Exhibit 10.1

THIRD LOAN MODIFICATION AGREEMENT

             This Third Loan Modification Agreement (this “Loan Modification
Agreement”) is entered into as of July 23, 2001, by and between ART TECHNOLOGY
GROUP, INC., a Delaware corporation with its principal place of business at 25
First Street, Cambridge, Massachusetts  02141 (“Borrower”) and SILICON VALLEY
BANK, a California-chartered bank, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan production
office located at One Newton Executive Park, Suite 200, 2221 Washington Street,
Newton, Massachusetts 02462, doing business under the name “Silicon Valley East”
(the “Bank”).

             1.          ­DESCRIPTION OF EXISTING INDEBTEDNESS. Among other
obligations and indebtedness which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of December 29, 2000,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of December 29, 2000 between Borrower and Bank, as amended by a certain Loan
Modification Agreement dated as of March 30, 2001, as further amended by a
certain Second Loan Modification Agreement dated as of June 29, 2001 (as
amended, the “Loan Agreement’).  Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreement.

Hereinafter, all obligations and indebtedness owing by Borrower to Bank shall be
referred to as the “Obligations”.

             2.          ­DESCRIPTION OF COLLATERAL.  Repayment of the
Obligations is secured by the Collateral as described in the Loan Agreement and
a certain Intellectual Property Security Agreement dated as of December 29, 2000
between Borrower and Bank (together with any other collateral security granted
to Bank, the “Security Documents”).

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

3.   DESCRIPTION OF CHANGE IN TERMS.           Modifications to Loan Agreement.
          1.   The Loan Agreement shall be amended by deleting Section 6.2(b) in
its entirety.               2.   The Loan Agreement shall be amended by deleting
Section 6.2(d) in its entirety.               3.   The Loan Agreement shall be
amended by deleting Section 6.7 in its entirety.               4.   The Loan
Agreement shall be amended by deleting the definition of  “Committed Revolving
Line” appearing in Section 13.1 and inserting in lieu thereof the following:    
                ““Committed Revolving Line” is Twelve Million Five Hundred
Thousand Dollars ($12,500,000.00).”                 5.   The Borrowing Base
Certificate appearing as Exhibit C to the Loan Agreement is hereby deleted in
its entirety.               6.   The Compliance Certificate appearing as Exhibit
D to the Loan Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A hereto.

             4.          ­NO DEFAULT.  Reference is made to a certain letter
dated July 12, 2001 wherein Bank made demand on Borrower to cure certain
defaults under the Loan Agreement.  The Bank hereby rescinds such demand and
acknowledges that the Borrower has reinstated under the Existing Loan Documents,
subject to and in accordance with this Loan Modification Agreement.

             5.          ­NO AVAILABILITY.  Borrower acknowledges and agrees
that, notwithstanding anything to the contrary contained in the Loan Agreement
or any of the Existing Loan Documents, Borrower has no ability to request Credit
Extensions under the Loan Agreement and Bank has no obligation to make any
further Credit Extensions thereunder, including, without limitation, any
obligation to issue Letters of Credit for Borrower’s  account.  Bank may, at its
option, make Credit Extensions to Borrower, but any such Credit Extension shall
at Bank’s sole and exclusive discretion in each instance.

             6.          ­CASH COLLATERAL.  Simultaneously with the execution of
the Loan Modification Agreement, and to secure the prompt, punctual, and
faithful perfor­mance of all and each of the Obligations, including, without
limitation, any reimbursement obligation under any outstanding Letter of Credit,
Borrower shall pledge, assign, transfer and deliver to Bank cash (or cash
equivalents acceptable to Bank) in an amount equal to one hundred percent
(100.0%) of the stated amount of all outstanding Letters of Credit.

             7.          ­FEE.  Borrower shall reimburse Bank for all reasonable
legal fees and expenses incurred in connection with this amendment to the
Existing Loan Documents.

             8.          ­RATIFICATION OF PERFECTION CERTIFICATE.  Borrower
hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of November
21, 2000, as amended March 30, 2001, as further amended as of the date hereof,
between Borrower and Bank, and acknowledges, confirms and agrees the disclosures
and information above Borrower provided to Bank in the Perfection Certificate
has not changed, as of the date hereof.  Further, Borrower shall not without
providing the Bank with prior written notice: (i) relocate its principal
executive office or add any new offices or business locations or keep any
Collateral in any additional locations, or (ii) change its state of formation,
or (iii) change its organizational structure, (iv) change its legal name, or (v)
change any organizational number (if any) assigned by its state of formation. 
In addition, the Borrower hereby certifies that no Collateral is in the
possession or any third party bailee (such as at a warehouse).  In the event
that Borrower, after the date hereof, intends to store or otherwise deliver the
Collateral to such a bailee, then Borrower shall receive the prior written
consent of Bank and such bailee must acknowledge in writing that the bailee is
holding such Collateral for the benefit of Bank.

             9.          ­AUTHORIZATION TO FILE.  Borrower hereby authorizes
Bank to file financing statements without notice to Borrower, with all
appropriate jurisdictions, as Bank deems appropriate, in order to further
perfect or protect Bank’s interest in the Collateral.

             10.        CONSISTENT CHANGES.  The Existing Loan Documents are
hereby amended wherever necessary to reflect the changes described above.

             11.        ­RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby
ratifies, confirms, and reaffirms all terms and conditions of all security or
other collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.

             12.        ­NO DEFENSES OF BORROWER.  Borrower agrees that, as of
this date, it has no defenses against the obligations to pay any amounts under
the Obligations.

             13.        ­CONTINUING VALIDITY.  Borrower understands and agrees
that in modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified pursuant to this Loan Modification
Agreement, the terms of the Existing Loan Documents remain unchanged and in full
force and effect.  Bank’s agreement to modifications to the existing Obligations
pursuant to this  Loan Modification Agreement in no way shall obligate Bank to
make any future modifications to the Obligations.  Nothing in this Loan
Modification Agreement shall constitute a satisfaction of the Obligations.  It
is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by virtue of this Loan Modification
Agreement.

             14.        ­RIGHT OF SET-OFF.  In consideration of Bank’s agreement
to enter into this Loan Modification Agreement, Borrower and any guarantor
hereby reaffirm and hereby grant to Bank, a lien, security interest and right of
setoff as security for all Obligations to Bank, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Bank or any entity under the control of the Bank or in transit to any of them. 
At any time after the occurrence and during the continuance of an Event of
Default, without demand or notice, Bank may set off the same or any part thereof
and apply the same to any liability or obligation of Borrower and any guarantor
even though unmatured and regardless of the adequacy of any other collateral
securing the loan.  ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.

             15.        ­JURISDICTION/VENUE.  Borrower accepts for itself and in
connection with its properties, unconditionally, the non-exclusive jurisdiction
of any state or federal court of competent jurisdiction in the Commonwealth of
Massachusetts in any action, suit, or proceeding of any kind against it which
arises out of or by reason of this Loan Modification Agreement; provided,
however, that if for any reason Bank cannot avail itself of the courts of the
Commonwealth of Massachusetts, then venue shall lie in Santa Clara County,
California.  NOTWITHSTANDING THE FOREGOING,  THE BANK SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS
AGAINST THE BORROWER OR ITS PROPERTY.

             16.        ­COUNTERSIGNATURE.  This Loan Modification Agreement
shall become effective only when it shall have been executed by Borrower and
Bank (provided, however, in no event shall this Loan Modification Agreement
become effective until signed by an officer of Bank in California).

 

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             This Loan Modification Agreement is executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the date first written
above.

BORROWER:   BANK:             ART TECHNOLOGY GROUP, INC.   SILICON VALLEY BANK,
doing business as
SILICON VALLEY EAST           By:

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  By:

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          Name:

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  Name:

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          Title:

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  Title:

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  SILICON VALLEY BANK     By:

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        Name:

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        Title:

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    (signed in Santa Clara County, California)

 

 

             The undersigned, ATG Securities Corporation,  ratifies, confirms
and reaffirms, all and singular, the terms and conditions of a certain Unlimited
Guaranty dated December 29, 2000 (the “Guaranty”) and a certain Security
Agreement dated as of December 29, 2000 (the “Security Agreement”) and
acknowledges, confirms and agrees that the Guaranty and Security Agreement shall
remain in full force and effect and shall in no way be limited by the execution
of this Loan Modification Agreement, or any other documents, instruments and/or
agreements executed and/or delivered in connection herewith.

 

ATG SECURITIES CORPORATION   By:

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    Name:

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    Title:

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658274.2

EXHIBIT A

COMPLIANCE CERTIFICATE

TO: SILICON VALLEY BANK     FROM: ART TECHNOLOGY GROUP, INC.

             The undersigned authorized officer of Art Technology Group, Inc.
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date.  Attached
are the required documents supporting the certification.  The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes.  The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.

                           Please indicate compliance status by circling Yes/No
under “Complies” column.

Reporting Covenant Required Complies       Monthly financial statements with CC
Monthly within 25 days Yes   No Annual (CPA Audited) FYE within 120 days Yes  
No 10–Q, 10–K and 8-K Within 5 days after filing with SEC Yes   No

 

Comments Regarding Exceptions:  See Attached.   BANK USE ONLY       Sincerely,  
Received by:

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      AUTHORIZED SIGNER

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      SIGNATURE   Date:

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  Verified:

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TITLE     AUTHORIZED SIGNER        

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  Date:

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DATE   Compliance Status: Yes     No 658274.2   3