Document:

<PAGE>

                                                                   Exhibit 10.27
                                                                   -------------

                              EMPLOYMENT AGREEMENT
                              --------------------

  THIS EMPLOYMENT AGREEMENT, dated as of November 6, 2000 (this "Agreement"), by
                                                                 ---------
and between Sola International, Inc., a Delaware corporation (the "Company"),
                                                                   -------
and Jeremy Charles Bishop (the "Executive").
                                ---------

  WHEREAS, the Executive possesses skills and experience that are of value to
the Company; and

  WHEREAS, the Company has determined that it is in its best interest to secure
the continued services and employment of the Executive on behalf of the Company
in accordance with the terms of this Agreement and the Executive is willing to
render such services on the terms and conditions set forth herein.

  NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:

  1.  Employment Term.  Subject to the terms and provisions of this Agreement,
      ---------------
the Company hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed exclusively by the Company, for the period commencing on
the date hereof and ending on the third anniversary of the date hereof (the

"Initial Term"), unless terminated sooner or extended as hereinafter provided
-------------
(the "Employment Term").  Unless the Company or the Executive shall have given
      ---------------
the other party written notice not less than 60 days prior to the expiration of
the Initial Term that the Initial Term shall not be extended, the Initial Term
shall automatically be extended for successive one-year periods (each one-year
period an "Additional Term") until either party shall have given the other party
           ---------------
written notice not less than 60 days prior to the expiration of any Additional
Term that such Additional Term shall not be extended.  If either party shall
have elected not to extend the Initial Term or any Additional Term, this
Agreement shall terminate upon expiration of such term, unless terminated sooner
as hereinafter provided.

  2.  Duties.  During the Employment Term, the Executive shall serve as
      ------
President and Chief Executive Officer of the Company, and such other position(s)
as may be reasonably designated by the Board of Directors of the Company (the

"Board"), including serving on the Board.  During the Employment Term, the
------
Executive shall be responsible for the management and control of the day to day
operations of the Company.  The Executive shall also perform such other duties,
services and responsibilities as are determined from time to time by the Board
consistent with the duties of a chief executive officer.  In performing such
duties, the Executive will report directly to the Board.

     The Executive shall devote all of his business time and attention and
ability to the performance of such duties, services and responsibilities, and
will use his best efforts to promote the interests of the Company.  The
Executive will not, directly or indirectly, render services of a business,
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior consent of the Board.

  3.  Compensation.  In full consideration of the performance by the
      ------------
Executive of the Executive's obligations during the Employment Term (including
any services by the Executive as an officer, director, employee or member of any
committee
<PAGE>

of any subsidiary or affiliate of the Company, or otherwise on behalf of
Company), the Executive shall be compensated as follows:

          (a) The Executive shall receive a base salary (the "Base Salary") at
                                                              -----------
an annual rate of $400,000 per year during the Employment Term, payable in
accordance with the normal payroll practices of the Company then in effect.  The
Executive will be eligible to receive annual increases in the Base Salary as
determined in the sole discretion of the Board.

          (b) The Executive shall be eligible for a bonus pursuant to the terms
and conditions of the Company's "Management Incentive Plan" or successor
thereto.

  The Executive shall be solely responsible for taxes imposed on the Executive
by reason of any compensation and benefits provided under this Agreement and all
such compensation and benefits shall be subject to applicable withholding taxes.

  4.  Benefits.  In addition to the payments and awards described in Section 3
      --------                                                       ---------
of this Agreement, during the Employment Term, the Executive shall be entitled
to participate in any and all employee benefit plans the Company regularly
provides its other executives or employees including, but not limited to,
health, dental, vision, pension or other retirement plans.  In addition the
Executive shall be entitled to the other benefits specified on the attached
Schedule.

  5.  Termination.  The Executive's employment with the Company and the
      -----------
Employment Term shall terminate upon the expiration of the Initial Term or any
Additional Term or upon the earlier occurrence of any of the following events
(the date of termination, the "Termination Date"):
                               ----------------

          (a) The death or disability of the Executive.

          (b) The termination of employment by the Company for Cause.  As used
herein, "Cause" shall mean Executive's: (i) willful misconduct, neglect of
         -----
duties, or any act or omission any or all of which materially adversely affect
the Company's business after receipt from the Company of a detailed statement of
the cause for termination, or (ii) conviction of, or plea of guilty or nolo
                                                                       ----
contendere to, a felony.
----------

          (c) The termination of employment by the Company other than for Cause.

          (d) Resignation by the Executive for Good Reason.  As used herein,

"Good Reason" shall mean (i) regular assignment by the Company to the Executive
------------
of duties and responsibilities that materially diminish his position as
President and CEO of the Company; or (ii) reduction of the Executive's Base
Salary or a material reduction in his employee benefits (other than incentive
compensation) that is not part of, or is disproportionate to a general reduction
by the Company of executive compensation.

  6.  Termination Payments.  If the Executive's employment with the
      --------------------
Company terminates or the Initial Term or any Additional Term expires, the
Company's, its subsidiaries' and its affiliates' sole obligation hereunder,
except as otherwise provided in this Section 6, shall be to pay the Executive
(a) any accrued and unpaid Base Salary as of the Termination Date and (b) an
amount equal to such reasonable and necessary business
<PAGE>

expenses incurred by the Executive in connection with the Executive's employment
on behalf of the Company on or prior to the Termination Date but not previously
paid to the Executive (the "Accrued Compensation"). In addition, if the
                            --------------------
Executive's employment with the Company terminates pursuant to either
Section 5(c) or Section 5(d) hereof, or if the Company elects not to extend the
------------    ------------
Initial Term or any Additional Term for any reason other than Cause (each, a
"Severance Event"), the Company's, its subsidiaries' and its affiliates' sole
-----------------
obligation hereunder shall be to (a) pay the Accrued Compensation, (b) continue
to pay the Executive the Base Salary (at the rate in effect at the time of
termination of employment) for a period of eighteen months, commencing with the
first of the month following the month in which termination takes place, (c) pay
the Executive 150% of the average Management Incentive Plan compensation (or
successor thereto) paid or payable to him for the three completed fiscal years
immediately prior to the date of such termination (including the year of
termination if the Termination Date occurs on the last day of a fiscal year)
(the "MIP Severance"), (d) continue to provide the Executive with the benefits
described in Section 4 of this Agreement for a period of eighteen months after
the date of such termination and (e) pay up to $25,000 for outplacement
assistance on behalf of the Executive in the form of professional consultation
and administrative assistance during the eighteen months after the date of such
termination, in the latter case, subject to the Company's approval which may not
be unreasonably withheld.

          The Company shall have no obligation to the Executive for any payments
or benefits other than the Accrued Compensation if the Executive (i) elects not
to extend the Initial Term or any Additional Term or (ii) terminates his
employment with the Company other than for Good Reason.

  7.   Executive Covenants.
       -------------------

          (a) Unauthorized Disclosure.  The Executive recognizes that the
              -----------------------
services to be performed during the Employment Term by the Company are special,
unique, and extraordinary and that by reason of the Executive's employment with
the Company the Executive has acquired and will acquire confidential information
and trade secrets concerning the Company's operations ("Company Confidential
                                                        --------------------
Information") and the operations of its affiliates ("Affiliate Confidential
-----------                                          ----------------------
Information").  Accordingly, it is agreed that:
-----------

               (i)  The Executive shall not divulge to any entity or person,
          other than the Company or its affiliates, or, in the event of an
          assignment of this Agreement pursuant to Section 14 hereof, the
          assignee and its affiliates, if any, whether during the Employment
          Term or after a Severance Event, any Company Confidential Information
          concerning  the Company's customer lists, research or development
          programs or plans, processes, methods or any other of its trade
          secrets, except information that is then available to the public in
          published literature and became publicly available through no fault of
          the Executive.

               (ii)  The Executive shall not divulge to any person or entity,
          including an assignee of this Agreement and its affiliates, but
          excepting the Company and its affiliates, whether during the
          Employment Term or after a Severance Event, any Affiliate Confidential
          Information acquired by the Executive concerning the customer lists,
          research or development programs or plans, processes, methods or any
          other trade secrets of the Company or any affiliate, except
          information which is then available to the public in published
          literature and became publicly available through no fault of the
          Executive.
<PAGE>

               (iii)  The Executive acknowledges that all information the
          disclosure of which is prohibited hereby is of a confidential and
          proprietary character and of great value to the Company and its
          affiliates.  Upon a Severance Event, the Executive shall forthwith
          deliver up to the Company all records, memoranda, data and documents
          of any description which refer or relate in any way to Company
          Confidential Information or Affiliate Confidential Information and
          return to the Company any of its equipment and property which may then
          be in the Executive's possession or under the Executive's personal
          control.  Upon the assignment of this Agreement, pursuant to Section
          14, the Executive shall forthwith deliver up to the Company all
          records, memoranda, data and documents of any description which refer
          or relate in any way to Affiliate Confidential Information and return
          to the Company any of its equipment and property which may then be in
          the Executive's possession or under the Executive's personal control.

          (b) Non-competition.  By and in consideration of the Company's
              ---------------
entering into this Agreement and the payments to be made and benefits to be
provided by the Company hereunder, and in further consideration of the
Executive's exposure to the Company Confidential Information and Affiliate
Confidential Information, it is agreed that during the Employment Term, and for
eighteen months following a Severance Event, the Executive will not, directly or
indirectly, as an officer, director, stockholder, partner, associate, owner,
employee, consultant or otherwise, become or be interested in or associated with
any other corporation, firm or business engaged in the same or a similar or
competitive business with the Company or any of its affiliates in any
geographical area in which the Company or any of its affiliates are then engaged
in business, provided that the Executive's ownership, directly or indirectly, of
not more than one percent of the issued and outstanding stock of a corporation
the shares of which are regularly traded on a national securities exchange or in
the over-the-counter market shall not, in any event, be deemed to be a violation
of this Subsection.

          (c) Non-solicitation.  The Executive agrees not to solicit any person
              ----------------
employed by the Company or its affiliates.  As used herein, "solicit" or
"soliciting" means any direct or indirect approach or appeals to such an
employee to leave the Company.  Indirect solicitation includes but is not
limited to, acting through a third party or parties or characterizing job
advertisements or opportunities in such a fashion so as to entice any employee.
The Executive agrees that, if approached by a Company employee, the Executive
will:

               (i)  Inform the employee of the Executive's obligations set forth
          in this subparagraph;

               (ii)  Refer the employee to the relevant Company Human Resources
          personnel; and

               (iii)  Request that the employee confirm in writing to the
          Company that he has approached the Executive and confirm that request
          in a memorandum to such Human Resources organization.

          (d) Remedies.  The Company shall be entitled, in addition to any other
              --------
right or remedy that it may have at law or in equity with respect to a breach of
this Agreement by the Executive (including the right to terminate payments
pursuant to Section 6 hereof), to an injunction, without the posting of a bond
or other security, enjoining or restraining the
<PAGE>

Executive from any violation or threatened violation of this Section 7 and
Sections 8 and 9 hereof and the Executive hereby consents to the issuance of
such an injunction.

  8.  Proprietary Rights.  The Executive agrees that any invention made
      ------------------
by the Executive during the Employment Term shall belong to the Company if (a)
it was made in the normal course of the duties of the Executive or in the course
of duties falling outside the Executive's normal duties but specifically
assigned to the Executive, and the circumstances in either case were such that
an invention might reasonably be expected to result from the carrying out of
such duties, or (b) the invention was made in the course of the duties of the
Executive and, at the time of making the invention, because of the nature of the
Executive's duties and the particular responsibilities arising from the nature
of the Executive's duties, the Executive had a special obligation to further the
interests of the Company.  In addition, if (a) the Executive during the
Employment Term shall make any improvement or develop any know-how,
copyrightable work or design, (b) such improvement, know-how, copyrightable work
or design is relevant to the business of the Company or any of its subsidiaries,
and (c) such improvement, know-how, copyrightable work or design arose directly
out of any work carried out during the Employment Term, or out of Confidential
Company Information or Confidential Affiliate Information to which the Executive
had access while in the employ of the Company, then such improvement, know-how,
copyrightable work or design shall belong to the Company, whether or not it was
disclosed to the Company during the Employment Term by the Company.

     In the event that the Executive makes any invention or develops any
improvement, know-how, copyrightable design or work which belongs to the
Company, the Executive shall fully, freely and immediately communicate the same
to the Company and the Executive shall, if and as desired by the Company execute
all documents and do all acts and things at the Company's cost which may be
necessary or desirable to obtain letters patent or other adequate protection in
any part of the world for such invention, improvement, know-how, copyrightable
work or design and to vest the same in the Company for the Company's benefit.
The Executive hereby irrevocably appoints the Company as the Executive's
attorney in the Executive's name and on the Executive's behalf to execute all
such deeds and documents and to do all such acts and things as may be necessary
to give effect to this Subsection in the event that the Executive fails to
comply within seven days with the written directions given by the Company
pursuant to this Subsection.

     The Executive has been notified and understands that the provisions of the
two immediately preceding paragraphs of this Section 8 do not apply to any
invention that qualifies fully under the provisions of Section 2870 of the
California Labor Code, which states as follows:

          (a) 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,
               or

               (ii)  Result from any work performed by the employee for the
               employer.
<PAGE>

          (b) 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.

  9.  Non-Disparagement. In the event of a Severance Event both the Executive
      -----------------
and the Company agree that neither of them will disparage the other in any
manner.

 10.  Moral Rights Waiver.  As used herein, "Moral Rights" shall mean
      -------------------                    ------------
any right to claim authorship of a work, any right to object to any distortion,
or other modification of a work, and any similar right, existing under the law
of any country in the world, or under any treaty.  Executive hereby irrevocably
transfers and assigns to the Company any and all Moral Rights that Executive may
have in any services or materials.  Executive also hereby forever waives and
agrees never to assert against the Company, its successors or assigns any and
all Moral Rights Executive may have in any services or materials, even after
termination of this Agreement.

 11.  Release.  In consideration of the payments and covenants under
      -------
this Agreement, the Executive hereby releases the Company, its employees,
officers, directors, subsidiaries, affiliates, successors and assigns and the
Company, its subsidiaries, affiliates, successors and assigns hereby release the
Executive from any and all claims for relief or causes of action relating to any
matters of any kind arising out of his employment (or its termination) with the
Company arising prior to the date hereof.

     The Executive expressly waives all rights and remedies under Section 1542
of the Civil Code of the State of California 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.

          The Executive understands that if the facts with respect to which this
Agreement is executed are found hereafter to be different from the facts which
he now believes to be true, the Executive expressly accepts and assumes the risk
of such possible differences in facts and agrees that this Agreement shall be
and remain effective notwithstanding such differences in facts.

 12.  Notices.  All notices, consents, waivers or demands of any kind
      -------
which either party to this Agreement may be required or may desire to serve on
the other party in connection with this Agreement shall be in writing and may be
delivered by personal service or sent by telegraph or cable or sent by
registered or certified mail, return receipt requested with postage thereon
fully prepaid.  All such communications shall be addressed as follows:

               The Company:                    Sola International, Inc.

                                               Suite 230

                                               1290 Oakmead Parkway

                                               Sunnyvale, California 94085

                                               Attn: Stephen J. Lee
<PAGE>

               The Executive:                  Jeremy Charles Bishop

                                               P.O. Box 8546

                                               Rancho Santa Fe, California 92067

     If sent by telegraph or cable, a confirmed copy of such telegraphic or
cable notice shall be promptly sent by mail (in the manner provided above) to
the addressees.  Service of any such communication made only by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing which ever is later in time.  Either
party hereto may from time to time, by notice in writing served upon the other
as aforesaid, designate a different mailing address or a different person to
which such notices or demands are thereafter to be addressed or delivered.
Nothing contained in this Agreement shall excuse either party from giving oral
notice to the other when prompt notification is appropriate, but any oral notice
given shall not satisfy the requirement of written notice as provided in this
paragraph.

 13.  Governing Law.  This Agreement shall be governed and construed
      -------------
and enforced in accordance with the laws of the State of California (regardless
of that jurisdiction or any other jurisdictions' choice of law principles).

 14.  Assignment.  This Agreement may be assigned by the Company to any
      ----------
affiliate of the Company or to any non-affiliate of the Company that shall
succeed to the business and assets of the Company.  In the event of such
assignment, the Company shall cause such affiliate or non-affiliate as the case
may be, to assume the obligations of the Company hereunder by written agreement
addressed to the Executive concurrently with any assignment with the same effect
as if such assignee were the Company hereunder.  This Agreement is personal to
the Executive and the Executive may not assign any rights or delegate any
responsibilities hereunder without the prior approval of the Company.

 15.  Entire Agreement.  This Agreement is the entire Agreement between
      ----------------
the Company and the Executive with respect to the subject matter hereof and
cancels and supersedes any and all other agreements regarding the subject matter
hereof between the parties.  This Agreement may not be altered, modified,
changed, or discharged except in writing signed by both of the parties.

 16.  Severability.  If any one or more of the provisions (or any part
      ------------
thereof) of this Agreement, or any application thereof to the circumstances,
shall be held to be invalid, illegal or unenforceable in any respect the
remaining provisions (or any part thereof) shall not in any way be affected or
impaired thereby.

 17.  Arbitration.  Except as otherwise provided in Section 7(d) hereof, with
      -----------
respect to any controversy arising out of or relating to this Agreement, or the
subject matter thereof, such controversy shall be settled by final and binding
arbitration in Palo Alto, California in accordance with the then
existing rules ("the Rules") of the American Arbitration Association
                      ---------
("AAA") and judgment upon the award rendered by the arbitrators may be entered
  ---
in any court having jurisdiction thereof; provided, however, that the law
applicable to any controversy shall be the law of California, regardless of its
or any jurisdiction's choice of law
<PAGE>

principle. Arbitration shall be the sole and exclusive remedy for the resolution
of the disputes described above. In any such arbitration, the award or decision
shall be rendered by a majority of the members of a board of arbitration
consisting of three members, one of whom shall be appointed by each party and
the third of whom shall be the chairman of the panel and be appointed by mutual
agreement of said two party appointed arbitrators. In the event of the failure
of said two arbitrators to agree, within five working days after the
commencement of the arbitration, upon appointment of the third arbitrator, the
third arbitrator shall be appointed by the AAA in accordance with the Rules. In
the event that either party shall fail to appoint an arbitrator within five days
after the commencement of the arbitration proceeding, such arbitrator and the
third arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitrators are empowered but, not limited, in making an award in favor of the
Executive to require any act or acts which they believe necessary to effectuate
the intent of this Agreement. The Company agrees that any costs of any
arbitration borne by the Executive, including the Executive's reasonable
attorneys' fees and expenses and the costs, fees and expenses of the Executive's
appointed arbitrator, shall be borne by the Company to the extent attributable
to issues on which the Executive prevails on the merits.

 18.  Excise Tax Limitation.
      ---------------------

          (a) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive under
any other Company plan or agreement (such payments or benefits are collectively
referred to as the "Payments") would be subject to the excise tax (the "Excise
                    --------                                            ------
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
---
amended (the "Code"), the Payments shall be reduced (but not below zero) if and
to the extent necessary so that no Payment to be made or benefit to be provided
to the Executive shall be subject to the Excise Tax (such reduced amount is
hereinafter referred to as the "Limited Payment Amount").  Unless the Executive
                                ----------------------
shall have given prior written notice specifying a different order to the
Company to effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the Determination (as hereinafter defined).  Any
notice given by the Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Executive's rights and entitlements to any benefits or
compensation.

          (b) The determination of whether the Payments shall be reduced to the
Limited Payment Amount pursuant to this Agreement and the amount of such Limited
Payment Amount shall be made, at the Company's expense, by an accounting firm
selected by the Executive which is one of the five largest accounting firms in
the United States (the "Accounting Firm").  The Accounting Firm shall provide
                        ---------------
its determination (the "Determination"), together with detailed supporting
                        -------------
calculations and documentation to the Company and the Executive within ten (10)
days of the date of termination, if applicable, or such other time as requested
by the Company or by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax) and if the Accounting
Firm determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive and the Company with an opinion
reasonably acceptable to the Executive that no Excise Tax will be imposed with
respect to any such Payments.  The Determination shall be binding, final and
conclusive upon the Company and the Executive.

  19.  Non-Waiver of Rights.  The failure to enforce at any time the provisions
       --------------------
of this Agreement or to require at any time performance by any other party of
any provisions hereof shall in no way be
<PAGE>

construed to be a waiver of such provisions or to affect either the validity of
this Agreement or any part hereof, or the right of any party to enforce each and
every provision in accordance with its terms. No waiver by any party hereto of
any breach by any other party hereto of any provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions at the time or at any prior or subsequent time.

  20.  Headings.  The headings contained herein are solely for the purposes of
       --------
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.

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

  22.  THE EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT
WITH THE ADVISOR OF HIS CHOICE AND THAT HE HAS FREELY AND VOLUNTARILY ENTERED
INTO THIS AGREEMENT.

  IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be
executed by authority of its Board of Directors, and the Executive has hereunto
set the Executive's hand, on the day and year first above written.

                               Sola International, Inc.:
                               ------------------------

                               By: /s/Stephen J. Lee
                                  ------------------
                                  Name:  Stephen J. Lee
                                  Title:   Vice President, H.R.

                               Executive:
                               ---------

                                /s/ Jeremy Charles Bishop
                               --------------------------
                               Jeremy Charles Bishop
<PAGE>

Schedule of Continuing Benefits Entitlement Pursuant to Paragraph 4 of the
Attached Agreement between SOLA International Inc. and Jeremy C. Bishop.

1.  Participation in the SOLA International Inc. Stock Option Plan.

2.  Provision of a Company Car under the Company's Executive Automobile Plan
    with a lease reimbursement of up to $1,200 per month.

3.  Payment of an Expatriate Housing Allowance, subject to the Executive's
    continuing residence in California.

4.  Reimbursement of repatriation costs (including real estate agents
    commissions on the sale of his home) in the event that the Executive
    relocates back to the United Kingdom.

5.  Provision of Tax Return Preparation and Advice.

6.  Participation in Company Retirement Plans.

7.  Reimbursement of travel expenses for Family Home Leave while resident in the
    United States.<PAGE>

                                                                    Exhibit 10.6

                              Actuate Corporation

                          2001 Supplemental Stock Plan

                     (As Adopted Effective January 2, 2001)
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                    Page
<S>                                                                                                 <C>
ARTICLE 1.  INTRODUCTION...........................................................................    1

ARTICLE 2.  ADMINISTRATION.........................................................................    1
     2.1  Committee Composition....................................................................    1
     2.2  Committee Responsibilities...............................................................    1

ARTICLE 3.  SHARES AVAILABLE FOR GRANTS............................................................    1
     3.1  Basic Limitation.........................................................................    1
     3.2  Additional Shares........................................................................    1

ARTICLE 4.  ELIGIBILITY............................................................................    2

ARTICLE 5.  OPTIONS................................................................................    2
     5.1  Stock Option Agreement...................................................................    2
     5.2  Number of Shares.........................................................................    2
     5.3  Exercise Price...........................................................................    2
     5.4  Exercisability and Term..................................................................    2
     5.5  Modification or Assumption of Options....................................................    2
     5.6  Buyout Provisions........................................................................    2

ARTICLE 6.  CHANGE IN CONTROL......................................................................    3
     6.1  Effect of Change in Control..............................................................    3
     6.2  Involuntary Termination..................................................................    3

ARTICLE 7.  PAYMENT FOR OPTION SHARES..............................................................    3
     7.1  General Rule.............................................................................    3
     7.2  Surrender of Stock.......................................................................    3
     7.3  Exercise/Sale............................................................................    3
     7.4  Exercise/Pledge..........................................................................    3
     7.5  Promissory Note..........................................................................    4
     7.6  Other Forms of Payment...................................................................    4

ARTICLE 8.  RESTRICTED SHARES......................................................................    4
     8.1  Restricted Stock Agreement...............................................................    4
     8.2  Payment for Awards.......................................................................    4
     8.3  Vesting Conditions.......................................................................    4
     8.4  Voting and Dividend Rights...............................................................    4

ARTICLE 9.  PROTECTION AGAINST DILUTION............................................................    4
     9.1  Adjustments..............................................................................    4
     9.2  Dissolution or Liquidation...............................................................    5
     9.3  Reorganizations..........................................................................    5
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                   <C>
ARTICLE 10.  DEFERRAL OF DELIVERY OF SHARES..........................................................   5

ARTICLE 11.  AWARDS UNDER OTHER PLANS................................................................   5

ARTICLE 12.  LIMITATION ON RIGHTS....................................................................   6
     12.1  Retention Rights..........................................................................   6
     12.2  Stockholders' Rights......................................................................   6
     12.3  Regulatory Requirements...................................................................   6

ARTICLE 13.  WITHHOLDING TAXES.......................................................................   6
     13.1  General...................................................................................   6
     13.2  Share Withholding.........................................................................   6

ARTICLE 14.  FUTURE OF THE PLAN......................................................................   6
     14.1  Term of the Plan..........................................................................   6
     14.2  Amendment or Termination..................................................................   7

ARTICLE 15.  DEFINITIONS.............................................................................   7
</TABLE>

                                      ii
<PAGE>

                              Actuate Corporation

                         2001 Supplemental Stock Plan

     ARTICLE 1.  INTRODUCTION.

          The Plan was adopted by the Board effective January 2, 2001.  The
purpose of the Plan is to promote the long-term success of the Company and the
creation of stockholder value by (a) encouraging Employees and Consultants to
focus on critical long-range objectives, (b) encouraging the attraction and
retention of Employees and Consultants with exceptional qualifications and (c)
linking Employees and Consultants directly to stockholder interests through
increased stock ownership.  The Plan seeks to achieve this purpose by providing
for Awards in the form of Restricted Shares or Options (which shall constitute
nonstatutory stock options).

          The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions).

     ARTICLE 2.  ADMINISTRATION.

          2.1  Committee Composition. The Committee shall administer the Plan.
The Committee shall consist exclusively of one or more directors of the Company,
who shall be appointed by the Board.

          2.2  Committee Responsibilities. The Committee shall (a) select the
Employees and Consultants who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.

     ARTICLE 3.  SHARES AVAILABLE FOR GRANTS.

          3.1  Basic Limitation. Common Shares issued pursuant to the Plan may
be authorized but unissued shares or treasury shares. The aggregate number of
Options and Restricted Shares awarded under the Plan shall not exceed (a)
2,700,000 plus (b) the additional Common Shares described in Section 3.2. The
limitations of this Section 3.1 and Section 3.2 shall be subject to adjustment
pursuant to Article 8.

          3.2  Additional Shares. If Options are forfeited or terminate for any
other reason before being exercised, then the corresponding Common Shares shall
again become available for the grant of Options or Restricted Shares under the
Plan. If Restricted Shares or Common Shares issued upon the exercise of Options
are forfeited, then such Common Shares shall again become available for the
grant of Options and Restricted Shares under the Plan.
<PAGE>

     ARTICLE 4.  ELIGIBILITY.

          Employees and Consultants shall be eligible for the grant of Awards,
except that members of the Board and individuals who are considered officers of
the Company under the rules of the National Association of Securities Dealers
shall not be eligible for the grant of Awards.

     ARTICLE 5.  OPTIONS.

          5.1  Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical. Options may be granted in consideration of a reduction in
the Optionee's other compensation. A Stock Option Agreement may provide that a
new Option will be granted automatically to the Optionee when he or she
exercises a prior Option and pays the Exercise Price in the form described in
Section 6.2.

          5.2  Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 8.

          5.3  Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price shall in no event be less than
85% of the Fair Market Value of a Common Share on the date of grant. A Stock
Option Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the Option is outstanding.

          5.4  Exercisability and Term. Each Stock Option Agreement shall
specify the date or event when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option. A Stock Option Agreement may provide for accelerated exercisability in
the event of the Optionee's death, disability or retirement or other events and
may provide for expiration prior to the end of its term in the event of the
termination of the Optionee's service.

          5.5  Modification or Assumption of Options. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

          5.6  Buyout Provisions. The Committee may at any time (a) offer to buy
out for a payment in cash or cash equivalents an Option previously granted or
(b) authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.

                                       2
<PAGE>

     ARTICLE 6.  CHANGE IN CONTROL.

          6.1  Effect of Change in Control. In the event of any Change in
Control, each outstanding Award shall automatically accelerate so that each such
Award shall, immediately prior to the effective date of the Change in Control,
become fully exercisable for all of the shares of Common Stock at the time
subject to such Award and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. However, an outstanding Award shall not so
accelerate if and to the extent such Award is, in connection with the Change in
Control, either to be assumed by the successor corporation (or parent thereof)
or to be replaced with a comparable Award for shares of the capital stock of the
successor corporation (or parent thereof). The determination of Award
comparability shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.

          6.2  Involuntary Termination. In addition, except as otherwise
provided in the Agreement evidencing an Award, in the event that the Award is
assumed by the successor corporation (or parent thereof) and the Participant
experiences an Involuntary Termination within twelve months following a Change
in Control, each outstanding Award shall automatically accelerate so that each
such Award shall, immediately prior to the effective date of the Involuntary
Termination, become fully exercisable for all of the shares of Common Stock at
the time subject to such Award and may be exercised for any or all of those
shares as fully-vested shares of Common Stock.

     ARTICLE 7.  PAYMENT FOR OPTION SHARES.

          7.1  General Rule. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash or cash equivalents at the
time when such Common Shares are purchased, unless the Committee accepts payment
in any other form(s) described in this Article 7.

          7.2  Surrender of Stock. To the extent that this Section 7.2 is
applicable, all or any part of the Exercise Price may be paid by surrendering,
or attesting to the ownership of, Common Shares that are already owned by the
Optionee. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan. The Optionee shall
not surrender, or attest to the ownership of, Common Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.

          7.3  Exercise/Sale. To the extent that this Section 7.3 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.

          7.4  Exercise/Pledge. To the extent that this Section 7.4 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid by delivering (on a form prescribed by the Company) an irrevocable
direction to pledge all or part of the Common Shares

                                       3
<PAGE>

being purchased under the Plan to a securities broker or lender approved by the
Company, as security for a loan, and to deliver all or part of the loan proceeds
to the Company.

          7.5  Promissory Note. To the extent that this Section 7.5 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid by delivering (on a form prescribed by the Company) a full-recourse
promissory note. However, the par value of the Common Shares being purchased
under the Plan, if newly issued, shall be paid in cash or cash equivalents.

          7.6  Other Forms of Payment. To the extent that this Section 7.6 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable laws, regulations
and rules.

     ARTICLE 8.  RESTRICTED SHARES.

          8.1  Restricted Stock Agreement. Each grant of Restricted Shares under
the Plan shall be evidenced by a Restricted Stock Agreement between the
recipient and the Company. Such Restricted Shares shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various Restricted Stock
Agreements entered into under the Plan need not be identical.

          8.2  Payment for Awards. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the consideration
shall consist exclusively of cash, cash equivalents or past services rendered to
the Company (or a Parent or Subsidiary) or, for the amount in excess of the par
value of such newly issued Restricted Shares, full-recourse promissory notes, as
the Committee may determine.

          8.3  Vesting Conditions. Each Award of Restricted Shares may or may
not be subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant's death, disability or retirement or other events.

          8.4  Voting and Dividend Rights. The holders of Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights as
the Company's other stockholders. A Restricted Stock Agreement, however, may
require that the holders of Restricted Shares invest any cash dividends received
in additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to
which the dividends were paid.

     ARTICLE 9.  PROTECTION AGAINST DILUTION.

          9.1  Adjustments. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend

                                       4
<PAGE>

payable in a form other than Common Shares in an amount that has a material
effect on the price of Common Shares, a combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of (a) the number of Options and Restricted Shares
available for future Awards under Article 3, (b) the number of Common Shares
covered by each outstanding Option or (c) the Exercise Price under each
outstanding Option. Except as provided in this Article 8, a Participant shall
have no rights by reason of any issue by the Company of stock of any class or
securities convertible into stock of any class, any subdivision or consolidation
of shares of stock of any class, the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class.

          9.2  Dissolution or Liquidation. To the extent not previously
exercised, Options shall terminate immediately prior to the dissolution or
liquidation of the Company.

          9.3  Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Options and Restricted Shares shall
be subject to the agreement of merger or reorganization. Such agreement shall
provide for (a) the continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation, (b) the assumption of the outstanding
Awards by the surviving corporation or its parent or subsidiary, (c) the
substitution by the surviving corporation or its parent or subsidiary of its own
awards for the outstanding Awards, (d) full exercisability or vesting and
accelerated expiration of the outstanding Awards or (e) settlement of the full
value of the outstanding Awards in cash or cash equivalents followed by
cancellation of such Awards.

     ARTICLE 10. DEFERRAL OF DELIVERY OF SHARES.

          The Committee (in its sole discretion) may permit or require an
Optionee to have Common Shares that otherwise would be delivered to such
Optionee as a result of the exercise of an Option converted into amounts
credited to a deferred compensation account established for such Optionee by the
Committee as an entry on the Company's books.  Such amounts shall be determined
by reference to the Fair Market Value of such Common Shares as of the date when
they otherwise would have been delivered to such Optionee.  A deferred
compensation account established under this Article 10 may be credited with
interest or other forms of investment return, as determined by the Committee.
An Optionee for whom such an account is established shall have no rights other
than those of a general creditor of the Company.  Such an account shall
represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Optionee and the Company.  If the conversion of Options is permitted or
required, the Committee (in its sole discretion) may establish rules, procedures
and forms pertaining to such conversion, including (without limitation) the
settlement of deferred compensation accounts established under this Article 9.

     ARTICLE 11. AWARDS UNDER OTHER PLANS.

          The Company may grant awards under other plans or programs.  Such
awards may be settled in the form of Common Shares issued under this Plan.  Such
Common Shares

                                       5
<PAGE>

shall be treated for all purposes under the Plan like Restricted Shares and
shall, when issued, reduce the number of Common Shares available under Article
3.

     ARTICLE 12.  LIMITATION ON RIGHTS.

          12.1  Retention Rights. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain an Employee or
Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the
right to terminate the service of any Employee or Consultant at any time, with
or without cause, subject to applicable laws and a written employment agreement
(if any).

          12.2  Stockholders' Rights. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect to any
Common Shares covered by his or her Award prior to the time when a stock
certificate for such Common Shares is issued or, in the case of an Option, the
time when he or she becomes entitled to receive such Common Shares by filing a
notice of exercise and paying the Exercise Price. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to such
time, except as expressly provided in the Plan.

          12.3  Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

     ARTICLE 13.  WITHHOLDING TAXES.

          13.1  General. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

          13.2  Share Withholding. To the extent that applicable law subjects a
Participant to tax withholding obligations, the Committee may permit such
Participant to satisfy all or part of such obligations by having the Company
withhold all or a portion of any Common Shares that otherwise would be issued to
him or her or by surrendering all or a portion of any Common Shares that he or
she previously acquired. Such Common Shares shall be valued at their Fair Market
Value on the date when they are withheld or surrendered.

     ARTICLE 14.  FUTURE OF THE PLAN.

          14.1  Term of the Plan. The Plan, as set forth herein, shall become
effective on January 2, 2001. The Plan shall remain in effect until it is
terminated under Section 14.2.

                                       6
<PAGE>

          14.2  Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.

     ARTICLE 15.  DEFINITIONS.

          15.1  "Affiliate" means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

          15.2  "Award" means any award of an Option or a Restricted Share under
the Plan.

          15.3  "Board" means the Company's Board of Directors, as constituted
from time to time.

          15.4  "Change in Control" means:

                (a)  The consummation of a merger or consolidation of the
     Company with or into another entity or any other corporate reorganization,
     if persons who were not stockholders of the Company immediately prior to
     such merger, consolidation or other reorganization own immediately after
     such merger, consolidation or other reorganization 50% or more of the
     voting power of the outstanding securities of each of (i) the continuing or
     surviving entity and (ii) any direct or indirect parent corporation of such
     continuing or surviving entity;

                (b)  The sale, transfer or other disposition of all or
     substantially all of the Company's assets;

                (c)  A change in the composition of the Board, as a result of
     which fewer than two-thirds of the incumbent directors are directors who
     either (i) had been directors of the Company on the date 24 months prior to
     the date of the event that may constitute a Change in Control (the
     "original directors") or (ii) were elected, or nominated for election, to
     the Board with the affirmative votes of at least a majority of the
     aggregate of the original directors who were still in office at the time of
     the election or nomination and the directors whose election or nomination
     was previously so approved; or

                (d)  Any transaction as a result of which any person is the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of securities of the Company representing at least
     50% of the total voting power represented by the Company's then outstanding
     voting securities. For purposes of this Subsection (d), the term "person"
     shall have the same meaning as when used in sections 13(d) and 14(d) of the
     Exchange Act but shall exclude (i) a trustee or other fiduciary holding
     securities under an employee

                                       7
<PAGE>

     benefit plan of the Company or of a Parent or Subsidiary and (ii) a
     corporation owned directly or indirectly by the stockholders of the Company
     in substantially the same proportions as their ownership of the common
     stock of the Company.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

          15.5  "Code" means the Internal Revenue Code of 1986, as amended.

          15.6  "Committee" means a committee of the Board, as described in
Article 2.

          15.7  "Common Share" means one share of the common stock of the
Company.

          15.8  "Company" means Actuate Corporation, a Delaware corporation.

          15.9  "Consultant" means a consultant or adviser who provides bona
fide services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan.

          15.10 "Employee" means a common-law employee of the Company, a Parent,
a Subsidiary or an Affiliate.

          15.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          15.12 "Exercise Price" means the amount for which one Common Share may
be purchased upon exercise of an Option, as specified in the applicable Stock
Option Agreement.

          15.13 "Fair Market Value" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal. Such determination
                                   -----------------------
shall be conclusive and binding on all persons.

          15.14 "Involuntary Termination" means the termination of the
Participant's service which occurs by reason of:

                (a)  such individual's involuntary dismissal or discharge by the
     Corporation for reasons other than Misconduct, or

                (b)  such individual's voluntary resignation following (A) a
     change in his or her position with the Corporation which materially reduces
     his or her level of responsibility, (B) a reduction in his or her level of
     compensation (including base salary, fringe benefits and participation in
     bonus or incentive programs) or (C) a relocation of such individual's place
     of employment by more

                                       8
<PAGE>

     than fifty (50) miles, provided and only if such change, reduction or
     relocation is effected by the Corporation without the individual's consent.

          15.15  "Misconduct" means the commission of any act of fraud,
embezzlement or dishonesty by the Participant, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Participant or other person in the Service of the
Corporation (or any Parent or Subsidiary).

          15.16  "NSO" means a stock option not described in sections 422 or 423
of the Code.

          15.17  "Option" means an NSO granted under the Plan and entitling the
holder to purchase Common Shares.

          15.18  "Optionee" means a person or estate who holds an Option.

          15.19  "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

          15.20  "Participant" means a person or estate who holds an Award.

          15.21  "Plan" means this Actuate Corporation 2001 Supplemental Stock
Plan, as amended from time to time.

          15.22  "Restricted Share" means a Common Share awarded under the Plan.

          15.23  "Restricted Stock Agreement" means the agreement between the
Company and the recipient of a Restricted Share that contains the terms,
conditions and restrictions pertaining to such Restricted Share.

          15.24  "Stock Option Agreement" means the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.

          15.25  "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

                                       9

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