Document:

<PAGE>   1
                                                                    EXHIBIT 4.1

                  FORM OF NOTE FOR MANUGISTICS GROUP, INC.'S
                  5% Convertible Notes due November 1, 2007

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO MANUGISTICS
GROUP, INC. (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT
IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

<PAGE>   2

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE
SECURITIES ACT WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT)
OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902
UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF
WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH
REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.

<PAGE>   3

                           MANUGISTICS GROUP, INC.

                                                          ISIN No. US565011AA15
Number R-1                                                CUSIP No. 565011 AA 1

                  5% Convertible Subordinated Note Due 2007

         Manugistics Group, Inc., a Delaware corporation (the "Company"),
promises to pay to Cede & Co. or registered assigns, the principal sum of Two
Hundred Million Dollars ($200,000,000) on November 1, 2007 and to pay interest
on the principal amount of this Note beginning the most recent date to which
interest has been paid or, if no interest has been paid, beginning October 20,
2000 at the rate of 5% per annum.

Interest Payment Dates:    May 1 and November 1
Record Dates:              April 15 and October 15

         This Note is convertible at such times and as specified on the other
side of this Note. Additional provisions of this Note are set forth on the
other side of this Note.

<PAGE>   4

         IN WITNESS WHEREOF, the Company has caused this 5% Convertible
Subordinated Note due 2007 to be signed by its duly authorized officers.

Dated:   October 20, 2000       MANUGISTICS GROUP, INC.

                                By:
                                       ----------------------------------------
                                       Name:     Raghavan Rajaji
                                       Title:    Executive Vice President and
                                                 Chief Financial Officer

                                By:
                                       ----------------------------------------
                                       Name:     Timothy T. Smith
                                       Title:    Senior Vice President,
                                                 General Counsel and
                                                 Secretary

Trustee's Certificate of
Authentication:

Dated:   October 20, 2000

This is one of the Securities referred to in the within mentioned Indenture.

State Street Bank and Trust Company,
  as Trustee

By:
     ---------------------------------------
         Authorized Signatory

<PAGE>   5

                           MANUGISTICS GROUP, INC.

                  5% Convertible Subordinated Note Due 2007

1.       Interest.

         Manugistics Group, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company shall pay interest semi-annually on May 1 and
November 1 of each year, commencing May 1, 2001. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from October 20, 2000. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.

         The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated October 20, 2000, among the Company,
Deutsche Bank Securities Inc. and Banc of America Securities LLC.

2.       Method of Payment.

         The Company will pay interest on this Note (except defaulted
interest) to the person who is the registered Holder of this Note at the close
of business on the April 15 and October 15 next preceding the interest payment
date. The Holder must surrender this Note to the Paying Agent to collect
payment of principal. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal and interest
by its check payable in such money. It may mail an interest check to the
Holder's registered address.

3.       Paying Agent, Registrar and Conversion Agent.

         Initially, State Street Bank and Trust Company (the "Trustee") will
act as Paying Agent, Registrar and Conversion Agent. The Company may change
any Paying Agent, Registrar or Conversion Agent without notice to the holder.
The Company or any of its Subsidiaries may act as Paying Agent, Registrar or
Conversion Agent.

4.       Indenture; Limitations.

         This Note is one of a duly authorized issue of Notes of the Company
designated as its 5% Convertible Subordinated Notes Due 2007 (the "Notes"),
issued under an Indenture dated as of October 20, 2000 (the "Indenture"),
between the Company and the Trustee. The terms of this Note include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended
by the Trust Indenture Reform Act of 1990, as in effect on the date hereof or,
from and after the date that the Indenture shall be qualified thereunder, as
in effect on such date. This Note is subject to all such terms, and the holder
of this Note is referred to the Indenture and said Act for a statement of
them.

<PAGE>   6

         The Notes are subordinated unsecured obligations of the Company
limited to up to $200,000,000 aggregate principal amount plus an additional
principal amount not exceeding $50,000,000 in the aggregate as may be issued
upon the exercise by the Initial Purchasers, in whole or in part, of the
Purchase Option.

5.       Optional Redemption.

         The Notes may be redeemed at the Company's option, in whole or in
part, at any time and from time to time on and after November 7, 2003 (an
"Optional Redemption") if the trading price of the Company's Common Stock for
20 Trading Days (as defined in the Indenture) in a period of 30 consecutive
Trading Days ending on the Trading Day prior to the date of mailing of the
provisional notice of redemption exceeds 120% of the Conversion Price (as
defined below) of the Notes. The redemption price for the Notes, expressed as
a percentage of the principal amount, is as follows for the 12-month periods
set forth below:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
              Redemption Period                                   Percentage
              --------------------------------------------------------------
<S>                                                              <C>
              November 7, 2003 through October 31, 2004..............103.0%
              November 1, 2004 through October 31, 2005..............102.0%
              November 1, 2005 through October 31, 2006..............101.0%
-------------------------------------------------------------------------------
</TABLE>

and 100% of the principal amount on and after November 1, 2006, together in
the case of any such redemption with accrued and unpaid interest to the date
of redemption, but any interest payment that is due and payable on or prior to
such date of redemption will be payable to the Holders of such Notes, or one
or more predecessor Notes, of record at the close of business on the relevant
record dates referred to on the face hereof, all as provided in the Indenture.

6.       Notice of Redemption.

         Notice of redemption will be mailed by first class mail at least 30
days prior to the redemption date in the case of a Provisional Redemption, and
at least 20 days but not more than 60 days before the redemption date in the
case of an Optional Redemption, to each Holder of Notes to be redeemed at his
registered address. Notes in denominations larger than $1,000 may be redeemed
in part, but only in whole multiples of $1,000. On and after the redemption
date, subject to the deposit with the Paying Agent of funds sufficient to pay
the redemption price, interest ceases to accrue on Notes or portions of them
called for redemption.

7.       Repurchase of Notes at Option of Holder upon a Change in Control.

         If at any time that Notes remain outstanding there shall have
occurred a Change in Control (as defined in the Indenture), at the option of
the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to repurchase all or any part specified by the
Holder (so long as the principal amount of such part is $1,000 or an integral
multiple thereof) of the Notes held by such Holder on the Repurchase Date. The
Holder shall have the right to withdraw any Repurchase Notice by delivering a

<PAGE>   7

written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture. The Repurchase Price is payable in cash.

8.       Conversion.

         At any time after 90 days following the latest date of original
issuance of the Notes and prior to the close of business on the business day
immediately preceding November 1, 2007, a Holder of a Note may convert such
Note into shares of Common Stock of the Company; provided, however, that if
the Note is called for redemption, the conversion right will terminate at the
close of business on the Business Day before the redemption date of such Note
(unless the Company shall default in making the redemption payment when due,
in which case the conversion right shall terminate at the close of business on
the date such default is cured and such Note is redeemed). The initial
conversion price is $88.125 per share, subject to adjustment under certain
circumstances as described in the Indenture (the "Conversion Price"). The
number of shares issuable upon conversion of a Note is determined by dividing
the principal amount converted by the Conversion Price in effect on the
conversion date. Upon conversion, no adjustment for interest or dividends will
be made. No fractional shares will be issued upon conversion; in lieu thereof,
an amount will be paid in cash based upon the current market price (as defined
in the Indenture) of the Common Stock on the last trading day prior to the
date of conversion.

         To convert a Note, a Holder must (a) complete and sign the conversion
notice set forth below and deliver such notice to the Conversion Agent, (b)
surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by the Registrar or the
Conversion Agent, (d) pay any transfer or similar tax, if required and (e) if
the Note is held in book-entry form, complete and deliver to the Depositary
appropriate instructions pursuant to the Depositary's book-entry conversion
programs. If a Holder surrenders a Note for conversion between the record date
for the payment of an installment of interest and the next interest payment
date, the Note must be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the principal amount of the
Note or portion thereof then converted; provided, however, that no such
payment shall be required if such Note has been called for redemption on a
redemption date within the period between and including such record date and
such interest payment date, or if such Note is surrendered for conversion on
the interest payment date. A Holder may convert a portion of a Note equal to
$1,000 or any integral multiple thereof.

         A Note in respect of which a Holder had delivered a Repurchase Notice
exercising the option of such Holder to require the Company to repurchase such
Note may be converted only if the notice of exercise is withdrawn as provided
above and in accordance with the terms of the Indenture.

9.       Subordination.

         The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment
to the prior payment

<PAGE>   8

in full of all Senior Indebtedness of the Company, as defined in the
Indenture. Any Holder by accepting this Note agrees to and shall be bound by
such subordination provisions and authorizes the Trustee to give them effect.

         In addition to all other rights of Senior Indebtedness described in
the Indenture, the Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any terms of any
instrument relating to the Senior Indebtedness or any extension or renewal of
the Senior Indebtedness.

10.      Denominations, Transfer, Exchange.

         The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be
imposed by law or permitted by the Indenture.

         The aggregate principal amount of the Note in global form represented
hereby may from time to time be reduced to reflect conversions or redemptions
of a part of this Note in global form or cancellations of a part of this Note
in global form, in each case, and in any such case, by means of notations on
the Global Note Transfer Schedule on the last page hereof. Notwithstanding any
provision of this Note to the contrary, conversions or redemptions of a part
of this Note in global form and cancellations of a part of this Note in global
form, may be effected without the surrendering of this Note in global form,
provided that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Cancellations and Transfers are made by the Trustee, or the
Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal amount
of this Note in a global form resulting therefrom or as a consequence thereof.

11.      Persons Deemed Owners.

         The registered holder of a Note may be treated as the owner of it for
all purposes.

12.      Unclaimed Money.

         If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay, subject
to applicable escheatment laws, the money back to the Company at its request.
After that, Holders entitled to money must look to the Company for payment
unless an abandoned property law designates another person.

13.      Amendment, Supplement, Waiver.

         Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of a majority in
aggregate principal amount of the Notes then outstanding and any past default
or compliance with any provision may

<PAGE>   9

be waived in a particular instance with the consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
the consent of or notice to any Holder, the Company and the Trustee may amend
or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, omission, defect or inconsistency or make any other change that
does not adversely affect the rights of any Holder.

14.      Successor Corporation.

         When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.

15.      Defaults and Remedies.

         An Event of Default is: default for 30 days in payment of interest on
the Notes; default in payment of principal on the Notes when due; failure by
the Company for 60 days after appropriate notice to it to comply with any of
its other agreements contained in the Indenture or the Notes; default by the
Company or any Subsidiary with respect to its obligation to pay principal of
or interest on indebtedness for borrowed money aggregating more than $20.0
million or the acceleration of such indebtedness if not withdrawn within 15
days from the date of such acceleration; and certain events of bankruptcy,
insolvency or reorganization of the Company or any of its Significant
Subsidiaries. If an Event of Default (other than as a result of certain events
of bankruptcy, insolvency or reorganization) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding may declare all unpaid principal of and accrued interest to the
date of acceleration on the Notes then outstanding to be due and payable
immediately, all as and to the extent provided in the Indenture. If an Event
of Default occurs as a result of certain events of bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Notes then
outstanding shall become due and payable immediately without any declaration
or other act on the part of the Trustee or any Holder, all as and to the
extent provided in the Indenture. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing default (except
a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of default.

16.      Trustee Dealings with the Company.

         State Street Bank and Trust Company, the Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or an Affiliate of the Company, and
may otherwise deal with the Company or an Affiliate of the Company, as if it
were not the Trustee.

<PAGE>   10

17.      No Recourse Against Others.

         A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect or by reason of,
such obligations or their creation. The Holder of this Note by accepting this
Note waives and releases all such liability. The waiver and release are part
of the consideration for the issue of this Note.

18.      Discharge Prior to Maturity.

         If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Notes to maturity as provided in the Indenture, the Company will be
discharged from the Indenture except for certain Sections thereof.

19.      Authentication.

         This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.

20.      Abbreviations and Definitions.

         Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).

         All capitalized terms used in this Note and not specifically defined
herein are defined in the Indenture and are used herein as so defined.

21.      Indenture to Control.

         In the case of any conflict between the provisions of this Note and
the Indenture, the provisions of the Indenture shall control.

         The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to:  Manugistics
Group, Inc., 2115 East Jefferson Street, Rockville, Maryland  20852,
Attention:  General Counsel.

<PAGE>   11

                               TRANSFER NOTICE

This Transfer Notice relates to $__________ principal amount of the 5%
Convertible Subordinated Notes Due 2007 of Manugistics Group, Inc., a Delaware
corporation, held by ______________________________ (the "Transferor").

           (I) or (we) assign and transfer this Convertible Note to

-------------------------------------------------------------------------------
            (Print or type assignee's name, address and zip code)

                             -------------------

-------------------------------------------------------------------------------
             (Insert assignee's social security or tax I.D. no.)

and irrevocably appoint _______________________________ agent to transfer this
Note on the books of the Company.  The agent may substitute another to act for
him.

Your Signature: ___________________________________

         (Sign exactly as your name appears on the other side of this
Convertible Note)

         Date: __________________

         Signature Guarantee(1)__________________________

In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the date that is three years after the later of
the date of original issuance of such Notes and the last date, if any, on
which such Notes were owned by the Company or any Affiliate of the Company,
the undersigned confirms that such Notes are being transferred:

CHECK ONE BOX BELOW

         (1)      [  ]     to Manugistics Group, Inc.; or

         (2)      [  ]     pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or

         (3)      [  ]     pursuant to and in compliance with Regulation S
under the Securities Act of 1933, as amended; or

         (4)      [  ]     pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or

         (5)      [  ]     pursuant to an effective registration statement
under the Securities Act of 1933.

--------
(1)      Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.

<PAGE>   12

                  Unless one of the boxes is checked, the Trustee will refuse
                  to register any of the Notes evidenced by this certificate
                  in the name of any person other than the registered holder
                  thereof; provided, however, that if box (2), (3) or (4) is
                  checked, the Trustee may require, prior to registering any
                  such transfer of the Notes such legal opinions,
                  certifications and other information as the Company has
                  reasonably requested to confirm that such transfer is being
                  made pursuant to an exemption from, or in a transaction not
                  subject to, the registration requirements of the Securities
                  Act of 1933, such as the exemption provided by Rule 144
                  under such Act.

                  Unless the box below is checked, the undersigned confirms
                  that such Note is not being transferred to an "affiliate" of
                  the Company as defined in Rule 144 under the Securities Act
                  of 1933, as amended (an "Affiliate"):

         (6)      [  ]     The transferee is an Affiliate of the Company.

                                          -------------------------------------
                                          Signature

                                          -------------------------------------
                                          Date

                                          -------------------------------------
                                          Signature Guarantee(2)

         TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

--------
(2)      Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.

<PAGE>   13

         The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.

Dated:
        -------------------
         [Signature of executive officer of purchaser]

                           Name:
                                  -------------------------------------------
                           Title:
                                   ------------------------------------------

<PAGE>   14

                              CONVERSION NOTICE

To Manugistics Group, Inc.:

         The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion below designated, into Common
Stock of Manugistics Group, Inc. in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different
name has been indicated in the assignment below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.

         Any holder of Notes, upon exercise of its conversion rights in
accordance with the terms of the Indenture and the Security, agrees to be
bound by the terms of the Registration Rights Agreement relating to the Common
Stock issuable upon conversion of the Notes.

[  ] Convert whole                               [  ] Convert in part

                                                      Amount of Note to be
                                                      converted ($1,000 or
                                                      integral multiples
                                                      thereof):

                                                      $
                                                       ----------------

                                                 ------------------------------
                                                 Signature (sign exactly as
                                                 name appears on the other
                                                 side of this Note)

                                                 ------------------------------
                                                 Signature Guarantee:(3)

--------
(3)      Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.

<PAGE>   15

         If you want the stock certificate made out in another person's name,
complete the following for such person:

-----------------------------------------------------
Name

-----------------------------------------------------
Social Security or Taxpayer Identification Number

-----------------------------------------------------
Street Address

-----------------------------------------------------
City, State and Zip Code

<PAGE>   16

                     OPTION OF HOLDER TO ELECT REPURCHASE

         If you want to elect to have this Note repurchased by the Company
pursuant to Section 3.9 of the Indenture, check the box:

                                     [  ]

         If you want to elect to have only part of this Note repurchased by
the Company pursuant to Section 3.9 of the Indenture, state the principal
amount (which shall be $1,000 or a multiple thereof) to be repurchased:
$__________________

Dated:
      -----------------------------------------------

      -----------------------------------------------

                                                 Signature (sign exactly as
                                                 name appears on the other
                                                 side of this Note)

-----------------------------------------------
Signature Guarantee:(4)

--------
4        Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.

<PAGE>   17

                           [Schedule A to Exhibit A

                        GLOBAL NOTE TRANSFER SCHEDULE

                Changes to Principal Amount of Global Security

<TABLE>
<CAPTION>
=============== ==================================== ====================================== =======================
                Principal Amount of Securities by     Remaining Principal Amount of this    Authorized Signature
                which this Global Security Is to                Global Security             of officer of Trustee
     Date       Be Reduced and Reason for Reduction           (following decrease)          or Note Custodian
--------------- ------------------------------------ -------------------------------------- -----------------------
<S>             <C>                                  <C>                                    <C>
--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

--------------- ------------------------------------ -------------------------------------- -----------------------

=============== ==================================== ====================================== =======================
</TABLE>

         Schedule to be maintained by Depositary in cooperation with Trustee.]<PAGE>   1

                                                                   EXHIBIT 10.1

                          SUBORDINATED PROMISSORY NOTE

$5,000,000.00                                                Dallas, Texas
                                                             December 27, 2000

               FOR VALUE RECEIVED, the undersigned, UNITED STATES LIME &
MINERALS, INC., a Texas corporation, TEXAS LIME COMPANY, a Texas corporation,
and ARKANSAS LIME COMPANY, an Arkansas corporation (such three corporations
collectively, the "Borrowers"), hereby jointly and severally promise to pay to
the order of INBERDON ENTERPRISES, LTD., a British Columbia corporation (the
"Payee"), on March 27, 2001, the principal sum of Five Million Dollars
(US$5,000,000.00), at the offices of the Payee at 1020-789 West Pender Street,
Vancouver, British Columbia, Canada V6C 1H2, and to pay interest on the unpaid
principal balance hereof from time to time outstanding payable at the time and
in the manner set forth above, accrued at the rate which at all times prior to
maturity shall be nine and three-quarters percent (9 3/4%) per annum and which
from and after maturity shall be eleven and three-quarters percent (11 3/4%) per
annum and shall be payable on demand. All sums payable hereon, whether
principal, interest or otherwise, shall be payable in lawful money of the United
States of America and in immediately available funds, all without any offset,
deduction, recoupment or counterclaim whatsoever. Interest hereon shall be
calculated on the basis of a 360-day year for the actual number of days elapsed.

               The Borrowers reserve the right to prepay this Subordinated
Promissory Note in whole at any time or in portions consisting of $100,000.00 or
an integral multiple thereof from time to time, without premium or penalty but
with interest on the principal amount being prepaid accrued to the date of the
prepayment.

               Interest shall continue to accrue hereon at the rate or rates
hereinabove set forth after, as well as before, the filing of any petition or
application or the commencement of any proceeding or the appointment of any
custodian, receiver, trustee or similar official of the type described in the
following paragraph, in each case whether under state, federal or foreign law.

               In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest hereon exceed the highest rate permissible under any
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court shall
determine that the Payee or other holder hereof has charged or received interest
hereon in excess of the highest permissible rate, the rate in effect hereon
shall automatically be reduced to the maximum rate permissible under applicable
law and the Payee or other holder hereof shall, at its election, (i) promptly
refund to the Borrowers any interest received by it in excess of the maximum
lawful rate or (ii) shall apply such excess to the principal balance hereof. It
is the intent hereof that the Borrowers not pay or contract to pay, and that the
Payee not

<PAGE>   2

receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrowers under applicable
law.

               If the Borrower (i) shall generally not, or shall be unable to,
or shall admit in writing its inability to pay its debts as such debts become
due; or (ii) shall make a general assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian, receiver,
trustee or other similar official for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have any
such petition or application filed or any such proceeding commenced against it,
in which an order for relief is entered or adjudication or appointment is made
and which remains undismissed for a period of sixty (60) days or more; or (v) by
any act or omission shall indicate its consent to, approval of, or acquiescence
in any such petition, application or proceeding, or order for relief, or the
appointment of a custodian, receiver, trustee or other similar official for all
or any substantial part of its properties; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of sixty (60) days or more, THEN, and in any such event, the outstanding
principal balance hereof, all interest thereon, and all other amounts payable
hereunder shall forthwith become and thereafter be due and payable without
notice, declaration, presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrowers.

               If all or any portion of the principal of or interest on this
Subordinated Promissory Note, or other sum owing hereunder, is not paid
punctually when due, the undersigned agrees to pay all costs and expenses
(including without limitation the reasonable fees and disbursements of counsel)
incurred by the Payee or other holder hereof in the collection of this
Subordinated Promissory Note.

               This Subordinated Promissory Note is subordinated on the terms
set forth in the following subparagraphs (a) through (i), inclusive (the terms
set forth in such subparagraphs being herein sometimes referred to collectively
as the "Subordination Provisions"):

                  (a) Any provision of this Subordinated Promissory Note to the
         contrary notwithstanding, but subject, however, to subparagraph (h)
         hereof, the Borrowers hereby agree, and the Payee and each subsequent
         holder hereof (the Payee and any such subsequent holder for the time
         being collectively, the "Holder") by its acceptance hereof hereby
         agrees, that the payment of all of the principal of and all interest,
         fees and other amounts owing hereon or in respect hereof are and shall
         be subject and subordinate to the prior payment in full of (i) all of
         the indebtedness of the Borrowers to the Lenders and the Administrative
         Agent (both as hereinafter defined) under the Credit Agreement, dated
         as of April 22, 1999, as amended (as amended, the "Credit Agreement"),
         by and among the Borrowers, the Lenders referred to therein (the
         "Lenders") and First Union National Bank, as Administrative Agent (the
         "Administrative Agent") and (ii) all of the indebtedness of the
         Borrowers to First Union National Bank (the "Working Capital Lender")
         from time to time outstanding under the Working Capital Facility
         referred to in

<PAGE>   3

         the Credit Agreement (the "Working Capital Facility"), in each case
         whether such indebtedness is now existing or hereafter arises (all of
         the indebtedness referred to in the foregoing clauses (i) and (ii)
         being herein sometimes referred to collectively as the "Senior Debt"),
         in the manner and to the extent hereinafter set forth.

                  (b) Anything in any agreement executed and delivered by the
         Borrowers or the Payee, or any promissory note executed by the
         Borrowers, or otherwise, to the contrary notwithstanding, but subject,
         however, to subparagraph (h) hereof, the Borrowers shall not make and
         the Holder shall not demand, accept or retain, any payment or
         prepayment of any portion of the indebtedness evidence hereby (such
         indebtedness being hereinafter sometimes referred to collectively as
         the "Subordinated Debt") so long as any part of the Senior Debt shall
         remain outstanding.

                  (c) Subject to subparagraph (h) hereof, in the event of any
         voluntary or involuntary case under the federal bankruptcy laws
         involving any of the Borrowers or any other voluntary or involuntary
         proceeding or action involving any of the Borrowers of the type
         referred to in sections 10.1(i) and (j) of the Credit Agreement (and,
         in the case of any such involuntary case, proceeding or action the same
         shall have continued unstayed and undismissed for the grace period, if
         any, applicable thereto specified in such sections), then and in any
         such event: (i) all of the Senior Debt shall first be paid in full
         before any payment or distribution of any character, whether in cash,
         securities or other property, shall be made in respect of the
         Subordinated Debt; and (ii) any payment or distribution of any
         character payable or deliverable in respect of the Subordinated Debt
         (including any payment or distribution of any other indebtedness of the
         Borrowers or any of them being subordinated to the Subordinated Debt)
         shall be paid or delivered directly to the Administrative Agent for the
         ratable benefit of the Lenders and the Working Capital Lender
         (collectively, the "Senior Creditors") until all Senior Debt shall have
         been paid in full, and the Holder irrevocably authorizes, empowers and
         directs all receivers, custodians, trustees, liquidators, conservators
         and others having authority in the premises to effect all such payments
         and deliveries. The Holder shall execute and deliver to the
         Administrative Agent, for the ratable benefit of the Senior Creditors,
         all such further instruments confirming the authorization referred to
         in the preceding sentence as the Administrative Agent or the Working
         Capital Lender may reasonably request.

                  (d) In the event that any of the Borrowers shall make an
         assignment for the benefit of creditors or any proceedings shall be
         commenced by or against the Borrowers or any of them under any
         bankruptcy, reorganization, readjustment of debt, arrangement,
         dissolution, receivership, liquidation or insolvency law or statute now
         or hereafter in effect, then and in any such event and at any time
         thereafter the Holder will, upon the written request of the
         Administrative Agent or the Working Capital Lender and at the expense
         of the Senior Creditors, use reasonable efforts to prove, enforce and
         endeavor to obtain payment of the aggregate outstanding amount of all
         unpaid Subordinated Debt payments due and payable, or thereafter
         becoming due and payable from the affected

<PAGE>   4

         Borrower or Borrowers to the Holder, and, subject to subparagraph (h),
         will turn over to the Administrative Agent, for the ratable benefit of
         the Senior Creditors, in precisely the form received, any payment of
         any kind or character received on account of such Subordinated Debt for
         application to the payment of any indebtedness, liabilities and
         obligations then existing of the Borrowers to the holders of the Senior
         Debt or any of them. Subject to subparagraph (h), in the event that the
         Holder shall fail to take any such action properly requested by the
         Administrative Agent or the Working Capital Lender, the Administrative
         Agent may, as attorney-in-fact for the Holder but on prior notice to
         the Holder, take such action on behalf of the Holder, but for the use
         and benefit of the Senior Creditors pro rata, and the Holder hereby
         appoints the Administrative Agent as its attorney-in-fact to demand,
         sue for, collect and receive every such payment and distribution and
         give acquittance therefor and to file claims and to take such other
         proceedings in the Administrative Agent"s own name or in the name of
         the Holder or otherwise, and to vote, give consent and take any other
         steps with regard thereto, all as the Administrative Agent may deem
         necessary or advisable for the enforcement of these Subordination
         Provisions; and the Holder, by its acceptance hereof hereby agrees to
         execute and deliver to the Agent for the ratable benefit of the Senior
         Creditors such additional powers of attorney, assignments and other
         instruments as may reasonably be requested by the Administrative Agent
         or the Working Capital Lender in order to enable the Administrative
         Agent to enforce any and all claims upon or with respect to the
         aforesaid Subordinated Debt and to collect and give any and all
         payments or distributions which may be payable or deliverable at any
         time upon or with respect to such Subordinated Debt.

                  (e) In case cash, securities or other property otherwise
         payable or deliverable to the Holder shall have been applied pursuant
         to the provisions of the preceding paragraph to the payment of Senior
         Debt, and if the Senior Debt shall have been paid in full, then and in
         any such case the Holder shall be subrogated to any rights of the
         Administrative Agent or the Senior Creditors to receive any further
         payments or distributions applicable to the Senior Debt, until the
         Holder shall have been paid in full. No such payments or distributions
         received by the Holder by reason of such subrogation, of cash,
         securities or other property which otherwise would be paid or
         distributed to the Administrative Agent or the Senior Creditors, shall,
         as between the Borrower and its creditors other than the Senior
         Creditors, on the one hand, and the Holder on the other hand, be deemed
         to be a payment by any Borrower on account of the Subordinated Debt.

                  (f) Each Holder by its acceptance hereof hereby (i) waives any
         and all notices of the acceptance of these Subordination Provisions or
         of the creation, renewal, extension or accrual, now or at any time in
         the future, of any indebtedness, liabilities or obligations of any
         Borrower to any Senior Creditor or of the reliance of any Senior
         Creditor on these Subordination Provisions, (ii) consents that, without
         notice to or further assent by it, the indebtedness, liabilities or
         obligations of the Borrowers or of any other party with respect to such
         indebtedness, liabilities and obligations may from time to time, in
         whole or in part, be renewed, extended, modified or released by the
         obligee with respect to such indebtedness, liabilities or obligations
         as the case may be, as such obligee may deem advisable, (iii) consents
         that the Credit Agreement or the Working Capital Facility, or both, or
         any other instrument or document executed and delivered in connection
         with any of them, may from time to time, in whole or in

<PAGE>   5

         part, be (x) renewed, extended, modified or released by the
         Administrative Agent or the Working Capital Lender, as the case may be,
         as it may deem advisable and (y) amended, modified, supplemented or
         terminated, (iv) consents that any collateral security for any of such
         indebtedness, liabilities and obligations may from time to time, in
         whole or in part, be exchanged, sold or surrendered by the
         Administrative Agent or the Working Capital Lender, as the case may be,
         as it may deem advisable, and (v) consents that the Administrative
         Agent or the Working Capital Lender, as the case may be, may take any
         other action it may deem necessary or appropriate in connection with
         such indebtedness, liabilities and obligations, all without in any
         manner or to any extent impairing or affecting the obligations of the
         Borrowers and the Holder contained in these Subordination Provisions.

                  (g) If, notwithstanding the provisions of this Subordinated
         Promissory Note any payment or distribution of any character (whether
         in cash, securities or other property) or any security shall be
         received by the Holder from any of the Borrowers in contravention of
         the terms of this Subordinated Promissory Note, such payment,
         distribution or security shall not be commingled with any other assets
         of the Holder, shall be held in trust for the benefit of the Senior
         Creditors and shall be paid over or delivered and transferred to the
         Administrative Agent, or its representative, for application to the
         payment pro rata of all Senior Debt remaining unpaid, until all of the
         Senior Debt shall have been paid in full.

                  (h) Any provision of this Subordinated Promissory Note to the
         contrary notwithstanding, all or any part of the indebtedness,
         principal, interest or otherwise, evidenced hereby may be freely paid
         or prepaid in whole at any time or in portions as hereinabove provided
         from time to time, without any consent, authorization or approval of
         any Senior Creditor or other person, solely out of the proceeds of the
         issuance by the Borrowers or any of them of any shares of the capital
         stock of the Borrowers or any one or more of them, or any obligations
         of the Borrowers or any one or more of them subordinated on like terms
         with these Subordination Provisions or on terms otherwise acceptable to
         the Required Lenders and the Working Capital Lender.

<PAGE>   6

                  (i) The foregoing provisions of subparagraphs (a) through (h)
         are solely for the purpose of defining the relative rights and
         priorities of the Payee and all subsequent holders hereof from time to
         time, on the one hand, and the Senior Creditors, on the other hand,
         and, subject to the rights of the Senior Creditors as aforesaid,
         nothing herein contained shall affect the obligations of the Borrowers,
         which obligations are absolute and unconditional, to pay to the Holder,
         in each case punctually when due, all of the principal of, interest on
         and other amounts owing in respect of this Subordinated Promissory Note
         strictly in accordance with the terms hereof. The provisions of these
         subparagraphs (a) through (i) may not be amended or terminated orally,
         but may be amended or terminated only in writing signed by the
         Borrowers, the Holder, the Administrative Agent and the Working Capital
         Lender or their respective successors or assigns. No waiver of any term
         or provision of this Subordinated Promissory Note shall be effective
         unless it is in writing, signed by the party or parties against whom
         such waiver is sought to be enforced, and making specific reference to
         this Subordinated Promissory Note. This Subordinated Promissory Note
         shall inure to the benefit of the holders of the Senior Debt and their
         successors and assigns and shall be binding upon the Borrowers and the
         Holder and their respective successors and assigns.

               Presentment for payment, demand, dishonor, protest and notice of
dishonor and of protest are all hereby waived by the Borrowers and all
endorsers, if any, hereon.

               This Subordinated Promissory Note shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without reference to the conflicts or choice of law principles thereof.

               IN WITNESS WHEREOF, the Borrowers have caused this Subordinated
Promissory Note to be duly executed in their names by their proper corporate
officer and their seals, if any, to be affixed hereto on the day and year first
hereinabove set forth.

                                   UNITED STATES LIME & MINERALS, INC.
                                   TEXAS LIME COMPANY
                                   ARKANSAS LIME COMPANY

                                   By: /s/ TIMOTHY W. BYRNE
                                      -----------------------------------------
                                      Timothy W. Byrne
                                      President of each such corporation

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