Exhibit 10.1

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 10, 2003, by
and among Commerce One, Inc., a Delaware corporation, with headquarters located
at 4440 Rosewood Dr., Pleasanton, CA  94588 (the “Company”), and the undersigned
buyers (each, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A.           IN CONNECTION WITH THE SECURITIES PURCHASE AGREEMENT BY AND AMONG
THE PARTIES HERETO OF EVEN DATE HEREWITH (THE “SECURITIES PURCHASE AGREEMENT”),
THE COMPANY HAS AGREED, UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE
SECURITIES PURCHASE AGREEMENT, TO ISSUE AND SELL TO THE BUYERS AN AGGREGATE OF
(I) 100,000 SHARES (THE “PREFERRED SHARES”) OF THE COMPANY’S SERIES B
CONVERTIBLE PREFERRED STOCK (THE “PREFERRED STOCK”), WHICH WILL BE CONVERTIBLE
INTO SHARES OF THE COMPANY’S COMMON STOCK, PAR VALUE $0.0001 PER SHARE (THE
“COMMON STOCK”) (AS CONVERTED, THE “CONVERSION SHARES”) IN ACCORDANCE WITH THE
TERMS OF THE COMPANY’S CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
THE PREFERRED STOCK (THE “CERTIFICATE OF DESIGNATIONS”) AND (II) WARRANTS (THE
“WARRANTS”) TO PURCHASE SHARES OF COMMON STOCK (THE “WARRANT SHARES”); AND

 

B.             TO INDUCE THE BUYERS TO EXECUTE AND DELIVER THE SECURITIES
PURCHASE AGREEMENT, THE COMPANY HAS AGREED TO PROVIDE CERTAIN REGISTRATION
RIGHTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS THEREUNDER, OR ANY SIMILAR SUCCESSOR STATUTE (COLLECTIVELY, THE
“1933 ACT”), AND APPLICABLE STATE SECURITIES LAWS.

 

C.             THE LOCATION OF DEFINED TERMS IN THIS AGREEMENT IS SET FORTH ON
THE INDEX OF TERMS ATTACHED HERETO.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

 

1.               DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

A.               “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY OR ANY
OTHER DAY ON WHICH COMMERCIAL BANKS IN THE CITY OF NEW YORK ARE AUTHORIZED OR
REQUIRED BY LAW TO REMAIN CLOSED.

 

B.              “INVESTOR” MEANS A BUYER, ANY PERMITTED TRANSFEREE OR ASSIGNEE
THEREOF TO WHOM A BUYER ASSIGNS ITS RIGHTS UNDER THIS AGREEMENT IN CONNECTION
WITH A TRANSFER OF REGISTRABLE SECURITIES AND WHO AGREES TO BECOME BOUND BY THE
PROVISIONS OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 9 AND ANY PERMITTED
TRANSFEREE OR ASSIGNEE THEREOF TO WHOM A TRANSFEREE OR ASSIGNEE ASSIGNS ITS
RIGHTS UNDER THIS AGREEMENT IN CONNECTION WITH A TRANSFER OF REGISTRABLE
SECURITIES AND WHO AGREES TO BECOME BOUND BY THE PROVISIONS OF THIS AGREEMENT IN
ACCORDANCE WITH SECTION 9.

 

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C.               “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION AND  GOVERNMENTAL OR ANY DEPARTMENT OR AGENCY THEREOF.

 

D.              “REGISTER,” “REGISTERED,” AND “REGISTRATION” REFER TO A
REGISTRATION EFFECTED BY PREPARING AND FILING ONE OR MORE REGISTRATION
STATEMENTS (AS DEFINED BELOW) IN COMPLIANCE WITH THE 1933 ACT AND PURSUANT TO
RULE 415 UNDER THE 1933 ACT OR ANY SUCCESSOR RULE PROVIDING FOR OFFERING
SECURITIES ON A CONTINUOUS OR DELAYED BASIS (“RULE 415”), AND THE DECLARATION OR
ORDERING OF EFFECTIVENESS OF SUCH REGISTRATION STATEMENT(S) BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE “SEC”).

 

E.               “REGISTRABLE SECURITIES” MEANS (I) THE CONVERSION SHARES ISSUED
OR ISSUABLE UPON CONVERSION OF THE PREFERRED SHARES, (II) THE WARRANT SHARES
ISSUED OR ISSUABLE UPON EXERCISE OF THE WARRANTS AND (III) ANY SHARES OF CAPITAL
STOCK ISSUED OR ISSUABLE WITH RESPECT TO THE CONVERSION SHARES, THE PREFERRED
SHARES, THE WARRANT SHARES OR THE WARRANTS AS A RESULT OF ANY STOCK SPLIT, STOCK
DIVIDEND, RECAPITALIZATION, EXCHANGE OR SIMILAR EVENT OR OTHERWISE, WITHOUT
REGARD TO ANY LIMITATIONS ON CONVERSIONS OF THE PREFERRED SHARES OR EXERCISES OF
WARRANTS.

 

F.                 “REGISTRATION STATEMENT” MEANS A REGISTRATION STATEMENT OR
REGISTRATION STATEMENTS OF THE COMPANY FILED UNDER THE 1933 ACT COVERING THE
REGISTRABLE SECURITIES.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

 

2.               REGISTRATION.

 

A.               MANDATORY REGISTRATION.  THE COMPANY SHALL PREPARE, AND, AS
SOON AS PRACTICABLE BUT IN NO EVENT LATER THAN 45 DAYS AFTER THE CLOSING DATE
(AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT) (THE “FILING DEADLINE”), FILE
WITH THE SEC THE REGISTRATION STATEMENT ON FORM S-3 COVERING THE RESALE OF ALL
OF THE REGISTRABLE SECURITIES.  IN THE EVENT THAT FORM S-3 IS UNAVAILABLE FOR
SUCH A REGISTRATION, THE COMPANY SHALL USE SUCH OTHER FORM AS IS AVAILABLE FOR
SUCH A REGISTRATION, SUBJECT TO THE PROVISIONS OF SECTION 2(D); PROVIDED THAT
THE COMPANY REPRESENTS AND WARRANTS THAT IT IS CURRENTLY ELIGIBLE TO REGISTER
THE REGISTRABLE SECURITIES ON FORM S-3 AND KNOWS OF NO REASON WHY IT WILL NOT BE
ELIGIBLE TO SO REGISTER THE REGISTRABLE SECURITIES ON FORM S-3 ON OR BEFORE THE
FILING DEADLINE AND ON OR BEFORE THE EFFECTIVENESS DEADLINE.  THE REGISTRATION
STATEMENT PREPARED PURSUANT HERETO SHALL REGISTER FOR RESALE AT LEAST 7,300,000
SHARES OF COMMON STOCK.  THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO
HAVE THE REGISTRATION STATEMENT DECLARED EFFECTIVE BY THE SEC AS SOON AS
PRACTICABLE, BUT IN NO EVENT LATER THAN THE DATE WHICH IS 180 DAYS AFTER THE
CLOSING DATE (THE “EFFECTIVENESS DEADLINE”).

 

B.              ALLOCATION OF REGISTRABLE SECURITIES.  THE INITIAL NUMBER OF
REGISTRABLE SECURITIES INCLUDED IN ANY REGISTRATION STATEMENT AND EACH INCREASE
IN THE NUMBER OF REGISTRABLE SECURITIES INCLUDED THEREIN SHALL BE ALLOCATED PRO
RATA AMONG THE INVESTORS BASED ON THE NUMBER OF REGISTRABLE SECURITIES HELD BY
EACH INVESTOR AT THE TIME THE REGISTRATION STATEMENT COVERING SUCH INITIAL
NUMBER OF REGISTRABLE SECURITIES OR INCREASE THEREOF IS DECLARED EFFECTIVE BY
THE SEC.  IN THE EVENT THAT AN INVESTOR SELLS OR OTHERWISE TRANSFERS ANY OF SUCH
INVESTOR’S REGISTRABLE

 

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Securities, each transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration
Statement for such transferor.  Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement.  The Company may include securities other than
Registrable Securities on any Registration Statement to the extent the Company
is contractually obligated to do so pursuant to registration rights obligations
in existence prior to the date of this Agreement.

 

C.               LEGAL COUNSEL.  SUBJECT TO SECTION 5 HEREOF, THE BUYERS HOLDING
AT LEAST A MAJORITY OF THE REGISTRABLE SECURITIES SHALL HAVE THE RIGHT TO SELECT
ONE LEGAL COUNSEL TO REVIEW AND OVERSEE ANY OFFERING PURSUANT TO THIS SECTION 2
(“LEGAL COUNSEL”), WHICH SHALL BE SCHULTE ROTH & ZABEL LLP OR SUCH OTHER COUNSEL
AS THEREAFTER DESIGNATED BY THE HOLDERS OF AT LEAST A MAJORITY OF THE
REGISTRABLE SECURITIES.  THE COMPANY AND LEGAL COUNSEL SHALL REASONABLY
COOPERATE WITH EACH OTHER IN PERFORMING THE COMPANY’S OBLIGATIONS UNDER THIS
AGREEMENT.

 

D.              INELIGIBILITY FOR FORM S-3.  IN THE EVENT THAT FORM S-3 IS NOT 
AVAILABLE FOR THE REGISTRATION OF THE RESALE OF REGISTRABLE SECURITIES
HEREUNDER, THE COMPANY SHALL (I) REGISTER THE RESALE OF THE REGISTRABLE
SECURITIES ON ANOTHER APPROPRIATE FORM REASONABLY ACCEPTABLE TO THE HOLDERS OF
AT LEAST A MAJORITY OF THE REGISTRABLE SECURITIES AND (II) UNDERTAKE TO REGISTER
THE REGISTRABLE SECURITIES ON FORM S-3 AS SOON AS SUCH FORM IS AVAILABLE,
PROVIDED THAT THE COMPANY SHALL MAINTAIN THE EFFECTIVENESS OF THE REGISTRATION
STATEMENT THEN IN EFFECT UNTIL SUCH TIME AS A REGISTRATION STATEMENT ON FORM S-3
COVERING THE REGISTRABLE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SEC.

 

E.               SUFFICIENT NUMBER OF SHARES REGISTERED.  IN THE EVENT THE
NUMBER OF SHARES AVAILABLE UNDER A REGISTRATION STATEMENT FILED PURSUANT TO
SECTION 2(A) IS INSUFFICIENT TO COVER ALL OF THE REGISTRABLE SECURITIES REQUIRED
TO BE COVERED BY SUCH REGISTRATION STATEMENT OR AN INVESTOR’S ALLOCATED PORTION
OF THE REGISTRABLE SECURITIES PURSUANT TO SECTION 2(B), THE COMPANY SHALL AMEND
THE REGISTRATION STATEMENT, OR FILE A NEW REGISTRATION STATEMENT (ON THE SHORT
FORM AVAILABLE THEREFOR, IF APPLICABLE), OR BOTH, SO AS TO COVER AT LEAST THE
NUMBER OF SUCH REGISTRABLE SECURITIES AS OF THE TRADING DAY IMMEDIATELY
PRECEDING THE DATE OF THE FILING OF SUCH AMENDMENT OR NEW REGISTRATION
STATEMENT, IN EACH CASE, AS SOON AS PRACTICABLE, BUT IN ANY EVENT NOT LATER THAN
FIFTEEN (15) DAYS AFTER THE NECESSITY THEREFOR ARISES.  THE COMPANY SHALL USE
ITS REASONABLE BEST EFFORTS TO CAUSE SUCH AMENDMENT AND/OR NEW REGISTRATION
STATEMENT TO BECOME EFFECTIVE AS SOON AS PRACTICABLE FOLLOWING THE FILING
THEREOF.  THE CALCULATION OF THE NUMBER OF REGISTRABLE SECURITIES REQUIRED TO BE
COVERED BY SUCH REGISTRATION STATEMENT SHALL BE MADE WITHOUT REGARD TO ANY
LIMITATIONS ON THE CONVERSION OF THE PREFERRED SHARES OR THE EXERCISE OF THE
WARRANTS AND SUCH CALCULATION SHALL ASSUME THAT THE PREFERRED SHARES AND THE
WARRANTS ARE THEN CONVERTIBLE OR EXERCISABLE INTO SHARES OF COMMON STOCK AND
ASSUMING THE MAXIMUM AMOUNT OF DIVIDENDS (AS DEFINED IN THE CERTIFICATE OF
DESIGNATIONS) RELATING TO THE PREFERRED SHARES WILL BE PAID ON THE PREFERRED
SHARES.

 

F.                 EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN
EFFECTIVENESS OF REGISTRATION STATEMENT.  IF (I) A REGISTRATION STATEMENT
COVERING ALL THE REGISTRABLE SECURITIES AND REQUIRED TO BE FILED BY THE COMPANY
PURSUANT TO THIS AGREEMENT IS NOT DECLARED EFFECTIVE BY THE

 

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SEC on or before the Effectiveness Deadline or (ii) on any day after the
Registration Statement has been declared effective by the SEC and prior to the
termination of the Registration Period sales of all the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r)) pursuant to
the Registration Statement (including, without limitation, because of a failure
to keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement or to
register sufficient shares of Common Stock), then, as partial relief for the
damages to any holder by reason of any such delay in or reduction of its ability
to sell the underlying shares of Common Stock (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Preferred Shares relating to such Registration
Statement an amount in cash per such Preferred Share held equal to the product
of (i) $100 multiplied by (ii) the product of (I) .0005 multiplied by (II) the
sum of (x) the number of days after the Effectiveness Deadline that the
Registration Statement is not declared effective by the SEC, plus (y) the number
of days after the Registration Statement has been declared effective by the SEC
that such Registration Statement is not available (other than during an
Allowable Grace Period) for the sale of at least all the Registrable Securities
required to be included on such Registration Statement.  The payments to which a
holder shall be entitled pursuant to this Section 2(f) are referred to herein as
“Registration Delay Payments.”  Registration Delay Payments shall be paid on the
earlier of (I) the last day of the calendar month during which such Registration
Delay Payments are incurred and (II) the third Business Day after the event or
failure giving rise to the Registration Delay Payments is cured.  In the event
the Company fails to make Registration Delay Payments in a timely manner, such
Registration Delay Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full.

 

3.               RELATED OBLIGATIONS.

 

At such time as the Company is obligated to file a Registration Statement with
the SEC pursuant to Section 2(a) or 2(e), the Company will use its reasonable
best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:

 

A.               THE COMPANY SHALL PROMPTLY PREPARE AND FILE WITH THE SEC A
REGISTRATION STATEMENT WITH RESPECT TO THE REGISTRABLE SECURITIES (BUT IN NO
EVENT LATER THAN THE APPLICABLE FILING DEADLINE) AND USE ITS REASONABLE BEST
EFFORTS TO CAUSE SUCH REGISTRATION STATEMENT RELATING TO THE REGISTRABLE
SECURITIES TO BECOME EFFECTIVE AS SOON AS PRACTICABLE AFTER SUCH FILING (BUT IN
NO EVENT LATER THAN THE EFFECTIVENESS DEADLINE).  THE COMPANY SHALL KEEP EACH
REGISTRATION STATEMENT EFFECTIVE PURSUANT TO RULE 415 AT ALL TIMES UNTIL THE
EARLIER OF (I) THE DATE AS OF WHICH THE INVESTORS MAY SELL ALL OF THE
REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT WITHOUT
RESTRICTION PURSUANT TO RULE 144(K) (OR SUCCESSOR THERETO) PROMULGATED UNDER THE
1933 ACT OR (II) THE DATE ON WHICH THE INVESTORS SHALL HAVE SOLD ALL THE
REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT (THE “REGISTRATION
PERIOD”), WHICH REGISTRATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO AND PROSPECTUSES CONTAINED THEREIN) SHALL NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT REQUIRED TO BE
STATED THEREIN, OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE
CIRCUMSTANCES IN WHICH THEY WERE MADE, NOT MISLEADING.  THE TERM “REASONABLE
BEST EFFORTS” SHALL MEAN, AMONG OTHER THINGS, THAT THE COMPANY SHALL SUBMIT TO
THE SEC, WITHIN TWO (2) BUSINESS

 

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Days after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff has no further
comments on the Registration Statement, as the case may be, and the approval of
Legal Counsel pursuant to Section 3(c), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.

 

B.              THE COMPANY SHALL PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) AND SUPPLEMENTS TO A REGISTRATION
STATEMENT AND THE PROSPECTUS USED IN CONNECTION WITH SUCH REGISTRATION
STATEMENT, WHICH PROSPECTUS IS TO BE FILED PURSUANT TO RULE 424 PROMULGATED
UNDER THE 1933 ACT, AS MAY BE NECESSARY TO KEEP SUCH REGISTRATION STATEMENT
EFFECTIVE AT ALL TIMES DURING THE REGISTRATION PERIOD, AND, DURING SUCH PERIOD,
COMPLY WITH THE PROVISIONS OF THE 1933 ACT WITH RESPECT TO THE DISPOSITION OF
ALL REGISTRABLE SECURITIES OF THE COMPANY COVERED BY SUCH REGISTRATION STATEMENT
UNTIL SUCH TIME AS ALL OF SUCH REGISTRABLE SECURITIES SHALL HAVE BEEN DISPOSED
OF IN ACCORDANCE WITH THE INTENDED METHODS OF DISPOSITION BY THE SELLER OR
SELLERS THEREOF AS SET FORTH IN SUCH REGISTRATION STATEMENT.  IN THE CASE OF
AMENDMENTS AND SUPPLEMENTS TO A REGISTRATION STATEMENT WHICH ARE REQUIRED TO BE
FILED PURSUANT TO THIS AGREEMENT (INCLUDING PURSUANT TO THIS SECTION 3(B)) BY
REASON OF THE COMPANY FILING A REPORT ON FORM 10-K, FORM 10-Q OR FORM 8-K OR ANY
ANALOGOUS REPORT UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
“1934 ACT”), THE COMPANY SHALL HAVE INCORPORATED SUCH REPORT BY REFERENCE INTO
THE REGISTRATION STATEMENT, IF APPLICABLE, OR SHALL FILE SUCH AMENDMENTS OR
SUPPLEMENTS WITH THE SEC ON THE SAME DAY ON WHICH THE 1934 ACT REPORT IS FILED
WHICH CREATED THE REQUIREMENT FOR THE COMPANY TO AMEND OR SUPPLEMENT THE
REGISTRATION STATEMENT.

 

C.               THE COMPANY SHALL (A) PERMIT LEGAL COUNSEL TO REVIEW AND
COMMENT UPON (I) THE REGISTRATION STATEMENT AT LEAST FIVE (5) BUSINESS DAYS
PRIOR TO ITS FILING WITH THE SEC AND (II) ALL OTHER REGISTRATION STATEMENTS AND
ALL AMENDMENTS AND SUPPLEMENTS TO ALL REGISTRATION STATEMENTS (EXCEPT FOR ANNUAL
REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND CURRENT REPORTS ON FORM
8-K AND ANY SIMILAR OR SUCCESSOR REPORTS) WITHIN A REASONABLE NUMBER OF DAYS
PRIOR TO THEIR FILING WITH THE SEC, AND (B) NOT FILE ANY REGISTRATION STATEMENT
OR AMENDMENT OR SUPPLEMENT THERETO IN A FORM TO WHICH LEGAL COUNSEL REASONABLY
OBJECTS.  THE COMPANY SHALL NOT SUBMIT A REQUEST FOR ACCELERATION OF THE
EFFECTIVENESS OF A REGISTRATION STATEMENT OR ANY AMENDMENT OR SUPPLEMENT THERETO
WITHOUT THE PRIOR APPROVAL OF LEGAL COUNSEL, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD.  THE COMPANY SHALL FURNISH TO LEGAL COUNSEL, WITHOUT
CHARGE, (I) COPIES OF ANY CORRESPONDENCE FROM THE SEC OR THE STAFF OF THE SEC TO
THE COMPANY OR ITS REPRESENTATIVES RELATING TO ANY REGISTRATION STATEMENT, (II)
PROMPTLY AFTER THE SAME IS PREPARED AND FILED WITH THE SEC, ONE COPY OF ANY
REGISTRATION STATEMENT AND ANY AMENDMENT(S) THERETO AND (III) UPON THE
EFFECTIVENESS OF ANY REGISTRATION STATEMENT, ONE COPY OF THE PROSPECTUS INCLUDED
IN SUCH REGISTRATION STATEMENT AND ALL AMENDMENTS AND SUPPLEMENTS THERETO.  THE
COMPANY SHALL REASONABLY COOPERATE WITH LEGAL COUNSEL IN PERFORMING THE
COMPANY’S OBLIGATIONS PURSUANT TO THIS SECTION 3.

 

D.              THE COMPANY SHALL FURNISH TO EACH INVESTOR WHOSE REGISTRABLE
SECURITIES ARE INCLUDED IN ANY REGISTRATION STATEMENT, WITHOUT CHARGE,  (I)
PROMPTLY AFTER THE SAME IS PREPARED AND FILED WITH THE SEC, AT LEAST ONE COPY OF
SUCH REGISTRATION STATEMENT AND ANY AMENDMENT(S) THERETO AND EACH PRELIMINARY
PROSPECTUS, (II) UPON THE EFFECTIVENESS OF ANY REGISTRATION STATEMENT, SUCH
NUMBER OF COPIES OF THE PROSPECTUS INCLUDED IN SUCH REGISTRATION

 

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STATEMENT AND ALL AMENDMENTS AND SUPPLEMENTS THERETO AS SUCH INVESTOR MAY
REASONABLY REQUEST AND (III) SUCH OTHER DOCUMENTS, INCLUDING COPIES OF ANY
PRELIMINARY OR FINAL PROSPECTUS, AS SUCH INVESTOR MAY REASONABLY REQUEST FROM
TIME TO TIME IN ORDER TO FACILITATE THE DISPOSITION OF THE REGISTRABLE
SECURITIES OWNED BY SUCH INVESTOR.

 

E.               THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO (I)
REGISTER AND QUALIFY, UNLESS AN EXEMPTION FROM REGISTRATION AND QUALIFICATION
APPLIES, THE RESALE BY INVESTORS OF THE REGISTRABLE SECURITIES COVERED BY A
REGISTRATION STATEMENT UNDER SUCH OTHER SECURITIES OR “BLUE SKY” LAWS OF ALL
APPLICABLE JURISDICTIONS IN THE UNITED STATES, (II) PREPARE AND FILE IN THOSE
JURISDICTIONS, SUCH AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) AND
SUPPLEMENTS TO SUCH REGISTRATIONS AND QUALIFICATIONS AS MAY BE NECESSARY TO
MAINTAIN THE EFFECTIVENESS THEREOF DURING THE REGISTRATION PERIOD, (III) TAKE
SUCH OTHER ACTIONS AS MAY BE NECESSARY TO MAINTAIN SUCH REGISTRATIONS AND
QUALIFICATIONS IN EFFECT AT ALL TIMES DURING THE REGISTRATION PERIOD, AND (IV)
TAKE ALL OTHER ACTIONS REASONABLY NECESSARY OR ADVISABLE TO QUALIFY THE
REGISTRABLE SECURITIES FOR SALE IN SUCH JURISDICTIONS; PROVIDED, HOWEVER, THAT
THE COMPANY SHALL NOT BE REQUIRED IN CONNECTION THEREWITH OR AS A CONDITION
THERETO TO (X) QUALIFY TO DO BUSINESS IN ANY JURISDICTION WHERE IT WOULD NOT
OTHERWISE BE REQUIRED TO QUALIFY BUT FOR THIS SECTION 3(E), (Y) SUBJECT ITSELF
TO GENERAL TAXATION IN ANY SUCH JURISDICTION, OR (Z) FILE A GENERAL CONSENT TO
SERVICE OF PROCESS IN ANY SUCH JURISDICTION.  THE COMPANY SHALL PROMPTLY NOTIFY
LEGAL COUNSEL AND EACH INVESTOR WHO HOLDS REGISTRABLE SECURITIES OF THE RECEIPT
BY THE COMPANY OF ANY NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE
REGISTRATION OR QUALIFICATION OF ANY OF THE REGISTRABLE SECURITIES FOR SALE
UNDER THE SECURITIES OR “BLUE SKY” LAWS OF ANY JURISDICTION IN THE UNITED STATES
OR ITS RECEIPT OF ACTUAL NOTICE OF THE INITIATION OR THREATENING OF ANY
PROCEEDING FOR SUCH PURPOSE.

 

F.                 THE COMPANY SHALL NOTIFY LEGAL COUNSEL AND EACH INVESTOR IN
WRITING, INCLUDING VIA FACSIMILE OR E-MAIL, OF THE HAPPENING OF ANY EVENT, AS
PROMPTLY AS PRACTICABLE AFTER BECOMING AWARE OF SUCH EVENT, AS A RESULT OF WHICH
THE PROSPECTUS INCLUDED IN A REGISTRATION STATEMENT, AS THEN IN EFFECT, INCLUDES
AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMISSION TO STATE A MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING (PROVIDED
THAT IN NO EVENT SHALL SUCH NOTICE CONTAIN ANY MATERIAL, NONPUBLIC INFORMATION),
AND, SUBJECT TO SECTION 3(R), PROMPTLY PREPARE A SUPPLEMENT OR AMENDMENT TO SUCH
REGISTRATION STATEMENT TO CORRECT SUCH UNTRUE STATEMENT OR OMISSION, AND DELIVER
SUCH NUMBER OF COPIES AS LEGAL COUNSEL OR SUCH INVESTOR MAY REASONABLY REQUEST. 
THE COMPANY SHALL ALSO PROMPTLY NOTIFY LEGAL COUNSEL AND EACH INVESTOR IN
WRITING, INCLUDING VIA FACSIMILE OR E-MAIL, (I) WHEN A PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT HAS BEEN FILED, AND WHEN A
REGISTRATION STATEMENT OR ANY POST-EFFECTIVE AMENDMENT HAS BECOME EFFECTIVE
(NOTIFICATION OF SUCH EFFECTIVENESS SHALL BE DELIVERED TO LEGAL COUNSEL AND EACH
INVESTOR BY FACSIMILE OR E-MAIL ON THE SAME DAY OF SUCH EFFECTIVENESS), (II) OF
ANY REQUEST BY THE SEC FOR AMENDMENTS OR SUPPLEMENTS TO A REGISTRATION STATEMENT
OR RELATED PROSPECTUS OR RELATED INFORMATION, AND (III) OF THE COMPANY’S
REASONABLE DETERMINATION THAT A POST-EFFECTIVE AMENDMENT TO A REGISTRATION
STATEMENT WOULD BE APPROPRIATE.

 

G.              THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO PREVENT
(EXCEPT BY THE COMPANY DURING AN ALLOWABLE GRACE PERIOD) THE ISSUANCE OF ANY
STOP ORDER OR OTHER SUSPENSION OF EFFECTIVENESS OF A REGISTRATION STATEMENT, OR
THE SUSPENSION OF THE QUALIFICATION OF ANY OF THE REGISTRABLE SECURITIES FOR
SALE IN ANY JURISDICTION AND, IF SUCH AN ORDER OR SUSPENSION IS ISSUED, TO
OBTAIN THE WITHDRAWAL OF SUCH ORDER OR SUSPENSION AT THE EARLIEST POSSIBLE
MOMENT AND

 

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TO NOTIFY LEGAL COUNSEL AND EACH INVESTOR WHO HOLDS REGISTRABLE SECURITIES BEING
SOLD OF THE ISSUANCE OF SUCH ORDER AND THE RESOLUTION THEREOF OR ITS RECEIPT OF
ACTUAL NOTICE OF THE INITIATION OR THREAT OF ANY PROCEEDING FOR SUCH PURPOSE.

 

H.              IF ANY INVESTOR IS REQUIRED UNDER APPLICABLE SECURITIES LAW TO
BE DESCRIBED IN THE REGISTRATION STATEMENT AS AN UNDERWRITER, AT THE REASONABLE
REQUEST OF SUCH INVESTOR, THE COMPANY SHALL FURNISH TO SUCH INVESTOR, ON THE
DATE OF THE EFFECTIVENESS OF THE REGISTRATION STATEMENT AND THEREAFTER FROM TIME
TO TIME ON SUCH DATES AS AN INVESTOR MAY REASONABLY REQUEST (I) A LETTER, DATED
SUCH DATE, FROM THE COMPANY’S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS IN FORM
AND SUBSTANCE AS IS CUSTOMARILY GIVEN BY INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS TO UNDERWRITERS IN AN UNDERWRITTEN PUBLIC OFFERING, ADDRESSED TO THE
INVESTORS, AND (II) AN OPINION, DATED AS OF SUCH DATE, OF COUNSEL REPRESENTING
THE COMPANY FOR PURPOSES OF SUCH REGISTRATION STATEMENT, IN FORM, SCOPE AND
SUBSTANCE AS IS CUSTOMARILY GIVEN IN AN UNDERWRITTEN PUBLIC OFFERING, ADDRESSED
TO THE INVESTORS.

 

I.                  NOTWITHSTANDING THE PROVISIONS OF SECTION 4(I) OF THE
SECURITIES PURCHASE AGREEMENT, UPON THE WRITTEN REQUEST OF ANY INVESTOR IN
CONNECTION WITH ANY INVESTOR’S DUE DILIGENCE REQUIREMENTS, IF ANY, THE COMPANY
SHALL MAKE AVAILABLE FOR INSPECTION BY (I) ANY INVESTOR, (II) LEGAL COUNSEL AND
(III) ONE FIRM OF ACCOUNTANTS OR OTHER AGENTS RETAINED BY THE INVESTORS
(COLLECTIVELY, THE “INSPECTORS”), ALL PERTINENT FINANCIAL AND OTHER RECORDS, AND
PERTINENT CORPORATE DOCUMENTS AND PROPERTIES OF THE COMPANY (COLLECTIVELY, THE
“RECORDS”), AS SHALL BE REASONABLY DEEMED NECESSARY BY EACH INSPECTOR, AND CAUSE
THE COMPANY’S OFFICERS, DIRECTORS AND EMPLOYEES TO SUPPLY ALL INFORMATION WHICH
ANY INSPECTOR MAY REASONABLY REQUEST; PROVIDED, HOWEVER, THAT EACH INSPECTOR
SHALL AGREE TO HOLD IN STRICT CONFIDENCE AND SHALL NOT MAKE ANY DISCLOSURE
(EXCEPT TO AN INVESTOR) OR USE OF ANY RECORD OR OTHER INFORMATION WHICH THE
COMPANY DETERMINES IN GOOD FAITH TO BE CONFIDENTIAL, AND OF WHICH DETERMINATION
THE INSPECTORS ARE SO NOTIFIED, UNLESS (A) THE DISCLOSURE OF SUCH RECORDS IS
NECESSARY TO AVOID OR CORRECT A MISSTATEMENT OR OMISSION IN ANY REGISTRATION
STATEMENT OR IS OTHERWISE REQUIRED UNDER THE 1933 ACT, (B) THE RELEASE OF SUCH
RECORDS IS ORDERED PURSUANT TO A FINAL, NON-APPEALABLE SUBPOENA OR ORDER FROM A
COURT OR GOVERNMENT BODY OF COMPETENT JURISDICTION, OR (C) THE INFORMATION IN
SUCH RECORDS HAS BEEN MADE GENERALLY AVAILABLE TO THE PUBLIC OTHER THAN BY
DISCLOSURE IN VIOLATION OF THIS OR ANY OTHER AGREEMENT OF WHICH THE INSPECTOR
HAS KNOWLEDGE.  EACH INVESTOR AGREES THAT IT SHALL, UPON LEARNING THAT
DISCLOSURE OF SUCH RECORDS IS SOUGHT IN OR BY A COURT OR GOVERNMENTAL BODY OF
COMPETENT JURISDICTION OR THROUGH OTHER MEANS, GIVE PROMPT NOTICE TO THE COMPANY
AND ALLOW THE COMPANY, AT ITS EXPENSE, TO UNDERTAKE APPROPRIATE ACTION TO
PREVENT DISCLOSURE OF, OR TO OBTAIN A PROTECTIVE ORDER FOR, THE RECORDS DEEMED
CONFIDENTIAL.  NOTHING HEREIN (OR IN ANY OTHER CONFIDENTIALITY AGREEMENT BETWEEN
THE COMPANY AND ANY INVESTOR) SHALL BE DEEMED TO LIMIT THE INVESTORS’ ABILITY TO
SELL REGISTRABLE SECURITIES IN A MANNER WHICH IS OTHERWISE CONSISTENT WITH
APPLICABLE LAWS AND REGULATIONS.

 

J.                  THE COMPANY SHALL HOLD IN CONFIDENCE AND NOT MAKE ANY
DISCLOSURE OF INFORMATION CONCERNING AN INVESTOR PROVIDED TO THE COMPANY UNLESS
(I) DISCLOSURE OF SUCH INFORMATION IS NECESSARY TO COMPLY WITH FEDERAL OR STATE
SECURITIES LAWS, (II) THE DISCLOSURE OF SUCH INFORMATION IS NECESSARY TO AVOID
OR CORRECT A MISSTATEMENT OR OMISSION IN ANY REGISTRATION STATEMENT, (III) THE
RELEASE OF SUCH INFORMATION IS ORDERED PURSUANT TO A SUBPOENA OR OTHER FINAL,
NON-APPEALABLE ORDER FROM A COURT OR GOVERNMENTAL BODY OF COMPETENT
JURISDICTION, OR (IV) SUCH INFORMATION HAS BEEN MADE GENERALLY AVAILABLE TO THE
PUBLIC OTHER THAN BY DISCLOSURE IN VIOLATION

 

7

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of this Agreement or any other agreement.  The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

 

K.               THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS EITHER TO (I)
CAUSE ALL THE REGISTRABLE SECURITIES COVERED BY A REGISTRATION STATEMENT TO BE
LISTED ON EACH SECURITIES EXCHANGE ON WHICH SECURITIES OF THE SAME CLASS OR
SERIES ISSUED BY THE COMPANY ARE THEN LISTED, IF ANY, IF THE LISTING OF SUCH
REGISTRABLE SECURITIES IS THEN PERMITTED UNDER THE RULES OF SUCH EXCHANGE, OR
(II) SECURE DESIGNATION AND QUOTATION OF ALL THE REGISTRABLE SECURITIES COVERED
BY THE REGISTRATION STATEMENT ON THE NASDAQ NATIONAL MARKET, OR (III) IF,
DESPITE THE COMPANY’S REASONABLE BEST EFFORTS TO SATISFY THE PRECEDING CLAUSE
(I) OR (II), THE COMPANY IS UNSUCCESSFUL IN SATISFYING THE PRECEDING CLAUSE  (I)
OR (II), TO SECURE THE INCLUSION FOR QUOTATION ON THE NASDAQ SMALLCAP MARKET FOR
SUCH REGISTRABLE SECURITIES AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, TO USE ITS REASONABLE BEST EFFORTS TO ARRANGE FOR AT LEAST TWO MARKET
MAKERS TO REGISTER WITH THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. 
(“NASD”) AS SUCH WITH RESPECT TO SUCH REGISTRABLE SECURITIES.  THE COMPANY SHALL
PAY ALL FEES AND EXPENSES IN CONNECTION WITH SATISFYING ITS OBLIGATION UNDER
THIS SECTION 3(K).

 

L.                  THE COMPANY SHALL COOPERATE WITH THE INVESTORS WHO HOLD
REGISTRABLE SECURITIES BEING OFFERED AND, TO THE EXTENT APPLICABLE AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS, FACILITATE THE TIMELY PREPARATION
AND DELIVERY OF CERTIFICATES (NOT BEARING ANY RESTRICTIVE LEGEND) REPRESENTING
THE REGISTRABLE SECURITIES TO BE OFFERED PURSUANT TO A REGISTRATION STATEMENT
AND ENABLE SUCH CERTIFICATES TO BE IN SUCH DENOMINATIONS OR AMOUNTS, AS THE CASE
MAY BE, AS THE INVESTORS MAY REASONABLY REQUEST AND REGISTERED IN SUCH NAMES AS
THE INVESTORS MAY REQUEST.

 

M.            IF REQUESTED BY AN INVESTOR, THE COMPANY SHALL (I) AS SOON AS
PRACTICABLE INCORPORATE IN A PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT
SUCH INFORMATION AS AN INVESTOR REASONABLY REQUESTS TO BE INCLUDED THEREIN
RELATING TO THE SALE AND DISTRIBUTION OF REGISTRABLE SECURITIES, INCLUDING,
WITHOUT LIMITATION, INFORMATION WITH RESPECT TO THE NUMBER OF REGISTRABLE
SECURITIES BEING OFFERED OR SOLD, THE PURCHASE PRICE BEING PAID THEREFOR AND ANY
OTHER TERMS OF THE OFFERING OF THE REGISTRABLE SECURITIES TO BE SOLD IN SUCH
OFFERING; (II) AS SOON AS PRACTICABLE MAKE ALL REQUIRED FILINGS OF SUCH
PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT AFTER BEING NOTIFIED OF THE
MATTERS TO BE INCORPORATED IN SUCH PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE
AMENDMENT; AND (III) AS SOON AS PRACTICABLE, SUPPLEMENT OR MAKE AMENDMENTS TO
ANY REGISTRATION STATEMENT IF REASONABLY REQUESTED BY AN INVESTOR HOLDING ANY
REGISTRABLE SECURITIES.

 

N.              THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO CAUSE THE
REGISTRABLE SECURITIES COVERED BY THE REGISTRATION STATEMENT TO BE REGISTERED
WITH OR APPROVED BY SUCH OTHER GOVERNMENTAL AGENCIES OR AUTHORITIES AS MAY BE
NECESSARY TO CONSUMMATE THE DISPOSITION OF SUCH REGISTRABLE SECURITIES.

 

O.              THE COMPANY SHALL MAKE GENERALLY AVAILABLE TO ITS SECURITY
HOLDERS AS SOON AS PRACTICAL, BUT NOT LATER THAN 90 DAYS AFTER THE CLOSE OF THE
PERIOD COVERED THEREBY, AN

 

8

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earnings statement (in form complying with the provisions of Rule 158 under the
1933 Act) covering a twelve-month period beginning not later than the first day
of the Company’s fiscal quarter next following the effective date of the
Registration Statement.

 

P.              THE COMPANY SHALL OTHERWISE USE ITS REASONABLE BEST EFFORTS TO
COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE SEC IN CONNECTION WITH
ANY REGISTRATION HEREUNDER.

 

Q.              WITHIN TWO (2) BUSINESS DAYS AFTER A REGISTRATION STATEMENT
WHICH COVERS REGISTRABLE SECURITIES IS ORDERED EFFECTIVE BY THE SEC, THE COMPANY
SHALL DELIVER, AND SHALL CAUSE THE GENERAL COUNSEL FOR THE COMPANY TO DELIVER,
TO THE TRANSFER AGENT FOR SUCH REGISTRABLE SECURITIES (WITH COPIES TO THE
INVESTORS WHOSE REGISTRABLE SECURITIES ARE INCLUDED IN SUCH REGISTRATION
STATEMENT) CONFIRMATION THAT SUCH REGISTRATION STATEMENT HAS BEEN DECLARED
EFFECTIVE BY THE SEC IN THE FORM ATTACHED HERETO AS EXHIBIT A.

 

R.                 NOTWITHSTANDING TO THE CONTRARY HEREIN, THE COMPANY MAY
SUSPEND A REGISTRATION STATEMENT, IF THE COMPANY SHALL FURNISH TO THE INVESTORS
A CERTIFICATE SIGNED BY THE CHIEF EXECUTIVE OFFICER OF THE COMPANY STATING THAT
IN THE GOOD FAITH JUDGMENT OF THE BOARD OF DIRECTORS IT WOULD BE SERIOUSLY
DETRIMENTAL TO THE COMPANY OR ITS STOCKHOLDERS FOR SUCH A REGISTRATION STATEMENT
NOT TO BE SUSPENDED (A “GRACE PERIOD”).  IN SUCH EVENT, THE COMPANY’S OBLIGATION
UNDER THIS AGREEMENT TO KEEP A REGISTRATION STATEMENT EFFECTIVE SHALL BE
DEFERRED FOR A GRACE PERIOD NOT TO EXCEED 30 CONSECUTIVE DAYS DURING ANY 90 DAY
PERIOD, PROVIDED, THAT THE COMPANY MAY NOT EXERCISE THIS RIGHT OF DEFERRAL FOR
AN AGGREGATE OF IN EXCESS OF 75 DAYS IN ANY ONE YEAR PERIOD (AN “ALLOWABLE GRACE
PERIOD”).  IF THE COMPANY SUSPENDS THE EFFECTIVENESS OF A REGISTRATION
STATEMENT, THE COMPANY WILL PROMPTLY DELIVER NOTICE TO THE INVESTORS OF SUCH
SUSPENSION AND WILL AGAIN DELIVER NOTICE TO THE INVESTORS WHEN SUCH SUSPENSION
IS NO LONGER NECESSARY.  THE COMPANY SHALL NOT ACCRUE ANY REGISTRATION DELAY
PAYMENTS DURING AN ALLOWABLE GRACE PERIOD.

 

4.               OBLIGATIONS OF THE INVESTORS.

 

A.               AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO THE FIRST ANTICIPATED
FILING DATE OF A REGISTRATION STATEMENT, THE COMPANY SHALL NOTIFY EACH INVESTOR
IN WRITING OF THE INFORMATION THE COMPANY REQUIRES FROM EACH SUCH INVESTOR IF
SUCH INVESTOR ELECTS TO HAVE ANY OF SUCH INVESTOR’S REGISTRABLE SECURITIES
INCLUDED IN SUCH REGISTRATION STATEMENT.  IT SHALL BE A CONDITION PRECEDENT TO
THE OBLIGATIONS OF THE COMPANY TO COMPLETE THE REGISTRATION PURSUANT TO THIS
AGREEMENT WITH RESPECT TO THE REGISTRABLE SECURITIES OF A PARTICULAR INVESTOR
THAT SUCH INVESTOR SHALL FURNISH TO THE COMPANY SUCH INFORMATION REGARDING
ITSELF, THE REGISTRABLE SECURITIES HELD BY IT AND THE INTENDED METHOD OF
DISPOSITION OF THE REGISTRABLE SECURITIES HELD BY IT, AS SHALL BE REASONABLY
REQUIRED TO EFFECT AND MAINTAIN THE EFFECTIVENESS OF THE REGISTRATION OF SUCH
REGISTRABLE SECURITIES AND SHALL EXECUTE SUCH DOCUMENTS IN CONNECTION WITH SUCH
REGISTRATION AS THE COMPANY MAY REASONABLY REQUEST.

 

B.              EACH INVESTOR, BY SUCH INVESTOR’S ACCEPTANCE OF THE REGISTRABLE
SECURITIES, AGREES TO COOPERATE WITH THE COMPANY AS REASONABLY REQUESTED BY THE
COMPANY IN CONNECTION WITH THE PREPARATION AND FILING OF ANY REGISTRATION
STATEMENT HEREUNDER, UNLESS SUCH

 

9

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Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.

 

C.               EACH INVESTOR AGREES THAT, UPON RECEIPT OF ANY NOTICE FROM THE
COMPANY OF THE HAPPENING OF ANY EVENT OF THE KIND DESCRIBED IN SECTION 3(G), THE
FIRST SENTENCE OF 3(F) OR DURING AN ALLOWABLE GRACE PERIOD, SUCH INVESTOR WILL
IMMEDIATELY DISCONTINUE DISPOSITION OF REGISTRABLE SECURITIES PURSUANT TO ANY
REGISTRATION STATEMENT(S) COVERING SUCH REGISTRABLE SECURITIES UNTIL SUCH
INVESTOR’S RECEIPT OF THE COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS
CONTEMPLATED BY SECTION 3(G), THE FIRST SENTENCE OF 3(F) OR DURING AN ALLOWABLE
GRACE PERIOD OR RECEIPT OF NOTICE THAT NO SUPPLEMENT OR AMENDMENT IS REQUIRED. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE COMPANY SHALL CAUSE ITS TRANSFER
AGENT TO DELIVER UNLEGENDED SHARES OF COMMON STOCK TO A TRANSFEREE OF AN
INVESTOR IF ALLOWED UNDER THE APPLICABLE REQUIREMENTS OF THE SECURITIES PURCHASE
AGREEMENT, THE WARRANTS AND THE CERTIFICATE OF DESIGNATION IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS AND THE TERMS OF THE SECURITIES PURCHASE AGREEMENT,
IN CONNECTION WITH ANY SALE OF REGISTRABLE SECURITIES WITH RESPECT TO WHICH AN
INVESTOR HAS ENTERED INTO A CONTRACT FOR SALE PRIOR TO THE INVESTOR’S RECEIPT OF
A NOTICE FROM THE COMPANY OF THE HAPPENING OF ANY EVENT OF THE KIND DESCRIBED IN
SECTION 3(G), THE FIRST SENTENCE OF 3(F) OR DURING AN ALLOWABLE GRACE PERIOD AND
FOR WHICH THE INVESTOR HAS NOT YET SETTLED.

 

5.               EXPENSES OF REGISTRATION.

 

All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.  The Company shall also
reimburse the BayStar Capital II, L.P. for the fees and disbursements of Legal
Counsel in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 in
the aggregate.

 

6.               INDEMNIFICATION.

 

In the event any Registrable Securities are included in a Registration Statement
under this Agreement:

 

A.               TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY WILL, AND
HEREBY DOES, INDEMNIFY, HOLD HARMLESS AND DEFEND EACH INVESTOR, THE DIRECTORS,
OFFICERS, PARTNERS, EMPLOYEES, AGENTS, REPRESENTATIVES OF, AND EACH PERSON, IF
ANY, WHO CONTROLS ANY INVESTOR WITHIN THE MEANING OF THE 1933 ACT OR THE 1934
ACT (EACH, AN “INDEMNIFIED PERSON”), AGAINST ANY LOSSES, CLAIMS, DAMAGES,
LIABILITIES, JUDGMENTS, FINES, PENALTIES, CHARGES, COSTS, REASONABLE ATTORNEYS’
FEES, AMOUNTS PAID IN SETTLEMENT OR EXPENSES, JOINT OR SEVERAL, (COLLECTIVELY,
“CLAIMS”) INCURRED IN INVESTIGATING, PREPARING OR DEFENDING ANY ACTION, CLAIM,
SUIT, INQUIRY, PROCEEDING, INVESTIGATION OR APPEAL TAKEN FROM THE FOREGOING BY
OR BEFORE ANY COURT OR GOVERNMENTAL, ADMINISTRATIVE OR OTHER REGULATORY AGENCY,
BODY OR THE SEC, WHETHER PENDING OR THREATENED, WHETHER OR NOT AN INDEMNIFIED
PARTY IS OR MAY BE A PARTY THERETO (“INDEMNIFIED DAMAGES”), TO WHICH ANY OF THEM
MAY BECOME SUBJECT INSOFAR AS SUCH CLAIMS (OR ACTIONS OR PROCEEDINGS, WHETHER
COMMENCED OR THREATENED, IN RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON: 
(I) ANY

 

10

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untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”).  Subject to Section 6(c), the Company shall reimburse the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.  Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(d); (ii) with respect to any
preliminary prospectus, shall not inure to the benefit of any such person from
whom the person asserting any such Claim purchased the Registrable Securities
that are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(d), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it or
failed to deliver the correct prospectus as required by the 1933 Act and such
correct prospectus was timely made available pursuant to Section 3(d); (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company, including a corrected prospectus, if such prospectus or corrected
prospectus was timely made available by the Company pursuant to Section 3(d);
and (iv) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed.  Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

 

B.              IN CONNECTION WITH ANY REGISTRATION STATEMENT IN WHICH AN
INVESTOR IS PARTICIPATING, EACH SUCH INVESTOR AGREES TO SEVERALLY AND NOT
JOINTLY INDEMNIFY, HOLD HARMLESS AND DEFEND, TO THE SAME EXTENT AND IN THE SAME
MANNER AS IS SET FORTH IN SECTION 6(A), THE COMPANY, EACH OF ITS DIRECTORS, EACH
OF ITS OFFICERS WHO SIGNS THE REGISTRATION STATEMENT EACH PERSON, IF

 

11

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any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
(each, an “Indemnified Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section 6(c), such
Investor will reimburse any legal or other expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.  Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

C.               PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OR INDEMNIFIED
PARTY UNDER THIS SECTION 6 OF NOTICE OF THE COMMENCEMENT OF ANY ACTION OR
PROCEEDING (INCLUDING ANY GOVERNMENTAL ACTION OR PROCEEDING) INVOLVING A CLAIM,
SUCH INDEMNIFIED PERSON OR INDEMNIFIED PARTY SHALL, IF A CLAIM IN RESPECT
THEREOF IS TO BE MADE AGAINST ANY INDEMNIFYING PARTY UNDER THIS SECTION 6,
DELIVER TO THE INDEMNIFYING PARTY A WRITTEN NOTICE OF THE COMMENCEMENT THEREOF,
AND THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO PARTICIPATE IN, AND, TO THE
EXTENT THE INDEMNIFYING PARTY SO DESIRES, JOINTLY WITH ANY OTHER INDEMNIFYING
PARTY SIMILARLY NOTICED, TO ASSUME CONTROL OF THE DEFENSE THEREOF WITH COUNSEL
MUTUALLY SATISFACTORY TO THE INDEMNIFYING PARTY AND THE INDEMNIFIED PERSON OR
THE INDEMNIFIED PARTY, AS THE CASE MAY BE; PROVIDED, HOWEVER, THAT AN
INDEMNIFIED PERSON OR INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO RETAIN ITS OWN
COUNSEL WITH THE FEES AND EXPENSES OF NOT MORE THAN ONE COUNSEL FOR SUCH
INDEMNIFIED PERSON OR INDEMNIFIED PARTY TO BE PAID BY THE INDEMNIFYING PARTY,
IF, IN THE REASONABLE OPINION OF COUNSEL RETAINED BY THE INDEMNIFYING PARTY, THE
REPRESENTATION BY SUCH COUNSEL OF THE INDEMNIFIED PERSON OR INDEMNIFIED PARTY
AND THE INDEMNIFYING PARTY WOULD BE INAPPROPRIATE DUE TO ACTUAL OR POTENTIAL
DIFFERING INTERESTS BETWEEN SUCH INDEMNIFIED PERSON OR INDEMNIFIED PARTY AND ANY
OTHER PARTY REPRESENTED BY SUCH COUNSEL IN SUCH PROCEEDING.  IN THE CASE OF AN
INDEMNIFIED PERSON, LEGAL COUNSEL REFERRED TO IN THE IMMEDIATELY PRECEDING
SENTENCE SHALL BE SELECTED BY THE INVESTORS HOLDING AT LEAST A MAJORITY IN
INTEREST OF THE REGISTRABLE SECURITIES INCLUDED IN THE REGISTRATION STATEMENT TO
WHICH THE CLAIM RELATES.  THE INDEMNIFIED PARTY OR INDEMNIFIED PERSON SHALL
COOPERATE FULLY WITH THE INDEMNIFYING PARTY IN CONNECTION WITH ANY NEGOTIATION
OR DEFENSE OF ANY SUCH ACTION OR CLAIM BY THE INDEMNIFYING PARTY AND SHALL
FURNISH TO THE INDEMNIFYING PARTY ALL INFORMATION REASONABLY AVAILABLE TO THE
INDEMNIFIED PARTY OR INDEMNIFIED PERSON WHICH RELATES TO SUCH ACTION OR CLAIM. 
THE INDEMNIFYING PARTY SHALL KEEP THE INDEMNIFIED PARTY OR INDEMNIFIED PERSON
FULLY APPRISED AT ALL TIMES AS TO THE STATUS OF THE DEFENSE OR ANY SETTLEMENT
NEGOTIATIONS

 

12

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with respect thereto.  No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such Claim or litigation.  Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made. 
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

 

D.              THE INDEMNIFICATION REQUIRED BY THIS SECTION 6 SHALL BE MADE BY
PERIODIC PAYMENTS OF THE AMOUNT THEREOF DURING THE COURSE OF THE INVESTIGATION
OR DEFENSE, AS AND WHEN BILLS ARE RECEIVED OR INDEMNIFIED DAMAGES ARE INCURRED.

 

E.               THE INDEMNITY AGREEMENTS CONTAINED HEREIN SHALL BE IN ADDITION
TO  (I) ANY CAUSE OF ACTION OR SIMILAR RIGHT OF THE INDEMNIFIED PARTY OR
INDEMNIFIED PERSON AGAINST THE INDEMNIFYING PARTY OR OTHERS, AND (II) ANY
LIABILITIES THE INDEMNIFYING PARTY MAY BE SUBJECT TO PURSUANT TO THE LAW.

 

7.               CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that:  (i) no
person involved in the sale of Registrable Securities which person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

 

8.               REPORTS UNDER THE 1934 ACT.

 

Until the date on which (A) the Investors shall have sold all the Conversion
Shares and the Warrant Shares and (B) none of the Preferred Shares is
outstanding, with a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration (“Rule 144”), the Company agrees to:

 

13

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A.               MAKE AND KEEP PUBLIC INFORMATION AVAILABLE, AS THOSE TERMS ARE
UNDERSTOOD AND DEFINED IN RULE 144;

 

B.              FILE WITH THE SEC IN A TIMELY MANNER ALL REPORTS AND OTHER
DOCUMENTS REQUIRED OF THE COMPANY UNDER THE 1933 ACT AND THE 1934 ACT SO LONG AS
THE COMPANY REMAINS SUBJECT TO SUCH REQUIREMENTS (IT BEING UNDERSTOOD THAT
NOTHING HEREIN SHALL LIMIT THE COMPANY’S OBLIGATIONS UNDER SECTION 4(C) OF THE
SECURITIES PURCHASE AGREEMENT) AND THE FILING OF SUCH REPORTS AND OTHER
DOCUMENTS IS REQUIRED FOR THE APPLICABLE PROVISIONS OF RULE 144; AND

 

C.               FURNISH TO EACH INVESTOR SO LONG AS SUCH INVESTOR OWNS
REGISTRABLE SECURITIES, PROMPTLY UPON REQUEST, (I) A WRITTEN STATEMENT BY THE
COMPANY, IF TRUE, THAT IT HAS COMPLIED WITH THE REPORTING REQUIREMENTS OF RULE
144, THE 1933 ACT AND THE 1934 ACT, (II) A COPY OF THE MOST RECENT ANNUAL OR
QUARTERLY REPORT OF THE COMPANY AND SUCH OTHER REPORTS AND DOCUMENTS SO FILED BY
THE COMPANY, AND (III) SUCH OTHER INFORMATION AS MAY BE REASONABLY REQUESTED TO
PERMIT THE INVESTORS TO SELL SUCH SECURITIES PURSUANT TO RULE 144 WITHOUT
REGISTRATION.

 

9.               ASSIGNMENT OF REGISTRATION RIGHTS.

 

The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of Registrable Securities if:  (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable securities laws and the applicable requirements
of the Securities Purchase Agreement, the Warrants and the Certificate of
Designations.

 

10.         AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least a majority of the Registrable Securities.  Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.  No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Registrable Securities. 
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

11.         MISCELLANEOUS.

 

A.               A PERSON IS DEEMED TO BE A HOLDER OF REGISTRABLE SECURITIES
WHENEVER SUCH PERSON OWNS OR IS DEEMED TO OWN OF RECORD SUCH REGISTRABLE
SECURITIES.  IF THE COMPANY

 

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receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the such record owner of
such Registrable Securities.

 

B.              ANY NOTICES, CONSENTS, WAIVERS OR OTHER COMMUNICATIONS REQUIRED
OR PERMITTED TO BE GIVEN UNDER THE TERMS OF THIS AGREEMENT MUST BE IN WRITING
AND WILL BE DEEMED TO HAVE BEEN DELIVERED:  (I) UPON RECEIPT, WHEN DELIVERED
PERSONALLY; (II) UPON RECEIPT, WHEN SENT BY FACSIMILE (PROVIDED CONFIRMATION OF
TRANSMISSION IS MECHANICALLY OR ELECTRONICALLY GENERATED AND KEPT ON FILE BY THE
SENDING PARTY); OR (III) ONE BUSINESS DAY AFTER DEPOSIT WITH A NATIONALLY
RECOGNIZED OVERNIGHT DELIVERY SERVICE, IN EACH CASE PROPERLY ADDRESSED TO THE
PARTY TO RECEIVE THE SAME.  THE ADDRESSES AND FACSIMILE NUMBERS FOR SUCH
COMMUNICATIONS SHALL BE:

 

If to the Company:

 

 

 

 

Commerce One, Inc.

 

4440 Rosewood Dr.

 

Pleasanton, CA  94588

 

Telephone:

(925) 520-6000

 

Facsimile:

(925) 520-6060

 

Attention:

Chief Financial Officer

 

 

 

 

and a separate notice to:

 

 

 

 

Commerce One, Inc.

 

4440 Rosewood Dr.

 

Pleasanton, CA  94588

 

Telephone:

(925) 520-6000

 

Facsimile:

(925) 520-6060

 

Attention:

General Counsel

 

 

 

With a copy to:

 

 

 

Wilson Sonsini Goodrich & Rosati

 

650 Page Mill Road

 

Palo Alto, CA  94304

 

Telephone:

(650) 849-3223

 

Facsimile:

(650) 493-6811

 

Attention:

N. Anthony Jeffries, Esq.

 

 

If to Legal Counsel:

 

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Schulte Roth & Zabel LLP

 

919 Third Avenue

 

New York, New York 10022

 

Telephone:

(212) 756-2000

 

Facsimile:

(212) 593-5955

 

Attention:

Eleazer Klein, Esq.

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

C.               FAILURE OF ANY PARTY TO EXERCISE ANY RIGHT OR REMEDY UNDER THIS
AGREEMENT OR OTHERWISE, OR DELAY BY A PARTY IN EXERCISING SUCH RIGHT OR REMEDY,
SHALL NOT OPERATE AS A WAIVER THEREOF.

 

D.              ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF
LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS
OTHER THAN THE STATE OF DELAWARE.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON- EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING DELAWARE,
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH
ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE
VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH
PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  IF ANY PROVISION OF THIS
AGREEMENT SHALL BE INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY
OR UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE
REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE VALIDITY OR
ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER JURISDICTION. 
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

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E.               THIS AGREEMENT, THE SECURITIES PURCHASE AGREEMENT, THE WARRANTS
AND THE CERTIFICATE OF DESIGNATIONS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF.  THERE ARE
NO RESTRICTIONS, PROMISES, WARRANTIES OR UNDERTAKINGS, OTHER THAN THOSE SET
FORTH OR REFERRED TO HEREIN AND THEREIN.  THIS AGREEMENT, THE SECURITIES
PURCHASE AGREEMENT, THE WARRANTS AND THE CERTIFICATE OF DESIGNATIONS SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND THEREOF.

 

F.                 SUBJECT TO THE REQUIREMENTS OF SECTION 9, THIS AGREEMENT
SHALL INURE TO THE BENEFIT OF AND BE BINDING UPON THE PERMITTED SUCCESSORS AND
ASSIGNS OF EACH OF THE PARTIES HERETO.

 

G.              THE HEADINGS IN THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE
ONLY AND SHALL NOT LIMIT OR OTHERWISE AFFECT THE MEANING HEREOF.

 

H.              THIS AGREEMENT MAY BE EXECUTED IN IDENTICAL COUNTERPARTS, EACH
OF WHICH SHALL BE DEEMED AN ORIGINAL BUT ALL OF WHICH SHALL CONSTITUTE ONE AND
THE SAME AGREEMENT.  THIS AGREEMENT, ONCE EXECUTED BY A PARTY, MAY BE DELIVERED
TO THE OTHER PARTY HERETO BY FACSIMILE TRANSMISSION OF A COPY OF THIS AGREEMENT
BEARING THE SIGNATURE OF THE PARTY SO DELIVERING THIS AGREEMENT.

 

I.                  EACH PARTY SHALL DO AND PERFORM, OR CAUSE TO BE DONE AND
PERFORMED, ALL SUCH FURTHER ACTS AND THINGS, AND SHALL EXECUTE AND DELIVER ALL
SUCH OTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND DOCUMENTS, AS THE OTHER
PARTY MAY REASONABLY REQUEST IN ORDER TO CARRY OUT THE INTENT AND ACCOMPLISH THE
PURPOSES OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

J.                  ALL CONSENTS AND OTHER DETERMINATIONS REQUIRED TO BE MADE BY
THE INVESTORS PURSUANT TO THIS AGREEMENT SHALL BE MADE, UNLESS OTHERWISE
SPECIFIED IN THIS AGREEMENT, BY INVESTORS HOLDING AT LEAST A MAJORITY OF THE
REGISTRABLE SECURITIES, DETERMINED AS IF ALL OF THE PREFERRED SHARES HELD BY
INVESTORS THEN OUTSTANDING HAVE BEEN CONVERTED INTO REGISTRABLE SECURITIES AND
ALL WARRANTS THEN OUTSTANDING HAVE BEEN EXERCISED FOR REGISTRABLE SECURITIES
WITHOUT REGARD TO ANY LIMITATIONS ON CONVERSION OF THE PREFERRED SHARES OR ON
EXERCISES OF THE WARRANTS.

 

K.               THE LANGUAGE USED IN THIS AGREEMENT WILL BE DEEMED TO BE THE
LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL INTENT AND NO RULES OF
STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.

 

L.                  THIS AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES
HERETO AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND ASSIGNS, AND IS NOT FOR THE
BENEFIT OF, NOR MAY ANY PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON.

 

* * * * * *

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.

 

 

COMPANY:

BUYERS:

 

 

COMMERCE ONE, INC.

BAYSTAR CAPITAL II, L.P.

 

 

 

By: BayStar Capital Management, LLC

 

 

By:

             /s/ Charles Boynton

 

 

 

 

Name:

Charles Boynton

By:

               /s/ Steven M. Lamar

 

Title:

Senior Vice President and

 

Name:  Steven M. Lamar

 

 

Chief Financial Officer

 

Title:    Managing Member

 

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SCHEDULE OF BUYERS

 

 

Investor

 

Investor Address
and Facsimile Number

 

Investor’s Representative’s Address
and Facsimile Number

 

 

 

 

 

BayStar Capital II, L.P.

 

c/o BayStar Capital Management, LLC
80 E Sir Francis Drake Blvd.
Suite 2B
Larkspur, California  94939
Attention:  Steven M. Lamar
Facsimile:  (415) 834-4601
Telephone: (415) 834-4620

 

Schulte Roth & Zabel LLP 
919 Third Avenue 
New York, NY 10022 
Attn:  Eleazer Klein, Esq. 
Facsimile:  (212) 593-5955 
Telephone:  (212) 756-2000

 

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EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

 

EquiServe

150 Royall Street

Canton, MA 02021

Attention: Norris Richardson

 

Re:                    Commerce One, Inc.

 

Ladies and Gentlemen:

 

I am the General Counsel to Commerce One, Inc., a Delaware corporation (the
“Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement (the “Purchase Agreement”) entered into by and
among the Company and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares of its Series B
Convertible Preferred Stock, par value $.0001 per share, (the “Preferred
Shares”) convertible into shares of the Company’s Common Stock, par value $.0001
per share (the “Common Stock”) and warrants exercisable for shares of Company
Common Stock (the “Warrants”).  Pursuant to the Purchase Agreement, the Company
also has entered into a Registration Rights Agreement with the Holders (the
“Registration Rights Agreement”) pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants under
the Securities Act of 1933, as amended (the “1933 Act”).  In connection with the
Company’s obligations under the Registration Rights Agreement, on
                            , 2003, the Company filed a Registration Statement
on Form S-3 (File No. 333-                      ) (the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names each of the Holders as a selling stockholder
thereunder.

 

In connection with the foregoing, I advise you that a member of the SEC’s staff
has advised me by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and I have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

 

 

Very truly yours,

 

 

 

[ISSUER’S COUNSEL]

 

 

 

By:

 

 

 

CC:                             [LIST NAMES OF HOLDERS]

 

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INDEX OF TERMS

 

1933 Act

1934 Act

Agreement

Allowable Grace Period

Blue Sky Filing

Business Day

Buyer

Certificate of Designations

Claims

Common Stock

Company

Conversion Shares

Effectiveness Deadline

Filing Deadline

Grace Period

Indemnified Damages

Indemnified Party

Indemnified Person

Inspectors

Investor

Legal Counsel

NASD

Person

Preferred Shares

Preferred Stock

Records

Register

Registrable Securities

Registration Delay Payments

Registration Period

Registration Statement

Rule 144

Rule 415

SEC

Securities Purchase Agreement

Violations

Warrant Shares

Warrants

 

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