Employment Agreement - Ariba Inc. and James Steele

January 22, 2001


Mr. James Steele
210 Forrester Road
Los Gatos, CA  95030

Dear Jim:

On behalf of Ariba, Inc. I am pleased to extend this invitation to you to join
Ariba in the capacity of Executive Vice President Worldwide Sales and Service.
The Ariba team is very impressed with your qualifications and believes that
attracting outstanding individuals like you is key to our success.

Your base pay as Executive Vice President Worldwide Sales and Service initially
will be $25,000.00 per month payable in arrears in two equal portions on the
15th and last working day of each month. You will be eligible to participate in
the FY2001 Executive Bonus Plan. Under this plan you will receive a cash bonus
that is targeted at $300,000.00 on an annualized basis depending on the
completion of specific goals and objectives.

Subject to the approval of Ariba's Compensation Committee, you will be granted
an option to purchase 875,000 shares of Ariba's Common Stock (the "First
Option"). The exercise price per share will be equal to the fair market value
per share on the date the First Option is granted or on your first day of
employment, whichever is later. The First Option will be subject to terms and
conditions substantially similar to those applicable to options granted under
Ariba's 1999 Equity Incentive Plan, as described in that Plan and the applicable
stock option agreement. The First Option will become exercisable for 25% of the
First Option shares after 12 months of continuous service and the balance in
equal monthly installments over the next 36 months of continuous service, as
described in the applicable stock option agreement.

Subject to the discretion of Ariba's Compensation Committee, you will be granted
an option to purchase 100,000 shares of Ariba Common Stock (the "Second Option")
at a future date. The exercise price per share will be equal to the fair market
value per share on the date the Second Option is granted. The Second Option will
be subject to terms and conditions substantially similar to those applicable to
options granted under Ariba's 1999 Equity Incentive Plan, as described in that
Plan and the applicable stock option agreement. However, the Second Option may
vest on an accelerated basis if so determined by the Compensation Committee on
the date of grant.

You will be provided with benefit choices, including medical, dental, vision,
life and disability insurance coverage for you and your dependents, as well as
participation in the 401(k) and Employee Stock Purchase plans. The provisions of
these and other benefits offered by Ariba are explained more fully in the
enclosed Employee Benefits Summary. To aid in the timely processing of your
benefits enrollment form, it is important that you complete and sign the
enclosed Personal Data form, omitting the Qualifying Life Change section and
return it with your signed offer letter.

You will be required to sign the Ariba Employee Agreement. In this document you
will be asked to agree to the following: 1) to hold the Company's proprietary
information confidential during and 

 
James Steele
January 22, 2001
Page 2


after employment; 2) that you have not brought any former Employer's proprietary
information or any of their clients' proprietary information with you; and 3)
that you will agree to assign to the Company any patentable inventions that you
created through your work with the Company.

Employment with Ariba is for no specific period of time. As a result, either you
or Ariba may terminate your employment at any time for any reason, with or
without cause. This is the full and complete agreement between you and the
company regarding this term. This at-will employment relationship may only be
changed in a document signed by both you and Ariba's Chief Executive Officer.

As required by federal law, Ariba must verify that its employees are eligible to
work in the United States. On your first day of employment, you will be required
to certify that you are a citizen or lawful permanent resident or an alien
authorized to work in the U.S. Please bring your Employment Eligibility
Verification (Form I-9) and acceptable supporting documents (as listed on the
reverse side of the I-9 Form) to your first day of work. If you expect to have
any difficulty in producing these documents, please contact our Human Resources
Department prior to your employment to discuss alternative suitable
documentation. Ariba understands that you may need to obtain an employment visa
to undertake this employment. In the event your employment needs visa
sponsorship, your employment is contingent upon you receiving the appropriate
visa petitions through the Immigration and Naturalization Service.

Upon acceptance, please sign both copies of the Offer Letters and Employee
Agreements. Retain one copy each for your personal records. Please return one
signed and completed copy of the Offer Letter, Employee Agreement, and Personal
Data form to the Ariba Talent Acquisition Department in the envelope provided.
Please note that these documents must be received, by mail or fax, prior to your
start of employment with Ariba. This letter supersedes any prior representations
or agreements written, verbal or otherwise regarding the terms described above.
This offer will remain open for five days from the date of this letter.

Jim I am looking forward to working with you in continuing to build a company
that provides great value to its customers and employees. I believe that you
have much to offer and much to gain - personally, professionally, and
financially - in sharing this exciting opportunity.

Sincerely,

/s/ Larry Mueller

Larry Mueller
President & COO
Ariba, Inc.

Accepted:
/s/ James W. Steele                                  1-22-01                    
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James Steele                                                  Date

Planned start date:       2-05-01
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