<PAGE>

                                                                   Exhibit 10.31

                          CROSSWORLDS SOFTWARE, INC.

                    SEPARATION AGREEMENT AND MUTUAL RELEASE

     This Separation Agreement ("Agreement") is made by and between CrossWorlds
Software, Inc., a Delaware corporation (the "Company"), and Mark R. Kent ("Mr.
Kent" or "Employee").

     WHEREAS, Mr. Kent is employed by the Company; and

     WHEREAS, the Company and Mr. Kent have mutually agreed to terminate the
employment relationship, to release each other from any claims arising from or
related to the employment relationship and to enter into a consulting
arrangement.

     NOW, THEREFORE, in consideration of the mutual promises made herein, the
Company and Mr. Kent (collectively referred to as the "Parties") hereby agree as
follows:

     1.   Resignation and Termination of Employment.  Mr. Kent and the Company
          -----------------------------------------
acknowledge and agree that Mr. Kent resigned as Chief Financial Officer and
Senior Vice President Finance of the Company (and as an officer and/or director
of any other entity which may be deemed to be an affiliate of the Company)
effective January 25, 2001 (the "Resignation Date") and that Mr. Kent will
terminate his employment with the Company effective on March 15, 2001 (the
"Termination Date").  For the period from February 1 through the Termination
Date, Mr. Kent will be out of the office using his accrued but unused vacation
time but will make himself reasonably available during such period to provide
transition assistance as requested by the Company.

     2.   Consulting Arrangement.  In consideration for the release of claims
          ----------------------
set forth below and other obligations under this Agreement, and subject to the
terms of this Agreement, the Company agrees to retain Mr. Kent as a consultant
for the period from March 16, 2001 through July 15, 2001 (the "Consulting
Period"), to perform such services as may reasonably be requested in writing by
the Company (the "Consulting Arrangement"). The terms of the Consulting
Arrangement are more fully described in Exhibit A attached hereto.
                                        ---------

     3.   Employee Benefits.
          -----------------

          (a)  Mr. Kent shall continue to receive the Company's life, medical,
dental and vision insurance benefits at Company expense until March 31, 2001,
which date shall be the "qualifying event" date under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA").

          (b)  The Company shall reimburse Mr. Kent for all reasonable business
expenses incurred by Mr. Kent up until the Termination Date in accordance with
Company policy.

     4.   Stock Options.
          -------------

          (a)  Vesting.  Mr. Kent currently holds seven (7) options granted
               -------
under the CrossWorlds Software, Inc. 1997 Stock Plan and the CrossWorlds
Software, Inc. 1999 Executive Stock Plan (the "Options"). A detailed listing of
the Options is provided in Exhibit B attached hereto. Pursuant to the terms of
                           ---------
the existing stock option agreements (the "Option Agreements") for the Options
and the provisions of the stock plan to which the Options are subject, the
Options shall continue to vest through the Termination Date. In addition, as
described in Exhibit A attached hereto, the Options shall continue to vest
             ---------
during the Consulting Period at the rate of 1/2 the number of shares that would
have vested had Mr. Kent remained a full-time employee or consultant of the
Company through the end of the Consulting Period. Mr. Kent acknowledges that the
vested Options must be exercised within either thirty (30) or ninety (90) days,
as indicated in the applicable Option Agreement, after the end of the Consulting
Period.

          (b)  Change of Control.  Mr. Kent acknowledges and agrees that
               -----------------
termination of his employment under this Agreement is not in connection with a
Change of Control of the Company, as such term is
<PAGE>

defined in certain documents related to a Change of Control, including without
limitation, Mr. Kent's February 2000 Employment Agreement with the Company, and
the minutes of the meetings of the Company's Board of Directors held in October
1999 and December 2000 (collectively, the "Change of Control Documents").
Accordingly, in the event there is a Change of Control of the Company following
the Resignation Date, Mr. Kent shall not be entitled to any of the benefits
described in the Change of Control Documents.

          (c)  General.  Except as set forth in this Section 4 and in the Option
               -------
Agreements, Mr. Kent acknowledges that he has no right, title or interest in or
to any shares of the Company's capital stock under the Option Agreements, the
Change of Control Documents, or any other agreement (oral or written) with the
Company.

     5.   No Other Payments Due.  Mr. Kent and the Company agree that the
          ---------------------
Company shall pay to Mr. Kent his regular salary by reduction of his accrued PTO
through the Termination Date in accordance with the Company's normal payroll
practices, and that the Company shall pay to Mr. Kent on or before the
Termination Date all salary, accrued PTO and other sums as are then due to Mr.
Kent. By executing this Agreement, Mr. Kent hereby acknowledges receipt of all
such payments as received, or to be received, and acknowledges that, in light of
the payment by the Company of all wages due to Mr. Kent, California Labor Code
Section 206.5 is not applicable to the Parties hereto. That section provided in
pertinent part as follows:

          No employer shall require the execution of any release of any claim or
          right on account of wages due, or to become due, or made as an advance
          on wages to be earned, unless payment of such wages has been made.

     6.   Release of Claims.  In consideration for the obligations of both
          -----------------
parties set forth in this Agreement, Mr. Kent and the Company, on behalf of
themselves, and their respective heirs, executors, officers, directors,
employees, investors, stockholders, administrators and assigns, hereby fully and
forever release each other and their respective heirs, executors, officers,
directors, employees, investors, stockholders, administrators, parent and
subsidiary corporations, predecessor and successor corporations and assigns, of
and from any claim, duty, obligation or cause of action relating to any matters
of any kind, whether presently known or unknown, suspected or unsuspected, that
any of them may possess arising from any omissions, acts or facts that have
occurred up until and including the date of this Agreement including, without
limitation:

          (a)  any and all claims relating to or arising from Mr. Kent's
employment relationship with the Company and the termination of that
relationship;

          (b)  any and all claims relating to, or arising from, Mr. Kent's right
to purchase, or actual purchase of shares of stock of the Company;

          (c)  any and all claims for wrongful discharge of employment; breach
of contract, both express and implied; breach of a covenant of good faith and
fair dealing, both express and implied, negligent or intentional infliction of
emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage;
negligence; and defamation;

          (d)  any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, and the Americans with Disabilities Act of 1990;

          (e)  any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and

          (f)  any and all claims for attorneys' fees and costs.

     The Company and Mr. Kent agree that the release set forth in this Section 6
shall be and remain in effect in all respects as a complete general release as
to the matters released.  This release does not extend to any obligations
incurred or specified under this Agreement.

                                      -2-
<PAGE>

     7.   Acknowledgment of Waiver of Claims under ADEA.  Mr. Kent acknowledges
          ---------------------------------------------
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Mr. Kent and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement. Mr. Kent acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Mr. Kent was already entitled. Mr. Kent further
acknowledges that he has been advised by this writing that (a) he should consult
with an attorney prior to executing this Agreement; (b) he has at least twenty-
                 -----
one (21) days within which to consider this Agreement; (c) he has seven (7) days
following his execution of this Agreement to revoke the Agreement (the
"Revocation Period"). This Agreement shall not be effective until the Revocation
Period has expired. Nothing in this Agreement prevents or precludes Mr. Kent
from challenging or seeking a determination in good faith of the validity of
this waiver under the ADEA, nor does it impose any condition precedent,
penalties or costs for doing so, unless specifically authorized by federal law.

     8.   Civil Code Section 1542.  The Parties represent that they are not
          -----------------------
aware of any claim by either of them other than the claims that are released by
this Agreement. Mr. Kent and the Company acknowledge that they are familiar with
the provisions of California Civil Code Section 1542, which provides as follows:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

     Mr. Kent and the Company, being aware of said Code section, agree to
expressly waive any rights they may have thereunder, as well as under any other
statute or common law principles of similar effect.

     9.   Employee Covenants.
          ------------------

          (a)  General.  Mr. Kent agrees that for all periods described in this
               -------
Agreement, he shall continue to conduct himself in a professional manner that is
supportive of the business of the Company.

          (b)  Confidential Information.  Mr. Kent represents and warrants that
               ------------------------
he has not breached his obligations to the Company under the terms of the
Employment, Confidential Information and Invention Assignment Agreement he
executed March 19, 1999 (the "Confidentiality Agreement"), a copy of which is
attached hereto as Exhibit C.  Mr. Kent understands and agrees that his
                   ---------
obligations to the Company under the Confidentiality Agreement survive the
termination of his relationship with the Company under this Agreement.  Mr. Kent
further agrees to execute the Termination Certification attached as Exhibit B to
the Confidentiality Agreement.

          (c)  SEC Reporting.  Mr. Kent will cooperate with the Company in
               --------------
providing information with respect to all reports required to be filed by the
Company with the Securities and Exchange Commission as they relate to required
information with respect to Mr. Kent.

          (d)  Noncompetition.  During the period from the Resignation Date
               ---------------
through the end of the Consulting Period, Mr. Kent agrees that he shall not
provide services (as an employee, director, contractor, consultant or otherwise)
to a direct competitor of CrossWorlds, as determined in CrossWorlds' discretion.
Upon determining that he may wish to provide services to an entity that may be a
direct competitor of CrossWorlds, Mr. Kent may notify CrossWorlds in writing of
the same, and CrossWorlds will respond within a reasonable time as to whether,
in CrossWorlds' discretion, such entity is a direct competitor of CrossWorlds.

     10.  Authority.  The Company represents and warrants that the undersigned
          ---------
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.  Mr.
Kent represents and warrants that he has the capacity to act on his own behalf
and on behalf of all who might claim through his to bind them to the terms and
conditions of this Agreement.  Each Party warrants and represents that there are
no liens or claims of lien or assignments in law or equity or otherwise of or
against any of the claims or causes of action released herein.

                                      -3-
<PAGE>

     11.  No Representations.  Neither Party has relied upon any representations
          ------------------
or statements made by the other Party hereto which are not specifically set
forth in this Agreement.

     12.  Severability.  In the event that any provision hereof becomes or is
          ------------
declared by a court or other tribunal of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.

     13.  Arbitration.  The Parties shall attempt to settle all disputes arising
          -----------
in connection with this Agreement through good faith consultation.  In the event
no agreement can be reached on such dispute within fifteen (15) days after
notification in writing by either Party to the other concerning such dispute,
the dispute shall be settled by binding arbitration to be conducted in San Mateo
County, California before the American Arbitration Association, or by a judge to
be mutually agreed upon.  The arbitration decision shall be final, conclusive
and binding on both Parties and any arbitration award or decision may be entered
in any court having jurisdiction.  The Parties agree that the prevailing party
in any arbitration shall be entitled to injunctive relief in any court of
competent jurisdiction to enforce the arbitration award.  The Parties further
agree that the prevailing Party in any such proceeding shall be awarded
reasonable attorneys' fees and costs.  This Section 13 shall not apply to the
Confidentiality Agreement.  The parties hereby waive any rights they may have to
trial by jury in regard to arbitrable claims.

     14.  Indemnification.  The Indemnification Agreement entered into by Mr.
          ---------------
Kent and the Company on March 22, 1999, a copy of which is attached hereto as

Exhibit D, shall remain in effect following the Termination Date in accordance
---------
with the terms of such agreement.

     15.  Entire Agreement.  This Agreement, and the exhibits hereto, represent
          ----------------
the entire agreement and understanding between the Company and Mr. Kent
concerning Mr. Kent's separation from the Company, and supersede and replace any
and all prior agreements and understandings concerning Mr. Kent's relationship
with the Company and his compensation by the Company.

     16.  No Oral Modification.  This Agreement may only be amended in writing
          --------------------
signed by Mr. Kent and the Company.

     17.  Governing Law.  This Agreement shall be governed by the laws of the
          --------------
State of California, without regard to its conflicts of law provisions.

     18.  Effective Date.  This Agreement is effective upon the expiration of
          --------------
the Revocation Period described in Section 7 and such date is referred to herein
as the "Effective Date."

     19.  Counterparts.  This Agreement may be executed in counterparts, and
          ------------
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

     20.  Assignment.  This Agreement may not be assigned by Mr. Kent or the
          ----------
Company without the prior written consent of the other party.  Notwithstanding
the foregoing, this Agreement may be assigned by the Company to a corporation
controlling, controlled by or under common control with the Company without the
consent of Mr. Kent.

     21.  Voluntary Execution of Agreement.  This Agreement is executed
          --------------------------------
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims.  The Parties
acknowledge that:

          (a)  they have read this Agreement;

          (b) they have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

                                      -4-
<PAGE>

          (c)  they understand the terms and consequences of this Agreement and
of the releases it contains; and

          (d)  they are fully aware of the legal and binding effect of this
Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Separation Agreement and
Mutual Release on the respective dates set forth below.

                                    CrossWorlds Software, Inc.

Dated as of March 9, 2001           By: /s/ Alfred J. Amoroso
                                       -----------------------------
                                    Title:  President & CEO

                                    Mark R. Kent, an individual

Dated as of March 9, 2001           /s/ Mark R. Kent
                                    --------------------------------
                                    Mark R. Kent

                                      -5-
<PAGE>

                                   EXHIBIT A
                                   ---------

                        TERMS OF CONSULTING ARRANGEMENT

     Scope of Services: Consulting and advice related to transition of the
investor relations function and to support of corporate development activities.

     Compensation:  A $15,000 monthly retainer, payable upon submission of
monthly invoices by Mr. Kent, and continued vesting of Mr. Kent's Options at the
rate of  1/2 the number of Option shares that would otherwise have vested during
the Consulting Period had Mr. Kent remained a full-time employee or consultant
to the Company.  Such vesting shall occur over the Consulting Period in
accordance with the vesting schedule set forth in each Option Agreement issued
to Mr. Kent by the Company (the details of which are set forth in Exhibit B of
                                                                  ---------
this Agreement).

     Term:  March 16, 2001 - July 15, 2001, subject to extension by mutual
written agreement of the Company and Mr. Kent.

                                      -6-
<PAGE>

                                   EXHIBIT B


CrossWorlds Software, Inc.       STOCK OPTIONS GRANTED         Page: 1
                                 FROM 1/1/96 TO 12/31/00       File: Granted
                                                               Date: 3/7/01
                                                               Time: 11:27:36 AM

                                 STATUS - Active and Inactive

<TABLE>
<CAPTION>
                      Option    Option                                        Total
?        ID           Number    Date       Plan  Shares       Market Value    Market Value    Price      Total Price    Compensation
-------  ------------ --------- ---------  ----- -----------  --------------  --------------  ---------- -------------- ------------
<S>      <C>          <C>       <C>        <C>   <C>          <C>             <C>             <C>        <C>            <C>
t, Mark  ###-##-####  00001215    8/12/99  1997       83,333     $    6.6000  $   549,997.80  $   6.6000 $   549,997.80    $    0.00
t, Mark  ###-##-####  00001495   10/11/99  99XR       66,667     $    6.6000  $   440,002.20  $   6.6000 $   440,002.20    $    0.00
t, Mark  ###-##-####  00001051    3/22/99  1997       91,813     $    5.2500  $   482,018.25  $   5.2500 $   482,018.25    $    0.00
t, Mark  ###-##-####  00001052    3/22/99  1997      158,186     $    5.2500  $   830,476.50  $   5.2500 $   830,476.50    $    0.00
t, Mark  ###-##-####  00002114    8/23/00  97A         7,373     $   16.0000  $   117,968.00  $  16.0000 $   117,968.00    $    0.00
t, Mark  ###-##-####  00002115    8/23/00  97A        67,627     $   16.0000  $ 1,082,032.00  $  16.0000 $ 1,082,032.00    $    0.00
t, Mark  ###-##-####  00002530   12/13/00  97A        92,133     $    5.4375  $   500,973.19  $   5.4375 $   500,973.19    $    0.00
                                                 -----------                  --------------             -------------- ------------
                                         TOTALS      567,132                  $ 4,003,467.94             $ 4,003,467.94    $    0.00
                                                          Hi     $   16.0000             Hi    $ 16.0000
                                                          Avg    $    7.0591             Avg   $  7.0591
                                                          Lo     $    5.2500             Lo    $  5.2500
</TABLE>




<PAGE>

                                   Exhibit C

                                                              Employee Agreement

                           CROSSWORLDS SOFTWARE, INC.
    Employment, Confidential Information and Invention Assignment Agreement

     As a condition of my employment with CrossWorlds Software, Inc., its
subsidiaries, affiliates, successors or assigns (together the "Company"), and in
                                                               -------
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:

     1.   Employment.
          ----------

          (a)  I understand and acknowledge that my employment with the Company
is for an unspecified duration and constitutes "at-will" employment.  I
acknowledge that this employment relationship may be terminated at any time,
with or without good cause or for any or no cause, at the option either of the
Company or myself, with or without notice.

          (b)  I agree that, during the term of my employment with the Company,
I will not engage in any other employment, occupation, consulting or other
business activity directly related to the business in which the Company is now
involved or becomes involved during the term of my employment, nor will I engage
in any other activities that conflict with my obligations to the Company.

          (c)  I agree to adhere to the Company's Conflict of Interest
Guidelines attached as Exhibit A hereto.
                       ---------

     2.   Confidential Information.
          ------------------------

          (a)  Company Information.  I agree at all times during the term of my
               -------------------
employment and thereafter to hold in strictest confidence, and not to use except
for the benefit of the Company or to disclose to any person, firm or corporation
without written authorization of the Board of Directors of the Company, any
Confidential Information of the Company.  I understand that "Confidential
                                                             ------------
Information" means any Company proprietary information, technical data, trade
-----------
secrets or know-how, including, but not limited to, research, product plans,
products, services, customer lists and customers (including, but not limited to,
customers of the Company on whom I called or with whom I became acquainted
during the term of my employment), markets, software, developments, inventions,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, marketing, finances or other business information
disclosed to me by the Company either directly or indirectly in writing, orally
or by drawings or observation of parts or equipment.  I further understand that
Confidential Information does not include any of the foregoing items which has
become publicly known and made generally available through no wrongful act of
mine or of others who were under confidentiality obligations as to the item or
items involved.

          (b)  Former Employer Information.  I agree that I will not, during my
               ---------------------------
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.

          (c)  Third Party Information.  I recognize that the Company has
               -----------------------
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes.  I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.

     3.   Inventions.
          ----------

          (a)  Assignment of Inventions.  I agree that I will promptly make full
               ------------------------
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title, and interest in and to any and all inventions, original works
of authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, which I may
solely or jointly conceive or develop or reduce to practice, or cause to be
conceived or developed or reduced to practice, during the period of time I am in
the employ of the Company (collectively referred to as "Inventions") and which
                                                        ----------
(i) are developed using the equipment, supplies, facilities or Confidential
Information of the Company, (ii) result from or are suggested by work performed
by me for the Company, or (iii) relate (or, for employees in Kansas, Minnesota
or Washington only, which directly relate) to the business, or to the actual or
demonstrably anticipated research or development of the Company will be the sole
and exclusive property of the Company, and I will and hereby do assign all my
right, title and interest in such Inventions to the Company, except as provided
in Section 3(f).  I further acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of and
during the period of my employment with the Company and which are protectible by
copyright are "works made for hire," as that term is defined in the United
States Copyright Act.

          (b)  Patent and Copyright Registrations.  I agree to assist the
               ----------------------------------
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for
<PAGE>

and obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such Inventions, and any copyrights, patents, mask work
rights or other intellectual property rights relating thereto. I further agree
that my obligation to execute or cause to be executed, when it is in my power to
do so, any such instrument or papers shall continue after the termination of
this Agreement. If the Company is unable because of my mental or physical
incapacity or for any other reason to secure my signature to apply for or to
pursue any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to
the Company as above, then I hereby irrevocably designate and appoint the
Company and its duly authorized officers and agents as my agent and attorney in
fact, to act for and in my behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.

          (c)  Maintenance of Records.  I agree to keep and maintain adequate
               ----------------------
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company.  The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company.  The records will be available to and remain the sole
property of the Company at all times.

          (d)  Inventions Assigned to the United States.  I agree to assign to
               ----------------------------------------
the United States government all my right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.

          (e)  Inventions Retained and Licensed.  I provide below a list of all
               --------------------------------
inventions, original works of authorship, developments, improvements, and trade
secrets which were made by me prior to my employment with the Company
(collectively referred to as "Prior Inventions"), which belong to me, which
                              ----------------
relate to the Company's proposed business, products or research and development,
and which are not assigned to the Company hereunder; or, if no such list is
attached, I represent that there are no such Prior Inventions.  If in the course
of my employment with the Company, I incorporate into a Company product, process
or machine a Prior Invention owned by me or in which I have an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.

     Prior Inventions:
                                                       Identifying Number
     Title                    Date                     or Brief Description

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

          (f)  Exception to Assignments.  I understand that the provisions of
               ------------------------
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention that (i) I develop entirely on my own time; and (ii) I develop
without using Company equipment, supplies, facilities, or trade secret
information; and (iii) do not result from any work performed by me for the
Company; and (iv) do not relate (or, for employees in Kansas, Minnesota or
Washington only, do not directly relate) at the time of conception or reduction
                        --------
to practice to the Company's business, or to its actual or demonstrably
anticipated research or development.  Any such invention will be owned entirely
by me, even if developed by me during the time period in which I am employed by
the Company.* I will advise the Company promptly in writing of any inventions
that I believe meet the criteria for exclusion set forth herein and are not
otherwise disclosed pursuant to Section 3(e) above.

          (g)  Return of Company Documents.  I agree that, at the time of
               ---------------------------
leaving the employ of the Company, I will deliver to the Company (and will not
keep in my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence, specifications,
drawings blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment, I agree
to sign and deliver the "Termination Certificate" attached hereto as
                         -----------------------
Exhibit B.
---------

* For employees in California only, the Company acknowledges the applicability
of Section 2870 of the California Labor Code, which provides: "Any provision in
an employment agreement which provides that an employee shall assign, or offer
to assign, any of his or her rights in an invention to his or her employer shall
not apply to an invention that the employee developed entirely on his or her own
time without using the employer's equipment, supplies, facilities, or trade
secret information except for those inventions that either: (i) relate at the
time of conception or reduction to practice of the invention to the employer's
business, or actual or demonstrably anticipated research or development of the
employer and (ii) result from any work performed by the employee for the
employer. To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."

                                      -3-
<PAGE>

     4.   Notification of New Employer. In the event that I leave the employ of
          ----------------------------
the Company, I hereby grant consent to notification by the Company to my new
employer or consulting client about my rights and obligations under this
Agreement.

     5.   No Solicitation of Employees. In consideration for my employment by
          ----------------------------
the Company and other valuable consideration, receipt of which is hereby
acknowledged, I agree that during the period of my association with the Company
as an employee, officer and/or director and a period of twelve (12) months
thereafter, I shall not solicit the employment of any person who shall then be
employed by the Company (as an employee or consultant) or who shall have been
employed by the Company (as an employee or consultant) within the prior twelve
(12) month period, on behalf of myself or any other person, firm, corporation,
association or other entity, directly or indirectly.

     6.   Representations. I represent that my performance of all the terms of
          ---------------
this Agreement will not breach any agreement to keep in confidence propriety
information acquired by me in confidence or in trust prior to my employment by
the Company. I have not entered into, and I agree I will not enter into, any
oral or written agreement in conflict herewith. I agree to execute any proper
oath or verify any proper document required to carry out the terms of this
Agreement.

     7.   Arbitration and Equitable Relief.
          --------------------------------

          (a)  Arbitration.  Except as provided in Section 7(b) below, I agree
               -----------
that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in San Mateo County, California, in accordance
with the rules then in effect of the American Arbitration Association.  The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration.  Judgment may be entered on the arbitrator's
decision in any court having jurisdiction.  The Company and I shall each pay
one-half of the costs and expenses of such arbitration, and each of us shall
separately pay our counsel fees and expenses.

          (b)  Equitable Remedies.  I agree that it would be impossible or
               ------------------
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 2, 3 and 5 herein.  Accordingly, I agree that if
I breach any such Section, the Company will have available, in addition to any
other right or remedy available, the right to obtain an injunction from a court
of competent jurisdiction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement.  I further agree
that no bond or other security shall be required in obtaining such equitable
relief and I hereby consent to the issuance of such injunction and to the
ordering of specific performance.

     8.   General Provisions.
          ------------------

          (a)  Governing Law; Consent to Personal Jurisdiction.  This Agreement
               -----------------------------------------------
will be governed by the laws of the State of California as they apply to
contracts entered into and wholly to be performed within such State.  I hereby
expressly consent to the nonexclusive personal jurisdiction and venue of the
state and federal courts located in the federal Northern District of California
for any lawsuit filed there against me by the Company arising from or relating
to this Agreement.

          (b)  Entire Agreement.  This Agreement sets forth the entire agreement
               ----------------
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us.  No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in writing signed by the party to be charged.  Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.

          (b)  Severability.  If one or more of the provisions in this Agreement
               ------------
are deemed void by law, then the remaining provisions will continue in full
force and effect.

          (c)  Successors and Assigns.  This Agreement will be binding upon my
               ----------------------
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.

Date:  3/19, 1999                  /s/ Mark R. Kent
                                   ---------------------------------------------
                                   Signature


                                   ---------------------------------------------
Witness

Name (Print)

                                      -3-
<PAGE>

                                   EXHIBIT A
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.

                        Conflict of Interest Guidelines

     It is the policy of CrossWorlds Software, Inc. and its subsidiaries and
affiliates (together, the "Company") to conduct its affairs in strict compliance
                           -------
with the letter and spirit of the law and to adhere to the highest principles of
business ethics.  Accordingly, all officers, employees and independent
contractors must avoid activities which are in conflict, or give the appearance
of being in conflict, with these principles and with the interests of the
Company.  The following are potentially compromising situations which must be
avoided.  Any exceptions must be reported to the President and written approval
for continuation must be obtained.

     1.   Revealing confidential information to outsiders or misusing
confidential information.  Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended.  (The Employment, Confidential Information and Invention
Assignment Agreement elaborates on this principle and is a binding agreement.)

     2.   Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.

     3.   Participating in civic or professional organizations that might
involve divulging confidential information of the Company.

     4.   Initiating or approving any form of personal or social harassment of
employees.

     5.   Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.

     6.   Borrowing from or lending to employees, customers or suppliers.

     7.   Acquiring real estate of interest to the Company.

     8.   Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.

     9.   Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.

     10.  Making any unlawful agreement with distributors with respect to
prices.

     11.  Improperly using or authorizing the use of any inventions which are
the subject of patent claims of any other person or entity.

     12.  Engaging in any conduct which is not in the best interest of the
Company.

     Each officer, employee and independent contractor must take every necessary
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review.  Violations of this conflict of
interest policy may result in discharge without warning.
<PAGE>

                                   EXHIBIT B
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.

                            Termination Certificate

     This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to CrossWorlds Software, Inc., its subsidiaries, affiliates,
successors or assigns (together, the "Company").
                                      -------

     I further certify that I have complied with all the terms of the Company's
Employment, Confidential Information and Invention Assignment Agreement signed
by me (the "Employee Agreement"), including the reporting of any inventions and
            ------------------
original works of authorship (as defined therein) conceived or made by me
(solely or jointly with others) covered by the Employee Agreement.

     I further agree that, in compliance with the Employment Agreement, I will
preserve as confidential all trade secrets, confidential knowledge, data or
other proprietary information relating to products, processes, know-how,
designs, formulas, developmental or experimental work, computer programs, data
bases, other original works of authorship, customer lists, business plans,
financial information or other subject matter pertaining to any business of the
Company or any of its employees, clients, consultants or licensees.

     I further agree that for twelve (12) months from this date, I shall not
solicit the employment of any person who shall then be employed by the Company
(as an employee or consultant) or who shall have been employed by the Company
(as an employee or consultant) within the prior twelve (12) month period, on
behalf of myself or any other person, firm, corporation, association or other
entity, directly or indirectly, all as provided more fully with the Employee
Agreement.

Date:  ___________________, 199__

                                             ___________________________________
                                             Signature


                                             ___________________________________
                                             Name (Print)
<PAGE>

                                   Exhibit D

                          CROSSWORLDS SOFTWARE, INC.

                           INDEMNIFICATION AGREEMENT

     This Indemnification Agreement  (this "Agreement") is entered into as of
                                            ---------
the 22nd day of March, 1999 by and between CrossWorlds Software, Inc., a
Delaware corporation (the "Company"), and Mark Kent ("Indemnitee").
                           -------                    ----------

                                    RECITALS
                                    --------

     A.  The Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance.

     B.  The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.

     C.  Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other directors, officers,
employees, agents and fiduciaries of the Company may not be willing to continue
to serve in such capacities without additional protection.

     D.  The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.

     E.  In view of the considerations set forth above, the Company desires that
Indemnitee be indemnified by the Company as set forth herein.

     NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

     1.  Indemnification.
         ---------------

         (a)  Indemnification of Expenses. The Company shall indemnify
              ---------------------------
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnity in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
                                                       -----
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee,
<PAGE>

agent or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event")
                                                           -------------------
against any and all expenses (including attorneys fees and all other costs,
expenses and obligations incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or investigation),
judgments, fines, penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be unreasonably
withheld) of such Claim and any federal, state, local or foreign taxes imposed
on Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement (collectively, hereinafter "Expenses"), including all interest,
                                           --------
assessments and other charges paid or payable in connection with or in respect
of such Expenses. Such payment of Expenses shall be made by the Company as soon
as practicable but in any event no later than five days after written demand by
Indemnitee therefor is presented to the Company.

         (b)  Reviewing Party. Notwithstanding the foregoing, (i) the
              ---------------
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if;
                  ---------------
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof; including the legal
or factual bases therefor, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.

                                      -2-
<PAGE>

         (c)  Change in Control. The Company agrees that if there is a Change in
              -----------------
Control of the Company (other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then, with respect to all matters thereafter
arising concerning the rights of Indemnitee to payments of Expenses and Expense
Advances under this Agreement or any other agreement or under the Company's
Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including "attorneys"
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.

         (d)  Mandatory Payment of Expenses. Notwithstanding any other provision
              -----------------------------
of this Agreement other than Section 9 hereof, to the extent that Indemnitee has
been successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (l)(a) hereof or in
the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by Indemnitee in connection therewith.

     2.  Expenses; Indemnification Procedure.
         -----------------------------------

         (a)  Advancement of Expenses. The Company shall advance all Expenses
              -----------------------
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
days after written demand by Indemnitee therefor to the Company.

         (b)  Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
              --------------------------------
precedent to Indemnitee's right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.

         (c)  No Presumptions; Burden of Proof. For purposes of this Agreement,
              --------------------------------
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
                                                         ---- ----------
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of

                                      -3-
<PAGE>

conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief. In connection with
any determination by the Reviewing Party or otherwise as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.

         (d)  Notice to Insurers. If, at the time of the receipt by the Company
              ------------------
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.

         (e)  Selection of Counsel. In the event the Company shall be obligated
              --------------------
hereunder to pay the Expenses of any Claim, the Company, if appropriate, shall
be entitled to assume the defense of such Claim with counsel approved by
Indemnitee, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall
have the right to employ Indemnitee's counsel in any such Claim at Indemnitee's
expense and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.

     3.  Additional Indemnification Rights; Nonexclusivity.
         -------------------------------------------------

         (a)  Scope. The Company hereby agrees to indemnify Indemnitee to the
              -----
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a California corporation to indemnify
a member of its Board of Directors or an officer, employee, agent or fiduciary,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
California corporation to indemnify a member of its Board of Directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties rights and obligations hereunder
except as set forth in Section 8(a) hereof.

                                      -4-
<PAGE>

         (b)  Nonexclusivity. The indemnification provided by this Agreement
              --------------
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
Shareholders or disinterested directors, the General Corporation Law of the
State of California, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though Indemnitee may have ceased
to serve in such capacity.

     4.  No Duplication of Payments. The Company shall not be liable under this
         --------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.

     5.  Partial Indemnification. If Indemnitee is entitled under any provision
         -----------------------
of this Agreement to indemnification by the Company for some or a portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.

     6.  Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that
         ---------------------
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

     7.  Liability Insurance. To the extent the Company maintains liability
         -------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

     8.  Exceptions. Any other provision herein to the contrary notwithstanding,
         ----------
the Company shall not be obligated pursuant to the terms of this Agreement:

         (a)  Excluded Action or Omissions. To indemnify Indemnitee for acts,
              ----------------------------
omissions or transactions from which Indemnitee may not be relieved of liability
under applicable law;

         (b)  Claims Initiated by Indemnitee. To indemnify or advance expenses
              ------------------------------
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a

                                      -5-
<PAGE>

right to indemnification under this Agreement or any other agreement or
insurance policy or under the Company's Certificate of Incorporation or Bylaws
now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Delaware
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be;

         (c)  Lack of Good Faith. To indemnify Indemnitee for any expenses
              ------------------
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous; or

         (d)  Claims Under Section 16(b). To indemnify Indemnitee for expenses
              --------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

     9.  Period of Limitations. No legal action shall be brought and no cause of
         ---------------------
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
                                    --------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

     10. Construction of Certain Phrases.
         -------------------------------

         (a)  For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

         (b)  For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its beneficiaries;

                                      -6-
<PAGE>

and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.

          (c)  For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the Shareholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, (A) who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by 5% or more over the
percentage so owned by such person, or (B) becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's Shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or (iii) the Shareholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the Shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.

          (d)  For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).

          (e)  For purposes of this Agreement, a "Reviewing Party" shall mean
any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.

          (f)  For purposes of this Agreement, "Voting Securities" shall mean
any securities of the Company that vote generally in the election of directors.

                                      -7-
<PAGE>

     11.  Counterparts. This Agreement may be executed in one or more
          ------------
counterparts, each of which shall constitute an original.

     12.  Binding Effect; Successors and Assigns. This Agreement shall be
          --------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director, officer, employee, agent or fiduciary of the Company or of any other
enterprise at the Company's request.

     13.  Attorneys Fees. In the event that any action is instituted by
          --------------
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof; Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee's counterclaims and cross-claims made in
such action), and shall be entitled to the advancement of Expenses with respect
to such action, unless, as a part of such action, a court having jurisdiction
over such action determines that each of Indemnitee's material defenses to such
action was made in bad faith or was frivolous.

     14.  Notice. All notices and other communications required or permitted
          ------
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission with copy by
first class mail, postage prepaid, and shall be addressed if to the Indemnitee,
at the Indemnitee's address as set forth beneath his signature to this Agreement
and if to the Company at the address of its principal corporate offices
(attention: Secretary) or at such other address as such party may designate by
ten days' advance written notice to the other party hereto.

     15.  Consent to Jurisdiction. The Company and Indemnitee each hereby
          -----------------------
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection

                                      -8-
<PAGE>

with any action or proceeding which arises out of or relates to this Agreement
and agree that any action instituted under this Agreement shall be commenced,
prosecuted and continued only in the Superior Court of the State of California
in and for San Mateo County, which shall be the exclusive and only proper forum
for adjudicating such a claim.

     16.  Severability. The provisions of this Agreement shall be severable in
          ------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

     17.  Choice of Law.  This Agreement and all acts and transactions pursuant
          -------------
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.

     18.  Subrogation. In the event of payment under this Agreement, the Company
          -----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

     19.  Amendment and Termination. No amendment, modification, termination or
          -------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

     20.  Integration and Entire Agreement. This Agreement sets forth the entire
          --------------------------------
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.

     21.  No Construction as Employment Agreement. Nothing contained in this
          ---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

                                      -9-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.



                              CROSSWORLDS SOFTWARE, INC.,
                              a Delaware corporation


                              By: /s/ K. A. Garnett
                                  -----------------

                              Title: _____________________________

                              Address:
                              577 Airport Boulevard, Suite 800
                              Burlingame, CA 94010-2024


AGREED TO AND ACCEPTED BY:

INDEMNITEE

/s/ Mark R. Kent
--------------------------------

Address:
203 Lexington Dr.
--------------------------------
Megerlo Park, CA 94025
--------------------------------