Exhibit 10.3


 


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN
A FORM GENERALLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER SAID ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER BONA FIDE LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.


 


COMMERCE ONE, INC.


 


WARRANT TO PURCHASE COMMON STOCK


 


Warrant No.:  W1


Number of Shares:  2,209,945


Date of Issuance: July 10, 2003
(“Issuance Date”)


 


 


Commerce One, Inc., a Delaware
corporation (the “Company”),
hereby certifies that, for good and valuable consideration set forth in the
Securities Purchase Agreement (as defined below), the receipt and sufficiency
of which are hereby acknowledged, BAYSTAR CAPITAL II, L.P., the registered
holder hereof or its permitted assigns, is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, upon surrender of this Warrant to Purchase Common Stock
(including all Warrants to Purchase Common Stock issued in exchange, transfer
or replacement hereof, the “Warrant”),
at any time or times on or after the date hereof, but not after 11:59 P.M., New
York Time, on the Expiration Date (as defined below), Two Million Two Hundred
Nine Thousand Nine Hundred and Forty-Five (2,209,945) fully paid, nonassessable
shares of Common Stock (as defined below)  (the
“Warrant Shares”).  Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section
15.  This Warrant is one of the Warrants
to Purchase Common Stock (the “SPA Warrants”)
issued pursuant to Section 1 of that certain Securities Purchase Agreement,
dated as of July 10, 2003 (the “Initial
Issuance Date”), among the Company and the purchasers (the “Purchasers”) referred to therein (the “Securities Purchase Agreement”).


 

















 


1.             EXERCISE OF WARRANT.


 


(a)           Mechanics of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)),
this Warrant may be exercised by the holder hereof on any day, in whole or in
part, by (i) delivery of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of
such holder’s election to exercise this Warrant, (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by
wire transfer of immediately available funds or (B) by notifying the Company
that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)) and (iii) the surrender to the Company, on or as
soon as practicable following the date the holder of this Warrant delivers the
Exercise Notice to the Company, of this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction).  On or before the third
Business Day following the date on which the Company has received each of the
Exercise Notice, the Aggregate Exercise Price (or notice of a Cashless
Exercise) and this Warrant (or an indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction) (the “Exercise Delivery Documents”), the Company
shall (X) issue and deliver to the address specified in the Exercise Notice, a
certificate, registered in the name of the holder of this Warrant or its
designee, for the number of shares of Common Stock to which the holder of this
Warrant is entitled pursuant to such exercise, or (Y) provided that if the
Company’s transfer agent (the “Transfer Agent”)
is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, and so long
as the certificates therefor do not require a legend (pursuant to the terms of
the Securities Purchase Agreement) and the holder thereof is not required to
return such certificate for the placement of a legend thereon (pursuant to the
Securities Purchase Agreement), the Company shall cause the Transfer Agent to
promptly electronically transmit the Common Stock issuable upon exercise to the
holder by crediting the account of the holder or its nominee with DTC through
its Deposit Withdrawal Agent Commission system.  Upon delivery of the Exercise Notice, this Warrant and the
Aggregate Exercise Price referred to in clause (ii)(A) above or notification to
the Company of a Cashless Exercise referred to in Section 1(d), the holder of
this Warrant shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised as of the date of the Exercise Notice, irrespective of the date
of delivery of this Warrant as required by clause (iii) above or the
certificates evidencing such Warrant Shares. 
If the number of Warrant Shares represented by this Warrant submitted
for exercise pursuant to this Section 1(a) is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company shall as soon
as practicable and in no event later than five Business Days after any exercise
and at its own expense, issue a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised.  No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but rather cash equal to the
product of the fractional share and the closing sale price of the Common Stock
on the date of the Exercise Notice.  The
Company shall pay any and all documentary stamp, transfer or similar taxes that
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant; provided, that such taxes shall be limited to


 


2

















 


United States federal taxes,
state taxes and the taxes of the jurisdiction of incorporation of the Company.


 


(a)           Exercise Price.  For purposes of this Warrant, “Exercise Price” means $2.715, subject to
adjustment as provided herein.


 


(b)           Company’s Failure to Timely
Deliver Securities. Subject to Section 1(f), if the Company shall fail for
any reason or for no reason to issue to the holder within ten Business Days of
receipt of the Exercise Delivery Documents, a certificate for the number of
shares of Common Stock to which the holder is entitled or to credit the holder’s
balance account with DTC for such number of shares of Common Stock to which the
holder is entitled upon the holder’s exercise of this Warrant (excluding shares
not issued as a result of an ongoing dispute pursuant to Section 12 or the
limitations on exercise in Section 1(d)), the Company shall pay as additional
damages in cash to such holder on the day after the tenth  Business Day that the issuance of such
Common Stock certificate is not timely effected an amount equal to 0.5% of the
product of (A) the sum of the number of shares of Common Stock not issued to
the holder on a timely basis and to which the holder is entitled and (B) the
Closing Sale Price of the Common Stock on the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock to
the holder without violating Section 1(a).


 


(d)           Cashless Exercise.  Notwithstanding
anything contained herein to the contrary, the holder of this Warrant may, in
its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless
Exercise”):


 


	
  Net Number = 

  	
  (A x B) - (A x C)

  
	
   

  	
  B

  



 


For purposes
of the foregoing formula:


 


A= the total
number of shares with respect to which this Warrant is then being exercised.


 


B= the Closing
Sale Price of the Common Stock (as reported by Bloomberg) on the date
immediately preceding the date of the Exercise Notice.


 


C= the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.


 


(c)           Disputes.  In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to


 


3

















 


the holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 12.


 


(d)           Limitations on Exercises.


 


(i)            Beneficial
Ownership.  The Company shall not
effect the exercise of this Warrant, and no Person (as defined below) who is a
holder of this Warrant shall have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Person (together with
such Person’s affiliates) would beneficially own in excess of 4.99% of the
shares of the Common Stock outstanding immediately after giving effect to such
exercise.  For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
such Person and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude shares of
Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such Person and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such
Person and its affiliates (including, without limitation, any convertible notes
or convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be calculated
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended.  For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock a holder may
rely on the number of outstanding shares of Common Stock as reflected in (1)
the Company’s most recent Form 10-Q, Form 10-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent
public announcement by the Company or (3) any other notice by the Company or
its Transfer Agent setting forth the number of shares of Common Stock
outstanding.  For any reason at any
time, upon the written or oral request of the holder of this Warrant, the
Company shall within five Business Days confirm in writing to the holder of this
Warrant the number of shares of Common Stock then outstanding.  In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including the SPA
Securities and the SPA Warrants, by the holder of this Warrant and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.


 


(ii)           Principal Market
Regulation.  The Company shall not
be obligated to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed that number of
shares of Common Stock which the Company may issue upon exercise of this
Warrant (including, as applicable, any shares of Common Stock issued upon
conversion of the SPA Securities) without breaching the Company’s obligations
under the rules


 


4

















 


or regulations
of the Principal Market of the Common Stock on the Issuance Date (including
without limitation NASD Marketplace Rule 4350(i), or any market or exchange
where the Common Stock subsequently trades) (the “Exchange Cap”), except that such limitation shall not apply in
the event that the Company (A) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of
Common Stock in excess of such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which
opinion shall be reasonably satisfactory to the holders of the SPA Warrants
representing more than a majority of the shares of Common Stock underlying the
SPA Warrants then outstanding.  Until
such approval is obtained, no Purchaser shall be issued, upon exercise of any
SPA Warrants, shares of Common Stock in an amount greater than the product of
the Exchange Cap multiplied by a fraction, the numerator of which is the total
number of shares of Common Stock underlying the SPA Warrants issued to such
Purchaser pursuant to the Securities Purchase Agreement on the Initial Issuance
Date and the denominator of which is the aggregate number of shares of Common
Stock underlying all the Warrants issued to the Purchasers pursuant to the
Securities Purchase Agreement on the Initial Issuance Date (with respect to
each Purchaser, the “Exchange Cap Allocation”).  In the event that any Purchaser shall sell
or otherwise transfer any of such Purchaser’s SPA Warrants, the transferee
shall be allocated a pro rata portion of such Purchaser’s Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap Allocation allocated
to such transferee.  In the event that
any holder of SPA Warrants shall exercise all of such holder’s SPA Warrants
into a number of shares of Common Stock which, in the aggregate, is less than
such holder’s Exchange Cap Allocation, then the difference between such
holder’s Exchange Cap Allocation and the number of shares of Common Stock
actually issued to such holder shall be allocated to the respective Exchange
Cap Allocations of the remaining holders of SPA Warrants on a pro rata basis in
proportion to the shares of Common Stock underlying the SPA Warrants then held
by each such holder.  In the event that
the Company is prohibited from issuing any Warrant Shares for which an Exercise
Notice has been received as a result of the rules and regulations of the
Principal Market, the Company shall pay cash in exchange for cancellation of
such Warrant Shares that it is prohibited from issuing, at a price per Warrant
Share equal to the difference between the Closing Sale Price and the Exercise
Price as of the date of the attempted exercise.


 


2.             ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES.  If the
Company at any time after the date of issuance of this Warrant subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be
proportionately increased.  If the
Company at any time after the date of issuance of this Warrant combines (by
combination, reverse stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination will be proportionately increased
and the


 


5

















 


number of Warrant Shares will
be proportionately decreased.  Any
adjustment under this Section 2(b) shall become effective at the close of
business on the date the subdivision or combination becomes effective.


 


3.             RIGHTS UPON DISTRIBUTION OF
ASSETS.  If the Company shall
declare or make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the
issuance of this Warrant and prior to the Expiration Date, then the holder this
Warrant shall be entitled upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock subject hereto, to receive the amount of
such Distribution which would have been payable to the holder of this Warrant
had such holder been the holder of such shares of Common Stock on the record
date for the determination of stockholders entitled to such Distribution.


 


4.             PURCHASE RIGHTS; ORGANIC CHANGE.


 


(a)           Purchase Rights.  In addition to any adjustments pursuant to
Section 2 above, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the “Purchase Rights”),
then the holder of this Warrant will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.


 


(b)           Organic Change.  Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of
the Company’s assets to another Person or other transaction, in each case which
is effected in such a way that holders of Common Stock are entitled to receive
securities or assets with respect to or in exchange for Common Stock is
referred to herein as an “Organic Change.”  Subject to Section 4(k) of the Securities
Purchase Agreement, prior to the consummation of any (i) sale of all or
substantially all of the Company’s assets to an acquiring Person or (ii) other
Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the Person
issuing the securities or providing the assets in such Organic Change (in each
case, the “Acquiring Entity”) a
written agreement (in form and substance reasonably satisfactory to the holders
of SPA Warrants representing more than a majority of the shares of Common Stock
obtainable upon exercise of the SPA Warrants then outstanding) to deliver to
the holder of this Warrant in exchange for this Warrant, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and reasonably satisfactory to the holder of
this Warrant (including, an adjusted exercise price equal to the value for the
Common Stock reflected by the terms of such consolidation, merger or sale, and
exercisable for a corresponding number of shares of Common Stock acquirable and
receivable


 


6

















 


upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant), if the
value so reflected is less than the Exercise Price in effect immediately prior
to such consolidation, merger or sale). 
In the event that an Acquiring Entity is directly or indirectly controlled
by a company or entity whose common stock or similar equity interest is listed,
designated or quoted on a securities exchange or trading market, the holder of
this Warrant may elect to treat such Person as the Acquiring Entity for
purposes of this Section 4(b).  Prior to
the consummation of any other Organic Change, the Company shall be required to
make appropriate provision (in form and substance reasonably satisfactory to
the holders of SPA Warrants representing at least a majority of the shares of
Common Stock obtainable upon exercise of the SPA Warrants then outstanding) to
insure that the holder of this Warrant thereafter will have the right to
acquire and receive in lieu of or in addition to (as the case may be) the
shares of Common Stock immediately theretofore acquirable and receivable upon
the exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant including those set forth in Sections 1(f)(i) and 1(f)(ii) of
this Warrant), such shares of stock, securities or assets that would have been
issued or payable in such Organic Change with respect to or in exchange for the
number of shares of Common Stock which would have been acquirable and
receivable upon the exercise of this Warrant as of the date of such Organic
Change (without regard to any limitations on the exercise of this Warrant
including those set forth in Sections 1(f)(i) and 1(f)(ii) of this Warrant).


 


5.             NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all the provisions of
this Warrant and take all action as may be required to protect the rights for
the holder of this Warrant.  Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect,
(ii) will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii) will, so
long as any of the SPA Warrants are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the exercise of the SPA Warrants, 100% of
the number of shares of Common Stock as shall from time to time be necessary to
effect the exercise of the SPA Warrants then outstanding (without regard to any
limitations on exercise).


 


6.             WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. 
Except as otherwise specifically provided herein, no holder, solely in
such Person’s capacity as a holder, of this Warrant shall be entitled to vote
or receive dividends or be deemed the holder of shares of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the
holder hereof, solely in such Person’s capacity as a holder of this Warrant,
any of the rights of a shareholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of
the


 


7

















 


Warrant Shares which such
Person is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on such holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company. 
Notwithstanding this Section 6, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.


 


7.             REISSUANCE OF WARRANTS.


 


(a)           Transfer of Warrant.  A Holder of this Warrant may transfer this
Warrant and the rights hereunder only in accordance with applicable securities
laws and Section 14 hereunder.  If this
Warrant is to be transferred, the holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the holder of this Warrant a new Warrant (in accordance with Section 7(d)),
registered as the holder of this Warrant may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less then the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the
holder of this Warrant representing the right to purchase the number of Warrant
Shares not being transferred.


 


(b)           Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the holder of this Warrant to the Company in
customary form and reasonably acceptable to the Company, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then underlying
this Warrant.


 


(c)           Warrant Exchangeable for Multiple
Warrants.  This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant
Shares then underlying this Warrant, and each such new Warrant will represent
the right to purchase such portion of such Warrant Shares as is designated by
the holder of this Warrant at the time of such surrender; provided, however,
that no Warrants for fractional shares of Common Stock shall be given.


 


(d)           Issuance of New Warrants.  Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall
be of like tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the holder of
this Warrant which, when added to the number of shares of Common Stock
underlying the other new Warrants issued in connection with such issuance, does
not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same rights and
conditions as this Warrant.


 


8

















 


8.             NOTICES.  Whenever notice is required to be given
under this Warrant, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase
Agreement.  The Company shall provide
the holder of this Warrant with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. 
Without limiting the generality of the foregoing, the Company will give
written notice to the holder of this Warrant (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) either ten days or such
shorter period allowed for under Rule 10b-17 of the Securities Exchange Act of
1934, as amended, prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata grants, issues or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of Common Stock or (C) for determining rights to vote
with respect to any Change of Control (as defined in the SPA Securities),
dissolution or liquidation, provided in each case that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to such holder.


 


9.             AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the holders of
SPA Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the SPA Warrants then outstanding; provided that no
such action may increase the exercise price of any SPA Warrant or decrease the
number of shares or class of stock obtainable upon exercise of any SPA Warrant
without the written consent of the holder of this Warrant.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants then
outstanding.


 


10.           GOVERNING LAW.  This Warrant shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware.


 


11.           CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly
drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. 
The headings of this Warrant are for convenience of reference and shall
not form part of, or affect the interpretation of, this Warrant.


 


12.           DISPUTE RESOLUTION.  (a) 
In the case of a dispute as to the arithmetic calculation of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed arithmetic calculations via facsimile within two
Business Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the holder of this Warrant.  The holder of this Warrant and the Company shall determine the
correct arithmetic calculation within three Business days of such disputed
arithmetic calculation being transmitted to such holder.  If the holder of this Warrant and the
Company are unable to agree upon correct arithmetic calculation of the Exercise
Price or the Warrant Shares within such time,


 


9

















 


then the Company shall, within
five Business Days submit via facsimile the disputed calculation to an
independent, reputable nationally recognized accounting firm selected by the
Company and approved by the holder of this Warrant.  The Company shall cause the accounting firm to perform the
calculation and notify the Company and the Holder of the results no later than
ten Business Days from the time it receives the disputed determinations or
calculations.  Such accounting firm’s
determination shall be binding upon all parties absent manifest error.


 


(b)           In the case of a dispute as to the
determination of fair market value of a security to determine the Exercise
Price, the Company shall submit the disputed determination via facsimile within
two Business Days of receipt of the Exercise Notice giving rise to such
dispute, as the case may be, to the holder of this Warrant.  If the holder of this Warrant and the
Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such
disputed determination being submitted to the Holder, then the Company shall,
within five Business Days submit via facsimile the disputed determination of
the Exercise Price to an independent, reputable investment bank selected by the
Company and approved by the holder of this Warrant.  The Company shall cause the investment bank to perform the
determinations and notify the Company and the Holder of the results no later
than ten Business Days from the time it receives the disputed determinations or
calculations.  Such investment bank’s
determination shall be binding upon all parties absent manifest error.


 


(c)           The fees and expenses associated with
the determinations made by such investment bank or accountant shall be paid by
the party whose determination or calculation as initially presented to the
investment bank or accountant is further from the final determination or
calculation of the investment bank or accountant (or shared equally by the
Company and the holder if the final determination or calculation is at the
midpoint of the determinations or calculations presented by the Company and the
holder of this Warrant).


 


13.           REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this
Warrant, the Securities Purchase Agreement, the Certificate of Designations and
the Registration Rights Agreement, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the right of the holder of this Warrant right to pursue actual damages
for any failure by the Company to comply with the terms of this Warrant. The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holder of this Warrant and that the remedy at law
for any such breach may be inadequate. 
The Company therefore agrees that, in the event of any such breach or
threatened breach, the holder of this Warrant shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.


 


14.           TRANSFER.          This Warrant may not be offered for
sale, sold, transferred or assigned, except as permitted by Section 2(f) of the
Securities Purchase Agreement.


 


15.           CERTAIN
DEFINITIONS.  For purposes of this
Warrant, the following terms shall have the following meanings:


 


(a)           “Bloomberg”
means Bloomberg Financial Markets.


 


10

















 


(b)           “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.


 


(c)           “Closing
Bid Price” and “Closing Sale
Price” means, for any security as of any date, the last closing bid
price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins
to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price, as the case may be, then the last bid price
or last trade price, respectively, of such security prior to 4:00:00 p.m., New
York Time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the
principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported
by Bloomberg, or, if no closing bid price or last trade price, respectively, is
reported for such security by Bloomberg, the average of the bid prices, or the
ask prices, respectively, of any market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.).  If the Closing Bid Price or the
Closing Sale Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as
the case may be, of such security on such date shall be the fair market value
as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 12.  All such determinations to
be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation period.


 


(d)           “Common
Stock” means (i) the Company’s common stock, par value $0.0001
per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of
such Common Stock.


 


(e)           “Convertible
Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.


 


(f)            “Expiration
Date” means the date five years after the Closing Date (as defined
in the Securities Purchase Agreement) or, if such date falls on a day other
than a Business Day or on which trading does not take place on the Principal
Market (a “Holiday”), the next
date that is not a Holiday.


 


(g)           “Options”
means any rights, warrants or options to subscribe for or purchase Common Stock
or Convertible Securities.


 


(h)           “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.


 


11

















 


(i)            “Principal
Market” means the Nasdaq National Market or in the event that the
Company is no longer listed with the Nasdaq National Market, the market or
exchange on which the Common Stock is then listed and traded, which only may be
either the Nasdaq SmallCap Market or The New York Stock Exchange, Inc.


 


(j)            “Registration
Rights Agreement” means that certain registration rights agreement
between the Company and the Purchasers.


 


(k)           “SPA
Securities” means the convertible preferred stock of the Company
issued pursuant to the Securities Purchase Agreement.


 


[Signature Page Follows]


 


12

















 


IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.


 


	
   

  	
  COMMERCE
  ONE, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  Boynton

  
	
   

  	
  Name:  Charles Boynton

  
	
   

  	
  Title:    Senior Vice President and Chief

  
	
   

  	
  Financial Officer

  



 

















 


EXHIBIT A


 


EXERCISE NOTICE


 


TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS


WARRANT TO PURCHASE COMMON STOCK


 


COMMERCE ONE, INC.


 


The undersigned holder
hereby exercises the right to purchase
                              
of the shares of Common Stock (“Warrant
Shares”) of Commerce One, Inc., a Delaware corporation (the “Company”), evidenced by the attached
Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.


 


1.  Form of Exercise Price. 
The Holder intends that payment of the Exercise Price shall be made as:


 


                           a
“Cash Exercise” with respect to
                           
Warrant Shares; and/or


 


                           a
“Cashless Exercise” with respect to
                           
Warrant Shares.


 


2.  Payment of Exercise Price. 
In the event that the holder has elected a Cash Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the holder
shall pay the Aggregate Exercise Price in the sum of $                              to the Company in accordance with the terms
of the Warrant.


 


3.  Delivery of Warrant Shares. 
The Company shall deliver to the holder                      Warrant Shares in accordance with the terms
of the Warrant.


 


4.  Representations and Warranties.  The representations and warranties contained
in Sections 2(a) – 2(g) of the Securities Purchase Agreement, dated July 10,
2003 among the Company and the purchasers referred to therein, are true and correct
as if made by the undersigned holder as of, and with respect to, the date
hereof.


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    Name of Registered Holder

  	
   

  
	
   

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
							



 

















 


ACKNOWLEDGMENT


 


The Company
hereby acknowledges this Exercise Notice and hereby directs Equiserve to issue
the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated July 10, 2003 from the Company and
acknowledged and agreed to by Equiserve.


 


	
   

  	
  COMMERCE
  ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: