1999 Executive Stock Plan

CrossWorlds Software, Inc.


1999 EXECUTIVE STOCK PLAN


1. Purposes of the Plan. The purposes of this 1999 Executive Stock Plan
-------------------- are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options (as defined under Section 422 of the Code) or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder. Stock Purchase Rights may also be granted under the Plan.


2. Definitions. As used herein, the following definitions shall apply:
-----------


(a) "Administrator" means the Board or its Committee appointed
------------- pursuant to Section 4 of the Plan.


(b) "Affiliate" means an entity other than a Subsidiary in which the
--------- Company owns an equity interest or which, together with the Company, is under common control of a third person or entity.


(c) "Applicable Laws" means the legal requirements relating to the
--------------- administration of stock option plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any Stock Exchange rules or regulations and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to time.


(d) "Board" means the Board of Directors of the Company.
-----


(e) "Code" means the Internal Revenue Code of 1986, as amended.
----


(f) "Committee" means one or more committees or subcommittees of the
--------- Board appointed by the Board to administer the Plan in accordance with Section 4 below.


(g) "Common Stock" means the Common Stock of the Company.
------------


(h) "Company" means CrossWorlds Software, Inc., a Delaware
------- corporation.


(i) "Consultant" means any person, including an advisor, who renders
---------- services to the Company, or any Parent, Subsidiary or Affiliate, and is compensated for such services, and any director of the Company whether compensated for such services or not; provided, however, that if and in the event the Company registers any class of equity security


pursuant to the Exchange Act, the term Consultant shall thereafter not include directors who are not compensated for their services or are paid only a director's fee by the Company.


(j) "Continuous Service Status" means the absence of any interruption
------------------------- or termination of service as an Employee or Consultant to the Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the case of transfers between locations of the Company or between the Company, its Parents, Subsidiaries or Affiliates or their respective successors. Unless otherwise determined by the Administrator, a change in status from an Employee to a Consultant or from a Consultant to an Employee will not constitute an interruption of Continuous Service Status.


(k) "Corporate Transaction" means 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.


(l) "Director" means a member of the Board.
--------


(m) "Employee" means any person, including officers and Directors,
-------- employed by the Company or any Parent, Subsidiary or Affiliate of the Company. The payment by the Company of a director's fee to a Director shall not be sufficient to constitute "employment" of such Director by the Company.


(n) "Exchange Act" means the Securities Exchange Act of 1934, as
------------ amended.


(o) "Fair Market Value" means, as of any date, the fair market value
----------------- of Common Stock determined as follows:


(i) If the Common Stock is listed on any established stock exchange or a national market system including without limitation the National Market of the National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
------ price for such stock (or the closing bid, if no sales were reported), as quoted on such system or exchange on the date of determination, or if no trading occurred on the date of determination, on the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;


(ii) If the Common Stock is quoted on the Nasdaq System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or


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(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.


(p) "Incentive Stock Option" means an Option intended to qualify as
---------------------- an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.


(q) "Listed Security" means any security of the Company that is
--------------- listed or approved for listing 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.


(r) "Nonstatutory Stock Option" means an Option not intended to
------------------------- qualify as an Incentive Stock Option, as designated in the applicable Option Agreement.


(s) "Option" means a stock option granted pursuant to the Plan.
------


(t) "Option Agreement" means a written document, the form(s) of which
---------------- shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice.


(u) "Option Exchange Program" means a program approved by the
----------------------- Administrator whereby outstanding Options are exchanged for Options with a lower exercise price.


(v) "Optioned Stock" means the Common Stock subject to an Option or a
-------------- Stock Purchase Right.


(w) "Optionee" means an Employee or Consultant who receives an
-------- Option.


(x) "Parent" means a "parent corporation," whether now or hereafter
------ existing, as defined in Section 424(e) of the Code, or any successor provision.


(y) "Participant" means any holder of one or more Options or Stock
----------- Purchase Rights, or of the Shares issuable or issued upon exercise of such awards, under the Plan.


(z) "Plan" means this 1999 Executive Stock Plan.
----


(aa) "Reporting Person" means an officer, Director, or greater than
---------------- 10% shareholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.


(bb) "Restricted Stock" means shares of Common Stock acquired pursuant
---------------- to a grant of a Stock Purchase Right under Section 10 below.


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(cc) "Restricted Stock Purchase Agreement" means a written document,
----------------------------------- the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of a Stock Purchase Right granted under the Plan and includes any documents attached to such agreement.


(dd) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
---------- as the same may be amended from time to time, or any successor provision.


(ee) "Share" means a share of the Common Stock, as adjusted in
----- accordance with Section 12 of the Plan.


(ff) "Stock Exchange" means any stock exchange or consolidated stock
-------------- price reporting system on which prices for the Common Stock are quoted at any given time.


(gg) "Stock Purchase Right" means the right to purchase Common Stock
-------------------- pursuant to Section 10 below.


(hh) "Subsidiary" means a "subsidiary corporation," whether now or
---------- hereafter existing, as defined in Section 424(f) of the Code, or any successor provision.


(ii) "Ten Percent Holder" means a person who owns stock representing
------------------ more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary.


3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
------------------------- the Plan, the maximum aggregate number of Shares that may be sold under the Plan is 4,000,000 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. In addition, any Shares of Common Stock that are retained by the Company upon exercise of an Option or Stock Purchase Right in order to satisfy the exercise or purchase price for such Option or Stock Purchase Right or any withholding taxes due with respect to such exercise shall be treated as not issued and shall continue to be available under the Plan. Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right that the Company may have shall not be available for future grant under the Plan.


4. Administration of the Plan.
--------------------------


(a) General. The Plan shall be administered by the Board or a
-------- Committee, or a combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Optionees and, if permitted by the Applicable Laws, the Board may authorize one or more officers to grant Options or Stock Purchase Rights under the Plan.


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(b) Administration with Respect to Reporting Persons. With respect
------------------------------------------------- to Options granted to Reporting Persons and Named Executives, the Plan may (but need not) be administered so as to permit such Options to qualify for the exemption set forth in Rule 16b-3 and to qualify as performance-based compensation under Section 162(m) of the Code.


(c) Committee Composition. If a Committee has been appointed
---------------------- pursuant to this Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and remove all members of a Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in the case of a Committee administering the Plan pursuant to Section 4(b) above, to the extent permitted or required by Rule 16b-3 and Section 162(m) of the Code.


(d) Powers of the Administrator. Subject to the provisions of the
--------------------------- Plan and in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any Stock Exchange, the Administrator shall have the authority, in its discretion:


(i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(o) of the Plan;


(ii) to select the Consultants and Employees to whom Options and Stock Purchase Rights or any combination thereof may from time to time be granted;


(iii) to determine whether and to what extent Options and Stock Purchase Rights or any combination thereof are granted;


(iv) to determine the number of Shares of Common Stock to be covered by each such award granted hereunder;


(v) to approve forms of agreement for use under the Plan;


(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, which terms and conditions include but are not limited to the exercise or purchase price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option, Optioned Stock, Stock Purchase Right or Restricted Stock, based in each case on such factors as the Administrator, in its sole discretion, shall determine;


(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 9(f) instead of Common Stock;


(viii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have


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declined since the date the Option was granted and to make any other amendments or adjustments to any Option that the Administrator determines, in its discretion and under the authority granted to it under the Plan, to be necessary or advisable, provided however that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Optionee shall be made without the prior written consent of the Optionee;


(ix) to determine the terms and restrictions applicable to Stock Purchase Rights and the Restricted Stock purchased by exercising such Stock Purchase Rights;


(x) to initiate an Option Exchange Program;


(xi) to construe and interpret the terms of the Plan and awards granted under the Plan; and


(xii) in order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options or Stock Purchase Rights to Participants who are foreign nationals or employed outside of the United States in order to recognize differences in local law, tax policies or customs.


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