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                                                                    EXHIBIT 10.4


                           Chordiant Software, Inc.

                1999 Non-Employee Directors' Stock Option Plan

                           Adopted November 30, 1999
                Approved By Stockholders _______________, _____

                 Effective Date: Upon Initial Public Offering

                            Termination Date:  None

1.   Purposes.

     (a)     Eligible Option Recipients.  The persons eligible to receive
Options are the Non-Employee Directors of the Company.

     (b)     Available Options.  The purpose of the Plan is to provide a means
by which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.

     (c)     General Purpose.  The Company, by means of the Plan, seeks to
retain the services of its Non-Employee Directors, to secure and retain the
services of new Non-Employee Directors and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.   Definitions.

     (a)     "Affiliate" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

     (b)     "Annual Grant" means an Option granted annually to all Non-Employee
Directors who meet the specified criteria pursuant to subsection 6(b) of the
Plan.

     (c)     "Annual Meeting" means the annual meeting of the stockholders of
the Company.

     (d)     "Board" means the Board of Directors of the Company.

     (e)     "Code" means the Internal Revenue Code of 1986, as amended.

     (f)     "Committee Grant" means an Option granted to a member of a
committee of the Board pursuant to subsection 6(c) of the Plan.

     (g)     "Common Stock" means the common stock of the Company.

     (h)     "Company" means Chordiant Software, Inc., a Delaware corporation.

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     (i)     "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate.  However, the term "Consultant" shall not include either
Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

     (j)     "Continuous Service" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated.  The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service.  For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service.  The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

     (k)     "Continuous Service" means that the Optionholder's service with the
Company as a Non-Employee Director is not interrupted or terminated.  The
Optionholder's Continuous Service shall be deemed to have terminated if the
Optionholder no longer is a Non-Employee Director.  However, merely becoming a
Consultant, for example, will not constitute an interruption of Continuous
Service if the Optionholder still is a Non-Employee Director.  The Board, in its
sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by the Board, including
sick leave, military leave or any other personal leave.

     (l)     "Director" means a member of the Board of Directors of the Company.

     (m)     "Disability" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate of the Company because
of the sickness or injury of the person.

     (n)     "Employee" means any person employed by the Company or an
Affiliate.  Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

     (o)     "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

     (p)     "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:

             (i)   If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a

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share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market (or
the exchange or market with the greatest volume of trading in the Common Stock)
on the last market trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable.

             (ii)  In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

     (q)     "Initial Grant" means an Option granted to a Non-Employee Director
who meets the specified criteria pursuant to subsection 6(a) of the Plan.

     (r)     "IPO Date" means the effective date of the initial public offering
of the Common Stock.

     (s)     "Non-Employee Director" means a Director who is not an Employee.

     (t)     "Nonstatutory Stock Option" means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

     (u)     "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (v)     "Option" means a Nonstatutory Stock Option granted pursuant to the
Plan.

     (w)     "Option Agreement" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be subject to the terms and conditions of
the Plan.

     (x)     "Optionholder" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

     (y)     "Plan" means this Chordiant Software, Inc. 1999 Non-Employee
Directors' Stock Option Plan.

     (z)     "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

     (aa)    "Securities Act" means the Securities Act of 1933, as amended.

3.   Administration.

     (a)     Administration by Board.  The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.

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     (b)     Powers of Board.  The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

             (i)   To determine the provisions of each Option to the extent not
specified in the Plan.

             (ii)  To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

             (iii) To amend the Plan or an Option as provided in Section 12.

             (iv)  Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company that are not in conflict with the provisions of the Plan.

     (c)     Effect of Board's Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4.   Shares Subject to the Plan.

     (a)     Share Reserve.  Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock and to the provisions of subsection
4(b) relating to automatic increases in the share reserve, the Common Stock that
may be issued pursuant to Options shall not exceed in the aggregate Seven
Hundred Thousand (700,000) shares of Common Stock.

     (b)     Automatic Increase to the Share Reserve.  The aggregate number of
shares of Common Stock that may be issued pursuant to Options granted under the
Plan as specified in subsection 4(a) hereof automatically shall be increased as
follows:

             (i)   For a period of ten (10) years, on October 1 of each year
(the "Calculation Date"), commencing in 2000, the aggregate number of shares of
Common Stock specified in subsection 4(a) hereof shall be increased by the
greater of (1) that number of shares of Common Stock equal to one-half of one
percent (0.5%) of the Diluted Shares Outstanding or (2) that number of shares of
Common Stock that have been made subject to Options granted under the Plan in
the prior 12-month period; provided, however, that each year the Board, in its
discretion, may provide for a smaller increase in the share reserve.

             (ii)  For purposes of subsection 4(b)(i) hereof, "Diluted Shares
Outstanding" shall mean, as of any date, (1) the number of outstanding shares of
Common Stock on such Calculation Date, plus (2) the number of shares of Common
Stock issuable upon such Calculation Date assuming the conversion of all
outstanding Preferred Stock and convertible

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notes, plus (3) the additional number of dilutive Common Stock equivalent shares
outstanding as the result of any options or warrants outstanding during the
fiscal year, calculated using the treasury stock method.

     (c)     Reversion of Shares to the Share Reserve.  If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such
Option shall revert to and again become available for issuance under the Plan.

     (d)     Source of Shares.  The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5.   Eligibility.

     The Options as set forth in section 6 automatically shall be granted under
the Plan to all Non-Employee Directors.

6.   Non-Discretionary Grants.

     Without any further action of the Board, each Non-Employee Director shall
be granted the following Options:

     (a)     Initial Grants.

             (i)   On the IPO Date, each person who is then a Non-Employee
Director automatically shall be granted an Initial Grant to purchase Twenty-five
Thousand (25,000) shares of Common Stock on the terms and conditions set forth
herein.

             (ii)  After the IPO Date, each person who is elected or appointed
for the first time to be a Non-Employee Director automatically shall, upon the
date of his or her initial election or appointment to be a Non-Employee Director
by the Board or stockholders of the Company, be granted an Initial Grant to
purchase Twenty-five Thousand (25,000) shares of Common Stock on the terms and
conditions set forth herein.

     (b)     Annual Grants.

             (i)   On the day following each Annual Meeting after the IPO Date,
each person who is then a Non-Employee Director automatically shall be granted
an Annual Grant to purchase Seven Thousand Five Hundred (7,500) shares of Common
Stock on the terms and conditions set forth herein.

             (ii)  If a person is first elected or appointed as a Non-Employee
Director during the 12-month period following the time specified in subsection
6(b)(i) but before the next Annual Meeting, then such person automatically shall
be granted an Annual Grant that is pro rated as to the number of shares and the
vesting schedule.  The pro rated number of shares shall be determined by
reducing Seven Thousand Five Hundred (7,500) shares of Common Stock by Six

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Hundred Twenty-five (625) shares of Common Stock for each full month that has
elapsed between the date of the prior Annual Meeting and the date of such
election or appointment.  The pro rated shares shall vest monthly after the date
of grant at the rate of Six Hundred Twenty-five (625) shares of Common Stock per
month.

     (c)      Committee Grants.

              (i)  On the day following each Annual Meeting after the IPO Date,
each Non-Employee Director who is then a member of a committee of the Board
automatically shall be granted, for each such committee, an Option to purchase
Five Thousand (5,000) shares of Common Stock.

              (ii) If a person is first appointed to a committee of the Board
during the 12-month period following the time specified in subsection 6(c)(i)
but before the next Annual Meeting, then such person automatically shall be
granted a Committee Grant that is pro rated as to the number of shares and the
vesting schedule. The pro rated number of shares shall be determined by reducing
Five Thousand (5,000) shares of Common Stock by Four Hundred Sixteen and
7/10/th/ (416.7) shares of Common Stock for each full month that has elapsed
between the date of the prior Annual Meeting and the date of such appointment
(rounded down to the nearest whole share). The pro rated shares shall vest
monthly after the date of grant at the rate of Four Hundred Seventeen (417)
shares of Common Stock per month.

7.   Option Provisions.

     Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan.  Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate.  Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:

     (a)      Term.  No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

     (b)      Exercise.  Each Option shall be exercisable immediately.

     (c)      Exercise Price.  The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted.  Notwithstanding the foregoing, the
exercise price for an Initial Grant made on the IPO Date shall be the price at
which the Common Stock is first sold to the public in the initial public
offering as specified in the final prospectus.  Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

     (d)      Consideration.  The purchase price of stock acquired pursuant to
an Option may be paid, to the extent permitted by applicable statutes and
regulations, in any combination of (i)

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cash or check, (ii) delivery to the Company of other Common Stock, (ii) deferred
payment or (iv) any other form of legal consideration that may be acceptable to
the Board. The purchase price of Common Stock acquired pursuant to an Option
that is paid by delivery to the Company of other Common Stock acquired, directly
or indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six (6) months (or such longer
or shorter period of time required to avoid a charge to earnings for financial
accounting purposes). At any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

     In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

     (e)      Transferability.  An Option shall not be transferable except (i)
by will or by the laws of descent and distribution and (ii) to the further
extent permitted under the rules for a Form S-8 registration statement under the
Securities Act. The Option shall be exercisable during the lifetime of the
Optionholder only by the Optionholder or a permitted transferee. Notwithstanding
the foregoing, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.

     (f)      Vesting Generally. Options shall vest and become exercisable as
follows:

              (i)   Initial Grants shall provide for vesting of 1/4th of the
shares one year after the date of the grant and 1/48th of the shares each month
thereafter.

              (ii)  Annual Grants shall provide for vesting of 1/12th of the
shares each month for 12 months after the date of the grant.

              (iii) Committee Grants shall provide for vesting of 1/12th of the
shares each month for 12 months after the date of the grant.

     (g)      Termination of Continuous Service.  In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service, or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement.  If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.

     (h)      Extension of Termination Date. If the exercise of the Option
following the termination of the Optionholder's Continuous Service (other than
upon the Optionholder's death or Disability) would be prohibited at any time
solely because the issuance of shares would

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violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option
set forth in subsection 7(a) or (ii) the expiration of a period of three (3)
months after the termination of the Optionholder's Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements.

     (i)      Disability of Optionholder.  In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the Option as
set forth in the Option Agreement.  If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

     (j)      Death of Optionholder.  In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death or (2) the expiration of the term of such Option as
set forth in the Option Agreement.  If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

8.   Covenants of the Company.

     (a)     Availability of Shares.  During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Options.

     (b)     Securities Law Compliance.  The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such
Option.  If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.

9.   Use of Proceeds from Stock.

     Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

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10.  Miscellaneous.

     (a)     Stockholder Rights.  No Optionholder shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Option unless and until such Optionholder has satisfied all
requirements for exercise of the Option pursuant to its terms.

     (b)     No Service Rights.  Nothing in the Plan or any instrument executed
or Option granted pursuant thereto shall confer upon any Optionholder any right
to continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

     (c)     Investment Assurances.  The Company may require an Optionholder, as
a condition of exercising or acquiring stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Optionholder's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (iii) the issuance of the shares upon the
exercise or acquisition of stock under the Option has been registered under a
then currently effective registration statement under the Securities Act or (iv)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.  The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

     (d)     Withholding Obligations.  The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means:  (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.

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11.  Adjustments upon Changes in Stock.

     (a)     Capitalization Adjustments.  If any change is made in the shares of
Common Stock subject to the Plan, or subject to any Option (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject both to the Plan pursuant to subsection 4(a) and to
the nondiscretionary Options specified in Section 5, and the outstanding Options
will be appropriately adjusted in the class(es) and number of securities and
price per share of Common Stock subject to such outstanding Options.  The Board
shall make such adjustments, and its determination shall be final, binding and
conclusive.  (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

     (b)     Change in Control.  In the event of a:  (1) a dissolution,
liquidation or sale of all or substantially all of the assets of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Common Stock outstanding immediately preceding
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise; or (4) the acquisition by any person,
entity or group within the meaning of Section 13(d) or 14(d) of the Exchange
Act, or any comparable successor provisions (excluding any employee benefit
plan, or related trust, sponsored or maintained by the Company or any Affiliate
of the Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of securities
of the Company representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors, then: (i) any surviving
corporation or acquiring corporation shall assume any Options outstanding under
the Plan or shall substitute similar options (including an option to acquire the
same consideration paid to the stockholders in the transaction described in this
subsection 11(b)) for those outstanding under the Plan, or (ii) in the event any
surviving corporation or acquiring corporation refuses to assume such Options or
to substitute similar options for those outstanding under the Plan, (A) with
respect to Options held by persons then performing services as Employees,
Directors or Consultants, the vesting of such Options (and, if applicable, the
time during which such Options may be exercised) shall be accelerated prior to
such event and the Options terminated if not exercised after such acceleration
and at or prior to such event, and (B) with respect to any other Options
outstanding under the Plan, such Options shall be terminated if not exercised
(if applicable) prior to such event.

     (c)     Acceleration of Vesting.  In the event of any transaction described
in subsection 11(b) (other than a merger or consolidation for the purpose of a
change in domicile) and subject to any limitation set forth in an Option, with
respect to Options held by persons then performing services as an Employee,
Director or Consultant of the Company, the vesting of such Options shall be
automatically accelerated immediately prior to such transaction such that each
such Option shall be exercisable for such number of vested shares that would
have been vested as of the date one year following the date of the transaction.

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In the event the terms of an Option provide for acceleration of vesting due to a
transaction described in subsection 11(b) or a similar transaction, the
acceleration provisions of this subsection 11(c) shall not be applicable to such
Option.

12.  Amendment of the Plan and Options.

     (a)     Amendment of Plan.  The Board at any time, and from time to time,
may amend the Plan.  However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.

     (b)     Stockholder Approval.  The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval.

     (c)     No Impairment of Rights.  Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

     (d)     Amendment of Options.  The Board at any time, and from time to
time, may amend the terms of any one or more Options; provided, however, that
the rights under any Option shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

13.  Termination or Suspension of the Plan.

     (a)     Plan Term.  The Board may suspend or terminate the Plan at any
time. No Options may be granted under the Plan while the Plan is suspended or
after it is terminated.

     (b)     No Impairment of Rights. Suspension or termination of the Plan
shall not impair rights and obligations under any Option granted while the Plan
is in effect except with the written consent of the Optionholder.

14.  Effective Date of Plan.

     The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

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15.  Choice of Law.

     All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of Delaware, without regard
to such state's conflict of laws rules.

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                           CHORDIANT SOFTWARE, INC.
                1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                            STOCK OPTION AGREEMENT
                          (NONSTATUTORY STOCK OPTION)


     Pursuant to your Stock Grant Notice ("Grant Notice") and this Stock Option
Agreement, Chordiant Software, Inc. (the "Company") has granted you an option
under its 1999 Non-Employee Directors' Stock Option Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.

     The details of your option are as follows:

     1.   Vesting. Subject to the limitations contained herein, your option will
vest as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.

     2.   Number of Shares and Exercise Price. The number of shares of Common
Stock subject to your option at your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for Capitalization Adjustments,
as provided in the Plan.

     3.   Exercise. Subject to the provisions of your option, you may elect at
any time that is both (i) during the period of your Continuous Service and (ii)
during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:

          (a)  a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;

          (b)  any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement; and

          (c)  you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred.

     4.   Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or by one or more of the following:







<PAGE>

         (a)  Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under  Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.

         (b)  Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery of already-
owned shares of Common Stock either that you have held for the period required
to avoid a charge to the Company's reported earnings (generally six months) or
that you did not acquire, directly or indirectly from the Company, that are
owned free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Fair Market Value on the date of exercise. "Delivery" for
these purposes, in the sole discretion of the Company at the time you exercise
your option, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the
Company of Common Stock to the extent such tender would violate the provisions
of any law, regulation or agreement restricting the redemption of the Company's
stock.

     5.  Whole Shares. You may exercise your option only for whole shares of
Common Stock.

     6.  Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

     7.  Term. The term of your option commences on the Date of Grant and
expires upon the earliest of the following:

         (a)  three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three- (3-) month period your option is not exercisable solely
because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;

         (b)  twelve (12) months after the termination of your Continuous
Service due to your Disability;
<PAGE>

         (c)  eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates; or

         (d)  the Expiration Date indicated in your Grant Notice.

     8.  Exercise.

         (a)  You may exercise your option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

         (b)  By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of the exercise of your
option.

     9.  Transferability.

         (a)  Your option is not transferable, except (i) by will or by the laws
of descent and distribution, (ii) by instrument to an inter vivos or
testamentary trust, in a form accepted by the Company, in which the option is to
be passed to beneficiaries upon the death of the trustor (settlor) and (iii) by
gift, in a form acceptable to the Company, to any person who is then eligible to
receive such securities, pursuant to the regulations then in place for a Form S-
8 registration statement under the Securities Act, by transfer from you,
including to your "family members." Notwithstanding the foregoing, by delivering
written notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.

         (b)  For purposes of the Form S-8 regulations, the term "family
members" currently means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and includes adoptive relationships, any person sharing your household (other
than a tenant or employee), a trust in which these persons have more than fifty
percent (50%) of the beneficial interest, a foundation in which these persons
(or you) control the management of the assets, and any other entity in which
these people (or you) own more than fifty percent (50%) of the voting interests.

         (c) Your option is exercisable during your life only by you or a
transferee satisfying the above-stated conditions. The right of a transferee to
exercise the transferred portion of your option after termination of your
Continuous Service shall terminate in accordance with your right to exercise
your option as specified in your option. In the event that your Continuous
Service terminates due to your death, your transferee will be treated as a
person who acquired the right to exercise your option by bequest or inheritance.
In addition to the foregoing, the Company may require, as a condition of the
transfer of your option to a trust or by gift, that your transferee enter into
an option transfer agreement provided by, or acceptable to, the Company.
<PAGE>

The terms of your option shall be binding upon your transferees, executors,
administrators, heirs, successors, and assigns.

     10.  Option Not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

    11.  Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

    12.  Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.