Exhibit 10.1




 




FIRST LOAN MODIFICATION AGREEMENT




 




This First

Loan Modification Agreement (this “Loan Modification Agreement’) is entered

into as of September 30, 2002, by and between 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” (“Bank”) and ART

TECHNOLOGY GROUP, INC., a Delaware corporation with its principal

place of business at 25 First Street, Cambridge, Massachusetts 02141

(“Borrower”).




 




DESCRIPTION OF EXISTING

INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may

be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan

arrangement dated as of June 13, 2002, evidenced by, among other documents, a

certain Amended and Restated Loan and Security Agreement dated as of June 13,

2002, between Borrower and Bank (as amended, the “Loan Agreement”).  The Loan Agreement established a working

capital line of credit in favor of Borrower in the maximum principal amount of

Fifteen Million Dollars ($15,000,000.00) (the “Committed Revolving Line”).  Capitalized terms used but not otherwise

defined herein shall have the same meaning as in the Loan Agreement.




 




Hereinafter, all indebtedness

and obligations owing by Borrower to Bank shall be referred to as the

“Obligations”.




 




DESCRIPTION OF COLLATERAL. 

Repayment of the Obligations is secured by the Collateral as described

in the Loan Agreement (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”.




 




DESCRIPTION OF CHANGE IN

TERMS.




 




Modifications

to Loan Agreement.




 




The Loan Agreement shall be amended by deleting the following

text, appearing in Section 6.2 thereof, in its entirety:




 




“(b)         Within thirty (30) days after the last

day of each month, Borrower shall deliver to Bank a Borrowing Base Certificate

signed by a Responsible Officer in the form of Exhibit C, with aged listings of accounts receivable (by

invoice date).”




 




and inserting

in lieu thereof the following:




 




“(b)         Within thirty (30) days after the last

day of each quarter, Borrower shall deliver to Bank a Borrowing Base

Certificate signed by a Responsible Officer in the form of Exhibit C, with aged listings of

accounts receivable (by invoice date).”




 




The Loan Agreement shall be amended by deleting the following

text, appearing in Section 6.7 thereof, in its entirety:




 




“(b)         Profitability.  Borrower

shall have quarterly net losses of not more than (i) $40,000,000.00  for the quarter ending December 31, 2001

(excluding all non-cash write off of deferred tax assets); (ii) $7,000,000.00  for the quarter ending March 31, 2002;

(iii) $6,000,000.00  for the

quarter ending June 30, 2002; (iv) $3,000,000.00  for the quarter ending September 30, 2002; and (v)

$2,000,000.00 for each quarter thereafter.”




 




and inserting

in lieu thereof the following:




 




“(b)         Profitability.  Borrower

shall have quarterly net losses of not more than (i) $40,000,000.00  for the quarter ending December 31, 2001

(excluding all non-cash write off of deferred tax assets); (ii) $7,000,000.00  for the quarter ending March 31, 2002;

(iii) $6,000,000.00  for the

quarter ending June 30, 2002; (iv) $4,500,000.00  for the quarter ending September 30, 2002; and (v)

$2,000,000.00 for each quarter thereafter.”




 




1





























 




The Compliance Certificate appearing as Exhibit D

to the Loan Agreement is hereby replaced with the Compliance Certificate

attached as Exhibit A hereto.




 




FEES. 

The Borrower shall reimburse Bank for all legal fees and expenses

incurred in connection with this amendment to the Existing Loan Documents.




 




RATIFICATION OF

INTELLECTUAL PROPERTY SECURITY AGREEMENT.  Borrower

hereby ratifies, confirms and reaffirms, all and singular, the terms and

conditions of a certain Intellectual Property Security Agreement dated as of

December 29, 2000 between Borrower and Bank, and acknowledges, confirms and

agrees that said Intellectual Property Security Agreement contains an accurate

and complete listing of all Intellectual Property Collateral as defined

in said Intellectual Property Security Agreement, shall remain in full force

and effect.




 




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 June 13, 2002 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.




 




CONSISTENT CHANGES. 

The Existing Loan Documents are hereby amended wherever necessary to

reflect the changes described above.




 




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.




 




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.




 




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.




 




JURISDICTION/VENUE. 

Borrower accepts for itself and in connection with its properties,

unconditionally, the 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.




 




2





























 




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).




 




[The remainder of this page is intentionally

left blank]




 




3





























 




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:


  	

  /s/ Paul

  Shorthose


  	

   


  	

  By:


  	

  /s/ Jonathan

  L. Gray


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Name


  	

  Paul

  Shorthose


  	

   


  	

  Name:

  Jonathan L. Gray


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Title:


  	

  Chief

  Executive Officer


  	

   


  	

  Title:

  Senior Vice President


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  SILICON VALLEY BANK


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By:


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Name:


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Title:


  	

   


  	

   


  
	

   


  	

  (signed in Santa Clara County, California)


  	

   


  
													





 




4





























 




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

Amended and Restated 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 30 days


  	

   


  	

  Yes


  	

   


  	

  No


  
	

  Quarterly

  financial statements with CC


  	

   


  	

  Quarterly

  within 45 days


  	

   


  	

  Yes


  	

   


  	

  No


  
	

  Annual (CPA

  Audited)


  	

   


  	

  FYE within

  120 days


  	

   


  	

  Yes


  	

   


  	

  No


  
	

  BBC A/R

  Agings


  	

   


  	

  Quarterly

  within 30 days


  	

   


  	

  Yes


  	

   


  	

  No


  





 




	

  Financial Covenant


  	

   


  	

  Required


  	

   


  	

  Actual


  	

   


  	

  Complies


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Maintain on a Monthly Basis:


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Minimum Liquidity


  	

   


  	

  $*


  	

   


  	

  $


  	

   


  	

   


  	

  Yes


  	

   


  	

  No


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Maintain on a Quarterly Basis:


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Profitability:


  	

   


  	

  $**


  	

   


  	

  $


  	

   


  	

   


  	

  Yes


  	

   


  	

  No


  	

   


  
												





 






















*See Section 6.7(a) of the Agreement




**See Section 6.7(b) of the Agreement




 




Comments Regarding Exceptions:  See Attached.




 




	

   


  	

   


  	

  BANK USE ONLY


  
	

   


  	

   


  	

  Received by:

  


  	

   


  	

   


  
	

  Sincerely,


  	

   


  	

  AUTHORIZED

  SIGNER


  
	

   


  	

   


  
	

   


  	

   


  	

  Date: 


  	

   


  	

   


  
	

  SIGNATURE


  	

   


  
	

   


  	

  Verified:


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  AUTHORIZED

  SIGNER


  
	

  TITLE


  	

   


  
	

   


  	

  Date:


  	

   


  	

   


  
	

   


  	

   


  	

  Compliance Status:


  	

  Yes


  	

  No


  
	

  DATE


  	

   


  	

   


  	

   


  
												





 




5