Document:

Prepared by MerrillDirect

EXHIBIT 10.14

 

EMPLOYMENT
AGREEMENT

 

             This EMPLOYMENT AGREEMENT is made
as of the _______________________ by and between and _______________________
(the "Employee") and Avant! Company, a Delaware corporation (the
"Company"). This Agreement restates and supersedes all previous
Employment Agreements or Severance Agreements between the Employee and the
Company.

 

WITNESSETH:

 

             WHEREAS, the Employee has been and
is now in the employment of the Company; and

 

             WHEREAS, the Company has concluded
that securing the service of the Employee will benefit it.

 

             NOW, THEREFORE, in consideration of
the premises and the mutual promises and agreements hereinafter set forth, the
parties therefore agree as follows:

 

1.  TERM OF EMPLOYMENT

(A)  Basic Rules.  The Company
hereby employs the Employee, and the Employee hereby accepts such employment
with the Company from the date of this Agreement until the date when the
Employee's employment terminates pursuant to subsection (b) below. The Employee
shall subject to his appointment as such from time to time (the
"Term") serve during the Term in the Company and its subsidiaries or
affiliates. During the Term, the Employee will devote his best efforts to such
employment and all of his business time and attention to the performance of his
duties hereunder; provided, however, that the Employee may devote reasonable
periods required for serving as a director or member of any Company,
partnership, trust or other entity ("Entity") organization involving
no conflict of interest with the interests of the Company or his personal
affairs so long as the same does not interfere with the performance of his
duties hereunder.

(B)  Termination of
Employment.  The Company may
terminate the Employee's employment at any time and for any reason by giving the
Employee 30 days' advance notice in writing. The Employee may resign his
employment by giving the Company 30 days' advance notice in writing. The
Employee's employment shall be terminated automatically in the event of his
death.

(C)  Termination of
Agreement.  This Agreement shall
be renewed automatically for successive periods of three (3) years unless the
Company notifies the Employees) of its intention not to renew at least 1 month
prior to the expiration of this agreement. This Agreement shall also be
terminated when all obligations of the parties hereunder have been satisfied.

(D)  Compensation
(Salary and Cash Bonus).  The Company
shall pay to the Employee, not less frequently than monthly; an annual base
salary (the "Minimum Salary") as fixed from time to time by the
Company during the Term of his employment hereunder. The Minimum Salary is
_______________ as of __________.  The
Company may increase the Minimum Salary from time to time and upon each such
increase the term "Minimum Salary" shall mean such increased total
amount. References to the Minimum Salary in this Agreement are to the Minimum
Salary, as adjusted, in the year in which the event requiring such reference
occurs. In addition to the Minimum Salary, the Employee shall be entitled to receive
during the Term an annual cash bonus based on the performance of the Company
and the Employee. The actual amount of any such annual cash bonus to be paid to
the Employee will be determined by the Company. Payment of any bonus
compensation in this Section shall be made within 60 days after such
determination.

(E)  Expenses, Benefit
Plans, and Pay–time–off.  The Company will
reimburse the Employee for all reasonable and necessary business and
entertainment expenses incurred by him in connection with the performance of
his duties hereunder.

The Employee
shall be eligible to participate in any employee benefit programs, pension,
profit sharing, stock option or similar plan or program and in any group life
insurance, hospitalization, mental, dental, accident, disability or similar
plan or program of the Company non–existing or establishes hereafter. In
addition, so long as the Company employs the Employee, the Employee shall be
entitled to receive other benefits – generally available to all employees
and any other, which are now or may hereafter be placed in effect.

The Employee
shall be entitled to pay–time–off (the "PTO"), at such
times and for such periods, as are in accordance with the policies of the
Company then in effect for all employees employed by the Company, but in no
event shall the Employee be entitled to fewer than 80 hours of PTO per year.
The Employee shall not be required to take any PTO to which he is entitled in a
given year. In the event the Employee does not take all of the PTO to which he
is entitled in a given year, such PTO will be deferred and accumulated for use
by the Employee in a subsequent year up to a maximum of 240 hours.

2.  RIGHTS UPON CERTAIN TERMINATIONS

(A)  Employee's
Rights.  Unless otherwise defined in this section, each
capitalized tern used in this Agreement shall have the meaning assigned to it
in the Company's 1995 & 2000 Stock Option/Stock Issuance Plan in effect on the date
of this Agreement (the "Plan"). Without limiting any other rights
which the Employee or the Company may have in such event, upon any voluntary
resignation or involuntary termination of the Employee's employment without
Employee's written consent (including but not limited to a Constructive Termination as defined below)
that occurs within six months after a Change in Control (as defined below), and subject to Section 7 below, the Company
shall:

	 	(a)	pay to the Employee cash termination payment
  equal to _____ years (the "Termination
  Payment Period") of the Employee's Minimum Salary in effect
  on the date of termination, in addition to any other payments, benefits, or
  other rights to which the Employee may then be entitled. The Company shall
  pay the above–mentioned payment amount in this Section 2.A.a to the
  Employee in full on the Termination Date;
	 	(b)	allow the Employee to automatically vest in
  full of the shares of Common Stock then subject to any option granted by the
  Company to the Employee and then outstanding (including but not limited to
  any such option drat may hereafter be granted to Employee, under the Plan or
  otherwise) but not otherwise vested; and all outstanding repurchase rights
  applicable to any Common Stock previously issued to the Employee by the
  Company (including any Common Stock hereafter issued which is then held by
  Employee) shall also terminate automatically. If any provisions of the
  preceding sentence regarding acceleration of options or early termination of
  repurchase rights shall conflict with any provision of any existing or future
  option agreement, stock purchase agreement or other agreement between the
  Employee and the Company, the provisions of the preceding sentence in this
  Agreement shall govern if they are more favorable to the Employee under the
  circumstances than the conflicting provisions in such other agreements, unless
  such other agreements expressly refers to the preceding sentence and states
  that it is intended to govern in the event of such a conflict with such
  sentence.

(B)  Change in
Control.  For all purposes under this Agreement, "Change
in Control" shall mean the occurrence of any of the following events after
the date of this Agreement:

	 	(a)	The consummation of a merger or consolidation
  of the Company with or into another entity or any other corporate
  reorganization, if more than 50% of the combined voting power of the
  continuing or surviving entity's securities outstanding immediately after
  such merger, consolidation or other reorganization is owned by persons who
  were not stockholders of the Company immediately prior to such merger,
  consolidation or other reorganization;
	 	 	 
	 	(b)	The sale, transfer, exchange or other
  disposition of all or substantially all of the Company's assets;
	 	 	 
	 	(c)	A change in the composition of the Company's
  Board of Directors (the "Board") as a result of which fewer than a
  majority of the directors are directors who either (A) had been directors of
  the Company of the date 12 months prior to the date of the event that may
  constitute a Change in Control (the " original directors") or (B)
  were elected, or nominated for election, to the Board with the affirmative
  votes of at least a majority of the aggregate of the original directors who
  were still in office at the time of the election or nomination and the
  directors whose election or nomination was previously so approved;
	 	 	 
	 	(d)	Any transaction as a result of which any
  person is the "beneficial owner" (as defined in rule 13(d)–3
  under the Securities Exchange Act of 1934, as amended – the
  "Exchange Act"), directly or indirectly, of securities of the
  Company representing at least 50% of the total voting power represented by
  the Company's then outstanding voting securities. For purpose of this
  subsection (d), the terse "person" shall have the same meaning as
  when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude
  (A) a trustee or other fiduciary holding securities under an employee benefit
  plan of the Company or of a parent or subsidiary of the Company and (B) a
  corporation owned directly or indirectly by the stockholders of the Company
  in substantially the same proportions as their ownership of the common stock
  of the Company; or
	 	 	 
	 	(e)	In the event of Gerald C. Hsu ceases to be the
  Chairman and CEO of the Company.
	 	 	 

A transaction shall in no event
constitute a Change in Control if its sole purpose is to change the state of
the Company's incorporation or to create a holding company that will be owned
in substantially the same proportions by the persons who held the Company's
securities immediately before such transaction.

(C)  Constructive Termination.  For all purposes
under this Agreement, "Constructive Termination" shall be deemed to
have occurred, within six months after a Change in Control, that on written
notice by the Employee to the Company, upon:

(a) the Employee's voluntary resignation
within six (6) months after a Change in Control;

(b) any refusal by the Employee to relocate the Employee's principal place of
employment to a location requested by the Company that is more than fifty (50)
miles from the Employee's current principal place of employment;

 

	 	(c) a reduction by more than fifteen percent
  (l5%) in the Employee's level of compensation including his Minimum Salary,
  non–stock–related fringe benefits, and cash bonus (to the extent
  that any reduction in bonus is disproportionate to a reduction in the
  Company's earnings per share between (i) the period for which the reduced
  bonus is paid, and (ii) the period for which the Employee's most recent prior
  bonus was paid);
	 	(d) any material adverse change in the
  Employee's position, title, job responsibilities, or reporting lines; or any
  activity by the Company that constitutes constructive termination of
  employment under applicable law. Without limiting the events which may
  constitute a material adverse change in the Employee's position, title, job
  responsibilities, or reporting lines under this definition, such a material
  adverse change shall conclusively be deemed to have occurred upon any
  material diminution or other material adverse of Company employees reporting
  to the Employee at the time of a Change in Control, or in the extent or
  nature of the Employee's authority with respect to such function or
  responsibilities or the employees who perform them.

For all
purposes under this Agreement, all of the compensation, cash bonus and other
relevant benefits provided on this Agreement shall be in no event applied to
the Employee(s) who maliciously takes advantage of the bona fide goodwill of
the Company–not only acquire(s) the above–mentioned compensation,
bonus, and benefits but also return(s) to work for Avant' after the Change in
Control with or without any cause.

3.  COVENANT NOT TO COMPETE

(A)  Non–Competition.
 For the purpose of this Section 3, a company,
entity, or person shall be deemed in competition with the Company, if any
company, entity, or person engages in the electronic design automation (the
"EDA") industry or, to the knowledge of the Employee, has definitive
plans to engage in the EDA industry. The parties confirm that it is reasonably
necessary for the protection of the Company that the Employee agree, and
accordingly, the Employee does hereby agree that he will not, directly or
indirectly, except for the benefit of the Company, at any time during his
employment hereunder and thereafter during the
Restricted Period, as hereinafter defined, from the date of
termination of this Agreement provided the Company shall duly perform its
obligations to the Employee pursuant to this Agreement:

	 	(i) Become an officer, director, partner,
  associate, employee, owner, agent, creditor, independent contractor, or
  otherwise, or be interested in or associated with any other EDA company, firm
  or business engaged, in any geographical area in which the Company is
  engaged, in making or selling one or more EDA products competitive with a
  product or products made or sold by Company now or during the term of this
  Agreement. However, after obtaining the prior approval from the Company, the
  Employee may devote reasonable periods required for serving as a director or
  member of any Company, partnership, trust or other entity ("Entity")
  organization involving no conflict of interest with the interests of the
  Company or his personal affairs so long as the same does not interfere with
  the performance of his duties hereunder;
	 	 
	 	(ii) Solicit, cause or authorize, directly or
  indirectly, to be solicited for or on behalf of himself or third parties,
  from parties who were customers of the Company in the EDA industry at any
  time within six (6) months prior to the cessation of his employment
  hereunder, any business competitive to the business transacted by the Company
  with such customers in the EDA industry;
	 	 
	 	(iii) Accept or cause or authorize, directly
  or indirectly, to be accepted for or on behalf of himself or third parties,
  any such business in the EDA industry from any such customers of the Company
  as defined in the preceding subsection;

(B)  Restricted
Period.  The tern "Restricted Period" as used in
this Section 3 shall mean the Termination Payment Period of the cash
termination payment as a consequence of Constructive Termination due to a
Change in Control, which the Employee is entitled to receive pursuant to the
provisions of Section 2 hereof.

(C)  Others.  This Section 3
shall survive the termination of the Employees employment hereunder for the
period provided in paragraph (B).

The Employee
further agrees that any breach or threatened breach by him of any provisions of
this Section 3 shall entitle the Company, in addition to any other legal or
equitable remedies available to it, to apply to any court of competent
jurisdiction to enjoin such breach or threatened breach.

Notwithstanding
anything in this Agreement to the contrary, if the Employee violates any of the
provisions of paragraph (a) hereof during the Restricted Period and fails to
cease such violation and to remedy the consequences of such violation within
ninety (90) days after notice from the Company specifying such violation and if
the Company obtains a final judgment from a court of competent jurisdiction to
the effect that the Employee has violated a provision of paragraph (a) and has
failed to cease such violation and to remedy the consequences of such violation
within ninety (90) days after notice from the Company, all obligations of the
Company to compensate the Employee and to forgive indebtedness, if any, of the
Employee to the Company shall cease, and the Company shall be entitled to
recover from the Employee compensation received by the Employee and any
indebtedness forgiven while such violation existed.

(D)  Special Non–Competition
Cash Payment.  The Company recognizes
that a Change in Control Termination will subject the Employee to losses and
damages, the amount of which might not readily be determined, and that there
exist only a limited number of employment opportunities comparable in statue,
compensation and opportunity to employment as an Employee of the Company.
Therefore, the Employee shall not be required to seek or accept employment in
mitigation of any obligations of the Company arising by reason of his
Constructive Termination due to a Change in Control. In consideration of the
Employee's special services and the Employee's agreement to not compete in the
EDA industry during the Restricted Period after the date of termination of his
employment, hereunder the Company agrees to pay the Employee a lump sum of
_______________, payable within 30 days after the termination of his
employment.

4.  MUTUAL RELEASES AFTER TERMINATION OF EMPLOYMENT

Upon the
termination of the Employee's employment, the Company and the Employee agree
that in consideration for the Employee's services, the Company shall execute a
general release, in form and substance, satisfactory to the Employee's counsel,
that releases and forever discharges the Employee, his heirs, successors and
assigns, from any and all actions, causes of actions, claims, or demands for
general, special or punitive damages, attorney's fees, expenses, or other
compensation, which in any way relate to or arise out of the Employee's
employment with the Company or any of its subsidiaries.

5.  INDEMNIFICATION

To the fullest
extent not inconsistent with applicable law, in the event that the Employee is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
consultant, employee or agent of the Company or any of its subsidiaries, or is
or was serving at the request of the Company as a director, officer,
consultant, employee or agent of another Company, partnership, joint venture,
trust or other enterprise, the Company shall indemnify the Employee and hold
him harmless, against all expenses (including costs and attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by his in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Employee did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the Company, or that, with respect to any criminal action or
proceeding, the Employee had reasonable cause to believe that his conduct was
unlawful. The provisions of this Section 5 shall not be deemed exclusive of any
other rights of indemnification to which the Employee maybe entitled or which
may be granted to him, and it shall be in addition to any rights of
indemnification to which he may be entitled under any policy of insurance. The
provisions of this Section 5 shall continue in effect after the Employee has
ceased to be an officer, employee or agent of the Company, shall inure to the
benefit of the Employee's heirs, executors, administrators and in testate
distributes and shall survive the termination of this Agreement under all
circumstances.

	 	All litigation or inquiries by third parties
  (for example, but not limited to, those by shareholders –direct or
  derivative – or government agencies) arising out of or in connection
  with this Agreement or the Employee's performance hereunder, against either
  the Company or the Employee or both, shall be defended or opposed by the
  parties hereto, as the case may be, to support this Agreement, and the costs,
  fees and expenses thereof, including fees of counsel for the parties, shall
  be home by the Company.
	 	 
	 	Notwithstanding the foregoing provisions of
  this Section 5, during the term of the Employee's employment hereunder and
  during such time he continues as an officer, the Company agrees to maintain
  substantially the same Officers' liability insurance in place on the date
  hereof and shall increase such coverage in the event the Employee determines
  that it is in the best interest of the Company to have such increased
  coverage.

6.  CONFIDENTIAL INFORMATION

The Employee
recognizes that as an Employee of the Company he has had and will have access
to secret and confidential information regarding the Company, its products,
customers and plans relating to the EDA industry. The Employee acknowledges
that such information is of great value to the Company, and is the sole
property of the Company and that such information has been and will be acquired
by his in confidence. In consideration of the obligations undertaken by the
Company as set forth herein, the Employee will not, at any time, during or for
a period of one year after his employment of the Company hereunder, reveal,
divulge or make known, except as authorized by the Company or required on its
behalf or required pursuant to legal or administrative processes, any
information of a confidential nature concerning the Company's business
involving the EDA industry acquired by the Employee during the course of his
employment to any competitor to the Company in the EDA industry.

7.  MISCELLANEOUS PROVISIONS

(A)  No right to
Employment.  Notwithstanding this
Agreement, either party may terminate the Employee's employment at any time and
for any reason, or for no reason upon written notice to the other party;
provided, however, that any Change in Control Termination shall be subject to
all of the consequences described in sections 2 and 3 above.

(B)  Notice.  Notices and all
other communications contemplated by this Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered or when mailed by
U.S. registered mail, return receipt requested and postage personally delivered
or when the Employee, mailed notices shall be addressed to the Employee at the
home address shown below on this Agreement or at the home address which the
Employee most recently communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be addressed to the attention of its Secretary.

(C)  Waiver.  No provision of this
Agreement shall be modified, waived or discharged unless the modification,
waiver or discharge is agreed to in writing and signed by the Employee and by
an authorized officer of the Company (other than the Employee). No waiver by
either party of any breach of, or of compliance with, any condition or
provision of his Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at another time.

(D)  WholeAgreement;
Modifications.  No agreements, representations or
understanding (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either part with respect to the subject matter hereof. This Agreement contains
the entire understanding of the parties with respect to the subject matter
hereof. A modification of this Agreement shall be valid only if it is made in
writing and executed by both parties hereto.

(E)  Withholding
Taxes.  All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges required to be withheld
by law.

(F)  Choice of
Law.  The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of
California (except their provisions governing the choice of law).

(G) 
Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

(H)  Company's
Successors.  This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business
and/or assets, which become bound by this Agreement.

(I)  Employee's
Successors.  This Agreement and all right of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal of legal representatives, executors, heirs, distributes,
devisees, and legatees.

(J)  No
Assignment.  The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without imitation) bankruptcy, garnishment, attachment, or
other creditor's process, and any action in violation of this paragraph shall
be void.

(K) 
Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(L) 
Confidentiality.  The Employee agrees that the Employee
will not disclose the existence or the terms of this Agreement to anyone other
than the Employee's spouse, tax advisor, or legal advisor. In the event the
Employee breaches this confidentiality obligation, the Company may immediately
terminate this Agreement.

(M)  Arbitration.  Any controversy or claim between the Company and
Employee, their representatives, heirs, successors and assigns, arising out of
or relating to this Agreement or any breach or asserted breach hereof or
questioning the validity and binding effect hereof shall be determined by
arbitration conducted in San Francisco in accordance with the Rules of the
American Arbitration Association then obtaining, and judgment upon any award
rendered may be entered in any court having jurisdiction thereof. The decision
of the arbitrators shall be final and binding upon the parties hereto. All of
the Employee's costs and expenses (including attorneys, fees) arising out of or
in connection with any matters submitted to arbitration pursuant to this
subsection shall be paid by the Company, unless the award of the arbitrators
shall explicitly find that the Employee's claim or his defense against a claim
by the Company was frivolous and completely without merit, in which case the
Employee shall pay the costs and expenses (including, without limitation,
reasonable attorneys, fees) incurred by the Company in such connection.

(N)  Section
Headings.  The headings or titles of the sections of
this Agreement are not a part of this Agreement and are not intended to aid in
the construction of any provision thereof.

IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company, by its duly authorized officer, as of
the day and year first above written.

 

 

	

	Signature Of the Employee
	 
	 
	

	Printed name of the Employee
	 
	 
	

	Date of Signature
	 
	 
	

	 
	 
	

	The Employee’s mailing address
	 
	 
	 
	 
	AVANT! CORPORATION
	 
	 
	 
	

	Gerald C. Hsu
	 
  Chairman, Chief Executive Officer, & President
	 
	 
	 
	

	Date of SignaturePrepared by MerrillDirect

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).

 

[The remainder of this page is
intentionally left blank]

             

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:	

	 	By:	

	 	 	 	 	 
	Name:	

	 	Name:	

	 	 	 	 	 
	Title:	

	 	Title:	

							

 

	 	SILICON
  VALLEY BANK
	 	 
	By:	

	 
	 	 	 
	Name:	

	 
	 	 	 
	Title:	

	 
	 	(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:	

	 	 
	Name:	

	 	 
	Title:	

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:	

	 	 	 	AUTHORIZED
  SIGNER
	

	 	 	 
	SIGNATURE	 	Date:	

	 	 	 	 
	

	 	Verified:	

	TITLE	 	 	AUTHORIZED
  SIGNER
	 	 	 	 
	

	 	Date:	

	DATE	 	Compliance
  Status:	Yes     No
	658274.2	 	3

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