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Filed pursuant to Rule 424(b)3
of the Securities Act of 1933
Registration No. 333-41748
PROSPECTUS
4,916,434 SHARES
COMMERCE ONE, INC.
COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of 4,916,434 shares of our common stock which are held by some of
our current stockholders.
The prices at which such stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is quoted on The Nasdaq Stock Market's National
Market under the symbol "CMRC." On July 28, 2000, the closing price of our
common stock was $42.875 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTION ENTITLED
"RISK FACTORS" BEGINNING ON PAGE 3 FOR CERTAIN RISKS AND UNCERTAINTIES THAT YOU
SHOULD CONSIDER.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is July 31, 2000.
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No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
this offering, and if given or made, such information or representations may not
be relied upon as having been authorized by Commerce One, Inc. (referred to in
this prospectus as "Commerce One," "we," "us," "our" or the "Registrant"), any
selling stockholder or by any other person. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information herein is correct as of any time subsequent to
the date hereof. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities covered
by this prospectus, nor does it constitute an offer to or a solicitation of any
person in any jurisdiction in which an offer or solicitation may not lawfully be
made.
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TABLE OF CONTENTS
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Where You Can Find More Information........................ 2
The Company................................................ 3
Risk Factors............................................... 3
Plan of Distribution....................................... 17
Selling Stockholders....................................... 19
Legal Matters.............................................. 21
Experts.................................................... 21
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read
and copy any document we file at the SEC's Public Reference Room, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the Public Reference Room. Our
SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13a, 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 as amended until
our offering is completed.
(a) Commerce One's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, filed March 30, 2000;
(b) Commerce One's Definitive Proxy Statement on Schedule 14A (filed
May 1, 2000);
(c) Commerce One's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000, filed May 15, 2000;
(d) Commerce One's Current Report on Form 8-K, filed July 31, 2000;
(e) Commerce One's Current Report on Form 8-K, filed July 26, 2000;
(f) Commerce One's Current Report on Form 8-K, filed June 29, 2000;
(g) Commerce One's Current Report on Form 8-K, filed June 28, 2000;
(h) Commerce One's Current Report on Form 8-K filed February 2,
2000, as amended by the Current Report on Form 8-K/A filed on March 22, 2000
and March 23, 2000;
(i) Commerce One's Current Report on Form 8-K filed January 20,
2000, as amended by the Current Report on Form 8-K/A filed on January 25,
2000; and
(j) The description of Commerce One Common Stock contained in its
registration statement on Form 8-A filed June 21, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Robert M. Tarkoff
Sr. Vice President, General Counsel and Secretary
Commerce One, Inc.
4440 Rosewood Drive
Pleasanton, California 94588
(925) 520-6000
You should rely only on the information incorporated by reference or
provided in this prospectus or in any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or in any prospectus
supplement is accurate as of any date other than the date on the front of the
prospectus or any prospectus supplement.
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THE COMPANY
Commerce One is a leading provider of business-to-business electronic
commerce solutions that link buyers and suppliers of goods and services into
trading communities over the Internet. We were founded under the name
DistriVision Development Corporation in 1994. In March 1997, we changed our name
to Commerce One, Inc. and embarked on an aggressive product development effort,
which culminated in the release of the BuySite and MarketSite products in April
1998. In March 1999, we re-incorporated under the laws of the State of Delaware.
We released subsequent versions of the BuySite and MarketSite products in
November 1998, April 1999 and December 1999. Commerce One's principal executive
offices are located at 4440 Rosewood Drive, Pleasanton California 94588.
Commerce One's telephone number is (925) 520-6000.
RISK FACTORS
THIS FORM S-3 AND THE DOCUMENTS INCORPORATED BY REFERENCE INTO THIS
FORM S-3 CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO COMMERCE
ONE'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND BUSINESS. WORDS SUCH AS
"ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES"
AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE
SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE RESULTS CONTEMPLATED BY THE FORWARD-LOOKING STATEMENTS. AN
INVESTMENT IN COMMERCE ONE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN
EVALUATING OUR STOCK, YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION OF RISKS AND
UNCERTAINTIES BELOW.
IF THE CONDITIONS TO THE MERGER WITH APPNET ARE NOT MET, THE MERGER WILL NOT
OCCUR.
In June 2000, Commerce One executed definitive agreements to acquire
AppNet, Inc., a premier provider of end-to-end Internet professional
services. Several conditions must be satisfied or waived to complete the
merger between Commerce One and AppNet. These conditions include, among
others:
- AppNet's stockholders must vote a majority of the outstanding shares of
AppNet common stock for the adoption of the merger agreement and approval
of the merger;
- the registration statement on Form S-4 relating to the registration of the
shares of Commerce One to be issued in the merger must be effective with the
Securities and Exchange Commission;
- no law, regulation or order preventing the completion of the merger may be
in effect;
- the applicable waiting periods under antitrust laws must expire or be
terminated;
- each Commerce One and AppNet must receive an opinion of tax counsel that
the merger will qualify as a tax-free reorganization; and
- the shares of Commerce One common stock that the AppNet stockholders
receive in the merger must be authorized for listing on The Nasdaq Stock
Market's National Market.
Commerce One cannot assure you that each of these conditions will be
satisfied. If the conditions are not satisfied or waived, the merger will not
occur or will be delayed, and Commerce One may lose some or all of the
intended benefits of the merger.
COMMERCE ONE HAS A LIMITED OPERATING HISTORY, A HISTORY OF LOSSES AND MAY
NEVER BE PROFITABLE
Commerce One incurred net losses of $63.3 million, $24.6 million and
$11.2 million for the years ended December 31, 1999, 1998 and 1997,
respectively, and $43.6 million for the three months ended March 31, 2000. As
of March 31, 2000, Commerce One had an accumulated deficit of $146.2 million.
In addition, Commerce One has a limited operating history that makes it
difficult to forecast Commerce One's future operating results. Commerce One
expects in 2000 to (a) substantially increase its sales and marketing, product
development and general and administrative expenses and (b) experience increased
costs associated with the issuance of equity securities and the amortization of
intangible assets as a result of the acquisition of AppNet, Inc. and other
transactions. As a result, Commerce One will need to generate significant
additional revenues to achieve and maintain profitability in the future.
Although Commerce One's revenues have grown in recent quarters, Commerce One
cannot be certain that such growth will continue or that it will achieve
sufficient revenues for profitability.
THE QUARTERLY FINANCIAL RESULTS OF COMPANIES IN COMMERCE ONE'S INDUSTRIES ARE
PRONE TO SIGNIFICANT FLUCTUATIONS AND THIS COULD CAUSE ITS STOCK PRICE TO FALL.
Commerce One believes that quarter-to-quarter comparisons of its
revenues and operating results are not necessarily meaningful, and that such
comparisons may not be accurate indicators of future performance. The
operating results of companies in the electronic commerce industry have in
the past experienced significant quarter-to-quarter fluctuations which may
adversely affect the combined company. As with other companies in this
industry, Commerce One's operating expenses, which include sales and
marketing, product development and general and administrative expenses, are
based on its expectations of future revenues and are relatively fixed in the
short term. As a result of Commerce One's acquisition of AppNet, Commerce
One's fixed expenses will increase substantially. Further, if AppNet's
existing agreements with clients are terminated before it completes
engagements, or if it is unable or otherwise does not enter into new
engagements, the combined company's revenues will decline. If Commerce One's
revenues for a quarter fall below its expectations and Commerce One is not
able to quickly reduce spending in response, its operating results for that
quarter would be harmed. It is likely that in some future quarter its
operating results may be below the expectations of public market analysts and
investors and, as a result, the price of its common stock may fall.
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COMMERCE ONE'S FUTURE SUCCESS DEPENDS UPON ITS GLOBAL TRADING WEB PARTNERS
DEVELOPING AND OPERATING SUCCESSFUL MARKETSITE MARKETPLACES.
Commerce One has established strategic relationships with various
companies that have licensed Commerce One's Buysite and MarketSite products in
order to create MarketSite marketplaces. Commerce One cannot assure you that
these companies will be able to implement its products and services effectively,
that they will develop and launch MarketSite marketplaces or that buyers and
suppliers will participate in their MarketSite marketplaces. These companies may
encounter delays in launching their MarketSite marketplaces, in fully deploying
these marketplaces and in achieving supplier participation in their
marketplaces. Many of the companies that have agreed to launch MarketSites, or
have indicated that they will launch MarketSites, have not yet done so.
Additionally, although Commerce One's technology architecture is designed to
support the development of trading communities that can operate with each other,
these marketplaces may not in fact operate with each other. If these or any
other MarketSite marketplaces are not successful, Commerce One's business,
operating results and financial condition will suffer.
IF COMMERCE ONE'S JOINT PRODUCT DEVELOPMENT RELATIONSHIPS ARE NOT SUCCESSFUL ITS
BUSINESS COULD SUFFER.
Commerce One has entered into relationships with various companies
to jointly develop new software products. In particular, Commerce One
recently entered into a non-binding memorandum of understanding with SAP AG
to jointly develop and market a comprehensive software solution for the
business-to-business electronic commerce marketplace. These joint development
and marketing relationships can be difficult to implement and may not succeed
for various reasons, including:
- cultural differences between the companies and their respective
employees;
- difficulties in coordinating sales and marketing efforts;
- technical obstacles to combining existing software products or
developing new compatible products; and
- the need to divert significant management attention, technical and
sales personnel and capital to these relationships.
Commerce One cannot assure you that these joint development and
marketing relationships lead to successful new products, greater market
penetration or increased revenues for Commerce One.
THE DEVELOPMENT OF LARGE, INDUSTRY OR GEOGRAPHICALLY SPECIFIC MARKETPLACES OR
EXCHANGES ENTAILS CERTAIN RISKS FOR COMMERCE ONE.
Many of the MarketSite marketplaces are intended to be very large
and to include many of the most significant companies in the particular
industry or region they address. These marketplaces include the proposed
exchange with General Motors and potentially Ford, DaimlerChrysler and other
automotive manufacturers. The development of these large trading exchanges
will entail significant risks for Commerce One. These risks include the
diversion of a significant portion of Commerce One's management, technical
and sales personnel to develop the exchange; technical hurdles associated
with developing an exchange on this scale and integrating it with companies'
existing computer systems and those of other parties; antitrust issues
arising from the creation of the exchanges; difficulties reaching
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agreements with the founders of the exchanges and other parties concerning
the establishment and development of the exchanges; and all of the other
risks of creating such exchanges described elsewhere in this Risk Factors
section. These exchanges, including the proposed automotive exchange, may not
be successfully established or operated. If Commerce One is not able to
manage these risks, its business, results of operations and financial
condition will suffer.
ANTITRUST SCRUTINY OF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE EXCHANGES MAY
ADVERSELY AFFECT COMMERCE ONE'S BUSINESS.
The establishment and operation of business-to-business electronic
commerce exchanges may raise issues under U.S. and foreign antitrust laws.
The Federal Trade Commission and Department of Justice's Antitrust Division
have recently informally requested information from certain exchanges about
how these exchanges plan to operate. The European Union can also be expected
to review major business-to-business exchanges for compliance with European
competition law. In addition, the proposed automotive exchange among Commerce
One, General Motors, Ford, DaimlerChrysler and certain other companies has
filed notification with the FTC and DOJ under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 with respect to the business it proposes to conduct.
The FTC has recently requested additional information concerning the proposed
exchange from Commerce One and the other companies forming the exchange.
Commerce One intends to respond as soon as practicable. It may, however, take
a significant period of time to produce this information. The proposed
exchange may not begin conducting business until the FTC has received the
requested information and all applicable waiting periods under the HSR Act
have expired or been terminated. To the extent that U.S. or foreign antitrust
regulators take adverse action or establish rules or regulations with respect
to the proposed exchange or business-to-business e-commerce exchanges in
general, the establishment and growth of such exchanges may be delayed.
Commerce One's revenues may suffer as a result.
BECAUSE COMMERCE ONE'S INDUSTRY IS HIGHLY COMPETITIVE AND HAS LOW BARRIERS TO
ENTRY, COMMERCE ONE CANNOT ASSURE YOU THAT IT WILL BE ABLE TO COMPETE
EFFECTIVELY.
The market for Internet-based, business-to-business electronic commerce
solutions is extremely competitive. Commerce One expects competition to
intensify as current competitors expand their product offerings and new
competitors enter the market. Because there are relatively low barriers to entry
in the electronic commerce market, competition from other established and
emerging companies may develop in the future. In addition, Commerce One's
customers and partners may become competitors in the future. Increased
competition is likely to result in price reductions, lower average sales prices,
reduced margins, longer sales cycles and a decrease or loss of Commerce One's
market share, any of which could harm its business, operating results or
financial condition.
Commerce One's competitors include Ariba, Freemarkets, i2, Oracle,
PurchasePro, SAP and VerticalNet. Certain of these competitors have announced
plans to jointly offer business-to-business electronic commerce solutions to
potential customers. These joint efforts could intensify the competitive
pressure in Commerce One's market. Many of Commerce One's competitors have,
and new potential competitors may have, more experience developing
Internet-based software and end-to-end purchasing solutions, larger technical
staffs, larger customer bases, more established distribution channels and
customer relationships, greater brand recognition and greater financial,
marketing and other resources than Commerce One has. In addition, competitors
may be able to develop products and services that are superior to its
products and services, that achieve greater customer acceptance or that have
significantly improved functionality as compared to its existing and future
products and services. The business-to-business electronic commerce solutions
offered by competitors may be perceived by buyers and suppliers as superior
to Commerce One's.
The market for professional services is intensely competitive and is
becoming more competitive. AppNet's competitors include e-business
professional services providers, large information technology consulting
services providers, electronic commerce software and service providers, and
Internet access and service providers. Some of AppNet's competitors have
longer
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operating histories and client relationships, greater financial, technical,
marketing and public relations resources, larger client bases and greater
brand or name recognition than it has. Its competitors may also be able to
respond more quickly to technological developments and changes in clients'
needs. In addition, there are relatively low barriers to entry into AppNet's
business. AppNet does not own any technologies that preclude or inhibit
competitors from entering its markets. Its competitors may independently
develop and patent or copyright technologies that are superior or
substantially similar to its technologies. The costs to develop and provide
e-business professional services are low.
COMMERCE ONE MAY NOT BE ABLE TO HIRE AND RETAIN SUFFICIENT SALES, MARKETING,
SERVICES AND TECHNICAL PERSONNEL THAT IT NEEDS TO SUCCEED BECAUSE THESE
PERSONNEL ARE LIMITED IN NUMBER AND IN HIGH DEMAND.
If Commerce One fails to hire and retain sufficient numbers of
sales, marketing, services and technical personnel, its business, operating
results and financial condition would be harmed. Competition for qualified
sales, marketing, services and technical personnel is intense as these
personnel are in limited supply, and it might not be able to hire and retain
sufficient numbers of such personnel to grow its business. Commerce One needs
to substantially expand Commerce One's sales operations and marketing
efforts, both domestically and internationally, in order to increase market
awareness and sales of Commerce One's BuySite and MarketSite products and the
related services Commerce One offers. Commerce One will also need to
significantly increase its technical and services staff to support the growth
of its business and its increasing commitments to other parties. In
particular, Commerce One will need to hire a significant number of technical
personnel with various skill sets to establish and operate the large industry
specific exchanges. Although Commerce One intends to increase the size of its
technical and services staff through the acquisition of AppNet, AppNet's
personnel may not remain with AppNet prior to, or with the combined company
after the closing of the acquisition.
In addition, the market price of Commerce One's common stock has
fluctuated substantially since its initial public offering in July 1999.
Consequently, potential employees may perceive Commerce One's equity
incentives such as stock options as less attractive and current employees
whose options are no longer priced below market value may choose not to
remain employed with Commerce One. In that case, Commerce One's ability to
attract employees will be adversely affected. Furthermore, a substantial
portion of the equity incentives previously granted to AppNet's officers will
accelerate and become substantially vested upon the closing of the merger.
New options granted to AppNet's officers or other employees at the
current market price of Commerce One's common stock may not be sufficient to
retain these employees. Finally, should Commerce One's stock price
substantially decline, the retention value of stock options granted since
Commerce One's initial public offering will decline and Commerce One's
employees may choose not to remain with the company.
COMMERCE ONE HAS EXPERIENCED SIGNIFICANT GROWTH IN RECENT PERIODS AND FAILURE TO
MANAGE THIS GROWTH COULD STRAIN ITS MANAGEMENT AND OTHER RESOURCES.
Commerce One's ability to successfully offer products and services
and implement its business plan in a rapidly evolving market requires an
effective planning and management process. Future expansion efforts could be
expensive and put a strain on management and resources. Commerce One has
increased, and plans to continue to increase, the scope of Commerce One's
operations at a rapid rate. Commerce One's headcount has grown and will
continue to grow substantially. At March 31, 2000, Commerce One had a total
of 936 employees and at December 31, 1998 had a total of 157 employees. As a
result of the proposed merger with AppNet, Commerce One will add over 1,200
employees. Similarly, AppNet has grown rapidly. AppNet's total number of
employees has increased from eight as of March 15, 1998 to approximately
1,166 as of March 31, 2000. In addition, Commerce One expects to continue to
hire a significant number of new
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employees in the near future. To manage future growth effectively, Commerce
One must maintain and enhance its financial and accounting systems and
controls, integrate new personnel and manage expanded operations. Commerce
One may not be able to do this effectively.
CURRENT AND FUTURE ACQUISITIONS, INCLUDING THE PROPOSED ACQUISITION OF
APPNET, MAY ADVERSELY AFFECT COMMERCE ONE'S BUSINESS.
As part of Commerce One's business strategy, it has made and expects
to continue to make acquisitions of businesses that offer complementary
products, services and technologies. In June 2000, Commerce One signed a
definitive agreement to acquire AppNet, Inc., a provider of end-to-end
Internet professional services. Commerce One's acquisitions are and will be
accompanied by the risks commonly encountered in acquisitions of businesses.
Such risks include, among other things, the possibility that Commerce One
pays more than the acquired business is worth, the difficulty of integrating
the operations and personnel of the acquired business into its business, the
potential disruption of Commerce One's ongoing business, the distraction of
management from Commerce One's business, the inability of management to
maximize Commerce One's financial and strategic position, and the impairment
of relationships with employees and customers. In addition, we also risk not
closing acquisitions we announce, such as AppNet. Commerce One has limited
experience acquiring businesses, and may not acquire such businesses on
favorable terms or be able to integrate such organizations into its business
successfully. Further, the financial consequences of Commerce One's
acquisitions and investments may include potentially dilutive issuances of
equity securities, one-time write-offs, amortization expenses related to
goodwill and other intangible assets and the incurrence of contingent
liabilities. These risks could have a material adverse effect on Commerce
One's business, financial condition and results of operations.
COMMERCE ONE'S LENGTHY SALES CYCLE COULD CAUSE DELAYS IN REVENUE GROWTH.
The period between Commerce One's initial contact with a potential
customer and the purchase of its products and services is often long and may
have delays associated with the lengthy budgeting and approval process of
Commerce One's customers. Historically, Commerce One's typical sales cycle
has been approximately three to six months. This lengthy cycle could have a
negative impact on the timing of Commerce One's revenues, especially its
realization of any transaction based revenues.
Commerce One believes that a customer's decision to purchase its
products and services is discretionary, involves a significant commitment of
resources, and is influenced by customer budgetary cycles. To successfully sell
its products and services, Commerce One generally must educate potential
customers regarding the use and benefit of its products and services, which can
require significant time and resources. Many of Commerce One's potential
customers are large enterprises that generally take longer to make significant
business decisions.
COMMERCE ONE'S FUTURE REVENUES DEPEND UPON COMMERCE ONE'S ABILITY TO INCREASE
BUSINESS SERVICE AND TRANSACTION FEE REVENUE FROM ITS MARKETSITE MARKETPLACES.
To date, Commerce One has derived a substantial portion of its
revenues from licensing its MarketSite and BuySite products to customers and
providing related implementation, support and maintenance services. A
significant portion of these revenues have come from the recognition of
one-time license fees by customers. Although Commerce One's revenues from
business services has grown recently, Commerce One's transaction-based
revenue has been immaterial to date. Commerce One's business model
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calls for a significant portion of its revenues in the future to be derived
from business services and transaction based fees. If such revenues do not
materialize, Commerce One's business will suffer.
COMMERCE ONE'S CUSTOMER BASE IS CONCENTRATED AND ITS SUCCESS DEPENDS IN PART ON
ITS ABILITY TO RETAIN EXISTING CUSTOMERS.
In 1999, Toronto Dominion accounted for 21% of Commerce One's total
revenues, Singapore Telecommunications accounted for 15%, and British
Telecommunications accounted for 11%. In the first quarter of 2000, Endessa
Marketplace SA accounted for 16% of Commerce One's total revenues and Portugal
Telecom accounted for 12%. The significant contribution of these customers to
Commerce One's revenues in the periods described generally reflects the payment
by these customers of large one-time license fees to Commerce One. Commerce One
does not have long-term contractual commitments from any of its current
customers and its customers may terminate their contracts with Commerce One with
little or no advance notice and without significant penalty to them. As a
result, Commerce One cannot assure you that any of its current customers will be
customers in future periods. A customer termination would not only result in
lost revenues, but also the loss of customer references that are necessary for
securing future customers.
IF SUPPLIERS DO NOT PARTICIPATE IN THE MARKETSITE MARKETPLACES, COMMERCE ONE'S
BUSINESS MAY BE ADVERSELY AFFECTED.
MarketSite marketplaces will be attractive to suppliers only if a
significant number of buyers are willing to purchase goods and services
through the MarketSite marketplaces. Suppliers incur costs making information
relating to their goods and services available on these trading communities
and thus must realize additional revenues to justify their continued
participation in these trading communities. Suppliers may not remain in the
MarketSite marketplaces or join these communities in sufficient numbers to
make them successful.
COMMERCE ONE DEPENDS UPON CONTINUING ITS RELATIONSHIP WITH THIRD-PARTY
INTEGRATORS WHO SUPPORT ITS SOLUTIONS.
Commerce One's success depends upon the acceptance and successful
integration by customers and their suppliers of its BuySite and MarketSite
products. Commerce One's current customers and potential customers and their
related suppliers often rely on third-party systems integrators such as
Andersen Consulting, PricewaterhouseCoopers and Cambridge Technology Partners
and others to develop, deploy and manage their Internet-based,
business-to-business electronic commerce platforms and solutions. Commerce
One and its customers will need to continue to rely on these systems
integrators even as Commerce One increases the size of its professional
services organization. If large systems
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integrators fail to continue to support Commerce One's solution or commit
resources to Commerce One, if any of its customers or suppliers are not able
to successfully integrate its solution or if Commerce One is unable to
adequately train its existing systems integration partners, its business,
operating results and financial condition could suffer.
COMMERCE ONE'S STRATEGY OF STRATEGIC RESELLING THROUGH PARTNERS MAY NOT BE
SUCCESSFUL.
Commerce One has established strategic relationships with companies
that resell Commerce One's existing BuySite and Marketsite applications to
its customers. These relationships are new and this strategy is unproven.
Commerce One cannot assure you that any of these companies, or those it may
appoint in the future, will be able to resell its product solution sets to a
sufficient number of customers, or that those customers will purchase
Commerce One's applications and more importantly, connect into MarketSite
marketplaces. Further, Commerce One may encounter disagreements from time to
time with companies concerning the terms of their reseller agreements. To
date, a few of Commerce One's partners have been unsuccessful in reselling
its BuySite products. If Commerce One's current or future strategic partners
are not able to successfully resell its BuySite products, its business will
suffer.
COMMERCE ONE'S EXECUTIVE OFFICERS AND CERTAIN KEY PERSONNEL ARE CRITICAL TO
COMMERCE ONE'S BUSINESS AND THESE OFFICERS AND KEY PERSONNEL MAY NOT REMAIN WITH
THE COMPANY IN THE FUTURE.
Commerce One's future success depends upon the continued service of
Commerce One's executive officers and other key personnel, and none of
Commerce One's current executive officers other than Jay M. Tenenbaum, its
Senior Vice President and Chief Scientist, are bound by an employment
agreement for any specific term. Any of Commerce One's officers may leave the
Company in the future. In particular, the services of Mark Hoffman, Commerce
One's Chief Executive Officer, Robert Kimmitt, its President, and Chuck
Donchess, its Executive Vice President and Chief Strategy Officer, would be
difficult to replace. If Commerce One loses the services of one or more of
its executive officers or key employees, or if one or more of them decides to
join a competitor or otherwise compete directly or indirectly with Commerce
One, its business, operating results and financial condition would be
seriously harmed.
COMMERCE ONE INTENDS TO CONTINUE TO EXPAND ITS INTERNATIONAL OPERATIONS AND
THESE EFFORTS MAY NOT BE SUCCESSFUL IN GENERATING ADDITIONAL REVENUES.
Commerce One has generated significant international revenues and is
planning to increase its international operations and sales efforts. However,
Commerce One may not be able to continue to increase international revenues and
the risks of international sales and operations may harm Commerce One.
International business involves inherent risks, and Commerce One
anticipates the risks that may affect us include:
- unexpected changes in regulatory requirements and tariffs that may
be imposed on electronic commerce
- seasonal reductions in business activity
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- difficulties in staffing and managing foreign offices as a result of,
among other things, distance, language and cultural differences
- longer payment cycles and greater difficulty in accounts receivable
collection
- potentially harmful tax consequences, including withholding tax
issues
- fluctuating exchange rates
- price controls or other restrictions on foreign currency
- difficulties in obtaining export and import licenses
In addition, Commerce One has only limited experience in marketing,
selling and supporting its products and services in foreign countries. This may
be more difficult or take longer than Commerce One anticipates especially due to
international problems, such as language barriers or currency exchange issues,
and the fact that the Internet infrastructure in such foreign countries may be
less advanced than the Internet infrastructure in the United States.
COMMERCE ONE'S MARKET MAY UNDERGO RAPID TECHNOLOGICAL CHANGE AND THIS CHANGE MAY
MAKE COMMERCE ONE'S PRODUCTS AND SERVICES OBSOLETE OR CAUSE COMMERCE ONE TO
INCUR SUBSTANTIAL COSTS TO ADAPT TO THESE CHANGES.
If the market for Commerce One's products and services fails to develop
and grow or Commerce One fails to gain acceptance in this market, such failure
would harm its business, operating results and financial condition. Commerce
One's market is characterized by rapidly changing technology, evolving industry
standards and frequent new product announcements. To be successful, Commerce One
must adapt to the rapidly changing market by continually improving the
performance, features and reliability of its products and services or else its
products and services may become obsolete. Commerce One also could incur
substantial costs to modify its products, services or infrastructure in order to
adapt to these changes. Commerce One's business, operating results and financial
condition could be harmed if it incurs significant costs without adequate
results, or is unable to adapt rapidly to these changes.
-10-
<PAGE>
SECURITY RISKS OF ELECTRONIC COMMERCE MAY DETER FUTURE USE OF COMMERCE ONE'S
PRODUCTS AND SERVICES.
A fundamental requirement to conduct Internet-based,
business-to-business electronic commerce is the secure transmission of
confidential information over public networks. Failure to prevent security
breaches of the MarketSite marketplaces, or well publicized security breaches
affecting the Internet in general, could significantly harm Commerce One's
business, operating results and financial condition. Advances in computer
capabilities, new discoveries in the field of cryptography, or other
developments may not be sufficient to prevent a compromise or breach of the
algorithms it uses to protect content and transactions on MarketSite
marketplaces or proprietary information in its databases. Anyone who is able to
circumvent Commerce One's security measures could misappropriate proprietary,
confidential customer information or cause interruptions in its operations.
Commerce One may be required to incur significant costs to protect against
security breaches or to alleviate problems caused by breaches. Further, a
well-publicized compromise of security could deter people from using the
Internet to conduct transactions that involve transmitting confidential
information.
AppNet provides e-business services that rely on encryption and
authentication technology licenses from third parties to provide the security
and authentication needed to safely transmit confidential information. Although
it has designed and implemented a variety of network security measures,
unauthorized access, computer viruses, accidental or intentional acts and other
disruptions may occur. AppNet's e-business outsourcing centers may experience
delays or service interruptions as a result of the accidental or intentional
acts of Internet users, current and former employees or others. Such acts could
potentially jeopardize the security of confidential information, such as credit
card and bank account numbers, stored in AppNet's and its clients' computer
systems. Such a breach in security could result in liability and in the loss of
existing clients or the deterrence of potential clients. Although AppNet plans
to continue using industry-standard security measures, such measures have been
circumvented in the past, and may be circumvented in the future. The costs
required to eliminate computer viruses and alleviate other security problems
could be prohibitively expensive, and efforts to address such problems could
result in delays or interruption of service to its clients.
FAILURE TO EXPAND INTERNET INFRASTRUCTURE COULD LIMIT COMMERCE ONE'S FUTURE
GROWTH.
The recent growth in Internet traffic has caused frequent periods of
decreased performance, and if Internet usage continues to grow rapidly, its
infrastructure may not be able to support these demands and its performance and
reliability may decline. If outages or delays on the Internet occur frequently
or increase in frequency, overall Internet usage, including usage of Commerce
One's products and services, could grow more slowly or decline. Commerce One's
ability to increase the speed and scope of its services to customers is
ultimately limited by and depends upon the speed and reliability of both the
Internet and its customers' internal networks. Consequently, the emergence and
growth of the market for its services depends upon improvements being made to
the entire Internet as well as to its individual customers' networking
infrastructures to alleviate overloading and congestion. If these improvements
are not made, the ability of Commerce One's customers to utilize its solution
will be hindered, and its business, operating results and financial condition
may suffer.
CONTINUED ADOPTION OF THE INTERNET AS A METHOD OF CONDUCTING BUSINESS IS
NECESSARY FOR COMMERCE ONE'S FUTURE GROWTH.
The market for Internet-based, business-to-business electronic commerce
products is relatively new and is evolving rapidly. Commerce One's future
revenues and any future profits depend upon the widespread acceptance and use of
the Internet as an effective medium of business-to-business commerce,
particularly as a medium to perform procurement and fulfillment functions. The
acceptance and use of the Internet for
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<PAGE>
business-to-business commerce could be limited by a number of factors, such
as the growth and use of the Internet in general, the relative ease of
conducting business on the Internet, the efficiencies and improvements that
conducting commerce on the Internet provides, concerns about transaction
security and taxation of transactions on the Internet. The failure of the
Internet to continue to develop as a commercial or business medium or of
significant numbers of buyers and suppliers to conduct business-to-business
commerce on the Internet would harm Commerce One's business, operating
results and financial condition.
IF COMMERCE ONE RELEASES PRODUCTS CONTAINING DEFECTS, COMMERCE ONE MAY NEED TO
HALT FURTHER SHIPMENTS UNTIL IT FIXES THE DEFECTS, AND ITS BUSINESS AND
REPUTATION MAY BE HARMED.
Products as complex as Commerce One's often contain unknown and
undetected errors or performance problems. Many defects are frequently found
during the period immediately following introduction and initial shipment of
new products or enhancements to existing products. Although Commerce One
attempts to resolve all errors that it believes would be considered serious
by its customers before shipment to them, its products are not error-free.
These errors or performance problems could result in lost revenues or delays
in customer acceptance and would be detrimental to Commerce One's business
and reputation. In the past, defects in Commerce One's products have delayed
their shipments after those products have been commercially introduced. While
these delays have not been material to date, undetected errors or performance
problems in its existing or future products may be discovered in the future
and known errors currently considered minor may in the future be considered
serious by its customers. Any delays in releasing new products, due to
defects, the need for further enhancements or otherwise, could adversely
affect Commerce One's revenues.
IF COMMERCE ONE'S POTENTIAL CUSTOMERS ARE NOT WILLING TO SWITCH TO OR ADOPT ITS
ELECTRONIC COMMERCE SOLUTION, ITS GROWTH AND REVENUES WILL BE LIMITED.
The failure to generate a large customer base would harm Commerce One's
growth and revenues. This failure could occur for several reasons. Some of
Commerce One's business-to-business electronic commerce competitors charge their
customers large fees upon the execution of customer agreements. Businesses that
have made substantial up-front payments to Commerce One's competitors for
electronic commerce solutions may be reluctant to replace their current solution
and adopt its solution. As a result, Commerce One's efforts to create a larger
customer base may be more difficult than expected even if it is deemed to offer
products and services superior to those of its competitors. Further, because the
business-to-business electronic commerce market is new and underdeveloped,
potential customers in this market may be confused or uncertain about the
relative merits of each electronic commerce solution or which electronic
commerce solution to adopt, if any. Confusion and uncertainty in the marketplace
may inhibit customers from adopting Commerce One's solution, which could harm
its business, operating results and financial condition.
APPNET'S REVENUES MAY FLUCTUATE BECAUSE THEY ARE PRIMARILY GENERATED ON A
PROJECT-BY-PROJECT BASIS AND PROJECTS CAN BE TERMINATED.
If AppNet's existing agreements with clients are terminated before
the engagements are complete, or if AppNet is unable to enter into new
engagements, AppNet's business, financial condition or results or operations
could be materially adversely affected. AppNet derives its revenues primarily
from fees for services generated on a project-by-project basis. These
projects vary in size, scope and duration. A client that accounts for a
significant portion of AppNet's revenues in a particular period may not
account for a similar portion of Commerce One's revenues in future periods. A
client may or may not engage AppNet for further services once a project is
completed. As a result, AppNet's revenues are not recurring from period to
period, which makes them more difficult to predict.
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<PAGE>
APPNET CONTRACTS CONTAIN PRICING RISKS.
Generally, AppNet has charged its clients for the time, materials and
expenses incurred during the course of an engagement. However, the combined
company intends to increase the percentage of its work that is billed at a fixed
rate. Although AppNet has experience pricing and managing fixed-price
contracts, if the combined company underestimates the resources and time
required to complete projects, it could be subject to cost overruns leading to
losses on engagements.
IF THIRD PARTIES CLAIM THAT COMMERCE ONE INFRINGES UPON THEIR INTELLECTUAL
PROPERTY, ITS ABILITY TO USE CERTAIN TECHNOLOGIES AND PRODUCTS COULD BE LIMITED
AND IT MAY INCUR SIGNIFICANT COSTS TO RESOLVE THESE CLAIMS.
Litigation regarding intellectual property rights is common in the
Internet and software industries. Commerce One expects third-party infringement
claims involving Internet technologies and software products and services to
increase. If an infringement claim is filed against Commerce One, it may be
prevented from using certain technologies and may incur significant costs to
resolve the claim.
Commerce One has in the past received letters suggesting that it is
infringing the intellectual rights of others and it may from time to time
encounter disputes over rights and obligations concerning intellectual property.
Although Commerce One believes that its intellectual property rights are
sufficient to allow it to market its existing products without incurring
liability to third parties, its products and services may be found to infringe
on the intellectual property rights of third parties.
In addition, Commerce One has agreed, and may agree in the future, to
indemnify customers against claims that its products infringe upon the
intellectual property rights of others. Commerce One could incur substantial
costs in defending itself and its customers against infringement claims. In the
event of a claim of
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infringement, Commerce One and its customers may be required to obtain one or
more licenses from third parties. Commerce One or its customers may not be
able to obtain necessary licenses from third parties at a reasonable cost or
at all.
FAILURE TO PROTECT INTELLECTUAL PROPERTY RIGHTS OR MAINTAIN RIGHTS TO USE
LICENSED INTELLECTUAL PROPERTY COULD HAVE ADVERSE EFFECTS.
In connection with AppNet's e-business professional services, it
develops intellectual property for its clients. AppNet frequently assigns
ownership of such intellectual property to the client and retains only a license
for limited uses. Issues relating to ownership of and rights to use such
intellectual property can be complicated. AppNet may become involved in disputes
that affect its ability to resell or reuse this intellectual property. In
addition, many projects involve the use of material that is confidential or
proprietary client information. The successful assertion of one or more large
claims against AppNet by its clients or other third parties could have a
material adverse effect.
BECAUSE THE PROTECTION OF COMMERCE ONE'S PROPRIETARY TECHNOLOGY IS LIMITED,
COMMERCE ONE'S PROPRIETARY TECHNOLOGY COULD BE USED BY OTHERS.
Commerce One's success depends, in part, upon Commerce One's
proprietary technology and other intellectual property rights. To date, Commerce
One has relied primarily on a combination of copyright, patent, trade secret,
and trademark laws, and nondisclosure and other contractual restrictions on
copying and distribution to protect Commerce One's proprietary technology.
Commerce One has no issued patents to date. Commerce One may not be able to
protect its intellectual property rights adequately in the United States or
abroad.
Furthermore, litigation may be necessary to enforce Commerce One's
intellectual property rights, to protect its trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Such litigation could result in
substantial costs and diversion of resources and could harm its business,
operating results and financial condition.
COMMERCE ONE'S MARKETSITE MARKETPLACES MAY NOT FUNCTION AS EFFECTIVELY WHEN
HANDLING HIGH VOLUMES OF TRANSACTIONS.
As the volume of transactions on Commerce One's MarketSite marketplaces
increases, participants in these marketplaces may experience slower response
times or other problems. In addition, participants in Commerce One's MarketSite
marketplaces will depend upon Internet service providers, telecommunications
companies and their computer networks to access these marketplaces. Each of
these has experienced performance problems in the past and could experience
similar problems in the future. Any delays in the response time of Commerce
One's MarketSite marketplaces or other performance problems could adversely
affect customer usage and adoption of its solutions.
COMMERCE ONE MAY NOT HAVE ADEQUATE BACK-UP SYSTEMS, AND A DISASTER COULD
DAMAGE COMMERCE ONE'S OPERATIONS.
Commerce One currently does not have a disaster recovery plan in
effect and does not have fully redundant systems for service at an alternate
site. A disaster could severely harm Commerce One's business because its
service could be interrupted for an indeterminate length of time. Commerce
One's operations depend upon Commerce One's ability to maintain and protect
its computer systems in its principal facilities in Pleasanton, Santa Clara,
Mountain View and Cupertino, California, which exist on or near known
earthquake fault zones. Commerce One also depends upon third parties to host
most of its MarketSite marketplaces and some of these third parties are also
located in the same earthquake fault zones. Although these systems are
designed to be fault tolerant, they are vulnerable to damage from fire,
floods, earthquakes, power loss, telecommunications failures and similar
events.
In the event AppNet's hardware malfunctions and its back-up systems
fail, it may not be able to maintain its standard of service to its customers.
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<PAGE>
If AppNet was unable to provide e-business outsourcing services at either of
its e-business outsourcing centers, it would materially adversely impact its
ability to continue to provide the type of e-business outsourcing services
processed through that center.
THE COMBINED COMPANY MAY HAVE POTENTIAL LIABILITY TO CLIENTS WHO ARE
DISSATISFIED WITH ITS PROFESSIONAL SERVICES.
Commerce One and AppNet design, develop, implement and manage
electronic commerce solutions that are crucial to the operation of their
clients' businesses. Defects in the solutions they develop could result in
delayed or lost revenues, adverse customer reaction and negative publicity or
require expensive corrections, any of which could have a material adverse
effect on the combined company's business, financial condition or results of
operations. Clients who are not satisfied with these services could bring
claims against Commerce One and AppNet for substantial damages. Any claims
asserted could exceed the level of the combined company's insurance. There
can be no assurance that the insurance that the combined company carries will
continue to be available on economically reasonable terms, or at all. The
successful assertion of one or more large claims that are uninsured, exceed
insurance coverage or result in changes to insurance policies, including
premium increases, could have a material adverse effect on the combined
company's business, financial condition or results of operations.
ADDITIONAL GOVERNMENT REGULATIONS MAY INCREASE COMMERCE ONE'S COSTS OF DOING
BUSINESS.
The laws governing Internet transactions remain largely unsettled. The
adoption or modification of laws or regulations relating to the Internet could
harm Commerce One's business, operating results and financial condition by
increasing its costs and administrative burdens. It may take years to determine
whether and how existing laws such as those governing antitrust, intellectual
property, privacy, libel, consumer protection and taxation apply to the
Internet.
Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. Commerce One must comply with new
regulations in both Europe and the United States, as well as any other
regulations adopted by other countries where it may do business. The growth and
development of the market for online commerce may prompt calls for more
stringent consumer protection laws, both in the United States and abroad, as
well as new laws governing the taxation of Internet commerce. Compliance with
any newly adopted laws may prove difficult and may harm Commerce One's business,
operating results and financial condition.
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<PAGE>
COMMERCE ONE'S OPERATIONS MAY CONTINUE TO PRODUCE A NEGATIVE CASH FLOW;
CONSEQUENTLY, IF IT CANNOT RAISE ADDITIONAL CAPITAL, COMMERCE ONE MAY NOT BE
ABLE TO FUND ITS CONTINUED OPERATIONS.
Since Commerce One's inception, cash used in its operations has
substantially exceeded cash received from its operations, and Commerce One
expects this trend to continue in the future. Commerce One currently
anticipates that its available cash resources will be sufficient to meet its
anticipated working capital and capital expenditure requirements for at least
the next twelve months. However, these resources may not be sufficient for
anticipated or unanticipated working capital and capital expenditure
requirements for this period. Factors that may vary significantly affect
whether Commerce One's cash resources are sufficient to meet its needs for
the period indicated. These factors include Commerce One's expectation that
it will continue to incur net losses and its continuing incurrence of
substantial negative cash flow. If adequate funds are not available or are
not available on acceptable terms, Commerce One may not be able to take
advantage of its opportunities, develop new products or services, fund its
continued operations, or otherwise respond to unanticipated competitive
pressures. Any additional financing that Commerce One may need may not be
available on favorable terms, if at all.
INTERNET RELATED STOCK PRICES ARE ESPECIALLY VOLATILE AND THIS VOLATILITY MAY
DEPRESS COMMERCE ONE'S STOCK PRICE.
The stock market and specifically the stock prices of Internet related
companies have been very volatile. This volatility is often not related to the
operating performance of the companies. This broad market volatility and
industry volatility may reduce the price of Commerce One's common stock, without
regard to its operating performance. Due to this volatility, the market price of
Commerce One's common stock could significantly decrease at any time.
FUTURE SALES OF COMMERCE ONE COMMON STOCK, INCLUDING THOSE ISSUED IN THE
MERGER WITH APPNET, MAY DEPRESS COMMERCE ONE'S STOCK PRICE
If Commerce One's stockholders or optionees sell substantial amounts
of its common stock in the public market, the market price of the common
stock could fall. On June 30, 2000, Commerce One had 161.0 million shares of
common stock outstanding. Of these shares, approximately 157.2 million shares
are currently available for sale in the public market. Commerce One will also
issue up to approximately 27.2 million freely tradable shares to AppNet's
stockholders in the proposed merger with AppNet. In addition, shares of
common stock issued upon the exercise of options and warrants, including
those assumed in the merger, may generally be sold in the public market
without restriction.
A total of 3.8 million shares of Commerce One's common stock will
first become eligible under the federal securities laws in the public market
on June 14, 2001. In addition, up to an additional 28.8 million shares of
common stock may be issued to General Motors or General Motors and Ford in
connection with the creation of an exchange for the automotive industry,
which shares will eligible for sale under the federal securities laws
beginning one year after the date they are issued.
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<PAGE>
PLAN OF DISTRIBUTION
Commerce One is registering all 4,916,434 shares of common stock on
behalf of certain selling stockholders. We issued all of the shares in
connection with our acquisitions of Mergent Systems, Inc. in January 2000 and
CommerceBid.com, Inc. in November 1999. Commerce One will receive no proceeds
from this offering. The selling stockholders named in the table below or
pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling stockholder as a gift, partnership distribution
or other non-sale-related transfer after the date of this prospectus
(collectively, the "Selling Stockholders") may sell the shares from time to
time. The Selling Stockholders will act independently of Commerce One in
making decisions with respect to the timing, manner and size of each sale.
The sales may be made on one or more exchanges or in the over-the-counter
market or otherwise, at prices and at terms then prevailing at prices related
to the then current market price or in negotiated transactions. The Selling
Stockholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination
of, the following:
- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of distribution.
In effecting sales, broker-dealers engaged by the Selling Stockholders may
arrange for other broker-dealers to participate in the resales.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because Selling
Stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the Selling Stockholders will be subject to the
prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The Selling Stockholders have advised Commerce One
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of shares by Selling Stockholders.
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<PAGE>
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations of the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
Selling Stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the Selling Stockholders. Commerce One will make
copies of this prospectus available to the Selling Stockholders and has informed
them of the need for delivery of copies of this prospectus to purchasers at or
prior to the time of any sale of the shares.
Commerce One will file a supplement to this prospectus, if required,
pursuant to Rule 424(b) promulgated under the Securities Act upon being notified
by a Selling Stockholder that any material arrangement has been entered into
with a broker-dealer for the sale of shares through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer. Such supplement will disclose:
- the name of each such Selling Stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
Commerce One will bear all costs, expenses and fees in connection
with the registration of the shares. The Selling Stockholders will bear all
commissions and discounts, if any, attributable to the sales of the shares.
The Selling Stockholders may agree to indemnify any broker-dealer or agent
that participates in transactions involving sales of the shares against
certain liabilities, including liabilities arising under the Securities Act.
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SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of
the Selling Stockholders. None of the Selling Stockholders has held any
position or office or had a material relationship with Commerce One within
the past three years other than as a result of the ownership of the shares or
other securities of Commerce One or as a result of their employment with
Commerce One as of the date of the closing of the acquisitions. The Selling
Stockholders named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable. No estimate can be given
as to the number of shares that will be held by the Selling Stockholders
after completion of this offering because the Selling Stockholders may offer
all or some of the shares and because there currently are no agreements,
arrangements or understandings with respect to the sale of any of the shares.
The shares offered by this prospectus may be offered from time to time by the
Selling Stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SHARES PERCENT OF REGISTERED FOR SALE
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED OUTSTANDING SHARES HEREBY (1)
--------------------------------------------------------- ------------------ ------------------ -------------------
<S> <C> <C> <C>
Liron & Naomi Petrushka 1,966,764 1.26 1,561,734
Ramesh Balwani 1,966,764 1.26 1,561,734
Media Technology Ventures, L.P. 617,378 * 524,772
Michael Genesereth 397,900 * 323,216
Amos Barzilay 262,110 * 207,794
Naveen Jain 209,574 * 166,416
Prescient Trust UAD 9/7/99 209,574 * 166,416
Stan Bedows 88,668 * 70,410
Media Technology Entrepreneurs Fund LP 79,716 * 67,758
Arthur Keller 45,264 * 38,474
Emanuel Gadiel 31,686 * 26,934
Keller Family Trust Agreement Dated July 23, 1999 22,632 * 19,238
Rebecca Jepsen 18,106 * 15,390
Corey McCleland 15,844 * 13,468
Rod A. Beckstrom Trust 15,518 * 13,190
Marc Chalfen 16,122 * 12,804
Bruce Nelson 16,122 * 12,804
John Lopez 13,770 * 10,932
Rod Beckstrom 9,326 * 7,928
Raman Khanna 9,054 * 7,696
Jon Krass 8,658 * 6,876
Tom Thorner 7,922 * 6,734
Sigura Vandi 7,922 * 6,734
Robert Bedows 8,064 * 6,402
Glenn Miller 8,064 * 6,402
Michael Davidson 8,064 * 6,402
Gregory Eaton 8,064 * 6,402
Greg Swick 8,064 * 6,402
Dennis O'Donnell 8,064 * 6,402
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SHARES PERCENT OF REGISTERED FOR SALE
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED OUTSTANDING SHARES HEREBY (1)
--------------------------------------------------------- ------------------ ------------------ -------------------
<S> <C> <C> <C>
Steve Oakley 8,064 * 6,402
Caroline Delaney 9,834 * 3,903
Richard Ling 4,842 * 3,846
Terrance J. Delaney and Caroline M. Delaney, JT 9,834 * 3,903
John Staenberg 3,228 * 2,562
James Topinka 2,742 * 2,178
Emmanuel Rouvelas 2,742 * 2,178
Peter Hart 1,812 * 1,540
Roger Carrick 1,614 * 1,284
Grace Yuan 972 * 774
--------- ---------
6,120,628 4,916,434
--------- ---------
--------- ---------
</TABLE>
----------------------
* Represents beneficial ownership of less than one percent.
(1) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares registered
for sale hereby by reason of any stock divided, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of Commerce
One's outstanding shares of common stock.
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LEGAL MATTERS
The validity of the securities offered pursuant to this prospectus
will be passed upon for Commerce One by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. As of the date of this
prospectus, investment partnerships composed of members of and persons
associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation
and members and persons associated with the firm representing the firm in the
transaction beneficially own an aggregate of approximately 34,000 shares of
Commerce One common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements and financial statement schedule included
in our Annual Report on Form 10-K for the year ended December 31, 1999, as
set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial
statements and financial statement schedule are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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