Pledge Agreement



EXHIBIT 10.5

EXECUTION COPY

PLEDGE AGREEMENT

PLEDGE AGREEMENT (this "Agreement"), dated as of the
31st day of December, 2003, by and between COMMERCE ONE OPERATIONS, INC. (the
"Pledgor"), a Delaware corporation and wholly-owned subsidiary of Commerce One,
Inc., a Delaware corporation ("Commerce One"), and COMVEST INVESTMENT PARTNERS
II LLC ("ComVest," the "Administrative Agent" or the "Pledgee"), a Delaware
limited liability company, as Administrative Agent for ComVest Investment
Partners II LLC and DCC Ventures, LLC (the "Purchasers").  Any capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Purchase Agreement.  

W I T N E S S E T H :

WHEREAS, concurrently herewith, Commerce One is issuing
to the Purchasers Senior Secured Non-Convertible Promissory Notes of Commerce
One of even date herewith in the aggregate principal amount of Five Million
Dollars ($5,000,000) (as amended or restated from time to time, the "Notes") and
related warrants (the "Warrants") in accordance with the terms and conditions of
a Note and Warrant Purchase Agreement, dated as of even date herewith (the
"Purchase Agreement"); and

WHEREAS, in order to induce the Purchasers to accept
the Notes and the indebtedness evidenced thereby, the Pledgor has agreed to
guaranty repayment of the Notes and Commerce One's performance of all of its
obligations under the Purchase Agreement and the other Closing Documents,
pursuant to the terms of a Guaranty, dated as of even date herewith (the
"Guaranty");

WHEREAS, in order further to induce the Purchasers to
accept the Notes and the indebtedness evidenced thereby, the Pledgor has agreed
to pledge to the Purchasers all of the Pledgor's rights and obligations under
the Perfect Commerce Note (as such term is hereinafter defined), and all
proceeds thereof as collateral security for the Obligations (as such term is
hereinafter defined);

WHEREAS, the Purchasers have appointed ComVest as
Administrative Agent to act as Pledgee on behalf of the Purchasers pursuant to
the terms and conditions set forth in detail in the Note and Warrant Purchase
Agreement, dated on or about the date hereof, by and among Commerce One, the
Pledgor and the Purchasers (the "Purchase Agreement"), the Security Agreement,
dated on or about the date hereof, by and among the Pledgor and the Purchasers
(the "Security Agreement") and below, and expressly agree that the
Administrative Agent will be deemed the Pledgee for purposes of administering
the collateral pledged pursuant to the terms and conditions set forth in detail
below;







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

1.Definitions.

In addition to those terms defined elsewhere in this
Agreement, the following terms shall have the following meanings wherever used
in this Agreement: 

(a)"Event of Default" shall have the same meaning
ascribed thereto in the Guaranty and the Security Agreement.

(b)"Obligations" shall mean the collective reference to
all principal, interest, collection costs, expenses and other amounts owing or
payable from time to time under the Notes, and any further amounts which,
pursuant to this Agreement and/or any other security documents relating to the
Notes (expressly including, but not limited to, this Agreement, the Security
Agreement and the Guaranty), may be deemed part of and/or added to the
Obligations, whether arising before or after the commencement of any case with
respect to the Pledgee under the United States Bankruptcy Code or any similar
statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case).

(c)"Perfect Commerce Note" shall mean,
collectively, (i) the promissory notes, dated January 24, 2003, issued by eScout
LLC and eScout Acquisition LLC (a/k/a Perfect Commerce) in favor of Pledgee, in
the aggregate principal amount of Two Million One Hundred Eighty-Two Dollars
($2,000,182); and



(d)"Satisfaction Date" shall mean the earlier of (i) that
date on which all of the Obligations have been paid in full or (ii) the
Conversion of the Notes in accordance with their terms or (iii) the Pledgee
releases its security interest in the Perfect Commerce Note following the sale
of the Perfect Commerce Note by Commerce One or the Pledgor resulting in net
proceeds of at least One Million Five Hundred Thousand Dollars ($1,500,000).

2.Pledge of the Perfect Commerce Note.

(a)As security for the due and timely payment (whether
upon maturity, by acceleration or otherwise) and performance of all of the
Obligations from time to time, the Pledgor hereby pledges to the Pledgee, and
grants to the Pledgee a first priority perfected lien and security interest in,
the Perfect Commerce Note and all proceeds thereof, until the Satisfaction Date;
provided, however, that the Pledgor shall expressly have the right
to sell the Perfect Commerce Note at any time (other than if an Event of Default
has occurred and is continuing), upon at least ten (10) days' prior written
notice to Pledgee, in accordance with the terms of the Notes.  The Pledgee shall
cooperate with Pledgor, in effecting the sale of the Perfect Commerce Note,
including delivering the Perfect Commerce Note and releasing its liens thereon
in accordance with the terms of the Security Agreement.    



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(b)In furtherance of the pledge hereunder, the Pledgor
is, concurrently herewith, (i) delivering to the Pledgee the original Perfect
Commerce Note (provided, however, that with respect to the portion
of the Perfect Commerce Note that is currently held in escrow by U.S. Bank,
National Association, the Pledgor shall deliver such portion to the Pledgee
promptly upon its release or partial release from escrow) and (ii) causing the
issuer or obligor of the Perfect Commerce Note to record on its books the lien
and security interest of the Pledgee hereunder.  The Pledgor hereby authorizes
the Pledgee to file such financing statements as the Pledgee may deem necessary
or appropriate in order to perfect and/or give notice of the pledge hereunder.


3.Retention of the Perfect Commerce Note.

(a)Except as otherwise provided herein, the Pledgee shall
have no obligation with respect to the Perfect Commerce Note or any other
property held or received by the Pledgee hereunder, except to use reasonable
care in the custody and preservation thereof, to the extent required by law.

(b)The Pledgee shall hold the Perfect Commerce Note and
any other property held or received by the Pledgee hereunder in the form in
which same are delivered herewith, unless and until there shall occur an Event
of Default or the Perfect Commerce Note is sold by the Pledgor, upon at least
ten (10) days' prior written notice to the Pledgee, in accordance with the terms
of the Notes. 

4.Event of Default; Power of Attorney.

(a)Upon the occurrence and during the continuance of any
Event of Default, the Pledgee shall have the right to (i) effect any sale,
transfer or disposition of all or any portion of the Perfect Commerce Note and
in furtherance thereof, take possession of and endorse any and all checks,
drafts, bills of exchange, money orders or other documents and instruments
received on account of the Perfect Commerce Note, and apply the net proceeds
thereof to the Obligations in such order as the Pledgee may determine, sell the
Perfect Commerce Note, (ii) apply any funds or other property received in
respect of the Perfect One Note to the Obligations, and receive in its own name
any and all further distributions which may be paid in respect of the Perfect
Commerce Note, all of which shall, upon receipt by the Pledgee, be applied to
the Obligations in such order as the Pledgee may determine, (iii) transfer all
or any portion of the Perfect Commerce Note (as determined by the Pledgee in its
discretion) on the books of the issuer or obligor thereof to and in the name of
the Pledgee or such other person or persons as the Pledgee may designate, (iv)
collect, sue for and give acquaintance for any money due on account of any of
the foregoing, and (v) take any and all other action contemplated by this
Agreement, or as otherwise permitted by law, or as the Pledgee may reasonably
deem necessary or appropriate, in order to accomplish the purposes of this
Agreement.

(b)In furtherance of the foregoing powers of the Pledgee,
the Pledgor hereby authorizes and appoints the Pledgee, with full powers of
substitution, as the true and lawful attorney-in-fact of the Pledgor, in its
name, place and stead, solely during the continuance of an Event of Default, to
take any and all such action as the Pledgee, in its sole discretion, may deem
necessary or appropriate in furtherance of the exercise of the aforesaid powers.
Such power of



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attorney shall be coupled with an interest, and shall be
irrevocable until the Satisfaction Date. Without limitation of the foregoing,
such power of attorney shall not in any manner be affected or impaired by reason
of any act of the Pledgor or by operation of law.  Nothing herein contained,
however, shall be deemed to require or impose any duty upon the Pledgee to
exercise any of the rights or powers granted herein.
(c)The foregoing rights and powers granted to the
Pledgee, and the foregoing power of attorney, shall be fully binding upon any
person who may acquire any beneficial interest in any of the Perfect Commerce
Note or any other property held or received by the Pledgee hereunder.

5.Foreclosure; Sale of Perfect Commerce Note by
Pledgee.

(a)Without limitation of paragraph 4 above, in the event
that the Pledgee shall make any sale or other disposition of any or all of the
Perfect Commerce Note following an Event of Default, the Pledgee may also:

(i)offer and sell all or any portion of the Perfect
Commerce Note by means of a private placement restricting the offer or sale to a
limited number of prospective purchasers who meet such suitability standards as
the Pledgee and its counsel may deem appropriate, and who may be required to
represent that they are purchasing Perfect Commerce Note for investment and not
with a view to distribution; and the Pledgor hereby acknowledges, confirms and
consents that the requirement to effect the offer and sale of Perfect Commerce
Note in such manner may result in lower proceeds and/or less favorable terms
than would otherwise obtain if the subject Perfect Commerce Note were registered
for public sale and sold by means of public offer and sale, and the Pledgor
hereby waives any claims against the Pledgee by reason thereof;

(ii) purchase all or any portion of the Perfect Commerce
Note for the Pledgee's own account at a price not less than the highest
bona fide offer received therefor, which if effected in a manner
in compliance with applicable law, shall be deemed to be a commercially
reasonable disposition of the subject Perfect Commerce Note;

(iii)sell any or all of the Perfect Commerce Note upon
credit or for future delivery, without being in any way liable for failure of
the purchaser to pay for the subject Perfect Commerce Note; and

(iv) receive and collect the net proceeds of any sale or
other disposition of the Perfect Commerce Note, and apply same in such order and
to such of the Obligations (including the costs and expenses of the sale or
disposition of the Perfect Commerce Note) as the Pledgee may, in its absolute
discretion, deem appropriate.

(b)Upon any sale by Pledgee of any of the Perfect
Commerce Note in accordance with this Agreement, the Pledgee shall have the
right to assign, transfer and deliver the Perfect Commerce Note to the
purchaser(s) thereof, and each such purchaser shall be entitled to hold such
Perfect Commerce Note absolutely free from any right or claim of the Pledgor
and/or any other person claiming any beneficial interest in the Perfect Commerce
Note, including



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any equity of redemption (which right and all other such rights
are hereby waived by the Pledgor to the fullest extent permitted by law).
(c)Nothing herein contained shall be deemed to require
the Pledgee to effect any sale or disposition of any Perfect Commerce Note at
any time, or to consummate any proposed public or private sale at the time and
place at which same was initially called.  It is the intention of the parties
hereto that the Pledgee shall, subject to any further conditions imposed by this
Agreement, at all times during the continuance of an Event of Default, have the
right to use or deal with the Perfect Commerce Note as if the Pledgee were the
outright owner thereof, and to exercise any and all rights and remedies, as a
secured party in possession of collateral or otherwise, under any and all
provisions of law.  The Pledgor hereby waives any requirement for marshalling of
assets, or for the Pledgee to proceed against any guarantor of the Obligations
or any other collateral for the Obligations.

6.Covenants, Representations and Warranties.

In connection with the transactions contemplated by this
Agreement, and knowing that the Pledgee is and shall be relying hereon, the
Pledgor hereby covenants, represents and warrants that:

(a)this Agreement has been duly authorized, executed and
delivered by the Pledgor, and constitutes the legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
its terms; and

()the Pledgor has not taken (and, during the
effectiveness of this Agreement, will not take) any action to assign, transfer
or encumber any of the Perfect Commerce Note or any interest therein, other than
as contemplated by this Agreement, the Purchase Agreement, the Notes and the
Security Agreement.

7.Satisfaction of Obligations; Return of the Perfect
Commerce Note.To the extent that the Pledgee shall not previously have
taken, acquired, sold, transferred, disposed of or otherwise realized value on
the Perfect Commerce Note in accordance with this Agreement, the Pledgee shall
release its lien hereunder, execute and deliver to Pledgee a satisfaction and
release, and return the Perfect Commerce Note to and in the name of the Pledgor
at the Satisfaction Date.  The foregoing notwithstanding, in the event and to
the extent that any payment received by the Pledgee in respect of the
Obligations is reduced or rescinded or is required to be repaid to the Pledgor
or to any trustee or other official on behalf of the Pledgor, then such
Obligations shall be restored and the Pledgee shall be restored to its
collateral position with respect to any and all Perfect Commerce Note
theretofore returned hereunder.



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8.Expenses of the Pledgee.All expenses
incurred by the Pledgee (including but not limited to reasonable attorneys'
fees) in connection with any actual or attempted sale or other disposition of
Perfect Commerce Note hereunder during the continuance of an Event of Default
shall be reimbursed to the Pledgee by the Pledgor on demand, or, at the
Pledgee's option, such expenses may be added to the Obligations and shall be
payable on demand and may (in addition to any and all other means of collection)
be recovered out of any proceeds of sale of Perfect Commerce Note.  

9.Further Assurances.From time to time
hereafter, each party shall take any and all such further action, and shall
execute and deliver any and all such further documents and/or instruments, as
any other party may request in order to accomplish the purposes of and fulfill
the parties' obligations under this Agreement, in order to enable Pledgor to
sell the Perfect Commerce Note, in order to enable the Pledgee to exercise any
of its rights hereunder, and/or in order to secure more fully the Pledgee's
interest in the Perfect Commerce Note.

10.Miscellaneous.

()All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally, by overnight courier, or by facsimile transmission or
mailed by first class postage prepaid to the parties at the following addresses
or facsimile numbers:
If to the Pledgor, to:


COMMERCE ONE OPERATIONS, INC.

c/o Commerce One, Inc.

One Market Street, Steuart Tower

Suite 1300

San Francisco, CA 94105

Attn:  General Counsel

Fax: (415) 644-8750


If to the Pledgee, to:

COMVEST INVESTMENT PARTNERS II LLC

830 Third Avenue

New York, NY 10022

Attn:  Carl Kleidman

Fax: (212) 829-5978




All such notices, requests and other communications will (i)
if delivered personally or by overnight courier to the address as provided
herein, be deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided herein, be deemed given upon
receipt, (iii) if delivered by reputable overnight courier, be deemed given one
(1) business day after being deposited with the courier service with all charges
prepaid or billed to the account of the sender, and (iv) if delivered by mail in
the manner described above to the address as provided herein, be deemed given
upon receipt regardless of whether such notice, request or



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other communication
is received by any other person to whom a copy of such notice is to be delivered
pursuant hereto.  Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice (in the manner herein provided) specifying such change to the other party
hereto.
(b)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.  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 consents 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.      

(c)This Agreement may be executed in counterparts and by
facsimile.  This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns and
the Purchasers shall expressly be third-party beneficiaries of this Agreement.
The Pledgor shall not, however, assign any of its rights or obligations
hereunder without the prior written consent of the Pledgee.  Except as otherwise
referred to herein, this Agreement, the Closing Documents, and the documents
executed and delivered pursuant hereto, constitute the entire agreement between
the parties relating to the specific subject matter hereof.

(d)Neither any course of dealing between the Pledgor and
the Pledgee nor any failure to exercise, or any delay in exercising, on the part
of the Pledgee, any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege operate as a waiver of any other exercise of such right, power or
privilege or any other right, power or privilege.

(e)The Pledgee's rights and remedies, whether hereunder
or pursuant to any other agreements or by law or in equity, shall be cumulative
and may be exercised singly or concurrently

(f)No change, amendment, modification, waiver, assignment
of rights or obligations, cancellation or discharge hereof, or of any part
hereof, shall be valid unless the Pledgee (and, in the case of any change,
amendment or modification, the Pledgor) shall have consented thereto in writing
in accordance with Section 9 of the Security Agreement.

(g)The captions and paragraph headings in this Agreement
are for convenience of reference only, and shall not in any way define, limit or
describe the construction, terms or provisions of this Agreement.

(h)If any provision of this Agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only
to the extent necessary to render same valid, or not



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applicable to given
circumstances, or excised from this Agreement, as the situation may require, and
this Agreement shall be construed and enforced as if such provision had been
included herein as so modified in scope or application, or had not been included
herein, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the date first set forth above.

COMMERCE ONE OPERATIONS, INC., as Pledgor

By: /s/ Mark B. Hoffman

     Name:

     Title:


COMVEST INVESTMENT PARTNERS II LLC, as Administrative Agent


By: /s/ Harold Blue

     Name:

     Title:



ACKNOWLEDGED AND ACCEPTED:


COMMERCE ONE, INC., as Seller


 

By: /s/ Mark B. Hoffman

     Name:

     Title:



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