**EXHIBIT10.81**

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**LOAN AND SECURITY AGREEMENT**

**by and between**

**MANUGISTICS GROUP, INC.,**

**AND MANUGISTICS, INC.,**

**as Borrowers**

**and**

**SILICON VALLEY BANK,**

**as Bank**

**MARCH 31, 2004**

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**LOAN AND SECURITY AGREEMENT**

**THIS LOAN AND SECURITY AGREEMENT**dated March 31, 2004, between SILICON VALLEY BANK (“Bank”), whose addressis 3003 Tasman Drive, Santa Clara, California 95054 and having a loanproduction office at 1660 International Drive, Suite 600, McLean,Virginia  22102 and **MANUGISTICS GROUP, INC.**, a corporationorganized under the laws of the State of Delaware whose address is 9715 KeyWest Avenue, Rockville, Maryland  20850(the “Company”), **MANUGISTICS, INC.**, a corporationorganized under the laws of the State of Delaware whose address is 9715 KeyWest Avenue, Rockville, Maryland  20850and any Persons who are now or hereafter made parties to this Agreement (each a“Borrower” and collectively, “Borrowers”), provides the terms on which Bank willlend to Borrowers and Borrowers will repay Bank. The parties agree as follows:

# **1              ACCOUNTINGAND OTHER TERMS**

Accountingterms not defined in this Agreement will be construed following GAAP.Calculations and determinations must be made following GAAP. The term “financialstatements” includes the notes and schedules. The terms “including” and “includes”always mean “including (or includes) without limitation,” in this or any LoanDocument.

**2              LOANAND TERMS OF PAYMENT**

**2.1**          **Promise to Pay**

Borrowersjointly and severally promise to pay Bank the unpaid principal amount of allCredit Extensions and interest on the unpaid principal amount of the CreditExtensions in accordance with the Loan Documents.

### **2.1.1       EquipmentAdvances.**

#### (a)**          **Subject to the terms and conditions of thisAgreement, Bank agrees to lend to Borrowers, from time to time prior to theCommitment Termination Date, equipment advances (each an “Equipment Advance”and collectively the “Equipment Advances”) in an aggregate amount not to exceedthe Committed Equipment Line. When repaid, the Equipment Advances may not bereborrowed. The proceeds of the Equipment Advances will be used solely toreimburse Borrowers for the purchase of Eligible Equipment purchased within onehundred twenty (120) days of the Equipment Advance provided that the firstEquipment Advance may be used to reimburse Borrowers for Eligible Equipmentpurchased since January 1, 2002 if such first Equipment Advance iscompleted within one hundred twenty (120) days of the Closing Date. AllEquipment Advances shall be evidenced by the Equipment Term Note to be executedand delivered by Borrowers to Bank on the Closing Date and shall be repaid inaccordance with the terms of the Equipment Term Note. Bank’s obligation to lend hereunder shall terminate on the earlier of (i) theoccurrence and continuance of an Event of Default, or (ii) the CommitmentTermination Date.  For purposes of thisSection, the minimum amount of each Equipment Advance is One Hundred ThousandDollars ($100,000) and the maximum number of Equipment Advances that will bemade is five (5).

#### (b)           To obtain an Equipment Advance,Borrowers will deliver to Bank a completed supplement in substantially the formattached as Exhibit B (“Loan Supplement”), copies of invoices forthe Financed Equipment, together with a UCC Financing Statement, if requestedby Bank, covering the Equipment described on the Loan Supplement, and suchadditional information as Bank may request at least five (5) Business Daysbefore the proposed funding date (the “Funding Date”). On each Funding Date,Bank will specify in the Loan Supplement for each Equipment Advance, the BasicRate, the Loan Factor, and the Payment Dates. If Borrowers satisfy theconditions of each Equipment Advance specified herein, Bank will disburse suchEquipment Advance by internal transfer to Company’s deposit account with Bank. EachEquipment Advance may not exceed one hundred percent (100%) of the OriginalStated Cost.

#### (c)           Bank’s obligation to lend theundisbursed portion of the Committed Equipment Line will terminate if, in Bank’ssole discretion, there has been a Material Adverse Change.

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### **2.1.2       InterestRate, Payments**.

#### (a)           Principal and Interest Payments OnPayment Dates.  Borrowers will repay eachEquipment Advance on the terms provided in the related Loan Supplement. Borrowerswill make payments monthly in advance of principal and accrued interest foreach Equipment Advance (collectively, “Scheduled Payments”), on the firstBusiness Day of the month following the Funding Date (or commencing on theFunding Date if the Funding Date is the first Business Day of the month) withrespect to such Equipment Advance and continuing thereafter during theRepayment Period on the first Business Day of each calendar month (each a “PaymentDate”), in an amount equal to the Loan Factor multiplied by the Loan Amount forsuch Equipment Advance as of such Payment Date. All unpaid principal andaccrued interest is due and payable in full on the last Payment Date withrespect to such Equipment Advance. Payments received after 12:00 noon Easterntime are considered received at the opening of business on the next BusinessDay.  An Equipment Advance may only beprepaid in accordance with Sections 2.1.2(d) and 2.1.2(f). Bank may debitany of Borrowers’ deposit accounts including Account Number     _for principal and interest payments owing or any amounts Borrowers owe Bank ifnot paid when due or within the applicable cure period. Bank will promptlynotify Company when it debits Borrowers’ accounts. These debits are not aset-off. When a payment is due on a day that is not a Business Day, the paymentis due the next Business Day and additional fees or interest accrue.

#### (b)           Interest Rate.  Borrowers will pay interest on the PaymentDates (as described above) at the per annum rate of interest equal to the BasicRate.  Any amounts outstanding during thecontinuance of an Event of Default shall bear interest at a per annum rateequal to the Basic Rate plus four percent (4%). If any change in the lawincreases Bank’s expenses or decreases its return from the Equipment Advances,Borrowers will pay Bank (upon request and delivery by Bank to Borrowers of adescription of such increased expenses or decreased returns and the methods bywhich Bank has allocated such increases or decreases to its customers) theamount of such increase or decrease.

#### (c)           Interim Payment. Inaddition to the Scheduled Payments, on the Funding Date for each EquipmentAdvance (unless the Funding Date is the first Business Day of the month)Borrowers shall pay to Bank, on behalf of Bank, the projected interest toaccrue from the Funding Date to the first Payment Date, at the Basic Rate.

#### (d)           Prepayment Upon an Event of Loss. If any FinancedEquipment is subject to an Event of Loss and Borrowers are required to or electto prepay the Equipment Advance with respect to such Financed Equipmentpursuant to Section 6.7, then such Equipment Advance shall be prepaid tothe extent and in the manner provided in such section.

#### (e)           Mandatory Prepayment Upon an Acceleration. If theEquipment Advances are accelerated following the occurrence of an Event ofDefault or otherwise (other than following an Event of Loss), then Borrowerswill immediately pay to Bank (i) all unpaid Scheduled Payments (includingprincipal and interest) with respect to each Equipment Advance, (ii) alloutstanding principal, (iii) all accrued unpaid interest, including thedefault rate of interest, to the date of the prepayment, (iv) thePrepayment Fee, and (v) all other sums, if any, that shall have become dueand payable with respect to any Equipment Advance.

#### (f)            Permitted Prepayment of Loans. Borrowers shall have theoption to prepay any Equipment Advance (or all Equipment Advances) advanced byBank under this Agreement, provided Borrowers (i) provide writtennotice to Bank of its election to prepay such Equipment Advance at least thirty(30) days prior to such prepayment, and (ii) pays, on the date of theprepayment (A) all outstanding principal; (B) all unpaid accruedinterest to the date of the prepayment; (C) a prepayment fee (the “PrepaymentFee”) equal to (i) one and one half of one percent (1.5%) of the amountprepaid if the prepayment occurs within the first twelve (12) months from thedate of the Equipment Advance; (ii) one percent (1%) of the amount prepaidif the prepayment occurs after the first twelve (12) months, and prior to thetwenty fourth (24th)month from the date of the Equipment Advance; and (iii) one half of onepercent (.5%) of the amount prepaid at all times after the first twenty four(24) months from the date of the

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#### Equipment Advance; and (D) all othersums, if any, that shall have become due and payable hereunder with respect tothis Agreement. Notwithstanding the foregoing, Borrower shall not be requiredto pay the Prepayment Fee in the event it elects to pay the Obligations in fullwithin thirty (30) days of obtaining knowledge that all or any part of, or anyinterest in, Bank’s obligations, rights and benefits under this Agreement havebeen transferred, sold or assigned as permitted under Section 12.1 herein.

## **2.2          Requestsfor Advances, Etc.**

(a)           Eachof the Borrowers hereby represents and warrants to Bank that each such Borrowerwill derive benefits, either directly or indirectly, from the proceeds of eachCredit Extension, both in its individual capacity and as a member of theintegrated group to which the Borrowers belong, because the successfuloperation of the integrated group referred to in this Agreement as “theBorrowers” is dependent upon the continued successful performance of thefunctions of the integrated group as a whole.

(b)           TheBorrowers, in the discretion of their respective managements, are to agreeamong themselves as to the allocation of the benefits of the proceeds of theCredit Extensions and the purposes for which such benefits and proceeds will beused, provided that no allocation, purpose or use shall be in violation of thisAgreement. For administrative convenience, each Borrower is hereby irrevocablyappointed by each and every other Borrower as agent for each and every otherBorrower for the purpose of requesting Credit Extensions, receiving thebenefits of the proceeds of such Credit Extensions, and disbursing the proceedsof such Credit Extensions among the Borrowers. By reason thereof, each Borroweris hereby irrevocably appointed by each and every other Borrower with power andauthority through its duly authorized officer or officers (i) to endorseany check (if any) for the proceeds of any Credit Extension for and on behalfof each and every Borrower and in the name of each and every Borrower, and (ii) toinstruct Bank to credit the proceeds of any Credit Extension directly to abanking account of one or more of the Borrowers which shall evidence the makingof such Credit Extension and shall constitute the acknowledgment by each andevery Borrower of the receipt of the proceeds of such Credit Extension. Bankmay require from time to time such certificates, reports and other items asBank may reasonably deem necessary to evidence the allocation of the proceedsof the Credit Extensions among the Borrowers. In particular, Bank may requirefrom time to time that any advances of the proceeds of the Credit Extensions byone or more of the Borrowers be evidenced by one or more promissory notes orother written instruments or agreements between one or more of the Borrowers toevidence intercompany receivables between one or more of the Borrowers. Allactions taken by each Borrower in connection with the Credit Extensions and theLoan Documents shall be conclusively presumed to be the joint and severalactions of the Borrowers even though any one Borrower may act from time to timein its name alone. This appointment is coupled with an interest and isirrevocable without the prior written consent of Bank.

(c)           Withoutimplying any limitation on the joint and several nature of the Obligations,Bank agrees that, notwithstanding any other provision of this Agreement, theBorrowers may create inter-company indebtedness between and/or among theBorrowers with respect to the allocation of the benefits and proceeds of theadvances under this Agreement. The Borrowers agree among themselves, and Bankconsents to that agreement, that each and every Borrower shall have rights ofcontribution from all of the other Borrowers to the extent each such Borrowerincurs Obligations in excess of the proceeds of the Credit Extensions receivedby, or allocated to purposes for the direct benefit of, each such Borrower. Allsuch indebtedness and rights shall be, and are hereby agreed by the Borrowersto be, subordinate in priority and payment to the indefeasible payment in fullof the Obligations, and, unless Bank agrees in writing otherwise, shall not beexercised or repaid in whole or in part until all of the Obligations have beensatisfied, provided, however, that prior to the occurrence of a paymentDefault, the Borrowers shall be permitted to make payments on account of anysuch inter-company indebtedness from time to time in accordance with the termsthereof. Each and every Borrower hereby waives all rights of counterclaim,recoupment and offset between or among themselves arising on account of thatindebtedness. Unless required by the laws of the United States or the countrywhere such indebtedness is created, each and every Borrower agrees not toevidence that indebtedness or rights by note or other instrument, and shall notsecure that indebtedness with any mortgage, security agreement or otherwise.

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(d)           Bankis hereby irrevocably authorized by the Borrowers to make Credit Extensions to theBorrowers, all pursuant to the provisions of this Agreement upon the written,oral or telephone request of any one of the Persons who is from time to time aResponsible Officer of the Borrowers under the provisions of the most recentcertificate of corporate resolutions of the Borrowers on file with Bank or asotherwise designated in writing by the Borrowers. Except for gross negligenceor willful misconduct, Bank assumes no responsibility or liability for anyerrors, mistakes, and/or discrepancies in the oral, telephonic, written orother transmissions of any instructions, orders, requests and confirmationsbetween Bank and the Borrowers in connection with any of Credit Extension, orany other transaction in connection with the provisions of this Agreement.

## **2.3          Fees.**

Borrowerswill pay:

#### (a)           Facility Fee.A fully earned, nonrefundable fee in the amount of Eighteen Thousand SevenHundred Fifty Dollars ($18,750) on the Closing Date.

#### (b)           Bank Expenses.All Bank Expenses (including reasonable attorneys’ fees and reasonableexpenses) incurred through and after the date of this Agreement, are payablewhen due.

# **3              CONDITIONSOF LOANS**

## **3.1          Conditions Precedent to Initial CreditExtension.**

Bank’sobligation to make the initial Credit Extension is subject to the conditionprecedent that it receive the agreements, documents and fees it requires andBank’s receipt of an insurance certificate in form and substance acceptable toBank showing that Bank has been added to such policies pursuant to a lender’sloss payable endorsement as an additional loss payee and with respect to allliability policies, showing the Bank as an additional insured and providingthat the insurer must give Bank at least twenty (20) days notice beforecanceling its policy.

## **3.2          Conditions Precedent to all CreditExtensions.**

Bank’sobligations to make each Credit Extension, including the initial CreditExtension, is subject to the following:

#### (a)           timely receipt ofany Loan Supplement; and

#### (b)           the representationsand warranties in Section 5 must be true on the date of the LoanSupplement and on the effective date of each Credit Extension and no Event ofDefault may have occurred and be continuing, or result from the CreditExtension. Each Credit Extension is Borrowers’ representation and warranty onthat date that the representations and warranties of Section 5 remaintrue.

# **4              CREATIONOF SECURITY INTEREST**

## **4.1          Grant of Security Interest.**

Borrowersgrant Bank a continuing security interest in all presently existing and lateracquired Collateral to secure all Obligations and performance of each ofBorrowers’ duties under the Loan Documents. Any security interest will be afirst priority security interest in the Collateral. Bank upon the occurrence ofany Event of Default, may place a “hold” on any deposit account of any Borrowermaintained with Bank. The Bank’s hold on any such deposit account shall belimited to the aggregate amount of the outstanding Obligations, includingwithout limitation, the outstanding Obligations under the Committed RevolvingLine, including the face amount of all undrawn letters of credit issuedthereunder. If this Agreement is terminated, Bank’s lien and security interestin the Collateral will continue until Borrowers fully satisfy theirObligations.

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# **5              REPRESENTATIONSAND WARRANTIES**

EachBorrower represents and warrants as follows:By:

## **5.1          Due Organization and Authorization.**

EachBorrower is duly existing and in good standing in its state of incorporationand qualified and licensed to do business in, and in good standing in, anystate in which the conduct of its business or its ownership of propertyrequires that it be qualified, except where the failure to do so could notreasonably be expected to cause a Material Adverse Change. Each Borrower’sexact legal name is as set forth on the signature pages of this Agreement.The execution, delivery and performance of the Loan Documents have been dulyauthorized, and do not conflict with Borrower’s formation documents, norconstitute an event of default under any material agreement by which Borroweris bound. Each Borrower is not in default under any agreement to which it is aparty, or by which it is bound, in which the default could reasonably beexpected to cause a Material Adverse Change.

## **5.2          Collateral.**

EachBorrower has good title to the Collateral, free of Liens.

## **5.3          Litigation.**

Thereare no actions or proceedings pending or, to the knowledge of each Borrower’sResponsible Officers, threatened by or against any Borrower or any Subsidiaryin which a likely adverse decision could reasonably be expected to cause aMaterial Adverse Change.

## **5.4          No Material Adverse Change inFinancial Statements.**

Allconsolidated financial statements for the Company and its Subsidiaries,delivered to Bank fairly present in all material respects the consolidatedfinancial condition and the consolidated results of operations of the Companyand its Subsidiaries. There has not been any material deterioration in theconsolidated financial condition of the Company and its Subsidiaries since thedate of the most recent consolidated financial statements submitted to Bank.

## **5.5          Solvency.**

Thefair salable value of Borrowers’ assets (including goodwill minus dispositioncosts) exceeds the fair value of their liabilities; no Borrower is left withunreasonably small capital after the transactions in this Agreement or any ofthe Loan Documents; and each Borrower is able to pay its debts (including tradedebts) as they mature.

## **5.6          Regulatory Compliance.**

NoBorrower is an “investment company” or a company “controlled” by an “investmentcompany” under the Investment Company Act. No Borrower is engaged as one of itsimportant activities in extending credit for margin stock (underRegulations T and U of the Federal Reserve Board of Governors). Borrowerhas complied in all material respects with the Federal Fair Labor Standards Act.No Borrower has violated any laws, ordinances or rules, the violation of whichcould reasonably be expected to cause a Material Adverse Change. None of anyBorrowers’ or any Subsidiary’s properties or assets has been used by anyBorrower or any Subsidiary or, to the best of any Borrower’s knowledge, byprevious Persons, in disposing, producing, storing, treating, or transportingany hazardous substance other than legally. Each Borrower and each Subsidiaryhas timely filed all required tax returns and paid, or made adequate provisionto pay, all material taxes, except those being contested in good faith withadequate reserves under GAAP. Each Borrower and each Subsidiary has obtainedall consents, approvals and authorizations of, made all declarations or filingswith, and given all notices to, all

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governmentauthorities that are necessary to continue its business as currently conducted,except where the failure to do so could not reasonably be expected to cause aMaterial Adverse Change.

## **5.7          Omitted.**

## **5.8          Designated Senior Indebtedness.**

TheCompany represents, warrants and agrees with the Bank that the Obligationsshall at all times be deemed to be “Designated Senior Indebtedness” under thatcertain Indenture dated October 20, 2000 between the Company and StateStreet Bank and Trust Company as the same may from time to time be amended,restated or otherwise modified.

## **5.9          Full Disclosure.**

Nowritten representation, warranty or other statement of any Borrower in anycertificate or written statement given to Bank (taken together with all suchwritten certificates and written statements to Bank) contains any untruestatement of a material fact or omits to state a material fact necessary tomake the statements contained in the certificates or statements not misleading.It being recognized by Bank that the projections and forecasts provided by eachBorrower in good faith and based upon reasonable assumptions are not viewed asfacts and that actual results during the period or periods covered by suchprojections and forecasts may differ from the projected and forecasted results.

# **6              AFFIRMATIVECOVENANTS**

EachBorrower will do all of the following for so long as Bank has an obligation tomake any Credit Extension, or there are outstanding Obligations:

## **6.1          Government Compliance.**

EachBorrower will maintain its legal existence and good standing as a RegisteredOrganization in only the State of such Borrower’s incorporation as set forth inthe Schedule and maintain qualification in each jurisdiction in which thefailure to so qualify would reasonably be expected to cause a material adverseeffect on such Borrower’s business or operations. Each Borrower will comply,and have each Subsidiary comply, with all laws, ordinances and regulations towhich it is subject, noncompliance with which could have a material adverseeffect on such Borrower’s business or operations or would reasonably beexpected to cause a Material Adverse Change.

## **6.2          Financial Statements, Reports,Certificates.**

#### (a)           The Company willdeliver to Bank:  (i) as soon asavailable, but no later than fifty (50) days after the last day of each of theCompany’s fiscal quarters, a company prepared quarterly financial statementincluding a consolidated balance sheet and income statement covering Borrowers’consolidated operations during the period certified by a Responsible Officer; (ii) assoon as available, but no later than one hundred twenty (120) days after thelast day of the Company’s fiscal year, audited consolidated financialstatements prepared under GAAP, consistently applied, together with anunqualified opinion on the financial statements from an independent certifiedpublic accounting firm acceptable to Bank; (iii) a prompt report of anylegal actions pending or threatened against any Borrower or any Subsidiary thatcould result in damages or costs to any Borrower or any Subsidiary in excess of$3,000,000 or which could result in a Material Adverse Change; and (iv) budgets,sales projections, operating plans or other financial information Bankreasonably requests. In lieu of items (a)(i) and (a)(ii) above,Company may deliver to Bank, Company’s 10-Q and 10-K along with theunqualified opinion described above, as applicable, within the time framedescribed above for delivering such financial statements.

#### (b)           Within fifty (50)days after the last day of each of the Company’s fiscal quarters, the Companywill deliver to Bank with the quarterly financial statements a ComplianceCertificate signed by a Responsible Officer in the form of Exhibit C.

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#### (c)           Each documentrequired to be delivered pursuant to paragraphs (a) and (b) of this Section 6.2shall be deemed to have been delivered on the date on which the Company postssuch document on the Company’s website on the Internet at the website addresslisted on the Schedule, or when such document is posted on the Securities andExchange Commission’s website at www.sec.gov; provided that (i) if theBank so requests, the Company shall deliver paper copies of all such documentsto the Bank until the Bank requests that the Company cease delivering suchpaper copies and (ii) the Company shall notify the Bank by facsimile ofthe posting of each such document.

## **6.3          Financial Covenants.**

Borrowerswill maintain as of the last day of each fiscal quarter:

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

(b)              Tangible Net Worth. ATangible 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, andthereafter at such levels as agreed to by Bank based upon the Company’sprojections.

## **6.4          Taxes.**

EachBorrower will make, and cause each Subsidiary to make, timely payment of allmaterial federal, state, and local taxes or assessments (other than taxes andassessments which Borrowers are contesting in good faith, with adequatereserves maintained in accordance with GAAP) and will deliver to Bank, ondemand, appropriate certificates attesting to the payment.

## **6.5          Insurance.**

EachBorrower will keep its business and the Collateral insured for risks and inamounts standard for Borrower’s industry, and as Bank may reasonably request. Insurancepolicies will be in a form, with companies, and in amounts that aresatisfactory to Bank in Bank’s reasonable discretion. At Bank’s request, Borrowerwill deliver certified copies of policies and evidence of all premium payments.Proceeds payable under any policy will, at Bank’s option, be payable to Bank onaccount of the Obligations.

## **6.6          Deposit Accounts.**

Borrowerswill at all times, maintain not less than $50,000,000 in cash and/orinvestments with Bank and/or its Affiliates. Funds may be maintained ininvestment vehicles or operating accounts at the Borrower’s discretion. Borrowersagree that in the event that Borrowers request that any such amounts requiredto be maintained herein be held in an investment or other account with anyAffiliate of Bank, Borrowers shall promptly execute and deliver an AccountControl Agreement to Bank in Bank’s standard form

## **6.7          Loss, Destruction or Damage.**

EachBorrower will bear the risk of the Financed Equipment being lost, stolen,destroyed, or damaged. If during the term of this Agreement any item ofFinanced Equipment is lost, stolen, destroyed, damaged beyond repair, renderedpermanently unfit for use, or seized by a governmental authority for any reasonfor a period equal to at least the remainder of the term of this Agreement (an “Eventof Loss”), then in each case, Borrowers:

#### (a)           prior to theoccurrence of an Event of Default, at Borrowers’ option, will (1) pay toBank on account of the Obligations relating to the Financed Equipment affectedby the Event of Loss all accrued interest to the date of the prepayment, plusall outstanding principal, plus a prepayment fee equal

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#### to (i) oneand one half of one percent (1.5%) of the amount prepaid if the prepaymentoccurs within the first twelve (12) months from the date of the EquipmentAdvance; (ii) one percent (1%) 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 theEquipment Advance; and (iii) one half of one percent (.5%) of the amountprepaid at all times after the first twenty four (24) months from the date ofthe Equipment Advance; or (2) repair or replace any Financed Equipmentsubject to an Event of Loss provided the repaired or replaced FinancedEquipment is of equal or like value to the Financed Equipment subject to anEvent of Loss and provided further that Bank has a first priority perfectedsecurity interest in such repaired or replaced Financed Equipment.

#### (b)           during thecontinuance of an Event of Default, on or before the Payment Date after suchEvent of Loss for each such item of Financed Equipment subject to such Event ofLoss, Borrowers will, at Bank’s option, pay to Bank an amount equal to allaccrued interest to the date of the prepayment, plus all outstanding principal,plus a prepayment fee equal to (i) one and one half of one percent (1.5%)of the amount prepaid if the prepayment occurs within the first twelve (12)months from the date of the Equipment Advance; (ii) one percent (1%) ofthe amount prepaid if the prepayment occurs after the first twelve (12) months,and prior to the twenty fourth (24th) month from the date of the EquipmentAdvance; and (iii) one half of one percent (.5%) of the amount prepaid atall times after the first twenty four (24) months from the date of theEquipment Advance, plus all other sums, if any, that shall have become due andpayable, including interest at the Default Rate with respect to any past dueamounts.

Onthe date of receipt by Bank of the amount specified above with respect to eachsuch item of Financed Equipment subject to an Event of Loss, this Agreementshall terminate as to such Financed Equipment. If any proceeds of insurance orawards received from governmental authorities are in excess of the amount owedunder this Section, Bank shall promptly remit to Borrowers the amount in excessof the amount owed to Bank.

## **6.8          Joinder of Subsidiaries.**

Inthe event that any Subsidiary of any Borrower which is not then a Borrowerunder this Loan Agreement becomes the owner of any interest in any FinancedEquipment purchased with any Equipment Advance through either the initialpurchase of such Financed Equipment from a third party or by way of anytransfer, assignment or sale of such Financed Equipment by any other Borrower,Borrowers shall cause such Subsidiary to deliver to Bank, within twenty (20)days of acquiring any such interest in any Financed Equipment, an Additional BorrowerJoinder Supplement in substantially the form attached hereto as Exhibit Dpursuant to which (a) it shall join as a Borrower under each of the LoanDocuments to which the Borrowers are parties, and (b) encumber suchFinanced Equipment to secure the Obligations, free and clear of all Liens.

## **6.9          Further Assurances.**

EachBorrower will execute any further instruments and take further action as Bankreasonably requests to perfect or continue Bank’s security interest in theCollateral or to effect the purposes of this Agreement.

# **7              NEGATIVECOVENANTS**

NoBorrower will do any of the following without Bank’s prior written consent, forso long as Bank has an obligation to make Credit Extensions or there are anyoutstanding Obligations:

## **7.1          Dispositions.**

Convey,sell, lease, transfer or otherwise dispose of (collectively “Transfer”), orpermit any of its Subsidiaries to Transfer, all or any part of the Collateral(including, any Transfer to another Borrower for which Bank has not filed afinancing statement on such Borrower with respect to such Collateral).

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## **7.2          Changes in Business, Ownership,Management or Business Locations.**

Engagein or permit any of its Subsidiaries to engage in any business other than thebusinesses currently engaged in by Borrower or reasonably related thereto orhave a material change in its senior management, unless such senior managementis replaced with an individual or individuals with comparable experience andqualifications in Borrower’s good faith business judgment within 120 days or anyPerson or group of Persons acting in concert shall acquire more thirty fivepercent (35%) (other than by the sale of Borrower’s equity securities in apublic offering or to venture capital investors so long as Borrower identifiesand advises Bank of the venture capital investors prior to the closing of theinvestment), except where (i) no Event of Default has occurred and iscontinuing or would result from such action during the term of this Agreementand (ii) Borrowers remain in compliance with Section 6.3 hereoffollowing any such transaction. A Subsidiary may merge or consolidate intoanother Subsidiary or into any Borrower. Borrower will not, without at leastthirty (30) days prior written notice, change its state of formation, or changethe locations where the Collateral is located as set forth in the Schedule oras previously disclosed to Bank.

## **7.3          Mergers or Acquisitions.**

Mergeor consolidate, or permit any of its Material Subsidiaries to merge orconsolidate, with any other Person, or acquire, or permit any of itsSubsidiaries to acquire, all or substantially all of the capital stock orproperty of another Person (a “Target”), except (a) a Subsidiary may mergeor consolidate into another Subsidiary or into any Borrower (b) inconnection with a Permitted Acquisition (as hereinafter defined). Borrower mayacquire by merger, stock purchase, asset purchase or otherwise, all orsubstantially all the assets of any Person or make any investments in any suchPerson (each a “Permitted Acquisition” and collectively, the “PermittedAcquisitions”) during the existence of this Agreement without Bank’s consent, provided,however, that each of the following conditions precedent are insatisfied:

(i)           After giving effect to suchPermitted Acquisition, Borrower shall continue to be in compliance with thefinancial covenants set forth in Section 6.3 hereof;

(ii)          The net cash consideration (afteradding any cash and cash equivalents to be acquired through the acquisition ofthe Target) for any single Permitted Acquisition does not exceed FifteenMillion Dollars ($15,000,000) and the aggregate net cash consideration of allPermitted Acquisitions within a single fiscal year does not exceed ThirtyMillion Dollars ($30,000,000) (the “Acquisition Cap”);

(iii)          The Person being acquired (“Target”)is a going concern;

(iv)          With respect to any PermittedAcquisitions financed with the Company’s equity, the number of the shares ofthe Company’s common stock issued as consideration for any single PermittedAcquisition does not exceed twenty percent (20%) of the  number of the shares of the Company’s issuedand outstanding common stock on the closing date of such Permitted Acquisition

(v)           After giving affect to the PermittedAcquisition, the Borrowers’ current Senior Management remains actively involvedin the ongoing business of each Borrower (subject to changes in SeniorManagement permitted by Section 7.2 hereof); and

(vi)          After giving affect to the PermittedAcquisition, there shall not exist any Event of Default under this Agreement orany of the Loan Documents.

For purposeshereof, only cash consideration incurred in connection with each PermittedAcquisition (not the value of non-compete agreements and the value of assets,stock, warrants, or other property transferred, pledged or given in connectionwith any Permitted Acquisition) shall be included in the calculation of theAcquisition Cap, if such Target is a Material Subsidiary.

Upon completion ofeach Permitted Acquisition, Borrowers shall at Borrowers’ expense, cause each Targetwhich is organized in the United States to be added as a co-obligor on thisAgreement and the Loan Documents.

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## **7.4          Indebtedness.**

Create,incur, assume, or be liable for any Indebtedness, or permit any Subsidiary todo so, other than Permitted Indebtedness.

## **7.5          Encumbrance.**

Create,incur, or allow any Lien on any Collateral, or permit any of its Subsidiariesto do so, or permit any Collateral not to be subject to the first prioritysecurity interest granted here.

## **7.6          Distributions; Investments.**

Directlyor indirectly acquire or own any Person, or make any Investment in any Person,other than Permitted Investments, or permit any of its Subsidiaries to do so orpay any dividends or make any distribution or payment or redeem, retire orpurchase any capital stock, except where (i) no Event of Default hasoccurred and is continuing or would result from such action during the term ofthis Agreement and (ii) and Borrowers remain in compliance with Section 6.3hereof following any such transaction.

## **7.7          Transactions with Affiliates.**

Directlyor indirectly enter into or permit to exist any material transaction with anyAffiliate of any Borrower except for transactions that are in the ordinarycourse of such Borrower’s business, upon fair and reasonable terms that are noless favorable to such Borrower than would be obtained in an arm’s lengthtransaction with a non­affiliated Person.

## **7.8          Subordinated Debt.**

#### (a)           Make any MaterialSubordinated Debt Modification to any document relating to the SubordinatedDebt without Bank’s prior written consent, or (b) make any payment on theSubordinated Debt, provided, however, that (i) Borrowers are permitted tomake payments (“Permitted Conversion Payments”) of up to Ten Million Dollars($10,000,000) in the aggregate in any twelve-month period in connection withthe conversion of Subordinated Debt into equity so long as such payments arenot payments of principal or interest, but are additional consideration paid tothe holders of the Subordinated Debt in connection with such conversion, andprovided, further, that Permitted Conversion Payments may only be made if suchPermitted Conversion Payments are approved by the Board of Directors of theCompany, and further provided that at the time of and on a pro forma basisafter giving effect to such Permitted Conversion Payments, no Event of Defaultshall have occurred or would thereby occur under any Loan Document, and (ii) Borrowersare permitted to make payments on the Subordinated Debt from proceeds of salesof the Company’s capital stock from and after the date hereof, provided that atthe time of and on a pro forma basis after giving effect to such payments, noEvent of Default shall have occurred or would thereby occur under any LoanDocument.

## **7.9          Compliance.**

Becomean “investment company” or a company controlled by an “investment company,”under the Investment Company Act of 1940 or undertake as one of its importantactivities extending credit to purchase or carry margin stock, or use theproceeds of any Credit Extension for that purpose; fail to meet the minimumfunding requirements of ERISA, permit a Reportable Event or ProhibitedTransaction, as defined in ERISA, to occur; fail to comply with the FederalFair Labor Standards Act or violate any other law or regulation, if the violationcould reasonably be expected to have a material adverse effect on any Borrower’sbusiness or operations or would reasonably be expected to cause a MaterialAdverse Change, or permit any of its Subsidiaries to do so.

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# **8              EVENTSOF DEFAULT**

#### Any one of the following is an Event of Default:

## **8.1          Payment Default.**

#### If Borrowers fail to pay any of the Obligations when due and suchfailure shall continue for three (3) Business Days. During the additionaltime, the failure to cure the default is not an Event of Default (but no CreditExtensions will be made during the cure period);

## **8.2          Covenant Default.**

#### If any Borrower does not perform any obligation in Section 6 orviolates any covenant in Section 7; or if any Borrower does not perform orobserve any other material term, condition or covenant in this Agreement, anyLoan Documents, or in any agreement between any Borrower and Bank; and in eachsuch case, as to any default under a term, condition or covenant that can becured, has not cured the default within fifteen (15) days from the earlier of (i) noticefrom Bank of such default to a Responsible Officer of the Company or (ii) actualknowledge of such default by an officer of any Borrower, provided, however, ifthe default cannot be cured within fifteen (15) days or cannot be cured afterthe defaulting Borrower’s attempts within such fifteen (15) day period, and thedefault may be cured within a reasonable time, then the defaulting Borrower hasan additional period (of not more than thirty (30) days) to attempt to cure thedefault. During the additional time, the failure to cure the default is not anEvent of Default (but no Credit Extensions will be made during the cureperiod);

## **8.3          Material Adverse Change.**

#### If there (i) occurs a material adversechange in the business, operations, or condition (financial or otherwise) ofthe Borrowers and their Subsidiaries taken as a whole, or (ii) is amaterial impairment of the prospect of repayment of any portion of theObligations or (iii) is a material impairment of the value or priority ofBank’s security interests in the Collateral.

## **8.4          Attachment.**

#### If any material portion of any Borrower’s assets is attached, seized,levied on, or comes into possession of a trustee or receiver and the attachment,seizure or levy is not removed in ten (10) days, or if any Borrower isenjoined, restrained, or prevented by court order from conducting a materialpart of its business or if a judgment or other claim becomes a Lien on amaterial portion of any Borrower’s assets, or if a notice of lien, levy, orassessment is filed against any of any Borrower’s assets by any governmentagency and not paid within ten (10) days after such Borrower receivesnotice. These are not Events of Default if stayed or if a bond is postedpending contest by such Borrower (but no Credit Extensions will be made duringthe cure period);

## **8.5          Insolvency.**

#### If any Borrower becomes insolvent or if any Borrower begins anInsolvency Proceeding or an Insolvency Proceeding is begun against any Borrowerand not dismissed or stayed within forty-five (45) days (but no CreditExtensions will be made before any Insolvency Proceeding is dismissed);

## **8.6          Other Agreements.**

#### If there is a default in any agreement between any Borrower and a thirdparty that gives the third party the right to accelerate any Indebtednessexceeding $3,000,000 or that could cause a Material Adverse Change;

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## **8.7          Judgments.**

#### If a money judgment(s) in the aggregate of at least $3,000,000 isrendered against any Borrower and is unsatisfied and unstayed for 10 days (butno Credit Extensions will be made before the judgment is stayed or satisfied);

## **8.8          Misrepresentations.**

#### If any Borrower or any Person acting for any Borrower makes anymaterial misrepresentation or material misstatement now or later in anywarranty or representation in this Agreement or in any writing delivered toBank or to induce Bank to enter this Agreement or any Loan Document; or

## **8.9          Subsidiaries.**

#### Any circumstance described in Sections 8.4, 8.5 or 8.7 occurs toany Material Subsidiary of any Borrower.

# **9              BANK’SRIGHTS AND REMEDIES**

## **9.1          Rights and Remedies.**

#### When an Event of Default occurs and continues Bank may, without noticeor demand, do any or all of the following:

#### (a)           Declare allObligations immediately due and payable (but if an Event of Default describedin Section 8.5 occurs all Obligations are immediately due and payablewithout any action by Bank);

#### (b)           Stop advancing moneyor extending credit for Borrowers’ benefit under this Agreement or under anyother agreement between any Borrower and Bank;

#### (c)           Make any paymentsand do any acts it considers necessary or reasonable to protect its securityinterest in the Collateral. Borrowers will assemble the Collateral if Bankrequires and make it available as Bank designates. Bank may enter premiseswhere the Collateral is located, take and maintain possession of any part ofthe Collateral, and pay, purchase, contest, or compromise any Lien whichappears to be prior or superior to its security interest and pay all expensesincurred. Each Borrower grants Bank a license to enter and occupy any of itspremises, without charge, to exercise any of Bank’s rights or remedies;

#### (d)           Apply to theObligations any (i) balances and deposits of any Borrower, Bank or itsAffiliate it holds, or (ii) any amount held by Bank owing to or for thecredit or the account of any Borrower;

#### (e)           Ship, reclaim,recover, store, finish, maintain, repair, prepare for sale, advertise for sale,and sell the Collateral;

#### (f)            Exercise a right ofset off or bank lien as to any monies of any Borrower deposited in any accountsof any nature maintained by any Borrower with Bank or any Affiliate of Bank,without advance notice, regardless of whether such accounts are general orspecial. Each Borrower, Bank and any Affiliate of Bank at which any suchaccounts are maintained agree that such Affiliate shall comply with anyinstructions given by Bank with respect to the disposition of funds held in anysuch account without further consent of any Borrower; and

#### (g)           Dispose of theCollateral according to the Code.

## **9.2          Power of Attorney.**

#### Effective only when an Event of Default occurs and continues, eachBorrower irrevocably appoints Bank as its lawful attorney to:  (i) endorse such Borrower’s name on anychecks or other forms

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#### of payment orsecurity; (ii) make, settle, and adjust all claims under such Borrower’sinsurance policies; and (iii) transfer the Collateral into the name ofBank or a third party as the Code permits. Bank may exercise the power ofattorney to sign each Borrower’s name on any documents necessary to perfect orcontinue the perfection of any security interest regardless of whether an Eventof Default has occurred if Borrower has refused to do so upon the Bank’srequest. Bank’s appointment as each Borrower’s attorney in fact, and all ofBank’s rights and powers, coupled with an interest, are irrevocable until allObligations have been fully repaid and performed and Bank’s obligation toprovide Credit Extensions terminates.

## **9.3          Omitted.**

## **9.4          Bank Expenses.**

#### If any Borrower fails to pay any amount or furnish any required proofof payment to third persons, Bank may make all or part of the payment or obtaininsurance policies required in Section 6.5, and take any action under thepolicies Bank deems prudent. Any amounts paid by Bank are Bank Expenses andimmediately due and payable, bearing interest at the then applicable rate andsecured by the Collateral. No payments by Bank are deemed an agreement to makesimilar payments in the future or Bank’s waiver of any Event of Default.

## **9.5          Bank’s Liability for Collateral.**

#### If Bank complies with reasonable banking practices and the Code, it isnot liable for: (a) the safekeeping of the Collateral; (b) any lossor damage to the Collateral; (c) any diminution in the value of the Collateral;or (d) any act or default of any carrier, warehouseman, bailee, or otherperson. Borrowers bear all risk of loss, damage or destruction of theCollateral.

## **9.6          Remedies Cumulative.**

#### Bank’s rights and remedies under this Agreement, the Loan Documents,and all other agreements are cumulative. Bank has all rights and remediesprovided under the Code, by law, or in equity. Bank’s exercise of one right orremedy is not an election, and Bank’s waiver of any Event of Default is not acontinuing waiver. Bank’s delay is not a waiver, election, or acquiescence. Nowaiver is effective unless signed by Bank and then is only effective for thespecific instance and purpose for which it was given.

## **9.7          Demand Waiver.**

#### Each Borrower waives demand, notice of default or dishonor, notice ofpayment and nonpayment, notice of any default, nonpayment at maturity, release,compromise, settlement, extension, or renewal of accounts, documents,instruments, chattel paper, and guarantees held by Bank on which Borrowers areliable.

# **10           NOTICES**

#### All notices or demands by any party about this Agreement or any otherrelated agreement must be in writing and be personally delivered or sent by anovernight delivery service, by certified mail, postage prepaid, return receiptrequested, or by telefacsimile to the addresses set forth at the beginning ofthis Agreement. A party may change its notice address by giving the other partywritten notice.

# **11           CHOICEOF LAW , VENUE AND JURY TRIAL WAIVER**

#### Virginia****law governs theLoan Documents without regard to principles of conflicts of law. Each Borrowerand Bank each submit to the exclusive jurisdiction of the State and Federalcourts in the Commonwealth of Virginia provided, however, that if for anyreason the Bank can not avail itself of the courts of the Commonwealth ofVirginia, the Borrower and Bank each submit to the jurisdiction of the Stateand Federal Courts in Santa Clara County, California.

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**EACHBORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSEOF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATEDTRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS.THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THISAGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.**

# **12           GENERAL PROVISIONS**

## **12.1        Successors and Assigns.**

#### This Agreement binds and is for the benefit of the successors andpermitted assigns of each party. Borrowers may not assign this Agreement or anyrights under it without Bank’s prior written consent which may be granted orwithheld in Bank’s discretion. Bank has the right, without the consent of ornotice to Borrowers, to sell, transfer, negotiate, or grant participation inall or any part of, or any interest in, Bank’s obligations, rights and benefitsunder this Agreement.

## **12.2        Indemnification.**

#### Each Borrower will indemnify, defend and hold harmless Bank and itsofficers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted byany other party in connection with the transactions contemplated by the LoanDocuments; and (b) all losses or Bank Expenses incurred, or paid by Bankfrom, following, or consequential to transactions between Bank and any Borrower(including reasonable attorneys fees and expenses), except with respect to (a) and(b) above where such losses, obligations, demands, claims or liabilitiesare caused by Bank’s gross negligence or willful misconduct.

## **12.3        Time of Essence.**

#### Time is of the essence for the performance of all obligations in thisAgreement.

## **12.4        Severability of Provision.**

#### Each provision of this Agreement is severable from every otherprovision in determining the enforceability of any provision.

## **12.5        Amendments in Writing, Integration.**

#### All amendments to this Agreement must be in writing and signed byBorrowers and Bank. This Agreement represents the entire agreement about thissubject matter, and supersedes prior negotiations or agreements. All prioragreements, understandings, representations, warranties, and negotiationsbetween the parties about the subject matter of this Agreement merge into thisAgreement and the Loan Documents.

## **12.6        Counterparts.**

#### This Agreement may be executed in any number of counterparts and bydifferent parties on separate counterparts, each of which, when executed anddelivered, are an original, and all taken together, constitute one Agreement.

## **12.7        Survival.**

#### All covenants, representations and warranties made in this Agreementcontinue in full force while  anyObligations remain outstanding. The obligations of Borrowers in Section 12.2to indemnify Bank will survive until all statutes of limitations for actionsthat may be brought against Bank have run.

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## **12.8        Confidentiality.**

#### In handling any confidential information, Bank will exercise the samedegree of care that it exercises for its own proprietary information, butdisclosure of information may be made (i) to Bank’s subsidiaries oraffiliates in connection with their business with Borrowers, (ii) toprospective transferees or purchasers of any interest in the loans (provided,however, Bank shall use commercially reasonable efforts in obtaining suchprospective transferee or purchasers agreement of the terms of this provision),(iii) as required by law, regulation, subpoena, or other order, (iv) asrequired in connection with Bank’s examination or audit and (v) as Bankconsiders appropriate exercising remedies under this Agreement. Confidentialinformation does not include information that either: (a) is in the publicdomain or in Bank’s possession when disclosed to Bank, or becomes part of thepublic domain after disclosure to Bank; or (b) is disclosed to Bank by athird party, if Bank does not know that the third party is prohibited fromdisclosing the information.

## **12.9        Attorneys’ Fees, Costs and Expenses.**

#### In any action or proceeding between any Borrower and Bank arising outof the Loan Documents, the prevailing party will be entitled to recover itsreasonable attorneys’ fees and other reasonable costs and expenses incurred, inaddition to any other relief to which it may be entitled.

# **13           DEFINITIONS**

## **13.1        Definitions.**

#### In this Agreement:

#### “**Affiliate**” of a Person isa Person that owns or controls directly or indirectly the Person, any Personthat controls or is controlled by or is under common control with the Person,and each of that Person’s senior executive officers, directors, partners and,for any Person that is a limited liability company, that Person’s managers andmembers.

#### “**Bank Expenses**” are allaudit fees and expenses and reasonable costs and expenses (including reasonableattorneys’ fees and expenses) for preparing, negotiating, administering (exceptfor administrative expenses incurred in the ordinary course or where suchadministration does not result in out-of-pocket expenses), defending andenforcing the Loan Documents (including appeals or Insolvency Proceedings).

#### “**Basic Rate**” is a perannum rate of interest (based on a year of 360 days) equal to seven andthree-quarters percent (7.75%).

#### “**Borrower’s Books**” are allof each Borrower’s books and records including ledgers, records regarding eachBorrower’s assets or liabilities, the Collateral, business operations orfinancial condition and all computer programs or discs or any equipmentcontaining the information.

#### “**Business Day**” is any daythat is not a Saturday, Sunday or a day on which the Bank is closed.

#### “**Closing Date**” is the dateof this Agreement.

#### “**Code**” is the UniformCommercial Code, in effect in the Commonwealth of Virginia as of the ClosingDate.

#### “**Collateral**” is theproperty described on Exhibit A.

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

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#### “**Committed Revolving Line”**is a line of credit from Bank to Borrowers in the original maximum principalamount of Fifteen Million Dollars ($15,000,000), as the same may be amended,modified, increased or renewed from time to time.

#### **“Commitment Termination Date”**is December 31, 2004.

#### **“Contingent Obligation”**is, for any Person, any direct or indirect liability, contingent or not, ofthat Person for (i) any indebtedness, lease, dividend, letter of credit orother obligation of another such as an obligation directly or indirectlyguaranteed, endorsed, co-made, discounted or sold with recourse by thatPerson, or for which that Person is directly or indirectly liable; (ii) anyobligations for undrawn letters of credit for the account of that Person; and (iii) allobligations from any interest rate, currency or commodity swap agreement,interest rate cap or collar agreement, or other agreement or arrangementdesignated to protect a Person against fluctuation in interest rates, currencyexchange rates or commodity prices;  but “ContingentObligation” does not include endorsements in the ordinary course of business. Theamount of a Contingent Obligation is the stated or determined amount of theprimary obligation for which the Contingent Obligation is made or, if notdeterminable, the maximum reasonably anticipated liability for it determined bythe Person in good faith; but the amount may not exceed the maximum of theobligations under the guarantee or other support arrangement.

#### **“Credit Extension”**is each Equipment Advance, or any other extension of credit by Bank for anyBorrower’s benefit.

#### **“Current Liabilities”**are the aggregate amount of the Total Liabilities of the Company and itsconsolidated Subsidiaries which mature within one (1) year.

#### **“Eligible Equipment”**is general purpose computer equipment, office equipment, test and laboratoryequipment, furnishings, and, subject to the limitations set forth below, OtherEquipment that complies with all of Borrowers’ representations and warrantiesto Bank and which is acceptable to Bank in all respects. Equipment financedwith the proceeds of Equipment Advances may be new or used Equipment.

#### **“Equipment”** has themeaning set forth in the Code and includes all present and future machinery,equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts andattachments in which any Borrower has any interest.

#### **“Equipment Advance”**is defined in Section 2.1.1.

#### **“Equipment Term Note”**means that certain Equipment Term Note of even date herewith in the principalamount of Five Million Dollars ($5,000,000) from Borrowers in favor of Bank,together with all renewals, amendments, modifications and substitutionstherefor.

#### **“ERISA”** is theEmployment Retirement Income Security Act of 1974, and its regulations.

#### **“Financed Equipment”**is defined in the Loan Supplement.

#### **“Funding Date”** isany date on which an Equipment Advance is made to or on account of Borrowers.

#### **“GAAP”** is generallyaccepted accounting principles.

#### **“Indebtedness”** is (a) indebtednessfor borrowed money or the deferred price of property or services, such asreimbursement and other obligations for surety bonds and letters of credit, (b) obligationsevidenced by notes, bonds, debentures or similar instruments, (c) capitallease obligations and (d) Contingent Obligations.

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#### **“Insolvency Proceeding”**are proceedings by or against any Person under the United States BankruptcyCode, or any other bankruptcy or insolvency law, including assignments for thebenefit of creditors, compositions, extensions generally with its creditors, orproceedings seeking reorganization, arrangement, or other relief.

#### **“Investment”** is anybeneficial ownership of (including stock, partnership interest or othersecurities) any Person, or any loan, advance or capital contribution to anyPerson.

#### **“Lien”** is amortgage, lien, deed of trust, charge, pledge, security interest or otherencumbrance.

#### **“Loan Amount”** is theaggregate amount of the Equipment Advance.

#### **“Loan Documents”**are, collectively, this Agreement, the Equipment Term Note, any note, or notesor guaranties executed by any Borrower and any other present or futureagreement between any Borrower and/or for the benefit of Bank in connectionwith this Agreement, all as amended, extended or restated.

#### **“Loan Factor”** is thepercentage which results from amortizing the Equipment Advance over theRepayment Period, using the Basic Rate as the interest rate.

#### **“Loan Supplement”** isattached as **Exhibit B**.

#### **“Material Adverse Change”**has the meaning set forth in Section 8.3.

#### **“Material Subordinated Debt Modification”**means any amendment or modification to any instrument, agreement or otherdocument relating to the Subordinated Debt or any other action in connectionwith the Subordinated Debt that, individually or in combination with otheramendments, modifications or actions, (a) increases the interest rate,fees or expenses due under the Subordinated Debt, (b) increases themaximum principal amount of the Subordinated Debt, (c) accelerates the duedate or maturity date of all or part of the Subordinated Debt, (d) changesthe collateral, if any, for the Subordinated Debt or (e) otherwise has amaterial adverse effect on Borrower’s ability to pay and perform itsobligations in favor of Bank or the validity or priority of Bank’s securityinterest in the Collateral.

#### **“Material Subsidiary”**means any Subsidiary now or hereafter existing, that owns assets with anaggregate book value exceeding 5% of the aggregate book value of theconsolidated total assets of the Company and its consolidated Subsidiariestaken as a whole, in each case, as measured as of the last day of the mostrecently completed fiscal quarter for which financial statements have beendelivered pursuant to Section 6.2, or (ii) has generated revenueduring the most recently completed four fiscal quarter period exceeding 5% ofthe aggregate consolidated revenue generated by the Company and itsSubsidiaries during the most recently completed four fiscal quarter period forwhich financial statements have been delivered pursuant to Section 6.2.

#### **“Obligations”** aredebts, principal, interest, Bank Expenses and other amounts Borrowers owe Banknow or later, including cash management services, letters of credit and foreignexchange contracts, if any and including interest accruing after InsolvencyProceedings begin and debts, liabilities, or obligations of Borrowers assignedto Bank.

#### **“Original Stated Cost”**is (i), the original cost to any Borrower of the item of new Equipment(including without limitation Other Equipment) any and all freight,installation, tax and related charges associated with the purchase of suchEquipment or  (ii) the fair marketvalue assigned to such item of used Equipment (including without limitationOther Equipment) by mutual agreement of Borrowers and Bank at the time ofmaking of the Equipment Advance, plus any and all freight, installation, taxand related charges associated with the purchase of such Equipment, subject tothe sub-limit on Other Equipment set forth below.

#### **“Other Equipment”**isleasehold improvements, intangible property such as computer software andsoftware licenses, equipment specifically designed or manufactured for anyBorrower, other

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#### intangibleproperty, limited use property and other similar property and any and allfreight, installation, tax and other related charges associated with thepurchase of Financed Equipment. Unless otherwise agreed to by Bank not morethan twenty percent (20%) of the Committed Equipment Line shall consist ofOther Equipment.

#### **“Permitted Indebtedness”**is:

(a)           Borrowers’ indebtedness to Bank underthis Agreement or any other Loan Document;

(b)           Indebtedness existing on the ClosingDate and shown on the Schedule and any Indebtedness hereafter incurred for thepurpose of refinancing such existing Indebtedness, provided the principalamount of such Indebtedness does not increase as a result of such refinancing(it being understood that the Indebtedness permitted under this clause shall bein addition to the Indebtedness permitted under any of the other clauses ofthis definition of Permitted Indebtedness);

(c)           Subordinated Debt;

(d)           Indebtedness to trade creditors andother account payables incurred in the ordinary course of business;

(e)           Unsecured Indebtedness of the Companyand certain of its Subsidiaries in the maximum aggregate principal amount ofTen Million Dollars ($10,000,000), provided the maturity date of all suchIndebtedness is not less than one hundred eighty (180) days after the RevolvingMaturity Date;

(f)            Indebtedness under capital leasesand purchase money obligations provided such Indebtedness does not exceedFifteen Million Dollars ($15,000,000) in the aggregate for all Borrowers;

(g)           Guaranty obligations of the Companyor any Subsidiary in respect of Indebtedness otherwise permitted hereunder ofthe Company or any Subsidiary; and

(h)           Indebtedness not otherwise permittedunder subsections (a) through (g) above to the extent that suchIndebtedness does not exceed Ten Million Dollars ($10,000,000) in the aggregatefor all Borrowers.

#### **“Permitted Investments”**are:

(a)           Investments shown on the Schedule andexisting on the Closing Date;

(b)           (i) marketable directobligations issued or unconditionally guaranteed by the United States or itsagency or any State maturing within 2 years from its acquisition, (ii) commercialpaper maturing no more than 2 years after its creation and having the highestrating from either Standard & Poor’s Corporation or Moody’s InvestorsService, Inc., and (iii) Bank’s certificates of deposit issued maturingno more than 2 years after issue;

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

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

#### **“Person”** is anyindividual, sole proprietorship, partnership, limited liability company, jointventure, company association, trust, unincorporated organization, association,corporation, institution, public benefit corporation, firm, joint stockcompany, estate, entity or government agency.

#### **“Proceeds”** has themeaning described in the Code as in effect from time to time.

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#### **“Quick Assets”** is,on any date, all unrestricted cash, cash equivalents and investments held atBank or at an Affiliate of Bank, plus all net accounts receivables of the Companyand its consolidated Subsidiaries, determined according to GAAP.

#### **“Quick Ratio”** isunrestricted cash, cash equivalents and investments at Bank plus total accountsreceivable divided by total current liabilities plus long-term Bank debt andissued letters of credit and minus deferred revenue.

#### **“Registered Organization”**means an organization organized solely under the law of a single state or theUnited States and as to which the state or the United States must maintain apublic record showing the organization to have been organized.

#### **“Repayment Period,”**as to the initial Equipment Advance is twenty-four (24) months and as to allother Equipment Advances is thirty (30) months.

#### **“Responsible****Officer”** is each of the chief executiveofficer, the president, the chief financial officer and the chief accountingofficer, the treasurer or the assistant treasurer of either Borrower.

#### **“Schedule”** is anyattached schedule of exceptions.

#### **“Subordinated Debt”**is indebtedness under the Notes issued pursuant to the Indenture dated as of October 20,2000 between the Company and State Street Bank & Trust Company, asTrustee, and any other debt incurred by any Borrower subordinated to Borrowers’indebtedness owed to Bank and which is reflected in a written agreement in amanner and form acceptable to Bank and approved by Bank in writing.

#### **“Subsidiary”** is forany Person, or any other business entity of which more than 50% of the votingstock or other equity interests is owned or controlled, directly or indirectly,by the Person or one or more Affiliates of the Person.

#### **“Tangible Net Worth”**is on any date, the total assets of the Company and its consolidatedSubsidiaries minus (i) any amounts attributable to (a) goodwilland, (b) other intangible assets such as acquired technology, customerrelationships, patents, trade and service marks and names, copyrights andcapitalized software costs, and (ii) Total Liabilities.

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

*[Signaturesappear on the following page]*

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| BORROWERS:              |   |                                                         |
|-------------------------|--------|--------------------------------------------------------------|
|                    |   |                                                         |
| MANUGISTICS GROUP, INC. |   |                                                         |
|                    |   |                                                         |
|                    |   |                                                         |
| By:                     |   | /s/ Raghavan Rajaji                                          |   |   |
|                    |   | Name: Raghavan Rajaji                                        |   |   |
|                    |   | Title: Executive Vice President and Chief Financial  Officer |   |   |
|                    |   |                                                         |   |   |
|                    |   |                                                         |   |   |
| MANUGISTICS, INC.       |   |                                                         |
|                    |   |                                                         |
|                    |   |                                                         |
| By:                     |   | /s/ Raghavan Rajaji                                          |   |   |
|                    |   | Name: Raghavan Rajaji                                        |   |   |
|                    |   | Title: Executive Vice President and Chief Financial  Officer |   |   |
|                    |   |                                                         |   |   |
|                    |   |                                                         |   |   |
| BANK:                   |   |                                                         |
|                    |   |                                                         |
| SILICON VALLEY BANK     |   |                                                         |
|                    |   |                                                         |
|                    |   |                                                         |
| By:                     |   | /s/ Megan Scheffel                                           |   |   |
|                    |   | Name: Megan Scheffel                                         |   |   |
|                    |   | Title: Vice President                                        |   |   |

 

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EXHIBIT A

TheCollateral consists of all of Borrowers’ right, title and interest in and tothe following:

Eachitem of equipment, or personal property financed with a “Equipment Advance”pursuant to that certain Loan and Security Agreement, dated as of March     ,2004 (the “Loan Agreement”), by and between Borrowers and Bank, including,without limitation, the property described in Annex A hereto or Annex A to anyLoan Supplement, whether now owned or hereafter acquired, together with allsubstitutions, renewals or replacements of and additions, improvements, andaccessions to any and all of the foregoing, and all proceeds from sales,renewals, releases or other dispositions thereof.

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**EXHIBIT B**

FORM OF LOANAGREEMENT SUPPLEMENT

LOAN AGREEMENT SUPPLEMENT No. [ ]

LOANAGREEMENT SUPPLEMENT No. [ ], dated               ,200   (“Supplement”), to the Loan and Security Agreement dated as of March   ,2004 (the “Loan Agreement) by and between the undersigned (“Borrowers”), andSilicon Valley Bank (“Bank”).

Capitalizedterms used herein but not otherwise defined herein are used with the respectivemeanings given to such terms in the Loan Agreement.

To secure theprompt payment by Borrowers of all amounts from time to time outstanding underthe Loan Agreement, and the performance by Borrowers of all the terms containedin the Loan Agreement, Borrowers grant Bank, a first priority security interestin each item of equipment and other property described in Annex A hereto, whichequipment and other property shall be deemed to be additional FinancedEquipment and Collateral. The Loan Agreement is hereby incorporated byreference herein and is hereby ratified, approved and confirmed.

Annex A(Equipment Schedule) and Annex B (Loan Terms Schedule) are attached hereto.

The proceeds ofthe Loan should be transferred to Borrowers’ account with Bank set forth below:

Bank Name:           Silicon Valley Bank

Account No.:                                    

Borrowers herebycertify that (a) the foregoing information is true and correct andauthorizes Bank to endorse in its respective books and records, the Basic Rateapplicable to the Funding Date of the Loan contemplated in this Loan AgreementSupplement and the principal amount set forth in the Loan Terms Schedule; (b) therepresentations and warranties made by Borrowers in the Loan Agreement are trueand correct on the date hereof and will be true and correct on such FundingDate. No Event of Default has occurred and is continuing under the LoanAgreement. This Supplement may be executed by Borrowers and Bank in separatecounterparts, each of which when so executed and delivered shall be anoriginal, but all such counterparts shall together constitute but one and thesame instrument.

ThisSupplement is delivered as of this day and year first above written.

The Financed Equipment subject to this LoanSupplement is owned by                           and Borrowers hereby authorize Bank to file a financing statement naming suchBorrower as the debtor with respect to such Financed Equipment.
| SILICON VALLEY BANK |   | MANUGISTICS GROUP, INC. |
|---------------------|--------|-------------------------|
|                |   |                    |   |   |
|                |   |                    |   |   |   |   |
|                |   |                    |   |   |   |   |
| By:                 |   |                    | By: |   |
|                | Name:  |                    |   |   | Name: |   |
|                | Title: |                    |   |   | Title: |   |
|                |   |                    |   |   |   |   |
|                |   |                    |   |   |   |   |
|                |   |                    |   | MANUGISTICS, INC. |
|                |   |                    |   |   |   |   |
|                |   |                    |   |   |   |   |
|                |   |                    |   | By: |   |
|                |   |                    |   |   | Name: |   |
|                |   |                    |   |   | Title: |   |

 

Annex A - Description of Financed EquipmentAnnex B - Loan Terms Schedule

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Annex A to Exhibit B

TheFinanced Equipment being financed with the Equipment Advance which this LoanAgreement Supplement is being executed is listed below. Upon the funding ofsuch Equipment Advance, this schedule automatically shall be deemed to be a partof the Collateral.
| Description of Equipment: |   | Make |   | Model |   | Serial # |   | Invoice # |
|---------------------------|--------|------|--------|-------|--------|----------|--------|-----------|

 

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Annex B to Exhibit B

LOAN TERMS SCHEDULE #              

Loan FundingDate:               ,200

Original LoanAmount:  $

Basic Rate:  7.5%

Loan Factor:              %

Scheduled PaymentDates and Amounts*:

One (1) paymentof$             due                                              payment of$             due monthly in advance from             through             .        One (1) payment of$             due                        

Maturity Date:                         

Payment No.                                         PaymentDate

  1  2  3  4.. . . 35[36].. . .

*/                                     Theamount of each Scheduled Payment will change as the Loan Amount changes.

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**EXHIBIT CCOMPLIANCE CERTIFICATE**

TO:                                                                            SILICON VALLEY BANK                                                                                                3003 Tasman Drive                                                                                                Santa Clara, CA 95054

FROM:                                                         MANUGISTICSGROUP, INC.

Theundersigned authorized officer of Manugistics Group, Inc. (“Company”)certifies that under the terms and conditions of the Loan and SecurityAgreement between Borrowers and Bank (the “Agreement”), (i) Borrowers arein complete compliance for the period ending                              with all required covenants except as noted below and (ii) allrepresentations and warranties in the Agreement are true and correct in allmaterial respects on this date. Attached are the required documents supportingthe certification. The Officer certifies that these are prepared in accordancewith Generally Accepted Accounting Principles (GAAP) consistently applied fromone period to the next except as explained in an accompanying letter orfootnotes. The Officer acknowledges that no borrowings may be requested at anytime or date of determination that Borrowers are not in compliance with any ofthe terms of the Agreement, and that compliance is determined not just at thedate this certificate is delivered.

**Pleaseindicate compliance status by circling Yes/No under “Complies” column.**
| **Reporting Covenant**         | ** ** | **Required**              | ** ** | **Complies**                  | ** ** |
|-------------------------------------|------------|---------------------------|------------|-------------------------------|------------|
| Quarterly Financial  Statement + CC |       | Quarterly  within 50 days |       | Yes    No |       |
| Annual Financial  Statement         |       | FYE within 120 days       |       | Yes    No |       |

 
| **Financial Covenant** | ** ** | **Required**  | ** **  | **Actual**                                    | ** ** | **Complies**                  | ** ** |
|-----------------------------|------------|---------------|-------------|-----------------------------------------------|------------|-------------------------------|------------|
| Measured Quarterly:         |       |          |        |                                          |       |                          |       |
| Adjusted Quick  Ratio,      |       | 1.75  to 1.00 |        |         to 1.00 |       | Yes    No |       |
| Minimum Tangible Net  Worth |       |          |        |                                          |       |                          |       |
| 05/31/04                    |       | $             | 130,000,000 |                                          | $          |                          |       | Yes    No |   |
| 08/31/04                    |       | $             | 140,000,000 |                                          | $          |                          |       | Yes    No |   |
| 11/30/04                    |       | $             | 140,000,000 |                                          | $          |                          |       | Yes    No |   |
| 02/28/05                    |       | $             | 140,000,000 |                                          | $          |                          |       | Yes    No |   |
| Thereafter                  |       | Reset         |        |                                          |       |                          |       |

 
| Comments Regarding Exceptions: See Attached. | ** ** | **BANK  USE ONLY** | ** **                    |
|----------------------------------------------|------------|--------------------|-------------------------------|
|                                         |       |               |                          |
|                                         |       | Received by:       |                          |   |
| Sincerely,                                   |       |               | AUTHORIZED SIGNER             |   |
|                                         |       |               |                          |
|                                         |       |               |                          |
|                                         |       | Date:              |                          |   |
| SIGNATURE                                    |       |               |                          |   |
|                                         |       | Verified:          |                          |   |
|                                         |       |               | AUTHORIZED SIGNER             |   |
|                                         |       |               |                          |
| TITLE                                        |       | Date:              |                          |   |
|                                         |       |               |                          |   |
|                                         |       | Compliance Status: | Yes    No |   |
| DATE                                         |       |               |                          |
|                                              |            |                    |                               |  |  |  |  |

 

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Schedule to Loan and Security Agreement

| The exact correct corporate  name of each Borrower is (attach a copy of the formation documents,      |
|-------------------------------------------------------------------------------------------------------|
| e.g., articles,  partnership agreement):                                                              |   |
|                                                                                                  |
| Each Borrower’s  State of formation:                                                             |   |
|                                                                                                  |
| In the last five  (5) years each Borrower has operated under only the following other  names (if |
| none, so state):                                                                                      |
|                                                                                                  |
|                                                                                                  |
| Liens existing  on the Closing Date and disclosed to and accepted by Bank in writing:                 |
|                                                                                                  |
| **Subordinated  Debt:**                                                                               |
| ** **                                                                                            |
| Indebtedness on  the Closing Date and disclosed to and consented to by Bank in writing:               |
|                                                                                                  |
|                                                                                                  |
| Each Borrower’s  Tax ID Number is:                                                               |   |
|                                                                                                  |
| Each Borrower’s  Organizational Number, if any, is:                                              |   |
|                                                                                                  |
| The Company’s  website is                                                                        |   |
|                                                                                                  |
| Investments on  the Closing Date and disclosed to and consented to by Bank in writing:                |
|                                                                                                       |  |  |  |

 

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