Document:

<PAGE>
                                                                   EXHIBIT 10.21

                       SECOND LOAN MODIFICATION AGREEMENT

      This Second Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of December 20, 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").

1. 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 by a certain First Loan Modification Agreement dated as of September 17,
2002, as further amended by a certain Amendment dated as of____________ , 2002
(as amended, the "Loan Agreement"). Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreements.

2. 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".

3. DESCRIPTION OF CHANGE IN TERMS.

      Modifications to Loan Agreement.

            1.    The Loan Agreement shall be amended by deleting the following
                  text, appearing in Section 2.1.1 (a) thereof, in its entirety:

                        "(a) Availability. Bank shall make Advances not
                        exceeding (i) the Committed Revolving Line or the
                        Borrowing Base, whichever is less, minus (ii) the amount
                        of all outstanding Letters of Credit (including drawn
                        but unreimbursed Letters of Credit), minus (iii) the FX
                        Reserve, and minus (iv) the aggregate outstanding
                        Advances hereunder (including any Cash Management
                        Services). Amounts borrowed under this Section may be
                        repaid and reborrowed during the term of this
                        Agreement."

                  and inserting in lieu thereof the following:

                        "(a) Availability. Bank shall make Advances not
                        exceeding (i) the Committed Revolving Line, minus (ii)
                        the amount of all outstanding Letters of Credit
                        (including drawn but unreimbursed Letters of Credit),
                        minus (iii) the FX Reserve, and minus (iv) the aggregate
                        outstanding Advances hereunder (including any Cash
                        Management Services). Amounts borrowed under this
                        Section may be repaid and reborrowed during the term of
                        this Agreement"

            2.    The Loan Agreement shall be amended by deleting the following
                  text, appearing as the first two sentences in Section 2.1.2
                  (a) thereof in its entirety;

                        "Bank shall issue or have issued Letters of Credit for
                        Borrower's account not exceeding (i) the lesser of the
                        Committed Revolving Line or the Borrowing Base minus
                        (ii) the outstanding principal balance of any Advances
                        (including any Cash Management Services), minus (iii)
                        the amount of all Letters of Credit (including
<PAGE>
                        drawn but unreimbursed Letters of Credit), plus an
                        amount equal to any Letter of Credit Reserves. The face
                        amount of outstanding Letters of Credit (including drawn
                        but unreimbursed Letters of Credit and any Letter of
                        Credit Reserve) issued under this Agreement may not
                        exceed $15,000,000.00."

                  and inserting in lieu thereof the following:

                        "Bank shall issue or have issued Letters of Credit for
                        Borrower's account not exceeding (i) the Committed
                        Revolving Line minus (ii) the outstanding principal
                        balance of any Advances (including any Cash Management
                        Services), minus (iii) the amount of all Letters of
                        Credit (including drawn but unreimbursed Letters of
                        Credit), plus an amount equal to any Letter of Credit
                        Reserves. The face amount of outstanding Letters of
                        Credit (including drawn but unreimbursed Letters of
                        Credit and any Letter of Credit Reserve) issued under
                        this Agreement may not exceed $20,000,000.00."

            3.    The Loan Agreement shall be amended by deleting the amount of
                  $15,000,000.00" appearing in both Sections 2.1.3 and Section
                  2.1.4 thereof and inserting in lieu thereof "$20,000,000.00".

            4.    The Loan Agreement shall be amended by adding the following
                  new Section 2.4 (d):

                  "(d) Unused Line Fee. In the event, in any calendar quarter,
                  the average daily principal balance of the Advances
                  outstanding during the quarter is less than $20,000,000.00,
                  Borrower shall pay Bank an unused line fee in an amount equal
                  to 0.25% per annum on the difference between $20,000,000.00
                  and the average daily principal balance of the Advances
                  outstanding during the quarter, which unused line fee shall be
                  computed and paid quarterly, in arrears, on the first of the
                  following quarter"

            5.    The Loan Agreement shall be amended by adding the following
                  new Section 2.4 (e):

                  "(e) Compensating Balance/Compensating Balances Fees. In the
                  event, at any time, Borrower maintains less than $27,000,000
                  in unrestricted cash with Bank, of which at least $3,000,000
                  shall be maintained in Borrower's sweep account (account no.
                  3300070667) at Bank, Borrower shall pay such fees and expenses
                  as Bank shall determine, in its sole and exclusive discretion,
                  to compensate Bank for its loss on income on such deposit
                  balance (the "Additional Fees"). Such Additional Fees may be
                  instituted by Bank by, among other ways, (i) an increase in
                  the interest rate then in effect with respect to the Advances,
                  (ii) an increase in the Letter of Credit Fee, (iii) charging
                  of additional facility fees and other fees, or any combination
                  of the foregoing and other methods, all at Bank's option and
                  in its sole and exclusive discretion in each instance.
                  Notwithstanding the foregoing, Bank shall provide Borrower a
                  one-time five (5) Business Day notice period prior to
                  instituting the Additional Fees in order to provide Borrower
                  an opportunity to deposit additional unrestricted cash with
                  the Bank."

            6.    The Loan Agreement shall be amended by deleting the following
                  text, appearing as the third sentence in Section 4.1 thereof,
                  in its entirety:

                        "Bank may place a "hold" on any deposit account pledged
                        as Collateral."

                  and inserting in lieu thereof the following:

                        "After the occurrence of an Event of Default, Bank may
                        place a "hold" on any deposit account pledged as
                        Collateral"
<PAGE>
            7.    The Loan Agreement shall be amended by deleting Section 6.2(b)
                  thereof in its entirety

            8.    The Loan Agreement shall be amended by deleting the following
                  text, appearing in Section 6.6 thereof, in its entirety:

                        "6.6 PRIMARY ACCOUNTS. In order to permit the Bank to
                        monitor the Borrower's financial performance and
                        condition, Borrower shall maintain its primary domestic
                        depository and operating accounts with Bank. Borrower
                        shall maintain at least $18,000,000 in unrestricted cash
                        (subject to the proviso below) with Bank at all times
                        during the term of this Agreement, provided, however,
                        Borrower may use up to $3,000,000 of such amount to
                        secure letters of credit. Borrower shall identify " to
                        Bank, in writing, of any bank or securities account
                        opened by Borrower with any institution other than Bank.
                        In addition, for each such account that the Borrower at
                        any time opens or maintains, Borrower shall, at the
                        Bank's request and option, pursuant to an agreement in
                        form and substance acceptable to the Bank, cause the
                        depositary bank or securities intermediary to agree that
                        such account is the collateral of the Bank pursuant to
                        the terms hereunder. The provisions of this paragraph
                        shall not apply to deposit accounts exclusively used for
                        payroll, payroll taxes and other employee wage and
                        benefit payments to or for the benefit of the Borrower's
                        employees'

                  and inserting in lieu thereof the following:

                        "6.6 PRIMARY ACCOUNTS. In order to permit the Bank to
                        monitor the Borrower's financial performance and
                        condition, Borrower shall maintain its primary domestic
                        depository and operating accounts with Bank. Borrower
                        shall identify to Bank, in writing, any bank or
                        securities account opened by Borrower with any
                        institution other than Bank. In addition, for each such
                        account that the Borrower at any time opens or
                        maintains, Borrower shall, at the Bank's request and
                        option pursuant to an agreement in form and substance
                        acceptable to the Bank, cause the depositary bank or
                        securities intermediary to agree that such account is
                        the collateral of the Bank pursuant to the terms
                        hereunder. The provisions of this paragraph shall not
                        apply to deposit accounts exclusively used for payroll,
                        payroll taxes paid other employee wage and benefit
                        payments to or for the benefit of the Borrower's
                        employees."

            9.    The Loan Agreement shall be amended by deleting the following
                  text, appearing in Section 6.7(a) thereof, in its entirety;

                        "(a) LIQUIDITY COVERAGE. Borrower shall have at all
                        times, to be tested as of the last day of each month,
                        unrestricted and unencumbered cash equal to or greater
                        than the product of (A) all Obligations (including the
                        stated amount of any issued but undrawn Letters of
                        Credit) hereunder multiplied by (B) two (2.0)."

                  and inserting in lieu thereof the following:

                        "(a) LIQUIDITY. Borrower shall have at all times, to be
                        tested as of the last day of each month, unrestricted
                        and unencumbered cash equal to or greater than
                        $40,000,000.00."

            10.   The Loan Agreement shall be amended by deleting the following
                  texts appearing in Section 6.7(b) 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-
<PAGE>
                        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) $4,000,000.00 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) $4,500,000.00 for the
                        quarter ending December 31, 2002; (ii) $4,000,000.00 for
                        the quarter ending March 31, 2003; (iii) $2,000,000.00
                        for the quarter ending June 30, 2003: (iv) $1,000,000.00
                        for each quarter thereafter. In calculating Borrower's
                        profitability hereunder, Bank will exclude a
                        restructuring charge not to exceed $25,000,000 in the
                        aggregate (of which (x) not more than $7,500,000 will be
                        used for non-lease cash obligations payable within
                        twelve months and (y) not more than $12,000,000 will be
                        used for cash payments for lease termination obligations
                        payable within twelve months), which restructuring
                        charge may be taken by Borrower in each of or any of)
                        the quarters ending December 31, 2002, March 31, 2003,
                        June 30, 2003 and September 30, 2003."

            11.   The Loan Agreement shall be amended by deleting in their
                  entirety the definitions of "Borrowing Base", "Eligible
                  Accounts" and "Eligible Foreign Accounts", each appearing in
                  Section 13 thereof.

            12.   The Loan Agreement shall be amended by deleting the following
                  definition appearing in Section 1 3 thereof, in its entirety:

                        "COMMITTED REVOLVING LINE" is an Advance or Advances of
                        up to Fifteen Million Dollars ($15,000,000.00)."

                  and inserting in lieu thereof the following:

                        "COMMITTED REVOLVING LINE" is an Advance or Advances of
                        up to Twenty Million Dollars ($20,000,000.00)."

            13.   The Loan Agreement shall be amended by deleting the following
                  definition appearing in Section 13 thereof, in its entirety:

                        "REVOLVING MATURITY DATE" is December 27, 2002."

                  and inserting in Lieu thereof the following:

                        "REVOLVING MATURITY DATE" is December 26, 2003."

            14.   The Compliance Certificate appearing as EXHIBIT D to the Loan
                  Agreement is hereby replaced with the Compliance Certificate
                  attached as EXHIBIT A hereto.

4. FEES. Borrower shall pay to Bank a modification fee equal to Seventy Thousand
Dollars ($70,000.00), which fee shall be due on the date hereof and shall be
deemed fully earned as of the date hereof. The Borrower shall also reimburse
Bank for all reasonable legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.

5. 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
<PAGE>
as defined in said Intellectual Property Security Agreement, shall remain in
full force and effect.

6. 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
Borrower provided to Bank in said Perfection Certificate has not changed, as of
the date hereof.

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

8. 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.

9. 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.

10. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrowers 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.

11. 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.

12. 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]
<PAGE>
      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)
<PAGE>
                                    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 us 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

<TABLE>
<CAPTION>
          REPORTING COVENANT                   REQUIRED                   COMPLIES
          ------------------                   --------                   --------

<S>                                            <C>                        <C>
      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

      FINANCIAL COVENANT                       REQUIRED     ACTUAL
      ------------------                       --------     ------

      Maintain on a Monthly Basis:             $*           $_____        Yes   No
      Minimum Liquidity

      Maintain on a Quarterly Basis:           $**          $_____        Yes   No
      Profitability:
</TABLE>

* See Section 6.7(a) of the Agreement

** See Section 6.7(b) of the Agreement

COMMENTS REGARDING EXCEPTIONS: SEE ATTACHED.

Sincerely,

--------------------------------------------
SIGNATURE

--------------------------------------------
TITLE

--------------------------------------------
DATE

--------------------------------------------------------------------------------
                                  BANK USE ONLY

Received by:
             ------------------------------------------
                                AUTHORIZED SIGNER

Date:
      -------------------------------------------------

Verified:
         ----------------------------------------------
                                AUTHORIZED SIGNER

Date:
      -------------------------------------------------

--------------------------------------------------------------------------------<PAGE>
                                                                   EXHIBIT 10.22

December 31, 2002

By Hand

Paul Shorthose
11 Gage Street
Needham, MA 02492

Dear Paul:

         The Board of Directors of Art Technology Group, Inc. ("ATG" or the
"Company") is very pleased to extend you this offer of continuing employment
with the Company. The entire Board of Directors (the "Board") looks forward to a
mutually beneficial relationship and appreciates your past and continuing
contributions to the Company. This letter (the "Letter Agreement") sets forth a
summary of the terms and conditions of your continuing employment with ATG.
Please confirm that the terms and conditions of the agreement have been
accurately memorialized by signing and returning the enclosed copy of this
letter to the Company's Senior Vice President and Chief Financial Officer as
prescribed below.

1. RESPONSIBILITIES. You will report directly to the Chief Executive Officer
("CEO") and your title will be Working Chairman. Your initial responsibilities
shall include: (a) continuing to assist the CEO in managing activities relating
to Board activities, (b) continuing to assist the CEO in transitioning customer
and partner relationships and (c) continuing to assist the CEO in transitioning
the International Sales and Service organizations into a single worldwide sales
organization. Your work schedule and deadlines for the completion of various
projects shall be mutually agreed upon by the CEO and you on an ongoing basis
and you will be expected to perform any and all duties you are assigned in a
professional manner and to the best of your abilities at all times.

         By signing this Letter Agreement, you are confirming that you resigned
from the position of Chief Executive Officer, effective December 5, 2002, and
that you will sign and return promptly any other document which the Company
requests you to sign to evidence such resignation.

2. TERM. Your employment with ATG under the terms of this Letter Agreement will
begin on January 1, 2003. Your employment with ATG under the terms of this
Letter Agreement will continue through December 31, 2003, subject to the terms
of Section 3 hereof.

3.       WAGES AND OTHER COMPENSATION; BENEFITS; RELEASES OF CLAIMS; TERMINATION
         OF EMPLOYMENT.

         (A) (i) For the remainder of your employment with ATG, you will be paid
at an annualized rate of $25,000 per year, minus customary deductions for
federal and state taxes and the like; and (ii) in exchange for your execution
and submission of a release of claims to the CEO and the Board in a form
acceptable to the Company (which, barring unforseen circumstances, will be in a
form substantially similar to Exhibit A), as well as your submission of the
resignation letter attached hereto as Exhibit B on your last day of employment
with ATG, within two weeks thereafter, you will receive a lump sum payment of
$100,000, minus customary deductions for federal and state taxes and the like.
<PAGE>
         You agree that you shall not be eligible to receive any bonus or equity
of any type from the Company at any time in the future. No future payments from
the Company to you will include interest.

         (B) You agree that on your last day of employment, you shall sign, date
and submit to the Board the resignation letter attached hereto as Exhibit B. If
your employment is terminated by the Company without Cause prior to December 31,
2003, or you resign your employment prior to December 31, 2003, you shall
receive the payments noted in Section 3(a), less any amounts you have already
received, upon your post-employment submission to the CEO and the Board a
release in a form acceptable to the Company (which, barring unforseen
circumstances, will be in a form substantially similar to Exhibit A). If the
Company terminates your employment with Cause at any time, you shall not be
entitled to any payments noted in paragraph 3(a) that have not been made as of
the time of such termination. For purposes of this agreement, the term Cause
shall mean your commission of any felony or any act of fraud in connection with
your ATG responsibilities, or embezzlement or misappropriation of Company
assets.

         (C) You will be entitled to take advantage of any benefits offered by
ATG throughout your employment with the Company. You shall not be eligible to
participate in any ATG benefits (including any continued vesting in any equity
interest in the Company) after your final day of employment unless the law
explicitly permits you to do so. ATG benefits, of course, may be modified or
changed from time to time at the sole discretion of the Company, and where a
particular benefit is subject to a formal plan (for example, medical insurance),
eligibility to participate in and receive any particular benefit is governed
solely by the applicable plan document.

         (D) Exclusive of sub-paragraphs 3(a)-(c) above, in recognition of your
previous work on behalf of the Company with respect to the hiring of and
transition to a new CEO, as well as your efforts to facilitate ATG's
restructuring plan in the fourth quarter of 2002, and in exchange for your
execution and submission of the release of claims attached as Exhibit A (which
shall be incorporated herein by reference), along with your signed version of
this Letter Agreement to the CEO and the Board as prescribed below, the Company
shall pay you $225,000, minus customary deductions for federal and state taxes
and the like, by way of 26 approximately equal bi-weekly payments in 2003.

4. CONFIDENTIALITY, INVENTIONS AND NON-COMPETITION. Given the confidential
nature of various aspects of ATG's business, you may not discuss the fact or
terms of this offer or any employment discussions with anyone other than members
of the Board (or their designees) or members of your immediate family (and, if
relevant, your financial advisor or lawyer). You further agree that you shall
not divulge any information about ATG that is not known to the general public at
any time to anyone other than ATG officials with bona fide needs to know such
information. In addition, you explicitly agree that you shall forfeit any right
to the payment noted in Paragraph 3(a) of this Letter Agreement if you engage in
any activity whatsoever on behalf of or in the interests of any person or entity
that is engaged in or preparing to engage in
<PAGE>
the development, sale or support of any e-commerce related application or
infrastructure software prior to January 3, 2004.

5. STOCK OPTIONS. This provision confirms that vesting of the options to
purchase Company stock granted to you (a) as of June 22, 1999 at $5.00 per share
was accelerated such that, effective December 31, 2002, such grant (No. 808A) is
deemed to have vested to the extent of 42,500 additional shares (b) as of August
3, 2001 at $2.13 per share was accelerated such that, effective December 31,
2002, such grant (No. 4187A) is deemed to have vested to the extent of 18,750
additional shares and (c) as of October 23, 2001 at $1.31 per share were
accelerated such that, effective December 31, 2002, such grants (Nos. 5147 and
5147A) were deemed to have vested to the extent of 62,500 additional shares; all
subject to all other terms of the original option grants. In addition, the
parties hereto agree that the options to purchase Company stock granted to you
as of June 22, 1999 (82,500 shares per grant nos. 808 and 808A) and October 23,
2002 (87,500 shares per grant no. 5147) that remained unvested as of December
31, 2002 were cancelled as of that date and will not vest at any time. A chart
detailing the status of all stock options granted to you by the Company is
attached hereto as Exhibit C.

6. ENTIRE AGREEMENT; DISPUTE RESOLUTION. This letter constitutes the Company's
entire offer regarding the terms and conditions of your proposed continuing
employment with ATG. It supersedes any prior agreements (including your CEO
Offer Letter dated on or about October 23, 2001, and your Executive
Change-in-Control Agreement dated on or about October 1, 2002; provided,
however, that the Company acknowledges that 50% of your unvested stock options
as of December 5, 2002 vested on December 31, 2002, per the terms of the October
23, 2001 CEO Offer Letter), or other promises or statements (whether oral or
written) regarding your relationship with ATG; provided, however, that the stock
option agreements between you and the Company shall remain in effect on the
terms and conditions stated therein unless explicitly amended by this Letter
Agreement. The terms of your employment shall be governed by the law of the
Commonwealth of Massachusetts. By accepting this offer of employment, you agree
that any action, demand, claim or counterclaim in connection with any aspect of
your employment with the Company shall be resolved by a judge alone in a court
of competent jurisdiction in Suffolk or Middlesex County, Massachusetts.

         Paul, the Company is very appreciative of both your past efforts and
your ability to continue to lead the Company in a positive direction. Please
confirm that this Letter Agreement accurately reflects the terms and conditions
that you have agreed to by signing and returning the enclosed additional copy of
this Letter Agreement, along with the release of claims to me by no later than
March 25, 2003.

                                        Sincerely,

                                        Edward Terino
                                        Senior Vice President and
                                        Chief Financial Officer

<PAGE>
Acknowledgment:

         I, Paul Shorthose, have read, understand, and accept employment on the
terms and conditions outlined in this letter. I am not relying on any
representations made to me by anyone other than as set forth above.

------------------------            ---------------------------------
Signature                           Date
<PAGE>
                                                                       Exhibit A

                                RELEASE OF CLAIMS

         You agree and acknowledge that by signing this Release of Claims and
accepting the consideration reflected in the December 31, 2002 Letter Agreement
(the "Letter Agreement") between you and Art Technology Group, Inc. ("ATG" or
the "Company") and other good and valuable consideration, you are waiving your
right to assert any form of legal claim against ATG (including any divisions,
affiliates, subsidiaries and related entities, as well as its and their
respective officers, directors, employees, agents, representatives, successors
and assigns) of any kind whatsoever from the beginning of time through the date
of this Release of Claims. Your waiver and release is intended to bar any form
of legal claim, charge, complaint or any other form of action (jointly referred
to as "Claims") against ATG seeking any form of relief including, without
limitation, equitable relief (whether declaratory, injunctive or otherwise), the
recovery of any damages or any other form of monetary recovery whatsoever
(including, without limitation, back pay, front pay, compensatory damages,
emotional distress damages, punitive damages, attorneys fees and any other
costs) against ATG, through the date of this Release of Claims.

         Without limiting the foregoing general waiver and release of claims,
you specifically waive and release ATG from any Claim arising from or related to
your employment relationship with ATG or the planned termination thereof,
including, without limitation:

         (a) Claims under any local, state or federal discrimination, fair
employment practices or other employment related statute, regulation or
executive order (as they may have been amended through the date of this Release
of Claims) prohibiting discrimination or harassment based upon any protected
status including, without limitation, race, national origin, age, gender,
marital status, disability, veteran status or sexual orientation. Without
limitation, specifically included in this paragraph are any Claims arising under
the federal Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the
Americans With Disabilities Act, and any similar statute;

         (b) Claims under any other local, state or federal employment related
statute, regulation or executive order (as they may have been amended through
the date of this Release of Claims) relating to wages, hours or any other terms
and conditions of employment. Without limitation, specifically included in this
paragraph are any Claims arising under the Fair Labor Standards Act, the Family
and Medical Leave Act of 1993, the National Labor Relations Act, the Employee
Retirement Income Security Act of 1974, the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and any similar statute;

         (c) Claims under any local, state or federal common law theory
including, without limitation, wrongful discharge, breach of express or implied
contract, promissory estoppel, unjust enrichment, breach of a covenant of good
faith and fair dealing, violation of public policy, defamation, interference
with contractual relations, intentional or negligent infliction of emotional
distress, invasion of privacy, misrepresentation, deceit, fraud or negligence;
<PAGE>
         (d) Claims under any local, state or federal securities law, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and any Delaware, Massachusetts or other state
or local securities statutes and regulations; and

         (e) Any other Claim arising under local, state or federal law.

         You acknowledge and agree that, but for providing this waiver and
release of claims, you would not be receiving the consideration reflected in the
Letter Agreement or the release and waiver from the Company reflected below.

         YOU EXPLICITLY ACKNOWLEDGE THAT BECAUSE YOU ARE OVER FORTY (40) YEARS
OF AGE, YOU HAVE SPECIFIC RIGHTS UNDER THE OWBPA, WHICH PROHIBITS DISCRIMINATION
ON THE BASIS OF AGE, AND THAT THE RELEASES SET FORTH HEREIN ARE INTENDED TO
RELEASE ANY RIGHT THAT YOU MAY HAVE TO FILE A CLAIM AGAINST ATG ALLEGING
DISCRIMINATION ON THE BASIS OF AGE.

         IT IS ATG'S DESIRE AND INTENT TO MAKE CERTAIN THAT YOU FULLY UNDERSTAND
THE PROVISIONS AND EFFECTS OF THIS RELEASE OF CLAIMS. TO THAT END, YOU HAVE BEEN
ENCOURAGED AND GIVEN THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL FOR THE
PURPOSE OF REVIEWING THE TERMS OF THIS RELEASE OF CLAIMS. CONSISTENT WITH THE
PROVISIONS OF OWBPA, ATG HAS PROVIDED YOU WITH AT LEAST TWENTY-ONE (21) DAYS IN
WHICH TO CONSIDER AND ACCEPT THE TERMS OF THIS RELEASE OF CLAIMS. IN ADDITION,
YOU MAY RESCIND YOUR ASSENT TO THIS RELEASE OF CLAIMS WITHIN SEVEN (7) DAYS
AFTER YOU SIGN AND SUBMIT IT. TO DO SO, YOU MUST DELIVER A WRITTEN NOTICE OF
RESCISSION TO THE BOARD AND THE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER AT THE COMPANY'S OFFICE IN CAMBRIDGE, MASSACHUSETTS. TO BE EFFECTIVE,
SUCH RESCISSION MUST BE HAND DELIVERED OR POSTMARKED WITHIN THE SEVEN (7) DAY
PERIOD AND SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO (I) BOARD OF
DIRECTORS AND (II) EDWARD TERINO, ART TECHNOLOGY GROUP, 25 FIRST STREET, SECOND
FLOOR, CAMBRIDGE, MA 02141.

         Consistent with the provisions of the OWBPA and other federal
discrimination laws, nothing in this release shall be deemed to prohibit you
from challenging the validity of this release under the federal age or other
discrimination laws (the "Federal Discrimination Laws") or from filing a charge
or complaint of age or other employment-related discrimination with the Equal
Employment Opportunity Commission ("EEOC"), or from participating in any
investigation or proceeding conducted by the EEOC. Further, nothing in this
Release of Claims shall be deemed to limit ATG's right to seek immediate
dismissal of such charge or complaint on the basis that your signing of this
Release of Claims constitutes a full release of any individual rights under the
Federal Discrimination Laws, or to seek restitution to the extent permitted by
law of the economic benefits provided to you under this Release of Claims in the
event that you successfully challenge the validity of this release and prevail
in any claim under the Federal Discrimination Laws.

         ATG hereby waives and releases you from any claims relating to your
employment relationship with ATG of which ATG is aware or should be aware (in
the exercise of reasonable diligence) through the date on which an authorized
representative of ATG executes this Release of Claims.
<PAGE>
         This Release of Claims shall be deemed to have been made in
Massachusetts, and the validity, interpretation and performance of this Release
of Claims shall be governed by the internal law of Massachusetts, without giving
effect to conflict of law principles. Both parties agree that any action,
demand, claim or counterclaim relating to the terms and provisions of this
Release of Claims, or to its breach, shall be commenced in a court of competent
jurisdiction in Massachusetts and that venue shall lie exclusively in Middlesex
or Suffolk County Massachusetts. Both parties further agree that any action,
demand, claim or counterclaim shall be resolved by a judge alone, and both
parties hereby waive and forever renounce the right to a trial before a civil
jury. The provisions of this Release of Claims are severable, and if for any
reason any part hereof shall be found to be unenforceable, the remaining
provisions shall be enforced in full. By signing this Release of Claims, you
give ATG assurance that you have read and understood all of its terms; that you
have had a full and reasonable opportunity to consider its terms and that you
have signed this Release of Claims knowingly and voluntarily.

PAUL SHORTHOSE                          ART TECHNOLOGY GROUP, INC.

________________________________        By:  ___________________________
Paul Shorthose                               Edward Terino
                                             Senior Vice President and
                                             Chief Financial Officer

Dated:  ________________________        Dated:  ________________________
<PAGE>
                                                                       Exhibit B

By Hand

Board of Directors and Chief Executive Officer
Art Technology, Inc.
25 First Street

Cambridge, MA 02141

         I, Paul Shorthose, hereby resign my employment with Art Technology,
Inc. and acknowledge that I shall have no authority to bind the Company and or
represent myself as an employee or agent of the Company at any time. As of this
__ day of __________, 200_, I forever forfeit any rights accorded to employees
of the Company.

                                             ________________________________
                                             Paul Shorthose

                                             Dated:  ________________________
<PAGE>
                                                                       Exhibit C

Stock Option Status -
Paul Shorthose

<TABLE>
<CAPTION>
Grant Date        Grant      Shares       Strike     Vested as     Exercised  Outstanding   Outstanding      Accelerated   Cancelled
                  Number                  Price     of 12/31/02                             and unvested
----------        ------   ---------    ---------   -----------    ---------  -----------   -----------      -----------   ---------
<S>               <C>      <C>          <C>         <C>            <C>        <C>           <C>              <C>           <C>
6/22/1999           808      100,000    $    5.00       80,000       40,000       60,000       20,000               --       20,000
6/22/1999          808A      900,000    $    5.00      795,000      190,000      710,000      105,000           42,500       62,500
8/03/2001         4187A       50,000    $    2.13       31,250           --       50,000       18,750           18,750           --
10/23/2001         5147      100,000    $    1.31           --           --      100,000      100,000           12,500       87,500
10/23/2001        5147A      350,000    $    1.31      300,000           --      350,000       50,000           50,000           --
TOTAL                      1,500,000                 1,206,250      230,000    1,270,000      293,750          123,750      170,000

</TABLE>

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