Exhibit 10.4

EXECUTION COPY

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (the "Agreement"), dated as of December 31, 2003, is by
and among COMMERCE ONE OPERATIONS, INC., a Delaware corporation maintaining its
principal place of business located at One Market Street, Steuart Tower, Suite
1300, San Francisco, CA 94105 ("Operations"), COMMERCE ONE, INC., a Delaware
corporation maintaining its principal place of business located at One Market
Street, Steuart Tower, Suite 1300, San Francisco, CA 94105 ("Commerce One" and
together with Operations, the "Debtors"), and COMVEST INVESTMENT PARTNERS II
LLC, a Delaware limited liability company, as an investor and as administrative
agent ("ComVest," the "Administrative Agent" or "Secured Party") for ComVest and
DCC Ventures, LLC, a Nevada limited liability company ("DCC" or together with
ComVest, the "Purchasers") of Commerce One's Senior Secured Non-Convertible
Promissory Notes and Warrants under the terms of that certain Note and Warrant
Purchase Agreement dated on or about the date hereof (the "Purchase Agreement").
Any capitalized term used but not defined herein shall have the meaning ascribed
thereto in the Purchase Agreement.

W I T N E S S E T H:

WHEREAS, Commerce One has offered for sale to the Purchasers, and the Purchasers
have purchased from Commerce One, (i) Senior Secured Non-Convertible Promissory
Notes of Commerce One in the aggregate principal amount of Five Million Dollars
($5,000,000) (the "Notes") and (ii) Warrants to purchase shares of common stock,
par value $.0001 per share, of Commerce One (the "Warrants") under the terms of
the Purchase Agreement;

WHEREAS, under the terms and conditions of the Purchase Agreement, the
Purchasers have purchased the Notes and Warrants dated the date hereof and as
set forth in Exhibits A and B, respectively, annexed hereto and made a part
hereof, with payment of the Notes and any other obligations of Commerce One to
the Purchasers, and each of them, to be secured as provided for in the Purchase
Agreement;

WHEREAS, under the terms and conditions of the Purchase Agreement, in order to
induce the Purchasers to purchase the Notes and Warrant, (i) Operations agreed
to execute and deliver to the Secured Party a Guaranty as of even date herewith
(the "Guaranty"), pursuant to which Operations has agreed to guarantee the full
repayment of the Notes and all other obligations of Commerce One under the
Purchase Agreement and (ii) the Debtors agreed to execute and deliver to the
Secured Party this Security Agreement granting the Secured Party a first
perfected priority lien and security interest in the Collateral (as described
below) to secure the Debtor's' respective payment and other obligations under
the Purchase Agreement, the Notes and other Closing Documents;

WHEREAS, the Purchasers have appointed ComVest as Administrative Agent to act on
behalf of the Purchasers pursuant to the terms and conditions set forth in
detail in the Purchase Agreement and below, and expressly agree that the
Administrative Agent will be deemed the

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

Secured Party for purposes of administering the security interests granted to
the Purchasers pursuant to the terms and conditions set forth in detail below;

NOW, THEREFORE, in consideration of the premises and agreements hereinafter set
forth, the parties hereto agree as follows:

1.     Creation of Security Interest; Term.

In order to induce the Purchasers to enter into the Purchase Agreement and
purchase the Notes and Warrants, the Debtor hereby unconditionally and
irrevocably grant to the Secured Party a first perfected priority lien and
security interest in the Collateral described in Section 2 hereof (the
"Collateral") to secure Debtors' prompt payment (alone, the "Indebtedness"),
performance and discharge in full of all of their respective obligations under
the Purchase Agreement, the Notes, the Guaranty, the Pledge Agreement, this
Agreement and any other instruments entered into in connection with and any
further amounts which, pursuant to the Purchase Agreement and/or any other
security documents relating to the Notes, may be deemed to be a part of and/or
added to such obligations (together with the Indebtedness, the "Obligations").
Upon the earlier of (i) the payment, performance and discharge in full of all
Obligations, (ii) Conversion of the Notes or (iii) sale of the SRM Assets and/or
the Perfect Commerce Note in accordance with Section 8 of this Agreement, the
security interest granted herein shall expire and so shall this Agreement. The
Secured Party's security interest shall have priority and be superior to all
other interests in the Collateral and shall rank senior in lien priority to any
existing or future indebtedness of the Debtor, other than the Permitted Liens
and the CambridgePark Indebtedness. For purposes hereof, "CambridgePark
Indebtedness" shall mean the payments due by Commerce One to CambridgePark
Investors Limited Partnership ("CambridgePark") in the aggregate amount of Seven
Hundred and Fifty Thousand Dollars ($750,000), the repayment of which is secured
by a security interest in certain accounts receivable of Commerce One, in
accordance with the Settlement Agreement, dated as of June 6, 2003, by and
between Commerce One and CambridgePark. For the purposes hereof, "Permitted
Liens" shall mean (i) liens for taxes, fees, assessments or other government
charges or levies, either not delinquent or being contested in good faith and
for which Debtors maintain adequate reserves, (ii) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like liens arising in the
ordinary course of Debtors' respective business which are not overdue for a
period of more than thirty (30) days of which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained by Debtors; (iii) liens to secure payment of workers' compensation,
employment insurance, old age pensions, social security or other like
obligations incurred in the ordinary course of Debtors' respective businesses;
(iv) deposits to secure performance of bids, trade contracts (other than for
borrowed money), contracts for the purchase or property, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, in each case, incurred in the ordinary course of the Debtors'
respective businesses and not representing an obligation for borrowed money; (v)
easements, rights-of-way, restrictions and other similar encumbrances affecting
real property which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the Debtors'
respective businesses; (vi) liens arising by virtue of any contractual (which
shall be subject to standard and customary terms used in the banking industry),
statutory or common law provision relating to banker's liens, rights or set-off

2

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

or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution ; (vii) licenses and sublicenses granted
in the ordinary course of business, (viii) liens (including with respect to
capital leases) on property (including accessions, additions, parts,
replacements, fixtures, improvements and attachments thereto, and the proceeds
thereof) acquired or held by either or both Debtors or their respective
subsidiaries incurred for financing equipment, so long as such lien is confined
to such equipment (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto and the proceeds thereof) , and
(ix) the liens securing the CambridgePark Indebtedness.

2.     Collateral. The Collateral shall consist of the following:

(a) all tangible and intangible assets of both Debtors used in connection with
the development, operation and maintenance of that portion of the Debtors'
business that provides supplier relationship management (SRM) business process
applications (the "SRM Business"), including but not limited to (i) inventory,
both now owned and hereafter acquired, including raw materials, work in process,
finished goods, supplies and other tangible personal property held for sale or
lease or furnished or to be furnished under contracts of service or used or
consumed in the SRM Business, and any additions and accession thereto and
substitutions and replacements for any thereof, wherever located, (ii) Debtors'
intangible personal property, cash on hand and cash in and deposits with banks
or other financial institutions, whether now owned or hereafter acquired,
including, without limitation, all accounts, contract rights, goods, chattel
paper, documents, instruments and general intangibles; all tax refunds to which
either Debtor may be or become entitled in connection with the SRM Business;
(iii) all existing and future accounts receivable of the Debtors and their
respective direct and indirect subsidiaries in connection with the SRM Business;
(iv) all contracts, shares of stock, bonds, notes, evidences of indebtedness and
other securities, bills, notes, interests in life insurance policies,
copyrights, goodwill, trade names, trademarks, trademark applications, patents,
patent applications, copyrights, blue prints, drawings, claims, credits, choses
in action, licenses, permits, franchises and grants, any and all tangible and
intangible products, discoveries, developments, designs, improvements,
inventions, formulas, processes, techniques, know-how, data and software source
code whether or not registrable or patentable under statute, whenever made,
conceived, reduced to practice, learned or developed by or for the Debtors in
connection with the SRM Business; and (v) all other real, personal and mixed
(tangible and intangible) property and rights related thereto, of every
character and wherever situated, now owned and hereafter acquired by the
Debtors, including, without limitation, equipment, machinery, vehicles, tools,
furniture, fixtures, all attachments, accessions and other property used in
connection with the SRM Business, all additions, enlargements, extensions,
modifications, repairs, substitutions and replacements thereof, wherever located
(collectively, the "SRM Assets");

(b) all rights and obligations of Operations under the promissory notes, dated
January 24, 2003, issued by eScout LLC and eScout Acquisition LLC (a/k/a Perfect
Commerce) in favor of Operations, in the aggregate principal amount of Two
Million One Hundred Eighty-Two Dollars ($2,000,182) (together, the "Perfect
Commerce Note");

(c) all present and future books of account of the Debtors of every kind or
nature, invoices, purchase and sale agreements, ledger cards, bills or lading
and other

3

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

shipping evidence, statements, correspondence, memoranda, credit files and other
data relating to the SRM Business or the Perfect Commerce Note, together with
tapes, disks, diskettes and other data and software storage media and devices,
file cabinets or containers in which the foregoing are stored; and

(d) all products and proceeds of the foregoing, in any form, including, without
limitation, insurance proceeds for property damage or personal injury related to
the SRM Business and all claims against third parties for loss or damage to or
destruction of any of the foregoing.

Notwithstanding the foregoing, the security interest granted herein does not
extend to, and the term "Collateral" does not include, (i) any license or
contract rights to the extent the granting of a security interest in it would be
contrary to applicable law or that such rights are nonassignable by their terms
(but only to the extent such prohibition is enforceable under applicable law)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained) (ii) the assets identified on the Disclosure
Letter attached hereto and hereby made a part hereof and (iii) that portion (if
any) of the capital stock (or other equity interests of such subsidiary) owned
by Debtors with a jurisdiction of formation located outside of the United States
that is in excess of Sixty-Five Percent (65%) of the aggregate issued and
outstanding capital stock (or other equity interests of such subsidiary) .

3.     Payment Obligations of the Debtor.

(a) The Debtors shall, to the extent applicable to each of them, pay to the
Purchasers any sum or sums due or which may become due pursuant to the Note, the
Guaranty, the Pledge Agreement or this Agreement, payable to the order of each
of the Purchasers in the principal amount, together with accrued interest
thereon, in accordance with the terms of the Notes. The Debtors shall also
perform and discharge in full of all of their other respective Obligations.

(b) Debtors shall account fully and faithfully to the Secured Party for proceeds
from disposition of the Collateral in any manner, as reasonably requested by the
Secured Party, and, following an Event of Default (as defined below) hereunder,
shall pay or turn over promptly in cash, negotiable instruments, drafts,
assigned accounts or chattel paper all the proceeds from each sale to be applied
to Debtors' respective Obligations to the Secured Party, subject, if other than
cash, to final payment or collection. The manner in which such proceeds are
applied to the Obligations shall be in the sole discretion of the Secured Party,
provided such application of proceeds is made by the Secured Party in good faith
and in accordance with Section 7 hereof.

(c) Following an Event of Default hereunder, the Debtors shall pay to the
Secured Party on demand all reasonable expenses and expenditures (including, but
not limited to, reasonable fees and expenses of legal counsel) incurred or paid
by the Secured Party in exercising or protecting its interests, rights and
remedies under this Agreement, plus penalties thereon at the lesser of (i) the
per diem rates described in the Note or (ii) the highest rate of interest then
allowed by law.

4

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

(d) If requested by the Secured Party, the Debtors shall pay immediately the
entire unpaid principal amounts of the Note, together with accrued interest
thereon, to the Purchasers whether created or incurred pursuant to this
Agreement or otherwise, upon the occurrence and during the continuance of an
Event of Default hereunder.

4.     Representations, Warranties and Covenants of the Debtors. Each of the
Debtors hereby represents and warrants to, and covenants with, the Purchasers
and the Secured Party that:

(a) All information supplied and statements made by such Debtor in any
financial, credit or accounting statement or provided to the Purchasers and/or
the Secured Party prior to, contemporaneously with or subsequent to the
execution of this Agreement are and shall be true, correct, complete, valid and
genuine in all material respects as of the date made.

(b) Subject to Section 8 hereof and as otherwise set forth in the Pledge
Agreement, the Collateral shall remain in such Debtor's possession or control at
all times at such Debtor's risk of loss until (i) sold, licensed or otherwise
disposed of in the ordinary course of business or as otherwise contemplated by
the Purchase Agreement and Note, provided that the Secured Party shall be
granted a security interest in the proceeds and other consideration received for
such Collateral in accordance with Section 2 hereof, or (ii) as authorized in
writing by the Secured Party.

(c) Subject to Section 8 hereof, until an Event of Default, such Debtor may use
the Collateral in any lawful manner not inconsistent with this Agreement or with
the terms or conditions of any policy of insurance thereon and may also sell,
license or otherwise dispose of the Collateral in the ordinary course of
business or as otherwise contemplated by the Purchase Agreement and Note. The
Secured Party's security interest shall attach to all proceeds of sales,
licenses and other dispositions of the Collateral in accordance with Section 2
hereof.

(d) Such Debtor shall promptly notify the Secured Party in writing of any change
in the location of its chief executive office and principal place of business as
set forth in the introduction to this Agreement.

(e) Such Debtor shall pay prior to delinquency all material taxes, charges,
liens and assessments against the Collateral, except those that such Debtor is
contesting in good faith and for which adequate accruals have been made, and
upon such Debtor's failure to do so after ten (10) days' prior written notice,
the Secured Party at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same. Such payment shall become part of the Obligations secured by this
Agreement and shall be paid to the Purchasers by such Debtor immediately and
without demand, with interest thereon at the rate set forth in Section 3(c)
hereof.

(f) Such Debtor shall have and maintain insurance at all times with respect to
all Collateral against risks of fire, theft and such other risks as is
reasonable for its business and as the Secured Party may reasonably require (but
in no event shall such Debtor be obligated to insure such Collateral in an
amount greater than the replacement value thereof), including extended coverage.
Within ten (10) days after the date hereof, such Debtor shall amend such
insurance policies to contain a standard mortgagee's endorsement providing for
payment of any

5

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

loss to the Secured Party and to provide for twenty (20) days' written minimum
cancellation notice to the Secured Party. Following an Event of Default, subject
to the provisions of Section 7 hereof, the Secured Party may act as attorney for
such Debtor in obtaining, adjusting, settling and canceling such insurance and
endorsing any drafts drawn by insurers of the Collateral. The Secured Party may
apply any proceeds of such insurance which may be received by it in payment on
account of the obligations secured hereby, whether due or not.

(g) Such Debtor shall, at its own expense, do, make, procure, execute and
deliver all acts, things, writings and assurances as the Secured Party may at
any time reasonably request to protect, assure or enforce its interests, rights
and remedies created by, provided in or emanating from this Agreement, including
with respect to filings with the Patent and Trademark Office. Such Debtor shall
execute financing statements and take whatever other actions are reasonably
requested by the Secured Party to perfect and continue the Secured Party's
security interests in the Collateral. In addition, such Debtor shall use its
best efforts to take all appropriate action (including but not limited to all
appropriate action requested by the Secured Party) to perfect the Secured
Party's security interest for any liens which may not be perfected by the filing
of a Form UCC-1 (including but not limited to filings with the U.S. Patent and
Trademark Office). Prior to an Event of Default and upon the reasonable request
of the Secured Party for purposes of perfection only, such Debtor shall deliver
to the Secured Party any and all of the documents evidencing or constituting the
Collateral, and such Debtor shall note the Secured Party's interests upon any
and all of such documents if not delivered to the Secured Party for possession
by it. Further, such Debtor hereby agrees not to take any action or, to its
knowledge, omit to any action, that would cause the security interests granted
hereby to be or become unperfected. Upon the occurrence and during the
continuance of an Event of Default and upon the reasonable request of the
Secured Party for purposes of enforcing the Secured Party's rights hereunder,
such Debtor shall deliver to the Secured Party any and all of the documents
evidencing or constituting the Collateral. Such Debtor hereby agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement where permitted by
law.

(h) Except in the ordinary course of business, as provided for in this
Agreement, the Purchase Agreement or the Note or as otherwise authorized by the
Secured Party in writing by a Majority Vote (as defined in Section 9 hereof),
such Debtor shall not sell, lend, license, rent, lease or otherwise dispose of
the Collateral or any interest therein, and such Debtor shall keep the
Collateral, including the proceeds thereof, free from unpaid charges, including
taxes, and from liens, encumbrances and security interests other than the
security interests created by this Agreement in favor of the Secured Party (and
Permitted Liens) .

(i) Such Debtor shall keep accurate and complete records of the Collateral and
its proceeds.

(j) Such Debtor has good and valid rights in and title to the Collateral and has
the full power and authority to grant to the Secured Party the security
interests in the Collateral created by this Agreement and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other person other than any consent or
approval that has been obtained.

6

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

(k) Except as set forth on Schedule 4(k) hereof, such Debtor is the owner of the
Collateral free of all liens, claims and encumbrances, except (i) the security
interest created by this Security Agreement and granted in favor of the Secured
Party and (ii) the Permitted Liens.

(l) Except as set forth on Schedule 4(l), with respect to any and all
Collateral, such Debtor has not obtained and is not in the process of applying
for any patents, trademarks or copyrights in the United States Copyright Office,
the Patent and Trademark Office (or other foreign jurisdictions related to such
filings). Such Debtor shall notify the Secured Party at least thirty (30) days
prior to the filing of any initial patent, trademark or copyright applications
with respect to the Collateral and will provide the Secured Party with all
information necessary to assist the Secured Party in perfecting its security
interest in the Collateral prior to the filing of any patent, copyright or
trademark applications.

(m) Such Debtor agrees that the Secured Party holds the Collateral as agent for
the Purchasers, and is hereby authorized to and may turn over to the Purchasers
upon request therefor any such Collateral after all obligations and indebtedness
of Debtors to the Secured Party have been fully paid and performed.
Notwithstanding the foregoing, the Debtors hereby acknowledge and agree that in
terms of payments in respect of the Notes and from the proceeds of any
Collateral, each Purchaser shall be treated ratably in accordance with its pro
rata share of the Notes based upon the ratio of the then outstanding principal
amount of Purchaser's Note to the outstanding principal balance of all of the
Notes ("Pro Rata Share") and the Debtors shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable in the reasonable opinion of the Secured Party to effectuate the
provisions and purposes of the provisions of Section 7 hereof.

(n) As to that portion of the Collateral which is accounts, such Debtor
represents, warrants and agrees with respect to each such account that:

(i) The account arose from the performance of services by such Debtor which have
been performed or from the lease or the absolute sale of goods or provision of
services by such Debtor in which such Debtor had the sole and complete
ownership, and the goods or services have been delivered or provided to, as the
case may be, the account debtor.

(ii) The account is not subject to any prior or subsequent assignment, claim,
lien or security interest other than (i) the security interest created by this
Security Agreement and granted in favor of the Secured Party and (ii) the
Permitted Liens.

(iii) The account arose in the ordinary course of such Debtor's business, and no
notice of bankruptcy, insolvency or financial embarrassment of the account
debtor has been received by such Debtor.

(o) The assets listed on the Disclosure Letter attached hereto are not used
primarily in the SRM Business.

7

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

(p) Upon the occurrence of an Event of Default, and upon the request of the
Secured Party, the Debtors shall use their best efforts (with the cooperation of
the Secured Party) to obtain the consent of eScout LLC and eScout Acquisitions
LLC to transfer the Perfect Commerce Note to the Secured Party.

5.     Events of Default. The Debtors shall be in default under this Agreement
upon the happening of any condition or event set forth below (each, an "Event of
Default"):

(a) The occurrence of any Event of Default (as defined in the Notes) that is not
cured within any applicable cure period;

(b) Failure of Operations to pay any amounts due under the Guaranty as and when
due;

(c) Application for, or consent to, the appointment of a receiver, trustee or
liquidator for Operations or any of its properties;

(d) Filing by Operations of a voluntary petition in bankruptcy or a petition or
an answer seeking reorganization or an arrangement with creditors;

(e) The entry against Operations of a court order approving a petition filed
against it under the federal bankruptcy laws, which order shall not have been
vacated or set aside or otherwise terminated within sixty (60) days;

(f) With respect to any instrument or agreement for borrowed money to which
Operations is a party, (i) an event of default has occurred and has been
declared by any third party to such instrument or agreement, the amount of the
declared default exceeds Fifty Thousand Dollars ($50,000), and such third party
has accelerated any payments due under such instrument or agreement or (ii) an
event of default has occurred and has been declared by any third party to such
instrument or agreement, the amount of the declared default exceeds Three
Hundred Thousand Dollars ($300,000), and Operations is not actively disputing
such declaration of default after making a good faith determination, with advise
of its legal counsel, that such amount is not due and that Operations has valid
and reasonable defenses against non-payment of such amount;

(g) Operations agrees to pay in full settlement of any litigation, proceeding or
action, or a judgment is entered by a court of competent jurisdiction with
respect to any litigation, proceeding or action involving Operations (other than
any settlement entered into or judgment entered with respect to obligations
incurred by Operations in the ordinary course of business and which were accrued
for on the balance sheet of Operations in the ordinary course of business), of
at least Five Hundred Thousand Dollars ($500,000) in any one instance or One
Million One Hundred Thousand Dollars ($1,100,000) in the aggregate, in each case
that is not covered by any insurance maintained by Operations

(h) The security interest created hereunder shall cease to be a valid

8

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

first priority security interest in the Collateral (subject to the Permitted
Liens);

(i) Any material provision of this Agreement, the Purchase Agreement or any
other Closing Documents for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or Commerce One or Debtor shall
challenge the enforceability of any such document); or

(k) The creation of any liens (other than (i) the security interest created by
this Agreement and granted in favor of the Secured Party or (ii) the Permitted
Liens) without the prior written consent of the Secured Party in accordance with
Section 9 hereof.

6.     Secured Parties' Rights and Remedies.

(a) Rights Exclusive of Default. Until the termination of this Agreement, upon
reasonable notice to the Debtors:

(i) The Secured Party may enter each Debtor's premises at any reasonable time
during such Debtor's usual business hours without interruption of such Debtor's
business and without any breach of the peace to inspect the Collateral and such
Debtor's books and records pertaining to the Collateral, and such Debtor shall
assist the Secured Party in making any such inspection; and

(ii) At its option, the Secured Party may (x) agree to discharge taxes, liens or
security interests or other encumbrances at any time levied or placed on the
Collateral; (y) pay for the insurance on the Collateral; and (z) pay for the
maintenance and preservation of the Collateral. Such Debtor agrees to reimburse
the Secured Party on demand for any payment made, or expense incurred by the
Secured Party pursuant to the foregoing authorization, plus interest thereon at
the rate set forth in Section 3(c) hereof, and will indemnify and hold the
Secured Party harmless from and against liability in connection therewith.

(b) Rights in Event of Default. In addition to any other rights which the
Secured Party may have at law or hereunder, upon the occurrence and during the
continuation of an Event of Default, and at any time thereafter that such Event
of Default remains uncured, the Secured Party may:

(i) Declare all obligations secured hereby immediately due and payable and shall
have the rights and remedies of a "secured party" under the UCC in effect in the
local jurisdiction where the Collateral is located, including, without
limitation, the right to sell, lease or otherwise dispose of any or all of the
Collateral and the right to take possession of the Collateral, and for that
purpose the Secured Party may enter any premises on which the Collateral or any
part thereof may be situated and remove the same therefrom, so long as the same
may be accomplished without a breach of the peace. The Secured Party may require
the Debtors to assemble the Collateral and, to the extent reasonably
practicable, make it available to the Secured Party at a place to be designated
by the Secured Party which is reasonably convenient to the parties and
thereafter hold the

9

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

Collateral absolutely free from any claim or right whatsoever, and such demand,
notice and right or equity being hereby expressly waived and released. Unless
the Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Secured Party will send the Debtors
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other disposition thereof is to be made.
The requirement of sending reasonable notice shall be met if such notice is
given to the Debtors at least ten (10) days before the time of the sale or
disposition. Expenses of retaking, holding, preparing for sale, selling or the
like shall include the Secured Party's reasonable fees and expenses (including,
but not limited to, reasonable fees and expenses of legal counsel), and the
Debtors agree to pay such reasonable fees and expenses, plus interest thereon at
the rate set forth in Section 3(c) hereof. The Debtors shall remain jointly and
severally liable for any deficiency hereunder or under the Note;

(ii) Execute, sign, endorse, transfer or deliver in the name of the Debtors,
notes, checks, drafts or other instruments for the payment of money and
receipts, certificates of origin, applications for certificates of title or any
other documents, necessary to evidence, perfect or realize upon the security
interest and obligations created by this Agreement.

(iii) With respect to any such asset constituting Collateral, notify the account
of debtors or obligors of any accounts, chattel paper, negotiable instruments or
other evidences of indebtedness remitted by the Debtors to the Secured Party as
proceeds to pay the Secured Party directly;

(iv) Demand, sue for, collect or make any compromise or settlement with
reference to the Collateral as the Secured Party, in its sole discretion,
chooses; and

(v) Remedy any default and may waive any default without waiving or being deemed
to have waived any other prior or subsequent default.

(c) Private Sale. The Secured Party shall not incur any liability as a result of
a private sale of the Collateral, or any part thereof, at any sale pursuant to
Section 6(b) hereof conducted in good faith. The Debtors hereby waive any claims
against the Secured Party arising by the reason of the fact that the price at
which the Collateral, as the case may be, may have been sold at such private
sale was less than the price that might have been obtained at a public sale or
was less than the aggregate amount of the Obligations, even if the Secured Party
accepts the first offer received and does not offer the Collateral to more than
one offeree.

(d) Deficiency. If the proceeds of sale, collection or other realization of or
upon the Collateral pursuant to this Section 6 are insufficient to cover the
costs and expenses of such realization and the payment in full of the
Obligations, the Debtor shall remain liable for any deficiency.

7.     Intercreditor Arrangement.

10

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

(a) ComVest Investment Partners II LLC, as the "Administrative Agent" agrees, as
to the certain rights and priorities of each with respect to the Obligations and
with respect to their respective liens upon and security interest in the
Collateral, to provide for the orderly sharing among the Secured Party of the
proceeds of such Collateral upon any foreclosure thereon or other disposition
thereof, to the intercreditor arrangement set forth in this Section 7.

(b) Payments Held in Trust/Turnover; Application of Payments.

(i) In the event that any payment or distribution of assets of the Debtors,
whether in cash, property or securities, which is prohibited by this Agreement,
the Notes, the Warrants, the Purchase Agreement, the Registration Rights
Agreement, the Guaranty, the Pledge Agreement or the other Closing Documents,
shall be received by a Purchaser in contravention of such Closing Documents such
payment or distribution shall be held in trust for the benefit of and shall be
paid over to or delivered to the other Secured Party for application in
accordance with the terms hereof.

(ii) All payments of principal, interest, fees and expenses after the issuance
of the Notes, and proceeds of the Collateral shall be apportioned ratably among
the Secured Party, in accordance with each Purchaser's Pro Rata Share.

(c) Permitted Liens and Relative Priorities. As among the Purchasers, and
notwithstanding the terms (including the description of Collateral), dating,
execution, or delivery of any document, instrument, or agreement; the time,
order, method, or manner of granting, attachment or perfection of any security
interest or lien; the time of filing or recording of any financing statements,
assignments, deeds of trust, mortgages, or any other documents, instruments, or
agreements under the UCC or any other applicable law, and any provision of the
UCC or any other applicable law to the contrary, the Purchasers agree that the
Administrative Agent not individually, but on behalf of all of the Purchasers,
shall have a security interest in and lien upon the Collateral. For purposes of
the foregoing allocation of priorities, any claim of a right to a setoff shall
be treated in all respects as a security interest and no claimed right of setoff
shall be asserted to defeat or diminish the rights or priorities provided for
herein.

(d) No Alteration of Priority. The lien and security interest priorities
provided in Section 7(c) hereof shall not be altered or otherwise affected by
any amendment, modification, supplement, extension, renewal, restatement or
refinancing of any of the Obligations nor by any action or inaction which the
Administrative Agent may take or fail to take in respect of the Collateral.

(e) Nonavoidability and Perfection. The provisions of this Section 7 are
intended solely to govern the respective priorities as among the Purchasers.
Each Purchaser agrees that it will not directly or indirectly take any action to
contest or challenge the validity, legality, perfection, priority, availability,
or enforceability of the liens of the other Purchasers or the Administrative
Agent upon the Collateral or seek to have the same avoided, disallowed, set
aside, or otherwise invalidated in any judicial proceeding or otherwise. In the
event that any other Purchaser (either individually or together with others)
breaches or causes to be breached the terms of the preceding sentence, resulting
(directly or indirectly) in the avoidance or imperfection of the Administrative
Agent's lien or security interest held on behalf of all of the Purchasers in
some or all of the Collateral, then the priority of the lien or security
interest of the Secured Party in any such affected Collateral shall continue to
be governed by the terms of Section 7(c) hereof irrespective of the avoidance or

11

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

imperfection of the Administrative Agent's lien or security interest held on
behalf of all of the Purchasers.

(f) Management of Collateral. Notwithstanding anything to the contrary contained
in any of the Notes (with respect to provisions addressing management of
Collateral only):

(i) Until the Notes have been paid in full and subject to the remaining
provisions of this Section 7: (i) the Administrative Agent, on behalf of the
Purchasers, shall have the exclusive right to manage, perform, and enforce the
terms of the Closing Documents with respect to the Collateral and to exercise
and enforce all privileges and rights thereunder in its reasonable discretion
and its exercise of its business judgment, including, without limitation, the
exclusive right to enforce or settle insurance claims with respect to
Collateral, take or retake control or possession of Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate Collateral;
(ii) none of the Purchasers shall exercise or take any action in furtherance of
the sale, foreclosure, realization upon, or the repossession or liquidation of
any of the Collateral, including, without limitation: (A) the exercise of any
remedies or rights of a "Secured Creditor" under Article 9 of the UCC, such as,
without limitation, the notification of account debtors; (B) the exercise of any
remedies or rights as a mortgagee or beneficiary (or by the trustee on behalf of
the beneficiary), including, without limitation, the appointment of a receiver,
or the commencement of any foreclosure proceedings or the exercise of any power
of sale, including, without limitation, the placing of any advertisement for the
sale of any Collateral; (C) the exercise of any remedies available to a judgment
creditor; or (D) any other remedy available in respect of the Collateral
available to such Secured Creditor under any of the Closing Documents (the
"Secured Party Remedies") with respect to Collateral; and (iii) any and all
proceeds of Collateral which shall come into the possession, control, or custody
of the Secured Party will be deemed to have been received for the account of the
Administrative Agent and all other Purchasers, and shall be immediately paid
over to the Administrative Agent for application in accordance with the
provisions hereof. Each Purchaser waives any and all rights to affect the method
or challenge the appropriateness of any action by the Administrative Agent with
respect to the Collateral other than actions arising out of the gross negligence
or willful misconduct of the Administrative Agent, and waives any claims or
defenses they may have against the Administrative Agent, including any such
claims or defenses based on any actions or omissions of any such person in
connection with the perfection, maintenance, enforcement, foreclosure, sale,
liquidation or release of any lien or security interest therein, or any
modification or waiver of the Closing Documents specifically relating to the
management of the Collateral other than those arising out of the gross
negligence or willful misconduct of the Administrative Agent.

12

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

(ii) The rights and priorities set forth in this Section 7 shall remain binding
irrespective of the terms of any plan of reorganization in any proceeding
commenced by or against the Debtor under any provision of the United States
Bankruptcy Code (11 U.S.C. 101, et seq.), as amended, and any successor statute
(the "Bankruptcy Code") or under any other federal or state bankruptcy or
insolvency law, including assignments for the benefit of creditors, formal or
informal moratoria, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other similar relief, and
all converted or succeeding cases in respect thereof (the "Bankruptcy Case") or
other provisions of the Bankruptcy Code or any similar federal or state statute.

(g) Sale of Collateral. Until the Notes have been paid in full, only the
Administrative Agent on behalf of the Purchasers shall have the right to
restrict or permit, or approve or disapprove, the sale, transfer or other
disposition of the Collateral; provided, that the proceeds of any given sale
shall be applied to the Obligations of each Purchaser in accordance with its Pro
Rata Share and no such sale, transfer or other disposition shall be consented to
by the Administrative Agent with respect to all or substantially all of the
Collateral without the consent of the Secured Party by a Majority Vote (as
defined in Section 9 hereof).

(h) Sections 9-504 and 9-505 Notice and Waiver of Marshalling. Each Purchaser
hereby acknowledges that this Agreement shall constitute notice of the other
Purchaser's respective interests in the Collateral as provided by Sections 9-504
and 9-505 of the UCC and each of the Purchasers waives any right to compel the
other Purchaser to marshal any of the Collateral or to seek payment from any
particular assets of Debtors or from any third party.

(i) Bankruptcy Issues.

(i) Except as provided in this Section 7(j), this Section 7 shall continue in
full force and effect after the commencement of a Bankruptcy Case and shall
apply with full force and effect with respect to all Collateral acquired by
Debtors, and to all Indebtedness incurred by the Debtors, subsequent to such
commencement to the extent consented to by the Purchasers.

(ii) If either Debtor shall become subject to a Bankruptcy Case, and if the
Administrative Agent shall desire to permit the use of cash collateral or to
provide post-petition financing to such Debtor, the Administrative Agent shall
obtain the prior written consent of the Purchasers by a Majority Vote (as
defined in Section 9 hereof) for such use of cash collateral or post-petition
financing. No objection will be raised by the Purchasers to the Administrative
Agent's motion for relief from the automatic stay in any proceeding under the
Bankruptcy Code to foreclose on and sell the Collateral.

(iii) In any Bankruptcy Case by or against the Debtor,

(A) the Administrative Agent may, and is hereby irrevocably authorized and
empowered (in its own name or in the name of the

13

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

Purchasers or otherwise), but shall have no obligation, to, (1) demand, sue for,
collect and receive every payment or distribution in respect of the Indebtedness
and give acquittance therefor and (2) file claims and proofs of claim in respect
of all of the Indebtedness and take such other action (including, without
limitation, voting all of the Indebtedness or enforcing any security interest or
other lien securing payment of all of the Indebtedness) as the Administrative
Agent may reasonably deem necessary or advisable for the exercise or enforcement
of any of the rights or interests of the Administrative Agent and the
Purchasers; provided, that if the Administrative Agent elects not to do any of
the foregoing it shall notify each Purchaser in writing in a manner such that
such notice is received by the Purchasers on a date no less than ten (10)
business days prior to the date any such action is required to be taken under
applicable law and regulation and each Purchaser may take all actions necessary
thereunder consistent with the terms of this Security Agreement; and

(B) the Purchasers will duly and promptly take such action as the Administrative
Agent may reasonably request (1) to collect the Indebtedness and to file
appropriate claims or proofs of claim with respect thereto, (2) to execute and
deliver to the Administrative Agent such powers of attorney, assignments or
other instruments as the Administrative Agent may request in order to enable it
to enforce any and all claims with respect to, and any security interests and
other liens securing payment of, the Indebtedness, and (3) to collect and
receive any and all payments or distributions which may be payable or
deliverable upon or with respect to the Indebtedness for application to the
Purchasers in accordance with this Security Agreement.

(j) Notice of Default and Certain Events. Each Purchaser shall send written
notice to the other Purchasers upon the occurrence of any of the following as
applicable: (a) a request to the Administrative Agent that the Administrative
Agent declare any default under such Closing Document, (b) a request to the
Administrative Agent that the Administrative Agent accelerate any Indebtedness,
or (c) the intention of such Purchaser to exercise any of its enforcement rights
or remedies. Each such notice shall be sent to the other Purchasers
contemporaneously with the sending of such notice to Debtors if and when sent
under the applicable Closing Document. The failure of any Purchaser to give such
notice shall not affect the relative lien or security interest priorities or the
other privileges of such Purchaser as provided in this Security Agreement or
give rise to any liability.

(k) Bailment. With respect to any Collateral in which a security interest may be
perfected under the UCC or other relevant law only by possession ("Possessory
Collateral"), the Administrative Agent will act as pledgeholder for the
Purchasers until the payment in full in cash of the Indebtedness. Each Purchaser
acknowledges and agrees that: (i) the Administrative Agent makes no
representation or warranty whatsoever as to the nature, extent, description,
validity or priority of any Possessory Collateral or the security interests in
or liens upon any Possessory Collateral; (ii) while any Possessory Collateral is
held by the Administrative Agent, the Administrative Agent shall not have any
liability to, and shall be held harmless by, the

14

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

Purchasers, for any losses, damages, claim, or liability of any kind to the
extent arising out of the holding of such Possessory Collateral, other than
losses, damages, claims, or liabilities arising out of the Administrative
Agent's gross negligence or willful misconduct; (iii) the Administrative Agent
need not act as a pledgeholder for the Purchasers with respect to any Collateral
in which a security interest may be perfected by means other than possession;
(iv) the Purchasers shall immediately deliver to the Administrative Agent any
Possessory Collateral that is now or in the future comes into their possession
to be held by the Administrative Agent pursuant to the terms hereof; and (v) the
claim of each of the Purchasers in the security interests in and liens upon the
Possessory Collateral shall be governed by the terms of this Security Agreement.

(l) Authority of Agents/Trustees. Each of the Purchasers agrees that any
assignment or transfer of an interest in any of the Indebtedness held by it
shall be made expressly subject to the terms and conditions of this Security
Agreement.

(m) Successor Administrative Agent. The Administrative Agent may resign and be
discharged from all further duties and obligations hereunder by giving each of
the Purchasers thirty (30) days prior written notice or such shorter notice
period as may be agreed between the Administrative Agent and the Purchasers. In
addition, the Administrative Agent may be removed at any time by the Purchasers
by a Majority Vote (as defined in Section 9 hereof). Upon the resignation or
removal of the Administrative Agent, a successor Administrative Agent shall be
elected by the Purchasers by a Majority Vote (as defined in Section 8 hereof).
Upon the appointment of a successor Administrative Agent, all of the resigning
or removed Administrative Agent's liens or security interests held on behalf of
all of the Purchasers in some or all of the Collateral shall be assigned to the
successor Administrative Agent, and the resigning or removed Administrative
Agent shall do all acts necessary or appropriate to accomplish the above to vest
in the successor Administrative Agent all of the powers of the resigning or
removed Administrative Agent.

Section 8.     Termination of Security Interests; Release of Collateral.

(a) Upon the earliest to occur of (i) a termination event set forth in Section
4(b) of the Notes, (ii) the Conversion of the Note, or (iii) payment in full of
all Obligations, the security interest created hereunder shall terminate and all
rights in the Collateral, except to the extent applied in payment of the
Obligations, shall revert to the Debtors.

(b) Upon any such termination of the security interests or release of
Collateral, the Secured Party will, at the Debtors' expense, execute and deliver
to the Debtors such documents as the Debtors shall reasonably request to
evidence the termination of the security interest and/or the release of such
Collateral, as the case may be.

(c) The Secured Party further agrees to execute without fee or charge (other
than reasonable attorney's fees) any releases, acknowledgements or waivers
reasonably requested by the Debtors in connection with the sale or encumbrance
by Debtors of any asset that

15

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

does not constitute Collateral.

9.     Modification of Agreement. Except as otherwise expressly provided by this
Agreement, the Administrative Agent is hereby authorized to take all actions as
the Secured Party under this Agreement (including, without limitation, issuing
any consents or approvals), and the Debtors are entitled to rely on any
certification, notice or other communications from the Administrative Agent
which the Debtors believe to be genuine and correct and to have been signed or
sent by or on behalf of the Administrative Agent; provided, however, that no
modification, amendment or waiver of any provision of, this Agreement, nor any
consent to any departure by the Debtors herefrom, shall in any event be
effective unless the same shall be in writing by the Administrative Agent at the
direction of a majority in aggregate principal amount of then-outstanding Notes
under the Purchase Agreement (the "Majority Vote") and then such modification,
amendment, waiver or consent shall be effective only in the specific instance
and for the purpose given; provided, further, however, that, without the written
consent of each Purchaser affected thereby, no such action shall (i) reduce the
amount of principal or required principal payments due to each holder of Notes
beyond one (1) year; (ii) reduce the rate of interest payable to the Purchasers;
or (iii) postpone any date fixed for payment of principal. No notice to or
demand on the Debtors in any case shall entitle the Debtors to any other or
further notice or demand in the same, similar or other circumstances. When any
amendment, modification or waiver to this Agreement, the Notes, the Warrants, or
the Purchase Agreement, the Guaranty, the Registration Rights Agreement, the
Pledge Agreement or other Closing Documents is made in accordance with the terms
of this Section 9, such amendment, modification or waiver shall be enforceable
against each Purchaser or the Purchasers, as applicable, as if such Purchaser or
Purchasers, as applicable, had signed such amendment, modification or waiver.
The terms of this Agreement may be amended, modified or waived only in a written
instrument signed by the party against whom enforcement may be sought.

10.     Remedies Cumulative, etc. No right, power or remedy herein conferred
upon or reserved to the Administrative Agent or the Purchasers is intended to be
exclusive of any other right, power or remedy or remedies, and each and every
right, power and remedy of the Administrative Agent or the Purchasers pursuant
to the Closing Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall, to the extent permitted by law, be cumulative and
concurrent and shall be in addition to every other right, power or remedy
pursuant to this Agreement or the Notes, now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the exercise
by the Administrative Agent or the Purchasers of any one or more of such rights,
powers or remedies shall not preclude the simultaneous or later exercise by the
Administrative Agent and the Purchasers of any or all such other rights, powers
or remedies.

11.     No Waiver, etc. To the fullest extent permitted by law, no failure or
delay by the Administrative Agent or the Purchasers to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, the
Purchase Agreement, the Notes, the Warrants, the Guaranty, the Pledge Agreement,
the Registration Rights Agreement, or the other Closing Documents, or to
exercise any right, power or remedy hereunder or thereunder or consequent upon a
breach hereof or thereof, shall constitute a waiver of any such term, condition
covenant, agreement, right, power or remedy or of any such breach, or preclude
the Administrative Agent or the Purchasers from exercising any such right, power
or remedy at any later time or times.

16

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

12.     Notices. All notices, demands, requests, consents, approval or
instructions hereunder shall be in writing and delivered personally, sent by
registered or certified mail, postage prepaid, by nationally recognized
overnight courier service, or by telecopy (or like transmission), as follows:

(1) if to the Debtor:
One Market Street
Steuart Tower, Suite 1300
San Francisco, CA 94105
Attn: General Counsel

with a copy to:

Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: N. Anthony Jeffries, Esq.

(2) if to the Secured Party

830 Third Avenue
New York, New York 10022
Attn: Carl Kleidman

with a copy to:

Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, New York 10166
Attn: Alan I. Annex, Esq.

Any notice personally delivered shall be deemed to be given upon delivery. Any
notice so addressed and mailed shall be deemed to be given when so mailed. Any
notices addressed and otherwise delivered shall be deemed to be given when
actually received by the addressee. Any of the above addresses and telecopy
numbers may be changed at any time by notice given as provided above; provided,
however, that any such notice of change of address shall be effective only upon
receipt.

13.     Survival of Agreement. Each representation, warranty, covenant and
agreement herein contained, shall survive the making by the Purchasers of the
purchase of the Notes and Warrants and the execution and delivery to the
Purchasers of the Notes and Warrants, notwithstanding any investigation at any
time made by or on behalf of any party, and shall continue in full force and
effect so long as any obligation is outstanding and unpaid.

17

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

14.     Entire Agreement. This Agreement (including those documents and
instruments referred to herein) contains the entire agreement with respect to
the transactions contemplated hereby, and supersedes all prior understandings,
arrangements and agreements with respect to the subject matter hereof.

15.     Transferability; Benefit of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and may be assigned only in
accordance with Section 14(a) of the Purchase Agreement The Purchasers shall
expressly be third-party beneficiaries of this Agreement.

16.     Governing Law. This Agreement shall be governed by, construed under and
interpreted and enforced in accordance with laws of the State of New York,
without giving effect to principles of choice of law. The Uniform Commercial
Code as in effect in New York shall govern this Agreement. Any action or
proceeding arising out of or relating to this Agreement 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 parties and
any assignees thereof submits to the personal jurisdiction of the State of New
York. The parties hereby irrevocably consent to the exclusive personal
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 form in any
action instituted under this Agreement.

17.     Further Assurances. All property acquired by the Debtor after the date
hereof, which by the terms hereof is required or intended to be subjected to the
lien of this Agreement, shall, immediately upon the acquisition thereof and
without further mortgage, conveyance or assignment, become subject to the lien
of this Agreement as fully as though now owned by Debtor and specifically
described herein. Nevertheless, the parties will do all such further acts and
execute, acknowledge and deliver all such further conveyances, mortgages,
financing statements and assurances as the other shall reasonably require for
accomplishing the purposes of this Agreement.

18.     Captions. The captions appearing herein are for the convenience of the
parties only and shall not be construed to affect the meaning of the provisions
of this Agreement.

19.     Severability. In the event that one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision and never been contained
herein.

20.     Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one agreement.

[The remainder of this page intentionally left blank]

18

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

IN WITNESS WHEREOF, the undersigned have executed this Security Agreement as of
the date first above written.

DEBTORS:

COMMERCE ONE OPERATIONS,
INC.

By: /s/ Mark B. Hoffman
Name:
Title:

COMMERCE ONE, INC.

By: /s/ Mark B. Hoffman
Name:
Title:

19

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

IN WITNESS WHEREOF, the undersigned have executed this Security Agreement as of
the date first above written.

SECURED PARTY

COMVEST INVESTMENT PARTNERS II
LLC,

as Administrative Agent

By: /s/ Harold Blue
Name:
Title:

20

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