<PAGE>

                                                                     EXHIBIT 4.2

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

                               WARRANT AGREEMENT

             To Purchase Shares of the Series E Preferred Stock of

                           CROSSWORLDS SOFTWARE, INC.

               Dated as of January 7, 1999 (the "Effective Date")



     WHEREAS, CrossWorlds Software, Inc., a Delaware corporation (the "Company")
has entered into a Subordinated Loan and Security Agreement dated as of January
7, 1999, and related Subordinated Promissory Note(s) (collectively, the "Loans")
with Comdisco, Inc., a Delaware corporation (the "Warrantholder"); and

     WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Loans, the right to purchase shares of its Series E Preferred Stock;

     NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loans and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
     ----------------------------------------------

     The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 350,000 fully paid and non-
assessable shares of the Company's Series E Preferred Stock ("Preferred Stock")
at a purchase price of $2.00 per share (the "Exercise Price").  Notwithstanding
the foregoing, in the event the Company the second closing of the Series E
Preferred Stock financing occurs at a valuation lower than that reflected in the
Exercise Price above, the Exercise price shall be adjusted to reflect the lower
number.  The number and purchase price of such shares are ~ subject to
adjustment as provided in Section 8 hereof.

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

     Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) seven (7) years
from the date hereof or (ii) three (3) years from the effective date of the
Company's initial public offering, whichever is shorter.

3.   EXERCISE OF THE PURCHASE RIGHTS.
     -------------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time after
the issuance and sale of any Series E Preferred Stock by the Company and, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise the form attached hereto as
Exhibit I (the "Notice of Exercise"), duly completed and executed.  Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with

                                      -1-
<PAGE>

the terms set forth below, and in no event later than twenty-one (21) days
thereafter, the Company shall issue to the Warrantholder a certificate for the
number of shares of Preferred Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

     The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below.  If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:

             X = Y(A-B)
                  -----
                    A

     Where:  X =  the number of shares of Preferred Stock to be issued to the
                  Warrantholder.

             Y =  the number of shares of Preferred Stock requested to be
                  exercised under this Warrant Agreement.

             A =  the fair market value of one (1) share of Preferred Stock.

             B =  the Exercise Price.

     For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:

          (i) if the exercise is in connection  with an initial public offering
     of the Company's Common Stock, and if the Company's Registration Statement
     relating to such public offering has been declared effective by the SEC,
     then the fair market value per share shall be the product of (x) the
     initial "Price to Public" specified in the final prospectus with respect to
     the offering and (y) the number of shares of Common Stock into which each
     share of Preferred Stock is convertible at the time of such exercise;

          (ii) if this Warrant is exercised after, and not in connection with
     the Company's initial public offering, and:

               (a) if traded on a securities exchange, the fair market value
          shall be deemed to be the product of (x) the average of the closing
          prices over a twenty-one (21) day period ending three days before the
          day the current fair market value of the securities is being
          determined and (y) the number of shares of Common Stock into which
          each share of Preferred Stock is convertible at the time of such
          exercise; or

               (b) if actively traded over-the-counter, the fair market value
          shall be deemed to be the product of (x) the average of the closing
          bid and asked prices quoted on the NASDAQ system (or similar system)
          over the twenty-one (21) day period ending three days before the day
          the current fair market value of the securities is being determined
          and (y) the number of shares of Common Stock into which each share of
          Preferred Stock is convertible at the time of such exercise;

          (iii)  if at any time the Common Stock is not listed on any securities
     exchange or quoted in the NASDAQ System or the over-the-counter market, the
     current fair market value of Preferred Stock shall be the product of (x)
     the highest price per share which the Company could obtain from a willing
     buyer (not a current employee or director) for shares of Common Stock sold
     by the Company, from authorized but unissued shares, as determined in good
     faith by its Board of Directors and (y) the number of shares of Common
     Stock into which each share of Preferred Stock is convertible at the time
     of such exercise, unless the Company shall become subject to a merger,
     acquisition or other consolidation pursuant to which the

                                      -2-
<PAGE>

     Company is not the surviving party, in which case the fair market value of
     Preferred Stock shall be deemed to be the value received by the holders of
     the Company's Preferred Stock on a common equivalent basis pursuant to such
     merger or acquisition.

     Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder.  All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.   RESERVATION OF SHARES.
     ---------------------

          (a) Authorization and Reservation of Shares.  During the term of this
              ---------------------------------------
Warrant Agreement, the Company will authorize and reserve a sufficient number of
shares of its Preferred Stock to provide for the exercise of the rights to
purchase Preferred Stock as provided for herein.

          (b) Registration or Listing.  If any shares of Preferred Stock
              -----------------------
required to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as amended ("1933 Act"), as then
in effect, or any similar Federal statute then enforced, or any state securities
law, required by reason of any transfer involved in such conversion), or listing
on any domestic securities exchange, before such shares may be issued upon
conversion, the Company will, at its expense and as reasonably expeditiously as
possible, use its best efforts to cause such shares to be duly registered,
listed or approved for listing on such domestic securities exchange, as the case
may be.

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a) Merger and Sale of Assets.  If at any time there shall be a capital
         -------------------------
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation whether or not the Company is the surviving corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of preferred stock or other securities of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event.  In any such case, appropriate adjustment (as determined in
good faith by the

                                      -3-
<PAGE>

Company's Board of Directors) shall be made in the application of the provisions
of this Warrant Agreement with respect to the rights and interest of the
Warrantholder after the Merger Event to the end that the provisions of this
Warrant Agreement (including adjustments of the Exercise Price and number of
shares of Preferred Stock purchasable) shall be applicable to the greatest
extent possible.

     (b) Reclassification of Shares.  If the Company at any time shall, by
         --------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

     (c) Subdivision or Combination of Shares.  If the Company at any time shall
         ------------------------------------
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

     (d) Stock Dividends.  If the Company at any time shall pay a dividend
         ---------------
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution.
The Warrantholder shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

     (e) Right to Purchase Additional Stock.  If the Company has not paid any
         ----------------------------------
Subordinated Promissory Note(s) entered into pursuant to the Loan(s) in its
entirety by the Maturity Date (as defined in the applicable Subordinated
Promissory Note(s)), then for each additional month, or portion thereof,
thereafter that the outstanding principal is not paid, Warrantholder shall have
the right to purchase from the Company, at the Exercise Price (adjusted as set
forth herein), an additional number of shares of Preferred Stock which number
shall be determined by (i) multiplying the outstanding principal amount which
due but unpaid by 1% and (ii) dividing the product thereof by the Exercise
Price.

     (f) Antidilution Rights.  Additional antidilution rights applicable to the
         -------------------
Preferred Stock purchasable hereunder are as set forth in the Company's Amended
and Restated Certificate of incorporation, as amended through the Effective
Date, a true and complete copy of which is attached hereto as Exhibit IV (the
                                                                      --
"Charter").  The Company shall promptly provide the Warrantholder with any
restatement, amendment, modification or waiver of the Charter.  The Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security that, pursuant to Article IV, Section 3 of the
Charter would require an adjustment to the conversion price of the Series E
Preferred Stock to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

     (g) Notice of Adjustments.  If:  (i) the Company shall declare any dividend
         ---------------------
or distribution upon its stock, whether in cash, property, stock or other
securities; (ii) the Company shall offer for subscription prorata to the holders
of any class of its Preferred or other convertible stock any additional shares
of stock of any class or other rights; (iii) there shall be any Merger Event;
(iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the

                                      -4-
<PAGE>

Company shall send to the Warrantholder (A) at least ten (10) days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution, subscription rights (and
specifying the date on which the holders of Preferred Stock shall be entitled
thereto) or for determining rights to vote in respect of such Merger Event,
dissolution, liquidation or winding up; (B) in the case of any such Merger
Event, dissolution, liquidation or winding up, at least ten (10) days' prior
written notice of the date when the same shall take place (and specifying the
date on which the holders of Preferred Stock shall be entitled to exchange their
Preferred Stock for securities or other property deliverable upon such Merger
Event, dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least ten (10) days
written notice prior to the effective date thereof.

     Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (v) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

     (h) Timely Notice.  Failure to timely provide such notice required by
         -------------
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice Period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder.  The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit V, the Company hereby represents and warrants that:

     (a) Reservation of Preferred Stock.  The Preferred Stock issuable upon
         ------------------------------
exercise of the Warrantholder's rights will be duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and or Federal securities laws.  The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended.  The issuance of certificates for
shares of Preferred Stock upon exercise of the Warrant Agreement shall be made
without charge to the Warrantholder for any issuance tax in respect thereof, or
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Preferred Stock.  The Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
and the issuance and delivery of any certificate in a name other than that of
the Warrantholder.

     (b) Due Authority.  The execution and delivery by the Company of this
         -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

     (c) Consents and Approvals.  No consent or approval of, giving of notice
         ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the 1933 Act and any filing required by applicable state securities law,
which filings will be effective by the time required thereby.

                                      -5-
<PAGE>

     (d) Issued Securities.  All issued and outstanding shares of Common Stock,
         -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable.  All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws.  In addition, as of
December 15, 1998 (assuming filing of the restated Charter):

          (i) The authorized capital of the Company consists of (A) 75,000,000
shares of Common Stock, of which 8,196,203 shares are issued and outstanding,
and (B) 38,825,000 shares of preferred stock, of which 10,000,000 shares are
designated as Series A Preferred Stock, all of which are issued and outstanding;
6,212,500 shares are designated as Series B Preferred Stock, all of which are
issued and outstanding; 6,412.500 shares are designated Series C Preferred
Stock, 6,312,500 of which are issued and outstanding; 6,200,000 shares are
designated Series D Preferred Stock, 6,190,000 of which are issued and
outstanding and 10,000,000 shares of Series E Preferred Stock will be
authorized.

          (ii) The Company has reserved 12,419,583 shares of Common Stock for
issuance under the Company's 1996 Stock Option Plan and 1997 Stock Plan,
6,660,209 of which are issuable pursuant to outstanding options and 2,628,588 of
which remain available for grant.  In addition, the Company previously has
issued a warrant to purchase an aggregate of 100,000 shares of Series C
Preferred Stock.  Except for (A) the conversion privileges of the outstanding
Series A Preferred Stock, the outstanding Series B Preferred Stock, the
outstanding Series C Preferred Stock, the outstanding Series D Preferred Stock
and the Series E Preferred Stock to be issued and (B) the options and warrant
described in this Section 9(d)(ii) above, there are no other options.  warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities of the Company.

          (iii)  Except as set forth in the Fourth Restated Investors Rights
Agreement dated as of January 7, 1999, no shareholder of the Company has
preemptive rights to purchase new issuances of the Company's capital stock.

     (e) Insurance.  The Company has in full force and effect insurance
         ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f) Other Commitments to Register Securities.  Except as set forth in this
         ----------------------------------------
Warrant Agreement and in the Fourth Restated Investor Rights Agreement, dated as
of January 7, 1999, among the Company and the investors party thereto, the
Company is not, pursuant to the terms of any other agreement currently in
existence, under any obligation to register under the 1933 Act any of its
presently outstanding securities or any of its securities which may hereafter be
issued.

     (g) Exempt Transaction.  Subject to the accuracy of the Warrantholder's
         ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4 (2) thereof.

     (h) Compliance with Rule 144.  At the written request of the Warrantholder,
         ------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.  PRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     ------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder.

                                      -6-
<PAGE>

     (a) Investment Purpose.  The right to acquire Preferred Stock or the
         ------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.

     (b) Private Issue.  The Warrantholder understands (i) that the Preferred
         -------------
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.

     (c) Disposition of Warrantholder's Rights.  In no event will the
         -------------------------------------
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available.  Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required.  Whenever
the restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.

     (d) Financial Risk.  The Warrantholder has such knowledge and experience in
         --------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

     (e) Risk of No Registration.  The Warrantholder understands that if the
         -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act (the "1934 Act"), or file reports pursuant to
Section 15(d), of the 1934 Act, or if a registration statement covering the
securities under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii)
the Preferred Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period.  The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Preferred Stock or Preferred Stock which might be made by it in reliance upon
Rule 144 under the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.

     (f) Accredited Investor.  Warrantholder is an "accredited investor" within
         -------------------
the meaning of the Securities and Exchange Rule 501 of Regulation D.  as
presently in effect.

11.  TRANSFERS.
     ---------

     Subject to the terms and conditions contained in Section 10 hereof, this
Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder and any successor transferee, provided, however,

                                      -7-
<PAGE>

prior written notice is provided to the Company and the Warrantholder has
otherwise complied with Section 10(c); provided, further, however, and in no
event shall Warrantholder transfer its rights to any potential competitor of the
Company as determined in good faith by the Company's Board of Directors, in no
event shall the number of transfers of the rights and Interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of transfer in the form
attached hereto as Exhibit III (the "Transfer Notice"), at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.

12.  MISCELLANEOUS.
     -------------

     (a) Effective Date.  The provisions of this Warrant Agreement shall be
         --------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof.  This Warrant Agreement shall
be binding upon any successors or assigns of the Company.

     (b) Attorney's Fees.  In any litigation, arbitration or court proceeding
         ---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to reasonable attorneys' fees and expenses and all costs of
proceedings incurred in enforcing this Warrant Agreement.

     (c) Governing Law.  This Warrant Agreement shall be governed by and
         -------------
construed for all purposes under and in accordance with the laws of the State of
Illinois.

     (d) Counterparts.  This Warrant Agreement may be executed in two or more
         ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e) Notices.  Any notice required or permitted hereunder shall be given in
         -------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mall, addressed (i) to the Warrantholder at
6111 North River Road, Rosemont, Illinois 60018, attention: Venture Lease
Administration, cc: Legal Department, attn.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847) 518-5088 and (ii) to the Company at 557
Airport Boulevard, Suite 800, Burlingame, California 94010, attention: Chief
Financial Officer (and/or if by facsimile, (650) 685-5648 or at such other
address as any such party may subsequently designate by written notice to the
other party.

     (f) Remedies.  In the event of any default hereunder, the non-defaulting
         --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable.  The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.

     (g) No Impairment of Rights.  The Company will not, by amendment of its
         -----------------------
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

     (h) Survival.  The representations, warranties, covenants and conditions of
         --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.

     (i) Severability.  In the event any one or more of the provisions of this
         ------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal

                                      -8-
<PAGE>

and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.

     (j) Amendments.  Any provision of this Warrant Agreement may be amended
         ----------
only by a written instrument signed by the Company and by the Warrantholder.

     (k)  Additional Documents.  The Company, upon execution of this Warrant
          --------------------
Agreement, shall provide the Warrantholder with certified resolutions
authorizing the reservation, issuance and sale of the Warrant Agreement, the
Preferred Stock underlying the Warrant Agreement and any Common Stock issuable
upon conversion thereof.  The Company shall also supply such other documents as
the Warrantholder may from time to time reasonably request.

                                      -9-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.

                              Company:  CROSSWORLDS SOFTWARE, INC.



                              By: /s/ K. A. Garnett
                                  ________________________________________
                              Title: President and Chief Executive Officer
                                     _____________________________________


                              Warrantholder:  COMDISCO, INC.



                              By: /s/ JAMES P. LABE
                                  ________________________________________

                              Title: PRESIDENT, COMDISCO VENTURES DIVISION
                                     _____________________________________

                                      -10-
<PAGE>

                                   EXHIBIT I

                               NOTICE OF EXERCISE

     TO: _____________________________

(1)  The undersigned Warrantholder hereby elects to purchase ______shares of the
     Series____ Preferred Stock of _______________, pursuant to the terms of the
     Warrant Agreement dated the _____ day of ___________________, 19__ (the
     Warrant Agreement") between _________________________________ and the
     Warrantholder, and tenders herewith payment of the purchase price for such
     shares in full, together with all applicable transfer taxes, if any.

(2)  In exercising its rights to purchase the Series ____ Preferred Stock of
     ___________________________, the undersigned hereby confirms and
     acknowledges the investment representations and warranties made in Section
     10 of the Warrant Agreement.

(3)  Please issue a certificate or certificates representing said shares of
     Series ____ Preferred Stock in the name of the undersigned or in such other
     name as is specified below.


_______________________________________
(Name)


_______________________________________
(Address)


Warrantholder:  COMDISCO.  INC.

By: ___________________________________

Title: ________________________________

Date: _________________________________

                                      -11-
<PAGE>

                                   EXHIBIT II

                           ACKNOWLEDGMENT OF EXERCISE


     The undersigned ________________________________, hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc. to purchase shares of
the Series ____ Preferred Stock of _______________, pursuant to the terms of the
Warrant Agreement, and further acknowledges that ______ shares remain subject to
purchase under the terms of the Warrant Agreement


                              Company:

                              By: _____________________________________

                              Title: __________________________________

                              Date: ___________________________________

                                      -12-
<PAGE>

                                  EXHIBIT III

                                TRANSFER NOTICE

(To transfer or assign the foregoing Warrant Agreement execute this form and
supply required information.  Do not use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to


___________________________________________________________
(Please Print)

whose address is: _________________________________________

___________________________________________________________

                  Dated: __________________________________

                  Holder's Signature: _____________________

                  Holder's Address: _______________________

                  _________________________________________


Signature Guaranteed: _____________________________________



NOTE:  The signature to this Transfer Notice must correspond with the name as it
       appears on the face of the Warrant Agreement, without alteration or
       enlargement or any change whatever.  Officers of corporations and those
       acting in a fiduciary or other representative capacity should file proper
       evidence of authority to assign the foregoing Warrant Agreement.

                                      -13-