December 6, 1999


Mr. Timothy T. Smith
1443 Pleasant Lake Road
Annapolis, Maryland  21401

Dear Tim,

On behalf of  Manugistics,  Inc.,  as well as its  parent  company,  Manugistics
Group,  Inc., and the Board of Directors of both, we are very pleased to confirm
our verbal offer for the position of Senior Vice  President and General  Counsel
as of  December  6, 1999.  This  position  reports to the  President  and CEO of
Manugistics.

CASH  COMPENSATION.  In this position,  your annual base salary is $190,000.  In
addition,  you are  eligible  to  receive  an  annual  incentive  bonus of up to
$80,000.  The incentive bonus is payable as follows:  50% based on the financial
performance of the Company and 50% based upon management objectives. The bonuses
will be payable  under the plan  submitted  by you within the first  ninety (90)
days of your  employment and approved by the President and CEO. During the first
twelve (12) months of your employment with the Company,  you will earn a minimum
of fifty percent (50%) of the bonuses, payable to you on a quarterly basis.

STOCK  OPTIONS.  We are also  pleased  to offer you a stock  option  package  as
follows:

An  option,  granted  as of your date of hire,  to  purchase  110,000  shares of
Manugistics  Group, Inc. common stock  ("Manugistics  Stock") in accordance with
the Manugistics 1998 Stock Option Plan.

The vesting  period for the stock options under this first option shall commence
on the date of grant  and vest  over a four (4) year  period,  in equal  monthly
increments.


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Mr. Timothy T. Smith
December 6, 1999
Page Two


ADDITIONAL  STOCK  AWARD.  In  addition,  you will receive an option to purchase
additional shares of Manugistics Stock as follows:

o    If Manugistics Stock price reaches  $35/share,  you will have the option to
     purchase  25,000  shares  on the last day of the  fifteen  (15) day  period
     during which the stock maintains a closing price of at least $35/share;

BENEFITS.  Effective on your first day of  employment  and as a key executive in
the Company,  you will be eligible for the  comprehensive  Manugistics  benefits
program in accordance with the Company's written plans and which includes:

         o        Stock Options - as set forth above
         o        Employee Stock Purchase Plan
         o        401(k) Retirement Plan
         o        Comprehensive Medical Care
         o        Dental Care
         o        Employee Vision Care
         o        Life Insurance
         o        Accidental Death and Dismemberment Insurance
         o        Long Term Disability


TERMINATION.  If the Company  terminates  your employment for reasons other than
cause,  you will receive your base salary and  benefits in  accordance  with the
Company's  payroll  practices during the six (6) month period commencing on your
termination  date  ("severance  period").  The  foregoing  salary  and  benefits
payments will cease if you secure  alternative  employment  during the severance
period. In addition, if the Company terminates your employment for reasons other
than cause, the Company will continue the monthly vesting of the options granted
to you  pursuant  to this letter for a period of six (6) months  following  your
termination date.


<PAGE>


Mr. Timothy T. Smith
December 6, 1999
Page Three


CHANGE OF CONTROL. In the event that the Company has a change of control,  which
is defined as fifty one percent  (51%) of the  Company's  voting  stock having a
change  in  ownership:  (a) if your  responsibilities  are not  affected,  fifty
percent (50%) of your outstanding  options set out above shall immediately vest;
(b)  if  your   responsibilities   are  significantly   diminished  or  you  are
constructively  terminated,  i.e.,  your  responsibilities  no longer consist of
those  reasonably  associated  with the  position of Senior Vice  President  and
General Counsel,  one hundred percent (100%) of the outstanding  options set out
above shall immediately vest.

FINAL  DETERMINATION BY BOARD. All compensation and benefits included as part of
this offer will conform to the Company's standard policies, practices and plans.
In the event of any  question  with  regard  to the  compensation  and  benefits
described in this letter,  the Compensation  Committee of the Board of Directors
will make the final determination with regard to any interpretation  relating to
the elements of your compensation package.

In keeping with Manugistics  policy, all offers are contingent upon execution of
Manugistics, Inc.'s Conditions of Employment.

Please signify your acceptance of this offer by signing and dating this letter.

We look forward to your joining Manugistics as Senior Vice President and General
Counsel and we are confident that the association will be mutually rewarding.

Sincerely,

/s/ Gregory J. Owens
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Gregory J. Owens

Accepted by Timothy T. Smith

/s/ Timothy T. Smith
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