EXHIBIT 10.3

EXECUTION COPY

WARRANT

NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS CONVERTIBLE HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS BEEN ACQUIRED FOR
INVESTMENT AND NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS
CONVERTIBLE MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OF THEM UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH SALE OR TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE ACT. NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS
CONVERTIBLE MAY BE TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS
WARRANT AND THE NOTE AND WARRANT PURCHASE AGREEMENT, DATED AS OF EVEN DATE
HEREWITH (THE "PURCHASE AGREEMENT"), AND NO TRANSFER OF THIS WARRANT OR ANY
SECURITY INTO WHICH IT IS CONVERTIBLE SHALL BE VALID OR EFFECTIVE UNLESS AND
UNTIL SUCH CONDITIONS SHALL HAVE BEEN COMPLIED WITH. THE TRANSFERABILITY OF THIS
WARRANT AND ANY SECURITY INTO WHICH IT IS CONVERTIBLE IS SUBJECT TO THE TRANSFER
RESTRICTIONS SET FORTH HEREIN AND IN THE PURCHASE AGREEMENT.

WARRANT

TO PURCHASE COMMON STOCK OF

COMMERCE ONE, INC.

THIS WARRANT IS MADE AND DELIVERED PURSUANT TO A CERTAIN NOTE AND WARRANT
PURCHASE AGREEMENT, DATED AS OF EVEN DATE HEREWITH, AND SUBJECT TO THE TERMS AND
CONDITIONS THEREOF.

Certificate No. ____
Date of Issuance: December 31, 2003
Expiration Date: December 31, 2004

This Warrant is issued to COMVEST INVESTMENT PARTNERS II LLC (the "Holder") by
COMMERCE ONE, INC., a Delaware corporation (the "Company") , pursuant to the
terms of that certain Note and Warrant Purchase Agreement (the "Purchase
Agreement") of even date herewith, in connection with the Company's issuance to
the Holder of this Warrant and a Senior Secured Non-Convertible Promissory Note
of the Company in the principal amount of Four Million Dollars ($4,000,000) (the
"Note"), in reliance upon an exemption from registration pursuant to Section
4(2) of the Securities Act;

THIS CERTIFIES THAT, for value received, the receipt and sufficiency of which is
hereby acknowledged:

Subject to the conditions set forth herein and in the Purchase Agreement, the
Holder, with an address at 830 Third Avenue, New York, NY 10022, is entitled,
upon surrender of this Warrant at the principal office of the Company, to
subscribe for and purchase from the Company, for a period of one (1) year,
commencing as of the date hereof and ending at 5:00 p.m. Eastern Standard Time
on December 31, 2004 (the "Exercise Period"), up to 2,054,795 shares of Common
Stock at the Per Share Exercise Price. All capitalized terms used but not
defined herein shall have the meaning set forth in the Purchase Agreement.

This Warrant is subject to the following provisions, terms and conditions:

1. Definitions.

1.1 "Business Day" shall mean any day except a Saturday, a Sunday, or a legal
holiday in the City of New York other than a legal holiday on which the New York
Stock Exchange is open for trading on a regular basis.

1.2 "Common Stock" shall mean the shares of common stock, $.0001 par value per
share, of the Company.

1.3 "Commission" shall mean the U.S. Securities and Exchange Commission or any
other governmental authority at the time administering the Securities Act.

1.4 "Company" shall have the meaning specified in the introduction to this
Warrant, and shall include any corporation or business entity resulting from the
merger, consolidation or conversion of the Company .

1.5 "DCC Warrant" shall mean the warrant issued as of even date hereof by the
Company to DCC Ventures, LLC to purchase shares of Common Stock pursuant to
substantially the same terms and conditions of this Warrant.

1.6 "DCC Warrant Shares" shall mean the shares of Common Stock issuable upon
exercise of the DCC Warrant in accordance with its terms and conditions.

1.7 "Fair Market Price per Share" shall mean the average of the closing sales
prices, if available, or the average of the bid and asked prices for the Warrant
Shares, Common Stock or Marketable Securities, as the case may be (or their
successors) on the principal market therefor for the five (5) full Trading Days
preceding the day which is two (2) Business Days prior to the day of exercise,
or if no such price is available, then a price that is mutually agreed upon by
the Holder and the Company. If the Holder and the Company cannot agree upon a
mutually acceptable price, then such price shall be determined by a written
appraisal of a recognized firm of investment bankers who shall be selected by
the Company and shall be reasonably acceptable to the holders of a majority of
the Warrants. The determination of such independent appraiser shall be
conclusive and binding on the Holder and the Company.

1.8 "Marketable Securities" shall mean securities of a corporation subject to
the informational and reporting requirements of the Securities Exchange Act of
1934, as amended, that are listed and actively traded on a nationally-recognized
stock exchange or inter-dealer quotation system in the United States.

1.9 "Per Share Exercise Price" shall be $.0001, as may be adjusted in accordance
with Section 4 hereof.

1.10 "Registration Period" shall be the four (4)-month period immediately
following the Closing.

1.11 "Registration Statement" shall be (i) the registration statement that the
Company shall file with the Commission in accordance with Section 2(a) of the
Registration Rights Agreement, covering all of the Conversion Shares, if any,
and the Warrant Shares, within thirty (30) days after the Closing, or (ii) the
registration statement that the Company may file (or has filed) with the
Commission in accordance with Section 2(b) of the Registration Rights Agreement,
covering all or a part of the Conversion Shares, if any, and the Warrant Shares
so long as such registration statement is declared effective prior to the time
the registration statement contemplated by Section 2(a) of the Registration
Rights Agreement is declared effective; provided, however, that if any
registration statement filed under Section 2(b) of the Registration Rights
Agreement covers only a portion of the Conversion Shares, if any, and the
Warrant Shares, then "Registration Statement" shall mean both registration
statements described in subparagraphs (i) and (ii) above.

1.12 "Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.

1.13 "This Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.

1.14 "Trading Days" shall mean any days during the course of which the Company's
Common Stock is listed and traded with the Nasdaq National Market, the Nasdaq
SmallCap Market or any national securities exchange or the OTC Electronic
Bulletin Board or similar organization if Nasdaq is no longer reporting such
information.

2. Payment upon Exercise; Issuance of Certificates; No Fractional Shares.

(a) This Warrant may be exercised during the Exercise Period, in whole or in
part, by the surrender of this Warrant with the election at the end hereof (the
"Election") duly executed to the Company, during normal business hours on any
Business Day, at the address and in the manner set forth in Section 13 hereof,
or at such other place as is designated in writing by the Company. Such executed
Election must be accompanied by payment in an amount equal to the applicable
exercise price multiplied by the number of Warrant Shares for which this Warrant
is being exercised. Such payment may be made by check payable to the order of
the Company. The Company agrees that the Warrant Shares so purchased shall be
and are deemed to be issued to the Holder or its designee (subject to the
transfer restrictions applicable to this Warrant) as the record owner of such
Warrant Shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment shall have been made as aforesaid.

(b) Certificates for the Warrant Shares so purchased, representing the aggregate
number of securities specified in the Election, shall be delivered to the Holder
or its designee within a reasonable time, not exceeding ten (10) Business Days
after this Warrant shall have been duly exercised. The stock certificate or
certificates so delivered shall be in such denominations as may be requested by
the Holder and shall be registered in the name of the Holder or such other name
as shall be designated by the Holder (subject to the transfer restrictions
applicable to this Warrant). The Company shall pay all expenses and charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section 2, except that, in case such stock
certificates shall be registered in a name or names other than the Holder or the
Holder's designee, funds sufficient to pay all stock transfer taxes which shall
be payable in connection with the execution and delivery of such stock
certificates shall be paid by the Holder to the Company at the time of delivery
of such stock certificates by the Company.

(c) This Warrant shall be exercisable only for a whole number of Warrant Shares.
No fractions of such securities, or scrip for any such fraction of securities,
shall be issued upon the exercise of this Warrant. The Company shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the Fair
Market Price per Share of one share of Warrant Shares at the time of such
exercise multiplied by such fraction computed to the nearest whole cent.

3. Cashless Exercise. At any time during the Exercise Period , the Company
agrees that:

(a) The Holder may exercise this Warrant by surrendering it to the Company and
receiving, in exchange therefor, the number of shares of Common Stock then
purchasable upon exercise of that portion of the Warrant to be exercised less
the number of shares of Common Stock equal to the quotient of the aggregate
exercise price of all such shares underlying that portion of the Warrant to be
exercised divided by the Fair Market Price per Share.

(b) Concurrent with the occurrence of any event described in Section 4(a) for
cash, the Holder may exercise this Warrant by surrendering it to the Company in
exchange for the amount of cash per share the Holder would be entitled to
receive after the happening of such event if this Warrant had been exercised
immediately prior to the close of business on such record date or effective
date, as applicable, less the applicable exercise price per share.

(c) Concurrent with the occurrence of any event described in Section 4(a) for
Marketable Securities, the Holder may exercise this Warrant by surrendering it
to the Company in exchange for the applicable amount of such Marketable
Securities the Holder would be entitled to receive after the happening of such
event if this Warrant had been exercised immediately prior to the close of
business on such record date or effective date, as applicable, less the number
of such Marketable Securities equal to the quotient of the aggregate exercise
price of all shares underlying this Warrant divided by the Fair Market Price per
Share of such Marketable Securities.

4. Adjustments.

(a) Merger, Sale of Assets, etc. In the event the Company, at any time prior to
the Holder's exercise of this Warrant, (i) reorganizes (other than a
combination, reclassification, exchange or subdivision); (ii) merges or
consolidates the Company with or into another corporation in which the Company
is not the surviving entity, or merges with another corporation in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (iii) sells or transfers the Company's properties and assets
(other than the SRM Sale (as defined in the Notes)) as, or substantially as, an
entirety to any other person, then, as part of such reorganization, merger,
consolidation, sale or transfer, provision shall be made so that the Holder
shall thereafter be entitled to receive upon exercise of this Warrant the number
of securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
securities deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately prior to such reorganization, merger,
consolidation, sale or transfer.

(b) Declaration of Dividends, Stock Splits, etc. In the event the Company
declares a dividend or distribution of its common stock, or effects a stock
split or reverse stock split with respect to its common stock, or issues any
shares of its common stock by reclassification of shares of its common stock,
the exercise rights of the Holder in effect on the date of such event shall be
adjusted proportionately so that the Holder thereafter shall be entitled to
receive upon exercise pursuant to the terms and conditions hereof the aggregate
number of shares of common stock that the Holder would own or be entitled to
receive after the happening of any of the events mentioned in this Section 4(b)
if this Warrant had been exercised immediately prior to the close of business on
the date of such happening; provided, however that this Section 4(b) shall not
apply to the declaration or payment of any dividends with respect to the
dividends payable to BayStar Capital II, L.P. ("Baystar") in accordance with the
terms of the Certificate of Designations filed by the Company in connection with
the transactions contemplated by that certain Securities Purchase Agreement,
dated as of July 10, 2003, by and between the Company and Baystar.

(c) Written Notice. The Company shall give written notice to the Holder within
ten (10) days following the consummation of any transaction within the scope of
this Section 4 and provide in such written notice a brief description of the
terms and conditions of such transaction.

(d) Minimal Adjustments. No adjustment in a Per Share Exercise Price need be
made if such adjustment would result in a change in such Per Share Exercise
Price of less than five cents ($0.05). Any adjustment of less than five cents
($0.05) which is not made shall be carried forward and shall be made at the time
of and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of five cents ($0.05) or more in a Per Share Exercise
Price.

5. [Reserved]

6. Repurchase; Market Stand-Off.

(a) In the event that (i) the Company repays the entire principal amount of the
Note plus all accrued Interest thereon within the four (4) months immediately
following the date of issuance of this Warrant (the "Repurchase Period") and
(ii) the Registration Statement has been declared effective, then the Company
shall have the right to repurchase (the "Repurchase") from the Holder up to
Twenty Percent (20%) of this Warrant or the Warrant Shares (for purposes of this
Section 6, the "Repurchase Shares"), as the case may be (the "Repurchase"), at a
per share purchase price equal to the Per Share Exercise Price.

(b) In the event the Company desires to effect a Repurchase, the Company shall
provide the Holder with notice (the "Repurchase Note") that (i) all conditions
of a Repurchase have been satisfied and (ii) the Company desires to effect a
Repurchase. The Repurchase Notice shall also set forth the amount of the
Warrants or the Repurchase Shares, as the case may be, that will be subject to
the Repurchase and the date on which the Company desires the Repurchase to
occur). The Repurchase Notice shall be delivered to the Holder no later than ten
(10) days following the Company's satisfaction of the conditions of a Repurchase
and no less than ten (10) days prior to the date on which the Repurchase shall
be effective. Any Repurchase effected hereunder shall be done on a pro rata
basis between the Warrants or the Repurchase Shares, as the case may be.

(c) The Holder hereby agrees that, during the Repurchase Period, the Holder
shall not sell, transfer or otherwise dispose of (i) Twenty Percent (20%) of
this Warrant or (ii) the Repurchase Shares, as the case may be, and that the
Holder shall reserve (i) such portion of the Warrant or (ii) all of the
Repurchase Shares, as the case may be, for Repurchase by the Company in
accordance with Sections 6(a) and (b) above.

(d) Any Repurchase that is effected pursuant to this Section 6 shall be made on
a pro rata basis with the DCC Warrant or the DCC Warrant Shares, as the case may
be.

7. Issue Tax. The issuance of certificates for the Warrant Shares upon the
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the Holder
.

8. Transferability and Assignment. Except as set forth in Section 6 hereof and
subject to compliance with applicable federal and state securities laws, and to
the extent applicable, the parties may not assign their rights and obligations
under this Warrant except in accordance with Section 14(a) of the Purchase
Agreement. In the event the Holder proposes to effect an assignment, the Holder
must present this Warrant to the Company for transfer, accompanied by a duly
completed and executed Form of Assignment (as provided at the end hereof), the
transferee must agree to be bound by the terms of this Warrant as if such
transferee were an original holder of this Warrant, and the Holder must deliver
to the Company an opinion of counsel of the Holder in form reasonably
satisfactory to the Company that the transfer may be properly made under an
exemption from registration under the Securities Act and applicable state
securities laws. Upon any registration of transfer, the Company shall execute
and deliver a new Warrant certificate to the person entitled thereto. In the
event the Warrant is transferred, the subsequent holder shall have no greater
rights than those afforded the Holder hereunder. Any transfer made in violation
of this Section 8 shall be void.

9. Reservation of Warrant Shares. The Company shall, at all times when this
Warrant shall be outstanding, reserve and keep available out of its authorized
but unissued stock, for the purpose of effecting the exercise of this Warrant,
such number of its duly authorized shares of capital stock as shall from time to
time be sufficient to effect the exercise of this Warrant. Alternatively, the
Company shall take all action necessary to cause it to be authorized to issue
all necessary shares issuable upon exercise of this Warrant. All shares of
capital stock which may be issued in connection with the exercise of this
Warrant will, upon issuance by the Company, be validly issued, fully paid and
non-assessable.

10. Mutilated or Missing Warrant Certificate. In case the certificate evidencing
this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall,
at the request of the Holder, issue and deliver in exchange and substitution for
and upon cancellation of the mutilated certificate, or in lieu of and in
substitution for the certificate lost, stolen or destroyed, a new Warrant
certificate of like tenor and representing the equivalent rights and interests,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant. Applicants for such substitute Warrant
certificate shall also comply with such other reasonable requirements and pay
such other reasonable charges as the Company may prescribe. The Company shall
pay all taxes (other than securities transfer taxes) and all other expenses and
charges payable in connection with the preparation, execution and delivery of
Warrants pursuant to this Section 10.

11. No Rights as a Shareholder. Nothing contained herein shall be construed as
conferring upon the Holder or its transferees any rights as a shareholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or any other matter.

12. Legend. The Warrant Shares issued upon exercise of this Warrant shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:

"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or any state securities laws
and neither such securities nor any interest therein may be offered, sold,
pledged, assigned or otherwise transferred unless (1) a registration statement
with respect thereto is effective under the Act and any applicable state
securities laws, or (2) the Company receives an opinion of counsel to the holder
of such securities, which counsel and opinion are reasonably satisfactory to the
Company, that such securities may be offered, sold, pledged, assigned or
transferred in the manner contemplated without an effective registration
statement under the Act or applicable state securities laws."

13. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, addressed to Commerce One, Inc., One Market
Street, Steuart Tower, Suite 1300, San Francisco, CA 94105: Attn: General
Counsel, Telecopy No. (415) 644-8750; with a copy to Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, CA 94304, Attn: N. Anthony Jeffries,
Esq., Telecopy No. (650) 493-6811 (ii) if to the Holder, at the address set
forth above, or (iii) in either case, to such other address as the party shall
have furnished in writing in accordance with the provisions of this Section 13.
Notice to the estate of any party shall be sufficient if addressed to the party
as provided in this Section 13. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 13 shall be deemed given at the time of receipt thereof.

14. Governing Law. This Warrant shall be construed in accordance with the laws
of the State of Delaware, without regard to principles governing conflicts of
law. Any action or proceeding arising out of or relating to this Warrant shall
be commenced in a federal or state court having competent jurisdiction in the
State of New York, and for the purpose of any such action or proceeding, each of
the Company and the Holder and any assignee of the Holder submits to the
personal jurisdiction of the State of New York The parties hereby irrevocably
consent to the exclusive jurisdiction of any state or federal court for New York
County in the State of New York or the Southern District of New York. The
parties hereby waive any objection to venue and any objection based on a more
convenient forum in any action instituted under this Warrant.

15. Remedies. The Company stipulates that the remedies at law of the Holder in
the event of any default or threatened default by the Company in the performance
of or compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

16. Amendments; Waivers. The terms and provisions of this Warrant may be
amended, modified, waived or altered only in writing in accordance with Section
9 of the Security Agreement, and any such amendment effected pursuant to this
Section 16 shall be binding upon the successors and assigns of the parties.

17. Headings. The descriptive headings of the several sections of this Warrant
are inserted for purposes of reference only, and shall not affect the meaning or
construction of any of the provisions hereof.

 

[Signature Page to Warrant]

Dated: December 31, 2003

 

COMMERCE ONE, INC.

 

By: /s/ Charles Boynton

Name:

Title:

ACKNOWLEDGED AND ACCEPTED:

COMVEST INVESTMENT PARTNERS II LLC

 

By: /s/ Harold Blue

Name:

Title:

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)

FOR VALUE RECEIVED, ___________________ hereby sells, assigns, and transfers
unto _____________________________ Warrants to purchase _____________ shares of
_______________ of Commerce One, Inc. (the "Company"), together with all right,
title, and interest therein, and does hereby irrevocably constitute and appoint
_____________________________ attorney to transfer such Warrant on the books of
the Company, with full power of substitution.

 

Dated:____________________

 

Signature:___________________

NOTICE

The signature on the foregoing Assignment must correspond to the name as written
upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.

To: Commerce One, Inc.
One Market Street
Steuart Tower, Suite 1300
San Francisco, CA 94105

 

 

ELECTION TO EXERCISE

 

The undersigned hereby exercises his or its rights to purchase ______ Warrant
Shares covered by the within Warrant certificate and tenders payment herewith in
the amount of $_____________ in accordance with the terms thereof, and requests
that certificates for such securities be issued in the name of, and delivered
to:

(Print Name, Address and Social Security or Tax Identification Number)

The undersigned also hereby represents that the representations and warranties
provided by the undersigned in Section 6 of the Purchase Agreement are true and
correct in all material respects as if made on and as of the date hereof.

 

Signature: ____________________________

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EXECUTION COPY

WARRANT

NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS CONVERTIBLE HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS BEEN ACQUIRED FOR
INVESTMENT AND NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS
CONVERTIBLE MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OF THEM UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH SALE OR TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE ACT. NEITHER THIS WARRANT NOR ANY SECURITY INTO WHICH IT IS
CONVERTIBLE MAY BE TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS
WARRANT AND THE NOTE AND WARRANT PURCHASE AGREEMENT, DATED AS OF EVEN DATE
HEREWITH (THE "PURCHASE AGREEMENT"), AND NO TRANSFER OF THIS WARRANT OR ANY
SECURITY INTO WHICH IT IS CONVERTIBLE SHALL BE VALID OR EFFECTIVE UNLESS AND
UNTIL SUCH CONDITIONS SHALL HAVE BEEN COMPLIED WITH. THE TRANSFERABILITY OF THIS
WARRANT AND ANY SECURITY INTO WHICH IT IS CONVERTIBLE IS SUBJECT TO THE TRANSFER
RESTRICTIONS SET FORTH HEREIN AND IN THE PURCHASE AGREEMENT.

WARRANT

TO PURCHASE COMMON STOCK OF

COMMERCE ONE, INC.

THIS WARRANT IS MADE AND DELIVERED PURSUANT TO A CERTAIN NOTE AND WARRANT
PURCHASE AGREEMENT, DATED AS OF EVEN DATE HEREWITH, AND SUBJECT TO THE TERMS AND
CONDITIONS THEREOF.

Certificate No. ____
Date of Issuance: December 31, 2003
Expiration Date: December 31, 2004

This Warrant is issued to DCC VENTURES, LLC (the "Holder") by COMMERCE ONE,
INC., a Delaware corporation (the "Company") , pursuant to the terms of that
certain Note and Warrant Purchase Agreement (the "Purchase Agreement") of even
date herewith, in connection with the Company's issuance to the Holder of this
Warrant and a Senior Secured Non-Convertible Promissory Note of the Company in
the principal amount of One Million Dollars ($1,000,000) (the "Note"), in
reliance upon an exemption from registration pursuant to Section 4(2) of the
Securities Act;

THIS CERTIFIES THAT, for value received, the receipt and sufficiency of which is
hereby acknowledged:

Subject to the conditions set forth herein and in the Purchase Agreement, the
Holder, with an address at 3960 Howard Hughes Parkway, Fifth Floor, Las Vegas NV
89109, is entitled, upon surrender of this Warrant at the principal office of
the Company, to subscribe for and purchase from the Company, for a period of one
(1) year, commencing as of the date hereof and ending at 5:00 p.m. Eastern
Standard Time on December 31, 2004 (the "Exercise Period"), up to 513,699 shares
of Common Stock at the Per Share Exercise Price. All capitalized terms used but
not defined herein shall have the meaning set forth in the Purchase Agreement.

This Warrant is subject to the following provisions, terms and conditions:

1. Definitions.

1.1 "Business Day" shall mean any day except a Saturday, a Sunday, or a legal
holiday in the City of New York other than a legal holiday on which the New York
Stock Exchange is open for trading on a regular basis.

1.2 "Common Stock" shall mean the shares of common stock, $.0001 par value per
share, of the Company.

1.3 "Commission" shall mean the U.S. Securities and Exchange Commission or any
other governmental authority at the time administering the Securities Act.

1.4 "Company" shall have the meaning specified in the introduction to this
Warrant, and shall include any corporation or business entity resulting from the
merger, consolidation or conversion of the Company .

1.5 "ComVest Warrant" shall mean the warrant issued as of even date hereof by
the Company to ComVest Investment Partners II LLC to purchase shares of Common
Stock pursuant to substantially the same terms and conditions of this Warrant.

1.6 "ComVest Warrant Shares" shall mean the shares of Common Stock issuable upon
exercise of the ComVest Warrant in accordance with its terms and conditions.

1.7 "Fair Market Price per Share" shall mean the average of the closing sales
prices, if available, or the average of the bid and asked prices for the Warrant
Shares, Common Stock or Marketable Securities, as the case may be (or their
successors) on the principal market therefor for the five (5) full Trading Days
preceding the day which is two (2) Business Days prior to the day of exercise,
or if no such price is available, then a price that is mutually agreed upon by
the Holder and the Company. If the Holder and the Company cannot agree upon a
mutually acceptable price, then such price shall be determined by a written
appraisal of a recognized firm of investment bankers who shall be selected by
the Company and shall be reasonably acceptable to the holders of a majority of
the Warrants. The determination of such independent appraiser shall be
conclusive and binding on the Holder and the Company.

1.8 "Marketable Securities" shall mean securities of a corporation subject to
the informational and reporting requirements of the Securities Exchange Act of
1934, as amended, that are listed and actively traded on a nationally-recognized
stock exchange or inter-dealer quotation system in the United States.

1.9 "Per Share Exercise Price" shall be $.0001, as may be adjusted in accordance
with Section 4 hereof.

1.10 "Registration Period" shall be the four (4)-month period immediately
following the Closing.

1.11 "Registration Statement" shall be (i) the registration statement that the
Company shall file with the Commission in accordance with Section 2(a) of the
Registration Rights Agreement, covering all of the Conversion Shares, if any,
and the Warrant Shares, within thirty (30) days after the Closing, or (ii) the
registration statement that the Company may file (or has filed) with the
Commission in accordance with Section 2(b) of the Registration Rights Agreement,
covering all or a part of the Conversion Shares, if any, and the Warrant Shares
so long as such registration statement is declared effective prior to the time
the registration statement contemplated by Section 2(a) of the Registration
Rights Agreement is declared effective; provided, however, that if any
registration statement filed under Section 2(b) of the Registration Rights
Agreement covers only a portion of the Conversion Shares, if any, and the
Warrant Shares, then "Registration Statement" shall mean both registration
statements described in subparagraphs (i) and (ii) above.

1.12 "Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.

1.13 "This Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.

1.14 "Trading Days" shall mean any days during the course of which the Company's
Common Stock is listed and traded with the Nasdaq National Market, the Nasdaq
SmallCap Market or any national securities exchange or the OTC Electronic
Bulletin Board or similar organization if Nasdaq is no longer reporting such
information.

2. Payment upon Exercise; Issuance of Certificates; No Fractional Shares.

(a) This Warrant may be exercised during the Exercise Period, in whole or in
part, by the surrender of this Warrant with the election at the end hereof (the
"Election") duly executed to the Company, during normal business hours on any
Business Day, at the address and in the manner set forth in Section 13 hereof,
or at such other place as is designated in writing by the Company. Such executed
Election must be accompanied by payment in an amount equal to the applicable
exercise price multiplied by the number of Warrant Shares for which this Warrant
is being exercised. Such payment may be made by check payable to the order of
the Company. The Company agrees that the Warrant Shares so purchased shall be
and are deemed to be issued to the Holder or its designee (subject to the
transfer restrictions applicable to this Warrant) as the record owner of such
Warrant Shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment shall have been made as aforesaid.

(b) Certificates for the Warrant Shares so purchased, representing the aggregate
number of securities specified in the Election, shall be delivered to the Holder
or its designee within a reasonable time, not exceeding ten (10) Business Days
after this Warrant shall have been duly exercised. The stock certificate or
certificates so delivered shall be in such denominations as may be requested by
the Holder and shall be registered in the name of the Holder or such other name
as shall be designated by the Holder (subject to the transfer restrictions
applicable to this Warrant). The Company shall pay all expenses and charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section 2, except that, in case such stock
certificates shall be registered in a name or names other than the Holder or the
Holder's designee, funds sufficient to pay all stock transfer taxes which shall
be payable in connection with the execution and delivery of such stock
certificates shall be paid by the Holder to the Company at the time of delivery
of such stock certificates by the Company.

(c) This Warrant shall be exercisable only for a whole number of Warrant Shares.
No fractions of such securities, or scrip for any such fraction of securities,
shall be issued upon the exercise of this Warrant. The Company shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the Fair
Market Price per Share of one share of Warrant Shares at the time of such
exercise multiplied by such fraction computed to the nearest whole cent.

3. Cashless Exercise. At any time during the Exercise Period, the Company agrees
that:

(a) The Holder may exercise this Warrant by surrendering it to the Company and
receiving, in exchange therefor, the number of shares of Common Stock then
purchasable upon exercise of that portion of the Warrant to be exercised less
the number of shares of Common Stock equal to the quotient of the aggregate
exercise price of all such shares underlying that portion of the Warrant to be
exercised divided by the Fair Market Price per Share.

(b) Concurrent with the occurrence of any event described in Section 4(a) for
cash, the Holder may exercise this Warrant by surrendering it to the Company in
exchange for the amount of cash per share the Holder would be entitled to
receive after the happening of such event if this Warrant had been exercised
immediately prior to the close of business on such record date or effective
date, as applicable, less the applicable exercise price per share.

(c) Concurrent with the occurrence of any event described in Section 4(a) for
Marketable Securities, the Holder may exercise this Warrant by surrendering it
to the Company in exchange for the applicable amount of such Marketable
Securities the Holder would be entitled to receive after the happening of such
event if this Warrant had been exercised immediately prior to the close of
business on such record date or effective date, as applicable, less the number
of such Marketable Securities equal to the quotient of the aggregate exercise
price of all shares underlying this Warrant divided by the Fair Market Price per
Share of such Marketable Securities.

4. Adjustments.

(a) Merger, Sale of Assets, etc. In the event the Company, at any time prior to
the Holder's exercise of this Warrant, (i) reorganizes (other than a
combination, reclassification, exchange or subdivision); (ii) merges or
consolidates the Company with or into another corporation in which the Company
is not the surviving entity, or merges with another corporation in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (iii) sells or transfers the Company's properties and assets
(other than the SRM Sale (as defined in the Notes)) as, or substantially as, an
entirety to any other person, then, as part of such reorganization, merger,
consolidation, sale or transfer, provision shall be made so that the Holder
shall thereafter be entitled to receive upon exercise of this Warrant the number
of securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
securities deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately prior to such reorganization, merger,
consolidation, sale or transfer.

(b) Declaration of Dividends, Stock Splits, etc. In the event the Company
declares a dividend or distribution of its common stock, or effects a stock
split or reverse stock split with respect to its common stock, or issues any
shares of its common stock by reclassification of shares of its common stock,
the exercise rights of the Holder in effect on the date of such event shall be
adjusted proportionately so that the Holder thereafter shall be entitled to
receive upon exercise pursuant to the terms and conditions hereof the aggregate
number of shares of common stock that the Holder would own or be entitled to
receive after the happening of any of the events mentioned in this Section 4(b)
if this Warrant had been exercised immediately prior to the close of business on
the date of such happening; provided, however that this Section 4(b) shall not
apply to the declaration or payment of any dividends with respect to the
dividends payable to BayStar Capital II, L.P. ("Baystar") in accordance with the
terms of the Certificate of Designations filed by the Company in connection with
the transactions contemplated by that certain Securities Purchase Agreement,
dated as of July 10, 2003, by and between the Company and Baystar.

(c) Written Notice. The Company shall give written notice to the Holder within
ten (10) days following the consummation of any transaction within the scope of
this Section 4 and provide in such written notice a brief description of the
terms and conditions of such transaction.

(d) Minimal Adjustments. No adjustment in a Per Share Exercise Price need be
made if such adjustment would result in a change in such Per Share Exercise
Price of less than five cents ($0.05). Any adjustment of less than five cents
($0.05) which is not made shall be carried forward and shall be made at the time
of and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of five cents ($0.05) or more in a Per Share Exercise
Price.

5. [Reserved]

6. Repurchase; Market Stand-Off.

(a) In the event that (i) the Company repays the entire principal amount of the
Note plus all accrued Interest thereon within the four (4) months immediately
following the date of issuance of this Warrant (the "Repurchase Period") and
(ii) the Registration Statement has been declared effective, then the Company
shall have the right to repurchase (the "Repurchase") from the Holder up to
Twenty Percent (20%) of this Warrant or the Warrant Shares (for purposes of this
Section 6, the "Repurchase Shares"), as the case may be (the "Repurchase"), at a
per share purchase price equal to the Per Share Exercise Price.

(b) In the event the Company desires to effect a Repurchase, the Company shall
provide the Holder with notice (the "Repurchase Note") that (i) all conditions
of a Repurchase have been satisfied and (ii) the Company desires to effect a
Repurchase. The Repurchase Notice shall also set forth the amount of the
Warrants or the Repurchase Shares, as the case may be, that will be subject to
the Repurchase and the date on which the Company desires the Repurchase to
occur). The Repurchase Notice shall be delivered to the Holder no later than ten
(10) days following the Company's satisfaction of the conditions of a Repurchase
and no less than ten (10) days prior to the date on which the Repurchase shall
be effective. Any Repurchase effected hereunder shall be done on a pro rata
basis between the Warrants or the Repurchase Shares, as the case may be.

(c) The Holder hereby agrees that, during the Repurchase Period, the Holder
shall not sell, transfer or otherwise dispose of (i) Twenty Percent (20%) of
this Warrant or (ii) the Repurchase Shares, as the case may be, and that the
Holder shall reserve (i) such portion of the Warrant or (ii) all of the
Repurchase Shares, as the case may be, for Repurchase by the Company in
accordance with Sections 6(a) and (b) above.

(d) Any Repurchase that is effected pursuant to this Section 6 shall be made on
a pro rata basis with the ComVest Warrant or the ComVest Warrant Shares, as the
case may be.

7. Issue Tax. The issuance of certificates for the Warrant Shares upon the
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the Holder
.

8. Transferability and Assignment. Except as set forth in Section 6 hereof and
subject to compliance with applicable federal and state securities laws, and to
the extent applicable, the parties may not assign their rights and obligations
under this Warrant except in accordance with Section 14(a) of the Purchase
Agreement. In the event the Holder proposes to effect an assignment, the Holder
must present this Warrant to the Company for transfer, accompanied by a duly
completed and executed Form of Assignment (as provided at the end hereof), the
transferee must agree to be bound by the terms of this Warrant as if such
transferee were an original holder of this Warrant, and the Holder must deliver
to the Company an opinion of counsel of the Holder in form reasonably
satisfactory to the Company that the transfer may be properly made under an
exemption from registration under the Securities Act and applicable state
securities laws. Upon any registration of transfer, the Company shall execute
and deliver a new Warrant certificate to the person entitled thereto. In the
event the Warrant is transferred, the subsequent holder shall have no greater
rights than those afforded the Holder hereunder. Any transfer made in violation
of this Section 8 shall be void.

9. Reservation of Warrant Shares. The Company shall, at all times when this
Warrant shall be outstanding, reserve and keep available out of its authorized
but unissued stock, for the purpose of effecting the exercise of this Warrant,
such number of its duly authorized shares of capital stock as shall from time to
time be sufficient to effect the exercise of this Warrant. Alternatively, the
Company shall take all action necessary to cause it to be authorized to issue
all necessary shares issuable upon exercise of this Warrant. All shares of
capital stock which may be issued in connection with the exercise of this
Warrant will, upon issuance by the Company, be validly issued, fully paid and
non-assessable.

10. Mutilated or Missing Warrant Certificate. In case the certificate evidencing
this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall,
at the request of the Holder, issue and deliver in exchange and substitution for
and upon cancellation of the mutilated certificate, or in lieu of and in
substitution for the certificate lost, stolen or destroyed, a new Warrant
certificate of like tenor and representing the equivalent rights and interests,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant. Applicants for such substitute Warrant
certificate shall also comply with such other reasonable requirements and pay
such other reasonable charges as the Company may prescribe. The Company shall
pay all taxes (other than securities transfer taxes) and all other expenses and
charges payable in connection with the preparation, execution and delivery of
Warrants pursuant to this Section 10.

11. No Rights as a Shareholder. Nothing contained herein shall be construed as
conferring upon the Holder or its transferees any rights as a shareholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or any other matter.

12. Legend. The Warrant Shares issued upon exercise of this Warrant shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:

"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or any state securities laws
and neither such securities nor any interest therein may be offered, sold,
pledged, assigned or otherwise transferred unless (1) a registration statement
with respect thereto is effective under the Act and any applicable state
securities laws, or (2) the Company receives an opinion of counsel to the holder
of such securities, which counsel and opinion are reasonably satisfactory to the
Company, that such securities may be offered, sold, pledged, assigned or
transferred in the manner contemplated without an effective registration
statement under the Act or applicable state securities laws."

13. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, addressed to Commerce One, Inc., One Market
Street, Steuart Tower, Suite 1300, San Francisco, CA 94105: Attn: General
Counsel, Telecopy No. (415) 644-8750; with a copy to Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, CA 94304, Attn: N. Anthony Jeffries,
Esq., Telecopy No. (650) 493-6811 (ii) if to the Holder, at the address set
forth above, or (iii) in either case, to such other address as the party shall
have furnished in writing in accordance with the provisions of this Section 13.
Notice to the estate of any party shall be sufficient if addressed to the party
as provided in this Section 13. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 13 shall be deemed given at the time of receipt thereof.

14. Governing Law. This Warrant shall be construed in accordance with the laws
of the State of Delaware, without regard to principles governing conflicts of
law. Any action or proceeding arising out of or relating to this Warrant shall
be commenced in a federal or state court having competent jurisdiction in the
State of New York, and for the purpose of any such action or proceeding, each of
the Company and the Holder and any assignee of the Holder submits to the
personal jurisdiction of the State of New York The parties hereby irrevocably
consent to the exclusive jurisdiction of any state or federal court for New York
County in the State of New York or the Southern District of New York. The
parties hereby waive any objection to venue and any objection based on a more
convenient forum in any action instituted under this Warrant.

15. Remedies. The Company stipulates that the remedies at law of the Holder in
the event of any default or threatened default by the Company in the performance
of or compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

16. Amendments; Waivers. The terms and provisions of this Warrant may be
amended, modified, waived or altered only in writing in accordance with Section
9 of the Security Agreement, and any such amendment effected pursuant to this
Section 16 shall be binding upon the successors and assigns of the parties.

17. Headings. The descriptive headings of the several sections of this Warrant
are inserted for purposes of reference only, and shall not affect the meaning or
construction of any of the provisions hereof.

 

[Signature Page to Warrant]

Dated: December 31, 2003

 

COMMERCE ONE, INC.

 

By: /s/ Charles Boynton

Name:

Title:

ACKNOWLEDGED AND ACCEPTED:

DCC VENTURES, LLC

 

By: /s/ Michael T. Davies

Name: Michael T. Davies

Title: Secretary and Treasurer

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)

FOR VALUE RECEIVED, ___________________ hereby sells, assigns, and transfers
unto _____________________________ Warrants to purchase _____________ shares of
_______________ of Commerce One, Inc. (the "Company"), together with all right,
title, and interest therein, and does hereby irrevocably constitute and appoint
_____________________________ attorney to transfer such Warrant on the books of
the Company, with full power of substitution.

 

Dated:_________________

 

Signature:_________________

NOTICE

The signature on the foregoing Assignment must correspond to the name as written
upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.

To: Commerce One, Inc.
One Market Street
Steuart Tower, Suite 1300
San Francisco, CA 94105

 

 

ELECTION TO EXERCISE

 

The undersigned hereby exercises his or its rights to purchase ______ Warrant
Shares covered by the within Warrant certificate and tenders payment herewith in
the amount of $_____________ in accordance with the terms thereof, and requests
that certificates for such securities be issued in the name of, and delivered
to:

(Print Name, Address and Social Security or Tax Identification Number)

The undersigned also hereby represents that the representations and warranties
provided by the undersigned in Section 6 of the Purchase Agreement are true and
correct in all material respects as if made on and as of the date hereof.

 

Signature: ____________________________