Document:

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                                                                    EXHIBIT 10.9

                              EMPLOYMENT AGREEMENT

          This AGREEMENT is entered into as of 1-1-2000, by and between Arthur
R. Matin (the "Executive") and CrossWorlds Software, Inc., a Delaware
corporation (the "Company").

          1.  Duties and Scope of Employment.
              ------------------------------

               (a)  Position.  For the term of his employment under this
Agreement ("Employment"), the Company agrees to employ the Executive in the
position of Senior Vice President of Worldwide Sales. The Executive shall report
to the Company's Chief Executive Officer.

               (b)  Obligations to the Company.  During the term of his
                    --------------------------
Employment, the Executive shall devote his full business efforts and time to the
Company. The Executive shall comply with the Company's policies and rules, as
they may be in effect from time to time during the term of his Employment.

               (c)  No Conflicting Obligations.  The Executive represents and
                    --------------------------
warrants to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. The Executive represents and warrants that he will not use or
disclose, in connection with his employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the Executive or
any other person has any right, title or interest and that his employment by the
Company as contemplated by this Agreement will not infringe or violate the
rights of any other person or entity. The Executive represents and warrants to
the Company that he has returned all property and confidential information
belonging to any prior employers.

               (d)  Commencement Date.  The Executive shall commence full-time
                    -----------------
Employment on January 1, 2000.

               (e)  Office Location.  The Executive's office will be located in
                    ---------------
Westport, Connecticut.

          2.  Cash and Incentive Compensation.
              -------------------------------

               (a)  Salary.  The Company shall pay the Executive as compensation
                    ------
for his services a base salary at the rate of not less than $20,833.33 per
month, payable in accordance with the Company's standard payroll schedule. (The
compensation specified in this Subsection (a), together with any increases in
such compensation that the Company may grant from time to time, is referred to
in this Agreement as "Base Salary.")

               (b)  Sign-On Bonus.  The Executive shall be paid a sign-on bonus
                    -------------
of $300,000, less all applicable deductions, that will be earned when Executive
commences Employment. This bonus will be paid on or before March 1, 2000.

               (c)  Target Bonus.  The Executive will be eligible to earn an
                    ------------
annual bonus (the "Bonus") with a target of $225,000 based on his achievement of
objective criteria
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established by the Company's Chief Executive Officer. Any bonus payable
hereunder shall be payable annually in accordance with the Company's normal
practices and policies.

               (d)  Stock Options.
                    -------------

                  (i)  Option Grant.  Subject to the approval of the Company's
                       ------------
Board of Directors, the Company shall grant the Executive a stock option to
purchase 400,000 shares of the Company's common stock. This option will be
granted as soon as reasonably practicable after the date Executive's Employment
commences. The per share exercise price of the option will be equal to the per
share fair market value of the common stock on the date of grant, as determined
by the Board of Directors. The term of such option shall be 10 years, subject to
earlier expiration in the event of the termination of the Executive's
Employment. Such option shall be immediately exercisable, if Executive elects to
do so, but the purchased shares shall be subject to repurchase by the Company at
the exercise price in the event that the Executive's Employment terminates
before he vests in the shares, except that 50,000 shares of the option shall
vest immediately upon commencement of employment and will not be subject to the
Company's right of repurchase. As to the remaining 350,000 shares of the option,
the Executive shall vest in the option shares, and the Company's repurchase
right if applicable shall lapse, in equal monthly installments over forty-eight
(48) months from the date Executive's Employment commences.

                  (ii) Exercise of Options.  The option grant made pursuant to
                       -------------------
subsection (i) above shall be subject to the Company's standard form of stock
option agreement, a copy of which is attached hereto as an exhibit and must be
executed as a condition of the grant and exercise. Executive shall have the
right to exercise his option shares while he remains employed by the Company by
delivering a full recourse promissory note secured by a pledge of the shares
purchased thereunder. If required under the laws of the Company's state of
incorporation, Executive shall pay cash for the par value of the exercised
option shares. Interest on the promissory note shall accrue at the minimum
applicable federal rate under the Internal Revenue Code to avoid imputed income.
The principal balance and interest shall be due in full on the earlier of the
fourth anniversary of Executive's hire date or 90 days after the termination of
Executive's Employment. The note shall be subject to such other terms and
conditions as may be agreed to by the Company and Executive. The credit extended
to Executive hereunder shall equal the aggregate option price payable for the
purchased shares.

                  (iii)  Registration of Shares.  The Company will take all
                         ----------------------
reasonable steps at its sole cost and expense to register Executive's stock
following an initial public offering so that Executive can sell any vested
shares of stock if he so chooses following the expiration of any applicable
lock-up period. Nothing herein will be interpreted as requiring the Company to
breach any rights regarding the registration of securities under the Securities
Act of 1933.

                  (iv)   Effect of Termination of Employment.  If the Company
                         -----------------------------------
terminates Executive's Employment "Without Cause," or Executive resigns for
"Good Reason," then Executive shall receive additional vesting of all of his
outstanding options and, if applicable, the Company's repurchase rights as to
such shares will lapse, as if he had provided an additional twelve (12) months
of service from the date employment terminates.

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                  (v)  Effect of Change of Control.  In the event of a Change of
                       ---------------------------
Control during the period of Executive's employment, then each of Executive's
outstanding options will become fully vested and, if applicable, the Company's
repurchase rights will lapse as to all shares subject to all options.

                  (vi)  Definitions.
                        -----------

                        (a)  "Change of Control."  For all purposes under this
                             --------------------
Agreement, "Change of Control" shall mean (i) a merger or consolidation in which
securities possessing at least fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such transaction, or (ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.

                        (b)  "Good Reason."  For all purposes under this
                             --------------
Agreement, "Good Reason" for Executive's resignation will exist if he resigns
within sixty days of any of the following: (i) any reduction in his base salary
or target bonus; (ii) any material reduction in his benefits; (iii) a change in
his position with the Company or a successor company which materially reduces
his duties or level of responsibility; or (iv) any requirement that he relocate
his place of employment by more than thirty-five (35) miles from his then
current office, provided such reduction, change or reduction is effected by the
Company without his written consent. A resignation by Executive under any other
circumstances or for any other reasons will be a resignation "Without Good
Reason."

                        (c)  Termination for "Cause."  For all purposes under
                             ------------------------
this Agreement, a termination for "Cause" shall mean a good faith determination
by the Company's Board of Directors that Executive's Employment be terminated
for any of the following reasons: (i) willful misconduct which materially
damages the Company; (ii) misappropriation of the assets of the Company; or
(iii) conviction of, or a plea of "guilty" or "no contest" to, a felony under
the laws of the United States or any state thereof. A termination of Executive's
Employment in any other circumstances or for any other reasons will be a
termination "Without Cause."

          3.  Vacation and Executive Benefits.  During the term of his
              -------------------------------
Employment, the Executive shall be eligible for paid vacation in accordance with
the Company's standard policy for similarly situated employees, as it may be
amended from time to time. During the term of his Employment, the Executive
shall be eligible to participate in any employee benefit plans maintained by the
Company for similarly situated employees, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan.

          4.  Business Expenses.  During the term of his Employment, the
              -----------------
Executive shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties
hereunder. The Company shall reimburse the Executive for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's generally applicable policies.

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          5.  Term of Employment.
              ------------------

                  (a)  Basic Rule.  The Company agrees to continue the
                       ----------
Executive's Employment, and the Executive agrees to remain in Employment with
the Company, from the commencement date set forth in Section 1(d) until the date
when the Executive's Employment terminates pursuant to Subsection (b) below (the
"Employment Period"). The Executive's Employment with the Company shall be "at
will," which means that either the Executive or the Company may terminate the
Executive's Employment at any time, for any reason, with or without Cause. Any
contrary representations, which may have been made to the Executive shall be
superseded by this Agreement. This Agreement shall constitute the full and
complete agreement between the Executive and the Company on the "at will" nature
of the Executive's Employment, which may only be changed in an express written
agreement signed by the Executive and a duly authorized officer of the Company.

                  (b)  Termination.  The Company may terminate the Executive's
                       -----------
Employment at any time and for any reason (or no reason), and with "Cause" or
"Without Cause," by giving the Executive notice in writing. The Executive may
terminate his Employment by giving the Company 14 days' advance notice in
writing. The Executive's Employment shall terminate automatically in the event
of his death.

                  (c)  Rights Upon Termination.  Except as expressly provided in
                       -----------------------
Section 6, upon the termination of the Executive's Employment pursuant to this
Section 5, the Executive shall be entitled to the compensation, benefits and
reimbursements described in Sections 2, 3 and 4 for the period preceding the
effective date of the termination, including payment of a pro rata share of
Executive's target bonus for the year in which the termination occurs. The
payments under this Agreement shall fully discharge all responsibilities of the
Company to the Executive.

                  (d)  Termination of Agreement.  This Agreement shall terminate
                       ------------------------
when all obligations of the parties hereunder have been satisfied. The
termination of this Agreement shall not limit or otherwise affect any of the
Executive's obligations under Section 7.

          6.  Termination Benefits.
              --------------------

                  (a)  Severance Pay.  If the Company terminates the Executive's
                       -------------
Employment "Without Cause" or Executive resigns for "Good Reason" other than in
connection with a Change of Control, then the Company shall pay the Executive a
lump sum payment equal to the sum of (i) six (6) months of his Base Salary plus
(ii) one-half of his annual target bonus. The Company also will pay for the cost
of Executive continuing his medical coverage for himself and his eligible
dependents under COBRA for a period of six (6) months following the date his
employment terminates if he elects to continue that coverage. Executive's Base
Salary shall be paid at the rate in effect at the time of the termination of
Employment and in accordance with the Company's standard payroll procedures.

                  (b)  Severance Pay Upon Change of Control. If the Company
                       ------------------------------------
terminates the Executive's Employment "Without Cause" or Executive resigns for
"Good Reason" within one year after a Change of Control, then the Company shall
pay the Executive a lump sum payment equal to the sum of (i) nine (9) months of
his Base Salary plus (ii) three-

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quarters of his annual target bonus. The Company also will pay for the cost of
Executive continuing his medical coverage for himself and his eligible
dependents under COBRA for a period of nine (9) months following the date his
employment terminates if he elects to continue that coverage. Executive's Base
Salary shall be paid at the rate in effect at the time of the termination of
Employment and in accordance with the Company's standard payroll procedures.

          7.  Non-Solicitation and Non-Disclosure.
              -----------------------------------

                  (a)  Non-Solicitation.  During the period commencing on the
date of this Agreement and continuing until the first anniversary of the date
when the Executive's Employment terminated for any reason, the Executive shall
not directly or indirectly, personally or through others, solicit or attempt to
solicit (on the Executive's own behalf or on behalf of any other person or
entity) the employment or retaining of any employee or consultant of the Company
or any of the Company's affiliates.

                  (b)  Non-Disclosure.  As a condition of employment Executive
will execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.

          8.  Legal Fees.  The Company will pay Executive's reasonable
              ----------
attorneys' fees in connection with negotiating and drafting this Agreement.

          9.  Successors.
              ----------

                  (a)  Company's Successors.  This Agreement shall be binding
                       --------------------
upon any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

                  (b)  Executive's Successors.  This Agreement and all rights of
                       ----------------------
the Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

          10.  Indemnity.  The Company will indemnify and provide a defense to
               ---------
the Executive to the full extent permitted by law and its bylaws with respect to
any claims arising out of the performance of his duties as an employee, director
or officer of the Company. To the same extent, the Company will pay, and subject
to any legal limitations, advance all expenses, including reasonable attorney
fees and costs of court-approved settlements, actually and necessarily incurred
by Executive in connection with the defense of any action, suit or proceeding
and in connection with any appeal, which has been brought against Executive by
reason of his service as an officer, director or agent of the Company, or his
acceptance of this Agreement or the performance of his duties thereunder. The
Company shall use its best efforts to obtain coverage for Executive under a
liability insurance policy or policies that cover the actions of officers and
directors of the Company.

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          11.  Miscellaneous Provisions.
               ------------------------

                  (a)  Notice.  Notices and all other communications
                       ------
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by overnight courier,
U.S. registered or certified mail, return receipt requested and postage prepaid.
In the case of the Executive, mailed notices shall be addressed to him at the
home address which he most recently communicated to the Company in writing. In
the case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.

                  (b)  Modifications and Waivers.  No provision of this
                       -------------------------
Agreement shall be modified, waived or discharged unless the modification,
waiver or discharge is agreed to in writing and signed by the Executive and by
an authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

                  (c)  Whole Agreement.  No other agreements, representations or
                       ---------------
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

                  (d)  Taxes.  All payments made under this Agreement shall be
                       -----
subject to reduction to reflect taxes or other charges required to be withheld
by law.

                  (e)  Choice of Law.  The validity, interpretation,
                       -------------
construction and performance of this Agreement shall be governed by the laws of
the State of California (except provisions governing the choice of law).

                  (f)  Severability.  The invalidity or unenforceability of any
                       ------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

                  (g)  No Assignment.  This Agreement and all rights and
                       -------------
obligations of the Executive hereunder are personal to the Executive and may not
be transferred or assigned by the Executive at any time. The Company may assign
its rights under this Agreement to any entity that assumes the Company's
obligations hereunder in connection with any sale or transfer of all or a
substantial portion of the Company's assets to such entity.

                  (h)  Arbitration.  Any dispute or claim arising out of or in
                       -----------
connection with this Agreement will be finally settled by binding arbitration in
San Francisco, California in accordance with the rules of the American
Arbitration Association by one arbitrator appointed in accordance with said
rules. The Executive and the Company shall split the cost of the arbitration
filing and hearing fees and the cost of the arbitrator. Each party shall bear
its own attorney fees, unless otherwise determined by the arbitrator. The
arbitrator shall apply California law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any

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dispute. Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing, the parties
may apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this paragraph,
without breach of this arbitration provision. This Subsection 11(h) shall not
apply to any dispute or claim relating to the Proprietary Information Agreement.

                  (i)  Headings.  The headings of the paragraphs contained in
                       --------
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of any provision of this Agreement.

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

          IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.

                                 EXECUTIVE

                                 /s/ Arthur R. Matin
                                 --------------------------
                                 Arthur R. Matin

                                 CROSSWORLDS SOFTWARE, INC.

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

                                 Title: President and CEO
                                       --------------------

EXHIBIT A - Stock Option Agreement
EXHIBIT B - Proprietary Information Agreement

                                       7
<PAGE>

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                     STOCK OPTION AGREEMENT--EARLY EXERCISE

     Unless otherwise defined herein, the terms defined in the CrossWorlds
Software, Inc. 1999 Stock Plan (the "Plan") shall have the same defined meanings
in this Option Agreement.

1.  NOTICE OF STOCK OPTION GRANT
    ----------------------------

     You have been granted an option to purchase Common Stock of the CrossWorlds
Software, Inc. (the "Company"), subject to the terms and conditions of the Plan
and this Option Agreement, as follows:

Optionee                          Art Matin
                                  7 Melwood Lane
                                  Westport, CT 06880 USA
Grant Number                      00001712
Date of Grant                     01/12/2000
Vesting Commencement Date         01/12/2000
Exercise Price per Share          $  9.00
Number of Shares Granted          51,736
Total Exercise Price              $465,624.00
Type of Option:                   ISO
Term/Expiration Date:             01/12/2010

1. Vesting Schedule.  You may exercise this Option, in whole or in part
   ----------------
immediately following the Date of Grant.  These option shares are subject to the
following vesting schedule (and subject to the Company's right to repurchase
shares as set forth in Exhibit A, Section 4(a)):
                       -------------------------

   The shares of Common Stock subject to the Option (the "Shares") shall vest
as to 1/8th of the Shares on the date which is six (6) months from the Vesting
Commencement Date, with a further 1/48th of the Shares subject to the Option
vesting at the end of each one-month period thereafter, such that the Option
shall be vested in full 48 months following the Vesting Commencement Date
assuming Continuous Status as an Employee or Consultant.

2. Termination Period.  You may exercise this Option for 90 days after
   ------------------
termination of your Continuous Status as an Employee, Consultant or Director, or
for such longer period upon your death or disability as provided in the Plan.
If your status changes from Employee to Consultant or Director;  or Director or
Consultant to Employee, this Option Agreement shall remain in effect.  In no
case may you exercise this Option after the Term/Expiration Date as provided
above.

3. Agreement to Terms.  Optionee acknowledges receipt of a copy of the Plan and
   ------------------
represents that he is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, including the
terms and conditions of Grant on the reverse side hereof, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option.  Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY, DIRECTORSHIP OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

Dated:  01/12/2000
      -------------------------------------------

OPTIONEE

By:  /s/ Art Matin
   ----------------------------------------------

CROSSWORLDS SOFTWARE, INC.,
a Delaware corporation

By:  /s/ Stacey Giamalis
   ----------------------------------------------

Title: General Counsel
<PAGE>

1. TERMS AND CONDITIONS OF GRANT

   a.  Grant of Option.  CrossWorlds Software, Inc. (the "Company"), hereby
       ----------------
grants to the Optionee (the "Optionee") named in the Notice of Grant, a
[nonstatutory ][incentive] stock option (the "Option") to purchase the total
number of shares of Common Stock (the Shares") set forth in the Notice of Grant,
at the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the 1999 Stock Plan
(the "Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

   b.  Exercise of Option.  This Option shall be exercisable during its term in
       ------------------
accordance with the Vesting Schedule set out in the Notice of Grant and with the
provisions of Section 9 of the Plan as follows:

      (i) Right to Exercise.  (a) This Option may be exercised in whole or in
          -----------------
part at any time after the Date of Grant, as to Shares which have not yet vested
under the vesting schedule indicated on the Notice of Stock Option Grant;

provided, however, that Optionee shall execute as a condition to such exercise
--------  -------
of this Option, the Early Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Early Exercise Agreement").  If
                             ---------       ------------------------
Optionee chooses to exercise this Option solely as to Shares which have vested
under the vesting schedule indicated on the Notice of Stock Option Grant,
Optionee shall complete and execute the form of Exercise Notice attached hereto
as Exhibit B (the "Exercise Agreement").  Notwithstanding the foregoing, the
   ---------       ------------------
Company may in its discretion prescribe or accept a different form of notice of
exercise and/or stock purchase agreement if such forms are otherwise consistent
with this Agreement, the Plan and then-applicable law.  (b) This Option may not
be exercised for a fraction of a Share. (c) In the event of Optionee's death,
Disability or other termination of the Optionee's Continuous Status as an
Employee, Consultant or Director, the exercisability of the Option is governed
by Sections g, h and i below, subject to the limitation contained in Section k.
below.  (d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

      (ii) Method of Exercise.  This Option shall be exercisable by execution
           ------------------
and delivery of the Early Exercise Agreement or the Exercise Agreement,
whichever is applicable, or of any other written notice approved for such
purpose by the Company which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan.  Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company.  The written notice shall be accompanied by payment of
the Exercise Price.  This Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price.

      No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or national market system upon which the
Common Stock is then listed.  Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which
the Option is exercised with respect to such Shares.

   c.  Optionee's Representations.  In the event the Shares purchasable pursuant
       --------------------------
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit C.

   d.  Lock-Up Period.  Optionee hereby agrees that if so requested by the
       --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only  to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act.  The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

   e.  Method of Payment.  Payment of the Exercise Price shall be by any of the
       -----------------
following, or a combination thereof, at the election of the Optionee:

       (i)   cash; or

       (ii)  check; or

       (iii) surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

       (iv)  to the extent authorized by the Company, delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, share require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the Exercise Price; or

       (v)   promissory note (in the form provided by the Company).

   f.  Restrictions on Exercise.  This Option may not be exercised if the
       ------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board.  As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

   g.  Termination of Relationship.  In the event an Optionee's Continuous
       ---------------------------
Status as an Employee, Consultant or Director terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant.  To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

   h.  Disability of Optionee.  Notwithstanding the provisions of Section g.
       ----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his or her Disability, Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Notice of Grant) exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination.  To the extent that
Optionee is not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

   i.  Death of Optionee.  In the event of termination of Optionee's Continuous
       -----------------
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section k. below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.

   j.  Non-Transferability of Option.  Options may not be sold, pledged,
       -----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  The terms of this Option shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.

   k.  Term of Option.  This Option may be exercised only within the term set
       --------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.  The limitations set out
in Section 7 of the Plan regarding Options granted to more than ten percent
(10%) shareholders shall apply to this Option.

   l.  Tax Consequences.  Set forth below is a brief summary as of the date of
       ----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

      (i) Exercise of an NSO.  There may be a regular federal income tax
          ------------------
liability upon the exercise of an NSO.  The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.  In the case of the exercise of Option Shares which
have not vested as of the date of exercise, the Optionee will not realize
compensation income on the exercise until the date(s) on which shares vest
(i.e., have been released from the Company's repurchase option) unless the
Optionee files an election under Section 83(b) of the Code (an "83(b)
Election").  If an 83(b) election is filed, the amount of compensation income
will be determined on the date of exercise.  If Optionee is an Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise or vesting, as
applicable.

      (ii) Disposition of Shares.  If Shares are held for more than one year
           ---------------------
after the date of exercise (or the date of vesting, if later, in the case of the
exercise of unvested option shares and the Optionee had not filed an 83(b)
election at the time of such exercise, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes.
<PAGE>

                                   EXHIBIT A
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
               EARLY EXERCISE NOTICE AND STOCK PURCHASE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, _____, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Stock Option  Agreement dated _____________________________ (the
"Option Agreement").  Of these Shares, Purchaser has elected to purchase
_______________ of those Shares which have become vested as of the date hereof
under the Vesting Schedule set forth in the Notice of Stock Option Grant (the

"Vested Shares") and _____________ Shares which have not yet vested under such
--------------
Vesting Schedule (the "Unvested Shares").  The purchase price for the Shares
                       ---------------
shall be $______ per Share for a total purchase price of $_______________.
The term "Shares" refers to the purchased Shares and all
          ------
securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

          Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Limitations on Transfer.  In addition to any other limitation on
         -----------------------
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below).  After any Shares have
been released from such Repurchase Option, Purchaser shall not assign, encumber
or dispose of any interest in such Shares except in compliance with the
provisions below and applicable securities laws.

          (a)  Repurchase Option.
               -----------------

               (i) If Purchaser's Continuous Status as an Employee or Consultant
terminates for any reason (including for cause, death or disability), the
Company shall upon the date of such termination (the "Termination Date") have an
                                                      ----------------
irrevocable, exclusive option (the "Repurchase Option") for a period of 60 days
                                    -----------------
from such date to repurchase all or any portion of the Unvested Shares held by
Purchaser as of the Termination Date which have not yet been released from the
Company's Repurchase Option at the original purchase price per Share specified
in Section 1 (adjusted for any stock splits, stock dividends and the like).

               (ii) The Repurchase Option shall be exercised by the Company by
written notice to Purchaser or Purchaser's executor and, at the Company's
option, (A) by delivery to Purchaser or Purchaser's executor with such notice of
a check in the amount of the purchase price for the Shares being purchased, or
(B) in the event Purchaser is indebted to the Company, by cancellation by the
Company of an amount of such indebtedness equal to the purchase price for the
Shares being repurchased, or (C) by a combination of (A) and (B) so that the
combined payment and cancellation of indebtedness equals such purchase price.
Upon delivery of such notice and payment of the purchase price in any of the
ways described above, the Company shall become the legal and beneficial owner of
the Shares being repurchased and all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the
number of Shares being repurchased by the Company, without further action by
Purchaser.

               (iii)  One hundred percent (100%) of the Unvested Shares shall
initially be subject to the Repurchase Option.  The Unvested Shares shall be
released from the Repurchase Option in accordance with the Vesting Schedule set
forth in the Notice of Stock Option Grant
<PAGE>

until all Shares are released from the Repurchase Option. Fractional shares
shall be rounded to the nearest whole share.

          (b) Company's Right of First Refusal.  Before any Shares held by
              --------------------------------
Purchaser or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").

               (i)   Notice of Proposed Transfer. The Holder of the Shares shall
                     ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

               (ii)  Exercise of Right of First Refusal.  At any time within
                     ----------------------------------
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.

               (iii) Purchase Price. The purchase price ("Purchase Price") for
                     --------------
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.

               (iv)  Payment.  Payment of the Purchase Price shall be made, at
                     -------
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

               (v)   Holder's Right to Transfer. If all of the Shares proposed
                     --------------------------
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall
again be offered the Right of First Refusal before any Shares held by the Holder
may be sold or otherwise transferred.

               (vi) Exception for Certain Family Transfers.  Anything to the
                    --------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Purchaser's lifetime or on the Purchaser's death by
will or intestacy to the Purchaser's immediate family or a trust for the benefit
of the Purchaser's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

               (vii) Termination of Right of First Refusal.  The Right of First
                     -------------------------------------
Refusal shall terminate as to any Shares 90 days after the (i) first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or (ii) a merger of the
Company with a corporation whose stock is publicly traded on a national
exchange.

     5.  Transfer of Shares; Escrow.
         --------------------------

         (a) Purchaser hereby authorizes and directs the Secretary of the
Company, or such other person designated by the Company, to transfer any
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

         (b) To ensure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 4(a), Purchaser hereby appoints Katrina A. Garnett of the Company, or
any other person designated by the Company, as escrow agent (the "Escrow Agent")
                                                                  ------------
and as Purchaser's attorney-in-fact to sell, assign and transfer unto the
Company such Unvested Shares, if any, as may be repurchased by the Company
pursuant to the Repurchase Option and shall, upon execution of this Agreement,
deliver and deposit with the Escrow Agent the share certificates representing
the Unvested Shares, together with two stock assignments duly endorsed in blank
and in the form attached hereto as Attachment A .  The Unvested Shares and stock
                                   ------------
assignment shall be held by the Escrow Agent in escrow pursuant to Joint Escrow
Instructions in the form attached hereto as Attachment B , until (i) the Company
                                            ------------
exercises its Repurchase Option as provided in Section 4(a), (ii) such Unvested
Shares become Vested Shares, or (iii) such time as this Agreement no longer is
in effect.  Upon vesting of the Unvested Shares, the Escrow Agent shall promptly
deliver to Purchaser the certificate or certificates representing such Shares in
the Escrow Agent's
<PAGE>

possession belonging to Purchaser, and the Escrow Agent shall be discharged of
all further obligations hereunder. Notwithstanding any of the foregoing,
however, the Escrow Agent shall nevertheless retain such certificate or
certificates as Escrow Agent if so required pursuant to other restriction
imposed pursuant to this Agreement.

          (c) The Escrow Agent shall not be liable for any act it may do or omit
to do with respect to holding the Shares in escrow and while acting in good
faith and in the exercise of its judgment.

          (d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws.  Any
transferee shall hold such Shares subject to all the provisions hereof and shall
acknowledge the same by signing a copy of this Agreement.

          (e) No Shares may be sold, pledged, hypothecated or otherwise
transferred by Purchaser until such Shares have become Vested Shares and are no
longer subject to any security agreement for the benefit of the Company.

     6.   Ownership, Voting Rights, Duties.  This Agreement shall not affect in
          --------------------------------
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.  Purchaser shall enjoy rights as a
stockholder until such time as Purchaser disposes of the Shares or the Company
and/or its assignee(s) exercises either the Repurchase Option or the Right of
First Refusal hereunder.  Upon any such exercise, Purchaser shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser or the Escrow Agent, as the case may be, shall
forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.

     7.   Tax Consultation.  Purchaser understands that Purchaser may suffer
          ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares.  Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     8.   Restrictive Legends; Stop-Transfer Orders; Market Standoff
          ----------------------------------------------------------

          (a) Legends.  Purchaser understands and agrees that the Company shall
              -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

              THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
              THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
              SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
              UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY
              COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
              OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
              THEREWITH.

              THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
              RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
              ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
              ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
              MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
              TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
              TRANSFEREES OF THESE SHARES.

          (b) Stop-Transfer Notices.  Purchaser agrees that, in order to ensure
              ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company  transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) Market Standoff.  Purchaser hereby agrees that if so requested by
              ---------------
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

          (d) Refusal to Transfer.  The Company shall not be required (i) to
              -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     9.  Section 83(b) Election.  Purchaser understands that Section 83(a) of
         ----------------------
the Internal Revenue Code of 1986, as amended (the
<PAGE>

"Code"), taxes as ordinary income for a [Nonstatutory] [Incentive] Stock Option
the difference between the amount paid for the Shares and the Fair Market Value
of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" means the right of the Company to buy back the Shares
          -----------
pursuant to the Repurchase Option set forth in Section 4(a) of this Agreement.
Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by
filing an election under Section 83(b) (an "83(b) Election") of the Code with
                                            --------------
the Internal Revenue Service within 30 days from the date of purchase. Even if
the Fair Market Value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income tax treatment under Section 83(a) in the future. Purchaser
acknowledge that it is Purchaser's sole responsibility and not the Company's to
timely file the 83(b) Election, even if Purchaser requests the Company or its
representative to make this filing on Purchaser's behalf. Purchaser understands
that failure to file such an election in a timely manner may result in adverse
tax consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her federal income tax
return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of
United States federal income taxation with respect to purchase of the Shares
hereunder, and does not purport to be complete. Purchaser further acknowledges
that the Company has directed Purchaser to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, and the tax consequences
of Purchaser's death.

          Purchaser agrees that he or she will execute and deliver to the
Company with this executed Agreement a copy of the Acknowledgment and Statement
of Decision Regarding Section 83(b) Election (the "Acknowledgment") attached
                                                   --------------
hereto as Attachment C.  Purchaser further agrees that he or she will execute
          ------------
and submit with the Acknowledgment a copy of the 83(b) Election attached hereto
as Attachment D (for tax purposes in connection with the early exercise of an
   ------------
option) if Purchaser has indicated in the Acknowledgment his or her decision to
make such an election.

     10.  Notices.  All notices and other communications required or permitted
          -------
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after the deposit with the U.S.
Postal Service, if delivered by first class mail, postage prepaid (b) upon
delivery, if delivered by hand, or (c) one business day after the business day
of deposit with Federal Express or similar overnight courier, freight prepaid,
and shall be addressed (i) if to Purchaser, at Purchaser's address as set forth
beneath Purchaser's signature to this Agreement, or at such other address as
Purchaser shall have furnished to the Company in writing, (ii) if to the
Company, to CrossWorlds Software, Inc., with copy to Venture Law Group, 2775
Sand Hill Road, Menlo Park, California 94025, Attention:  Jon E. Gavenman, Esq.,
or Katrina A. Garnett, at CrossWorlds Software, Inc., or at such other address
as the Escrow Agent shall have furnished to the parties.

     11.  Successors and Assigns.  The Company may assign any of its rights
          ----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     12.  Interpretation.  Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     13.  Governing Law; Severability.  This Agreement shall be governed by and
          ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     14.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     15.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     16.  Delivery of Payment.  Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.
<PAGE>

     17.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser.

Submitted by:                             Accepted by:

PURCHASER:                                CROSSWORLDS SOFTWARE, INC.

By:_________________________________      By:_________________________________

Name:_______________________________      Its:________________________________

Address:                                  Address:
-------                                   -------

____________________________________      577 Airport Boulevard, Suite 800
____________________________________      Burlingame, CA  94010-2024
<PAGE>

                                 ATTACHMENT A
                                 ------------

                     ASSIGNMENT SEPARATE FROM CERTIFICATE
                     ------------------------------------

          FOR VALUE RECEIVED and pursuant to that certain Early Exercise Notice
and Restricted Stock Purchase Agreement between the undersigned ("Purchaser")
                                                                  --------
and CrossWorlds Software, Inc. (the "Company") dated _____________, ____ (the
                                     -------
"Agreement"), Purchaser hereby sells, assigns and transfers unto
----------
_______________________________ (________) shares of the Common Stock of the
Company, standing in Purchaser's name on the books of the Company and
represented by Certificate No. ___, and hereby irrevocably appoints
_____________________________ to transfer said stock on the books of the Company
with full power of substitution in the premises.  THIS ASSIGNMENT MAY ONLY BE
USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated: _________________

                              Signature:

                              _______________________________________
                              Purchaser

                              _______________________________________
                              Spouse of  Purchaser (if applicable)

Instruction:  Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
Repurchase Option set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE>

                                 ATTACHMENT B
                                 ------------

                           JOINT ESCROW INSTRUCTIONS
                           -------------------------

                                                           _______________, ____

Katrina A. Garnett
CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010

          As Escrow Agent for both CrossWorlds Software, Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
                  -------
Company ("Purchaser"), you are hereby authorized and directed to hold the
          ---------
documents delivered to you pursuant to the terms of that certain Early Exercise
Notice and Restricted Stock Purchase Agreement ("Agreement"), dated as of
                                                 ---------
__________ __, 19__, between the Company and the undersigned, in accordance with
the following instructions:

          1.  In the event that the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the ("Company") exercises
                                                          -------
the Company's repurchase option set forth in the Agreement, the Company shall
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing hereunder
at the principal office of the Company.  Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

          2.  At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

          3.  Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.  Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.

          4.  Upon written request of Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within sixty (60) days after cessation of Purchaser's continuous employment by
or services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

          5.  If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.

          6.  Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

          7.  You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

          8.  You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court.  In case you obey or comply with any such order, judgment or
<PAGE>

decree, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

          9.   You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder .

          10.  You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

          11.  You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

          12.  Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be an officer or agent of the Company or if you shall
resign by written notice to each party.  In the event of any such termination,
the Company shall appoint a successor Escrow Agent.

          13.  If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

          14.  It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

          15.  All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, or (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid, and shall be
addressed to each of the other parties thereunto entitled at the following
addresses or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.

          COMPANY:                       CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010
                                         Attn:  Controller

          PURCHASER:

          ESCROW AGENT:                  Katrina A. Garnett
                                         CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010

          16.  By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

          17.  This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
<PAGE>

          18.  These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California
as they apply to contracts entered into and wholly to be performed within such
state.

                                 Very truly yours,

                                 CROSSWORLDS SOFTWARE, INC.

                                 ____________________________________
                                 Katrina A. Garnett

                                 PURCHASER:

                                 ____________________________________
                                 Purchaser

                                 ESCROW AGENT:

                                 ____________________________________
                                 Katrina A. Garnett
<PAGE>

                                  ATTACHMENT C
                                  ------------

                    ACKNOWLEDGMENT AND STATEMENT OF DECISION
                    ----------------------------------------
                        REGARDING SECTION 83(b) ELECTION
                        --------------------------------

     The undersigned (which term includes the undersigned's spouse), a purchaser
of ___________ shares of Common Stock of CrossWorlds Software, Inc., a
California corporation (the "Company") by exercise of an option (the "Option")
                             -------                                  ------
granted pursuant to the Company's 1999 Executive Stock Plan (the "Plan"), hereby
                                                                  ----
states as follows:

     1.   The undersigned acknowledges receipt of a copy of the Plan relating to
the offering of such shares. The undersigned has carefully reviewed the Plan and
the option agreement pursuant to which the Option was granted.

     2.   The undersigned either [check and complete as applicable]:

          (a) ____ has consulted, and has been fully advised by, the
               undersigned's own tax advisor,
               _____________________________________, whose business address is
               ______________________________, regarding the federal, state and
               local tax consequences of purchasing shares under the Plan, and
               particularly regarding the advisability of making elections
               pursuant to Section 83(b) of the Internal Revenue Code of 1986,
               as amended (the "Code") and pursuant to the corresponding
                                ----
               provisions, if any, of applicable state law; or

          (b) ____ has knowingly chosen not to consult such a tax advisor.

     3.   The undersigned hereby states that the undersigned has decided [check
as applicable]:

          (a) ____  to make an election pursuant to Section 83(b) of the Code,
               and is submitting to the Company, together with the undersigned's
               executed Early Exercise Notice and Stock Purchase Agreement, an
               executed form entitled "Election Under Section 83(b) of the
               Internal Revenue Code of 1986;" or

          (b) ____ not to make an election pursuant to Section 83(b) of the
               Code.

     4.   Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares under the Plan
or of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.

Date:___________________________           _________________________________
                                           Purchaser

Date:___________________________           _________________________________
                                           Spouse of  Purchaser (if applicable)
<PAGE>

                                  ATTACHMENT D
                                  ------------

                          ELECTION UNDER SECTION 83(b)
                          ----------------------------
                      OF THE INTERNAL REVENUE CODE OF 1986
                      ------------------------------------

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any income that may be taxable to taxpayer in
connection with taxpayer's receipt of the property described below:

1.   The name, address, taxpayer identification number and taxable year of the
     undersigned are as follows:

     NAME OF TAXPAYER: ________________
     NAME OF SPOUSE:  ________________
     ADDRESS:

     IDENTIFICATION NO. OF TAXPAYER:  _______________
     IDENTIFICATION NO. OF SPOUSE:  _______________
     TAXABLE YEAR:  __________

2.   The property with respect to which the election is made is described as
     follows:

     ______________ shares of the Common Stock $.001 par value, of CrossWorlds
     Software, Inc., a California corporation (the "Company").
                                                    -------

3.   The date on which the property was transferred is:  _______________

4.   The property is subject to the following restrictions:

     Repurchase option at cost in favor of the Company upon termination of
     taxpayer's employment or consulting relationship.

5.   The Fair Market Value at the time of transfer, determined without regard to
     any restriction other than a restriction which by its terms will never
     lapse, of such property is: $____________

6.   The amount (if any) paid for such property: $____________

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property.  The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
--------------------------------------------------------------------------
except with the consent of the Commissioner.
-------------------------------------------

Dated:_______________________       ___________________________________
                                    Purchaser

Dated:_______________________       ___________________________________
                                    Spouse of Purchaser (if applicable)
<PAGE>

                                   EXHIBIT B
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                               EXERCISE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, 1999, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Incentive  Agreement dated _____________________________ (the
"Option Agreement").

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

         Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Company's Right of First Refusal.  Before any Shares held by Purchaser
         --------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

         (a) Notice of Proposed Transfer.  The Holder of the Shares shall
             ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

         (b) Exercise of Right of First Refusal.  At any time within thirty
             ----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

         (c) Purchase Price.  The purchase price ("Purchase Price") for the
             --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price.  If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

         (d) Payment.  Payment of the Purchase Price shall be made, at the
             -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

         (e) Holder's Right to Transfer.  If all of the Shares proposed in the
             --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee.  If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

         (f) Exception for Certain Family Transfers.  Anything to the contrary
             --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Purchaser's lifetime or on the Purchaser's death by will or
intestacy to the Purchaser's immediate family or a trust for the benefit of the
Purchaser's immediate family shall be exempt from the provisions of this
Section.  "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister.  In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

         (g) Termination of Right of First Refusal.  The Right of First Refusal
             -------------------------------------
shall terminate as to any Shares 90 days after the (i) first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or (ii) a merger of the Company
with a corporation whose stock is publicly traded on a national exchange.
<PAGE>

     5.  Tax Consultation. Purchaser understands that Purchaser may suffer
         ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     6.  Restrictive Legends; Stop-Transfer Orders; Market Standoff.
         ----------------------------------------------------------

         (a) Legends. Purchaser understands and agrees that the Company shall
             -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

             THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
             THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
             OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
             REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
             SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
             TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

             THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
             RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
             ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
             ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
             BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
             RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES
             OF THESE SHARES.

             (b) Stop-Transfer Notices. Purchaser agrees that, in order to
                 ---------------------
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

             (c) Market Standoff.  Purchaser hereby agrees that if so requested
                 ---------------
by the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

             (d) Refusal to Transfer.  The Company shall not be required (i) to
                 -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     7.  Successors and Assigns.  The Company may assign any of its rights under
         ----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     8.  Interpretation.  Any dispute regarding the interpretation of this
         --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     9.  Governing Law; Severability.  This Agreement shall be governed by and
         ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12.  Delivery of Payment. Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.

     13.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to
<PAGE>

the Purchaser's interest except by means of a writing signed by the Company and
Purchaser.

Submitted by:              Accepted by:

PURCHASER:
                         CROSSWORLDS SOFTWARE, INC.

By:_______________________________         By:______________________________

Name:_____________________________         Its:_____________________________

Address:                                 Address:
-------                                  -------

__________________________________       577 Airport Boulevard, Suite 800
__________________________________       Burlingame, CA  94010-2024
<PAGE>

                                   EXHIBIT C
                                   ---------

                      INVESTMENT REPRESENTATION STATEMENT

PURCHASER:   _____________________

COMPANY:     CROSSWORLDS SOFTWARE, INC.

SECURITY:    ___________ shares of Common Stock

AMOUNT:      __________________________________

DATE:        __________________________________

     In connection with the purchase of the above-listed Securities, the
undersigned Purchaser represents to the Company the following:

     (a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.  Purchaser is
acquiring these Securities for investment for Purchaser's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

     (b) Purchaser acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.  In this connection, Purchaser
understands that, in the view of the Securities and Exchange Commission, the
statutory basis for such exemption may be unavailable if Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future.  Purchaser further understands that the Securities must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.  Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Securities.  Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.

     (c) Purchaser is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions.  Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Purchaser, the exercise will
be exempt from registration under the Securities Act.  In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including:  (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d) Purchaser hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Purchaser
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
<PAGE>

     (e) Purchaser further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.  Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.

                                               Signature of Purchaser:

                                               ______________________________

                                               Date:___________________, 19__
<PAGE>

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                     STOCK OPTION AGREEMENT--EARLY EXERCISE

     Unless otherwise defined herein, the terms defined in the CrossWorlds
Software, Inc. 1999 Stock Plan (the "Plan") shall have the same defined meanings
in this Option Agreement.

1. NOTICE OF STOCK OPTION GRANT
   ----------------------------

     You have been granted an option to purchase Common Stock of the CrossWorlds
Software, Inc. (the "Company"), subject to the terms and conditions of the Plan
and this Option Agreement, as follows:

Optionee                          Art Matin
                                  7 Melwood Lane
                                  Westport, CT 06880 USA
Grant Number                      00001731
Date of Grant                     01/12/2000
Vesting Commencement Date         01/12/2000
Exercise Price per Share          $  9.00
Number of Shares Granted          298,264
Total Exercise Price              $2,684,376.00
Type of Option:                   NQ
Term/Expiration Date:             01/12/2010

1. Vesting Schedule.  You may exercise this Option, in whole or in part
   ----------------
immediately following the Date of Grant.  These option shares are subject to the
following vesting schedule (and subject to the Company's right to repurchase
shares as set forth in Exhibit A, Section 4(a)):
                       -------------------------

   The shares of Common Stock subject to the Option (the "Shares") shall vest
as to 1/8th of the Shares on the date which is six (6) months from the Vesting
Commencement Date, with a further 1/48th of the Shares subject to the Option
vesting at the end of each one-month period thereafter, such that the Option
shall be vested in full 48 months following the Vesting Commencement Date
assuming Continuous Status as an Employee or Consultant.

2. Termination Period.  You may exercise this Option for 90 days after
   ------------------
termination of your Continuous Status as an Employee, Consultant or Director, or
for such longer period upon your death or disability as provided in the Plan.
If your status changes from Employee to Consultant or Director;  or Director or
Consultant to Employee, this Option Agreement shall remain in effect.  In no
case may you exercise this Option after the Term/Expiration Date as provided
above.

3. Agreement to Terms.  Optionee acknowledges receipt of a copy of the Plan and
   ------------------
represents that he is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, including the
terms and conditions of Grant on the reverse side hereof, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option.  Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY, DIRECTORSHIP OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

Dated: 01/12/2000
      -----------------------------------
OPTIONEE

By: /s/ Art Matin
   --------------------------------------

CROSSWORLDS SOFTWARE, INC.,
a Delaware corporation

By: /s/ Stacey Giamalis
   --------------------------------------

Title: General Counsel
<PAGE>

1. TERMS AND CONDITIONS OF GRANT

   a.  Grant of Option.  CrossWorlds Software, Inc. (the "Company"), hereby
       ----------------
grants to the Optionee (the "Optionee") named in the Notice of Grant, a
[nonstatutory ][incentive] stock option (the "Option") to purchase the total
number of shares of Common Stock (the Shares") set forth in the Notice of Grant,
at the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the 1999 Stock Plan
(the "Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

   b.  Exercise of Option.  This Option shall be exercisable during its term in
       ------------------
accordance with the Vesting Schedule set out in the Notice of Grant and with the
provisions of Section 9 of the Plan as follows:

      (i) Right to Exercise.  (a) This Option may be exercised in whole or in
          -----------------
part at any time after the Date of Grant, as to Shares which have not yet vested
under the vesting schedule indicated on the Notice of Stock Option Grant;

provided, however, that Optionee shall execute as a condition to such exercise
--------  -------
of this Option, the Early Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Early Exercise Agreement").  If
                             ---------       ------------------------
Optionee chooses to exercise this Option solely as to Shares which have vested
under the vesting schedule indicated on the Notice of Stock Option Grant,
Optionee shall complete and execute the form of Exercise Notice attached hereto
as Exhibit B (the "Exercise Agreement").  Notwithstanding the foregoing, the
   ---------       ------------------
Company may in its discretion prescribe or accept a different form of notice of
exercise and/or stock purchase agreement if such forms are otherwise consistent
with this Agreement, the Plan and then-applicable law.  (b) This Option may not
be exercised for a fraction of a Share. (c) In the event of Optionee's death,
Disability or other termination of the Optionee's Continuous Status as an
Employee, Consultant or Director, the exercisability of the Option is governed
by Sections g, h and i below, subject to the limitation contained in Section k.
below.  (d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

      (ii) Method of Exercise.  This Option shall be exercisable by execution
           ------------------
and delivery of the Early Exercise Agreement or the Exercise Agreement,
whichever is applicable, or of any other written notice approved for such
purpose by the Company which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan.  Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company.  The written notice shall be accompanied by payment of
the Exercise Price.  This Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price.

      No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or national market system upon which the
Common Stock is then listed.  Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which
the Option is exercised with respect to such Shares.

   c.  Optionee's Representations.  In the event the Shares purchasable pursuant
       --------------------------
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit C.

   d.  Lock-Up Period.  Optionee hereby agrees that if so requested by the
       --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only  to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act.  The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

   e.  Method of Payment.  Payment of the Exercise Price shall be by any of the
       -----------------
following, or a combination thereof, at the election of the Optionee:

       (i)   cash; or

       (ii)  check; or

       (iii) surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

       (iv)  to the extent authorized by the Company, delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, share require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the Exercise Price; or

       (v)   promissory note (in the form provided by the Company).

   f.  Restrictions on Exercise.  This Option may not be exercised if the
       ------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board.  As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

   g.  Termination of Relationship.  In the event an Optionee's Continuous
       ---------------------------
Status as an Employee, Consultant or Director terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant.  To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

   h.  Disability of Optionee.  Notwithstanding the provisions of Section g.
       ----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his or her Disability, Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Notice of Grant) exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination.  To the extent that
Optionee is not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

   i.  Death of Optionee.  In the event of termination of Optionee's Continuous
       -----------------
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section k. below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.

   j.  Non-Transferability of Option.  Options may not be sold, pledged,
       -----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  The terms of this Option shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.

   k.  Term of Option.  This Option may be exercised only within the term set
       --------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.  The limitations set out
in Section 7 of the Plan regarding Options granted to more than ten percent
(10%) shareholders shall apply to this Option.

   l.  Tax Consequences.  Set forth below is a brief summary as of the date of
       ----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

      (i) Exercise of an NSO.  There may be a regular federal income tax
          ------------------
liability upon the exercise of an NSO.  The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.  In the case of the exercise of Option Shares which
have not vested as of the date of exercise, the Optionee will not realize
compensation income on the exercise until the date(s) on which shares vest
(i.e., have been released from the Company's repurchase option) unless the
Optionee files an election under Section 83(b) of the Code (an "83(b)
Election").  If an 83(b) election is filed, the amount of compensation income
will be determined on the date of exercise.  If Optionee is an Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise or vesting, as
applicable.

      (ii) Disposition of Shares.  If Shares are held for more than one year
           ---------------------
after the date of exercise (or the date of vesting, if later, in the case of the
exercise of unvested option shares and the Optionee had not filed an 83(b)
election at the time of such exercise, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes.
<PAGE>

                                   EXHIBIT A
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
               EARLY EXERCISE NOTICE AND STOCK PURCHASE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, _____, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Stock Option  Agreement dated _____________________________ (the
"Option Agreement").  Of these Shares, Purchaser has elected to purchase
_______________ of those Shares which have become vested as of the date hereof
under the Vesting Schedule set forth in the Notice of Stock Option Grant (the

"Vested Shares") and _____________ Shares which have not yet vested under such
--------------
Vesting Schedule (the "Unvested Shares").  The purchase price for the Shares
                       ---------------
shall be $______ per Share for a total purchase price of $_______________.
The term "Shares" refers to the purchased Shares and all
          ------
securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

          Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Limitations on Transfer.  In addition to any other limitation on
         -----------------------
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below).  After any Shares have
been released from such Repurchase Option, Purchaser shall not assign, encumber
or dispose of any interest in such Shares except in compliance with the
provisions below and applicable securities laws.

          (a)  Repurchase Option.
               -----------------

               (i) If Purchaser's Continuous Status as an Employee or Consultant
terminates for any reason (including for cause, death or disability), the
Company shall upon the date of such termination (the "Termination Date") have an
                                                      ----------------
irrevocable, exclusive option (the "Repurchase Option") for a period of 60 days
                                    -----------------
from such date to repurchase all or any portion of the Unvested Shares held by
Purchaser as of the Termination Date which have not yet been released from the
Company's Repurchase Option at the original purchase price per Share specified
in Section 1 (adjusted for any stock splits, stock dividends and the like).

               (ii) The Repurchase Option shall be exercised by the Company by
written notice to Purchaser or Purchaser's executor and, at the Company's
option, (A) by delivery to Purchaser or Purchaser's executor with such notice of
a check in the amount of the purchase price for the Shares being purchased, or
(B) in the event Purchaser is indebted to the Company, by cancellation by the
Company of an amount of such indebtedness equal to the purchase price for the
Shares being repurchased, or (C) by a combination of (A) and (B) so that the
combined payment and cancellation of indebtedness equals such purchase price.
Upon delivery of such notice and payment of the purchase price in any of the
ways described above, the Company shall become the legal and beneficial owner of
the Shares being repurchased and all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the
number of Shares being repurchased by the Company, without further action by
Purchaser.

               (iii)  One hundred percent (100%) of the Unvested Shares shall
initially be subject to the Repurchase Option.  The Unvested Shares shall be
released from the Repurchase Option in accordance with the Vesting Schedule set
forth in the Notice of Stock Option Grant
<PAGE>

until all Shares are released from the Repurchase Option. Fractional shares
shall be rounded to the nearest whole share.

          (b) Company's Right of First Refusal.  Before any Shares held by
              --------------------------------
Purchaser or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").

               (i)   Notice of Proposed Transfer. The Holder of the Shares shall
                     ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

               (ii)  Exercise of Right of First Refusal.  At any time within
                     ----------------------------------
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.

               (iii) Purchase Price. The purchase price ("Purchase Price") for
                     --------------
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.

               (iv)  Payment.  Payment of the Purchase Price shall be made, at
                     -------
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

               (v)   Holder's Right to Transfer. If all of the Shares proposed
                     --------------------------
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall
again be offered the Right of First Refusal before any Shares held by the Holder
may be sold or otherwise transferred.

               (vi) Exception for Certain Family Transfers.  Anything to the
                    --------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Purchaser's lifetime or on the Purchaser's death by
will or intestacy to the Purchaser's immediate family or a trust for the benefit
of the Purchaser's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

               (vii) Termination of Right of First Refusal.  The Right of First
                     -------------------------------------
Refusal shall terminate as to any Shares 90 days after the (i) first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or (ii) a merger of the
Company with a corporation whose stock is publicly traded on a national
exchange.

     5.  Transfer of Shares; Escrow.
         --------------------------

         (a) Purchaser hereby authorizes and directs the Secretary of the
Company, or such other person designated by the Company, to transfer any
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

         (b) To ensure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 4(a), Purchaser hereby appoints Katrina A. Garnett of the Company, or
any other person designated by the Company, as escrow agent (the "Escrow Agent")
                                                                  ------------
and as Purchaser's attorney-in-fact to sell, assign and transfer unto the
Company such Unvested Shares, if any, as may be repurchased by the Company
pursuant to the Repurchase Option and shall, upon execution of this Agreement,
deliver and deposit with the Escrow Agent the share certificates representing
the Unvested Shares, together with two stock assignments duly endorsed in blank
and in the form attached hereto as Attachment A .  The Unvested Shares and stock
                                   ------------
assignment shall be held by the Escrow Agent in escrow pursuant to Joint Escrow
Instructions in the form attached hereto as Attachment B , until (i) the Company
                                            ------------
exercises its Repurchase Option as provided in Section 4(a), (ii) such Unvested
Shares become Vested Shares, or (iii) such time as this Agreement no longer is
in effect.  Upon vesting of the Unvested Shares, the Escrow Agent shall promptly
deliver to Purchaser the certificate or certificates representing such Shares in
the Escrow Agent's
<PAGE>

possession belonging to Purchaser, and the Escrow Agent shall be discharged of
all further obligations hereunder. Notwithstanding any of the foregoing,
however, the Escrow Agent shall nevertheless retain such certificate or
certificates as Escrow Agent if so required pursuant to other restriction
imposed pursuant to this Agreement.

          (c) The Escrow Agent shall not be liable for any act it may do or omit
to do with respect to holding the Shares in escrow and while acting in good
faith and in the exercise of its judgment.

          (d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws.  Any
transferee shall hold such Shares subject to all the provisions hereof and shall
acknowledge the same by signing a copy of this Agreement.

          (e) No Shares may be sold, pledged, hypothecated or otherwise
transferred by Purchaser until such Shares have become Vested Shares and are no
longer subject to any security agreement for the benefit of the Company.

     6.   Ownership, Voting Rights, Duties.  This Agreement shall not affect in
          --------------------------------
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.  Purchaser shall enjoy rights as a
stockholder until such time as Purchaser disposes of the Shares or the Company
and/or its assignee(s) exercises either the Repurchase Option or the Right of
First Refusal hereunder.  Upon any such exercise, Purchaser shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser or the Escrow Agent, as the case may be, shall
forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.

     7.   Tax Consultation.  Purchaser understands that Purchaser may suffer
          ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares.  Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     8.   Restrictive Legends; Stop-Transfer Orders; Market Standoff
          ----------------------------------------------------------

          (a) Legends.  Purchaser understands and agrees that the Company shall
              -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

              THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
              THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
              SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
              UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY
              COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
              OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
              THEREWITH.

              THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
              RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
              ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
              ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
              MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
              TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
              TRANSFEREES OF THESE SHARES.

          (b) Stop-Transfer Notices.  Purchaser agrees that, in order to ensure
              ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company  transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) Market Standoff.  Purchaser hereby agrees that if so requested by
              ---------------
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

          (d) Refusal to Transfer.  The Company shall not be required (i) to
              -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     9.  Section 83(b) Election.  Purchaser understands that Section 83(a) of
         ----------------------
the Internal Revenue Code of 1986, as amended (the
<PAGE>

"Code"), taxes as ordinary income for a [Nonstatutory] [Incentive] Stock Option
the difference between the amount paid for the Shares and the Fair Market Value
of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" means the right of the Company to buy back the Shares
          -----------
pursuant to the Repurchase Option set forth in Section 4(a) of this Agreement.
Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by
filing an election under Section 83(b) (an "83(b) Election") of the Code with
                                            --------------
the Internal Revenue Service within 30 days from the date of purchase. Even if
the Fair Market Value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income tax treatment under Section 83(a) in the future. Purchaser
acknowledge that it is Purchaser's sole responsibility and not the Company's to
timely file the 83(b) Election, even if Purchaser requests the Company or its
representative to make this filing on Purchaser's behalf. Purchaser understands
that failure to file such an election in a timely manner may result in adverse
tax consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her federal income tax
return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of
United States federal income taxation with respect to purchase of the Shares
hereunder, and does not purport to be complete. Purchaser further acknowledges
that the Company has directed Purchaser to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, and the tax consequences
of Purchaser's death.

          Purchaser agrees that he or she will execute and deliver to the
Company with this executed Agreement a copy of the Acknowledgment and Statement
of Decision Regarding Section 83(b) Election (the "Acknowledgment") attached
                                                   --------------
hereto as Attachment C.  Purchaser further agrees that he or she will execute
          ------------
and submit with the Acknowledgment a copy of the 83(b) Election attached hereto
as Attachment D (for tax purposes in connection with the early exercise of an
   ------------
option) if Purchaser has indicated in the Acknowledgment his or her decision to
make such an election.

     10.  Notices.  All notices and other communications required or permitted
          -------
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after the deposit with the U.S.
Postal Service, if delivered by first class mail, postage prepaid (b) upon
delivery, if delivered by hand, or (c) one business day after the business day
of deposit with Federal Express or similar overnight courier, freight prepaid,
and shall be addressed (i) if to Purchaser, at Purchaser's address as set forth
beneath Purchaser's signature to this Agreement, or at such other address as
Purchaser shall have furnished to the Company in writing, (ii) if to the
Company, to CrossWorlds Software, Inc., with copy to Venture Law Group, 2775
Sand Hill Road, Menlo Park, California 94025, Attention:  Jon E. Gavenman, Esq.,
or Katrina A. Garnett, at CrossWorlds Software, Inc., or at such other address
as the Escrow Agent shall have furnished to the parties.

     11.  Successors and Assigns.  The Company may assign any of its rights
          ----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     12.  Interpretation.  Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     13.  Governing Law; Severability.  This Agreement shall be governed by and
          ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     14.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     15.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     16.  Delivery of Payment.  Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.
<PAGE>

     17.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser.

Submitted by:                             Accepted by:

PURCHASER:                                CROSSWORLDS SOFTWARE, INC.

By:_________________________________      By:_________________________________

Name:_______________________________      Its:________________________________

Address:                                  Address:
-------                                   -------

____________________________________      577 Airport Boulevard, Suite 800
____________________________________      Burlingame, CA  94010-2024
<PAGE>

                                 ATTACHMENT A
                                 ------------

                     ASSIGNMENT SEPARATE FROM CERTIFICATE
                     ------------------------------------

          FOR VALUE RECEIVED and pursuant to that certain Early Exercise Notice
and Restricted Stock Purchase Agreement between the undersigned ("Purchaser")
                                                                  --------
and CrossWorlds Software, Inc. (the "Company") dated _____________, ____ (the
                                     -------
"Agreement"), Purchaser hereby sells, assigns and transfers unto
----------
_______________________________ (________) shares of the Common Stock of the
Company, standing in Purchaser's name on the books of the Company and
represented by Certificate No. ___, and hereby irrevocably appoints
_____________________________ to transfer said stock on the books of the Company
with full power of substitution in the premises.  THIS ASSIGNMENT MAY ONLY BE
USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated: _________________

                              Signature:

                              _______________________________________
                              Purchaser

                              _______________________________________
                              Spouse of  Purchaser (if applicable)

Instruction:  Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
Repurchase Option set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE>

                                 ATTACHMENT B
                                 ------------

                           JOINT ESCROW INSTRUCTIONS
                           -------------------------

                                                           _______________, ____

Katrina A. Garnett
CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010

          As Escrow Agent for both CrossWorlds Software, Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
                  -------
Company ("Purchaser"), you are hereby authorized and directed to hold the
          ---------
documents delivered to you pursuant to the terms of that certain Early Exercise
Notice and Restricted Stock Purchase Agreement ("Agreement"), dated as of
                                                 ---------
__________ __, 19__, between the Company and the undersigned, in accordance with
the following instructions:

          1.  In the event that the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the ("Company") exercises
                                                          -------
the Company's repurchase option set forth in the Agreement, the Company shall
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing hereunder
at the principal office of the Company.  Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

          2.  At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

          3.  Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.  Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.

          4.  Upon written request of Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within sixty (60) days after cessation of Purchaser's continuous employment by
or services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

          5.  If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.

          6.  Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

          7.  You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

          8.  You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court.  In case you obey or comply with any such order, judgment or
<PAGE>

decree, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

          9.   You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder .

          10.  You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

          11.  You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

          12.  Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be an officer or agent of the Company or if you shall
resign by written notice to each party.  In the event of any such termination,
the Company shall appoint a successor Escrow Agent.

          13.  If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

          14.  It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

          15.  All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, or (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid, and shall be
addressed to each of the other parties thereunto entitled at the following
addresses or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.

          COMPANY:                       CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010
                                         Attn:  Controller

          PURCHASER:

          ESCROW AGENT:                  Katrina A. Garnett
                                         CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010

          16.  By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

          17.  This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
<PAGE>

          18.  These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California
as they apply to contracts entered into and wholly to be performed within such
state.

                                 Very truly yours,

                                 CROSSWORLDS SOFTWARE, INC.

                                 ____________________________________
                                 Katrina A. Garnett

                                 PURCHASER:

                                 ____________________________________
                                 Purchaser

                                 ESCROW AGENT:

                                 ____________________________________
                                 Katrina A. Garnett
<PAGE>

                                  ATTACHMENT C
                                  ------------

                    ACKNOWLEDGMENT AND STATEMENT OF DECISION
                    ----------------------------------------
                        REGARDING SECTION 83(b) ELECTION
                        --------------------------------

     The undersigned (which term includes the undersigned's spouse), a purchaser
of ___________ shares of Common Stock of CrossWorlds Software, Inc., a
California corporation (the "Company") by exercise of an option (the "Option")
                             -------                                  ------
granted pursuant to the Company's 1999 Executive Stock Plan (the "Plan"), hereby
                                                                  ----
states as follows:

     1.   The undersigned acknowledges receipt of a copy of the Plan relating to
the offering of such shares. The undersigned has carefully reviewed the Plan and
the option agreement pursuant to which the Option was granted.

     2.   The undersigned either [check and complete as applicable]:

          (a) ____ has consulted, and has been fully advised by, the
               undersigned's own tax advisor,
               _____________________________________, whose business address is
               ______________________________, regarding the federal, state and
               local tax consequences of purchasing shares under the Plan, and
               particularly regarding the advisability of making elections
               pursuant to Section 83(b) of the Internal Revenue Code of 1986,
               as amended (the "Code") and pursuant to the corresponding
                                ----
               provisions, if any, of applicable state law; or

          (b) ____ has knowingly chosen not to consult such a tax advisor.

     3.   The undersigned hereby states that the undersigned has decided [check
as applicable]:

          (a) ____  to make an election pursuant to Section 83(b) of the Code,
               and is submitting to the Company, together with the undersigned's
               executed Early Exercise Notice and Stock Purchase Agreement, an
               executed form entitled "Election Under Section 83(b) of the
               Internal Revenue Code of 1986;" or

          (b) ____ not to make an election pursuant to Section 83(b) of the
               Code.

     4.   Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares under the Plan
or of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.

Date:___________________________           _________________________________
                                           Purchaser

Date:___________________________           _________________________________
                                           Spouse of  Purchaser (if applicable)
<PAGE>

                                  ATTACHMENT D
                                  ------------

                          ELECTION UNDER SECTION 83(b)
                          ----------------------------
                      OF THE INTERNAL REVENUE CODE OF 1986
                      ------------------------------------

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any income that may be taxable to taxpayer in
connection with taxpayer's receipt of the property described below:

1.   The name, address, taxpayer identification number and taxable year of the
     undersigned are as follows:

     NAME OF TAXPAYER: ________________
     NAME OF SPOUSE:  ________________
     ADDRESS:

     IDENTIFICATION NO. OF TAXPAYER:  _______________
     IDENTIFICATION NO. OF SPOUSE:  _______________
     TAXABLE YEAR:  __________

2.   The property with respect to which the election is made is described as
     follows:

     ______________ shares of the Common Stock $.001 par value, of CrossWorlds
     Software, Inc., a California corporation (the "Company").
                                                    -------

3.   The date on which the property was transferred is:  _______________

4.   The property is subject to the following restrictions:

     Repurchase option at cost in favor of the Company upon termination of
     taxpayer's employment or consulting relationship.

5.   The Fair Market Value at the time of transfer, determined without regard to
     any restriction other than a restriction which by its terms will never
     lapse, of such property is: $____________

6.   The amount (if any) paid for such property: $____________

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property.  The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
--------------------------------------------------------------------------
except with the consent of the Commissioner.
-------------------------------------------

Dated:_______________________       ___________________________________
                                    Purchaser

Dated:_______________________       ___________________________________
                                    Spouse of Purchaser (if applicable)
<PAGE>

                                   EXHIBIT B
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                               EXERCISE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, 1999, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Incentive  Agreement dated _____________________________ (the
"Option Agreement").

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

         Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Company's Right of First Refusal.  Before any Shares held by Purchaser
         --------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

         (a) Notice of Proposed Transfer.  The Holder of the Shares shall
             ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

         (b) Exercise of Right of First Refusal.  At any time within thirty
             ----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

         (c) Purchase Price.  The purchase price ("Purchase Price") for the
             --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price.  If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

         (d) Payment.  Payment of the Purchase Price shall be made, at the
             -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

         (e) Holder's Right to Transfer.  If all of the Shares proposed in the
             --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee.  If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

         (f) Exception for Certain Family Transfers.  Anything to the contrary
             --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Purchaser's lifetime or on the Purchaser's death by will or
intestacy to the Purchaser's immediate family or a trust for the benefit of the
Purchaser's immediate family shall be exempt from the provisions of this
Section.  "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister.  In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

         (g) Termination of Right of First Refusal.  The Right of First Refusal
             -------------------------------------
shall terminate as to any Shares 90 days after the (i) first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or (ii) a merger of the Company
with a corporation whose stock is publicly traded on a national exchange.
<PAGE>

     5.  Tax Consultation. Purchaser understands that Purchaser may suffer
         ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     6.  Restrictive Legends; Stop-Transfer Orders; Market Standoff.
         ----------------------------------------------------------

         (a) Legends. Purchaser understands and agrees that the Company shall
             -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

             THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
             THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
             OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
             REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
             SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
             TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

             THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
             RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
             ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
             ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
             BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
             RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES
             OF THESE SHARES.

             (b) Stop-Transfer Notices. Purchaser agrees that, in order to
                 ---------------------
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

             (c) Market Standoff.  Purchaser hereby agrees that if so requested
                 ---------------
by the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

             (d) Refusal to Transfer.  The Company shall not be required (i) to
                 -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     7.  Successors and Assigns.  The Company may assign any of its rights under
         ----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     8.  Interpretation.  Any dispute regarding the interpretation of this
         --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     9.  Governing Law; Severability.  This Agreement shall be governed by and
         ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12.  Delivery of Payment. Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.

     13.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to
<PAGE>

the Purchaser's interest except by means of a writing signed by the Company and
Purchaser.

Submitted by:              Accepted by:

PURCHASER:
                         CROSSWORLDS SOFTWARE, INC.

By:_______________________________         By:______________________________

Name:_____________________________         Its:_____________________________

Address:                                 Address:
-------                                  -------

__________________________________       577 Airport Boulevard, Suite 800
__________________________________       Burlingame, CA  94010-2024
<PAGE>

                                   EXHIBIT C
                                   ---------

                      INVESTMENT REPRESENTATION STATEMENT

PURCHASER:   _____________________

COMPANY:     CROSSWORLDS SOFTWARE, INC.

SECURITY:    ___________ shares of Common Stock

AMOUNT:      __________________________________

DATE:        __________________________________

     In connection with the purchase of the above-listed Securities, the
undersigned Purchaser represents to the Company the following:

     (a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.  Purchaser is
acquiring these Securities for investment for Purchaser's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

     (b) Purchaser acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.  In this connection, Purchaser
understands that, in the view of the Securities and Exchange Commission, the
statutory basis for such exemption may be unavailable if Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future.  Purchaser further understands that the Securities must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.  Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Securities.  Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.

     (c) Purchaser is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions.  Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Purchaser, the exercise will
be exempt from registration under the Securities Act.  In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including:  (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d) Purchaser hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Purchaser
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
<PAGE>

     (e) Purchaser further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.  Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.

                                               Signature of Purchaser:

                                               ______________________________

                                               Date:___________________, 19__
<PAGE>

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                     STOCK OPTION AGREEMENT--EARLY EXERCISE

     Unless otherwise defined herein, the terms defined in the CrossWorlds
Software, Inc. 1999 Stock Plan (the "Plan") shall have the same defined meanings
in this Option Agreement.

1. NOTICE OF STOCK OPTION GRANT
   ----------------------------

     You have been granted an option to purchase Common Stock of the CrossWorlds
Software, Inc. (the "Company"), subject to the terms and conditions of the Plan
and this Option Agreement, as follows:

Optionee                          Art Matin
                                  7 Melwood Lane
                                  Westport, CT 06880 USA
Grant Number                      00001711
Date of Grant                     01/12/2000
Vesting Commencement Date         01/12/2000
Exercise Price per Share          $ 9.00
Number of Shares Granted          50,000
Total Exercise Price              $450,000
Type of Option:                   NQ
Term/Expiration Date:             01/12/2010

1. Vesting Schedule.  You may exercise this Option, in whole or in part
   ----------------
immediately following the Date of Grant.  These option shares are subject to the
following vesting schedule (and subject to the Company's right to repurchase
shares as set forth in Exhibit A, Section 4(a)):
                       -------------------------

   The shares of Common Stock subject to the Option (the "Shares") shall vest on
the Vesting Commencement Date such that the Option shall be vested in full upon
the Vesting Commencement Date.

2. Termination Period.  You may exercise this Option for 90 days after
   ------------------
termination of your Continuous Status as an Employee, Consultant or Director, or
for such longer period upon your death or disability as provided in the Plan.
If your status changes from Employee to Consultant or Director;  or Director or
Consultant to Employee, this Option Agreement shall remain in effect.  In no
case may you exercise this Option after the Term/Expiration Date as provided
above.

3. Agreement to Terms.  Optionee acknowledges receipt of a copy of the Plan and
   ------------------
represents that he is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, including the
terms and conditions of Grant on the reverse side hereof, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option.  Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY, DIRECTORSHIP OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT, CONSULTANCY OR
DIRECTORSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

Dated:  01/12/2000
      ---------------------------------------
OPTIONEE

By: /s/ Art Matin
   ------------------------------------------

CROSSWORLDS SOFTWARE, INC.,
a Delaware corporation

By: /s/ Stacey Giamalis
   ------------------------------------------

Title: General Counsel
<PAGE>

1. TERMS AND CONDITIONS OF GRANT

   a.  Grant of Option.  CrossWorlds Software, Inc. (the "Company"), hereby
       ----------------
grants to the Optionee (the "Optionee") named in the Notice of Grant, a
[nonstatutory ][incentive] stock option (the "Option") to purchase the total
number of shares of Common Stock (the Shares") set forth in the Notice of Grant,
at the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the 1999 Stock Plan
(the "Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

   b.  Exercise of Option.  This Option shall be exercisable during its term in
       ------------------
accordance with the Vesting Schedule set out in the Notice of Grant and with the
provisions of Section 9 of the Plan as follows:

      (i) Right to Exercise.  (a) This Option may be exercised in whole or in
          -----------------
part at any time after the Date of Grant, as to Shares which have not yet vested
under the vesting schedule indicated on the Notice of Stock Option Grant;

provided, however, that Optionee shall execute as a condition to such exercise
--------  -------
of this Option, the Early Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Early Exercise Agreement").  If
                             ---------       ------------------------
Optionee chooses to exercise this Option solely as to Shares which have vested
under the vesting schedule indicated on the Notice of Stock Option Grant,
Optionee shall complete and execute the form of Exercise Notice attached hereto
as Exhibit B (the "Exercise Agreement").  Notwithstanding the foregoing, the
   ---------       ------------------
Company may in its discretion prescribe or accept a different form of notice of
exercise and/or stock purchase agreement if such forms are otherwise consistent
with this Agreement, the Plan and then-applicable law.  (b) This Option may not
be exercised for a fraction of a Share. (c) In the event of Optionee's death,
Disability or other termination of the Optionee's Continuous Status as an
Employee, Consultant or Director, the exercisability of the Option is governed
by Sections g, h and i below, subject to the limitation contained in Section k.
below.  (d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

      (ii) Method of Exercise.  This Option shall be exercisable by execution
           ------------------
and delivery of the Early Exercise Agreement or the Exercise Agreement,
whichever is applicable, or of any other written notice approved for such
purpose by the Company which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan.  Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company.  The written notice shall be accompanied by payment of
the Exercise Price.  This Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price.

      No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or national market system upon which the
Common Stock is then listed.  Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which
the Option is exercised with respect to such Shares.

   c.  Optionee's Representations.  In the event the Shares purchasable pursuant
       --------------------------
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit C.

   d.  Lock-Up Period.  Optionee hereby agrees that if so requested by the
       --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only  to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act.  The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

   e.  Method of Payment.  Payment of the Exercise Price shall be by any of the
       -----------------
following, or a combination thereof, at the election of the Optionee:

       (i)   cash; or

       (ii)  check; or

       (iii) surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

       (iv)  to the extent authorized by the Company, delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, share require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the Exercise Price; or

       (v)   promissory note (in the form provided by the Company).

   f.  Restrictions on Exercise.  This Option may not be exercised if the
       ------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board.  As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

   g.  Termination of Relationship.  In the event an Optionee's Continuous
       ---------------------------
Status as an Employee, Consultant or Director terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant.  To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

   h.  Disability of Optionee.  Notwithstanding the provisions of Section g.
       ----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee, Consultant or Director as a result of his or her Disability, Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Notice of Grant) exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination.  To the extent that
Optionee is not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

   i.  Death of Optionee.  In the event of termination of Optionee's Continuous
       -----------------
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section k. below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.

   j.  Non-Transferability of Option.  Options may not be sold, pledged,
       -----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  The terms of this Option shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.

   k.  Term of Option.  This Option may be exercised only within the term set
       --------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.  The limitations set out
in Section 7 of the Plan regarding Options granted to more than ten percent
(10%) shareholders shall apply to this Option.

   l.  Tax Consequences.  Set forth below is a brief summary as of the date of
       ----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

      (i) Exercise of an NSO.  There may be a regular federal income tax
          ------------------
liability upon the exercise of an NSO.  The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.  In the case of the exercise of Option Shares which
have not vested as of the date of exercise, the Optionee will not realize
compensation income on the exercise until the date(s) on which shares vest
(i.e., have been released from the Company's repurchase option) unless the
Optionee files an election under Section 83(b) of the Code (an "83(b)
Election").  If an 83(b) election is filed, the amount of compensation income
will be determined on the date of exercise.  If Optionee is an Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise or vesting, as
applicable.

      (ii) Disposition of Shares.  If Shares are held for more than one year
           ---------------------
after the date of exercise (or the date of vesting, if later, in the case of the
exercise of unvested option shares and the Optionee had not filed an 83(b)
election at the time of such exercise, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes.
<PAGE>

                                   EXHIBIT A
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
               EARLY EXERCISE NOTICE AND STOCK PURCHASE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, _____, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Stock Option  Agreement dated _____________________________ (the
"Option Agreement").  Of these Shares, Purchaser has elected to purchase
_______________ of those Shares which have become vested as of the date hereof
under the Vesting Schedule set forth in the Notice of Stock Option Grant (the

"Vested Shares") and _____________ Shares which have not yet vested under such
--------------
Vesting Schedule (the "Unvested Shares").  The purchase price for the Shares
                       ---------------
shall be $______ per Share for a total purchase price of $_______________.
The term "Shares" refers to the purchased Shares and all
          ------
securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

          Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Limitations on Transfer.  In addition to any other limitation on
         -----------------------
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below).  After any Shares have
been released from such Repurchase Option, Purchaser shall not assign, encumber
or dispose of any interest in such Shares except in compliance with the
provisions below and applicable securities laws.

          (a)  Repurchase Option.
               -----------------

               (i) If Purchaser's Continuous Status as an Employee or Consultant
terminates for any reason (including for cause, death or disability), the
Company shall upon the date of such termination (the "Termination Date") have an
                                                      ----------------
irrevocable, exclusive option (the "Repurchase Option") for a period of 60 days
                                    -----------------
from such date to repurchase all or any portion of the Unvested Shares held by
Purchaser as of the Termination Date which have not yet been released from the
Company's Repurchase Option at the original purchase price per Share specified
in Section 1 (adjusted for any stock splits, stock dividends and the like).

               (ii) The Repurchase Option shall be exercised by the Company by
written notice to Purchaser or Purchaser's executor and, at the Company's
option, (A) by delivery to Purchaser or Purchaser's executor with such notice of
a check in the amount of the purchase price for the Shares being purchased, or
(B) in the event Purchaser is indebted to the Company, by cancellation by the
Company of an amount of such indebtedness equal to the purchase price for the
Shares being repurchased, or (C) by a combination of (A) and (B) so that the
combined payment and cancellation of indebtedness equals such purchase price.
Upon delivery of such notice and payment of the purchase price in any of the
ways described above, the Company shall become the legal and beneficial owner of
the Shares being repurchased and all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the
number of Shares being repurchased by the Company, without further action by
Purchaser.

               (iii)  One hundred percent (100%) of the Unvested Shares shall
initially be subject to the Repurchase Option.  The Unvested Shares shall be
released from the Repurchase Option in accordance with the Vesting Schedule set
forth in the Notice of Stock Option Grant
<PAGE>

until all Shares are released from the Repurchase Option. Fractional shares
shall be rounded to the nearest whole share.

          (b) Company's Right of First Refusal.  Before any Shares held by
              --------------------------------
Purchaser or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").

               (i)   Notice of Proposed Transfer. The Holder of the Shares shall
                     ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

               (ii)  Exercise of Right of First Refusal.  At any time within
                     ----------------------------------
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.

               (iii) Purchase Price. The purchase price ("Purchase Price") for
                     --------------
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.

               (iv)  Payment.  Payment of the Purchase Price shall be made, at
                     -------
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

               (v)   Holder's Right to Transfer. If all of the Shares proposed
                     --------------------------
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall
again be offered the Right of First Refusal before any Shares held by the Holder
may be sold or otherwise transferred.

               (vi) Exception for Certain Family Transfers.  Anything to the
                    --------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Purchaser's lifetime or on the Purchaser's death by
will or intestacy to the Purchaser's immediate family or a trust for the benefit
of the Purchaser's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

               (vii) Termination of Right of First Refusal.  The Right of First
                     -------------------------------------
Refusal shall terminate as to any Shares 90 days after the (i) first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or (ii) a merger of the
Company with a corporation whose stock is publicly traded on a national
exchange.

     5.  Transfer of Shares; Escrow.
         --------------------------

         (a) Purchaser hereby authorizes and directs the Secretary of the
Company, or such other person designated by the Company, to transfer any
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

         (b) To ensure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 4(a), Purchaser hereby appoints Katrina A. Garnett of the Company, or
any other person designated by the Company, as escrow agent (the "Escrow Agent")
                                                                  ------------
and as Purchaser's attorney-in-fact to sell, assign and transfer unto the
Company such Unvested Shares, if any, as may be repurchased by the Company
pursuant to the Repurchase Option and shall, upon execution of this Agreement,
deliver and deposit with the Escrow Agent the share certificates representing
the Unvested Shares, together with two stock assignments duly endorsed in blank
and in the form attached hereto as Attachment A .  The Unvested Shares and stock
                                   ------------
assignment shall be held by the Escrow Agent in escrow pursuant to Joint Escrow
Instructions in the form attached hereto as Attachment B , until (i) the Company
                                            ------------
exercises its Repurchase Option as provided in Section 4(a), (ii) such Unvested
Shares become Vested Shares, or (iii) such time as this Agreement no longer is
in effect.  Upon vesting of the Unvested Shares, the Escrow Agent shall promptly
deliver to Purchaser the certificate or certificates representing such Shares in
the Escrow Agent's
<PAGE>

possession belonging to Purchaser, and the Escrow Agent shall be discharged of
all further obligations hereunder. Notwithstanding any of the foregoing,
however, the Escrow Agent shall nevertheless retain such certificate or
certificates as Escrow Agent if so required pursuant to other restriction
imposed pursuant to this Agreement.

          (c) The Escrow Agent shall not be liable for any act it may do or omit
to do with respect to holding the Shares in escrow and while acting in good
faith and in the exercise of its judgment.

          (d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws.  Any
transferee shall hold such Shares subject to all the provisions hereof and shall
acknowledge the same by signing a copy of this Agreement.

          (e) No Shares may be sold, pledged, hypothecated or otherwise
transferred by Purchaser until such Shares have become Vested Shares and are no
longer subject to any security agreement for the benefit of the Company.

     6.   Ownership, Voting Rights, Duties.  This Agreement shall not affect in
          --------------------------------
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.  Purchaser shall enjoy rights as a
stockholder until such time as Purchaser disposes of the Shares or the Company
and/or its assignee(s) exercises either the Repurchase Option or the Right of
First Refusal hereunder.  Upon any such exercise, Purchaser shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser or the Escrow Agent, as the case may be, shall
forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.

     7.   Tax Consultation.  Purchaser understands that Purchaser may suffer
          ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares.  Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     8.   Restrictive Legends; Stop-Transfer Orders; Market Standoff
          ----------------------------------------------------------

          (a) Legends.  Purchaser understands and agrees that the Company shall
              -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

              THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
              THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
              SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
              UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY
              COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
              OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
              THEREWITH.

              THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
              RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
              ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
              ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
              MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
              TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
              TRANSFEREES OF THESE SHARES.

          (b) Stop-Transfer Notices.  Purchaser agrees that, in order to ensure
              ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company  transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) Market Standoff.  Purchaser hereby agrees that if so requested by
              ---------------
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

          (d) Refusal to Transfer.  The Company shall not be required (i) to
              -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     9.  Section 83(b) Election.  Purchaser understands that Section 83(a) of
         ----------------------
the Internal Revenue Code of 1986, as amended (the
<PAGE>

"Code"), taxes as ordinary income for a [Nonstatutory] [Incentive] Stock Option
the difference between the amount paid for the Shares and the Fair Market Value
of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" means the right of the Company to buy back the Shares
          -----------
pursuant to the Repurchase Option set forth in Section 4(a) of this Agreement.
Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by
filing an election under Section 83(b) (an "83(b) Election") of the Code with
                                            --------------
the Internal Revenue Service within 30 days from the date of purchase. Even if
the Fair Market Value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income tax treatment under Section 83(a) in the future. Purchaser
acknowledge that it is Purchaser's sole responsibility and not the Company's to
timely file the 83(b) Election, even if Purchaser requests the Company or its
representative to make this filing on Purchaser's behalf. Purchaser understands
that failure to file such an election in a timely manner may result in adverse
tax consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her federal income tax
return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of
United States federal income taxation with respect to purchase of the Shares
hereunder, and does not purport to be complete. Purchaser further acknowledges
that the Company has directed Purchaser to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, and the tax consequences
of Purchaser's death.

          Purchaser agrees that he or she will execute and deliver to the
Company with this executed Agreement a copy of the Acknowledgment and Statement
of Decision Regarding Section 83(b) Election (the "Acknowledgment") attached
                                                   --------------
hereto as Attachment C.  Purchaser further agrees that he or she will execute
          ------------
and submit with the Acknowledgment a copy of the 83(b) Election attached hereto
as Attachment D (for tax purposes in connection with the early exercise of an
   ------------
option) if Purchaser has indicated in the Acknowledgment his or her decision to
make such an election.

     10.  Notices.  All notices and other communications required or permitted
          -------
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after the deposit with the U.S.
Postal Service, if delivered by first class mail, postage prepaid (b) upon
delivery, if delivered by hand, or (c) one business day after the business day
of deposit with Federal Express or similar overnight courier, freight prepaid,
and shall be addressed (i) if to Purchaser, at Purchaser's address as set forth
beneath Purchaser's signature to this Agreement, or at such other address as
Purchaser shall have furnished to the Company in writing, (ii) if to the
Company, to CrossWorlds Software, Inc., with copy to Venture Law Group, 2775
Sand Hill Road, Menlo Park, California 94025, Attention:  Jon E. Gavenman, Esq.,
or Katrina A. Garnett, at CrossWorlds Software, Inc., or at such other address
as the Escrow Agent shall have furnished to the parties.

     11.  Successors and Assigns.  The Company may assign any of its rights
          ----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     12.  Interpretation.  Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     13.  Governing Law; Severability.  This Agreement shall be governed by and
          ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     14.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     15.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     16.  Delivery of Payment.  Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.
<PAGE>

     17.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser.

Submitted by:                             Accepted by:

PURCHASER:                                CROSSWORLDS SOFTWARE, INC.

By:_________________________________      By:_________________________________

Name:_______________________________      Its:________________________________

Address:                                  Address:
-------                                   -------

____________________________________      577 Airport Boulevard, Suite 800
____________________________________      Burlingame, CA  94010-2024
<PAGE>

                                 ATTACHMENT A
                                 ------------

                     ASSIGNMENT SEPARATE FROM CERTIFICATE
                     ------------------------------------

          FOR VALUE RECEIVED and pursuant to that certain Early Exercise Notice
and Restricted Stock Purchase Agreement between the undersigned ("Purchaser")
                                                                  --------
and CrossWorlds Software, Inc. (the "Company") dated _____________, ____ (the
                                     -------
"Agreement"), Purchaser hereby sells, assigns and transfers unto
----------
_______________________________ (________) shares of the Common Stock of the
Company, standing in Purchaser's name on the books of the Company and
represented by Certificate No. ___, and hereby irrevocably appoints
_____________________________ to transfer said stock on the books of the Company
with full power of substitution in the premises.  THIS ASSIGNMENT MAY ONLY BE
USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated: _________________

                              Signature:

                              _______________________________________
                              Purchaser

                              _______________________________________
                              Spouse of  Purchaser (if applicable)

Instruction:  Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
Repurchase Option set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE>

                                 ATTACHMENT B
                                 ------------

                           JOINT ESCROW INSTRUCTIONS
                           -------------------------

                                                           _______________, ____

Katrina A. Garnett
CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010

          As Escrow Agent for both CrossWorlds Software, Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
                  -------
Company ("Purchaser"), you are hereby authorized and directed to hold the
          ---------
documents delivered to you pursuant to the terms of that certain Early Exercise
Notice and Restricted Stock Purchase Agreement ("Agreement"), dated as of
                                                 ---------
__________ __, 19__, between the Company and the undersigned, in accordance with
the following instructions:

          1.  In the event that the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the ("Company") exercises
                                                          -------
the Company's repurchase option set forth in the Agreement, the Company shall
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing hereunder
at the principal office of the Company.  Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

          2.  At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

          3.  Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.  Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.

          4.  Upon written request of Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within sixty (60) days after cessation of Purchaser's continuous employment by
or services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

          5.  If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.

          6.  Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

          7.  You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

          8.  You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court.  In case you obey or comply with any such order, judgment or
<PAGE>

decree, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

          9.   You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder .

          10.  You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

          11.  You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

          12.  Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be an officer or agent of the Company or if you shall
resign by written notice to each party.  In the event of any such termination,
the Company shall appoint a successor Escrow Agent.

          13.  If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

          14.  It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

          15.  All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, or (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid, and shall be
addressed to each of the other parties thereunto entitled at the following
addresses or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.

          COMPANY:                       CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010
                                         Attn:  Controller

          PURCHASER:

          ESCROW AGENT:                  Katrina A. Garnett
                                         CrossWorlds Software, Inc.
                                         577 Airport Boulevard, Suite 800
                                         Burlingame, CA  94010

          16.  By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

          17.  This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
<PAGE>

          18.  These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California
as they apply to contracts entered into and wholly to be performed within such
state.

                                 Very truly yours,

                                 CROSSWORLDS SOFTWARE, INC.

                                 ____________________________________
                                 Katrina A. Garnett

                                 PURCHASER:

                                 ____________________________________
                                 Purchaser

                                 ESCROW AGENT:

                                 ____________________________________
                                 Katrina A. Garnett
<PAGE>

                                  ATTACHMENT C
                                  ------------

                    ACKNOWLEDGMENT AND STATEMENT OF DECISION
                    ----------------------------------------
                        REGARDING SECTION 83(b) ELECTION
                        --------------------------------

     The undersigned (which term includes the undersigned's spouse), a purchaser
of ___________ shares of Common Stock of CrossWorlds Software, Inc., a
California corporation (the "Company") by exercise of an option (the "Option")
                             -------                                  ------
granted pursuant to the Company's 1999 Executive Stock Plan (the "Plan"), hereby
                                                                  ----
states as follows:

     1.   The undersigned acknowledges receipt of a copy of the Plan relating to
the offering of such shares. The undersigned has carefully reviewed the Plan and
the option agreement pursuant to which the Option was granted.

     2.   The undersigned either [check and complete as applicable]:

          (a) ____ has consulted, and has been fully advised by, the
               undersigned's own tax advisor,
               _____________________________________, whose business address is
               ______________________________, regarding the federal, state and
               local tax consequences of purchasing shares under the Plan, and
               particularly regarding the advisability of making elections
               pursuant to Section 83(b) of the Internal Revenue Code of 1986,
               as amended (the "Code") and pursuant to the corresponding
                                ----
               provisions, if any, of applicable state law; or

          (b) ____ has knowingly chosen not to consult such a tax advisor.

     3.   The undersigned hereby states that the undersigned has decided [check
as applicable]:

          (a) ____  to make an election pursuant to Section 83(b) of the Code,
               and is submitting to the Company, together with the undersigned's
               executed Early Exercise Notice and Stock Purchase Agreement, an
               executed form entitled "Election Under Section 83(b) of the
               Internal Revenue Code of 1986;" or

          (b) ____ not to make an election pursuant to Section 83(b) of the
               Code.

     4.   Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares under the Plan
or of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.

Date:___________________________           _________________________________
                                           Purchaser

Date:___________________________           _________________________________
                                           Spouse of  Purchaser (if applicable)
<PAGE>

                                  ATTACHMENT D
                                  ------------

                          ELECTION UNDER SECTION 83(b)
                          ----------------------------
                      OF THE INTERNAL REVENUE CODE OF 1986
                      ------------------------------------

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any income that may be taxable to taxpayer in
connection with taxpayer's receipt of the property described below:

1.   The name, address, taxpayer identification number and taxable year of the
     undersigned are as follows:

     NAME OF TAXPAYER: ________________
     NAME OF SPOUSE:  ________________
     ADDRESS:

     IDENTIFICATION NO. OF TAXPAYER:  _______________
     IDENTIFICATION NO. OF SPOUSE:  _______________
     TAXABLE YEAR:  __________

2.   The property with respect to which the election is made is described as
     follows:

     ______________ shares of the Common Stock $.001 par value, of CrossWorlds
     Software, Inc., a California corporation (the "Company").
                                                    -------

3.   The date on which the property was transferred is:  _______________

4.   The property is subject to the following restrictions:

     Repurchase option at cost in favor of the Company upon termination of
     taxpayer's employment or consulting relationship.

5.   The Fair Market Value at the time of transfer, determined without regard to
     any restriction other than a restriction which by its terms will never
     lapse, of such property is: $____________

6.   The amount (if any) paid for such property: $____________

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property.  The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
--------------------------------------------------------------------------
except with the consent of the Commissioner.
-------------------------------------------

Dated:_______________________       ___________________________________
                                    Purchaser

Dated:_______________________       ___________________________________
                                    Spouse of Purchaser (if applicable)
<PAGE>

                                   EXHIBIT B
                                   ---------

                           CROSSWORLDS SOFTWARE, INC.
                           1999 EXECUTIVE STOCK PLAN
                               EXERCISE AGREEMENT

CrossWorlds Software, Inc.
577 Airport Boulevard, Suite 800
Burlingame, CA  94010-2024
Attention: Stock Administrator

     1.  Exercise of Option.  Effective as of today, ___________, 1999, the
         ------------------
undersigned ("Purchaser") __________________ hereby elects to exercise
Purchaser's option to purchase _________ shares of the Common Stock (the
"Shares") of CrossWorlds Software, Inc. (the "Company") under and pursuant to
the CrossWorlds Software , Inc., 1999 Executive Stock Plan, as amended (the
"Plan") and the Incentive  Agreement dated _____________________________ (the
"Option Agreement").

     2.  Representations of Purchaser.  Purchaser acknowledges that Purchaser
         ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.  Rights as Stockholder.  Until the stock certificate evidencing such
         ---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.

         Purchaser shall enjoy rights as a stockholder until such time as
Purchaser disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder.  Upon such exercise, Purchaser shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Purchaser shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.

     4.  Company's Right of First Refusal.  Before any Shares held by Purchaser
         --------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

         (a) Notice of Proposed Transfer.  The Holder of the Shares shall
             ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

         (b) Exercise of Right of First Refusal.  At any time within thirty
             ----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

         (c) Purchase Price.  The purchase price ("Purchase Price") for the
             --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price.  If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

         (d) Payment.  Payment of the Purchase Price shall be made, at the
             -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

         (e) Holder's Right to Transfer.  If all of the Shares proposed in the
             --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee.  If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

         (f) Exception for Certain Family Transfers.  Anything to the contrary
             --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Purchaser's lifetime or on the Purchaser's death by will or
intestacy to the Purchaser's immediate family or a trust for the benefit of the
Purchaser's immediate family shall be exempt from the provisions of this
Section.  "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister.  In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

         (g) Termination of Right of First Refusal.  The Right of First Refusal
             -------------------------------------
shall terminate as to any Shares 90 days after the (i) first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or (ii) a merger of the Company
with a corporation whose stock is publicly traded on a national exchange.
<PAGE>

     5.  Tax Consultation. Purchaser understands that Purchaser may suffer
         ----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

     6.  Restrictive Legends; Stop-Transfer Orders; Market Standoff.
         ----------------------------------------------------------

         (a) Legends. Purchaser understands and agrees that the Company shall
             -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

             THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
             THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
             OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
             REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
             SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
             TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

             THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
             RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
             ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE
             ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
             BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
             RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES
             OF THESE SHARES.

             (b) Stop-Transfer Notices. Purchaser agrees that, in order to
                 ---------------------
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

             (c) Market Standoff.  Purchaser hereby agrees that if so requested
                 ---------------
by the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), neither Purchaser nor
                                         --------------
Purchaser shall sell or otherwise transfer any Shares or other securities of the
Company during such period as the Company and the representatives of the
underwriters may request (not to exceed 180 days) following the effective date
of any registration statement of the Company filed under the Securities Act for
an underwritten public offering. The Company may impose stop-transfer
instructions with respect to Shares subject to the foregoing restrictions until
the end of such market standoff period.

             (d) Refusal to Transfer.  The Company shall not be required (i) to
                 -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     7.  Successors and Assigns.  The Company may assign any of its rights under
         ----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Purchaser and his or her heirs, executors, administrators, successors and
assigns.

     8.  Interpretation.  Any dispute regarding the interpretation of this
         --------------
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting.  The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.

     9.  Governing Law; Severability.  This Agreement shall be governed by and
         ---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law.  Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10.  Notices.  Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11.  Further Instruments.  The parties agree to execute such further
          -------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12.  Delivery of Payment. Purchaser herewith delivers to the Company the
          -------------------
full Exercise Price for the Shares.

     13.  Entire Agreement.  The Plan and Notice of Grant/Option Agreement are
          ----------------
incorporated herein by reference.  This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to
<PAGE>

the Purchaser's interest except by means of a writing signed by the Company and
Purchaser.

Submitted by:              Accepted by:

PURCHASER:
                         CROSSWORLDS SOFTWARE, INC.

By:_______________________________         By:______________________________

Name:_____________________________         Its:_____________________________

Address:                                 Address:
-------                                  -------

__________________________________       577 Airport Boulevard, Suite 800
__________________________________       Burlingame, CA  94010-2024
<PAGE>

                                   EXHIBIT C
                                   ---------

                      INVESTMENT REPRESENTATION STATEMENT

PURCHASER:   _____________________

COMPANY:     CROSSWORLDS SOFTWARE, INC.

SECURITY:    ___________ shares of Common Stock

AMOUNT:      __________________________________

DATE:        __________________________________

     In connection with the purchase of the above-listed Securities, the
undersigned Purchaser represents to the Company the following:

     (a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.  Purchaser is
acquiring these Securities for investment for Purchaser's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

     (b) Purchaser acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.  In this connection, Purchaser
understands that, in the view of the Securities and Exchange Commission, the
statutory basis for such exemption may be unavailable if Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future.  Purchaser further understands that the Securities must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.  Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Securities.  Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.

     (c) Purchaser is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions.  Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Purchaser, the exercise will
be exempt from registration under the Securities Act.  In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including:  (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d) Purchaser hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Purchaser
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
<PAGE>

     (e) Purchaser further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.  Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.

                                               Signature of Purchaser:

                                               ______________________________

                                               Date:___________________, 19__
<PAGE>

                                  EXHIBIT B
                                  ---------

                             Employee Agreement

                         CROSSWORLDS SOFTWARE, INC.

   Employment, Confidential Information and Invention Assignment Agreement

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

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

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

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

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

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

          (a) Company Information.  I agree at all times during the term of my
              -------------------
employment and thereafter to hold in strictest confidence, and not to use except
for the benefit of the Company or to disclose to any person, firm or corporation
without written authorization of the Board of Directors of the Company, any
Confidential Information of the Company.  I understand that "Confidential
                                                             ------------
Information" means any Company proprietary information, technical data, trade
-----------
secrets or know-how, including, but not limited to, research, product plans,
products, services, customer lists and customers (including, but not limited to,
customers of the Company on whom I called or with whom I became acquainted
during the term of my employment), markets, software, developments, inventions,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, marketing, finances or other business information
disclosed to me by the Company either directly or indirectly in writing, orally
or by drawings or observation of parts or equipment.  I further understand that
Confidential Information does not include any of the foregoing items which has
become publicly known and

<PAGE>

made generally available through no wrongful act of mine or of others who were
under confidentiality obligations as to the item or items involved.

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

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

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

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

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

                                     -2-

<PAGE>

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

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

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

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

Prior Inventions:
                                                   Identifying Number
Title                           Date               or Brief Description

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

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

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

                                     -3-

<PAGE>

          (f) Exception to Assignments.  I understand that the provisions of
              ------------------------
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention that (i) I develop entirely on my own time; and (ii) I develop
without using Company equipment, supplies, facilities, or trade secret
information; and (iii) do not result from any work performed by me for the
Company; and (iv) do not relate (or, for employees in Kansas, Minnesota or
Washington only, do not directly relate) at the time of conception or reduction
                        --------
to practice to the Company's business, or to its actual or demonstrably
anticipated research or development.  Any such invention will be owned entirely
by me, even if developed by me during the time period in which I am employed by
the Company./1/  I will advise the Company promptly in writing of any inventions
that I believe meet the criteria for exclusion set forth herein and are not
otherwise disclosed pursuant to Section 3(e) above.

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

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

     5.  No Solicitation of Employees.  In consideration for my employment by
         ----------------------------
the Company and other valuable consideration, receipt of which is hereby
acknowledged, I agree that during the period of my association with the
Company as an employee, officer and/or director and a period of twelve (12)
months thereafter, I shall not solicit the employment of any person

-----------------
/1/ For employees in California only, the Company acknowledges the applicability
of Section 2870 of the California Labor Code, which provides:  "Any provision in
an employment agreement which provides that an employee shall assign, or offer
to assign, any of his or her rights in an invention to his or her employer shall
not apply to an invention that the employee developed entirely on his or her own
time without using the employer's equipment, supplies,  facilities, or trade
secret information except for those inventions that either:  (i) relate at the
time of conception or reduction to practice of the invention to the employer's
business, or actual or demonstrably anticipated research or development of the
employer and (ii) result from any work performed by the employee for the
employer.  To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."

                                     -4-

<PAGE>

who shall then be employed by the Company (as an employee or consultant) or
who shall have been employed by the Company (as an employee or consultant)
within the prior twelve (12) month period, on behalf of myself or any other
person, firm, corporation, association or other entity, directly or
indirectly.

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

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

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

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

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

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

          (b) Entire Agreement.  This Agreement sets forth the entire agreement
              ----------------
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us.  No modification of or
amendment to this Agreement, nor any

                                     -5-

<PAGE>

waiver of any rights under this Agreement, will be effective unless in writing
signed by the party to be charged. Any subsequent change or changes in my
duties, salary or compensation will not affect the validity or scope of this
Agreement.

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

                                     -6-

<PAGE>

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

Date:  _______________, 199__

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

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

Witness

Name (Print)

                                     -7-

<PAGE>

                                  EXHIBIT A
                                  ---------

                         CROSSWORLDS SOFTWARE, INC.

                       Conflict of Interest Guidelines

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

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

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

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

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

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

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

     7.  Acquiring real estate of interest to the Company.

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

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

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

<PAGE>

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

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

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

                                     -9-

<PAGE>

                                  EXHIBIT B
                                  ---------

                         CROSSWORLDS SOFTWARE, INC.

                           Termination Certificate

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

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

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

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

Date:  ___________________, 199__

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

                                    ----------------------------------------
                                    Name (Print)<PAGE>

                                                                   EXHIBIT 10.11

                          CROSSWORLDS SOFTWARE, INC.

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

     This Secured Loan Agreement (this "Agreement") is made as of November 15,
                                        ---------
1999 by and between CROSSWORLDS SOFTWARE, INC., a Delaware corporation (the

"Company"), and BARTON S. FOSTER and KATHERINE A. FOSTER (each individually, a
 -------
"Borrower" and collectively, "Borrowers").
 --------                     ---------

                                   BACKGROUND
                                   ----------

     Borrowers desire to borrow from the Company, and the Company desires to
lend to Borrowers, an aggregate of $150,000 (the "Borrowed Amount").  The
                                                  ---------------
parties desire that such loan shall be secured pursuant to a Security Agreement
of even date herewith (the "Security Agreement") by a third deed of trust on
                            ------------------
Borrowers' principal residence located at 829 Crescent Avenue, San Mateo, CA
94401 ("Principal Residence") on the terms and conditions contained herein and
in the Security Agreement (the "Third Deed of Trust").
                                -------------------

                                   AGREEMENT
                                   ---------

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

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

     2.  Promissory Note.  In consideration of the Company's delivery of the
         ---------------
Borrowed Amount, Borrowers will execute a secured promissory note in the form
attached hereto as Exhibit A (the "Note"), in the principal amount of such
                   ---------       ----
Borrowed Amount and bearing interest at a rate of 5.49% per annum, compounded
semiannually.

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

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

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

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

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

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

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

          (b) Governing Law.  This Agreement and all acts and transactions
              -------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to the principles of conflicts of law of such
state.

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

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

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

                                      -2-
<PAGE>

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

                              CROSSWORLDS SOFTWARE, INC.

                              By: /s/ Mark R. Kent
                                  _____________________________________
                              Name: Mark R. Kent
                                    ___________________________________
                              Title: SUP and CFO
                                     __________________________________

                              Address: 577 Airport Boulevard
                                         Suite 800
                                       Burlingame, CA 94010

                              /s/ Barton Foster
                              _________________________________________
                              BARTON FOSTER

                              /s/ Katherine Foster
                              _________________________________________
                              KATHERINE FOSTER

                              Address: 829 Crescent Avenue
                                       San Mateo, CA  94401

                                      -3-
<PAGE>

                                   EXHIBIT A

                            SECURED PROMISSORY NOTE
                            -----------------------

$150,000                                                       November 15, 1999
                                                          Burlingame, California

FOR VALUE RECEIVED, BARTON S. FOSTER and KATHERINE A. FOSTER (each, a "Borrower"
                                                                       --------
and collectively, "Borrowers") jointly and severally promise to pay to the order
                   ---------
of CROSSWORLDS SOFTWARE, INC. (the "Company"), at its principal offices at 577
                                    -------
Airport Boulevard, Suite 800, Burlingame, CA 94010, the principal sum of One
Hundred and Fifty Thousand Dollars ($150,000),with interest from the date hereof
at a rate of 5.49% per annum, compounded semiannually, on the unpaid balance of
such principal sum, upon the terms and conditions specified below.  Capitalized
terms used but not otherwise defined herein shall have the meanings given to
such terms in that certain Secured Loan Agreement, dated as of November 15,
1999, by and between the Company and the Borrowers (the "Loan Agreement").
                                                         --------------

     1.  Payment.  Borrowers jointly and severally promise to repay the
         -------
principal and interest balance of this Note within ten days following the
earliest to occur of (A) the sale, conveyance, assignment, alienation or any
other form of transfer of the Borrowers' principal residence located at 829
Crescent Avenue, San Mateo, CA 94401, (B) the sale, conveyance, assignment,
alienation or any other form of transfer of any shares of the Company's Common
Stock purchased by Borrower pursuant to the exercise of stock options issued by
the Company (excluding transfers to family members or trusts that agree to be
bound by the term of this note and the Loan Agreement), provided however that
Borrowers' repayment obligation under this subsection (B) is limited to the
proceeds or value realized by Borrowers on the sale, conveyance, assignment,
alienation or other form of transfer of the Common Stock, (C) termination of Mr.
Foster's employment with the Company, or (D) November 15, 2001.

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

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

                                      -4-
<PAGE>

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

          A.  the failure of Borrowers to make any payment of any amount due
hereunder and the continuation of such default for a period of ten (10) days or
more;

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

          C.  the sale, transfer, mortgage, assignment, further encumbrance or
lease, whether voluntarily or involuntarily or by operation of law or otherwise
of the Principal Residence covered by the Third Deed of Trust, or any portion
thereof or interest therein, without the prior written consent of the Company;

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

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

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

     5.  Security.   Payment of this Note shall be secured by the Third Deed of
         --------
Trust on the Principal Residence under the terms of the Security Agreement and
is subject to all the provisions thereof.  Borrowers, however, shall remain
personally liable for payment of this Note, and all of the assets of Borrowers
(including, but not limited to, shares of the Company's Common Stock), in
addition to the collateral under the Third Deed of Trust may be applied to the
satisfaction of Borrower's obligations hereunder.  This Note is also subject to
the terms of the Loan Agreement.

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

                                      -5-
<PAGE>

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

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

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

                                    /s/ Barton Foster
                                    ___________________________________
                                    Borrower:  Barton Foster

                                    /s/ Katherine Foster
                                    ___________________________________
                                    Borrower:  Katherine Foster

                                    Address: 829 Crescent Avenue
                                             San Mateo, CA  94401

                                      -6-
<PAGE>

                                   EXHIBIT B
                                   ---------

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

     This Security Agreement (this "Agreement") is made as of November 15, 1999
                                    ---------
by and between CROSSWORLDS SOFTWARE, INC., a California corporation (the

"Company"), and BARTON S. FOSTER and KATHERINE A. FOSTER (each individually, a
 -------
"Borrower" and collectively, "Borrowers").
 --------                     ---------

                                    RECITALS
                                    --------

     The Company has loaned or will loan to Borrowers, and Borrowers have
borrowed or will borrow from the Company, an aggregate of $150,000 (the

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

                                   AGREEMENT
                                   ---------

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

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

          (a) In consideration of the Loan to Borrowers under the Loan
Agreement, and to secure the Borrowed Amount, Borrowers are delivering herewith
the Third Deed of Trust in form and substance approved by the Company and duly
executed by Borrowers and properly notarized.  The Company may, if the Company
so elects, but without obligation to do so, at any time record the Third Deed of
Trust against Borrowers' principal residence, located at 829 Crescent Avenue,
San Mateo, CA 94401 (the "Principal Residence"), in the official records of the
                          -------------------
county in which the Principal Residence is located.  Within five (5) days after
written demand, Borrowers shall furnish written evidence reasonably satisfactory
to the Company that (i) Borrowers hold good and marketable title to the
Principal Residence; (ii) there is no loan, deed of trust, mortgage or
encumbrance against the Principal Residence other than the first and second
deeds of trust held by Chase Manhattan Bank in the principal amounts of $620,000
and $75,000, respectively, (the "First and Second Deeds of Trust"); and (iii)
Borrowers are not in default under such First and Second Deeds of Trust or
related loan documents.  Upon the sale, conveyance, assignment, alienation,
encumbrance or any other form of transfer of the Principal Residence, the Note
shall be immediately due and payable in full.

                                      -7-
<PAGE>

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

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

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

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

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

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

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

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

          (a) Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or

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

                                      -8-
<PAGE>

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

          (d) Any default under the First and Second Deeds of Trust.

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

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

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

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

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

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

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

                                      -9-
<PAGE>

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

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

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

                              BARTON S. FOSTER
                              /s/ Barton Foster
                              _________________________________________
                                  (Signature)

                              KATHERINE A. FOSTER
                              /s/ Katherine Foster
                              _________________________________________
                                  (Signature)

                              Address:  829 Crescent Avenue
                                     Burlingame, CA  94401

                              CROSSWORLDS SOFTWARE, INC.

                              By: /s/ Mark R. Kent
                                  _____________________________________
                              Title: SVP and CFO
                                     ----------------------------------

                                      -10-
<PAGE>

                      ADDENDUM TO SECURED PROMISSORY NOTE

     The following shall constitute an Addendum to the Secured Promissory Note
executed by Barton S. Foster and Katherine A. Foster (collectively, "Borrowers")
on November 15, 1999.

                                    RECITALS

     A.  On November 15, 1999, Borrowers executed a Secured Promissory Note in
the amount of $150,000.00 payable to the order of CrossWorlds Software, Inc.
(the "Company"), a copy of which is attached as Exhibit A to this Addendum (the
                                                ---------
"Note").

     B.  On January 27, 2000, the Board of the Directors of the Company approved
the amendment of certain terms of the Note pertaining to forgiveness of
principal and accrued over the course of Barton Foster's continued employment
with the Company.  In connection with this amendment and in accordance with
applicable tax law, the interest rate on the Note shall increase to 5.88%,
compounded annually.  All other provisions of the Note that are not modified by
this Addendum remain in full force and effect.

     NOW, THEREFORE, pursuant to the terms of the Note, and in consideration of
the mutual promises, covenants and conditions hereinafter set forth, the parties
hereto mutually agree as follows:

     1.  Subsection 1 of the Note is hereby amended such that Section 1 now
provides in its entirety as follows:

     "Payment.  Borrowers jointly and severally promise to repay the principal
      -------
and interest balance of this Note within ten days following the earliest to
occur of (A) the sale, conveyance, assignment, alienation or any other form of
transfer of the Borrowers' principal residence located at 829 Crescent Avenue,
San Mateo, CA 94401, (B) the sale, conveyance, assignment, alienation or any
other form of transfer of any shares of the Company's Common Stock purchased by
Borrower pursuant to the exercise of stock options issued by the Company
(excluding transfers to family members or trusts that agree to be bound by the
term of this note and the Loan Agreement), provided however that Borrowers'
repayment obligation under this subsection (B) is limited to the proceeds or
value realized by Borrowers on the sale, conveyance, assignment, alienation or
other form of transfer of the Common Stock, (C) termination of Mr. Foster's
employment with the Company, or (D) November 15, 2001.  So long as Mr. Foster
remains an employee of the Company, the Company shall forgive the principal and
accrued interest of this Note over the course of two (2) years, according to the
following schedule: 1/24 of the principal and accrued interest on the first day
of each month, commencing February 1, 2000.  In the event of a Change of Control
of the Company (as defined below) prior to February 1, 2002, the Company shall
accelerate the forgiveness of the then remaining unpaid balance owing on this
Note so that this Note is forgiven in full as of the effective date of the
transaction.  For purposes of this Note, a Change of Control shall mean a sale
of all or substantially all of the Company's assets, or a merger, consolidation
or other capital reorganization of the Company with or into another corporation,
or any other transaction or series of related transactions in which the

                                       1
<PAGE>

Company's stockholders immediately prior thereto own less than 50% of the voting
stock of the Company (or its successor or parent) immediately thereafter.

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

     2.  Entire Agreement.  Section 1 of the Note is modified by the provisions
         ----------------
of this Addendum and the interest rate accruing on the Note is increased to
5.88%, compounded annually.  Except as so modified, the Note shall remain in
full force and effect.  In the event of any conflict between this Addendum and
the Note, this Addendum shall govern.  This Addendum and the Note (together with
the Secured Loan Agreement and Security Agreement executed by Borrowers in
connection with the Note, both of which are part of Exhibit A attached hereto)
                                                    ---------
constitute the entire agreement between Borrowers and the Company regarding the
subject matter hereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be duly
executed as of the day and year written below.

                                    CROSSWORLDS SOFTWARE, INC.

                                    By: /s/ Alfred J. Amoroso
                                        _______________________________

                                    Title: Chief Executive Officer
                                           ____________________________

                                    Date: January 27, 2000
                                          _____________________________

                                    Barton S. Foster
                                    /s/ Barton Foster
                                    ___________________________________
                                    Borrower: Barton Foster

                                    Katherine A. Foster
                                    /s/ Katherine Foster
                                    _______________________________
                                    Borrower: Katherine Foster

                                    Date: January 27, 2000

                                       2
<PAGE>

                                   EXHIBIT A

                            SECURED PROMISSORY NOTE
                            -----------------------

$150,000                                                       November 15, 1999
                                                          Burlingame, California

FOR VALUE RECEIVED, BARTON S. FOSTER and KATHERINE A. FOSTER (each, a "Borrower"
                                                                       --------
and collectively, "Borrowers") jointly and severally promise to pay to the order
                   ---------
of CROSSWORLDS SOFTWARE, INC. (the "Company"), at its principal offices at 577
                                    -------
Airport Boulevard, Suite 800, Burlingame, CA 94010, the principal sum of One
Hundred and Fifty Thousand Dollars ($150,000),with interest from the date hereof
at a rate of 5.49% per annum, compounded semiannually, on the unpaid balance of
such principal sum, upon the terms and conditions specified below.  Capitalized
terms used but not otherwise defined herein shall have the meanings given to
such terms in that certain Secured Loan Agreement, dated as of November 15,
1999, by and between the Company and the Borrowers (the "Loan Agreement").
                                                         --------------

     1.  Payment.  Borrowers jointly and severally promise to repay the
         -------
principal and interest balance of this Note within ten days following the
earliest to occur of (A) the sale, conveyance, assignment, alienation or any
other form of transfer of the Borrowers' principal residence located at 829
Crescent Avenue, San Mateo, CA 94401, (B) the sale, conveyance, assignment,
alienation or any other form of transfer of any shares of the Company's Common
Stock purchased by Borrower pursuant to the exercise of stock options issued by
the Company (excluding transfers to family members or trusts that agree to be
bound by the term of this note and the Loan Agreement), provided however that
Borrowers' repayment obligation under this subsection (B) is limited to the
proceeds or value realized by Borrowers on the sale, conveyance, assignment,
alienation or other form of transfer of the Common Stock, (C) termination of Mr.
Foster's employment with the Company, or (D) November 15, 2001.

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

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

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

          A.  the failure of Borrowers to make any payment of any amount due
hereunder and the continuation of such default for a period of ten (10) days or
more;

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

          C.  the sale, transfer, mortgage, assignment, further encumbrance or
lease, whether voluntarily or involuntarily or by operation of law or otherwise
of the Principal Residence covered by the Third Deed of Trust, or any portion
thereof or interest therein, without the prior written consent of the Company;

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

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

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

     5.  Security.   Payment of this Note shall be secured by the Third Deed of
         --------
Trust on the Principal Residence under the terms of the Security Agreement and
is subject to all the provisions thereof.  Borrowers, however, shall remain
personally liable for payment of this Note, and all of the assets of Borrowers
(including, but not limited to, shares of the Company's Common Stock), in
addition to the collateral under the Third Deed of Trust may be applied to the
satisfaction of Borrower's obligations hereunder.  This Note is also subject to
the terms of the Loan Agreement.

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

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

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

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

                                    /s/ Barton Foster
                                    ___________________________________
                                    Borrower:  Barton Foster

                                    /s/ Katherine Foster
                                    ___________________________________
                                    Borrower:  Katherine Foster

                                    Address: 829 Crescent Avenue
                                             San Mateo, CA  94401

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