Document:

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                                                                   Exhibit 10.42

                           LOAN MODIFICATION AGREEMENT

This Loan Modification Agreement is entered into as of September 25, 2001, by
and between Crossworlds Software, Inc. (the "Borrower") and Silicon Valley Bank
("Bank").

1.   DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
     ------------------------------------
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, an Amended and Restated Loan and Security Agreement, dated September
18, 2000, as may be amended from time to time, (the "Loan Agreement"). The Loan
Agreement provided for, among other things, a Committed Revolving Line in the
original principal amount of Ten Million Dollars ($10,000,000) and a Term Loan
in the original principal amount of Seven Hundred Twenty Two Thousand Two
Hundred Twenty Two and 12/100 Dollars ($722,222,12). Defined terms used but not
otherwise defined herein shall have the same meanings as set forth in the Loan
Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.   DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the
     -------------------------
Collateral as described in the Loan Agreement and in an Intellectual Property
Security Agreement dated October 28, 1998.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.   DESCRIPTION OF CHANGE IN TERMS.
     ------------------------------

     A.     Modification(s) to Loan Agreement.
            ---------------------------------

            1.    Notwithstanding anything to the contrary contained in Section
                  2.1.1 entitled "Revolving Advances," through October 15, 2001
                  (the "Overadvance Period"), Bank shall make Advances not
                  exceeding the lesser of (A) the Committed Revolving Line or
                  (B) the Borrowing Base minus (i) the Letter of Credit Sublimit
                  minus (ii) the Foreign Exchange Sublimit minus (iii) the Cash
                  Management Services Sublimit plus $2,500,000 (the
                  "Overadvance").

            2.    Notwithstanding anything to the contrary contained in Section
                  2.2 entitled "Overadvances," if Borrower's aggregate
                  Obligations under Section 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed
                  the lesser of the Committed Revolving Line or the Borrowing
                  Base, plus the Overadvance, Borrower must immediately pay Bank
                  the excess. At the end of the Overadvance Period, Borrower
                  shall cure such Overadvance by either (i) paying down the
                  Committed Revolving Line or (ii) increasing its Eligible
                  Accounts.

            3.    Section 6.6 entitled "Primary Accounts" is hereby amended to
                  read as follows.

                  Borrower will maintain its primary banking relationship with
                  Bank, which relationship shall include Borrower maintaining
                  account balances in any accounts at or through Bank
                  representing at least 33% of all account balances of Borrower
                  at any financial institution.

4.   CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended
     ------------------
wherever necessary to reflect the changes described above.

5.   NO DEFENSES OF BORROWER.  Borrower (and each guarantor and pledgor signing
     ------------------------
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.

<PAGE>

6.  CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
    -------------------
understands and agrees that in modifying the existing Indebtedness, Bank is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. Unless expressly released herein, no
maker, endorser, or guarantor will be released by virtue of this Loan
Modification Agreement. The terms of this paragraph apply not only to this Loan
Modification Agreement, but also to all subsequent loan modification agreements.

     This Loan Modification Agreement is executed as of the date first written
above.

BORROWER:                                             BANK:

CROSSWORLDS SOFTWARE, INC.                            SILICON VALLEY BANK

By: /s/ James Budge                                   By: /s/ Kim Crosslin
   -----------------------                               -------------------
Name:   James Budge                                   Name:   Kim Crosslin
     ---------------------                                 -----------------
Title:  SVP & CFO                                     Title:  RM
      --------------------                                 -----------------

       LEGAL OK

       /s/ AJH
       -------------<PAGE>

                                                                   Exhibit 10.43
                           CROSSWORLDS SOFTWARE, INC.

                       EXECUTIVE MANAGEMENT RETENTION PLAN

         This Executive Management Retention Plan (the "Plan") is hereby
                                                        ----
established by CrossWorlds Software, Inc., a Delaware corporation (the
"Company"), effective as of August 23, 2001.
 -------

         1. Purpose of the Plan. The Company considers it essential to the
            -------------------
operation of the Company that it retain the services and commitment of its
executive management team in the event of certain potential corporate
transactions. The purpose of the Plan is to provide incentive to certain
employees to continue in the service of the Company notwithstanding the
possibility or occurrence of such transactions. The Board of Directors or, as
delegated by the Board, the Compensation Committee of the Board of Directors
(the "Committee"), shall administer the Plan.
      ---------

         2. Eligibility to Participate. Employees of the Company shall be
            --------------------------
eligible to participate in the Plan only upon his or her designation by the
Board or Committee as a participant in the Plan (a "Participant").
                                                    -----------

         3. Operation of the Plan. The Plan will operate through establishment
            ---------------------
of a retention bonus pool (the "Retention Bonus Pool"). The Board or Committee
                                --------------------
may allocate a percentage of the Retention Bonus Pool to a Participant at their
discretion (a "Participating Percentage"). A Participating Percentage forfeited
               ------------------------
by a Participant who fails to meet the continuing eligibility requirements of
the Plan prior to the effective date of a Transaction may be allocated to a new
Participant(s) at the discretion of the Board or Committee. If the Board or
Committee does not reallocate a forfeited Participating Percentage, such
forfeited percentage shall be cancelled. A Participating Percentage forfeited by
a Participant who fails to meet the continuing eligibility requirements of the
Plan on or after the effective date of a Transaction shall be cancelled. A
Participating Percentage that has been cancelled shall be deemed outstanding
such that the other Participants' Participating Percentages shall remain
unaffected by such forfeiture and cancellation.

         For purposes of this Plan, "Transaction" 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 Company's
stockholders immediately prior thereto own less than fifty percent (50%) of the
voting stock of the Company (or its successor or parent) immediately thereafter,
provided, however, that the filing for bankruptcy by the Company shall not
constitute a Transaction for purposes of this Plan, after the effective date of
and prior to the termination of this Plan.

         4. Retention Bonus. Under the Plan, each Participant who meets the
            ---------------
eligibility conditions described in Section 6 below will become entitled to
receive cash (and/or property other than cash in accordance with Section 7
below) from the Company or its successor, as applicable, less applicable income
and employment tax withholdings (the "Retention Bonus"), in
                                      ---------------

                                       -1-

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an amount equal to (a) the Participant's Participating Percentage, multiplied by
(b) the Retention Bonus Pool, less (c) the Aggregate Value of the Participant's
Vested "in the Money" Stock Options (as defined below in this Section 4), if
any, as of the effective date of the Transaction. If the above formula results
in zero or a negative number, because the value of the Participant's Vested "In
The Money" Stock Options is equal to or greater than the product of (x) the
Participant's Participating Percentage and (y) the Retention Bonus Pool, the
Participant shall not receive any Retention Bonus.

         For purposes of this Plan, the "Aggregate Value of the Participant's
                                         ------------------------------------
Vested 'In The Money' Stock Options" shall equal the value of all of the
-----------------------------------
Participant's vested "in the money" stock options. For purposes of this Section
4 only, "stock options" shall include both outstanding stock options and any
         -------------
shares of common stock of the Company issued after August 1, 2001 from the
exercise of stock options. The value of each vested "in the money" stock option
shall equal the product of (a) the per share market value offered by the
acquiror for outstanding shares of common stock of the Company, less the per
share exercise price for the stock option and (b) the number of shares subject
to the stock option.

         A stock option shall be considered "in the money" if the per share
                                             ------------
market value offered by the acquiror for outstanding shares of common stock of
the Company is greater than the exercise price of the Participant's stock
option. If the per share market value offered by the acquiror for the
outstanding shares of common stock of the Company is less than or equal to the
exercise price of a stock option held by a Participant, the stock option shall
not be considered "in the money." Stock options shall be considered "vested" if,
                                                                     ------
pursuant to the terms of such Participant's stock option agreement, restricted
stock purchase agreement, or other agreement with the Company governing the
vesting of such Participant's stock options, they are vested, or a right of
repurchase in favor of the Company has lapsed, on the effective date of the
Transaction. The "per share market value offered by the acquiror for outstanding
                  --------------------------------------------------------------
shares of common stock of the Company" shall be valued at the value of such
-------------------------------------
property established in the Transaction (including amounts so distributed after
the effective date of the Transaction pursuant to any escrow, earn-out or
similar arrangement) or, if not so established, at the fair market value of the
property on the effective date of the Transaction, established in good faith by
the Board of Directors of the Company as constituted immediately prior to the
Transaction.

         5. Retention Bonus Pool. The Retention Bonus Pool shall be an amount
            --------------------
equal to $3,400,000 plus three percent (3%) of that portion of the Base
Valuation of the Company which is greater than $80,000,000, if any. The
Retention Bonus Pool shall not exceed $5,500,000.

         For purposes of this Plan, "Base Valuation of the Company," in the case
                                     -----------------------------
of an acquisition of the Company (other than by asset purchase, which is
provided for below), shall equal (a) the per share market value offered by the
acquiror for outstanding shares of common stock of the Company, multiplied by
(b) the sum of (x) all outstanding common stock of the Company on the effective
date of the Transaction and (y) the total common stock equivalents from
outstanding stock options on the effective date of the Transaction. The common
stock equivalents from outstanding options shall be calculated using the
treasury method which results in the total common stock equivalent shares that
theoretically could be purchased by the proceeds from the exercise of vested "in
the money" options. The market value assumed for the treasury method

                                       -2-

<PAGE>

calculation shall be the same as the per share market value offered by the
acquiror for outstanding shares of common stock of the Company. For purposes of
this Section, vested "in the money" options shall include all options which are
vested as of the effective date of a Transaction, in accordance with the terms
of the stock option agreement between the Company and the optionee (or any other
agreement between the Company and an optionee regarding stock option vesting),
where the exercise price of the option is less than the per share market value
offered by the acquiror for outstanding shares of common stock of the Company.

         For purposes of this Plan, "Base Valuation of the Company," in the case
                                     -----------------------------
of an acquisition of all or substantially all the assets of the Company, shall
equal the net amount available for distribution to the stockholders of the
Company on the effective date of a Transaction on account of their ownership of
shares of stock of the Company, including amounts so distributed after the
effective date pursuant to any escrow, earn-out or similar arrangement, as
determined by the Company's Board of Directors (as constituted immediately prior
to the Transaction) in its sole discretion.

         If the consideration paid by the acquiror (the "Acquisition
                                                         -----------
Consideration") includes property other than cash, the Acquisition Consideration
-------------
shall be valued at the value of such property established in the Transaction or,
if not so established, at the fair market value of the property on the effective
date of the Transaction, established in good faith by the Board of Directors of
the Company as constituted immediately prior to the Transaction.

6.       Payment of Retention Bonus.  Eligibility of a Participant for payment
         --------------------------
of the Retention Bonus shall be determined as follows:

         (a) Each Participant who remains an employee of the Company through the
effective date of a Transaction will be eligible for payment of fifty percent
(50%) of the Retention Bonus with respect to such Participant.

         (b) Each Participant who remains an employee of the Company or its
successor for a ninety (90) day period following the effective date of a
Transaction will become eligible for payment of the remaining fifty percent
(50%) of the Retention Bonus with respect to such Participant.

         (c) With respect to a Participant who is terminated by the Company or
its successor without Cause on or after the effective date of a Transaction,
then such Participant will become eligible as of the date of such termination or
resignation for payment of any portion of the Retention Bonus with respect to
such Participant not yet paid to such Participant as of the date of such
termination or resignation, provided in the case of such termination or
resignation the Participant executes a general release of claims with respect to
the Company and the acquiring or surviving corporation.

         (d) With respect to a Participant who is terminated for Cause or who
voluntarily quits or resigns his or her employment for any reason, then such
Participant shall upon such termination or resignation forfeit all right to any
portion of the Retention Bonus payable with

                                       -3-

<PAGE>

respect to such Participant for which they have not yet become eligible as of
the date of termination of employment.

         For purposes of this Plan, "Cause" for termination by the Company or
                                     -----
its successor shall mean that Participant's employment be terminated for any of
the following reasons: (i) gross negligence or willful misconduct in the
performance of a Participant's duties to the Company; (ii) repeated unexplained
or unjustified absence from the Company; (iii) a material and willful violation
of any federal or state law; (iv) refusal or failure to act in accordance with
any specific direction or order of, or contractual obligation with, the Company,
including, but not limited to, a material breach of a Confidential Information
and Invention Assignment Agreement; (v) commission of any act of fraud with
respect to the Company; (vi) conviction of or plea of no contest to a felony or
a crime involving moral turpitude causing material harm to the standing and
reputation of the Company, in each case as determined by the Board of Directors
of the Company or its successor in good faith. A termination of a Participant's
employment in any other circumstance or for any other reasons will be a
termination without Cause.

         7. Form and Timing of Payment. The Retention Bonus shall be paid in
            --------------------------
cash (or, in the discretion of an acquiring corporation and subject to Section 8
below, in stock of the acquiror or a combination of cash and stock of the
acquiror) by the Company or its successor, as applicable, less applicable income
and employment tax withholdings to eligible Participants no later than ten (10)
business days after the date the Participant meets the eligibility requirements
set forth in Section 6; provided, however, that any portion of the Retention
Bonus payable with respect to Acquisition Consideration payable after the
effective date of the Transaction pursuant to any escrow, earn-out or similar
arrangement shall be distributed to eligible Participants at the time the
corresponding escrow, earn-out or similar payment is distributed to stockholders
of the Company.

         8. Payment other than in Cash. In the event that the consideration in
            --------------------------
the Transaction includes property other than cash, and the acquiring corporation
pursuant to Section 7 elects to provide for payment of the Retention Bonus in
the form of the property included in the Acquisition Consideration, the amounts
of various forms of property included in the applicable Bonus shall be in
proportion to the amounts of such forms of property included in the Acquisition
Consideration. In addition, if such property includes stock of the acquiring or
surviving corporation in the Transaction (or an affiliate of the acquiring or
surviving corporation) which is not Freely Tradeable, then (a) such stock shall
not be issued or distributed to Participants until such time as such stock is
Freely Tradeable; and (b) no Participant shall have any rights with respect to
such stock until distribution to him or her except as a general unsecured
creditor of the Company and the acquiring or surviving corporation. For purpose
of the preceding sentence, "Freely Tradeable" means stock which is registered
for issuance or resale under the Securities Act of 1933 and listed on a national
securities exchange or designated or approved for designation as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. and which is not subject to lockup in
connection with the Transaction or otherwise (excluding restrictions on trading
arising out of the possession of non-public material information). In addition,
the acquiring or surviving corporation shall cause such stock to become Freely
Tradeable no later than the later of (x) the date common stock

                                       -4-

<PAGE>

of the acquiring or surviving corporation held by other employee stockholders of
the acquiring company is Freely Tradeable, or (y) three months after the
effective date of the Transaction.

         9.  Confidentiality Obligation. This Plan is a special compensation
             --------------------------
program adopted by the Company solely for the benefit of employees of the
Company who are designated as Participants in the Plan. Each Participant has an
affirmative obligation to maintain the confidentiality of the terms and
conditions of his or her participation in the Plan, including his or her
designation as a Participant in the Plan and his or her Participating
Percentage, except to the extent that the Plan or a Participant's Participating
Percentage is publicly disclosed in a filing with the Securities and Exchange
Commission, and except where disclosure is necessary on a "need to know" basis
by Participant's spouse, attorney and tax or financial advisor, or others with a
need to know, who, in turn, shall be advised by such Participant that they may
not disclose or communicate the terms and conditions of the Participant's
participation in the Plan.

         10. Amendment of the Plan or Participation Agreements. Prior to a
             -------------------------------------------------
Transaction, this Plan may be amended or terminated in the sole discretion of
the Company and without the consent of any of the Participants. This Plan may
not be amended by a successor corporation following a Transaction.

         11. Termination of the Plan. This Plan shall apply to any Transaction
             -----------------------
for which definitive agreements are executed after the effective date hereof and
prior to March 31, 2002 (even if the ultimate closing date of the Transaction
shall occur after March 31, 2002). No Participant shall have any rights
hereunder with regard to any Transaction for which definitive agreements are
executed on or after March 31, 2002.

         12. No Guarantee of Employment. This Plan is intended to provide a
             --------------------------
financial incentive to Participants and is not intended to confer any rights to
continued employment upon Participants. All employment shall continue to be at
will and subject to termination by the Company or the employee at any time for
any reason or no reason with or without notice.

         13. No Equity Interest. Neither this Plan nor the allocation of
             ------------------
interests therein creates or conveys any equity or ownership interest in the
Company nor any rights commonly associated with any such interest, including,
but not limited to, the right to vote on any matters put before the Company's
stockholders.

         14. Assignment. None of the rights, benefits, obligations or duties
             ----------
under this Plan may be assigned or transferred by any Participant; provided,
however, that the Participant's rights hereunder will inure to the benefit of,
and be enforceable by, his or her personal or legal representatives, executors,
administrators, heirs, devisees and legatees. Any purported assignment or
transfer by any Participant shall be void, except as set forth in the preceding
sentence. All obligations of the Company pursuant to this Plan shall be
assignable to and binding upon any successor of the Company.

         15. Governing Law. The rights and obligations of a Participant under
             -------------
this Plan shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of California without regard to its or any
other jurisdiction's conflicts of laws principles.

                                       -5-

<PAGE>

         16. Withholding of Compensation. The Company shall deduct and withhold
             ---------------------------
from the compensation or other amounts payable to Participants hereunder as a
Retention Bonus, or otherwise in connection with such Participants' employment,
any amounts required to be deducted and withheld by the Company under the
provisions of any applicable federal, state and local statute, law, regulation,
ordinance or order.

                                       -6-

<PAGE>

                     [CrossWorlds Software, Inc. Letterhead]

[date]

[employee name]
[employee address]

              Re: CrossWorlds Software, Inc. Executive Management Retention Plan
                  --------------------------------------------------------------
Dear ____:

         As we've discussed, you are a valued member of CrossWorlds' management
team. Accordingly, I've attached to this letter a copy of the CrossWorlds
Software, Inc. Executive Management Retention Plan (the "Plan") and I am pleased
                                                         ----
to inform you that the Company's Board of Directors has designated you a
participant in the Plan. The Board has allocated __ % of the Retention Bonus
Pool to you for purposes of determining your Retention Bonus ("Participating
                                                               -------------
Percentage"). The Retention Bonus becomes payable at the time of a change of
----------
control Transaction (as defined in the Plan), but is subject to payment terms
and forfeiture provisions as described in the Plan. Please see the Plan for the
amount of the Retention Bonus Pool, and please note that the value of your
vested "in the money" stock options at the time of a Transaction is subtracted
from the amount of your Retention Bonus.

         The actual amount of your Retention Bonus, if any, will be determined
and be paid to you in accordance with the terms of the Plan. In particular, the
Plan provides that your Retention Bonus, if any, is payable in cash or in
non-cash property (for example, stock) depending upon the form of payment paid
by an acquiring company. Also, Section 10 of the Plan provides that the Board
may amend or terminate the Plan in its sole discretion at any time prior to a
Transaction. Finally, note that the Plan terminates on March 31, 2002.

         Please review the attached Plan carefully to understand the
calculation, payment, forfeiture and other terms, conditions and limitations of
your Retention Bonus.

         To acknowledge your receipt of a copy of the Plan, please sign a copy
of this letter in the space indicated below and return it to James Budge on or
before Wednesday, September 5, 2001. Please note that Section 9 of the Plan
requires that you maintain as confidential, and disclose to no other person, the
terms and conditions of your participation in the Plan, including your
designation as a Participant and the percentage of the Retention Bonus Pool
allocated to you, with certain exceptions as set forth in section 9.

         Please contact me if you have any questions about the Plan or your
participation in the Plan.

                                     Sincerely,

                                     [name]
                                     [title]

I hereby acknowledge receipt of a copy of the Executive Management Retention
Plan. I agree to keep the terms and conditions of my participation in the Plan,
including my designation as a Participant and my

<PAGE>

Participating Percentage, confidential per the requirements of section 9 of the
Plan. I understand that I may disclose my designation as a Participant and my
Participating Percentage only to my spouse (if any), my attorney and any
tax/financial advisors, and only if they need to know such information.

Signature: ____________________________________      Dated: ____________________

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