Exhibit10.29

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**PROMISSORY NOTE**

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$19,000,000                                                                                                                                                            March15, 2002

 

                OnApril 1, 2003, or such earlier date as the indebtedness evidenced by this Notemay become due pursuant to Sections 2.2 or 6.2 ("*Maturity Date*"), for value received,the undersigned, **COMMERCE ONE OPERATIONS, INC**.,a Delaware corporation (formerly known as Commerce One, Inc.) ("*Borrower*"), promises to pay to theorder of **MICROSOFT CAPITAL CORPORATION**("*Lender*") at thePayment Account (defined below), the principal sum of NINETEEN MILLION AND00/100ths Dollars ($19,000,000).  Exceptas the context requires otherwise, references to Borrower in Sections 4, 5 and6 shall be deemed to include both Commerce One Operations, Inc. and its parentcompany, Commerce One, Inc., a Delaware corporation.

 

**Section 1.Payment Terms.**

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**               ***1.1.*  *Principal*.  The actual principal amount at any timeoutstanding and owing by the Borrower on account of this Note shall be the sumstated above less all payments of principal actually received by Lender.  The balance of the principal sum hereofoutstanding on the Maturity Date shall be due and payable on the Maturity Date.

 

                *1.2.* *Interest*.  Borrower promises to pay interest (computedon the basis of a year of 365 days for the actual number of days elapsed) toLender from the date hereof prior to the occurrence of an Event of Defaultunder Section 6.1(a) at the rate of seven percent (7%) per annum and after theoccurrence of an Event of Default under Section 6.1(a) (whether by lapse oftime, acceleration or otherwise) until paid in full at the rate of 10% perannum.  Interest shall be payable inarrears quarterly on the last day of each March, June, September and December(commencing March 29, 2002) and on the Maturity Date, and after the MaturityDate upon demand.  The interest ratepayable on this Note shall be subject, however, to the limitation that suchinterest rate shall never exceed the highest rate which Borrower may contractto pay under applicable law.

 

                *1.3.* *Place and Application of Payments andCollections*.  All payments ofprincipal and interest payable on this Note will be made to Lender at thefollowing account (the "*Payment Account*")no later than 11:00 a.m. (Pacific Time) on the date any such payment is due andpayable:

 
| Account Name: |   | Microsoft Capital Corp.  |
|---------------|--------|--------------------------|
| Account #:    |   | 3049-7564                |
| Bank:         |   | Citibank N.A.            |
|          |   | 111 Wall Street          |
|          |   | New York, NY  10013 |
| ABA#:         |   | 021000089                |

 

                Subjectto the provisions of the Collateral Documents, all payments and collectionsreceived in respect of the indebtedness evidenced by this Note and all proceedsof the Collateral Account or other collateral received, in each instance, byLender will be remitted to Lender and distributed as follows:

 

(a)           *first*,to the payment of any outstanding reasonable costs and expenses of a characterwhich Borrower has agreed to pay under Section 7;

 

 

 

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(b)           *second*,to the payment of any outstanding interest due under this Note;

 

(c)           *third*,to the payment of the principal of this Note; and 

 

(d)           *fourth*,to Borrower or whoever may be lawfully entitled thereto.

 

**Section 2.Prepayments.**

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**               ***2.1.*  *VoluntaryPrepayments. *Borrower willhave the right to prepay without premium or penalty, in whole or in part (but,if in part, then in an amount not less than $1,000,000), this Note upon three(3) days prior written notice to Lender. Prepayments shall be applied in accordance with Section 1.3.

 

                *2.2.* *Mandatory Prepayments. *Borrower covenants and agrees toprepay all indebtedness evidenced by this Note in the event Borrower'sunencumbered cash, cash equivalent and short-term investment reserves are lessthan $125,000,000 (and for purposes of this Section and Section 5.2,unencumbered cash, cash equivalent and short-term investment reserves will bedeemed to include the permitted collateral in the Collateral Account).

 

**Section 3.Collateral.**

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**               ***3.1.  Collateral. *The payment and performance of the Liabilities (as defined in theSecurity Agreement) shall be secured by collateral in the amount of $19,000,000held at Bank of America, N.A. (the "*Bank*")known as               (the "*Collateral Account*") pursuant to aAccount Pledge executed by Borrower in favor of Lender dated even date herewith(the "*Security Agreement*")granting a security interest in the Collateral Account, and subject toCollateral Account Notification and Acknowledgement among the Bank, Borrowerand Lender dated as of March 21, 2002 ( the "*Account Control Agreement*").  The Security Agreement, the Account Control Agreement and any andall other mortgages, deeds of trust, security agreements, assignments, financingstatements and other documents as shall from time to time secure theobligations of this Note are each referred to herein as a "*Collateral Document*" and collectivelyas the "*Collateral Documents.*"

 

                *3.2.  FurtherAssurances. *Borrowercovenants and agrees that it shall comply with all terms and conditions of eachof the Collateral Documents and that it shall, at any time and from time totime as requested by Lender, execute and deliver such further instruments anddo and perform such other acts as Lender may reasonably deem necessary ordesirable to provide for or protect or perfect the liens granted under theCollateral Documents.

 

**Section 4.Representations and Warranties. **Borrowerrepresents and warrants to Lender as follows:

 

                *4.1.         Organizationand Authority. *Borrower isduly organized, validly existing and in good standing as a corporation underthe laws of the State of Delaware, has full and adequate corporate power to ownits property and conduct its business as now conducted.  Borrower has full right and authority toexecute, deliver and perform its obligations under this Note and the CollateralDocuments, and to grant to Lender the liens described in the CollateralDocuments.  This Note and the CollateralDocuments have been duly authorized, executed and delivered by Borrower andconstitute valid and binding obligations of Borrower enforceable in accordancewith their terms except as enforceability may be limited by bankruptcy,insolvency fraudulent conveyance or similar laws affecting creditors' rightsgenerally and general principles of equity (regardless of whether theapplication of such principles is considered in a proceeding in equity or atlaw); and this Note and the Collateral Documents do not, nor does theperformance or observance by Borrower of any of the matters and things hereinor therein provided for, contravene or constitute a material

 

 

 

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default under any provision of law or anyjudgment, injunction, order or decree binding upon Borrower or any provision ofthe certificate of incorporation or by-laws of Borrower or any covenant,indenture or agreement of or affecting Borrower or any of its properties, orresult in the creation or imposition of any material lien on any property ofBorrower except for the lien granted in favor of Lender pursuant to theCollateral Documents.

 

                *4.2.         FinancialReports.* The consolidatedbalance sheet of Borrower and its Subsidiaries as at December 31, 2000, and therelated consolidated statements of income, retained earnings and cash flows ofBorrower and its Subsidiaries for the fiscal year then ended, and accompanyingnotes thereto, which financial statements are accompanied by the audit reportof Ernst & Young, independent public accountants, and the unaudited interimconsolidated balance sheet of Borrower and its Subsidiaries as atOctober 31, 2001, and the related consolidated statements of income,retained earnings and cash flows of Borrower and its Subsidiaries for the nine(9) months then ended, heretofore furnished to the Lenders, when read togetherfairly present in all material respects the consolidated financial condition ofBorrower and its Subsidiaries as at said dates and the consolidated results oftheir operations and cash flows for the periods then ended in conformity withgenerally accepted accounting principles applied on a consistent basis; provided,however, that such interim financial statements may not contain fullfootnotes as may be required by generally accepted accounting principles.  Neither Borrower nor any Subsidiary hascontingent liabilities which are material to Borrower and its Subsidiaries,taken as a whole, other than as indicated on such financial statements (or thefootnotes thereto) or, with respect to future periods, on the financialstatements (or the footnotes thereto) furnished to the Securities and ExchangeCommission.

 

                *4.3.         NoMaterial Adverse Change. *SinceDecember 31, 2001, there has been no change in the condition (financial orotherwise) of Borrower and its Subsidiaries, taken as a whole, except (a) thoseoccurring in the ordinary course of business, none of which individually or inthe aggregate have been materially adverse and (b) to the extent they may bedeemed material, the matters disclosed in Borrower's press releases datedJanuary 22, 2002 and the publicly reported and announced changes in theBorrower's relationship with SAP AG and SAP Markets.

 

                *4.4.         Litigationand Other Controversies. *Thereis no litigation or governmental proceeding or labor controversy pending, norto the knowledge of Borrower threatened, against Borrower or any Subsidiarywhich could reasonably be expected to (a) impair the validity or enforceabilityof, or impair the ability of Borrower to perform its obligations under, thisNote or any Collateral Document or (b) result in any material adverse change inthe financial condition, business or operations of Borrower and itsSubsidiaries, taken as a whole.

 

                *4.5.         Approvals. *No authorization, consent,license, or exemption from, or filing or registration by Borrower with, any courtor governmental department, agency or instrumentality, nor any approval orconsent of the stockholders of Borrower or any other person or entity, is orwill be necessary to the valid execution, delivery or performance by Borrowerof this Note or any Collateral Document.

 

                *4.6.         CashReserve Accounts. *Borrower'sunencumbered cash, cash equivalents and short-term investments are currentlyheld with the financial institutions and in the accounts identified on Schedule4.6 to this Note (the "*Cash ReserveAccounts").*

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*                4.7.         No Default. *No Event ofDefault has occurred and is continuing.

 

**Section 5.Covenants. **Borrower agreesthat, so long as any indebtedness remains unpaid under this Note:

 

                *5.1.         FinancialReporting. *Borrower shall,and shall cause each Subsidiary to, maintain a standard system of accounting inaccordance with GAAP and shall furnish to Lender:

 

 

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                (a)           as soon as available and in any eventwithin 90 days after the end of each fiscal year of Borrower a consolidatedbalance sheet of Borrower and its Subsidiaries as of the end of such fiscalyear and the related consolidated statements of income and cash flows for suchfiscal year, setting forth in each case in comparative form the figures for theprevious fiscal year, all prepared in accordance with generally acceptedaccounting principles applied on a consistent basis and certified byindependent public accountants of nationally recognized standing;

 

                (b)           as soon as available and in any event within 45 days afterthe end of each of the first three quarters of each fiscal year of the Borrowera consolidated balance sheet of Borrower and its Subsidiaries as of the end ofsuch quarter and the related consolidated statements of income and cash flowsfor such quarter and for the portion of Borrower's fiscal year ended at the endof such quarter, setting forth in each case in comparative form the figures forthe corresponding quarter and the corresponding portion of Borrower's previousfiscal year, all in reasonable detail and duly certified (subject to normalyear-end adjustments) by the chief financial officer of Borrower as having beenprepared in accordance with generally accepted accounting principles applied ona consistent basis: provided, however, that such financialstatements shall not be required to contain full footnotes as may be requiredby generally accepted accounting principles; and

 

                (c)           promptly upon the Borrower's obtaining knowledge of anyEvent of Default, a certificate of the chief financial officer of the Borrowersetting forth the details thereof and any action that the Borrower is taking orproposes to take with respect thereto.

 

                Reportsrequired to be delivered pursuant to Sections 5.1(a) or (b) aboveshall be deemed to have been delivered on the date on which Borrower posts suchreports on its website on the Internet at www.commerceone.com or such otherwebsite address of Borrower as to which it may have notified the Lender, orwhen such report is posted on the Securities and Exchange Commission's websiteat www.sec.gov; provided that (x) such reports otherwise comply with therequirements of Sections 5.1(a) or (b) above, as applicable, (y)Borrower shall deliver paper copies of such reports to Lender upon Lender'srequest, continuing until such time as the Lender may give notice to Borrowerthat it may cease delivering paper copies, subject to this paragraph, andBorrower shall notify Lender of the posting of any such new reports.

 

                *5.2. Unencumbered Cash *Borrowerwill keep its unencumbered cash, cash equivalent and short-term investmentreserves in the Cash Reserve Accounts. Borrower will direct each financialinstitution maintaining a Cash Reserve Account to copy Lender on any accountstatements (which account statements shall be delivered not less often thanmonthly) and, in the event unencumbered cash, cash equivalent and short-terminvestment reserves are less than $185,000,000 as of the date of the currentbalance provided in any account statement (for purposes of this Section,unencumbered cash, cash equivalent and short-term investment reserves will bedeemed to include the permitted collateral in the Collateral Account), directeach such financial institution to provide Lender access to daily accountbalances with respect to any Cash Reserve Account. Borrower may change CashReserve Accounts by updating Schedule 4.6 and directing the relevant financialinstitution to copy Lender on account statements and, if applicable, direct therelevant financial institution to provide Lender access to daily accountbalances with respect to any Cash Reserve Account.

 

**Section 6.Events of Default and Their Effect.**

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***               ****Section6.1 Events of Default.*  Eachof the following shall constitute an "Event of Default" under thisNote:

 

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(a)           Payment Default. Borrower fails to pay when due principal or interest of this Note or anyother of the liabilities due Lender by Borrower in connection with this Note orany Collateral Document.

 

(b)           Breach of Other Covenants or Failure of any Condition.  Borrower fails to perform, keep or observeany provision (not involving a payment obligation) or condition contained inthis Note or any Collateral Document and fails to cure the failure within 30days after Lender notifies Borrower of such failure (except for a breach underSection 5.2, in which case the cure period will be a period of seven days afterLender notifies Borrower that it has been denied access to the amount of thedaily balance of a Cash Reserve Account after rightfully requesting suchaccess).

 

(c)           Misrepresentation. Any representation or warranty made by Borrower in this Note or in anyCollateral Document, or in any certificate furnished by it pursuant hereto orthereto, proves untrue in any material respect as of the date of the issuanceor making thereof. 

 

(d)           Unenforceability. This Note or any Collateral Document shall for any reason not be orshall cease to be in full force and effect, declared to be null and void, orany of the Collateral Documents shall for any reason fail to create a valid andperfected first priority lien in favor of Lender in any collateral purported tobe covered thereby.

 

(e)           Bankruptcy, Etc. Borrower consolidates, dissolves or liquidates or takes an equivalentaction, or an involuntary petition is filed under any federal or statebankruptcy, reorganization, insolvency, moratorium or similar statute againstBorrower or a custodian, receiver, trustee, assignee for the benefit ofcreditors or other similar official is appointed to take possession, custody,or control of the property of Borrower, unless such petition or appointment isset aside or withdrawn or ceases to be in effect within 30 days from the dateof said filing or appointment; or Borrower becomes insolvent or admits inwriting its inability to pay its debts as they mature, or files any petition oraction for relief relating to any bankruptcy, reorganization, insolvency ormoratorium law, or any other law or laws for the relief of, or relating to,debtors; or Borrower makes an assignment for the benefit of creditors or entersinto an agreement of composition with its creditors; or Borrower failsgenerally to pay its debts as they become due; or Borrower fails to havedischarged within 30 days any judgment, execution, garnishment or attachment ofsuch consequence as could materially impair the ability of Borrower to carry onits operations as presently conducted; or

 

(f)            Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeitureproceedings, self-help, repossession or any other method, by any creditor ofBorrower other than Lender or by any governmental agency against theCollateral, as defined in the Security Agreement, or any other collateralsecuring the indebtedness evidenced by this Note, including any garnishment ofor levy upon Lender for obligations of Borrower.

 

                *Section 6.2. Effect of Event of Default. *If any Event of Default describedin Sections 6.1 (e) or 6.1 (f) shall occur, all indebtednessevidenced by this Note shall immediately become due and payable, all withoutpresentment, demand or notice of any kind; and, in the case of any other Eventof Default, Lender may declare this Note and all indebtedness evidenced by thisNote to be due and payable, all without presentment, demand or notice of anykind.

 

**Section 7.Costs and Expenses; Set-off. **Borrower agreesto pay to the holder of this Note all expenses incurred or paid by such holderin connection with the collection of this Note and the enforcement of rightsunder any Collateral Document. Borrower waives and shall not have any set-offrights against Lender with respect to the indebtedness evidenced by this Note.

 

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**Section 8. Definitions. **As used in this Note, the following capitalized terms shall have thefollowing meanings:

 

                *"Subsidiary"*means any entity more than 50% of the outstanding ordinary votingshares or other equity interests of which is at the time directly or indirectlyowned by Borrower, by one or more of its Subsidiaries, or by Borrower and oneor more of its Subsidiaries.

 

**Section 9. Waivers; Governing Law; Severability. **Borrowerhereby waives presentment and notice of dishonor. No delay by Lender in theexercise of any right or remedy shall operate as a waiver thereof, and nosingle or partial exercise by Lender of any right or remedy shall preclude anyother or further exercise thereof or the exercise of any other right or remedy.It is agreed that this Note and all the rights and remedies of the holderhereof shall be construed in accordance with and governed by the laws ofNevada. If any part of this Note is unenforceable, that will not make any otherpart unenforceable.

 

**Section 10. Submission to Jurisdiction; Waiver of Jury Trial. **EACHOF BORROWER AND ANY HOLDER HEREOF SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OFTHE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEVADA AND OF ANY NEVADASTATE COURT SITTING IN WASHOE COUNTY, NEVADA. FOR PURPOSES OF ALL LEGALPROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE, THE COLLATERAL DOCUMENTSOR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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                EACH OF BORROWERAND ANY HOLDER HEREOF WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGALPROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, THE COLLATERAL DOCUMENTS ORTHE TRANSACTIONS CONTEMPLATED HEREBY.

 

 
|   |   | **COMMERCE ONE OPERATIONS, INC.** |
|--------|--------|-----------------------------------|
|   |   |                              |
|   |   |                              |
|   |   | /s/ Peter Pervere                 |
|   | By:    | Peter Pervere                     |
|   | Its:   | SVP                               |

 

 

 

 

 

 

 

 

 

 

 

 

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