<PAGE>

                                                                   Exhibit 10.33
                          CROSSWORLDS SOFTWARE, INC.

                            SECURED LOAN AGREEMENT
                            ----------------------


     This Secured Loan Agreement (this "Agreement") is made as of April 26, 2000
                                        ---------
by and between CROSSWORLDS SOFTWARE, INC., a Delaware corporation (the

"Company"), and ALFRED J. AMOROSO and REGINA A. AMOROSO (each individually, a
 -------
"Borrower" and collectively, "Borrowers").
---------                     ---------


                                  BACKGROUND
                                  ----------

     Borrowers desire to borrow from the Company, and the Company desires to
lend to Borrowers, an aggregate of $1,500,000 (the "Borrowed Amount").  The
                                                    ---------------
parties desire that such loan shall be secured pursuant to a Security Agreement
of even date herewith (the "Security Agreement") by a second deed of trust on
                            ------------------
Borrowers' principal residence located at 20 Farm Hill Court, Hillsborough, CA
94010 ("Principal Residence") on the terms and conditions contained herein and
        -------------------
in the Security Agreement (the "Second Deed of Trust").
                                --------------------

                                   AGREEMENT
                                   ---------

     In consideration of the foregoing, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:

     1.  Agreement to Lend.  Subject to the terms and conditions contained in
         -----------------
this Agreement and at any time after execution of this Agreement, the Company
agrees to issue, in one or more installments, to Borrowers or for Borrowers'
account, at the Company's option, a check or other readily available funds in
the Borrowed Amount (the "Loan").
                          ----

     2.  Promissory Note.  In consideration of the Company's delivery of the
         ---------------
Borrowed Amount, Borrowers will execute one or more secured non-recourse
promissory notes in the form attached hereto as Exhibit A (each a "Note" and
                                                ---------          ----
collectively the "Notes"), in the aggregate principal amount of such Borrowed
                  -----
Amount.

     3.  Repayment of Loan.  Borrowers jointly and severally agree to repay in
         -----------------
full the principal amount of the Loan on the terms and conditions specified in
each Note.

     4.  Borrower Covenants.  Borrowers hereby covenant and agree for the
         ------------------
duration of this Agreement, the Loan and each Note to indemnify and hold the
Company harmless against any and all expenses (including attorneys' fees) and
all other costs, expenses and obligations arising from any liability related to
the Principal Residence.

     5.  Security Agreement.  Borrowers will additionally execute the Security
         ------------------
Agreement in the form attached hereto as Exhibit B as security for Borrowers'
                                         ---------
obligation to
<PAGE>

repay the Borrowed Amount, and will deliver, or cause to be delivered, until the
termination of this Agreement, the Security Agreement and each Note, together
with such other documents of assignment and other documents as may be reasonably
requested by the Company. Borrowers shall also deliver, or cause to be
delivered, to the Company the Second Deed of Trust, each executed by Borrowers,
to be recorded by the Company (if it so elects) with the official records of the
county in which the Principal Residence is located in accordance with the terms
of the Security Agreement.

     6.   No Employment Rights.  Nothing in this Agreement or the Notes is
          --------------------
intended or shall be construed to confer upon either Borrower any right to
employment or continued employment with the Company, or shall alter in any way
the nature of either Borrower's employment with the Company.

     7.   Miscellaneous.
          -------------

          (a) Successors and Assigns.  The terms and conditions of this
              ----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  This Agreement may not be assigned by
Borrowers without the prior written consent of the Company.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

          (b) Governing 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
California, without giving effect to the principles of conflicts of law of such
state.

          (c) Severability.  If one or more provisions of this Agreement are
              ------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith.  In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.

          (d) Advice of Legal Counsel.  Each party acknowledges and represents
              -----------------------
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement.  This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.

          (e) Counterparts.  This Agreement may be executed in counterparts,
              ------------
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.

                                      -2-
<PAGE>

     The parties hereto have executed this Secured Loan Agreement as of the day
and year first above written.


                              CROSSWORLDS SOFTWARE, INC.


                              By: /s/ James W. Budge
                                  --------------------------
                              Name:  James W. Budge
                                    ------------------------
                              Title: Chief Financial Officer
                                    ------------------------

                              Address:   577 Airport Boulevard
                                         Suite 800
                                         Burlingame, CA 94010


                               /s/ Alfred J. Amoroso
                               -----------------------------
                               ALFRED J. AMOROSO


                              /s/ Regina A. Amoroso
                              ------------------------------
                              REGINA A. AMOROSO

                              Address: 20 Farm Hill Court
                                       Hillsborough, CA  94010

                                      -3-
<PAGE>

                                   EXHIBIT A

                [Form of Secured Non-Recourse Promissory Note]

                                      -4-
<PAGE>

                     SECURED NON-RECOURSE PROMISSORY NOTE
                     ------------------------------------

$566,666                                                          April 26, 2000
                                                          Burlingame, California

FOR VALUE RECEIVED, ALFRED J. AMOROSO and REGINA A. AMOROSO (each, a "Borrower"
                                                                      --------
and collectively, "Borrowers") jointly and severally promise to pay to the order
                   ---------
of CROSSWORLDS SOFTWARE, INC. (the "Company"), at its principal offices at 577
                                    -------
Airport Boulevard, Suite 800, Burlingame, CA 94010, the principal sum of Five
Hundred Sixty Six Thousand Six Hundred Sixty Six Dollars ($566,666), with
interest from the date hereof at a rate of 6.60% per annum, compounded
semiannually, on the unpaid balance of such principal sum, upon the terms and
conditions specified below.  Capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in that certain Secured Loan
Agreement, dated as of April 26, 2000, by and between the Company and the
Borrowers (the "Loan Agreement").
                --------------

     1.  Payment.  Borrowers jointly and severally promise to repay the
         -------
principal and interest balance of this Note within ten days following the
earlier to occur of (A) the sale, conveyance, assignment, alienation or any
other form of transfer of the Borrowers' principal residence located at 20 Farm
Hill Court, Hillsborough, CA 94010, or (B) nine months after the date of
termination of Mr. Amoroso's employment with the Company.  So long as Mr.
Amoroso remains an employee of the Company, the Company shall forgive the
principal and accrued interest of this Note in equal monthly installments on the
last day of each month from the first day of his employment with the Company for
a period of forty-eight (48) months.  In the event of a termination of Mr.
Amoroso's employment with the Company "Without Cause" or for "Good Reason" (as
such terms are defined in Mr. Amoroso's employment agreement with the Company
dated October 5, 1999) prior to October 7, 2003, then on the termination date
the Company shall forgive the monthly installments of principal and accrued
interest of this Note for twelve (12) additional months as if Mr. Amoroso had
been employed by the Company for those additional months.  The Company will make
periodic bonus payments to Mr. Amoroso which, following the deduction of all
applicable taxes, will allow Mr. Amoroso to make all tax payments on the
forgiven amounts.

         Any payment to be made on a date that is not a business day may be made
on the next business day thereafter.  The records of the Company shall be
conclusive evidence of the unpaid principal balance hereof, and of all payments
made in respect thereof, absent manifest error.

     2.  Application of Payments.  Each payment shall be made in lawful tender
         -----------------------
of the United States.  Prepayment of principal may be made at any time without
penalty.  Borrowers agree that if payment becomes due as a result of termination
of Mr. Amoroso's employment with the Company, the Company shall offset from
Borrowers' salary, bonus, vacation pay or other amounts due to Borrowers from
the Company, any amount due and payable by Borrowers.
<PAGE>

Borrowers further agree to execute the documentation prepared by the Company to
effect any such offset.

     3.   Events of Acceleration.  The entire unpaid principal sum and accrued
          ----------------------
but unpaid interest of this Note shall become immediately due and payable upon
one or more of the following events:

          A.  the failure of Borrowers to make any payment of any amount due
hereunder and the continuation of such default for a period of thirty (30) days
or more;

          B.  the insolvency of either Borrower, the commission of any act of
bankruptcy by a Borrower, the execution by a Borrower of a general assignment
for the benefit of creditors, the filing by or against a Borrower of any
petition in bankruptcy or any petition for relief under the provisions of the
federal bankruptcy act or any other state or federal law for the relief of
debtors and the continuation of such petition without dismissal for a period of
thirty (30) days or more, the appointment of a receiver or trustee to take
possession of any property or assets of a Borrower, or the attachment of or
execution against any property or assets of a Borrower;

          C.  the sale, transfer, mortgage, assignment, further encumbrance or
lease, whether voluntarily or involuntarily or by operation of law or otherwise
of the Principal Residence or other collateral securing the Notes, as
applicable, or any portion thereof or interest therein, without substituting
other collateral acceptable to the Company to secure the Notes;

          D.  the occurrence of any event of default under the Security
Agreement or the Second Deed of Trust securing this Note or any obligation
secured thereby; or

          E.  Borrowers are unable to provide additional collateral if required
by Section 2 of the Security Agreement.

     4.   Employment Requirement.  The benefits of the interest arrangement
          ----------------------
under this Note are not transferable by Borrowers and are conditioned on the
future performance of substantial services by Mr. Amoroso. For purposes of
applying the provisions of this Note, Mr. Amoroso shall be considered to provide
substantial services to the Company for so long as he renders services as a
full-time employee of the Company or one or more of its subsidiaries.

     5.   Security.   Payment of this Note shall be secured by the Second Deed
          --------
of Trust on the Principal Residence under the terms of the Security Agreement
and is subject to all the provisions thereof. This Note is otherwise a non-
recourse note, such that the collateral under the Second Deed of Trust is the
only asset of the Borrowers that may be applied to the satisfaction of
Borrower's obligations hereunder. This Note is also subject to the terms of the
Loan Agreement.

     6.   Collection.  If Borrowers fail to pay this Note as and when required
          ----------
hereunder, Borrowers promise to pay all costs and expenses (including reasonable
attorney fees) incurred in connection with any proceedings to collect such
amounts in default whether or not an action is instituted.

                                      -2-
<PAGE>

     7.   Waiver.  No previous waiver and no failure or delay by the Company in
          ------
acting with respect to the terms of this Note, the Second Deed of Trust or the
Loan Agreement shall constitute a waiver of any breach, default, or failure of
condition under this Note, the Second Deed of Trust, the Loan Agreement or the
obligations secured thereby.  A waiver of any term of this Note, the Second Deed
of Trust, the Loan Agreement or of any of the obligations secured thereby must
be made in writing and shall be limited to the express terms of such waiver.
BORROWERS WAIVE PRESENTMENT; DEMAND; NOTICE OF DISHONOR; NOTICE OF DEFAULT OR
DELINQUENCY; NOTICE OF ACCELERATION; NOTICE OF PROTEST AND NONPAYMENT; NOTICE OF
COSTS, EXPENSES OR LOSSES AND INTEREST THEREON; NOTICE OF INTEREST ON INTEREST;
AND DILIGENCE IN TAKING ANY ACTION TO COLLECT ANY SUMS OWING UNDER THIS NOTE OR
IN PROCEEDING AGAINST ANY OF THE RIGHTS OR INTERESTS IN OR TO PROPERTIES
SECURING PAYMENT OF THIS NOTE.

     9.   Conflicting Agreements.  In the event of any inconsistencies between
          ----------------------
the terms of this Note and the terms of any other document related to the loan
evidenced by this Note, the terms of this Note shall prevail.

     10.  Governing Law.  This Note shall be construed in accordance with the
          -------------
laws of the State of California, without giving effect to the principles of
conflicts of law of such state.


                                    /s/ Alfred J. Amoroso
                                    ----------------------------
                                    Borrower:  Alfred J. Amoroso


                                    /s/ Regina A. Amoroso
                                    ----------------------------
                                    Borrower:  Regina A. Amoroso

                                    Address: 20 Farm Hill Court
                                             Hillsborough, CA 94010

                                      -3-
<PAGE>

                     SECURED NON-RECOURSE PROMISSORY NOTE
                     ------------------------------------

$933,334                                                            June 7, 2000
                                                          Burlingame, California

FOR VALUE RECEIVED, ALFRED J. AMOROSO and REGINA A. AMOROSO (each, a "Borrower"
                                                                      --------
and collectively, "Borrowers") jointly and severally promise to pay to the order
                   ---------
of CROSSWORLDS SOFTWARE, INC. (the "Company"), at its principal offices at 577
                                    -------
Airport Boulevard, Suite 800, Burlingame, CA 94010, the principal sum of Nine
Hundred Thirty Three Thousand Three Hundred Thirty Four Dollars ($933,334), with
interest from the date hereof at a rate of 6.51% per annum, compounded
semiannually, on the unpaid balance of such principal sum, upon the terms and
conditions specified below.  Capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in that certain Secured Loan
Agreement, dated as of April 26, 2000, by and between the Company and the
Borrowers (the "Loan Agreement").
                --------------

     1.  Payment.  Borrowers jointly and severally promise to repay the
         -------
principal and interest balance of this Note within ten days following the
earlier to occur of (A) the sale, conveyance, assignment, alienation or any
other form of transfer of the Borrowers' principal residence located at 20 Farm
Hill Court, Hillsborough, CA 94010, or (B) nine months after the date of
termination of Mr. Amoroso's employment with the Company.  So long as Mr.
Amoroso remains an employee of the Company, the Company shall forgive the
principal and accrued interest of this Note in equal monthly installments on the
last day of each month from the first day of his employment with the Company for
a period of forty-eight (48) months.  In the event of a termination of Mr.
Amoroso's employment with the Company "Without Cause" or for "Good Reason" (as
such terms are defined in Mr. Amoroso's employment agreement with the Company
dated October 5, 1999) prior to October 7, 2003, then on the termination date
the Company shall forgive the monthly installments of principal and accrued
interest of this Note for twelve (12) additional months as if Mr. Amoroso had
been employed by the Company for those additional months.  The Company will make
periodic bonus payments to Mr. Amoroso which, following the deduction of all
applicable taxes, will allow Mr. Amoroso to make all tax payments on the
forgiven amounts.

         Any payment to be made on a date that is not a business day may be made
on the next business day thereafter.  The records of the Company shall be
conclusive evidence of the unpaid principal balance hereof, and of all payments
made in respect thereof, absent manifest error.

     2.  Application of Payments.  Each payment shall be made in lawful tender
         -----------------------
of the United States.  Prepayment of principal may be made at any time without
penalty.  Borrowers agree that if payment becomes due as a result of termination
of Mr. Amoroso's employment with the Company, the Company shall offset from
Borrowers' salary, bonus, vacation pay or other amounts due to Borrowers from
the Company, any amount due and payable by Borrowers.
<PAGE>

Borrowers further agree to execute the documentation prepared by the Company to
effect any such offset.

     3.   Events of Acceleration.  The entire unpaid principal sum and accrued
          ----------------------
but unpaid interest of this Note shall become immediately due and payable upon
one or more of the following events:

          A.  the failure of Borrowers to make any payment of any amount due
hereunder and the continuation of such default for a period of thirty (30) days
or more;

          B.  the insolvency of either Borrower, the commission of any act of
bankruptcy by a Borrower, the execution by a Borrower of a general assignment
for the benefit of creditors, the filing by or against a Borrower of any
petition in bankruptcy or any petition for relief under the provisions of the
federal bankruptcy act or any other state or federal law for the relief of
debtors and the continuation of such petition without dismissal for a period of
thirty (30) days or more, the appointment of a receiver or trustee to take
possession of any property or assets of a Borrower, or the attachment of or
execution against any property or assets of a Borrower;

          C.  the sale, transfer, mortgage, assignment, further encumbrance or
lease, whether voluntarily or involuntarily or by operation of law or otherwise
of the Principal Residence or other collateral securing the Notes, as
applicable, or any portion thereof or interest therein, without substituting
other collateral acceptable to the Company to secure the Notes;

          D.  the occurrence of any event of default under the Security
Agreement or the Second Deed of Trust securing this Note or any obligation
secured thereby; or

          E.  Borrowers are unable to provide additional collateral if required
by Section 2 of the Security Agreement.

     4.   Employment Requirement.  The benefits of the interest arrangement
          ----------------------
under this Note are not transferable by Borrowers and are conditioned on the
future performance of substantial services by Mr. Amoroso. For purposes of
applying the provisions of this Note, Mr. Amoroso shall be considered to provide
substantial services to the Company for so long as he renders services as a
full-time employee of the Company or one or more of its subsidiaries.

     5.   Security.   Payment of this Note shall be secured by the Second Deed
          --------
of Trust on the Principal Residence under the terms of the Security Agreement
and is subject to all the provisions thereof. This Note is otherwise a non-
recourse note, such that the collateral under the Second Deed of Trust is the
only asset of the Borrowers that may be applied to the satisfaction of
Borrower's obligations hereunder. This Note is also subject to the terms of the
Loan Agreement.

     6.   Collection.  If Borrowers fail to pay this Note as and when required
          ----------
hereunder, Borrowers promise to pay all costs and expenses (including reasonable
attorney fees) incurred in connection with any proceedings to collect such
amounts in default whether or not an action is instituted.

                                      -2-
<PAGE>

     7.   Waiver.  No previous waiver and no failure or delay by the Company in
          ------
acting with respect to the terms of this Note, the Second Deed of Trust or the
Loan Agreement shall constitute a waiver of any breach, default, or failure of
condition under this Note, the Second Deed of Trust, the Loan Agreement or the
obligations secured thereby.  A waiver of any term of this Note, the Second Deed
of Trust, the Loan Agreement or of any of the obligations secured thereby must
be made in writing and shall be limited to the express terms of such waiver.
BORROWERS WAIVE PRESENTMENT; DEMAND; NOTICE OF DISHONOR; NOTICE OF DEFAULT OR
DELINQUENCY; NOTICE OF ACCELERATION; NOTICE OF PROTEST AND NONPAYMENT; NOTICE OF
COSTS, EXPENSES OR LOSSES AND INTEREST THEREON; NOTICE OF INTEREST ON INTEREST;
AND DILIGENCE IN TAKING ANY ACTION TO COLLECT ANY SUMS OWING UNDER THIS NOTE OR
IN PROCEEDING AGAINST ANY OF THE RIGHTS OR INTERESTS IN OR TO PROPERTIES
SECURING PAYMENT OF THIS NOTE.

     9.   Conflicting Agreements.  In the event of any inconsistencies between
          ----------------------
the terms of this Note and the terms of any other document related to the loan
evidenced by this Note, the terms of this Note shall prevail.

     10.  Governing Law.  This Note shall be construed in accordance with the
          -------------
laws of the State of California, without giving effect to the principles of
conflicts of law of such state.


                                    /s/ Alfred J. Amoroso
                                    ------------------------------
                                    Borrower:  Alfred J. Amoroso


                                    /s/ Regina A. Amoroso
                                    ------------------------------
                                    Borrower:  Regina A. Amoroso

                                    Address: 20 Farm Hill Court
                                             Hillsborough, CA 94010

                                      -3-
<PAGE>

                                   EXHIBIT B
                                   ---------

                              SECURITY AGREEMENT
                              ------------------


     This Security Agreement (this "Agreement") is made as of April 26, 2000 by
                                    ---------
and between CROSSWORLDS SOFTWARE, INC., a Delaware corporation (the "Company"),
                                                                     -------
and ALFRED J. AMOROSO and REGINA A. AMOROSO (each individually, a "Borrower" and
collectively, "Borrowers").
               ---------

                                   RECITALS
                                   --------

     The Company has loaned or will loan to Borrowers, and Borrowers have
borrowed or will borrow from the Company, an aggregate of $1,500,000 (the

"Borrowed Amount"), which loan is or shall be evidenced by non-recourse
 ---------------
promissory notes (each a "Note" and collectively the "Notes") and is to be
                          ----                        -----
secured by a second deed of trust on Borrowers' principal residence (the "Second
                                                                          ------
Deed of Trust").  The form of Note and the obligations thereunder are as set
-------------
forth in Exhibit A to the Secured Loan Agreement between the Company and
         ---------
Borrowers, dated the date hereof (the "Loan Agreement").
                                       --------------

                                   AGREEMENT
                                   ---------

     In consideration of the foregoing, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows (all capitalized terms used herein but not otherwise
defined shall have the meaning assigned to such terms in the Loan Agreement):

     1.   Deed of Trust.
          -------------

          (a) In consideration of the Loan to Borrowers under the Loan
Agreement, and to secure the Borrowed Amount, Borrowers are delivering herewith
the Second Deed of Trust in form and substance approved by the Company and duly
executed by Borrowers and properly notarized.  The Company may, if the Company
so elects, but without obligation to do so, at any time record the Second Deed
of Trust against Borrowers' principal residence, located at 20 Farm Hill Court,
Hillsborough, CA 94010 (the "Principal Residence"), in the official records of
                             -------------------
the county in which the Principal Residence is located.  Within five (5) days
after written demand, Borrowers shall furnish written evidence reasonably
satisfactory to the Company that (i) Borrowers hold good and marketable title to
the Principal Residence; (ii) there is no loan, deed of trust, mortgage or
encumbrance against the Principal Residence other than the first deed of trust
held by ______________ Bank in the principal amount of $__________ (the "First
                                                                         -----
Deed of Trust"); and (iii) Borrowers are not in default under such First Deed of
-------------
Trust or related loan documents.  Upon the sale, conveyance, assignment,
alienation, encumbrance or any other form of transfer of the Principal
Residence, the Notes shall be immediately due and payable in full.
<PAGE>

     2.   Borrowers' Representations, Warranties and Covenants. To induce the
          ----------------------------------------------------
Company to enter into this Agreement, Borrowers represent, warrant and covenant
to the Company, its successors and assigns, as follows:

          (a)  Borrowers will jointly and severally pay the principal sum of the
Notes secured hereby, together with interest thereon, and perform all other
obligations required of the Borrowers under the Loan Agreement at the time and
in the manner provided therein.

          (b)  Borrowers have good and marketable title to the Principal
Residence free and clear of all security interests, liens, encumbrances and
rights of others other than the First Deed of Trust constituting a first lien
against the Principal Residence and the Second Deed of Trust.  When duly
executed, delivered and recorded in the official land records of the county in
which the Principal Residence is located, the Second Deed of Trust will
constitute a valid, perfected security interest in the Principal Residence,
prior to all monetary liens or encumbrances other than the First Deed of Trust.

          (c)  The consent of no other party or entity is required to grant the
security interest in the Principal Residence (the "Existing Property") as
                                                   -----------------
provided for in this Agreement.  The creation of the security interest
referenced herein, and performance of the obligations of Borrowers hereunder,
will not violate or cause a conflict with any other agreement to which Borrowers
are parties, or to which the Principal Residence is subject.  Borrowers will
perform all obligations of Borrowers in connection with the First Deed of Trust
(and related documents), and a default thereunder will constitute a default
hereunder.

          (d)  Other than the First Deed of Trust and the Second Deed of Trust,
there are no security interests or liens on the Existing Property that could be
perfected or obtained by filing a financing statement or notice with any state
filing office.

          (e)  There are no actions, proceedings, claims or disputes pending or,
to Borrowers' knowledge, threatened against or affecting Borrowers or the
Existing Property except as disclosed to the Company in writing prior to the
date of this Agreement.

          (f)  Borrowers shall not sell, convey, assign, alienate, further
encumber or otherwise transfer the Principal Residence, or enter into any
contract or other agreement to sell, convey, assign, alienate, encumber or
otherwise transfer the Principal Residence or any interest therein without the
prior written consent of the Company.

     3.   Default.  Borrowers shall be deemed to be in default of the Notes and
          -------
of this Agreement in the event:

          (a)  Payment of principal or interest on a Note shall be delinquent
for a period of thirty (30) days or more; or

          (b)  Borrowers fail to perform any of the covenants contained in the
Loan Agreement (including exhibits thereto) for a period of ten (10) days after
written notice thereof from the Company; or

                                      -2-
<PAGE>

          (c)  Borrowers' representations and warranties to the Company
contained in this Agreement or the Second Deed of Trust were untrue or incorrect
as of the date of funding of the Loan Agreement; or

          (d)  Any default under the First Deed of Trust.

     4.   Remedies in the Event of Default. In the case of an event of default,
          --------------------------------
as set forth above, the Company shall have the right to accelerate payment of
the Notes upon notice to Borrowers, and shall thereafter be entitled to pursue
any or all of its remedies under applicable law, including, without limitation,
(a) offsetting from Borrowers' salary, bonuses, vacation pay or other amounts
due to Borrowers from the Company, any amount due and payable by Borrowers under
the Notes, and/or (b) proceeding against the Principal Residence under the
Second Deed of Trust.

     5.   Insolvency.  Borrowers agree that if a bankruptcy or insolvency
          ----------
proceeding is instituted by or against either Borrower, or if a receiver is
appointed for the property of either Borrower, or if either Borrower makes an
assignment for the benefit of creditors, the entire amount unpaid on the Notes
shall become immediately due and payable, and the Company may proceed as
provided in the case of default.

     6.   Miscellaneous.
          -------------

          (a)  Successors and Assigns.  The terms and conditions of this
               ----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

          (b)  Governing 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
California, without giving effect to principles of conflicts of law.

          (c)  Notices.  Any notice required or permitted by this Agreement
               -------
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by a nationally-recognized delivery service (such as Federal
Express or UPS) or confirmed facsimile, or forty-eight (48) hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid,
if such notice is addressed to the party to be notified at such party's address
or facsimile number as set forth below, or as subsequently modified by written
notice.

          (d)  Severability.  If one or more provisions of this Agreement are
               ------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith.  In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of

                                      -3-
<PAGE>

the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

          (e)  Advice of Legal Counsel.  Each party acknowledges and represents
               -----------------------
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement.  This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.

     The parties hereto have executed this Security Agreement as of the day and
year first above written.


                              ALFRED J. AMOROSO

                              /s/ Alfred J. Amoroso
                              --------------------------------------
                                              (Signature)


                              REGINA A. AMOROSO

                              /s/  Regina A. Amoroso
                              --------------------------------------
                                              (Signature)


                              Address: 20 Farm Hill Court
                                       Hillsborough, CA 94010


                              CROSSWORLDS SOFTWARE, INC.


                              By: /s/ James W. Budge
                                 -----------------------------------

                              Title: Chief Financial Officer
                                     -------------------------------

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