**SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT**
     This Second Amendment to Loan and Security Agreement is entered into as ofMarch 31, 2004 by and among **SILICON VALLEY BANK**(“Bank”), whose address is 3003Tasman Drive, Santa Clara, California 95054 and having a loan production officeat 1660 International Drive, Suite 600, McLean, Virginia 22102 and **MANUGISTICSGROUP, INC.**, a corporation organized under the laws of the State of Delawarewhose address is 9715 Key West Avenue, Rockville, Maryland 20850 (the“Company”), and **MANUGISTICS, INC.**, a corporation organized under the laws ofthe State of Delaware whose address is 9715 Key West Avenue, Rockville,Maryland 20850, and any Persons who are now or hereafter made parties to theLoan Agreement (as hereinafter defined) (each a “Borrower” and collectively,“Borrowers”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may beowing by Borrowers to Bank, Borrowers are indebted to Bank pursuant to, amongother documents, a Loan and Security Agreement, dated April 12, 2002 (asamended and as may be further amended from time to time, the “Loan Agreement”).The Loan Agreement provides for, among other things, a committed equipmentline in the original principal amount of Five Million Dollars ($5,000,000) (the“Equipment Facility”). In addition, (a) pursuant to that certain Loan andSecurity Agreement of even date herewith by and among the Borrowers and Bank,Bank has agreed to make an additional committed equipment line (the “SecondEquipment Facility”) to Borrowers in the maximum principal amount of FiveMillion Dollars ($5,000,000) and (b) pursuant to that certain Loan Agreementdated January 14, 2003 by and among Borrowers and Bank, Bank has agreed to makea revolving line of credit (the “Revolving Facility”) to Borrowers. in themaximum principal amount of Twenty Million ($20,000,000). Hereinafter, allindebtedness owing by Borrowers to Bank under the Equipment Facility shall bereferred to as the “Indebtedness.”
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by theCollateral as described in the Loan Agreement. Hereinafter, the LoanAgreement, together with all other documents securing repayment of theIndebtedness shall be referred to as the “Existing Loan Documents”.
3. DESCRIPTION OF CHANGE IN TERMS.
     A. Modifications to Equipment Facility.
          (i) Section 2.1.2(c) of the Loan Agreement is amended and restated in itsentirety as follows:
(c) Interim Payment. In addition to the Scheduled Payments, on theFunding Date for each Equipment Advance (unless the Funding Date isthe first Business Day of the month) Borrowers shall pay to Bank,on behalf of Bank, the projected interest to accrue from theFunding Date to the first Payment Date, at the Basic Rate.
          (ii) Sections 2.1.2(e) and (f) of the Loan Agreement are amended andrestated in their entirety as follows:
(e) Mandatory Prepayment Upon an Acceleration. If the EquipmentAdvances are accelerated following the occurrence of an Event ofDefault or otherwise (other than following an Event of Loss), thenBorrowers will immediately pay to Bank (i) all unpaid ScheduledPayments (including principal and interest) with respect to eachEquipment Advance, (ii) all outstanding principal, (iii) allaccrued unpaid interest, including the default rate of interest, tothe date of the prepayment, (iv) the Prepayment Fee, and (v) allother sums, if any, that shall have become due and payable withrespect to any Equipment Advance.
(f) Permitted Prepayment of Loans. Borrowers shall have the optionto prepay any Equipment Advance (or all Equipment Advances)advanced by Bank under this Agreement, provided Borrowers (i)provide written notice to Bank of its election to prepay
 

 

such Equipment Advance at least thirty (30) days prior to suchprepayment, and (ii) pays,on the date of the prepayment (A) all outstanding principal; (B)all unpaid accrued interest to the date of the prepayment; (C) aprepayment fee (the “Prepayment Fee”) equal to (i) one and one halfof one percent (1.5%) of the amount prepaid if the prepaymentoccurs within the first twelve (12) months from the date of theEquipment Advance; (ii) one percent (1%) of the amount prepaid ifthe prepayment occurs after the first twelve (12) months, and priorto the twenty fourth (24th) month from the date of the EquipmentAdvance; and (iii) one half of one percent (.5%) of the amountprepaid at all times after the first twenty four (24) months fromthe date of the Equipment Advance; and (D) all other sums, if any,that shall have become due and payable hereunder with respect tothis Agreement. Notwithstanding the foregoing, Borrower shall notbe required to pay the Prepayment Fee in the event it elects to paythe Obligations in full within thirty (30) days of obtainingknowledge that all or any part of, or any interest in, Bank’sobligations, rights and benefits under this Agreement have beentransferred, sold or assigned as permitted under Section 12.1herein.
          (iii) Section 6.3 of the Loan Agreement is amended and restated in itsentirety as follows:
          **Section 6.3 Financial Covenants.**
     Borrowers will maintain as of the last day of eachfiscal quarter:
(a) Quick Ratio. A ratio of (i) Quick Assets to (ii)Current Liabilities, plus long term Indebtedness to Bank andissued letters of credit under the Committed Revolving Lineminus deferred revenue of at least 1.75 to 1.00.
(b) Tangible Net Worth. A Tangible Net Worth of at least$130,000,000 as of the quarter ending May 31, 2004,$140,000,000 as of the quarters ending August 31, 2004 andNovember 30, 2004, and $150,000,000 for the quarter endingFebruary 28, 2005, and thereafter at such levels as agreedto by Bank based upon the Company’s projections.
          (iv) Section 6.6 of the Loan Agreement is amended and restated in itsentirety as follows:
          **Section 6.6 Deposit Accounts.**
     Borrowers will at all times, maintain not less than$50,000,000 in cash and/or investments with Bank and/or itsAffiliates. Funds may be maintained in investment vehiclesor operating accounts at the Borrower’s discretion.Borrowers agree that in the event that Borrowers requestthat any such amounts required to be maintained herein beheld in an investment or other account with any Affiliate ofBank, Borrowers shall promptly execute and deliver anAccount Control Agreement to Bank in Bank’s standard form.
          (v) Section 6.7(b) of the Loan Agreement is amended and restated in itsentirety as follows:
(b) during the continuance of an Event of Default, on or before thePayment Date after such Event of Loss for each such item ofFinanced Equipment subject to such Event of Loss, Borrowers will,at Bank’s option, pay to Bank an amount equal to all accruedinterest to the date of the prepayment, plus all outstandingprincipal, plus a prepayment fee equal to (i) one and one half ofone percent (1.5%) of the amount prepaid if the prepayment occurswithin the first twelve (12) months from the date of the EquipmentAdvance; (ii) one
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percent (1%) of the amount prepaid if theprepayment occurs after the first twelve (12)months, and prior to the twenty fourth (24th) month from the dateof the Equipment Advance; and (iii) one half of one percent (.5%)of the amount prepaid at all times after the first twenty four (24)months from the date of the Equipment Advance, plus all other sums,if any, that shall have become due and payable, including interestat the Default Rate with respect to any past due amounts.
          (vi) Section 7.2 of the Loan Agreement is amended and restated in itsentirety as follows:
          7.2 **Changes in Business, Ownership, Management or BusinessLocations.**
     Engage in or permit any of its Subsidiaries to engage in anybusiness other than the businesses currently engaged in by Borroweror reasonably related thereto or have a material change in itssenior management, unless such senior management is replaced withan individual or individuals with comparable experience andqualifications in Borrower’s good faith business judgment within120 days or any Person or group of Persons acting in concert shallacquire more thirty five percent (35%) (other than by the sale ofBorrower’s equity securities in a public offering or to venturecapital investors so long as Borrower identifies and advises Bankof the venture capital investors prior to the closing of theinvestment), except where (i) no Event of Default has occurred andis continuing or would result from such action during the term ofthis Agreement and (ii) Borrowers remain in compliance with Section6.3 hereof following any such transaction. A Subsidiary may mergeor consolidate into another Subsidiary or into any Borrower.Borrower will not, without at least thirty (30) days prior writtennotice, change its state of formation, or change the locationswhere the Collateral is located as set forth in the Schedule or aspreviously disclosed to Bank.
          (vii) Section 7.3 of the Loan Agreement is amended and restated in itsentirety as follows:
          **Section 7.3 Mergers or Acquisitions.**
     Merge or consolidate, or permit any of its MaterialSubsidiaries to merge or consolidate, with any other Person,or acquire, or permit any of its Subsidiaries to acquire,all or substantially all of the capital stock or property ofanother Person (a “Target”), except (a) a Subsidiary maymerge or consolidate into another Subsidiary or into anyBorrower (b) in connection with a Permitted Acquisition (ashereinafter defined). Borrower may acquire by merger, stockpurchase, asset purchase or otherwise, all or substantiallyall the assets of any Person or make any investments in anysuch Person (each a “Permitted Acquisition” andcollectively, the “Permitted Acquisitions”) during theexistence of this Agreement without Bank’s consent,provided, however, that each of the following conditionsprecedent are in satisfied:
(i) After giving effect to such Permitted Acquisition,Borrower shall continue to be in compliance with thefinancial covenants set forth in Section 6.3 hereof;
(ii) The net cash consideration (after adding any cashand cash equivalents to be acquired through theacquisition of the Target) for any single PermittedAcquisition does not exceed Fifteen Million Dollars($15,000,000) and the aggregate net cash considerationof all Permitted Acquisitions within a single fiscalyear does not exceed Thirty Million Dollars($30,000,000) (the “Acquisition Cap”);
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(iii) The Person being acquired (“Target”) is a goingconcern;
(iv) With respect to any Permitted Acquisitionsfinanced with the Company’s equity, the number of the shares of the Company’s common stock issued asconsideration for any single Permitted Acquisitiondoes not exceed twenty percent (20%) of the number ofthe shares of the Company’s issued and outstandingcommon stock on the closing date of such PermittedAcquisition;
(v) After giving affect to the Permitted Acquisition,the Borrowers’ current Senior Management remainsactively involved in the ongoing business of eachBorrower (subject to changes in Senior Managementpermitted by Section 7.2 hereof); and
(vi) After giving affect to the Permitted Acquisition,there shall not exist any Event of Default under thisAgreement or any of the Loan Documents.
For purposes hereof, only cash consideration incurredin connection with each Permitted Acquisition (not thevalue of non-compete agreements and the value ofassets, stock, warrants, or other propertytransferred, pledged or given in connection with anyPermitted Acquisition) shall be included in thecalculation of the Acquisition Cap, if such Target isa Material Subsidiary.
Upon completion of each Permitted Acquisition,Borrowers shall at Borrowers’ expense, cause eachTarget which is organized in the United States to beadded as a co-obligor on this Agreement and the LoanDocuments.
          (ix) Section 7.8 of the Loan Agreement is amended and restated in itsentirety as follows:
          **Section 7.8 Subordinated Debt.**
     (a) Make any Material Subordinated Debt Modification toany document relating to the Subordinated Debt withoutBank’s prior written consent, or (b) make any payment on theSubordinated Debt, provided, however, that (i) Borrowers arepermitted to make payments (“Permitted Conversion Payments”)of up to Ten Million Dollars ($10,000,000) in the aggregatein any twelve-month period in connection with the conversionof Subordinated Debt into equity so long as such paymentsare not payments of principal or interest, but areadditional consideration paid to the holders of theSubordinated Debt in connection with such conversion, andprovided, further, that Permitted Conversion Payments mayonly be made if such Permitted Conversion Payments areapproved by the Board of Directors of the Company, andfurther provided that at the time of and on a pro formabasis after giving effect to such Permitted ConversionPayments, no Event of Default shall have occurred or wouldthereby occur under any Loan Document, and (ii) Borrowersare permitted to make payments on the Subordinated Debt fromproceeds of sales of the Company’s capital stock from andafter the date hereof, provided that at the time of and on apro forma basis after giving effect to such payments, noEvent of Default shall have occurred or would thereby occurunder any Loan Document.
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          (x) The definitions of “Permitted Indebtedness”, “Permitted Investments”and “Tangible Net Worth” set forth in Section 13.1 of the Loan Agreement areamended and restated in their entirety as follows:
          “**Permitted Indebtedness**” is:
     (a) Borrowers’ indebtedness to Bank under this Agreement orany other Loan Document;
     (b) Indebtedness existing on the Closing Date and shown on theSchedule and any Indebtedness hereafter incurred for the purpose ofrefinancing such existing Indebtedness, provided the principalamount of such Indebtedness does not increase as a result of suchrefinancing (it being understood that the Indebtedness permittedunder this clause shall be in addition to the Indebtednesspermitted under any of the other clauses of this definition ofPermitted Indebtedness);
     (c) Subordinated Debt;
     (d) Indebtedness to trade creditors and other account payablesincurred in the ordinary course of business;
     (e) Unsecured Indebtedness of the Company and certain of itsSubsidiaries in the maximum aggregate principal amount of TenMillion Dollars ($10,000,000), provided the maturity date of allsuch Indebtedness is not less than one hundred eighty (180) daysafter the Revolving Maturity Date;
     (f) Indebtedness under capital leases and purchase moneyobligations provided such Indebtedness does not exceed FifteenMillion Dollars ($15,000,000) in the aggregate for all Borrowers;
     (g) Guaranty obligations of the Company or any Subsidiary inrespect of Indebtedness otherwise permitted hereunder of theCompany or any Subsidiary; and
     (h) Indebtedness not otherwise permitted under subsections (a)through (g) above to the extent that such Indebtedness does notexceed Ten Million Dollars ($10,000,000) in the aggregate for allBorrowers.
               “**Permitted Investments**” are:
     (a) Investments shown on the Schedule and existing on theClosing Date;
     (b) (i) marketable direct obligations issued orunconditionally guaranteed by the United States or its agency orany State maturing within 2 years from its acquisition, (ii)commercial paper maturing no more than 2 years after its creationand having the highest rating from either Standard & Poor’sCorporation or Moody’s Investors Service, Inc., and (iii) Bank’scertificates of deposit issued maturing no more than 2 years afterissue;
     (c) Investments made in accordance with any investment policyapproved by the Company’s Board of Directors; and
     (d) Investments in any Subsidiary of Borrower which is not aBorrower under this Agreement, provided that (a) all suchInvestments in the aggregate do not exceed $10,000,000 in any12-month period and (b) no Event of Default exists at the time ofany such Investment or would exist after giving effect to any suchInvestment.
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     “**Tangible Net Worth**” is on any date, the total assets of theCompany and its consolidated Subsidiaries minus (i) any amountsattributable to (a) goodwill and, (b) other intangible assets suchas acquired technology, customer relationships, patents, trade andservice marks and names, copyrights and capitalized software costs,and (ii) Total Liabilities.
          (xi) The following additional definitions are added to Section 13.1 of theLoan Agreement:
“Material Subordinated Debt Modification” means any amendment ormodification to any instrument, agreement or other documentrelating to the Subordinated Debt or any other action in connectionwith the Subordinated Debt that, individually or in combinationwith other amendments, modifications or actions, (a) increases theinterest rate, fees or expenses due under the Subordinated Debt,(b) increases the maximum principal amount of the SubordinatedDebt, (c) accelerates the due date or maturity date of all or partof the Subordinated Debt, (d) changes the collateral, if any, forthe Subordinated Debt or (e) otherwise has a material adverseeffect on Borrower’s ability to pay and perform its obligations infavor of Bank or the validity or priority of Bank’s securityinterest in the Collateral.
“Quick Ratio” is unrestricted cash, cash equivalents andinvestments at Bank plus total accounts receivable divided by totalcurrent liabilities plus long-term Bank debt and issued letters ofcredit and minus deferred revenue.
“Senior Management” is each of the following persons: the ChiefExecutive Officer, Chief Financial Officer and Senior VicePresident and General Counsel.
          (xii) Exhibit C to the Loan Agreement is replaced in its entirety withExhibit C attached hereto.
4. Designated Senior Indebtedness. The Company represents, warrants and agreeswith the Bank that the Obligations under the Existing Loan Documents shall atall times be deemed to be “Designated Senior Indebtedness” under that certainIndenture dated October 20, 2000 between the Company and State Street Bank andTrust Company as the same may from time to time be amended, restated orotherwise modified (the “Indenture”). The Company further represents andwarrants that the Indenture has not been amended, restated or otherwisemodified except as set forth in the Schedule.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherevernecessary to reflect the changes described above.
6. NO DEFENSES OF BORROWERS. Borrowers agree that they have no defensesagainst the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Each Borrower understands and agrees that in modifyingthe existing Indebtedness, Bank is relying upon Borrowers’ representations,warranties, and agreements, as set forth in the Existing Loan Documents.Except as expressly modified pursuant to this Second Amendment to Loan andSecurity Agreement, the terms of the Existing Loan Documents remain unchangedand in full force and effect. Bank’s agreement to modifications to theexisting Indebtedness pursuant to this Second Amendment to Loan and SecurityAgreement in no way shall obligate Bank to make any future modifications to theIndebtedness. Nothing in this Second Amendment to Loan and Security Agreementshall constitute a satisfaction of the Indebtedness. It is the intention ofBank and Borrowers to retain as liable parties all makers and endorsers ofExisting Loan Documents, unless the party is expressly released by Bank inwriting. No maker, endorser, or guarantor will be released by virtue of thisSecond Amendment
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to Loan and Security Agreement. The terms of this paragraph apply not only tothis Second Amendment to Loan and Security Agreement, but also to allsubsequent amendments to loan and security agreement.
*[SIGNATURES APPEAR ON THE FOLLOWING PAGE]*
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     This Second Amendment to Loan and Security Agreement is executed as of thedate first written above.   **BORROWERS:**   MANUGISTICS GROUP, INC.   By: /s/ Raghavan RajajiName: Raghavan RajajiTitle: Executive Vice President andChief Financial Officer   MANUGISTICS, INC.   By: /s/ Raghavan Rajaji Name: Raghavan RajajiTitle: Executive Vice President andChief Financial Officer   **BANK:**   **SILICON VALLEY BANK**   By: /s/ Megan Scheffel Name: Megan ScheffelTitle: Vice President
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