<PAGE>
                                                                    EXHIBIT 10.3

                           ART TECHNOLOGY GROUP, INC.

                              AMENDED AND RESTATED

                     1999 OUTSIDE DIRECTOR STOCK OPTION PLAN

1. Purpose

      The purpose of this Amended and Restated 1999 Outside Director Stock
Option Plan (the "Plan") of Art Technology Group, Inc., a Delaware corporation
(the "Company"), is to advance the interests of the Company's stockholders by
enhancing the Company's ability to attract, retain and motivate outside
directors of the Company by providing such directors with equity ownership
opportunities and performance-based incentives that are intended to better align
their interests with those of the Company's stockholders.

2. Eligibility

      Each director of the Company who is not an employee of the Company (an
"Eligible Director") is eligible to receive options, restricted stock and other
stock-based awards (each an "Award") under the Plan. Any Eligible Director who
receives an Award under the Plan is deemed a "Participant."

3. Administration and Delegation

      The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have authority to grant Awards and to adopt,
amend and repeal such administrative rules, guidelines and practices relating to
the Plan as it shall deem advisable. The Board may correct any defect, supply
any omission or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem expedient to carry the Plan into effect
(including any interpretation and implementation of Section 10(f)) and it shall
be the sole and final judge of such expediency. All decisions by the Board shall
be made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Option. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

4. Stock Available for Awards

      (a) Number of Shares. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 800,000 shares of common stock, $0.01 par value
per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part (including as the result of shares of Common Stock
subject to such Award being repurchased by the Company at the original issuance
price pursuant to a contractual repurchase right) or results in any Common Stock
not being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan. Shares issued under the Plan
may consist in whole or in part of authorized but unissued shares or treasury
shares.

      (b) Limit on Awards other than Options. The maximum number of shares with
respect to which Awards other than Options may be granted shall be 100,000.

5. Stock Options


<PAGE>

      (a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. None of the Options granted hereunder are intended to be
Incentive Stock Options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder.

      (b) Exercise Price. The exercise price per share for each Option shall
equal (1) the last reported sales price per share of the Common Stock on the
Nasdaq National Market or on any national securities exchange on which the
Common Stock is then traded, as the case may be, on the date of grant (or, if no
such price is reported on such date, such price as reported on the nearest
preceding day) or (2) if the Common Stock is not then traded on the Nasdaq
National Market or any national securities exchange, the fair market value of
the Common Stock on the date of grant, as determined by the Board.

      (c) Duration of Options. Each Option granted to a Participant shall expire
on the earlier of 10 years from the date of grant or one year following
termination of such Participant's service on the Board.

      (d) Exercise of Options. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(e) for the number of
shares for which the Option is exercised.

      (e) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

            (1) in cash or by check, payable to the order of the Company;

            (2) except as the Board may otherwise provide in an option
      agreement, by (A) delivery of an irrevocable and unconditional undertaking
      by a creditworthy broker to deliver promptly to the Company sufficient
      funds to pay the exercise price and any required tax withholding or (B)
      delivery by the Participant to the Company of a copy of irrevocable and
      unconditional instructions to a creditworthy broker to deliver promptly to
      the Company cash or a check sufficient to pay the exercise price and any
      required tax withholding;

            (3) when the Common Stock is registered under the Securities
      Exchange Act of 1934 (the "Exchange Act"), by delivery of shares of Common
      Stock owned by the Participant valued at their fair market value as
      determined by (or in a manner approved by) the Board ("Fair Market
      Value"), provided (A) such method of payment is then permitted under
      applicable law, (B) such Common Stock, if acquired directly from the
      Company, was owned by the Participant at least six months prior to such
      delivery and (C) such Common Stock is not subject to any repurchase,
      forfeiture, unfulfilled vesting or other similar requirements;

            (4) to the extent permitted by applicable law and by the Board, by
      (A) delivery of a promissory note of the Participant to the Company on
      terms determined by the Board or (B) payment of such other lawful
      consideration as the Board may determine; or

            (5) by any combination of the above permitted forms of payment.

      (f) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

6. Restricted Stock.

                                      -2-

<PAGE>

      (a) Grants. The Board may grant Awards entitling Eligible Directors to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").

      (b) Terms and Conditions. The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for repurchase
(or forfeiture) and the issue price, if any.

      (c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or the Designated Beneficiary of such Participant. For these
purposes, a "Designated Beneficiary" of a Participant shall be (1) a beneficiary
designated by such Participant, in a manner determined by the Board, to receive
amounts due or exercise rights of such Participant in the event of such
Participant's death or (2) in the absence of such a designation, the
Participant's estate.

      (d) Deferred Delivery of Shares. The Board may, at the time any Restricted
Stock Award is granted, provide that, at the time Common Stock would otherwise
be delivered pursuant to the Award, the Participant shall instead receive an
instrument evidencing the right to future delivery of Common Stock at such time
or times, and on such conditions, as the Board shall specify. The Board may at
any time accelerate the time at which delivery of all or any part of the Common
Stock shall take place.

7. Other Stock-Based Awards

      Other Awards of shares of Common Stock, and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, shares of Common
Stock or other property, may be granted under the Plan to Eligible Directors
("Other Stock Unit Awards"), including Awards entitling Eligible Directors to
receive shares of Common Stock to be delivered in the future. Such Other Stock
Unit Awards shall also be available as a form of payment in the settlement of
other Awards granted under the Plan or as payment in lieu of compensation to
which a Participant is otherwise entitled. Other Stock Unit Awards may be paid
in shares of Common Stock or cash, as the Board shall determine. Subject to the
provisions of the Plan, the Board shall determine the conditions of each Other
Stock Unit Awards, including any purchase price applicable thereto. At the time
any Award is granted, the Board may provide that, at the time Common Stock would
otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participant's right to future delivery of
the Common Stock.

8. Adjustments for Changes in Common Stock

      In the event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of Common Stock other than an ordinary cash dividend, (a) the number and class
of securities available under the Plan, (b) the number and class of securities
and exercise price per share of each outstanding Option, (c) the repurchase
price per share subject to each outstanding Restricted Stock Award and (d) the
share- and per-share-related provisions of each outstanding Other Stock Unit
Award, shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent determined by the Board.

9. General Provisions Applicable to Awards

      (a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, and, during
the life of the Participant, shall be exercisable only by the Participant.
References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees.

                                      -3-

<PAGE>

      (b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

      (c) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (1) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (2) in the opinion of the Company's counsel, all other legal matters in
connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (3) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

10. Miscellaneous

      (a) No Right To Board Membership or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continue as a director of the
Company.

      (b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

      (c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board. No Awards shall be granted under
the Plan after December 31, 2013, but Awards previously granted may extend
beyond that date.

      (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that, to the extent determined by
the Board, no amendment requiring stockholder approval under any applicable
legal, regulatory or listing requirement shall become effective until such
stockholder approval is obtained. No Award shall be made that is conditioned
upon stockholder approval of any amendment to the Plan.

      (e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

      (f) Effect of Restatement. This Amendment and Restatement of the Plan
shall not be effective until approved by the stockholders of the Company. All
Awards to Participants outstanding as of the date of the Amendment and
Restatement of the Plan shall continue in full force and effect without
modification by such Amendment and Restatement; provided that each reference in
any such Awards to a section of the Plan as in effect prior to the restatement
shall be deemed to refer to the corresponding section of the Plan as restated
unless the reference to such corresponding section would have an adverse impact
on the Participant holding the applicable Award.

      (g) Construction. The headings of the Sections of the Plan are included
only for convenience and shall not affect the meaning or interpretation of the
Plan. Except as otherwise expressly provided, references herein to Sections
shall mean such Sections of the Plan. The word "including" as used in the Plan
shall not be construed so as to exclude any other thing not referred to or
described.

                                      -4-

<PAGE>

                           ART TECHNOLOGY GROUP, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

 GRANTED UNDER THE AMENDED AND RESTATED 1999 OUTSIDE DIRECTOR STOCK OPTION PLAN

1. Grant of Option.

      This agreement evidences the grant by Art Technology Group, Inc., a
Delaware corporation (the "Company"), on [ , ____] (the "Grant Date") to [ ], a
director of the Company (the "Participant"), of an option to purchase, in whole
or in part, on the terms provided herein and in the Company's Amended and
Restated 1999 Outside Director Stock Option Plan (the "Plan"), a total of [ ]
shares of common stock, $.01 par value per share, of the Company ("Common
Stock") (the "Shares") at $[ ] per Share. Unless earlier terminated, this option
shall expire on the tenth anniversary of the Grant Date (the "Final Exercise
Date").

      It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant," as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.

2. Vesting Schedule.

      This option will become exercisable ("vest") as to 100% of the original
number of Shares on the Grant Date. This option shall expire upon, and will not
be exercisable after, the Final Exercise Date.

      The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.

3. Exercise of Option.

a. Form of Exercise. Each election to exercise this option shall be in writing,
signed by the Participant, and received by the Company at its principal office,
accompanied by this agreement, and payment in full in the manner provided in the
Plan. The Participant may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share.

b. Exercise Period. Each Option shall immediately vest and be exercisable. In
addition, no Option may be exercised more than one year after the Participant
ceases to serve as a director of the Company. No Option shall be exercisable
after the expiration of ten (10) years from the date of grant or prior to
approval of the Plan by the stockholders of the Company.

4. Nontransferability of Option.

      This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.

5. Provisions of the Plan.

      This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.

      IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.

                                      -5-

<PAGE>

                                          ART TECHNOLOGY GROUP, INC.

Dated:                                     By:
      _______________________              ___________________________

                                           Name:
                                           ___________________________

                                           Title:
                                           ___________________________


                            PARTICIPANT'S ACCEPTANCE

The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Art Technology Group, Inc. 1999 Outside Director Stock Option Plan.

                                      PARTICIPANT:

                                      _________________________________________

                                      Name:
                                                 _________________________

                                      Address:
                                                 ________________________

                                                 ________________________

                                                 ________________________

                                                 ________________________


                                 AMENDMENT NO. 1
                           TO THE AMENDED AND RESTATED
                   1999 OUTSIDE DIRECTOR STOCK OPTION PLAN OF
                           ART TECHNOLOGY GROUP, INC.

      Pursuant to Section 7(d) of the Amended and Restated Outside Director
Stock Option Plan (the "Plan") of Art Technology Group, Inc. (the "Company"),
the Plan is hereby amended as follows:

      1. Resolved: Section 5(d)(iii) be and hereby is amended by deleting the
entirety of subsection (ii) thereunder and renumbering subsection (iii) as
subsection (ii).

                                     Approved by the Board of Directors
                                     February 3, 2005

                                      -6-