**EXHIBIT 10.59**

 

FIFTH AMENDMENT TO LOAN AGREEMENT

 

This Fifth Amendment to Loan Agreement (this “Agreement”)is entered into as of April     , 2005, effective asof March 29, 2005 by and among SILICON VALLEY BANK (“Bank” or “Lender”),whose address is 3003 Tasman Drive, Santa Clara, California 95054 and having aloan production office at 8020 Towers Crescent Drive, Suite 475, Vienna,Virginia 22182 and MANUGISTICS GROUP, INC., a corporation organized under thelaws of the State of Delaware whose address is 9715 Key West Avenue, Rockville,Maryland 20850 (the “Company”), MANUGISTICS, INC., a corporation organizedunder 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 madeparties to the Loan Agreement (as hereinafter defined) (each a “Borrower” andcollectively, “Borrowers”).

 

1.                                       DESCRIPTION OF EXISTING INDEBTEDNESS:  Among other indebtedness which may be owingby Borrowers to Lender, Borrowers are indebted to Lender pursuant to, amongother documents, a Loan Agreement dated January 14, 2003, (as may beamended from time to time, the “Loan Agreement”).  The Loan Agreement provides for, among otherthings, a Committed Revolving Line in the original principal amount of TwentyMillion Dollars ($20,000,000) (the “Revolving Facility”) which amount wasreduced to Fifteen Million Dollars ($15,000,000) pursuant to that certain ThirdAmendment to Loan Agreement, dated March 31, 2004.  In addition, pursuant to that certain Loanand Security Agreement dated April 12, 2002 by and among the Company,Manugistics, Inc. and Bank, Bank agreed to make an equipment line ofcredit (the “Equipment Facility”) to the Company, and Manugistics, Inc. inthe maximum principal amount of Five Million Dollars ($5,000,000).  Hereinafter, all indebtedness owing byBorrowers to Lender under the Revolving Facility shall be referred to as the “Indebtedness.”  Capitalized terms used herein and nototherwise defined herein shall have the meaning attributed to such terms in theLoan Agreement.

 

2.                                       DESCRIPTION OF COLLATERAL.  Repayment of the Indebtedness shall besecured by the Collateral upon the occurrence of a Financial Covenant Defaultas described in Section 4 of the Loan Agreement.  Hereinafter, the Loan Agreement, togetherwith all other documents securing repayment of the Indebtedness shall bereferred to as the “Existing Loan Documents”.

 

3.                                       MODIFICATIONS TO LOAN AGREEMENT.

 

(A)                              The following Section is addedimmediately after Section 2.2 of the Loan Agreement, as Section 2.2Aof the Loan Agreement:

 

2.2A                       Supplemental Equipment Advances.

 

(a)                                  Through December 31, 2005 (the “SupplementalEquipment Availability End Date”), Bank will make advances (“SupplementalEquipment Advance” and, collectively, “Supplemental Equipment Advances”) notexceeding the Supplemental Committed Equipment Line.  The Supplemental Equipment Advances may onlybe used to finance or refinance computer equipment, office furniture and othercapital expenditures

 

(b)                                 Interest accrues from the date of eachSupplemental Equipment Advance at the rate in Section 2.3(a) and ispayable monthly in accordance with Section 2.3(b).  All Supplemental Equipment Advances shall beevidenced by the Supplemental Equipment Term Note and shall be repaid in accordancewith the terms of this Agreement. Supplemental Equipment Advances when repaid may not be reborrowed.

 

(c)                                  To obtain a Supplemental Equipment Advance,Borrower must notify Bank (the notice is irrevocable) by facsimile no laterthan 3:00 p.m. Eastern time one (1) Business Day before the day onwhich the Supplemental Equipment Advance is to be made.  The notice in the form of Exhibit B(Payment/Advance Form) must be signed by a Responsible Officer or designee andinclude a copy of the invoice for the assets being financed.

 

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(B)                                Interest Rate, Payments.  Section 2.3of the Loan Agreement is hereby amended and restated in its entirety asfollows:

 

2.3                                 Interest Rate, Payments.

 

(a)                                  Advances on the Committed Revolving Lineaccrue interest on the outstanding principal balance in accordance with theRevolving Promissory Note.  SupplementalEquipment Advances accrue interest at the fixed rate of seven and threequarters percent (7.75%) per annum.  Anyamounts outstanding during the continuance of an Event of Default, shall accrueinterest at four percent (4.0%) above the rate effective immediately before theEvent of Default.  The interest rate withrespect to any Credit Extensions which accrue interest at a floating rate basedon the Prime Rate, increases or decreases when the Prime Rate changes.  Interest is computed on a 360 day year forthe actual number of days elapsed.

 

(b)                                 Payments. Interest due on the Committed Revolving Line is payable on the fifth(5th) day of each month.  SupplementalEquipment Advances shall be repaid in equal payments of principal and interestwhich would fully amortize each Supplemental Equipment Advance in thirty six(36) installments, beginning on the first (1st) day of each month following thedate of the Supplemental Equipment Advance and ending on the SupplementalEquipment Maturity Date, when all outstanding Supplemental Equipment Advances,all accrued and unpaid interest shall be due and payable in full.

 

(c)                                  Permitted Prepayment of Loans.  Borrower may voluntarily prepay all or anyportion of any Supplemental Equipment Advance upon not less than five (5) BusinessDays notice to Bank, provided any such prepayment is accompanied by aprepayment fee equal to (i) one and one half percent (1.5%) of the amountprepaid if the prepayment occurs within the first twelve (12) months from thedate of the  Supplemental EquipmentAdvance; (ii) one percent (1.0%) of the amount prepaid if the prepaymentoccurs after the first twelve (12) months, and prior to the twenty fourth(24th) month from the date of the Supplemental Equipment Advance; and (iii) onehalf of one percent (.50%) of the amount prepaid at all times after the firsttwenty four (24) months from the date of the Supplemental Equipment Advance,provided, however, that the payment of principal due on the SupplementalEquipment Maturity Date if paid when due, shall not constitute a prepaymentsubject to the payment of any fee.  Inaddition to the above prepayment fee, at the time of any such prepayment,Borrower must pay, on the date of the prepayment (A) all unpaid accruedinterest to the date of the prepayment and all other sums, if any, that shallhave become due and payable hereunder with respect to this Agreement.

 

(d)                                 Bank may debit any of Borrower’s depositaccounts including Account Number                      forprincipal and interest payments owing or any amounts Borrower owes Bank.  Bank will promptly notify Borrower when itdebits Borrower’s accounts.  These debitsare not a set-off.  Payments receivedafter 12:00 noon Eastern time are considered received at the opening ofbusiness on the next Business Day.  Whena payment is due on a day that is not a Business Day, the payment is due thenext Business Day and additional fees or interest accrue.

 

(C)                                Section 6.3 of the Loan Agreement isamended and restated in its entirety as follows:

 

6.3                                 Financial Covenants.  Borrowers will maintain as of the last day ofeach fiscal quarter:

 

(a)                                  Quick Ratio. A ratio of (i) Quick Assets to (ii) Current Liabilities, pluslong term Indebtedness to Bank and outstanding letters of credit under theCommitted Revolving Line minus deferred revenue of at least 2.00 to 1.00.

 

(b)                                 Tangible Net Worth.  A Tangible Net Worth of at least $90,000,000,plus fifty percent (50%) consolidated net income (without regard to any loss)from each fiscal quarter of the Borrowers.

 

(D)                               The definitions of “Credit Extension”, “LoanDocuments”, “Revolving Maturity Date” and “Total Liabilities” set forth in Section 13.1of the Loan Agreement are amended and restated in their entirety as follows:

 

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“CreditExtension” is each Advance, Letter of Credit, Supplemental Equipment Advance orany other extension of credit by Bank for any Borrower’s benefit.

 

“LoanDocuments” are, collectively, this Agreement, the Revolving Promissory Note,the Security Agreement, the Negative Pledge Agreement, the SupplementalEquipment Note,  any note, or notes orguaranties executed by any Borrower and any other present or future agreementbetween any Borrower and/or for the benefit of Bank in connection with thisAgreement, all as amended, extended or restated.  In addition, at all times after an Event ofDefault, the term “Loan Documents” shall also include the Account ControlAgreement and at all times after the Lien Effective Date, the term “LoanDocuments” shall include the Security Agreement.

 

“RevolvingMaturity Date” is March 29, 2007.

 

“TotalLiabilities” is on any day, obligations that should, under GAAP, be classifiedas liabilities of the Company and its consolidated Subsidiaries, including allIndebtedness, and the current portion of Subordinated Debt, if any, thatBorrowers are allowed to pay under Section 7.8 hereof, but only to theextent the Borrowers have notified Bank in writing that they plan to make sucha payment.

 

(E)                                 The following definitions are added to Section 13.1of the Loan Agreement:

 

“SupplementalCommitted Equipment Line” is a Credit Extension of up to Five Million Dollars($5,000,000).

 

“SupplementalEquipment Advance” is defined in Section 2.2A.

 

“SupplementalEquipment Availability End Date” is defined in Section 2.2A.

 

“SupplementalEquipment Maturity Date” means August 31, 2007.

 

“SupplementalEquipment Term Note” means that certain Equipment Term Note dated April __,2005 in the principal amount of Five Million Dollars ($5,000,000) from Borrowerin favor of Bank, together with all renewals, amendments, modifications andsubstitutions therefor.

 

4.                                       COMPLIANCE CERTIFICATE.  From and after the effective date hereof, Exhibit Cattached hereto shall be the Compliance Certificate for purposes of theExisting Loan Documents.

 

5.                                       PAYMENT OF LOAN FEE.  Borrower shall pay to Lender an annual fee inthe amount of Seventy Five Thousand Dollars ($75,000) on the date hereof and onthe first anniversary date hereof in connection with the extension of theCommitted Revolving Line and in the amount of Twelve Thousand Five HundredDollars ($12,500) on the date hereof in connection with the SupplementalEquipment Facility (collectively, the “Loan Fee”) plus all out-of-pocket expenses,including, without limitation, all fees and expenses of Lender’s counsel.

 

6.                                       CONSISTENT CHANGES.  The Existing Loan Documents are herebyamended wherever necessary to reflect the changes described above.

 

7.                                       NO DEFENSES OF BORROWERS.  Borrowers agree that they have no defensesagainst the obligations to pay any amounts under the Indebtedness.

 

8.                                       CONTINUING VALIDITY.  Each Borrower understands and agrees that inmodifying the existing Indebtedness, Lender is relying upon Borrowers’representations, warranties, and agreements, as set forth in the Existing LoanDocuments.  Except as expressly modifiedpursuant to this Agreement, the terms of the Existing Loan Documents remainunchanged and in full force and effect. Lender’s agreement to modifications to the existing Indebtednesspursuant to this Agreement in no way shall obligate Lender to make any futuremodifications to the Indebtedness. Nothing in this Agreement shall constitute a satisfaction of the Indebtedness.  It is the intention of Lender and Borrowersto retain as liable parties all makers and endorsers of Existing LoanDocuments, unless the party is expressly released by Lender in writing.  No maker, endorser, or guarantor will bereleased by virtue of this

 

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Agreement.  The terms of this paragraph apply not only tothis Agreement, but also to all subsequent loan modification agreements.

 

ThisAgreement is executed as of the date first written above.

 

BORROWERS:

 

MANUGISTICSGROUP, INC.

 

 

By:

Name:

Title:

MANUGISTICS,INC.

 

By:

Name:

Title:

LENDER:

SILICONVALLEY BANK

 

By:

Name:

Title:

 

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