect. Lender’s agreement to modifications to the existing Indebtednesspursuant to this Loan Modification Agreement in no way shall obligate Lender tomake any future modifications to the Indebtedness. Nothing in this LoanModification Agreement shall constitute a satisfaction of the Indebtedness. Itis the intention of Lender and Borrowers to retain as liable parties all makersand endorsers of Existing Loan Documents, unless the party is expresslyreleased by Lender in writing. No maker, endorser, or guarantor will bereleased by virtue of this Loan Modification Agreement. The terms of thisparagraph apply not only to this Loan Modification Agreement, but also to allsubsequent loan modification agreements.
*[SIGNATURES APPEAR ON THE FOLLOWING PAGE]*
 

 

     This Loan Modification Agreement is executed as of the date first writtenabove.   **BORROWERS:**   MANUGISTICS GROUP, INC.   By: /s/ Raghavan Rajaji  Name: Raghavan RajajiTitle: Executive Vice President andChief Financial Officer   MANUGISTICS, INC.   By: /s/ Raghavan Rajaji  Name: Raghavan RajajiTitle: Executive Vice President andChief Financial Officer   **LENDER:**   SILICON VALLEY BANK   By: /s/ Megan Scheffel  Name: Megan ScheffelTitle: Vice President