Document:

Exhibit
10.1

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 10, 2003,
by and among Commerce One, Inc., a Delaware corporation, with headquarters
located at 4440 Rosewood Dr., Pleasanton, CA 
94588 (the “Company”),
and the undersigned buyers (each, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A.           In connection with the Securities Purchase
Agreement by and among the parties hereto of even date herewith (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyers an aggregate of (i) 100,000 shares (the “Preferred Shares”)
of the Company’s Series B Convertible Preferred Stock (the “Preferred Stock”),
which will be convertible into shares of the Company’s common stock, par value
$0.0001 per share (the “Common
Stock”) (as converted, the “Conversion Shares”) in accordance with
the terms of the Company’s Certificate of Designations, Preferences and Rights
of the Preferred Stock (the “Certificate of Designations”) and (ii)
warrants (the “Warrants”)
to purchase shares of Common Stock (the “Warrant Shares”); and

 

B.             To induce the Buyers to execute and
deliver the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute
(collectively, the “1933 Act”),
and applicable state securities laws.

 

C.             The location of defined terms in this
Agreement is set forth on the Index of Terms attached hereto.

 

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

 

1.               Definitions.

 

As used in
this Agreement, the following terms shall have the following meanings:

 

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

 

b.              “Investor” means a Buyer, any permitted
transferee or assignee thereof to whom a Buyer assigns its rights under this
Agreement in connection with a transfer of Registrable Securities and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9 and any permitted transferee or assignee thereof to whom a transferee
or assignee assigns its rights under this Agreement in connection with a
transfer of Registrable Securities and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9.

 

 

c.               “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and 
governmental or any department or agency thereof.

 

d.              “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the 1933 Act and
pursuant to Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis (“Rule 415”),
and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

 

e.               “Registrable
Securities” means (i) the Conversion Shares issued or issuable
upon conversion of the Preferred Shares, (ii) the Warrant Shares issued or
issuable upon exercise of the Warrants and (iii) any shares of capital stock
issued or issuable with respect to the Conversion Shares, the Preferred Shares,
the Warrant Shares or the Warrants as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, without
regard to any limitations on conversions of the Preferred Shares or exercises
of Warrants.

 

f.                 “Registration
Statement” means a registration statement or registration
statements of the Company filed under the 1933 Act covering the Registrable
Securities.

 

Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.

 

2.               Registration.

 

a.               Mandatory
Registration.  The Company shall
prepare, and, as soon as practicable but in no event later than 45 days after
the Closing Date (as defined in the Securities Purchase Agreement) (the “Filing Deadline”),
file with the SEC the Registration Statement on Form S-3 covering the resale of
all of the Registrable Securities.  In
the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration, subject to
the provisions of Section 2(d); provided that the Company represents and
warrants that it is currently eligible to register the Registrable Securities
on Form S-3 and knows of no reason why it will not be eligible to so register
the Registrable Securities on Form S-3 on or before the Filing Deadline and on
or before the Effectiveness Deadline. 
The Registration Statement prepared pursuant hereto shall register for
resale at least 7,300,000 shares of Common Stock.  The Company shall use its reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as practicable,
but in no event later than the date which is 180 days after the Closing Date
(the “Effectiveness
Deadline”).

 

b.              Allocation of
Registrable Securities.  The initial
number of Registrable Securities included in any Registration Statement and
each increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase thereof is
declared effective by the SEC.  In the
event that an Investor sells or otherwise transfers any of such Investor’s
Registrable

 

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Securities, each transferee
shall be allocated a pro rata portion of the then remaining number of
Registrable Securities included in such Registration Statement for such
transferor.  Any shares of Common Stock
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Investors, pro rata based on the
number of Registrable Securities then held by such Investors which are covered
by such Registration Statement.  The
Company may include securities other than Registrable Securities on any
Registration Statement to the extent the Company is contractually obligated to
do so pursuant to registration rights obligations in existence prior to the
date of this Agreement.

 

c.               Legal Counsel.  Subject to Section 5 hereof, the Buyers
holding at least a majority of the Registrable Securities shall have the right
to select one legal counsel to review and oversee any offering pursuant to this
Section 2 (“Legal
Counsel”), which shall be Schulte Roth & Zabel LLP or such
other counsel as thereafter designated by the holders of at least a majority of
the Registrable Securities.  The Company
and Legal Counsel shall reasonably cooperate with each other in performing the
Company’s obligations under this Agreement.

 

d.              Ineligibility for
Form S-3.  In the event that Form
S-3 is not  available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the holders of at least a majority of
the Registrable Securities and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.

 

e.               Sufficient
Number of Shares Registered.  In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor’s allocated portion of the Registrable Securities pursuant to Section
2(b), the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the number of such Registrable Securities as
of the trading day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor
arises.  The Company shall use its
reasonable best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.  The calculation of the number
of Registrable Securities required to be covered by such Registration Statement
shall be made without regard to any limitations on the conversion of the
Preferred Shares or the exercise of the Warrants and such calculation shall
assume that the Preferred Shares and the Warrants are then convertible or
exercisable into shares of Common Stock and assuming the maximum amount of
Dividends (as defined in the Certificate of Designations) relating to the
Preferred Shares will be paid on the Preferred Shares.

 

f.                 Effect of
Failure to File and Obtain and Maintain Effectiveness of Registration Statement.  If (i) a Registration Statement covering all
the Registrable Securities and required to be filed by the Company pursuant to
this Agreement is not declared effective by the

 

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SEC on or before the Effectiveness Deadline or (ii) on any day after
the Registration Statement has been declared effective by the SEC and prior to
the termination of the Registration Period sales of all the Registrable
Securities required to be included on such Registration Statement cannot be
made (other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to the Registration Statement (including, without limitation, because
of a failure to keep the Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement or to register sufficient shares of Common Stock), then, as partial
relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Preferred Shares relating to
such Registration Statement an amount in cash per such Preferred Share held
equal to the product of (i) $100 multiplied by (ii) the product of (I) .0005
multiplied by (II) the sum of (x) the number of days after the Effectiveness
Deadline that the Registration Statement is not declared effective by the SEC,
plus (y) the number of days after the Registration Statement has been declared
effective by the SEC that such Registration Statement is not available (other
than during an Allowable Grace Period) for the sale of at least all the
Registrable Securities required to be included on such Registration
Statement.  The payments to which a
holder shall be entitled pursuant to this Section 2(f) are referred to herein
as “Registration
Delay Payments.”  Registration Delay Payments shall be paid on
the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is
cured.  In the event the Company fails
to make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of 1.5% per month (prorated for
partial months) until paid in full.

 

3.               Related
Obligations.

 

At such time
as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a) or 2(e), the Company will use its reasonable best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

 

a.               The Company shall
promptly prepare and file with the SEC a Registration Statement with respect to
the Registrable Securities (but in no event later than the applicable Filing
Deadline) and use its reasonable best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline).  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the “Registration Period”),
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading. 
The term “reasonable best efforts” shall mean, among other things, that
the Company shall submit to the SEC, within two (2) Business

 

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Days after the Company learns
that no review of a particular Registration Statement will be made by the staff
of the SEC or that the staff has no further comments on the Registration
Statement, as the case may be, and the approval of Legal Counsel pursuant to
Section 3(c), a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than 48 hours after the submission of
such request.

 

b.              The Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to
keep such Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act
with respect to the disposition of all Registrable Securities of the Company
covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in such Registration Statement.  In the
case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Securities Exchange Act of 1934,
as amended (the “1934 Act”), the Company shall have incorporated such
report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the Company to amend
or supplement the Registration Statement.

 

c.               The Company shall
(A) permit Legal Counsel to review and comment upon (i) the Registration
Statement at least five (5) Business Days prior to its filing with the SEC and
(ii) all other Registration Statements and all amendments and supplements to
all Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld. 
The Company shall furnish to Legal Counsel, without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto and (iii) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto.  The Company shall reasonably cooperate with
Legal Counsel in performing the Company’s obligations pursuant to this Section
3.

 

d.              The Company shall
furnish to each Investor whose Registrable Securities are included in any
Registration Statement, without charge, 
(i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto and each
preliminary prospectus, (ii) upon the effectiveness of any Registration
Statement, such number of copies of the prospectus included in such
Registration 

 

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Statement and
all amendments and supplements thereto as such Investor may reasonably request
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

 

e.               The Company shall
use its reasonable best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during
the Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall
promptly notify Legal Counsel and each Investor who holds Registrable
Securities of the receipt by the Company of any notification with respect to
the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.

 

f.                 The Company shall
notify Legal Counsel and each Investor in writing, including via facsimile or
e-mail, of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and,
subject to Section 3(r), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies as Legal Counsel or such Investor may reasonably
request.  The Company shall also
promptly notify Legal Counsel and each Investor in writing, including via
facsimile or e-mail, (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile or e-mail on the same day of such effectiveness), (ii) of any request
by the SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

 

g.              The Company shall
use its reasonable best efforts to prevent (except by the Company during an
Allowable Grace Period) the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and 

 

6

 

to notify
Legal Counsel and each Investor who holds Registrable Securities being sold of
the issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.

 

h.              If any Investor is
required under applicable securities law to be described in the Registration
Statement as an underwriter, at the reasonable request of such Investor, the
Company shall furnish to such Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Investors, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.

 

i.                  Notwithstanding
the provisions of Section 4(i) of the Securities Purchase Agreement, upon the
written request of any Investor in connection with any Investor’s due diligence
requirements, if any, the Company shall make available for inspection by (i)
any Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial
and other records, and pertinent corporate documents and properties of the
Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the Inspector
has knowledge.  Each Investor agrees that
it shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.  Nothing herein (or in any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investors’ ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and regulations.

 

j.                  The Company
shall hold in confidence and not make any disclosure of information concerning
an Investor provided to the Company unless (i) disclosure of such information
is necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation 

 

7

 

of this Agreement or any other
agreement.  The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

 

k.               The Company shall
use its reasonable best efforts either to (i) cause all the Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure designation and
quotation of all the Registrable Securities covered by the Registration
Statement on the Nasdaq National Market, or (iii) if, despite the Company’s
reasonable best efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause  (i) or (ii), to secure the inclusion for
quotation on the Nasdaq SmallCap Market for such Registrable Securities and,
without limiting the generality of the foregoing, to use its reasonable best
efforts to arrange for at least two market makers to register with the National
Association of Securities Dealers, Inc. 
(“NASD”)
as such with respect to such Registrable Securities.  The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).

 

l.                  The Company
shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable and in compliance with applicable
securities laws, facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.

 

m.            If requested by an
Investor, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as an
Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable Securities.

 

n.              The Company shall
use its reasonable best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

 

o.              The Company shall
make generally available to its security holders as soon as practical, but not
later than 90 days after the close of the period covered thereby, an

 

8

 

earnings statement (in form
complying with the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of the Registration Statement.

 

p.              The Company shall
otherwise use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration hereunder.

 

q.              Within two (2)
Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause the general counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.

 

r.                 Notwithstanding to the contrary
herein, the Company may suspend a Registration Statement, if the Company shall
furnish to the Investors a certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its stockholders for such a
registration statement not to be suspended (a “Grace Period”).  In such event, the Company’s obligation
under this Agreement to keep a registration statement effective shall be
deferred for a Grace Period not to exceed 30 consecutive days during any 90 day
period, provided, that the Company may not exercise this right of deferral for
an aggregate of in excess of 75 days in any one year period (an “Allowable Grace
Period”).  If the Company
suspends the effectiveness of a Registration Statement, the Company will
promptly deliver notice to the Investors of such suspension and will again
deliver notice to the Investors when such suspension is no longer necessary.  The Company shall not accrue any
Registration Delay Payments during an Allowable Grace Period.

 

4.               Obligations Of
The Investors.

 

a.               At least five (5)
Business Days prior to the first anticipated filing date of a Registration
Statement, the Company shall notify each Investor in writing of the information
the Company requires from each such Investor if such Investor elects to have
any of such Investor’s Registrable Securities included in such Registration
Statement.  It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

 

b.              Each Investor, by
such Investor’s acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless such 

 

9

 

Investor has notified the
Company in writing of such Investor’s election to exclude all of such
Investor’s Registrable Securities from such Registration Statement.

 

c.               Each Investor
agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(g), the first sentence of 3(f) or
during an Allowable Grace Period, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(g),
the first sentence of 3(f) or during an Allowable Grace Period or receipt of
notice that no supplement or amendment is required.  Notwithstanding anything to the contrary, the Company shall cause
its transfer agent to deliver unlegended shares of Common Stock to a transferee
of an Investor if allowed under the applicable requirements of the Securities
Purchase Agreement, the Warrants and the Certificate of Designation in
accordance with applicable securities laws and the terms of the Securities
Purchase Agreement, in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor’s receipt of a notice from the Company of the happening of any event
of the kind described in Section 3(g), the first sentence of 3(f) or during an
Allowable Grace Period and for which the Investor has not yet settled.

 

5.               Expenses Of
Registration.

 

All reasonable
expenses, other than underwriting discounts and commissions, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. 
The Company shall also reimburse the BayStar Capital II, L.P. for the
fees and disbursements of Legal Counsel in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3 of this Agreement which
amount shall be limited to $10,000 in the aggregate.

 

6.               Indemnification.

 

In the event
any Registrable Securities are included in a Registration Statement under this
Agreement:

 

a.               To the fullest
extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”) incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon:  (i) any

 

10

 

untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities
are offered (“Blue Sky
Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”). 
Subject to Section 6(c), the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for
any legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. 
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): 
(i) shall not apply to a Claim by an Indemnified Person arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was timely
made available pursuant to Section 3(d); (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely
made available by the Company pursuant to Section 3(d); and (iv) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer
of the Registrable Securities by the Investors pursuant to Section 9.

 

b.              In connection with
any Registration Statement in which an Investor is participating, each such
Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement each Person, if

 

11

 

any, who controls the Company within the meaning of the 1933 Act or the
1934 Act (each, an “Indemnified
Party”), against any Claim or Indemnified Damages to which any
of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

c.               Promptly after
receipt by an Indemnified Person or Indemnified Party under this Section 6 of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not more than one counsel for such Indemnified Person or Indemnified Party to
be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding.  In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement
to which the Claim relates.  The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or Indemnified
Person which relates to such action or Claim. 
The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations

 

12

 

with respect thereto.  No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation.  Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party
or Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

 

d.              The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are received or Indemnified Damages are incurred.

 

e.               The indemnity
agreements contained herein shall be in addition to  (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

 

7.               Contribution.

 

To the extent
any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to
any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (i) no person involved in the sale of
Registrable Securities which person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) in connection with such
sale shall be entitled to contribution from any person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities pursuant to such Registration Statement.

 

8.               Reports Under
The 1934 Act.

 

Until the date on which (A) the Investors shall have sold all the
Conversion Shares and the Warrant Shares and (B) none of the Preferred Shares
is outstanding, with a view to making available to the Investors the benefits
of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration (“Rule 144”),
the Company agrees to:

 

13

 

a.               make and keep
public information available, as those terms are understood and defined in Rule
144;

 

b.              file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company’s obligations
under Section 4(c) of the Securities Purchase Agreement) and the filing of such
reports and other documents is required for the applicable provisions of Rule
144; and

 

c.               furnish to each
Investor so long as such Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied
with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
a copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

 

9.               Assignment of
Registration Rights.

 

The rights
under this Agreement shall be automatically assignable by the Investors to any
transferee of Registrable Securities if: 
(i) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment; (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v)
such transfer shall have been made in accordance with the applicable securities
laws and the applicable requirements of the Securities Purchase Agreement, the
Warrants and the Certificate of Designations.

 

10.         Amendment of Registration
Rights.

 

Provisions of
this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least a majority of the Registrable Securities.  Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities.  No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

11.         Miscellaneous.

 

a.               A Person is deemed
to be a holder of Registrable Securities whenever such Person owns or is deemed
to own of record such Registrable Securities. 
If the Company

 

14

 

receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the such record owner of such
Registrable Securities.

 

b.              Any notices,
consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered:  (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:

 

	
  If to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
  Commerce One, Inc.

  
	
   

  	
  4440 Rosewood Dr.

  
	
   

  	
  Pleasanton, CA  94588

  
	
   

  	
  Telephone:

  	
  (925) 520-6000

  
	
   

  	
  Facsimile:

  	
  (925) 520-6060

  
	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  and a separate notice to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Commerce One, Inc.

  
	
   

  	
  4440 Rosewood Dr.

  
	
   

  	
  Pleasanton, CA  94588

  
	
   

  	
  Telephone:

  	
  (925) 520-6000

  
	
   

  	
  Facsimile:

  	
  (925) 520-6060

  
	
   

  	
  Attention:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Wilson Sonsini Goodrich & Rosati

  
	
   

  	
  650 Page Mill Road

  
	
   

  	
  Palo Alto, CA  94304

  
	
   

  	
  Telephone:

  	
  (650) 849-3223

  
	
   

  	
  Facsimile:

  	
  (650) 493-6811

  
	
   

  	
  Attention:

  	
  N. Anthony Jeffries, Esq.

  
	
   

  	
   

  
	
  If to Legal Counsel:

  

 

15

 

	
   

  	
  Schulte Roth & Zabel LLP

  
	
   

  	
  919 Third Avenue

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Telephone:

  	
  (212) 756-2000

  
	
   

  	
  Facsimile:

  	
  (212) 593-5955

  
	
   

  	
  Attention:

  	
  Eleazer Klein, Esq.

  

 

If to a Buyer,
to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or to such other address and/or facsimile number and/or
to the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

c.               Failure of any
party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

 

d.              All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement 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.  Each party hereby irrevocably
submits to the non- exclusive jurisdiction of the state and federal courts
sitting Delaware, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is improper.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

16

 

e.               This Agreement, the
Securities Purchase Agreement, the Warrants and the Certificate of Designations
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. 
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein.  This Agreement, the Securities Purchase
Agreement, the Warrants and the Certificate of Designations supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

 

f.                 Subject to the
requirements of Section 9, this Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the parties
hereto.

 

g.              The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

h.              This Agreement may
be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.

 

i.                  Each party shall
do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

j.                  All consents and
other determinations required to be made by the Investors pursuant to this
Agreement shall be made, unless otherwise specified in this Agreement, by
Investors holding at least a majority of the Registrable Securities, determined
as if all of the Preferred Shares held by Investors then outstanding have been
converted into Registrable Securities and all Warrants then outstanding have
been exercised for Registrable Securities without regard to any limitations on
conversion of the Preferred Shares or on exercises of the Warrants.

 

k.               The language used
in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent and no rules of strict construction will be applied
against any party.

 

l.                  This Agreement
is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

* * * * * *

 

17

 

IN WITNESS
WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.

 

 

	
  COMPANY:

  	
  BUYERS:

  
	
   

  	
   

  
	
  COMMERCE ONE, INC.

  	
  BAYSTAR CAPITAL II, L.P.

  
	
   

  	
   

  
	
   

  	
  By: BayStar Capital Management, LLC

  
	
   

  	
   

  
	
  By:

  	
               /s/
  Charles Boynton

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Charles Boynton

  	
  By:

  	
                 /s/
  Steven M. Lamar

  
	
   

  	
  Title:

  	
  Senior Vice President and

  	
   

  	
  Name:  Steven M. Lamar

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  	
  Title:    Managing Member

  
						

 

18

 

SCHEDULE OF
BUYERS

 

 

	
  Investor

  	
   

  	
  Investor
  Address

  and Facsimile Number

  	
   

  	
  Investor’s
  Representative’s Address

  and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BayStar Capital II, L.P.

  	
   

  	
  c/o
  BayStar Capital Management, LLC

  80 E Sir Francis Drake Blvd.

  Suite 2B 

  Larkspur, California  94939 

  Attention:  Steven M. Lamar 

  Facsimile:  (415) 834-4601 

  Telephone: (415) 834-4620

  	
   

  	
  Schulte
  Roth & Zabel LLP  

  919 Third Avenue  
New York, NY 10022  
Attn: 
  Eleazer Klein, Esq.  
Facsimile:  (212) 593-5955  
Telephone:  (212) 756-2000

  

 

19

 

EXHIBIT
A

 

FORM OF NOTICE
OF EFFECTIVENESS

OF
REGISTRATION STATEMENT

 

 

EquiServe

150 Royall Street

Canton, MA 02021

Attention: Norris Richardson

 

Re:                    Commerce One,
Inc.

 

Ladies and
Gentlemen:

 

I am the
General Counsel to Commerce One, Inc., a Delaware corporation (the “Company”), and have represented the Company
in connection with that certain Securities Purchase Agreement (the “Purchase Agreement”) entered into by and
among the Company and the buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders shares of its Series B Convertible Preferred Stock, par
value $.0001 per share, (the “Preferred
Shares”) convertible into shares of the Company’s Common Stock, par
value $.0001  per share (the “Common Stock”) and warrants exercisable for
shares of Company Common Stock (the “Warrants”).  Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon conversion of the Preferred
Shares and upon exercise of the Warrants under the Securities Act of 1933, as
amended (the “1933 Act”).  In connection with the Company’s obligations
under the Registration Rights Agreement, on
                            ,
2003, the Company filed a Registration Statement on Form S-3 (File No.
333-                      )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.

 

In connection
with the foregoing, I advise you that a member of the SEC’s staff has advised
me by telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on
[ENTER DATE OF EFFECTIVENESS] and I have no knowledge, after telephonic inquiry
of a member of the SEC’s staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the Registration Statement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

CC:                             [LIST
NAMES OF HOLDERS]

 

20

 

INDEX
OF TERMS

 

	
  1933
  Act

  
	
  1934
  Act

  
	
  Agreement

  
	
  Allowable Grace Period

  
	
  Blue Sky Filing

  
	
  Business Day

  
	
  Buyer

  
	
  Certificate of Designations

  
	
  Claims

  
	
  Common Stock

  
	
  Company

  
	
  Conversion Shares

  
	
  Effectiveness Deadline

  
	
  Filing Deadline

  
	
  Grace Period

  
	
  Indemnified Damages

  
	
  Indemnified Party

  
	
  Indemnified Person

  
	
  Inspectors

  
	
  Investor

  
	
  Legal Counsel

  
	
  NASD

  
	
  Person

  
	
  Preferred Shares

  
	
  Preferred Stock

  
	
  Records

  
	
  Register

  
	
  Registrable Securities

  
	
  Registration Delay Payments

  
	
  Registration Period

  
	
  Registration Statement

  
	
  Rule 144

  
	
  Rule 415

  
	
  SEC

  
	
  Securities Purchase Agreement

  
	
  Violations

  
	
  Warrant Shares

  
	
  Warrants

  

 

21Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of July 10, 2003, by and among Commerce
One, Inc., a Delaware corporation, with headquarters located at 4440 Rosewood
Drive, Pleasanton, California 94588 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and
collectively, the “Buyers”).

 

WHEREAS:

 

A.                                   The Company has
authorized a new series of convertible preferred shares of the Company, the
terms of which are set forth in the certificate of designations for such series
of preferred shares (the “Certificate of
Designations”) in the form attached hereto as Exhibit A
(together with any convertible preferred shares issued in replacement thereof
in accordance with the terms thereof, the “Preferred
Shares”), which Preferred Shares shall be convertible into shares of
the Company’s Common Stock, par value $.0001 per share (the “Common Stock”) (as converted, the “Conversion Shares”), in accordance with the
terms of the Certificate of Designations;

 

B.                                     Each Buyer wishes
to purchase, and the Company wishes to sell, upon the terms and conditions
stated in this Agreement, (i) an aggregate of 100,000 Preferred Shares in the
respective amounts set forth opposite each Buyer’s name in column (3) on the
Schedule of Buyers and (ii) warrants, in substantially the form attached hereto
as Exhibit B (the “Warrants”),
to acquire that number of shares of Common Stock set forth opposite such
Buyer’s name in column (4) on the Schedule of Buyers (as exercised,
collectively, the “Warrant Shares”);

 

C.                                     The Company and
each Buyer is executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the “1933
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities
and Exchange Commission (the “SEC”)
under the 1933 Act to the extent necessary to issue the Preferred Shares, the
Conversion Shares, the Warrants and the Warrant Shares;

 

D.                                    Upon the
consummation of the transactions contemplated by this Agreement, the parties
hereto shall execute and deliver a Registration Rights Agreement, substantially
in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant
to which the Company will agree to provide certain registration rights with
respect to the Registrable Securities (as defined in the Registration Rights
Agreement) under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

 

E.                                      The Preferred
Shares, the Conversion Shares, the Warrants and the Warrant Shares collectively
are referred to herein as the “Securities”.

 

NOW,
THEREFORE, the Company and each Buyer hereby agree as
follows:

 

 

1.                                       PURCHASE
AND SALE OF PREFERRED SHARES AND WARRANTS.

 

(a)                                  Purchase
of Preferred Shares and Warrants.

 

(i)                                     Preferred
Shares and Warrants.  Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
agrees to purchase from the Company on the Closing Date (as defined below), the
respective number of Preferred Shares set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers,  along
with Warrants to acquire that number of Warrant Shares set forth opposite such
Buyer’s name in column (4) on the Schedule of Buyers (the “Closing”).

 

(ii)                                  Closing.  The Closing shall occur on the Closing Date
at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
York 10022.

 

(iii)                               Purchase
Price.  The purchase price for each
Buyer (the “Purchase Price”) of
the Preferred Shares and related Warrants to be purchased by each such Buyer at
the Closing shall be equal to $100 for each Preferred Share and related
Warrants being purchased by such Buyer at the Closing.

 

(b)                                 Closing
Date.  The date and time of the
Closing (the “Closing Date”) shall
be noon, New York City Time, on the date hereof after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6(a) and 7(a) below (or such later date as is mutually agreed to by the Company
and each Buyer).

 

(c)                                  Form
of Payment.  On the Closing Date,
(A) each Buyer shall pay the Purchase Price to the Company for the Preferred
Shares and Warrants to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Company’s
written wire instructions, less any amount withheld at the Closing for expenses
pursuant to Section 4(g), and (B) the Company shall deliver to each Buyer stock
certificates (the “Preferred Stock
Certificates”) representing such number of the Preferred Shares
which such Buyer is then purchasing hereunder along with the Warrants (in the
amounts as such Buyer shall request) such Buyer is purchasing, duly executed on
behalf of the Company and registered in the name of such Buyer.

 

2.                                       BUYER’S
REPRESENTATIONS AND WARRANTIES.

 

Each Buyer
represents and warrants with respect to only itself that:

 

(a)                                  No Public Sale or
Distribution.  Such Buyer is (i)
acquiring the Preferred Shares and the Warrants and (ii) upon conversion of the
Preferred Shares and exercise of the Warrants will acquire the Conversion
Shares issuable upon conversion of the Preferred Shares and the Warrant Shares
issuable upon exercise of the Warrants, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by

 

2

 

making the representations
herein, such Buyer does not agree to hold any of the Securities for any minimum
or other specific term and reserves the right to dispose of the Securities at
any time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.

 

(b)                                 Accredited
Investor Status.  Such Buyer is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(c)                                  Reliance
on Exemptions.  Such Buyer
understands that the Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Securities.

 

(d)                                 Information.  Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer.  Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. 
Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained herein.  Such Buyer understands that its investment in the Securities
involves a high degree of risk.  Such
Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

(e)                                  No
Governmental Review.  Such Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.

 

(f)                                    Transfer
or Resale.  Such Buyer understands
that: (i) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a form generally
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer shall have satisfied the
requirements of Rule 144(k) promulgated under the 1933 Act, as amended (or a
successor rule thereto); (ii) any sale of the Securities made in reliance on
Rule 144 or Rule 144A promulgated under the 1933 Act, as amended (or a
successor rule thereto) (collectively, “Rule
144”), may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person (as defined in Section 3(r))
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company

 

3

 

nor any other Person is under
any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.  The Securities may be pledged
in connection with a bona fide margin account or other bona fide loan secured
by the Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Buyer
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document, including, without
limitation, this Section 2(f); provided, that in order to make any sale,
transfer or assignment of Securities, such Buyer and its pledgee makes such
disposition in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. 
Notwithstanding the foregoing, no Buyer shall transfer any Preferred
Shares or Warrants other than to an affiliate of such Buyer.

 

(g)                                 Legends.  Such Buyer understands that the certificates
or other instruments representing the Preferred Shares and the Warrants and,
until such time as the sale of the Registrable Securities have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
stock certificates representing the Registrable Securities, except as set forth
below, shall bear any legend as required by the “blue sky” laws of any state
and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT 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. 
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.

 

The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities upon which it
is stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with
a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the 1933 Act, or (iii) such 

 

4

 

holder provides the Company with reasonable assurance that the
Securities can be sold, assigned or transferred pursuant to Rule 144(k).

 

(h)                                 Authorization;
Validity; Enforcement.  This
Agreement has been, and the Registration Rights Agreement shall have been by
the Closing Date, duly and validly authorized, executed and delivered on behalf
of such Buyer and shall constitute the legal, valid and binding obligations of
such Buyer enforceable against such Buyer in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

 

(i)                                     Residency.  Such Buyer is a resident of that country or
state specified below its address on the Schedule of Buyers.

 

(j)                                     Organization.  Such Buyer is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, and has the requisite power and authorization to execute and
deliver this Agreement and to consummate the transaction contemplated hereby.

 

(k)                                  No
Conflicts.  The execution, delivery
and performance of this Agreement and the Registration Rights Agreement by such
Buyer and the consummation by such Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of the constituent
documents of such Buyer or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which such
Buyer is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree applicable to such Buyer or by which any property or
asset of such Buyer is bound or affected, except in the case of clauses (ii)
and (iii), for such breaches or defaults as would not be reasonably expected to
have a material adverse effect on such Buyer’s ability to consummate the
transactions contemplated hereby.

 

3.                                       REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

Other than as
set forth in the SEC Documents (as defined below) and in a Schedule of
Exceptions delivered by the Company to the Buyers concurrently with the
execution of this Agreement, the Company represents and warrants to each Buyer
as of the Closing, or such other date as specified, that (for the purposes of
this Section 3, “knowledge” of the Company shall mean the actual knowledge of
the officers of the Company):

 

(a)                                  Organization
and Qualification.  The Company and
its “Subsidiaries” (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns more than 50% of the capital stock or holds a more than 50%
equity or similar interest) are entities duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are organized, and
have the requisite corporate or other power and authorization to own their
properties and to carry on their business as now being conducted.  Each of the Company and its Subsidiaries is
duly qualified as a foreign entity to do

 

5

 

business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, properties, assets, operations, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby or
by the agreements and instruments to be entered into in connection herewith, or
on the authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). 
The Company has no Subsidiaries except as set forth on Schedule 3(a).

 

(b)                                 Authorization;
Enforcement; Validity.  The Company
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Certificate of Designations, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as
defined in Section 5(b)) and the Warrants (collectively, the “Transaction Documents”) and to issue the
Securities in accordance with the terms hereof and thereof.  The execution and delivery of the
Transaction Documents by the Company and the execution and filing of the
Certificate of Designations by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Preferred Shares and the Warrants and the
reservation for issuance and the issuance of the Conversion Shares  and the Warrant Shares issuable upon
conversion or exercise thereof, as the case may be, have been duly authorized
by the Company’s Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders.  This Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.  The
Certificate of Designations has been filed on or prior to the Closing Date with
the Secretary of State of the State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with its terms and shall
not have been amended unless in compliance with its terms.

 

(c)                                  Issuance
of Securities.  The Preferred Shares
and Warrants are duly authorized and, upon issuance in accordance with the
terms hereof, shall be validly issued, free from all documentary stamp, transfer
or similar taxes (provided that such taxes shall be limited to United States
federal taxes, state taxes and taxes of the jurisdiction of incorporation of
the Company), liens and charges with respect to the issue thereof (other than
restrictions on transfer contained in this Agreement and the Registration
Rights Agreement), and the Preferred Shares shall be entitled to the rights and
preferences set forth in the Certificate of Designations.  As of the Closing, a number of shares of
Common Stock shall have been duly authorized and reserved for issuance which
equals 7,300,000.  Upon conversion or
exercise in accordance with the Preferred Shares or the Warrants, as the case
may be, the Conversion Shares and the Warrant Shares, respectively, will be
validly issued, fully paid and nonassessable and free from all documentary
stamp, transfer or similar taxes (provided that such taxes shall be limited to
United States federal taxes, state taxes and taxes of the jurisdiction of
incorporation of the Company),

 

6

 

liens and charges with respect
to the issue thereof (other than restrictions on transfer contained in this
Agreement and the Registration Rights Agreement), with the holders being
entitled to all rights accorded to a holder of Common Stock.  Assuming the accuracy of each of the
representations and warranties of Buyer contained in Section 2, the issuance by
the Company of the Securities is exempt from registration under the 1933 Act.

 

(d)                                 No
Conflicts.  The execution, delivery
and performance of the Transaction Documents, including the Certificate of
Designations, by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Preferred Shares and Warrants and reservation for issuance
and issuance of the Conversion Shares and the Warrant Shares) will not (i)
result in a violation of the certificate of incorporation, any certificate of
designations, preferences and rights of any outstanding series of preferred
stock or bylaws of the Company or any Subsidiary, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its Subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market) applicable to the Company or any
of its Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected.

 

(e)                                  Consents.  All consents, authorizations, orders,
filings and registrations which the Company is required as of the Closing Date
to obtain to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with their terms have
been obtained or effected on or prior to the Closing Date.  The Company and its Subsidiaries are unaware
of any facts or circumstances which might reasonably be expected to prevent the
Company from obtaining or effecting any of the foregoing.  The Company is not in violation of the
listing requirements of the Principal Market and has no knowledge of any facts
which would reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.

 

(f)                                    Acknowledgment
Regarding Buyer’s Purchase of Securities. 
The Company acknowledges and agrees that each Buyer is acting solely in
the capacity of arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and that no Buyer is an officer or director
of the Company.  The Company
further acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents, including the Certificate of Designations, and the
transactions contemplated hereby and thereby, and any advice given by a Buyer
or any of its representatives or agents in connection with the Transaction
Documents, including the Certificate of Designations, and the transactions
contemplated hereby and thereby is merely incidental to such Buyer’s purchase
of the Securities.  The Company further
represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by
the Company and its representatives.

 

(g)                                 No
General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its affiliates, nor any Person
acting on its or their behalf, has engaged in

 

7

 

any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities.  The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. 
The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, attorney’s fees and
out-of-pocket expenses) arising in connection with any such claim.  The Company has not engaged any placement
agent or other agent in connection with the sale of the Preferred Shares and
the Warrants.

 

(h)                                 No
Integrated Offering.  None of the
Company, its Subsidiaries, any of their affiliates, and any Person acting on
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of
the Company are listed or designated.

 

(i)                                     [Reserved]

 

(j)                                     Application
of Takeover Protections; Rights Agreement. 
The Company and its board of directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
(as defined in Section 3(q)) or the laws of the state of its incorporation
which is or could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Securities and any Buyer’s ownership of the
Securities.  Other than the Amended and
Restated Preferred Stock Rights Agreement, dated as of July 11, 2001, by and
among the Company, New Commerce One Holding, Inc. and Fleet National Bank, as
Rights Agent, the Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock
or a change in control of the Company.

 

(k)                                  SEC
Documents; Financial Statements. 
Since December 31, 2002, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”).  The Company has made available to the Buyers
or their respective representatives true, correct and complete copies of the
SEC Documents not available on the EDGAR system.  As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the 

 

8

 

circumstances under which they
were made, not misleading.  As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).  Taken as a whole, the
information provided by or on behalf of the Company to the Buyers when read together
with the SEC Documents does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made,
not misleading.

 

(l)                                     Absence
of Certain Changes.  Except as
disclosed in Schedule 3(l), since March 31, 2003, there have been no
changes or developments in the business, properties, operations, condition
(financial or otherwise) or results of operations of the Company or its
Subsidiaries that have had or would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Since March 31, 2003, the Company has not
(i) declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, in excess of $200,000 outside of the ordinary course of business or
(iii) had capital expenditures, individually or in the aggregate, in excess of
$200,000.  The Company has not taken any
steps to seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. 
The Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing will not be, Insolvent
(as defined below).  For purposes of
this Section 3(l), “Insolvent”
means (i) the present fair saleable value of the Company’s assets is less than
the amount required to pay the Company’s total indebtedness, contingent or
otherwise, (ii) the Company is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (iii) the Company intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature.

 

(m)                               No
Undisclosed Events, Liabilities, Developments or Circumstances.  Except for the transactions contemplated
hereby, no event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.

 

(n)                                 Conduct
of Business; Regulatory Permits. 
Neither the Company nor its Subsidiaries is in violation of any term of
or in default under its Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series

 

9

 

of preferred stock of the
Company or Bylaws or their organizational charter or bylaws, respectively
(except, with respect to the Subsidiaries, for violations that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect).  Neither the Company
nor any of its Subsidiaries is in violation of any judgment, decree or order or
any statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
Without limiting the generality of the foregoing, the Company is not in
violation of any of the material rules, regulations or requirements of the
Nasdaq National Market (the “Principal Market”)
currently in effect and has no knowledge of any facts or circumstances which would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future.  Since
December 31, 2002, (i) the Common Stock has been designated for quotation or
listed on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal Market.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

 

(o)                                 Foreign
Corrupt Practices.  Neither the
Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

 

(p)                                 Transactions
With Affiliates.  Except as set
forth on Schedule 3(p) and in the SEC Documents filed at least ten days
prior to the date hereof and other than the grant of stock options disclosed on
Schedule 3(q), none of the officers, directors or employees of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.

 

10

 

(q)                                 Equity
Capitalization.  As of the date
hereof, the authorized capital stock of the Company consists of (x) 950,000,000
shares of Common Stock, of which as of the date hereof, 31,398,715 are issued
and outstanding, 28,939 are issued but not outstanding as treasury shares,
10,161,504 shares are reserved for issuance pursuant to the Company’s stock
option and purchase plans and 20,000 shares are reserved for issuance pursuant
to securities (other than the Preferred Shares and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock, and (y)
50,000,000 shares of preferred stock, of which as of the date hereof, 300,000
are designated Series A Participating Preferred Stock and none are issued or
outstanding.  All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable.  Except as disclosed
on Schedule 3(q) and under the caption “Relationship with SAP — Equity
Relationship” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2002: (i) no shares of the Company’s capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries; (iii) there are no outstanding
debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness (as defined in
Section 3(r)) of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either singly or in
the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents (as defined herein) but not so
disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or would not reasonably be expected to
have a Material Adverse Effect.  The
Company has made available to the Buyer true, correct and complete copies of
the Company’s Restated Certificate of Incorporation, as amended and as in
effect on the date hereof (together with any certificate of designations of any
outstanding series of preferred stock of the Company, the “Certificate of Incorporation”), and the
Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all 

 

11

 

securities convertible into, or
exercisable or exchangeable for, Common Stock and the material rights of the
holders thereof in respect thereto.

 

(r)                                    Indebtedness
and Other Contracts.  Except as set
forth on Schedule 3(r), neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness in excess of $200,000 (as defined below),
(ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract,
agreement or instrument would reasonably be expected to result in a Material
Adverse Effect, other than contracts, agreements or instruments entered into in
the ordinary course of business which to the Company’s knowledge, neither it
nor any other party thereto is in default or other violation of, (iii) is in
violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company’s officers, has or is expected to have a
Material Adverse Effect.  For purposes of
this Agreement:  (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a
capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any mortgage, lien, pledge,
change, security interest or other encumbrance upon or in any property or
assets (including accounts and contract rights) owned by any Person, even
though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) “Contingent
Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; and (z) “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

 

(s)                                  Absence
of Litigation.  There is no action,
suit, proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, government agency,

 

12

 

self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against the
Company, the Common Stock or any of the Company’s Subsidiaries or any of the
Company’s or the Company’s Subsidiaries’ officers or directors in their
capacities as such, except (i) as disclosed in Item 3 of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2002 and in Part II, Item 1
of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2003 or (ii) such as are not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.  To the knowledge of the Company, none of the
directors or officers of the Company have been a party to any securities
related litigation during the past five years, other than as disclosed in the
SEC Documents.

 

(t)                                    Insurance.  The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.  Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.

 

(u)                                 Employee
Relations.  Neither the Company nor
any of its Subsidiaries is a party to any collective bargaining agreement or,
to its knowledge, employs any member of a union.  The Company and its Subsidiaries believe that their relations
with their employees are good.  No
executive officer of the Company (as defined in Rule 501(f) of the 1933 Act)
has notified the Company that such officer intends to leave the Company or
otherwise terminate such officer’s employment with the Company.  No executive officer of the Company, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and, to the knowledge of the
Company, the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any material liability with
respect to any of the foregoing matters. 
The Company and its Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance would not reasonably expected to
result, individually or in the aggregate, in a Material Adverse Effect.

 

(v)                                 Title.
Except as set forth in Schedule 3(v), the Company and its Subsidiaries have
good and marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except (i) immaterial liens
for taxes not yet delinquent, (ii) immaterial mechanics’ and materialmen’s
liens (and other similar liens), and immaterial liens under operating and
similar agreements, to the extent the same relate to expenses incurred in the
ordinary course of business and that are not yet due, (iii) that are routine
Governmental Approvals, or (iv) such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of its

 

13

 

Subsidiaries.  Neither the Company nor any of its
Subsidiaries owns any real property. 
Any real property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.

 

(w)                               Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate
rights or licenses to use all trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (“Intellectual
Property Rights”) necessary to conduct their respective businesses
as now conducted.  None of the Company’s
Intellectual Property Rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement, except
for those which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. 
The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others.  Except as set forth in Schedule 3(w),
there is no claim, action or proceeding being made or brought, or to the
knowledge of the Company, being threatened, against the Company or its
Subsidiaries regarding its Intellectual Property Rights.  The Company does not have any knowledge of
any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.

 

(x)                                   Environmental
Laws.  The Company and its
Subsidiaries (i) are in compliance with any and all Environmental Laws (as
hereinafter defined), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.  The term “Environmental
Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)  into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(y)                                 Tax
Status.  The Company and each of its
Subsidiaries (i) has made or filed all federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to

 

14

 

the periods to which such
returns, reports or declarations apply. 
There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know
of no specific basis for any such particular claim.

 

(z)                                   Internal
Accounting Controls.  The Company
and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference.

 

(aa)                            Sarbanes-Oxley
Act.  The Company is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof, except where such noncompliance would not have a Material Adverse
Effect.

 

(bb)                          Investment
Company Status.  The Company is not,
and upon consummation of the sale of the Securities will not be, an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.

 

4.                                       COVENANTS.

 

(a)                                  Reasonable
Best Efforts.  Each party shall use
its reasonable best efforts to satisfy timely each of the conditions to be
satisfied by it as provided in Sections 6 and 7 of this Agreement.

 

(b)                                 Form
D and Blue Sky.  The Company agrees
to file a Form D with respect to the Securities as required under Regulation D
and to provide a copy thereof to each Buyer promptly after such filing.  The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to
the Buyers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date.  The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

 

(c)                                  Reporting
Status.  Until the date on which the
Investors (as defined in the Registration Rights Agreement) shall have sold all
the Conversion Shares and Warrant Shares  and
none of the Preferred Shares  or
Warrants is outstanding, (the “Reporting
Period”), the Company shall file all reports required to be filed
with the SEC pursuant to the 1934 Act, and

 

15

 

the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would otherwise permit such
termination.

 

(d)                                 Use
of Proceeds.  The Company will use
the proceeds from the sale of the Securities for working capital purposes.

 

(e)                                  Financial
Information.  The Company agrees to
send the following to each Investor during the Reporting Period unless the
following are filed with the SEC through EDGAR and are available to the public
through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act;
provided, that in no case will the Company be required to furnish any exhibits
to such reports or other materials that are subject to a confidential treatment
request.  “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.

 

(f)                                    Listing.  The Company shall promptly secure the
listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents.  The Company shall maintain
the Common Stock’s authorization for quotation on the Principal Market or the
Nasdaq SmallCap Market.  Neither the
Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the Common Stock not being listed on the
Principal Market or the Nasdaq SmallCap Market.  The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).

 

(g)                                 Fees.  Subject to Section 8 below, at the Closing,
the Company shall pay BayStar Capital II, L.P. or its designee(s) for its
reasonable, accountable expenses in connection with the transactions
contemplated hereby in an amount up to $60,000 (of which $25,000 has previously
been paid), which amount shall be withheld by such Buyer from its Purchase
Price at the Closing.  Each party shall
be responsible for the payment of any placement agent’s fees, financial
advisory fees, or broker’s commissions incurred by it and relating to or
arising out of the transactions contemplated hereby.  The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney’s
fees and out-of-pocket expenses) arising in connection with claim relating to
any such payment.  Except as otherwise
set forth in this Agreement or in the Registration Rights Agreement, each party
to this Agreement shall bear its own expenses in connection with the sale of
the Securities to the Buyers.

 

(h)                                 Pledge
of Securities.  The Company
acknowledges and agrees that nothing in this Agreement will prevent an Investor
(as defined in the Registration Rights Agreement) from pledging the Securities
in connection with a bona fide margin agreement or other bona fide loan or
financing arrangement that is secured by such Securities.  The pledge of

 

16

 

the Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document, including,
without limitation, Section 2(f) of this Agreement; provided that an Investor
and its pledgee shall be required to comply with the provisions of Section 2(f)
hereof in order to effect a sale, transfer or assignment of Securities to such
pledgee.  The Company hereby agrees to
execute and deliver such documentation as a pledgee of Securities may
reasonably request in connection with a pledge of such Securities to such
pledgee by an Investor.

 

(i)                                     Disclosure
of Transactions and Other Material Information.  On or before 8:30 a.m., New York City time, on  the Business Day following the Closing
Date, the Company shall file a Current Report on Form 8-K describing the terms
of the transactions contemplated by the Transaction Documents in the form required
by the 1934 Act, and attaching the material Transaction Documents (including,
without limitation, this Agreement, the form of the Certificate of
Designations, the form of Warrant and the form of the Registration Rights
Agreement) as exhibits to such filing (the “8-K
Filing”).  From and after the
filing of the 8-K Filing with the SEC, so long as a Buyer does not exercise its
right to have an observer at meetings of the Company’s Board of Directors, such
Buyer shall not be in possession of any material, nonpublic information
actually provided by the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that was not specifically
requested by such Buyer and that is not disclosed in the 8-K Filing.  The Company shall not, and shall cause each
of its Subsidiaries and its and each of their respective officers, directors,
employees and agents, not to, provide any Buyer with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing with the SEC not directly solicited by such Buyer,
except in connection with such Buyer’s exercise of its right to have an
observer attend meetings of the Company’s Board of Directors.  Subject to the foregoing, neither the
Company nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval
of any Buyer, to make any press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of the Principal
Market (provided that in the case of clause (i) each Buyer shall be consulted
by the Company (although the consent of such Buyer shall not be required) in
connection with any such press release or other public disclosure prior to its
release).

 

(j)                                     No
Integrated Offering.  None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will, directly or indirectly, make any offers or sales of any security
or solicit any offers to buy any security, under circumstances that would
require registration of the Company’s sale of any of the Securities under the
1933 Act or cause this offering to be subject to any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of
the Company are listed or designated.

 

17

 

(k)                                  Reservation
of Shares.  The Company shall take
all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than the number of shares of Common Stock needed
to provide for the issuance of the shares of Common Stock upon conversion of
all outstanding Preferred Shares, including payment of paid-in-kind dividends
(without regard to any limitations on conversions) and the number of shares of
Common Stock needed to provide for the issuance of the shares of Common Stock
upon exercise of all outstanding Warrants (without regard to any limitations on
exercises).

 

(l)                                     Observer
Rights.  So long as the Buyers
(together with their affiliates) hold at least 50% of the Preferred Shares
initially issued to them hereunder, the Buyers shall have the right, but not
the obligation, to appoint one individual mutually agreeable to the Buyers and
the Company (a “Preferred Observer”)
to observe and participate in the discussion of any proceeding of the Company’s
Board of Directors in a nonvoting observer capacity; provided, that the
Preferred Observer may not be a member of or observer of the board of directors
of a competitor of the Company.  Each
Preferred Observer shall have the right to receive (i) any written material or
other information provided to members of the Board of Directors (or that any
director has the right to request); provided, that such Preferred
Observer shall acknowledge and agree that he or she will be bound to satisfy
the same duties and obligations of confidentiality with respect to such
information that members of the Board of Directors must satisfy and (ii) any
notice provided to the Board of Directors of the Company at the same time in
the same manner as such Board of Directors. 
If the Company proposes to take any action by written consent in lieu of
a meeting of its Board of Directors, the Company shall give written notice
thereof to each Preferred Observer promptly following the effective date of
such consent describing in reasonable detail the nature and substance of such
action.  Each Preferred Observer shall
be entitled to be the same reimbursement for expenses associated with attending
board meetings provided to the members of the Board of Directors.  Notwithstanding the foregoing, if the
Company determines in good faith that participation by the Preferred Observer
in any meeting or the distribution to the Preferred Observer of any written
materials described in this Section 4(l) relates to information deemed
confidential,  proprietary or
attorney-client privileged (“Protected
Information”), the Company shall have the right to exclude the
Preferred Observer from the portion of such meeting and from access to such
information in which Protected Information is discussed or presented.

 

5.                                       REGISTER;
TRANSFER AGENT INSTRUCTIONS.

 

(a)                                  Register.  The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Preferred Shares or Warrants), a register
for the Preferred Shares and the Warrants, in which the Company shall record
the name and address of the Person in whose name the Preferred Shares  and the Warrants have been issued
(including the name and address of each transferee), the number of Preferred
Shares held by such Person and the number of Warrant Shares issuable upon
exercise of the Warrants held by such Person. 
The Company shall keep the register open and available at all times
during business hours for inspection of any Buyer or its legal representatives.

 

(b)                                 Transfer
Agent Instructions.  The Company
shall issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates or credit

 

18

 

shares to the applicable
balance accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Conversion Shares and the Warrant Shares  in such amounts as specified from time to
time by each Buyer to the Company upon conversion of the Preferred Shares or
exercise of the Warrants in the form of Exhibit D attached hereto (the “Irrevocable Transfer Agent Instructions”).  The Company warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to Sections 2(f)
and 2(g) hereof, will be given by the Company to its transfer agent, and that
the Securities shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the other
Transaction Documents.  If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with
Section 2(f), the Company shall permit the transfer and shall promptly instruct
its transfer agent to issue one or more certificates or credit shares to the
applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment.  In the event that such sale, assignment or
transfer involves Conversion Shares or Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or in compliance
with Rule 144, the transfer agent shall issue such Securities to the Buyer,
assignee or transferee, as the case may be, without any restrictive
legend.  The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to a
Buyer.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5(b), that a
Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.

 

6.                                       CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL. 
The obligation of the Company hereunder to issue and sell the Preferred
Shares  and the related Warrants to
each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:

 

(i)                                     Such
Buyer and each other Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company.

 

(ii)                                  Such
Buyer and each other Buyer shall have delivered to the Company the Purchase
Price (less, in the case of BayStar Capital II, L.P., the amounts withheld
pursuant to Section 4(g)) for the Preferred Shares and the related Warrants
being purchased by such Buyer and each other Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.

 

(iii)                               The
representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and such Buyer shall have performed, satisfied and complied in
all material respects (except for covenants, agreements and conditions that are
qualified by

 

19

 

materiality, which shall be complied with in
all respects) with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date.

 

(iv)                              No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

7.                                       CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE. 
The obligation of each Buyer hereunder to purchase the Preferred Shares  and the related Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer’s sole
benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:

 

(i)                                     The
Company shall have executed and delivered to such Buyer each of the Transaction
Documents.

 

(ii)                                  The
Certificate of Designations shall have been filed with the Secretary of State
of the State of Delaware, and a copy thereof certified by the Secretary of
State of the State of Delaware shall have been delivered to such Buyer.

 

(iii)                               The
Company shall have executed and delivered to such Buyer the Preferred Stock
Certificates (in such denominations as such Buyer shall request) for the
Preferred Shares being purchased by such Buyer at the Closing.

 

(iv)                              Such
Buyer shall have received the opinion of Wilson Sonsini Goodrich & Rosati,
the Company’s counsel, dated as of the Closing Date, in substantially the form
of Exhibit E attached hereto.

 

(v)                                 The
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Preferred Shares and
exercise of the Warrants, at least 7,300,000 shares of Common Stock.

 

(vi)                              The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit D attached hereto, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

 

(vii)                           The
Company shall have delivered to such Buyer a certificate evidencing the
incorporation and good standing of the Company in such corporation’s state of
incorporation issued by the Secretary of State of such state of incorporation
as of a date within 10 days of the Closing Date.

 

20

 

(viii)                        The
Company shall have delivered to such Buyer a certificate evidencing the
Company’s qualification as a foreign corporation and good standing issued by
the Secretary of State of the State of California as of a date within 10 days
of the Closing Date.

 

(ix)                                The
Company shall have delivered to such Buyer a certified copy of the Certificate
of Incorporation as certified by the Secretary of State of the State of
Delaware within 10 days of the Closing Date.

 

(x)                                   The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions
consistent with Section 3(b) as adopted by the Company’s Board of Directors in
a form reasonably acceptable to such Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
form attached hereto as Exhibit F.

 

(xi)                                The
representations and warranties of the Company shall be true and correct as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all material
respects (except for covenants, agreements and conditions that are qualified by
materiality, which shall be complied with in all respects) with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.  Such Buyer shall have received a
certificate, executed by the Chief Executive Officer or the Chief Financial
Officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer in
the form attached hereto as Exhibit G.

 

(xii)                             The
Company shall have delivered to such Buyer a letter from the Company’s transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.

 

(xiii)                          The
Common Stock (x) shall be designated for quotation or listed on the Principal
Market and (y) shall not have been suspended by the SEC or the Principal Market
from trading on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened either (A) in writing by the SEC or the
Principal Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market; and the Conversion Shares issuable upon
conversion of the Preferred Shares (without regard to any limitations on
conversions) and the Warrant Shares issuable upon exercise of the Warrants
(without regard to any limitations on exercise) shall be listed (subject filing
an official notice of issuance of additional shares) upon the Principal Market.

 

(xiv)                         The
Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Preferred Shares
and the Warrants.

 

21

 

(xv)                            No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

8.                                       TERMINATION.  In the event that the Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company’s or such Buyer’s failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, this if this Agreement is
terminated pursuant to this Section 8, the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g)
above.

 

9.                                       MISCELLANEOUS.

 

(a)                                  Governing
Law; Jurisdiction; Jury Trial.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement 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.  Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in Delaware, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

(b)                                 Counterparts.  This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original,
not a facsimile signature.

 

22

 

(c)                                  Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(d)                                 Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.

 

(e)                                  Entire
Agreement; Amendments.  This
Agreement supersedes all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
holders of a majority or more of the Preferred Shares, or, if prior to the
Closing Date, the Company and the Buyers listed on the Schedule of Buyers as
being obligated to purchase a majority or more of the Preferred Shares.  No provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Preferred Shares then outstanding.  No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents, holders of Preferred Shares or holders of the Warrants,
as the case may be.  The Company has
not, directly or indirectly, made any agreements with any Buyers relating to
the terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents.

 

(f)                                    Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile
numbers for such communications shall be:

 

	
  If to the Company:

  
	
   

  
	
  Commerce One, Inc.

  
	
  4440 Rosewood Drive

  
	
  Pleasanton, California 94588

  
	
  Telephone:

  	
  (925) 520-6000

  
	
  Facsimile:

  	
  (925) 520-6060

  
	
  Attention:

  	
  Chief Financial Officer

  
	
   

  
	
  and a separate notice to

  

 

23

 

	
   

  
	
  Commerce One, Inc.

  
	
  4440 Rosewood Drive

  
	
  Pleasanton, California  94588

  
	
  Telephone:

  	
  (925) 520-6000

  
	
  Facsimile:

  	
  (925) 520-6060

  
	
  Attention:

  	
  General Counsel

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Wilson Sonsini Goodrich & Rosati

  
	
  650 Page Mill Road

  
	
  Palo Alto, California 
  94304-1050

  
	
  Telephone:

  	
  (650) 849-3223

  
	
  Facsimile:

  	
  (650) 493-6811

  
	
  Attention:

  	
  N. Anthony Jeffries, Esq.

  
	
   

  
	
  If to the Transfer Agent:

  
	
   

  
	
  Equiserve

  
	
  150 Royall
  Street

  
	
  Canton,
  Massachusetts

  
	
  Telephone:

  	
  (781)
  575-2394

  
	
  Facsimile:

  	
  (781) 575-2149

  
	
  Attention:

  	
  Norris Richardson

  

 

If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or to such other address and/or facsimile number and/or
to the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by
an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

(g)                                 Successors
and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Preferred Shares or the
Warrants.  The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of a majority or more of the Preferred Shares then
outstanding, including by merger or consolidation, except pursuant to a Change
of Control (as defined in Section 4(a) of the Certificate of Designations) with
respect to which the Company is in compliance with such section and Section
4(b) of the Warrants.  A Buyer may
assign some or all of its rights hereunder in connection with a transfer of
such Buyer’s Securities to any affiliate or lender without the

 

24

 

consent of the Company; provided
that such assignment is in compliance with applicable securities laws and this
Agreement, and upon consummation of a permitted assignment and the written
agreement of such assignee (in form and substance reasonably satisfactory to
the Company) to the terms and conditions of this Agreement, such assignee shall
be deemed to be a Buyer hereunder with respect to such assigned rights.

 

(h)                                 No
Third Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

(i)                                     Survival.  Unless this Agreement is terminated under
Section 8, the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9 shall survive the Closing. 
Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.

 

(j)                                     Further
Assurances.  Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

(k)                                  Indemnification.  In consideration of each Buyer’s execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold harmless
each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a) any material inaccuracy of any representation or warranty made by the
Company in the Transaction Documents, (b) any material breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of the Transaction Documents,
(ii) any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure
made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer
or holder of the Securities as an investor in the Company (other than, in each
of (i) through (iv) above, in connection with any action such Buyer may have
taken or resulting from any gross negligence or willful misconduct by the
Buyer).  To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the

 

25

 

payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable
law.  Except as otherwise set forth
herein, the mechanics and procedures with respect to the rights and obligations
under this Section 9(k) shall be the same as those set forth in Section 6 of
the Registration Rights Agreement.

 

(l)                                     No
Strict Construction.  The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be
applied against any party.

 

(m)                               Remedies.  Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law.  Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. 
Furthermore, the Company recognizes that in the event that it fails to
perform, observe, or discharge any or all of its obligations under this
Agreement, any remedy at law may prove to be inadequate relief to the
Buyers.  The Company therefore agrees
that the Buyers shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.

 

(n)                                 Payment
Set Aside.  To the extent that the
Company makes a payment or payments to the Buyers hereunder or pursuant to any
of the other Transaction Documents or the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

 

(o)                                 Independent
Nature of Buyers’ Obligations and Rights. 
The obligations of each Buyer under any Transaction Document are several
and not joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other
Buyer under any Transaction Document. 
Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents.  Each Buyer confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors.  Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitations,
the rights arising out of this Agreement or out of any other

 

26

 

Transaction Documents, and it
shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose.

 

[Signature Page Follows]

 

27

 

IN
WITNESS WHEREOF, each Buyer and the Company have
caused this Securities Purchase Agreement to be duly executed as of the date
first written above.

 

 

	
  COMPANY:

  	
   

  	
  BUYERS:

  
	
   

  	
   

  	
   

  
	
  COMMERCE ONE, INC.

  	
   

  	
  BAYSTAR CAPITAL II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:  BayStar Capital
  Management LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Charles
  Boynton

  	
   

  	
   

  	
   

  
	
  Name: 
  Charles Boynton

  	
   

  	
  By:

  	
  /s/ Steven M. Lamar

  	
   

  
	
  Title:   
  Senior Vice President and

  	
   

  	
  Name: 
  Steven M. Lamar

  
	
  Chief Financial Officer

  	
   

  	
  Title:   
  Managing Member

  
							

 

 

SCHEDULE OF BUYERS

 

	
  (1)

  	
   

  	
  (2)

  	
   

  	
  (3)

  	
   

  	
  (4)

  	
   

  	
  (5)

  	
   

  
	
  Buyer

  	
   

  	
  Address
  and Facsimile Number

  	
   

  	
  Number
  of

  Preferred

  Shares

  	
   

  	
  Aggregate
  

  Amount of

  Warrants

  	
   

  	
  Legal
  Representative’s

  Address and Facsimile

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BayStar
  Capital II, L.P.

  	
   

  	
  80
  E. Sir Francis Drake Boulevard,

  Suite 2B

  Larkspur, California 94939

  Attention:  Steven M. Lamar

  Facsimile: (415) 834-4601

  Telephone: (415) 834-4620

  Residence:  California

  	
   

  	
  100,000

  	
   

  	
  2,209,945

  	
   

  	
  Schulte
  Roth & Zabel LLP

  919 Third Avenue

  New York, New York 10022

  Attention:  Eleazer Klein, Esq.

  Facsimile: (212) 593-5955

  Telephone:  (212) 756-2376

  	
   

  

 

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Form of
  Certificate of Designations

  
	
  Exhibit B

  	
   

  	
  Form of
  Warrants

  
	
  Exhibit C

  	
   

  	
  Form of
  Registration Rights Agreement

  
	
  Exhibit D

  	
   

  	
  Form of
  Irrevocable Transfer Agent Instructions

  
	
  Exhibit E

  	
   

  	
  Form of
  Opinion

  
	
  Exhibit F

  	
   

  	
  Form of
  Secretary’s Certificate

  
	
  Exhibit G

  	
   

  	
  Form of
  Officers Certificate

  

 

SCHEDULES

 

	
  Schedule 3(a)

  	
   

  	
  Subsidiaries

  
	
  Schedule 3(l)

  	
   

  	
  Absence of Certain Changes

  
	
  Schedule 3(p)

  	
   

  	
  Transactions with Affiliates

  
	
  Schedule 3(q)

  	
   

  	
  Capitalization

  
	
  Schedule 3(r)

  	
   

  	
  Indebtedness and Other Contracts

  
	
  Schedule 3(w)

  	
   

  	
  Intellectual Property

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