Document:

<PAGE>   1
                                                                   EXHIBIT 10.13

                             CONVERTIBLE PROMISSORY
                       NOTE AND WARRANT PURCHASE AGREEMENT

                                  May 10, 1999

                             Convertible Promissory
                       Note and Warrant Purchase Agreement

      Sequoia Software Corporation, a Maryland corporation (the "Company") and
the persons listed on Schedule 1 hereto (the "Investors") hereby agree as
follows:

         1.       The Notes. The Company has authorized the issuance and sale,
in accordance with the terms hereof, of the Company's Convertible Promissory
Notes in the original aggregate principal amount of $5,500,000 (collectively,
the "Notes" and individually a "Note"). Each Note will be substantially in the
form set forth in Exhibit A hereto.

         2.       The Closings

                  2.1      Initial Closing. At the Initial Closing (as defined
below), the Company agrees to issue and sell to the Investors, and, subject to
and in reliance upon the representations, warranties, terms and conditions
contained herein, the each Investor agrees to purchase Notes in the aggregate
principal amount set forth opposite such Investor's name on Schedule 1 hereto.
The initial closing of the purchase and sale shall take place on May 10, 1999 at
the offices of the Company, or at such other place and time as shall be mutually
agreed upon (the " Initial Closing").

                  2.2      Subsequent Closings. Any Subsequent Closings of the
purchase and sale of the Notes under this Agreement shall take place no later
than 180 days after the Initial Closing at such times and places as the Company
and investors purchasing Notes after the Initial Closing (the "Subsequent
Investors") may mutually agree (each, a "Subsequent Closing" and collectively,
the "Subsequent Closings"). On or before each Subsequent Closing, the Company
will deliver to each Investor a notice of the total price of the Notes being
purchased by the Subsequent Investors.

         3.       Conversion. The Company contemplates that, on or before
December 31, 1999 (the "Financing Date"), it will issue and sell shares of a
newly designated series or class of Preferred Stock (the "Offered Securities")
in an aggregate amount of up to $20,000,000 (including the conversion of Notes
issued hereunder) (the "Subsequent Financing") to certain parties. If the
Subsequent Financing occurs prior to the Financing Date, on the date of the
Subsequent Financing, the Investors shall convert the outstanding principal and
accrued but unpaid interest on any Note outstanding on such date into shares of
Offered Securities at the same price at which the Offered Securities are offered
and sold (the "Subsequent Financing Price") and on the additional terms and
conditions applicable generally to the Subsequent

<PAGE>   2

Financing. If the Subsequent Financing has not occurred on or before the
Financing Date, the Investors shall convert the outstanding principal and
accrued but unpaid interest on the Notes into shares of the Company's Series B
Convertible Preferred Stock, $.001 par value (the "Series B Preferred Stock") at
a conversion price of $0.6763 per share as adjusted for stock splits, stock
dividends and the like (the "Series B Price") on the Financing Date; provided,
however, that if the Board of Directors of the Company and the Company's
investment banking firm collectively determine that the Company will not be
adversely affected by repayment of all or part of the Notes after the Financing
Date, the Investors may elect to receive repayment rather than to convert the
Notes into Series B Preferred.

         4.       Warrants. In consideration of the purchase of the Notes, the
Company covenants and agrees to issue a warrant (individually a "Warrant" and
collectively the "Warrants") to each Investor in the form attached hereto as
Exhibit B.

         5.       Representations and Warranties of the Company. The Company
hereby represents and warrants that, as of the Initial Closing,

                  (a)      the Company is a duly organized and validly existing
corporation under the laws of the State of Maryland;

                  (b)      except for the authorization, reservation or issuance
of (i) the securities issuable upon conversion of the Notes (hereinafter
referred to as "Note Shares") and exercise of the Warrants (hereinafter referred
to as "Warrant Shares") and (ii) the shares of the Company's Common Stock, par
value $0.001 per share, issuable upon conversion of the Note Shares and the
Warrant Shares (the "Conversion Shares") (all such securities now or hereafter
reserved or required to be reserved pursuant to (i) or (ii) above being
hereinafter referred to as "Reserved Shares"), the Company has taken or will
take all corporate action required to make all the obligations of the Company
reflected in the provisions of this Agreement, the Notes and the Warrants valid
obligations, enforceable against the Company except to the extent that
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally;

                  (c)      except as otherwise indicated in paragraph 5(b)
above, the issuance of the Notes, the Warrants, the Note Shares, the Warrant
Shares and the Conversion Shares will not require any further corporate action
and will not be subject to preemptive rights of any present or future
stockholders of the Company that have not been waived or will not be waived at
the Initial Closing;

                  (d)      neither the authorization, execution and delivery of
the Notes and the Warrants, nor the issuance and delivery of this Agreement, the
Note Shares, the Warrant Shares and the Conversion Shares, has constituted or
resulted in, nor will constitute or result in, a default or violation of any law
or regulation applicable to the Company or any term or provision of the
Company's Amended and Restated Articles of Incorporation or By-laws, both as
amended, or any agreement or instrument by which the Company is bound or to
which its properties or assets are subject;

                                      -2-
<PAGE>   3

                  (e)      a complete, correct listing of the authorized and
outstanding capital stock of the Company and all outstanding options, warrants,
convertible securities or other rights to acquire securities of the Company is
attached hereto as Exhibit C;

                  (f)      attached as Exhibit D is a schedule of Indebtedness
of the Company and its subsidiaries. "Indebtedness" means all obligations,
contingent and otherwise, which should, in accordance with generally accepted
accounting principles consistently applied, be classified upon the Company's
balance sheet as liabilities, but in any event including, without limitation,
liabilities secured by any mortgage on property owned or acquired subject to
such mortgage, whether or not the liability secured thereby shall have been
assumed, and also including, without limitation, (a) all guaranties,
endorsements and other contingent obligations, in respect of Indebtedness of
others, whether or not the same are or should be so reflected in said balance
sheet, except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business and (b)
the present value of any lease payments due under leases required to be
capitalized in accordance with applicable Statements of Financial Accounting
Standards, determined in accordance with applicable Statements of Financial
Accounting Standards; provided, however the Indebtedness shall not include trade
payables in the ordinary course of business, accrued wages or accrued taxes;

                  (g)      Subject to a lien on the Company's assets held by
Silicon Valley Bank, the Company has good and merchantable title to all of its
assets other than real property now carried on its books, free of any material
mortgages, pledges, liens, security interests or other encumbrances (other than
mechanics', workmens' and other liens arising by operation of law). The Company
owns or has a valid right to use the patents, patent rights, licenses,
trademarks, trademark rights, trade names or trade name rights or franchises,
copyrights, inventions and intellectual property rights being used to conduct
its business as now operated; and

                  (h)      Attached as Exhibit E is a copy of the Company's
Amended and Restated Articles of Incorporation, as amended through and including
the date of the Initial Closing.

                  (i)      The Company is not (i) in default under any lease,
license, note, bank loan or any other agreement, other than with respect to
technical defaults under the Company's loan arrangement with Silicon Valley
Bank, which defaults have been waived until the Initial Closing and which will
be cured at the Initial Closing, as evidenced by a letter from such bank
supplied to the Investors, or (ii) in violation of its Amended and Restated
Articles of Incorporation (the "Charter") or By-laws, the effect of which would
have, singularly or in the aggregate, a material adverse effect on the business
or properties of the Company as a whole.

         6.       Covenants of the Company.

                  (a)      For so long as any Note or Warrant is outstanding,
the Company covenants not to issue any of its current or future authorized but
unissued Reserved Shares without the unanimous written consent of the Investors
or their designees on the board of directors of the Company (the "Board
Representatives"), except upon the conversion of the Notes or exercise of

                                      -3-
<PAGE>   4

the Warrants in accordance with their terms. Further, the Company agrees to
reserve, no later than the earlier of the Subsequent Financing or the Financing
Date, an adequate number of Reserved Shares for conversion of the Notes,
exercise of the Warrants and conversion of the Note Shares and Warrant Shares,
free of any preemptive rights of any present or future stockholders of the
Company, whether or not such securities are currently authorized.

                  (b)      The Company agrees not to incur any additional
Indebtedness in excess of $75,000, individually or in the aggregate, without the
unanimous written consent of the Investors or the Board Representatives.

                  (c)      To the extent shares of Offered Securities or Series
B Preferred Stock shall ultimately be issued pursuant to the conversion of the
Notes, the Company agrees to provide the holders of such shares with identical
contractual rights as those provided to the other holders of the same class or
series of securities. The Company further agrees to cause its Amended and
Restated Articles of Incorporation and any agreement applicable to such equity
securities to be amended to provide the holders of the Notes with such rights no
later than the earlier of the Subsequent Financing or the Financing Date.

                  (d)      The Company shall amend its Articles of Incorporation
to increase the authorized number of shares of Series B Preferred Stock no later
than the Financing Date.

                  (e)      The Company shall not issue any Notes to Subsequent
Investors except pursuant to this Agreement.

         7.       Representations and Warranties of the Investors. Each Investor
hereby severally represents and warrants to the Company that:

                  (a)      Such Investor has full power and authority and has
taken all required action necessary to permit it to execute and deliver and to
carry out the terms of this Agreement and all other documents, instruments or
transactions contemplated hereby.

                  (b)      Such Investor is acquiring the Notes and Warrants for
its own account and that the Notes, Warrants, Note Shares, Warrant Shares and
Conversion Shares are being or will be acquired by such Investor for the purpose
of investment and not with a view to distribution. Such Investor agrees that it
will not sell or transfer any such securities without registration under
applicable federal and state securities laws, or the availability of exemptions
therefrom. Such Investor understands that the documents evidencing securities
issued pursuant hereto will bear a restrictive legend stating that the
securities represented thereby have not been registered under applicable federal
and state securities laws and referring to restrictions on their transferability
and sale.

                  (c)      Such Investor acknowledges that it is an accredited
investor, as such term is defined in Rule 501 of the Securities Act of 1933, as
amended (the "Securities Act") and that it has such knowledge and experience in
financial and business matters that such Investor is

                                      -4-
<PAGE>   5

capable of evaluating the merits and risks of this investment and further
acknowledges that it is able to bear the economic risk of this investment.

                  (d)      Such Investor has carefully reviewed the
representations concerning the Company contained in this Agreement and has made
detailed inquiries concerning the Company, its business and its personnel; the
officers of the Company have made available to the Investor any and all written
information which it has requested and have answered to such Investor's
satisfaction all inquiries made by such Investor; and such Investor has adequate
net worth and means of providing for its current needs and contingencies to
sustain a complete loss of its investment in the Company; such Investor's
overall commitment to investments which are not readily marketable is not
disproportionate to its net worth and such Investor's investment in the Notes
and Warrants and the underlying securities will not cause such overall
commitment to become excessive.

                  (e)      Each Investor is an Institutional Investor within the
definition set forth in Section 203(c) of the Pennsylvania Securities Act of
1972, as amended.

         8.       Covenants of the Investors.

                  (a)      Each Investor who is or controls a member of the
Board of Directors of the Company (each, a "Member of the Board") hereby agrees
to vote or to cause such controlled person to vote to reserve, no later than the
earlier of the Subsequent Financing or the Financing Date, an adequate number of
Reserved Shares for conversion of the Notes, exercise of the Warrants and
conversion of the Note Shares and Warrant Shares, free of any preemptive rights
of any present or future stockholders of the Company, whether or not such
securities are currently authorized.

                  (b)      To the extent shares of Offered Securities or Series
B Preferred Stock shall ultimately be issued pursuant to the conversion of the
Notes, each Investor who is (i) a shareholder of the Company, (ii) a party to
any relevant agreement or (iii) a Member of the Board agrees to vote its shares
or interest, or agree to amend such relevant documents to provide the holders of
the Offered Securities or Series B Preferred Stock with identical contractual
rights as those provided to the other holders of the same class or series of
securities. Each Investor described in clauses (i), (ii) or (iii) above further
agrees to vote its shares or interest or to amend any relevant agreement to
cause the Amended and Restated Articles of Incorporation of the Company (the
"Charter") and any agreement applicable to the Offered Securities or Series B
Preferred Stock to be amended to provide the holders of the Notes with such
rights no later than the earlier of the Subsequent Financing or the Financing
Date.

                  (d)      Each Investor who is a shareholder of the Company
agrees to vote its shares to amend the Charter to increase the authorized number
of shares of Series B Preferred Stock no later than the Financing Date.

                                      -5-
<PAGE>   6

         9.       Amendments, Waivers, Etc. The Investors hereby agree that
neither this Agreement, the Notes, the Warrants, nor any term hereof or thereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the Company and the holders of at least 66 2/3% in original amount of
the Notes issued hereunder; provided, however, that this Agreement, the Notes,
the Warrants nor any term hereof or thereof may not be amended without the
consent of each Investor and Subsequent Investor if the effect of such amendment
would be to provide a potential investor with terms more favorable than those
pursuant to which the Investors and Subsequent Investors have invested.

         10.      Choice of Law. The internal laws of the State of Maryland
shall govern the enforceability and validity of this Agreement without regard to
the conflicts of law principles thereof.

         11.      Parties in Interest. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of, and be enforceable
by, the respective successors and assigns of the parties hereto. This Agreement
shall not run to the benefit of or be enforceable by any person other than a
party to this Agreement and its successors and assigns.

         12.      Expenses. The Company shall pay the reasonable costs and
expenses of the Investors in connection with the transactions contemplated
hereby.

         13.      Waiver. By executing this Agreement the Investors consent to
the issuance of the Notes and Warrants hereunder and waive any right of first
refusal or pre-emptive rights they may have under the Company's Articles of
Incorporation or By-laws, the Series A Preferred Stock Purchase Agreement, as
amended, the Series B Preferred Stock Purchase Agreement, as amended, or any
other agreement of the Company in connection with the issuance of the Notes and
Warrants hereunder.

         14.      Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience and reference only and do not
constitute a part of this Agreement.

         15.      Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -6-
<PAGE>   7

         IN WITNESS WHEREOF, the undersigned Investors have executed this
Convertible Promissory Note and Warrant Purchase Agreement as of the date first
above written.

                                     COMPANY:

                                     SEQUOIA SOFTWARE CORPORATION

                                     By: /s/ MARK WESKER, PRESIDENT
                                        ----------------------------------------
                                                  Mark Wesker, President

                                     INVESTORS:

                                     ANTHEM CAPITAL, L.P.

                                     By:     Anthem Capital Partners, L.P.
                                             General Partner
                                     By:     Anthem Capital Partners, Inc.
                                             General Partner

                                     By: /s/ WILLIAM M. GUST II
                                        ----------------------------------------

                                     Title:
                                           -------------------------------------

                                     NEPA VENTURE FUND II, L.P.

                                     By:     NEPA II Management Corporation
                                     Its:    General Partner

                                     By: /s/ MARC BENSON
                                        ----------------------------------------
                                          Marc Benson, Vice President
                                          8230 Boone Boulevard
                                          Suite 347
                                          Vienna, VA 22182

                                     /s/ RICHARD C. FAINT, Jr.
                                     -------------------------------------------
                                     Richard C. Faint, Jr.

                                     /s/ KENNETH E. HOMA
                                     -------------------------------------------
                                     Kenneth E. Homa

                       {Signatures Continue on Next Page}

                                      -7-
<PAGE>   8

APPROVED                                   NELSON BUNKER HUNT TRUST ESTATE
                                               - TRUST B

By:/s/ MIRO VRANAC, JR.                    By:/s/ F.C. VICKERS
   -----------------------------              ----------------------------------
Miro Vranac, Jr. Member Advisory                  F.C. Vickers, Trustee
      Board

                                           LYDA BUNKER HUNT TRUST -
                                           MARY HUDDLESTON

By:/s/ MARY HUNT HUDDLESTON                By:/s/ MIRO VRANAC, JR.
   -----------------------------              ----------------------------------
Mary Hunt Huddleston, Trustee                   Miro Vranac, Jr., Trustee

                                           /s/ MARY HUNT HUDDLESTON
                                           -------------------------------------
                                           Mary Hunt Huddleston

                                           FLANDERS LANGUAGE VALLEY FUND, C.V.A.

                                           By:/s/ PHILIP VERMEULEN
                                              ----------------------------------

                                           Title: CEO FLV Management NV
                                                 -------------------------------

                                           LAMBRO'S L.P.
                                           By:  CJ Capital Management LLC

                                           By:/s/ DENNIS KEMPER
                                              ----------------------------------
                                                       Dennis Kemper
                                                       Investment Advisor

                                           SMART TECHNOLOGY VENTURES 2

                                             By:/s/ DAVID NAZARIAN
                                                --------------------------------
                                                    Name: David Nazarian
                                                         -----------------------
                                                    Title: Chief Investment
                                                           Officer
                                                          ----------------------

                       {Signatures Continued on Next Page}

                                      -8-
<PAGE>   9

                                    /s/ HARRIS KAPLAN
                                    --------------------------------------------
                                    Harris Kaplan

                                    /s/ MARGARETHA ZEYEN MANY
                                    --------------------------------------------
                                    Margaretha Zeyen Many

                                    JODA ENTERPRISES, LTD.

                                    By: /s/ DAVID W. PATTON
                                       -----------------------------------------
                                    Name: David W. Patton
                                          --------------------------------------
                                    Title: President
                                          --------------------------------------

                                    --------------------------------------------

                                    By: /s/ ANDREW J. FILIPOWSKI
                                       -----------------------------------------
                                                 Andrew J. Filipowski

                                    Odyssey Capital, L.P.

                                    By: /s/ ANDREW L. BARROWAY
                                        ----------------------------------------
                                    Its:
                                        ----------------------------------------

                                    /s/ JOHN BENDHEIM
                                    --------------------------------------------
                                    John Bendheim

                                    SEQ Capital Investments

                                    By: /s/ DR. KOUROSH MADDAHI
                                        ----------------------------------------
                                    Its:
                                        ----------------------------------------

                                      R. Torbati Family Trust Dtd. 08/15/93

                                    By: /s/ RAYMOND TORBATI
                                        ----------------------------------------
                                    Its:
                                        ----------------------------------------

                                    /s/ W. PHILLIP WALSH AND EDNA A. WALSH
                                    --------------------------------------------
                                    W. Phillip Walsh and Edna A. Walsh as JTWROS

                                       -9-
<PAGE>   10
                                    /s/ THOMAS BARRY
                                    --------------------------------------------
                                    Thomas Barry

                                    /s/ CILLIAN O'BRADAIGH
                                    --------------------------------------------
                                    Cillian O'Bradaigh

                                    /s/ JOHN WHITTIER MASON
                                    --------------------------------------------
                                    John Whittier Mason

                                    /s/ BRIAN WADE
                                    --------------------------------------------
                                    Brian Wade

                                    /s/ LINNEA CONRAD
                                    --------------------------------------------
                                    Linnea Conrad

                                      -10-
<PAGE>   11

                                   Schedule 1

                              Schedule of Investors

<TABLE>
<CAPTION>
NAME OF INVESTOR                        PURCHASE PRICE OF NOTES AND WARRANTS
----------------                        ------------------------------------
<S>                                                     <C>
Anthem Capital, L.P.                                    $433,000

NEPA Venture Fund II, L.P.                              $167,000

Richard C. Faint, Jr.                                   $400,000

Kenneth Homa                                            $175,000

Nelson Bunker Hunt Trust Estate
- Trust B                                               $240,000

Lyda Bunker Hunt Trust - Mary
Huddleston                                               $80,000

Mary Hunt Huddleston                                     $8,000

Flanders Language Valley Fund, C.V.A.                   $500,000

Lambro's L.P.                                          $1,100,000

Smart Technology Ventures 2                             $500,000

Harris Kaplan                                           $100,000

Margaretha Zeyen Many                                   $100,000

Joda Enterprises, Ltd.                                   $85,000

Andrew J. Filipowski                                    $450,000

Odyssey Capital, LP                                     $100,000

John Bendheim                                           $150,000

SEQ Capital Investments                                 $175,000

R. Torbati Family Trust Dtd. 08/15/93                   $175,000
</TABLE>

                                     -11-
<PAGE>   12

<TABLE>
<CAPTION>
NAME OF INVESTOR                        PURCHASE PRICE OF NOTES AND WARRANTS
----------------                        ------------------------------------
<S>                                                   <C>
W. Phillip Walsh and Edna A.
Walsh as JTWROS                                         $7,000

Thomas Barry                                            $7,000

Cillian O'Bradaigh                                      $8,000

John Whittier Mason                                     $5,000

Brian Wade                                              $15,000

Linnea Conrad                                           $20,000

TOTAL                                                 $5,000,000
</TABLE>

                                      -12-
<PAGE>   13
                                                        EXHIBIT A - FORM OF NOTE

ALL INDEBTEDNESS (INCLUDING FEES AND ACCRUED INTEREST) OUTSTANDING UNDER
CONVERTIBLE SUBORDINATED PROMISSORY NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF
PAYMENT AND OTHERWISE TO THE INDEBTEDNESS OF THE COMPANY TO SILICON VALLEY BANK.
THIS CONVERTIBLE PROMISSORY NOTE IS IN ALL RESPECTS GOVERNED BY AND SUBJECT TO
THE LOANS FROM SILICON VALLEY BANK TO SEQUOIA SOFTWARE CORPORATION. REFERENCE IS
MADE TO SILICON VALLEY BANK FOR THE TERMS UPON WHICH PAYMENTS MAY BE MADE AND
RECEIVED UNDER THIS SUBORDINATED PROMISSORY NOTE AND FOR LIMITATIONS ON
ENFORCEMENT OF THE PROVISIONS HEREOF.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SEQUOIA SOFTWARE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.

                           CONVERTIBLE PROMISSORY NOTE

$_______                                                            May 10, 1999

        FOR VALUE RECEIVED, Sequoia Software Corporation, a Maryland corporation
(the "Company"), hereby promises to pay to the order of __________________, on
December 31, 1999, the principal amount of ____________________________, plus
interest in arrears from and including the date hereof on the principal balance
from time to time outstanding, compounded annually, at a rate per annum equal to
eight percent (8%). This Note may be prepaid in whole or in part, at any time or
from time to time, without premium or penalty. Interest shall be calculated on
the basis of actual number of days elapsed over a year of 360 days. Accrued
interest shall be paid annually commencing one year from the date hereof and on
each anniversary thereafter so long as the Note is outstanding. Notwithstanding
any other provision of this Note, the holder hereof does not intend to charge
and the Company shall not be required to pay any interest or other fees or
charges in excess of the maximum permitted by applicable law; any payments in
excess of such maximum shall be refunded to the Company or credited to reduce
principal hereunder. All payments received by the holder hereunder will be
applied first to costs of collection, if any, then to interest and the balance
to principal.

        Payments of principal and interest will be made by check in immediately
available United States funds sent to the holder at the address furnished to the
Company for that purpose.

<PAGE>   14

        This Note is one of a series of Convertible Promissory Notes of like
tenor, issued by the Company pursuant to and entitled to the benefits of a
certain Convertible Promissory Note and Warrant Purchase Agreement, dated as of
May 10, 1999, among the Company and the Investors named in Schedule 1 thereto
(as the same may be amended from time to time, hereinafter referred to as the
"Purchase Agreement"), and each holder of this Note, by his acceptance hereof,
agrees to be bound by the provisions of the Purchase Agreement. All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement. This Note will be registered
on the books of the Company or its agent as to principal and interest. Any
transfer of this Note will be effected only by surrender of this Note to the
Company and reissuance of a new note to the transferee.

        1. Events of Default. The outstanding principal and accrued interest on
this Note shall, at the option of the holder hereof, become due and payable
without notice or demand, upon the happening of any one of the following
specified events:

           (a) failure to pay any amount as herein set forth;

           (b) default in the performance by the Company of any other obligation
to the holder, which default is not cured within thirty (30) days after written
notice of such default from the holder;

           (c) insolvency (however evidenced) or the commission of any act of
insolvency;

           (d) the making of a general assignment for the benefit of creditors;

           (e) the filing of any petition or the commencement of any proceeding
by the Company or any endorser or guarantor of this Note for any relief under
any bankruptcy or insolvency laws, or any laws relating to the relief of
debtors, readjustment of indebtedness, reorganizations, compositions, or
extensions;

           (f) the filing of any petition or the commencement of any proceeding
against the Company or any endorser or guarantor of this Note for any relief
under any bankruptcy or insolvency laws, or any laws relating to the relief of
debtors, readjustment of indebtedness, reorganizations, compositions, or
extensions, which proceeding is not dismissed within sixty (60) days;

           (g) suspension of the transaction of the usual business of the
Company; or

           (h) the past or future making of a false representation or warranty
by the Company in connection with this Note.

        2. Conversion.

           (a) The principal outstanding under this Note and accrued interest
thereon shall be converted immediately upon the occurrence of a Subsequent
Financing into shares of the Offered

                                     - 2 -
<PAGE>   15

Securities at a conversion price equal to the per share purchase price of the
Offered Securities (as such price may be adjusted for stock splits, stock
dividends and the like).

           (b) If the Subsequent Financing does not occur by December 31, 1999,
the outstanding principal and interest on this Note shall be converted
immediately into shares of Series B Preferred Stock at a conversion price of
$0.6763 per share (as such price may be adjusted for stock splits, stock
dividends and the like); provided, however, that if any event shall have
occurred that results in an adjustment in the Conversion Price, as described in
Article Fourth.B.4 of the Company's Amended and Restated Certificate of
Incorporation, the shares of Series B Preferred Stock issuable hereunder shall
be entitled to the benefit of such adjustment as if such shares had been
outstanding as of the date of such event and provided further that if the Board
of Directors of the Company and the Company's investment banking firm
collectively determine that the Company will not be adversely affected by
repayment of all or part of the Notes issued pursuant to the Purchase Agreement
after the Financing Date, the holder of this Note may elect to receive repayment
rather than to convert into Series B Preferred.

           (c) Upon conversion of this Note the holder shall be entitled to
become a party to, and enjoy the benefits of, any related agreement entered into
by the initial purchasers of the security into which this Note is then
converted.

        5. Expenses of Collection. The Company agrees to pay the holder's
reasonable costs in collecting and enforcing this Note, including reasonable
attorney's fees.

        6. Waiver or Amendment. No waiver of any obligation of the Company under
this Note or any amendment to this Note shall be effective unless it is in a
writing signed by the holders of Notes constituting at least 66 2/3% of the
original principal amount of the Notes issued under the Purchase Agreement,
except that no amendment shall reduce the principal amount or the interest rate
of this Note without the written consent of the holder hereof. A waiver by the
holder of any right or remedy under this Note on any occasion shall not be a bar
to exercise of the same right or remedy on any subsequent occasion or of any
other right or remedy at any time.

        7. Notice. Any notice required or permitted under this Note shall be in
writing and shall be deemed to have been given on the date of delivery, if
personally delivered to the party to whom notice is to be given, or on the fifth
business day after mailing, if mailed to the party to whom notice is to be
given, by certified mail, return receipt requested, postage prepaid, and
addressed as follows:

           If to the Company, at

           Sequoia Software Corporation
           5457 Twin Knolls Road, Suite 310
           Columbia, MD  21045

                                     - 3 -
<PAGE>   16

           If to the holder, at the most recent address provided to the Company
by the holder for such purpose; or, in each case, to the most recent address,
specified by written notice, given to the sender pursuant to this paragraph.

        8. Waiver by Company. The Company hereby expressly waives presentment,
demand, and protest, notice of demand, dishonor and nonpayment of this Note, and
all other notices or demands of any kind in connection with the delivery,
acceptance, performance, default or enforcement hereof, and hereby consents to
any delays, extensions of time, renewals, waivers or modifications that may be
granted or consented to by the holder hereof with respect to the time of payment
or any other provision hereof.

        9. Severability. In the event any one or more of the provisions of this
Note shall for any reason be held to be invalid, illegal or unenforceable, in
whole or in part or in any respect, or in the event that any one or more of the
provisions of this Note operate or would prospectively operate to invalidate
this Note, then and in any such event, such provision(s) only shall be deemed
null and void and shall not affect any other provision of this Note and the
remaining provisions of this Note shall remain operative and in full force and
effect and in no way shall be affected, prejudiced, or disturbed thereby.

        10. Governing Law. This Note shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland.

                                             SEQUOIA SOFTWARE CORPORATION

ATTEST:                                      By:
                                                --------------------------------
                                                   President

------------------

                                     - 4 -
<PAGE>   17

                                                     EXHIBIT B - FORM OF WARRANT

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SEQUOIA SOFTWARE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.

                        PREFERRED STOCK PURCHASE WARRANT

Warrant No. P__-__

                          SEQUOIA SOFTWARE CORPORATION

                             Void after May 10, 2004

         1. Issuance. This Warrant is issued to _______________ (with its
successors in interest, the "Investor" or the "Holder") by Sequoia Software
Corporation, a Maryland corporation (hereinafter with its successors called the
"Company") pursuant to the terms of a Convertible Promissory Note and Warrant
Purchase Agreement dated as of May 10, 1999 (the "Purchase Agreement"). All
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Purchase Agreement. This Warrant shall become
exercisable for shares of the Offered Securities or Series B Preferred, as
provided in Section 2 hereof, on the earlier of the Subsequent Financing or the
Financing Date.

         2. Exercise Price; Number and Type of Shares.

         (a) If a Subsequent Financing occurs prior to the Financing Date, the
Holder may exercise this Warrant for shares of Offered Securities at an exercise
price equal to the price of one share of the Offered Securities at the time of
original issuance. If, however, a Subsequent Financing does not occur prior to
the Financing Date, the Holder may exercise this Warrant for shares of Series B
Preferred at an exercise price equal to $0.6763, as adjusted for stock splits,
stock dividends and the like (the applicable exercise price is referred to
herein as the "Exercise Price").

         (b) If a Subsequent Financing occurs prior to the Financing Date, this
Warrant shall be exercisable for the number of shares of Offered Securities
equal to 25% of the total principal amount and accrued interest thereon of the
Note issued to the Investor pursuant to the Purchase

<PAGE>   18

Agreement (immediately prior to conversion of such Note in accordance with its
terms) divided by the Exercise Price. If, however, a Subsequent Financing does
not occur prior to the Financing Date, this Warrant shall be exercisable for the
number of shares of Series B Preferred equal to 25% of the total principal
amount and accrued interest thereon of the Note issued to the Investor pursuant
to the Purchase Agreement (immediately prior to conversion of such Note in
accordance with its terms) divided by the Exercise Price (the type of securities
for which this Warrant may be exercised are referred to herein as the "Warrant
Securities").

         (c) Both the Exercise Price and the number of shares of Warrant
Securities issuable upon exercise of this Warrant shall be subject to adjustment
as provided below.

         3. Payment of Exercise Price. The Exercise Price may be paid (i) in
cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Exercise Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Exercise Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (iv) by any combination of the foregoing.

         4. Net Issue Election. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant by paying the Exercise Price set
forth in Section 3, the Holder may, by providing notice thereof to the Company
along with the Notice of Exercise, elect to exercise the Warrant for a reduced
number of Shares determined in accordance with the following formula:

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

where    X =  the number of shares to be issued to the Holder

         Y =  the number of shares purchasable under this Warrant (at the date
              of such exercise).

         A =  the fair market value of one share (at the date of such exercise)
              as determined in such reasonable manner as may be prescribed in
              good faith by the Company's Board of Directors

         B =  Exercise Price

         5. Registration Rights. Upon exercise of this Warrant the Holder shall
be entitled to the same registration rights enjoyed by the initial purchasers of
the Warrant Securities.

         6. Partial Exercise. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.

                                     - 2 -
<PAGE>   19

         7. Issuance Date. The person or persons in whose name or names any
certificate representing shares of Warrant Securities is issued hereunder shall
be deemed to have become the Holder of record of the shares represented thereby
as at the close of business on the date this Warrant is exercised with respect
to such shares, whether or not the transfer books of the Company shall be
closed.

         8. Expiration Date. This Warrant shall expire at the close of business
on the fifth anniversary of the date this warrant was originally issued, and
shall be void thereafter.

         9. Reserved Shares; Valid Issuance. The Company covenants that it will
at all times after the creation of the Warrant Securities and up to the earlier
of the Subsequent Financing or the Financing Date reserve and keep available
such number of its authorized shares of Offered Securities, free from all
preemptive or similar rights therein, as will be sufficient to permit,
respectively, the exercise of this Warrant in full. The Company further
covenants that such shares as may be issued pursuant to such exercise will, upon
issuance, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issuance thereof.

         10. Stock Dividends. If after the Original Issue Date, the Company
shall subdivide the Warrant Securities, by split-up or otherwise, or combine the
Warrant Securities, or issue additional shares of Warrant Securities in payment
of a stock dividend on the Warrant Securities, the number of shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination, and the Exercise Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.

         11. Antidilution Provisions. If after the Original Issue Date, the
Company shall issue Warrant Securities at a per share price lower than the price
at which the same type of Warrant Securities were sold to the original
purchasers thereof, the number of shares issuable on the exercise of this
Warrant shall be increased and the Exercise Price shall be decreased in
accordance with the antidilution formula provided in the Company's Articles of
Incorporation with respect to such Warrant Securities.

         12. Mergers and Reclassifications. If after the Original Issue Date,
there shall be any reclassification, capital reorganization or change of the
Warrant Securities (other than as a result of a subdivision, combination or
stock dividend provided for in Section 10 hereof), or any consolidation of the
Company with, or merger of the Company into, another corporation or other
business organization (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification
or change of the outstanding Warrant Securities), or any sale or conveyance to
another corporation or other business organization of all or substantially all
of the assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant

                                     - 3 -
<PAGE>   20

in full, the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, reorganization, change,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Warrant Securities which might have been purchased by the Holder immediately
prior to such reclassification, reorganization, change, consolidation, merger,
sale or conveyance (or, if there are no Holders of Warrant Securities at such
time, by a holder of the number of shares of Warrant Securities which might have
been acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Warrant
Securities of all shares of Warrant Securities receivable upon such exercise),
and in any such case appropriate provisions shall be made with respect to the
rights and interest of the Holder to the end that the provisions hereof
(including without limitation, provisions for the adjustment of the Exercise
Price and the number of shares issuable hereunder) shall thereafter be
applicable in relation to any shares of stock or other securities and property
thereafter deliverable upon exercise hereof.

         13. Fractional Shares. In no event shall any fractional share of
Warrant Securities be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the Holder would, except as provided in
this Section 11, be entitled to receive a fractional share of Warrant
Securities, then the Company shall issue the next higher number of full shares
of Warrant Securities, issuing a full share with respect to such fractional
share.

         14. Notices of Record Date, Etc. In the event of:

            (a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,

            (b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets, or

            (c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then and in each such event the Company will mail or
cause to be mailed to the Holder a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which any such reclassification, reorganization,
consolidation, merger, sale or conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record in respect of such event are to be determined. Such notice
shall be mailed at least 20 days prior to the date specified in such notice on
which any such action is to be taken.

         15. Other Warrants. This Warrant is one of a series of warrants
(collectively, the "Warrants") that were originally issued by the Company
pursuant to the Purchase Agreement.

                                     - 4 -
<PAGE>   21

         16. Amendment. The terms of all the Warrants may be amended, modified
or waived only with the written consent of the Company and the holders of
Warrants representing at least 66-2/3% of the number of shares of Offered
Securities then issuable upon the exercise of the Warrants. No such amendment,
modification or waiver shall be effective as to this Warrant unless the terms of
such amendment, modification or waiver shall apply with the same force and
effect to all of the other Warrants then outstanding.

         17. Warrant Register; Transfers, Etc.

            (a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.

            (b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, for
transfer of this Warrant as an entirety by the Holder, the Company shall issue a
new warrant of the same denomination to the assignee. Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Offered
Securities purchasable hereunder, the Company shall issue a new warrant to the
assignee, in such denomination as shall be requested by the Holder hereof, and
shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.

            (c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as Anthem Capital, L.P. is the registered holder
of this Warrant, no indemnity shall be required other than its written agreement
to indemnify the Company against any loss arising from the issuance of such new
warrant.

         18. No Impairment. The Company will not, by amendment of its Amended
and Restated Articles of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, 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 action as may be necessary or
appropriate in order to protect the rights of the Holder.

                                     - 5 -
<PAGE>   22

         19. Governing Law. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
Maryland without regard to the conflicts of law principles thereof.

         20. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.

         21. Business Days. If the last or appointed day for the taking of any
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in the State of Maryland, then such action
may be taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.

                                     - 6 -
<PAGE>   23

Original Issue Date:   May 10, 1999         SEQUOIA SOFTWARE CORPORATION

(Corporate Seal)                            By:
                                               -------------------------------

                                            Title:
                                                  ----------------------------
Attest:

---------------------------

                                     - 7 -
<PAGE>   24

                                  SUBSCRIPTION

To:                                                    Date:
   -------------------------                                --------------------

         The undersigned hereby subscribes for __________ shares of Offered
Securities covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:

                                  ------------------------------
                                  Signature

                                  ------------------------------
                                  Name for Registration

                                  ------------------------------
                                  Mailing Address

                            NET ISSUE ELECTION NOTICE

To:                                                    Date:
   -------------------------                                --------------------

         The undersigned hereby elects under Section 4 to surrender the right to
purchase _______ shares of Offered Securities pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.

                                  ------------------------------
                                  Signature

                                  ------------------------------
                                  Name for Registration

                                  ------------------------------
                                  Mailing Address

                                     - 8 -
<PAGE>   25

                                   ASSIGNMENT

            For value received ____________________________ hereby sells,

assigns and transfers unto _________________________________________________

--------------------------------------------------------------------------------
    Please print or typewrite name and address of Assignee

--------------------------------------------------------------------------------

the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.

Dated:
      ------------------------------

                                   ------------------------------

In the Presence of:

------------------------------

                                     - 9 -
<PAGE>   26

                                                EXHIBIT C - CAPITALIZATION TABLE

                          SEQUOIA SOFTWARE CORPORATION
                            STOCK & OPTION OWNERSHIP
                              AS OF MARCH 31, 1999

<TABLE>
<CAPTION>
                               As of Dec-31-98       New Purchases  As of Mar-31-99   Per Cent           Position (if Employee)
                               ---------------       -------------  ---------------   --------           ----------------------
<S>                            <C>                  <C>             <C>              <C>            <C>
      COMMON STOCK
      Mark Wesker                    5,000,000                         5,000,000         15.07%       President

      Anil Sethi                     5,000,000                         5,000,000         15.07%       Founder, Chief Technology
                                                                                                      Officer
      Keith Tipton                      56,250                            56,250          0.17%       Options Exercised at $0.025
                                                                                                      per share - 12/98
      Steve Wingert                      6,250                             6,250          0.02%       Options Exercised at $0.025
                                                                                                      per share - 12/98
      Beth Mantegna                          0          6,250              6,250          0.02%       Options Exercised at $0.025
                                                                                                      per share - 3/99
      Chris McClelland                       0          3,750              3,750          0.01%       Options Exercised at $0.025
                                                                                                      per share - 3/99
      Joda Enterprises, Inc.           149,614                           149,614          0.45%
                               -------------------------------     --------------     ----------
                                    10,212,114         10,000         10,222,114         30.81%
                               -------------------------------     --------------     ----------
</TABLE>

<TABLE>
<CAPTION>
      CONVERTIBLE PREFERRED STOCK
      SERIES A
<S>                                                <C>                    <C>               <C>
      Anthem Capital                                 4,032,438              4,032,438         12.15%

      NEPA Ventures                                  2,016,219              2,016,219          6.08%

      David Hungerford                                 806,488                806,488          2.43%
      Rick Faint                                       907,299                907,299          2.73%
      Ken Homa                                         302,433                302,433          0.91%
      SERIES B                                                                                 0.00%
      Anthem Capital                                 1,010,290              1,010,290          3.05%

      NEPA Ventures                                    505,145                505,145          1.52%
      Nelson Bunker Hunt Trust Estate - Trust B      2,144,019              2,144,019          6.46%
      Lyda Hunt-Bunker Trust - Mary Huddleston         739,317                739,317          2.23%
      Mary Hunt Huddleston                              73,931                 73,931          0.22%
      O'Bryan Community Property Trust                 739,317                739,317          2.23%
      Flanders Language Valley Fund, C.V.A.          4,435,901              4,435,901         13.37%
                                               ----------------         --------------     ----------
                                                    17,712,797             17,712,797         53.39%
                                               ----------------         --------------     ----------
</TABLE>

<PAGE>   27

<TABLE>
<CAPTION>
      OPTIONS
<S>                                                <C>                     <C>                <C>
      Jack Schuster                                  1,000,000               1,000,000          3.01%   Senior Software Engineer

      Rick Faint                                     1,000,000               1,000,000          3.01%   Chief Executive Officer

      Ken Homa - Director                              100,000                 100,000          0.30%
      Jasen Fici                                       150,000                 150,000          0.45%   Senior Technology Architect
      Marc Rubin                                       300,000                 300,000          0.90%   Chief Financial Officer
      Bill Anderson                                     25,000                  25,000          0.08%   Senior Customer Service
                                                                                                        Representative
      Ron Capwell                                       50,000                  50,000          0.15%   Senior Software Engineer
      Todd Jackowski                                    25,000                  25,000          0.08%   Software Engineer
      Arul Kaliappan                                    25,000                  25,000          0.08%   Software Engineer
      Rich Scarbath                                     25,000                  25,000          0.08%
      Mendel Friedman                                   50,000                  50,000          0.15%
      Frank Schmidt                                     50,000                  50,000          0.15%
      Ken Klebanow, M.D.                                30,000                  30,000          0.09%
      Middelton, Limburg & Company, Inc.                12,500                  12,500          0.04%
      Joda Enterprises, Inc.                            12,500                  12,500          0.04%
                                               ----------------          --------------     ----------
      Total Employee Sharers                         2,855,000               2,855,000          8.61%
                                               ----------------          --------------     ----------
</TABLE>

<TABLE>
<CAPTION>
      DIRECTORS OPTION GRANTS
<S>                                                        <C>      <C>           <C>              <C>
      William Gust                                           0        100,000       100,000          0.30%
      Marc Benson                                            0         75,000        75,000          0.23%
      Ken Homa                                               0         50,000        50,000          0.15%
      Philip Vermeulin                                       0         25,000        25,000          0.08%
      Charles Vickers                                        0         50,000        50,000          0.15%
      Rick Faint                                             0         50,000        50,000          0.15%

                                               -------------------------------   -----------     ----------
      Total Director Options                                 0        350,000       350,000          1.05%
                                               -------------------------------   -----------     ----------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
      RESERVED EMPLOYEE OPTION POOL                Granted/(Forfeited)
<S>                            <C>           <C>             <C>                <C>
      Keith Tipton                     0                               0          0.00%   Vice President of Engineering

      David Rice                 150,000                         150,000          0.45%   Vice President of Integration Services

      Joe Kessel                 300,000      (150,000)          150,000          0.45%   Vice President of Sales
      Jeff Mason                  60,000         65,000          125,000          0.38%   Director of Marketing
      Steve Wingert                    0                               0          0.00%   Senior Software Engineer
      Paige Rees                  10,000          1,250           11,250          0.03%   Accounting Assistant (former Receptionist)

      Beth Mantegna               25,000       (25,000)                0          0.00%   Product Integration Manager
      Ron Louzon                  15,000          5,000           20,000          0.06%   Senior Software Engineer
      Kris Schroeder              25,000         15,000           40,000          0.12%   Quality Assurance Engineer
      Denise Williams             10,000          2,500           12,500          0.04%   Documentation Specialist
      John Hagius                 25,000          5,000           30,000          0.09%   Senior Software Engineer
      Ron Capwell                 25,000          5,000           30,000          0.09%   Senior Software Engineer
</TABLE>

                                     - 2 -
<PAGE>   28

<TABLE>
<S>                           <C>             <C>                <C>            <C>
      Arul Kaliappan              25,000         10,000           35,000          0.11%   Software Engineer
      Bill Anderson                    0                               0          0.00%   Senior Customer Service Representative
      Chris McCarthy              75,000         25,000          100,000          0.30%   Vice President, European Operations
      Dave Gutberlet              15,000          2,500           17,500          0.05%   Quality Assurance Engineer
      Bill Stutz                  20,000          5,000           25,000          0.08%   Software Engineer
      Cheryl McNaught                  0                               0          0.00%   Training Specialist
      Paul Martin                 35,000         90,000          125,000          0.38%   Product Development Manager
      Chris McClelland            15,000       (15,000)                0          0.00%   Software Engineer
      Sanders Damron              10,000          1,250           11,250          0.03%   Marketing Assistant
      Ron Boyd                    15,000                          15,000          0.05%   Southeast Regional Sales Manager
      Scarlett Zimmerman           5,000                           5,000          0.02%   Engineering Administrative Assistant
      Lee Kelly                        0                               0          0.00%   Quality Assurance Engineer
      Myo Kyaw                    20,000                          20,000          0.06%   Software Engineer
      Sam Fogle                   25,000          5,000           30,000          0.09%   Program Manager
      Jay Honeywell               12,000       (12,000)                0          0.00%   Software Engineer
      Jen Spiegel                 50,000                          50,000          0.15%   Director of Human Resources
      Maureen Gillen              15,000       (15,000)                0          0.00%   Regional Sales Manager
      Ken Davis                   25,000                          25,000          0.08%   Software Engineer
      Linda Amorrigi              25,000       (25,000)                0          0.00%   Product Integration Manager
      Jack Stose                  50,000         75,000          125,000          0.38%
      Bill Schneider              25,000         10,000           35,000          0.11%
      Bryan Caperletti            25,000         25,000           50,000          0.15%
      Grant English               50,000                          50,000          0.15%
      Marc Rubin                       0         50,000           50,000          0.15%
      Jasen Fici                       0        100,000          100,000          0.30%
      Todd Jackowski                   0          5,000            5,000          0.02%
      Leisa Clayton                    0         25,000           25,000          0.08%
      Mike LeMire                      0         25,000           25,000          0.08%
      Eric Spiegel                     0         25,000           25,000          0.08%
      Chuck Spear                      0         12,500           12,500          0.04%
      Jim Hooker                       0         15,000           15,000          0.05%
      Dave Harter                      0          5,000            5,000          0.02%
      Carie Hanley                     0          5,000            5,000          0.02%
      Jim Bielski                      0         10,000           10,000          0.03%
      Stephanie Gillen                 0         15,000           15,000          0.05%
      David Rundle                     0         10,000           10,000          0.03%
      Craig Holbien                    0         15,000           15,000          0.05%
      George Moutsiakis                0         15,000           15,000          0.05%
      Steve Scribner                   0         15,000           15,000          0.05%
      Dmitriy Shvadskiy                0         15,000           15,000          0.05%
      Debbie Alexander                 0          5,000            5,000          0.02%
      Bruce Basheer                    0         15,000           15,000          0.05%
      Wade Laye                        0         10,000           10,000          0.03%
      Anthony Marchetti                0         10,000           10,000          0.03%
      Jen Streeter                     0         15,000           15,000          0.05%
      Remaining Reserve          864,421      (523,000)          331,421          1.00%
                            ---------------------------------------------     ----------
                               2,046,421              0        2,036,421          6.14%
                            ---------------------------------------------     ----------
      Total Fully Diluted     32,826,332        360,000       33,176,332        100.00%
                            ----------------------------   --------------     ----------
</TABLE>

                                     - 3 -
<PAGE>   29

                          SEQUOIA SOFTWARE CORPORATION
                            STOCK & OPTION OWNERSHIP
                             AS OF DECEMBER 31, 1998
        AFTER CLOSING OF SECOND TRAUNCHE OF SERIES B - SEPTEMBER 28, 1998

<TABLE>
<CAPTION>
                                As of Sep-28-98       New Purchases   As of Dec-31-98   Per Cent           Position (if Employee)
                                ---------------       -------------   ---------------   --------           ----------------------
<S>                             <C>                  <C>             <C>                <C>           <C>
      COMMON STOCK

      Mark Wesker                     5,000,000                          5,000,000         15.23%       President

      Anil Sethi                      5,000,000                          5,000,000         15.23%       Founder, Chief Technology
                                                                                                        Officer
      Keith Tipton                                      56,250              56,250          0.17%       Options Exercised at $0.025
                                                                                                        per share - 12/98
      Steve Wingert                                      6,250               6,250          0.02%       Options Exercised at $0.025
                                                                                                        per share - 12/98
      Joda Enterprises, Inc.            149,614                            149,614          0.46%
                                -------------------------------      --------------     ----------
                                     10,149,614         62,500          10,212,114         31.11%
                                -------------------------------      --------------     ----------
</TABLE>

<TABLE>
<CAPTION>
      CONVERTIBLE PREFERRED STOCK
      SERIES A
<S>                                                <C>           <C>              <C>               <C>
      Anthem Capital                                 4,032,438                       4,032,438         12.28%
      NEPA Ventures                                  2,016,219                       2,016,219          6.14%
      David Hungerford                                 806,488                         806,488          2.46%
      Rick Faint                                       907,299                         907,299          2.76%
      Ken Homa                                         302,433                         302,433          0.92%
      SERIES B                                                                                          0.00%
      Anthem Capital                                 1,010,290                       1,010,290          3.08%
      NEPA Ventures                                    505,145                         505,145          1.54%
      Nelson Bunker Hunt Trust Estate - Trust B      2,144,019                       2,144,019          6.53%
      Lyda Hunt-Bunker Trust - Mary Huddleston         739,317                         739,317          2.25%
      Mary Hunt Huddleston                              73,931                          73,931          0.23%
      O'Bryan Community Property Trust                 739,317                         739,317          2.25%
      Flanders Language Valley Fund, C.V.A.                  0      4,435,901        4,435,901         13.51%
                                               ----------------                  --------------     ----------
                                                    13,276,896                      17,712,797         53.96%
                                               ----------------                  --------------     ----------
</TABLE>

                                     - 4 -
<PAGE>   30

<TABLE>
<CAPTION>
      OPTIONS
<S>                                                 <C>               <C>                <C>
      Jack Schuster                                  1,000,000         1,000,000          3.05%   Senior Software Engineer
      Rick Faint                                     1,000,000         1,000,000          3.05%   Chief Executive Officer
      Ken Homa - Director                              100,000           100,000          0.30%
      Jasen Fici                                       150,000           150,000          0.46%   Senior Technology Architect
      Marc Rubin                                       300,000           300,000          0.91%   Chief Financial Officer
      Bill Anderson                                     25,000            25,000          0.08%   Senior Customer Service
                                                                                                  Representative
      Ron Capwell                                       50,000            50,000          0.15%   Senior Software Engineer
      Todd Jackowski                                    25,000            25,000          0.08%   Software Engineer
      Arul Kaliappan                                    25,000            25,000          0.08%   Software Engineer
      Rich Scarbath                                     25,000            25,000          0.08%
      Mendel Friedman                                   50,000            50,000          0.15%
      Frank Schmidt                                     50,000            50,000          0.15%
      Ken Klebanow, M.D.                                30,000            30,000          0.09%
      Middelton, Limburg & Company, Inc.                12,500            12,500          0.04%
      Joda Enterprises, Inc.                            12,500            12,500          0.04%
                                               ----------------      ------------     ----------
      Total Employee Sharers                         2,855,000         2,855,000          8.70%
                                               ----------------      ------------     ----------
</TABLE>

<TABLE>
<CAPTION>
      RESERVED EMPLOYEE OPTION POOL                Granted/(Forfeited)
<S>                                 <C>          <C>            <C>          <C>
      Keith Tipton                  125,000      (125,000)               0     0.00%   Vice President of
                                                                                       Engineering
      David Rice                    150,000                        150,000     0.46%   Vice President of Integration
                                                                                       Services
      Joe Kessel                    300,000                        300,000     0.91%   Vice President of Sales
      Jeff Mason                     60,000                         60,000     0.18%   Director of Marketing
      Steve Wingert                  25,000       (25,000)               0     0.00%   Senior Software Engineer
      Paige Rees                     10,000                         10,000     0.03%   Accounting Assistant (former
                                                                                       Receptionist)
      Beth Mantegna                  25,000                         25,000     0.08%   Product Integration Manager
      Ron Louzon                     15,000                         15,000     0.05%   Senior Software Engineer
      Kris Schroeder                 25,000                         25,000     0.08%   Quality Assurance Engineer
      Denise Williams                10,000                         10,000     0.03%   Documentation Specialist
      John Hagius                    25,000                         25,000     0.08%   Senior Software Engineer
      Ron Capwell                    25,000                         25,000     0.08%   Senior Software Engineer
      Arul Kaliappan                 25,000                         25,000     0.08%   Software Engineer
      Bill Anderson                   5,000        (5,000)               0     0.00%   Senior Customer Service Representative
      Chris McCarthy                 75,000                         75,000     0.23%   Vice President, European Operations
      Dave Gutberlet                 15,000                         15,000     0.05%   Quality Assurance Engineer
      Bill Stutz                     20,000                         20,000     0.06%   Software Engineer
      Cheryl McNaught                20,000       (20,000)               0     0.00%   Training Specialist
</TABLE>

                                     - 5 -
<PAGE>   31

<TABLE>
<S>                              <C>             <C>            <C>           <C>
      Paul Martin                    35,000                         35,000     0.11%   Product Development
                                                                                       Manager
      Chris McClelland               15,000                         15,000     0.05%   Software Engineer
      Sanders Damron                 10,000                         10,000     0.03%   Marketing Assistant
      Ron Boyd                       15,000                         15,000     0.05%   Southeast Regional Sales
                                                                                       Manager
      Scarlett Zimmerman              5,000                          5,000     0.02%   Engineering Administrative
                                                                                       Assistant
      Lee Kelly                      15,000       (15,000)               0     0.00%   Quality Assurance Engineer
      Myo Kyaw                       20,000                         20,000     0.06%   Software Engineer
      Sam Fogle                      25,000                         25,000     0.08%   Program Manager
      Jay Honeywell                  15,000        (3,000)          12,000     0.04%   Software Engineer
      Jen Spiegel                    15,000         35,000          50,000     0.15%   Director of Human
                                                                                       Resources
      Maureen Gillen                 15,000                         15,000     0.05%   Regional Sales Manager
      Ken Davis                      15,000         10,000          25,000     0.08%   Software Engineer
      Linda Amorrigi                 25,000                         25,000     0.08%   Product Integration Manager
      Jack Stose                                    50,000          50,000     0.15%
      Bill Schneider                                25,000          25,000     0.08%
      Bryan Caperletti                              25,000          25,000     0.08%
      Grant English                                 50,000          50,000     0.15%
      Remaining Reserve             866,421        (2,000)         864,421     2.63%
                                ------------------------------------------- ---------
                                  2,046,421              0       2,046,421     6.23%
                                ------------------------------------------- ---------
                                ---------------------------    ------------ ---------
      Total Fully Diluted        28,327,931         62,500      32,826,332   100.00%
                                ---------------------------    ------------ ---------
</TABLE>

NOTE:

Additional shares of up to 500,000 are expected to be issued effective March 31,
1999 to Directors and Management.

                                     - 6 -
<PAGE>   32

                                            EXHIBIT D - SCHEDULE OF INDEBTEDNESS

1.    Liens and security interests granted to Silicon Valley Bank on all
      corporate assets under the terms and conditions of that certain loan dated
      May 14, 1997. Loan amount at the balance sheet date of March 31, 1999 is
      $118,322

2.    Lease Agreement dated November 9, 1998 between Principal Mutual Life
      Insurance Company and Sequoia Software Corporation relating to the
      company's offices.

3.    Lease Agreement dated August 30, 1996 between Danka Financial Services and
      Sequoia Software Corporation relating to a copier.

4.    Lease Agreement dated February 17, 1998 between American Business Leasing
      (as assignee of Primary Capital Corp.) and Sequoia Software Corporation
      relating to office furniture.

5.    Lease Agreement dated October 21, 1997 between American Business Credit
      and Sequoia Software Corporation relating to a copier.

6.    Lease Agreement dated December 12, 1997 between Leasing Technologies
      International, Inc. and Sequoia Software Corporation relating to various
      equipment.

7.    Line of Credit dated March 26, 1999 with Silicon Valley Bank and Sequoia
      Software Corporation for working capital. Advance amount at the balance
      sheet date of March 31, 1999 is $240,489.

<PAGE>   33

                      EXHIBIT E - AMENDED AND RESTATED ARTICLES OF INCORPORATION<PAGE>   1
                                                                   EXHIBIT 10.14

                    AMENDMENT TO CONVERTIBLE PROMISSORY NOTE
           AND WARRANT PURCHASE AGREEMENT AND PREFERRED STOCK PURCHASE
                                    WARRANT

         This Amendment (this "Amendment") to that certain Convertible
Promissory Note and Warrant Purchase Agreement dated as of May 10, 1999 (the
"Purchase Agreement") and Preferred Stock Purchase Warrant is made as of March
___, 2000 by and among Sequoia Software Corporation, a Maryland corporation (the
"Company") and the parties set forth on Schedule I hereto (the
"Warrantholders"). The Company and the Warrantholders are collectively referred
to herein as the "Parties". All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Purchase Agreement.

                                    RECITALS

         WHEREAS, the Company issued and sold Notes in an original aggregate
principal amount of $5,000,000 to the Warrantholders pursuant to the terms of
the Purchase Agreement; and

         WHEREAS, concurrently with the Initial Closing and Subsequent Closings
of the purchase and sale of the Notes under the Purchase Agreement, in
consideration of the purchase of the Notes, the Company issued to each
Warrantholder a warrant (collectively, the "Warrants") in the form attached
hereto as Exhibit A; and

         WHEREAS, pursuant to the terms of the Purchase Agreement, each
Warrantholder converted the outstanding principal and accrued but unpaid
interest on its Note into shares of the Company's Series C Convertible Preferred
Stock, par value $0.001 per share (the "Series C Preferred Stock"); and

         WHEREAS, the Parties desire to amend the terms of the Purchase
Agreement and the Warrants to set forth their mutual agreement and
understanding.

         NOW, THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Amendment, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the Parties
hereby agree as follows:

         1. Amendment of Purchase Agreement. The Purchase Agreement shall be
deemed to be amended as follows: the following shall be added immediately after
the last sentence of Section 3:

                  "Notwithstanding anything to the contrary herein, in the event
         that the Series C Preferred Stock shall have automatically converted
         into shares of common stock, par value $0.001 per share, of the Company
         ("Common Stock") pursuant to the terms of the Articles of Amendment and
         Restatement of the Company, the term "Offered Securities" shall mean
         shares of Common Stock."

<PAGE>   2

         2. Amendment of Warrant. Each Warrant held by each Warrantholder shall
be deemed to be amended as follows:

                  a) the following clause shall be deemed to be added
immediately after the end of the first sentence of paragraph (a) of Section 2:

                           "; provided, that, notwithstanding anything to the
contrary herein, in the event that pursuant to Section 3 of the Purchase
Agreement, as amended, shares of Common Stock shall constitute Offered
Securities, the Holder may exercise this Warrant for shares of Offered
Securities at an exercise price equal to $4.11.

                  b) the following clause shall be deemed to be added
         immediately after the end of the first sentence of paragraph (b) of
         Section 2:

                           "; provided, that, notwithstanding anything to the
                  contrary herein, in the event that pursuant to Section 3 of
                  the Purchase Agreement, as amended, shares of Common Stock
                  shall constitute Offered Securities, this Warrant shall be
                  exercisable by the Holder for the number of shares of Common
                  Stock set forth opposite its name on Schedule I hereto, as may
                  be adjusted by the Company from time to time for stock
                  dividends, stock splits, reclassifications, combinations,
                  consolidations or similar events."

                  c) the following clause shall be deemed to be added
         immediately after the end of the first sentence of Section 5:

                           "; provided, that, notwithstanding anything to the
         contrary herein, in the event that pursuant to Section 3 of the
         Purchase Agreement, as amended, shares of Common Stock shall constitute
         Offered Securities, upon exercise of this Warrant the Holder shall be
         entitled to the same registration rights enjoyed by the initial
         purchasers of the Series C Preferred Stock, other than the right of
         Baker Communications Fund, L.P. to request registration of the Offered
         Securities."

3.       Representations and Warranties of the Parties. Each Party hereby
represents and warrants to the other Parties that it has full power and
authority and has taken all required action necessary to permit it to execute
and deliver and to carry out the terms of this Amendment and all other
documents, instruments or transactions contemplated hereby.

4.       Choice of Law. The internal laws of the State of Maryland shall govern
the enforceability and validity of this Agreement without regard to the
conflicts of law principles thereof.

5.       Parties in Interest. The terms and provisions of this Amendment shall
be binding upon and inure to the benefit of, and be enforceable by, the
respective successors and assigns of the parties hereto. This Amendment shall
not run to the benefit of or be enforceable by any person other than a party to
this Amendment and its successors and assigns.

                                      -2-
<PAGE>   3

7.       Headings. The headings of the Sections and paragraphs of this Amendment
have been inserted for convenience and reference only and do not constitute a
part of this Amend.

8.       Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -3-
<PAGE>   4

         IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.

                                       COMPANY:

                                       SEQUOIA SOFTWARE CORPORATION

                                       By:
                                          --------------------------------------
                                                    Mark Wesker, President

                                       WARRANTHOLDERS:

                                       ANTHEM CAPITAL, L.P.

                                       By:     Anthem Capital Partners, L.P.
                                               General Partner

                                       By:     Anthem Capital Partners, Inc.
                                               General Partner

                                       By:
                                          --------------------------------------

                                       Title:
                                             -----------------------------------

                                       NEPA VENTURE FUND II, L.P.

                                       By:     NEPA II Management Corporation
                                       Its:    General Partner

                                       By:
                                          --------------------------------------
                                            Marc Benson, Vice President
                                            8230 Boone Boulevard
                                            Suite 347
                                            Vienna, VA 22182

                                       ----------------------------------
                                       Richard C. Faint, Jr.

                                       ----------------------------------
                                       Kenneth E. Homa

                       {Signatures Continue on Next Page}

                                      -4-
<PAGE>   5

APPROVED                                   NELSON BUNKER HUNT TRUST ESTATE
                                            TRUST B

By:                                        By:
   -----------------------------              ----------------------------------
Miro Vranac, Jr. Member Advisory                   F.C. Vickers, Trustee
      Board

                                           LYDA BUNKER HUNT TRUST -
                                           MARY HUDDLESTON

By:                                        By:
   -----------------------------              ----------------------------------
Mary Hunt Huddleston, Trustee                     Miro Vranac, Jr., Trustee

                                           -------------------------------------
                                           Mary Hunt Huddleston

                                           FLANDERS LANGUAGE VALLEY FUND, C.V.A.

                                           By:
                                              ----------------------------------

                                           Title:
                                                 -------------------------------

                                           LAMBRO'S L.P.
                                           By:  CJ Capital Management LLC

                                           By:
                                              ----------------------------------
                                                    Dennis Kemper
                                                    Investment Advisor

                                           SMART TECHNOLOGY VENTURES 2

                                             By:
                                                --------------------------------
                                                  Name:
                                                       -------------------------
                                                  Title:
                                                        ------------------------

                       {Signatures Continue on Next Page}

                                      -5-
<PAGE>   6
                                         ---------------------------------------
                                         Harris Kaplan

                                         ---------------------------------------
                                         Margaretha Zeyen Many

                                         JODA ENTERPRISES, LTD.

                                         By:
                                            ------------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                               ---------------------------------

                                         ---------------------------------------
                                         Andrew J. Filipowski

                                         Odyssey Capital, L.P.

                                         By:
                                             -----------------------------------
                                         Its:
                                             -----------------------------------

                                         ---------------------------------------
                                         John Bendheim

                                         SEQ Capital Investments

                                         By:
                                             -----------------------------------
                                         Its:
                                             -----------------------------------

                                           R. Torbati Family Trust Dtd. 08/15/93

                                         By:
                                             -----------------------------------
                                         Its:
                                             -----------------------------------

                                      -6-
<PAGE>   7
                                         ---------------------------------------
                                         W. Phillip Walsh and Edna A. Walsh
                                         as JTWROS

                                         ---------------------------------------
                                         Thomas Barry

                                         ---------------------------------------
                                         Cillian O'Bradaigh

                                         ---------------------------------------
                                         John Whittier Mason

                                         ---------------------------------------
                                         Brian Wade

                                         ---------------------------------------
                                         Linnea Conrad

                                      -7-
<PAGE>   8

                                   Schedule I

<TABLE>
<CAPTION>
NAME OF WARRANTHOLDER                   NUMBER OF SHARES OF COMMON STOCK
---------------------                   --------------------------------
<S>                                                  <C>
Anthem Capital, L.P.                                 27,263

NEPA Venture Fund II, L.P.                           10,594

Richard C. Faint, Jr.                                25,487

Kenneth E. Homa                                      11,101

Nelson Bunker Hunt Trust Estate
-- Trust B                                           15,156

Lyda Bunker Hunt Trust - Mary
Huddleston                                            5,052

Mary Hunt Huddleston                                   506

Flanders Language Valley Fund, C.V.A.                31,575

Lambro's L.P.                                        68,761

Smart Technology Ventures 2                          31,311

Harris Kaplan                                         6,263

Margaretha Zeyen Many                                 6,263

Joda Enterprises, Ltd.                                5,299

Andrew J. Filipowski                                 27,676

Odyssey Capital, L.P.                                 6,140

John Bendheim                                         9,209

SEQ Capital Investments                              10,744

R. Torbati Family Trust Dtd. 08/15/93                10,744
</TABLE>

<PAGE>   9

<TABLE>
<CAPTION>
NAME OF WARRANTHOLDER                   NUMBER OF SHARES OF COMMON STOCK
---------------------                   --------------------------------
<S>                                                  <C>
W. Phillip Walsh and Edna A.
Walsh as JTWROS                                        430

Thomas Barry                                           430

Cillian O'Bradaigh                                     492

John Whittier Mason                                    307

Brian Wade                                             921

Linnea Conrad                                         1,228

TOTAL                                                312,952
</TABLE>

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