<PAGE>
As filed with the Securities and Exchange Commission on January 21, 2000
Registration Statement No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
COMMERCE ONE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 680322810
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1600 RIVIERA, SUITE 200
WALNUT CREEK, CALIFORNIA 94596
(ADDRESS , INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------------
MERGENT SYSTEMS, INC. 1999 STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
-------------------------------
ROBERT M. TARKOFF
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
COMMERCE ONE, INC.
1600 RIVIERA, SUITE 200
WALNUT CREEK, CALIFORNIA 94596
(925) 941-6000
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
MICHELLE L. WHIPKEY, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF REGISTRATION
BE REGISTERED REGISTERED PER SHARE PRICE (2) FEE
=================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock of Commerce One issuable
under Mergent Systems, Inc's 1999 Stock
Option Plan.............................. 109,505 (1) $0.79 (2) $ 86,509 (2) $ 22.84 (2)
=================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Plan being registered pursuant
to this Registration Statement by reason of any stock dividend, stock split,
recapitalization or any other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
Registrant's outstanding shares of Common Stock.
(2) Estimated pursuant to Rule 457(h) under the Securities Act. With respect
to 109,505 shares subject to outstanding options to purchase Common Stock
under the Plan, the proposed maximum offering price per share is equal to the
weighted average exercise price of $0.79 per share pursuant to Rule 457(h)
under the Securities Act.
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference into this Registration
Statement the following documents and information heretofore filed with the
Commission:
1. The Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999.
2. The Registrant's Prospectus, filed with the Commission on
July 1, 1999, pursuant to Rule 424(b) promulgated under the Securities Act of
1933, as amended, (the "Securities Act").
3. The Registrant's Current Report on Form 8-K dated
November 23, 1999, filed on November 24, 1999 including any amendment or report
filed for the purpose of updating such description.
4. The Registrant's Current Report on Form 8-K dated January 7,
2000, filed on January 20, 2000 including any amendment or report filed for
the purpose of updating such description.
5. The description of Registrant's Common Stock contained in the
Company's Registration Statement on Form 8-A, as declared effective by the
Commission on June 21, 1999, filed pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Exchange Act") and, any amendment or report filed for
the purpose of updating such description.
All documents filed by Registrant pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Registration Statement on
Form S-8 and prior to the filing of a post-effective amendment that indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
II-2
<PAGE>
Article IX of the Registrant's Restated Certificate of Incorporation
provides for the indemnification of directors to the fullest extent
permissible under Delaware law.
Article VI of the Registrant's Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of
the Registrant if such person acted in good faith and in a manner reasonably
believed to be in and not opposed to the best interest of the Registrant,
and, in any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Mergent Systems, Inc's 1999 Stock Option Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of PricewaterhouseCoopers, LLP, Independent
Accountants.
23.3 Consent of WSGR (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
</TABLE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be
II-3
<PAGE>
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
[Remainder of Page Intentionally Left Blank]
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Commerce One, Inc., certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Walnut Creek, State of
California, on this 21st day of January, 2000.
COMMERCE ONE, INC.
By: /s/ MARK B. HOFFMAN
-----------------------------------------
Mark B. Hoffman
President, Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, Peter F. Pervere and Robert
M. Tarkoff and each of them, acting individual as his attorney-in-fact, with
full power of substitution, for him in any and all capacities, to sign any
and all amendments to this Registration Statement on Form S-8 (including
post-effective amendments), and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorney to any and all amendments to the Registration
Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-8 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ----------------------------------------------- ------------------
<S> <C> <C>
/s/ MARK B. HOFFMAN President, Chief Executive Officer and Chairman January 21, 2000
- -------------------------- of the Board (Principal Executive Officer)
Mark B. Hoffman
/s/ PETER F. PERVERE
- -------------------------- Vice President and Chief Financial Officer January 21, 2000
Peter F. Pervere (Principal Financial Officer)
/s/ ASIM ABDULLAH Director January 21, 2000
- --------------------------
Asim Abdullah
/s/ JOHN V. BALEN Director January 21, 2000
- --------------------------
John V. Balen
/s/ WILLIAM B. ELMORE Director January 21, 2000
- --------------------------
William B. Elmore
/s/ KENNETH C. GARDNER Director January 21, 2000
- --------------------------
Kenneth C. Gardner
/S/ THOMAS J. GONZALEZ Director January 21, 2000
- --------------------------
Thomas J. Gonzalez
II-5
<PAGE>
/s/ WILLIAM J. HARDING Director January 21, 2000
- --------------------------
William J. Harding
/s/ DAVID H. J. FURNISS Director January 21, 2000
- --------------------------
David H. J. Furniss
/s/ NORIYOSHI OSUMI Director January 21, 2000
- --------------------------
Noriyoshi Osumi
/s/ JAY M. TENEBAUM Director January 21, 2000
- --------------------------
Jay M. Tenebaum
/s/ JEFFREY T. WEBBER Director January 21, 2000
- --------------------------
Jeffrey T. Webber
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------- -------
<C> <S>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Mergent Systems, Inc. 1999 Stock Option Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.3 Consent of WSGR (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
</TABLE>
II-7
<PAGE>
EXHIBIT 5.1
[Wilson Sonsini Goodrich & Rosati Letterhead]
January 21, 2000
Commerce One, Inc.
1600 Riviera Avenue, Suite 200
Walnut Creek, CA 94596
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed
by you with the Securities and Exchange Commission on or about January 21,
2000 (the "Registration Statement") in connection with the registration under
the Securities Act of 1933, as amended, an aggregate of 109,505 shares of
your Common Stock (the "Shares") reserved for issuance pursuant to the
Mergent Systems, Inc. 1999 Stock Option Plan (the "Plan"). As your legal
counsel, we reviewed the actions taken and proposed to be taken by you and in
connection with the proposed sale and issuance of the Shares by the
Registrant under the Plan.
It is our opinion that, upon completion of the actions being taken, or
contemplated by us as your counsel to be taken by you prior to the issuance of
the Shares pursuant to the Registration Statement, the Plan, and upon completion
of the actions being taken in order to permit such transactions to be carried
out in accordance with the securities laws of the various states where required,
the Shares will be legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto. This opinion may be incorporated by reference in any
abbreviated registration statement filed pursuant to Item E under the general
instructions to Form S-8 under the Securities Act of 1933 with respect to the
Registration Statement.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE>
MERGENT SYSTEMS, INC.
1999 STOCK OPTION PLAN
1. ADOPTION AND PURPOSE OF THE PLAN. This stock option plan, to be
known as the "Mergent Systems, Inc. 1999 Stock Option Plan" (but referred to
herein as the "PLAN") has been adopted by the board of directors (the
"BOARD") of Mergent Systems, Inc., a California corporation (the "COMPANY"),
and is subject to the approval of its shareholders pursuant to section 7
below. The purpose of this Plan is to advance the interests of the Company
and its shareholders by enabling the Company to attract and retain qualified
directors, officers, employees, independent contractors, consultants and
advisers by providing them with an opportunity for investment in the Company.
The options that may be granted hereunder ("OPTIONS") represent the right by
the grantee thereof (each, including any permitted transferee pursuant to
section 6.7(c) below, an "OPTIONEE") to acquire shares of the Company's
common stock ("SHARES" which if acquired pursuant to the exercise of an
Option will be referred to as "OPTION SHARES") subject to the terms and
conditions of this Plan and a written agreement between the Company and the
Optionee to evidence each such Option (an "OPTION AGREEMENT").
2. CERTAIN DEFINITIONS. The defined terms set forth in EXHIBIT A
attached hereto and incorporated herein (together with other capitalized
terms defined elsewhere in this Plan) will govern the interpretation of this
Plan.
3. ELIGIBILITY. The Company may grant Options under this Plan only to
(i) persons who, at the time of such grant, are directors, officers, and
employees of the Company and/or any of its Subsidiaries, and (ii) natural
persons who at the time of such grant, are independent contractors,
consultants or advisers of the Company and/or any of its Subsidiaries and who
perform bona fide services on its behalf other than in connection with
capital-raising transactions (collectively, "ELIGIBLE PARTICIPANTS"). No
person will be an Eligible Participant following his or her Termination of
Eligibility Status and no Option may be granted to any person other than an
Eligible Participant. There is no limitation on the number of Options that
may be granted to an Eligible Participant.
4. OPTION POOL; SHARES RESERVED FOR OPTIONS. In no event will the
Company issue, in the aggregate, more than TWO MILLION EIGHT HUNDRED AND
SEVENTY SIX THOUSAND FIVE HUNDRED (2,876,500) Shares (the "OPTION POOL")
pursuant to the exercise of all Options granted under this Plan, exclusive of
those Option Shares that may be reacquired by the Company by repurchase or
otherwise; PROVIDED THAT in order to comply with the requirements of Section
260.140.45 of Title 10 of the California Code of Regulations (the "30%
RULE"), at no time will the total number of Shares that are issuable upon the
exercise of all outstanding Options granted under this Plan or under any
other outstanding options or warrants issued by the Company and the total
number of Shares provided for under any stock bonus or similar plan of the
Company in the aggregate exceed 30% of the total number of then issued and
outstanding Shares of the Company (or such higher percentage as has been
approved by the holders of at least two-thirds of the outstanding Shares of
the Company (including all securities convertible into Shares) entitled to
vote), as calculated in accordance with the conditions and exclusions of the
30% Rule. At all times while
<PAGE>
Options granted under this Plan are outstanding, the Company will reserve for
issuance for the purposes hereof a sufficient number of authorized and
unissued Shares to fully satisfy the Company's obligations under all such
outstanding Options.
5. ADMINISTRATION. This Plan will be administered and interpreted by
the Board, or by a committee consisting of two or more members of the Board,
appointed by the Board for such purpose (the Board, or such committee,
referred to herein as the "ADMINISTRATOR"). Subject to the express terms and
conditions hereof, the Administrator is authorized to prescribe, amend and
rescind rules and regulations relating to this Plan, and to make all other
determinations necessary or advisable for its administration and
interpretation. Specifically, the Administrator will have full and final
authority in its discretion, subject to the specific limitations on that
discretion as are set forth herein and in the Articles of Incorporation and
Bylaws of the Company, at any time:
(a) to select and approve the Eligible Participants to whom
Options will be granted from time to time hereunder;
(b) to determine the Fair Market Value of the Shares as of
the Grant Date for any Option that is granted hereunder;
(c) with respect to each Option it decides to grant, to
determine the terms and conditions of that Option, to be set forth in the
Option Agreement evidencing that Option (the form of which also being subject
to approval by the Administrator), which may vary from the "default" terms
and conditions set forth in section 6 below, except to the extent otherwise
provided in this Plan, including, without limitation, as follows:
(i) the total number of Option Shares that may be
acquired by the Optionee pursuant to the Option;
(ii) if the Option satisfies the conditions under
Section 422(b) of the Code, whether the Option will be treated as an ISO;
(iii) the per share purchase price to be paid to the
Company by the Optionee to acquire the Option Shares issuable upon exercise of
the Option (the "OPTION PRICE"), PROVIDED THAT the Option Price will not be less
than 85% of the Fair Market Value of the Shares as of the Grant Date, unless the
Optionee is a 10% shareholder, in which case the Option Price will not be less
than 110% of such Fair Market Value;
(iv) the maximum period or term during which the Option
will be exercisable (the "OPTION TERM"), PROVIDED THAT in no event may the
Option Term be longer than 10 years from the Grant Date;
(v) the maximum period following any Termination of
Eligibility Status, whether resulting from an Optionee's death, disability or
any other reason, during which period (the "GRACE PERIOD") the Option will be
exercisable, subject to Vesting and to the expiration of the Option Term,
{PROVIDED THAT in no event may the Administrator designate a Grace Period that
-2-
<PAGE>
is shorter than twelve (12) months after such Termination of Eligibility
Status by reason of the Optionee's death or disability, or 90 days after such
Termination of Eligibility for any other reason, except in the event of a
Termination for Cause, in which case no Grace Period will be required (i.e.,
the Option will terminate immediately);
(vi) whether to accept a promissory note or other
form of legal consideration in addition to cash as payment of all or a
portion of the Option Price and/or Tax Withholding Liability to be paid by
the Optionee upon the exercise of an Option granted hereunder;
(vii) the conditions (e.g., the passage of time or
the occurrence of events), if any, that must be satisfied prior to the
vesting of the right to exercise all or specified portions of an Option (such
portions being described as the number of Option Shares, or the percentage of
the total number of Option Shares that may be acquired by the Optionee
pursuant to the Option; the vested portion being referred to as a "VESTED
OPTION" and the unvested portion being referred to as an "UNVESTED OPTION"),
PROVIDED THAT no such conditions (except an Optionee's Termination of
Eligibility Status, after which no Unvested Option will become a Vested
Option) may be imposed which prevents an Optionee who is an employee, but who
is neither an officer or director, of the Company or any of its Subsidiaries,
from purchasing at least 20% of the Option Shares initially subject to the
Option as of the first anniversary of the Grant Date, and as of each
anniversary thereafter, such that by the fifth anniversary of the Grant Date
(assuming no such Termination of Eligibility Status) the entire Option would
be deemed a Vested Option; and
(viii) in addition, or as an alternative, to imposing
conditions on the right to exercise an Option as provided in section
5(c)(vii) above, after any portion of an Option has become a Vested Option,
whether any portion of the Option Shares acquired by an Optionee upon
exercise of an Option will be subject to repurchase by the Company or its
assigns pursuant to section 6.8(c), below, at the Option Price paid for such
Shares or at some other price that may be less than the Fair Market Value of
such Shares (such Shares, if subject to repurchase at less than Fair Market
Value, being referred to as "UNVESTED SHARES") following a Termination of
Eligibility Status or other designated event, and the conditions (e.g., the
passage of time or the occurrence of events), if any, that must be satisfied
for such Shares to be no longer subject to such right of repurchase at less
than Fair Market Value (such Shares being referred to as "VESTED SHARES");
PROVIDED THAT no such conditions (except an Optionee's Termination of
Eligibility Status, after which no Unvested Shares will become Vested Shares)
may be imposed which prevent Unvested Shares held by an employee, who is
neither an officer or director, of the Company and/or any of its
Subsidiaries, from becoming Vested Shares at the rate of at least twenty
percent (20%) per year following the Grant Date, such that by the fifth
anniversary of the Grant Date (assuming no earlier Termination of Eligibility
Status) all of the Shares would be deemed Vested Shares; and
(d) to delegate all or a portion of the Administrator's
authority under sections 5(a), (b) and (c) above to one or more members of
the Board who also are executive officers of the Company, and subject to such
restrictions and limitations as the Administrator may decide to impose on
such delegation.
-3-
<PAGE>
6. DEFAULT TERMS AND CONDITIONS OF OPTION AGREEMENTS. Unless
otherwise expressly provided in an Option Agreement based on the
Administrator's determination pursuant to section 5(c) above, the following
terms and conditions will be deemed to apply to each Option as if expressly
set forth in the Option Agreement:
6.1 ISO. No Option will be treated as an ISO unless treatment as
an ISO is expressly provided for in an Option Agreement and such Option
satisfies the conditions of Section 422(b) of the Code.
6.2 OPTION TERM. The Option Term will be for a period of 10 years
beginning on the Grant Date, except that in the case of an ISO granted to a
10% shareholder, the Option Term will be for a period of 5 years beginning on
the Grant Date.
6.3 GRACE PERIODS. Following a Termination of Eligibility Status:
(a) the Grace Period will be ninety (90) days, unless the
Termination of Eligibility Status is a result of a Termination for Cause or
the death or disability of the Optionee;
(b) the Grace Period will be twelve (12) months if the
Termination of Eligibility Status is a result of the death or disability of
the Optionee; and
(c) the Option will terminate, and there will be no Grace
Period, effective immediately as of the date and time of a Termination for
Cause of the Optionee, regardless of whether the Option is Vested or Unvested.
6.4 VESTING. The Option initially will be deemed an entirely
Unvested Option, but portions of the Option will become a Vested Option on
the following schedule:
(a) twenty-five percent (25%) will become a Vested Option as
of the first anniversary of the "Vesting Start Date" specified in the Option
Agreement (which may be earlier but may not be later than the Grant Date
specified therein); and
(b) six and one-fourth percent (6 and 1/4th%) of the Option
will become a Vested Option as of the end of each three-month period
thereafter;
PROVIDED THAT the Optionee does not suffer a Termination of Eligibility Status
prior to each such vesting date and PROVIDED FURTHER THAT additional vesting
will be suspended during any period while the Optionee is on a leave of absence
from the Company or its Subsidiaries, as determined by the Administrator.
6.5 EXERCISE OF THE OPTION; ISSUANCE OF SHARE CERTIFICATE.
(a) The portion of the Option that is a Vested Option may be
exercised by giving written notice thereof to the Company, on such form as
may be specified by the Administrator, but in any event stating: the
Optionee's intention to exercise the Option; the date of
-4-
<PAGE>
exercise; the number of full Option Shares to be purchased (which number will
be no less than 100 Shares, without regard to adjustments to the number of
Shares subject to the Option pursuant to section 8 below, or, if less, all of
the remaining Shares subject to the Option); the amount and form of payment
of the Option Price; and such assurances of the Optionee's investment intent
as the Company may require to ensure that the transaction complies in all
respects with the requirements of the 1933 Act and other applicable
securities laws. The notice of exercise will be signed by the person or
persons exercising the Option. In the event that the Option is being
exercised by the representative of the Optionee, the notice will be
accompanied by proof satisfactory to the Company of the representative's
right to exercise the Option. The notice of exercise will be accompanied by
full payment of the Option Price for the number of Option Shares to be
purchased, in United States dollars, in cash, by check made payable to the
Company, or by delivery of such other form of payment (if any) as approved by
the Administrator in the particular case.
(b) To the extent required by applicable federal, state,
local or foreign law, and as a condition to the Company's obligation to issue
any Shares upon the exercise of the Option in full or in part, the Optionee
will make arrangements satisfactory to the Company for the payment of any
applicable Tax Withholding Liability that may arise by reason of or in
connection with such exercise. Such arrangements may include, in the
Company's sole discretion, that the Optionee tender to the Company the amount
of such Tax Withholding Liability, in cash, by check made payable to the
Company, or in the form of such other payment as may be approved by the
Administrator, in its discretion pursuant to section 5(c)(vi) above.
(c) After receiving a proper notice of exercise and payment
of the applicable Option Price and Tax Withholding Liability, the Company
will cause to be issued a certificate or certificates for the Option Shares
as to which the Option has been exercised, registered in the name of the
person rightfully exercising the Option and the Company will cause such
certificate or certificates to be delivered to such person.
6.6 COMPLIANCE WITH LAW. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and Option Shares
may be issued pursuant to the exercise thereof by an Optionee, only after and
on the condition that there has been compliance with all applicable federal
and state securities laws. The Company will not be required to list,
register or qualify any Option Shares upon any securities exchange, under any
applicable state, federal or foreign law or regulation, or with the
Securities and Exchange Commission or any state agency, or secure the consent
or approval of any governmental regulatory authority, except that if at any
time the Board determines, in its discretion, that such listing, registration
or qualification of the Option Shares, or any such consent or approval, is
necessary or desirable as a condition of or in connection with the exercise
of an Option and the purchase of Option Shares thereunder, that Option may
not be exercised, in whole or in part, unless and until such listing,
registration, qualification, consent or approval is effected or obtained free
of any conditions that are not acceptable to the Board, in its discretion.
However, the Company will seek to register or qualify with, or as may be
provided by applicable local law, file for and secure an exemption from such
registration or qualification requirements from, the applicable securities
administrator and other officials of each jurisdiction in which an Eligible
Participant would be granted an Option hereunder prior to such grant.
-5-
<PAGE>
6.7 RESTRICTIONS ON TRANSFER.
(a) OPTIONS NONTRANSFERABLE. No Option will be transferable
by an Optionee otherwise than by will or the laws of descent and
distribution. During the lifetime of a natural person who is granted an
Option under this Plan, the Option will be exercisable only by him or her.
Notwithstanding anything else in this Plan to the contrary, no Option
Agreement will contain any provision which is contrary to, or which modifies,
the provisions of this section 6.7(a).
(b) PROHIBITED TRANSFERS. Prior to the Initial Public
Offering, no Holder of any Option Shares may Transfer such Shares, or any
interest therein: (i) except as expressly provided in this Plan; (ii) other
than in full compliance with all applicable securities laws and any
applicable restrictions on Transfer provided in the Company's Articles of
Incorporation and/or Bylaws, which will be deemed incorporated by reference
into this Plan. All Transfers of Option Shares not complying with the
specific limitations and conditions set forth in this section 6.7 and section
6.8 below are expressly prohibited. Any prohibited Transfer is void and of
no effect, and no purported transferee in connection therewith will be
recognized as a Holder of Option Shares for any purpose whatsoever. Should
such a Transfer purport to occur, the Company may refuse to carry out the
Transfer on its books, attempt to set aside the Transfer, enforce any
undertakings or rights under this Plan, or exercise any other legal or
equitable remedy.
(c) PERMITTED TRANSFERS. In the case of a Permitted
Transfer, the rights of first refusal and purchase of the Company set forth
in sections 6.8(a) and 6.8(b) below will not apply. For such purposes, a
"PERMITTED TRANSFER" means any of the following: (i) a Transfer by will or
under the laws of descent and distribution; or (ii) a Transfer by a Holder of
Option Shares to his or her ancestors, descendants or spouse (other than
pursuant to a decree of divorce, dissolution or separate maintenance, a
property settlement, or a separation agreement or any similar agreement or
arrangement with a spouse, except for BONA FIDE estate planning purposes), or
to a trust, partnership, limited liability company, custodianship or other
fiduciary account for the benefit of the Holder and/or such ancestors,
descendants or spouse, including any Transfer in the form of a distribution
from any such trust, partnership, limited liability company, custodianship or
other fiduciary account to any of the foregoing permitted beneficial owners
or beneficiaries thereof.
(d) CONDITIONS TO TRANSFER. It will be a condition to any
Transfer of any Option Shares that:
(i) the transferee of the Shares will execute such
documents as the Company may reasonably require to ensure that the Company's
rights under this Plan, and any applicable Option Agreement, are adequately
protected with respect to such Shares, including, without limitation, the
transferee's agreement to be bound by all of the terms and conditions of this
Plan and such Agreement, as if he or she were the original Holder of such
Shares; and
(ii) the Company is satisfied that such Transfer
complies in all respects with the requirements imposed by applicable state
and federal securities laws and regulations.
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(e) MARKET STANDOFF. If in connection with any public
offering of securities of the Company (or any Successor Entity), the
underwriter or underwriters managing such offering so requests, then each
Optionee and each Holder of Option Shares will agree to not sell or otherwise
Transfer any such Shares (other than Shares included in such underwriting)
without the prior written consent of such underwriter, for such period of
time as may be requested by the underwriter commencing on the effective date
of the registration statement filed with the Securities and Exchange
Commission in connection with such offering.
6.8 RIGHTS OF PURCHASE AND FIRST REFUSAL. The Company will have
the following rights of purchase and first refusal with respect to Option
Shares:
(a) RIGHT OF FIRST REFUSAL. If any Holder proposes to
Transfer any Option Shares prior to the Initial Public Offering, other than
in the case of a Permitted Transfer pursuant to section 6.7(c) above or an
Involuntary or Donative Transfer subject to section 6.8(b) below, the Company
will have an assignable right of first refusal to purchase such Shares on the
terms and conditions set out in this section 6.8(a). If the Company (or its
assignee) elects to exercise such right, it will do so with respect to any
particular Transfer of Shares in the following manner:
(i) Before any such Transfer, the Holder proposing
to Transfer such Shares will deliver a notice of proposed Transfer (a
"PROPOSED TRANSFER NOTICE") to the Company stating: the number of Option
Shares that the Holder proposes to Transfer and the Holder's BONA FIDE
intention to Transfer such Shares; the names and addresses of the Holder, the
proposed transferee and subsequently such other information regarding such
transferee as the Company reasonably requests; the manner and date of such
proposed Transfer; and the BONA FIDE cash price and/or other consideration
(and the fair market value thereof) per share, if any, that such Transferee
has offered to pay Holder for such Shares (the "OFFERED PRICE") as well as
such other terms, including payment terms, and conditions, if any, as were
included in such offer (the "OFFERED TERMS").
(ii) The Company (or its assignee) may exercise its
right of first refusal under this section 6.8(a) at any time not more than
twenty (20) days after the Company has received the Proposed Transfer Notice
with respect to such Shares. If the Company (or its assignee) elects to
exercise such purchase rights it will do so by delivering to the Holder of
such Shares a notice of such election and a closing date that is no more than
thirty (30) days after receipt of the Proposed Transfer Notice (or such later
date as the transferee may have offered or on which the Transfer is otherwise
scheduled to occur).
(iii) At the closing of the sale of the Shares to the
Company (or its assignee), to be held at its principal executive offices, the
Company (or its assignee) will pay the Holder of the Shares, in cash, the
purchase price equal to the Offered Price, subject to an appropriate
adjustment to take into account any deferred payment terms that were included
in the Offered Terms, except in the case of a Transfer of Option Shares
without consideration; PROVIDED THAT if the Offered Price includes any
non-cash consideration, the value thereof for purposes of this section 6.8(a)
will be determined in good faith by the Board.
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(iv) If the Company (including its assignees) fails
or refuses to exercise its rights under this section 6.8(a) with respect to
any Shares that are the subject of any Proposed Transfer Notice, then the
Holder will have the right to Transfer such Shares to the transferee named in
such Notice at the Offered Price and upon such Offered Terms as were set
forth in such Notice; PROVIDED THAT such Transfer must be completed within
ninety (90) days after the Company has received the Proposed Transfer Notice
with respect to such Shares.
(b) FOLLOWING AN INVOLUNTARY OR DONATIVE TRANSFER. Following
any Involuntary Transfer or Donative Transfer (other than a Permitted
Transfer) of Option Shares (the "TRANSFERRED SHARES") prior to the Initial
Public Offering, the Company will have the assignable right to purchase from
the transferee of the Transferred Shares ("TRANSFEREE") all or a portion of
such Shares for a purchase price that is equal to the Fair Market Value of
those Shares as of the date of such Transfer. If the Company (or its
assignee) elects to exercise such right, it will do so in the following
manner:
(i) Promptly after such Transfer, the transferor of
the Transferred Shares will deliver, or will cause the Transferee to deliver,
a notice (a "COMPLETED TRANSFER NOTICE") to the Company stating: the number
of Transferred Shares; the names and addresses of the transferor and the
Transferee, and subsequently such other information regarding the Transferee
as the Company reasonably requests; and the manner, circumstances and date of
such Transfer.
(ii) The Company (or its assignee) may exercise its
purchase rights under this section 6.8(b) at any time not more than ninety
(90) days after the Company has received the Completed Transfer Notice with
respect to the Transferred Shares. If the Company (or its assignee) elects
to exercise such purchase rights it will do so by delivering to the
Transferee a notice of such election, specifying the number of Transferred
Shares to be purchased and a closing date that is no more than sixty (60)
days after the giving of such notice.
(iii) At such closing, to be held at the Company's
principal executive offices, the Company (or its assignee) will pay the
Transferee the purchase price specified in this section 6.8(b).
(c) FOLLOWING A LOSS OF ELIGIBILITY STATUS. Following any
Loss of Eligibility Status by the Original Holder of an Option, the Company
will have the assignable right (but not the obligation) to purchase from the
Holder of Shares acquired pursuant to the exercise of the Option (except to
the extent that such Shares previously were transferred in a transaction as
to which section 6.8(a) or (b) applied), all or a portion of such Shares that
are Unvested Shares as of the date of Loss of Eligibility Status for a
purchase price that is equal to the Option Price per Share paid upon the
exercise of the Option. Such right will be exercisable in the following
manner:
(i) The Company (or its assignee) may exercise its
right of repurchase under this section 6.8(c) at any time not more than
ninety (90) days after the effective date of the Loss of Eligibility Status
of the Original Holder of the Option (or in the case of Shares issued upon
the exercise of Options after such Loss of Eligibility Status, a period of
ninety (90) days after the date of the exercise). If the Company (or its
assignee) elects to exercise such purchase
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rights it will do so by delivering to the Holder of such Shares a notice of
such election, specifying the number of Shares to be purchased and a closing
date that is within such ninety (90) day period.
(ii) At such closing, to be held at the Company's
principal executive offices, the Company (or its assignee) will pay the
Holder of the Shares, the purchase price, as specified in this section
6.8(c), in cash, or by cancellation of indebtedness to the Company, if any,
incurred by the original purchaser of the Option Shares to purchase the same,
or both, at a closing to be held at the Company's principal executive offices
on the date specified in such notice.
(d) ESCROW. For purposes of facilitating the enforcement of
the restrictions on Transfer set forth in this Plan or in any Option
Agreement, the Administrator may, at its discretion, require the Holder of
Option Shares to deliver the certificate(s) for such Shares with a stock
power executed by him or her and by his or her spouse (if required for
Transfer), in blank, to the Secretary of the Company or his or her designee,
to hold said certificate(s) and stock power(s) in escrow and to take all such
actions and to effectuate all such Transfers and/or releases as are in
accordance with the terms of this Plan. The certificates may be held in
escrow so long as the Option Shares whose ownership they evidence are subject
to any right of repurchase or first refusal under this Plan or under an
Option Agreement, and will be released by the escrow holder to an Optionee
(or to any permitted transferee of the Optionee) when they are no longer
subject to any right of repurchase or first refusal under this Plan or under
the Option Agreement. Each Optionee, by exercising an Option, thereby
acknowledges that the Secretary of the Company (or his or her designee) is so
appointed as the escrow holder with the foregoing authorities as a material
inducement to the grant of an Option under this Plan, that the appointment is
coupled with an interest, and that it accordingly will be irrevocable. The
escrow holder will not be liable to any party to an Option Agreement (or to
any other party) for any actions or omissions unless the escrow holder is
grossly negligent relative thereto. The escrow holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine.
(e) RESOLUTION OF DISPUTES. If there is a dispute concerning
the fair market value of the consideration offered or accepted for the Option
Shares or the Fair Market Value of the Option Shares, in connection with the
exercise by the Company of its rights under this section 6.8, the dispute
will be resolved by the independent certified public accounting firm that
audited or prepared without audit the Company's last regular annual financial
statement and the determination of that firm will be binding on the parties
in the absence of fraud.
6.9 CHANGE OF CONTROL TRANSACTIONS. In the event of a Change of
Control Transaction, (i) the Company shall endeavor to cause the Successor
Entity (or its parent or its Subsidiary) in such transaction either to assume
all of the Options which have been granted hereunder and which are
outstanding as of the consummation of such transaction ("CLOSING"), or to
issue (or cause to be issued) in substitution thereof comparable options of
such Successor Entity (or of its parent or its Subsidiary). If the Successor
Entity (or its parent or its Subsidiary) is unwilling to either assume such
Options or grant comparable options in substitution for such Options, on
terms that are acceptable to the Company as determined by the Board in the
exercise of its discretion, then the Board may cancel all outstanding
Options, and terminate this Plan, effective as of the Closing,
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provided that it will notify all Optionees of the proposed Change of Control
Transaction a reasonable amount of time prior to the Closing so that each
Optionee will be given the opportunity to exercise the Vested portion of his
or her Option prior to the Closing. For purposes of this section 6.9, the
term "CHANGE OF CONTROL TRANSACTION" means a Business Combination in which
less than (50%) of the outstanding voting securities of the Successor Entity
immediately following the Closing of the Business Combination transaction are
beneficially held by those persons and entities in the same proportion as
such persons and entities beneficially held the voting securities of the
Company immediately prior to such transaction; the term "BUSINESS
COMBINATION" means a transaction or series of transactions consummated within
any period of 90 days resulting in (A) the sale of all or substantially all
of the assets of the Company, (B) a merger or consolidation or other
reorganization of which the Company or a Subsidiary is a merging party.
6.10 ADDITIONAL RESTRICTIONS ON TRANSFER; INVESTMENT INTENT. By
accepting an Option and/or Option Shares under this Plan, the Optionee will
be deemed to represent, warrant and agree that, unless a registration
statement is in effect with respect to the offer and sale of Option Shares:
(i) neither the Option nor any such Shares will be freely tradeable and must
be held indefinitely unless such Option and such Shares are either registered
under the 1933 Act or an exemption from such registration is available; (ii)
the Company is under no obligation to register the Option or any such Shares;
(iii) upon exercise of the Option, the Optionee will purchase the Option
Shares for his or her own account and not with a view to distribution within
the meaning of the 1933 Act, other than as may be effected in compliance with
the 1933 Act and the rules and regulations promulgated thereunder; (iv) no
one else will have any beneficial interest in the Option Shares; (v) the
Optionee has no present intention of disposing of the Option Shares at any
particular time; and (vi) neither the Option nor the Shares have been
qualified under the securities laws of any state and may only be offered and
sold pursuant to an exception from qualification under applicable state
securities laws.
6.11 STOCK CERTIFICATES; LEGENDS. Certificates representing Option
Shares will bear all legends required by law and necessary or appropriate in
the Administrator's discretion to effectuate the provisions of this Plan and
of the applicable Option Agreement. The Company may place a "stop transfer"
order against Option Shares until full compliance with all restrictions and
conditions set forth in this Plan, in any applicable Option Agreement and in
the legends referred to in this section 6.11.
6.12 NOTICES. Any notice to be given to the Company under the
terms of an Option Agreement will be addressed to the Company at its
principal executive office, Attention: Secretary, or at such other address as
the Company may designate in writing. Any notice to be given to an Optionee
will be addressed to him or her at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly given if and when
enclosed in a properly sealed envelope, addressed as aforesaid, deposited,
postage prepaid, in a post office or branch post office regularly maintained
by the local postal authority.
6.13 OTHER PROVISIONS. Each Option Agreement may contain such
other terms, provisions and conditions, including restrictions on the
Transfer of Option Shares, and rights of the
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Company to repurchase such Shares, not inconsistent with this Plan and
applicable law, as may be determined by the Administrator in its sole
discretion.
6.14 SPECIFIC PERFORMANCE. Under those circumstances in which the
Company chooses to timely exercise its rights to repurchase Option Shares as
provided herein or in any Option Agreement, the Company will be entitled to
receive such Shares IN SPECIE in order to have the same available for future
issuance without dilution of the holdings of other shareholders of the
Company. By accepting Option Shares, the Holder thereof therefore
acknowledges and agrees that money damages will be inadequate to compensate
the Company and its shareholders if such a repurchase is not completed as
contemplated hereunder and that the Company will, in such case, be entitled
to a decree of specific performance of the terms hereof or to an injunction
restraining such holder (or such Holder's personal representative) from
violating this Plan or Option Agreement, in addition to any other remedies
that may be available to the Company at law or in equity.
7. TERM OF THE PLAN. This Plan will become effective on the date of
its adoption by the Board, PROVIDED THAT this Plan is approved by the
shareholders of the Company (excluding Option Shares issued by the Company
pursuant to the exercise of Options granted under this Plan) within 12 months
before or after that date. If this Plan is not so approved by the
shareholders of the Company within that 12-month period of time, any Options
granted under this Plan will be rescinded and will be void. This Plan will
expire on the tenth (10th) anniversary of the date of its adoption by the
Board or its approval by the shareholders of the Company, whichever is
earlier, unless it is terminated earlier pursuant to section 11 of this Plan,
after which no more Options may be granted under this Plan, although all
outstanding Options granted prior to such expiration or termination will
remain subject to the provisions of this Plan, and no such expiration or
termination of this Plan will result in the expiration or termination of any
such Option prior to the expiration or early termination of the applicable
Option Term.
8. ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change in
the outstanding Shares of the Company as a result of a stock split, reverse
stock split, stock bonus or distribution, recapitalization, combination or
reclassification, appropriate proportionate adjustments will be made in: (i)
the aggregate number of Shares that are reserved for issuance in the Option
Pool pursuant to section 4 above, under outstanding Options or future Options
granted hereunder; (ii) the Option Price and the number of Option Shares that
may be acquired under each outstanding Option granted hereunder; and (iii)
other rights and matters determined on a per share basis under this Plan or
any Option Agreement evidencing an outstanding Option granted hereunder. Any
such adjustments will be made only by the Board, and when so made will be
effective, conclusive and binding for all purposes with respect to this Plan
and all Options then outstanding. No such adjustments will be required by
reason of the issuance or sale by the Company for cash or other consideration
of additional Shares or securities convertible into or exchangeable for
Shares.
9. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of this Plan, the
Administrator may modify, extend or renew outstanding Options granted under
this Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options in
substitution therefor
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(to the extent not theretofore exercised). Notwithstanding the foregoing,
however, no modification of any Option will, without the consent of the
Optionee, alter or impair any rights or obligations under any outstanding
Option.
10. GOVERNING LAW; VENUE. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of
this Plan, the construction of its terms and the interpretation of the rights
and duties of the parties hereunder and under any Option Agreement. Any
party may seek to enforce its rights under this Plan or any Option Agreement
entered into under this Plan in any court of competent jurisdiction located
within the judicial district in which the Company [or its Subsidiaries] has a
regular place of business.
11. AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue this Plan at any time or from time to time; PROVIDED THAT no
action of the Board will, without the approval of the shareholders of the
Company, materially increase (other than by reason of an adjustment pursuant
to section 8 hereof) the maximum aggregate number of Option Shares in the
Option Pool, materially increase the benefits accruing to Eligible
Participants, or materially modify the category of, or eligibility
requirements for persons who are Eligible Participants. However, no such
action may alter or impair any Option previously granted under this Plan
without the consent of the Optionee, nor may the number of Option Shares in
the Option Pool be reduced to a number that is less than the aggregate number
of Option Shares (i) that may be issued pursuant to the exercise of all
outstanding and unexpired Options granted hereunder, and (ii) that have been
issued and are outstanding pursuant to the exercise of Options granted
hereunder.
12. INFORMATION PROVIDED BY COMPANY. Prior to the date on which the
Company is required to file its annual financial statements with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
the Company annually will provide the Company's financial statements (which
statements need not be audited) to each Optionee who is an employee of the
Company or any of its Subsidiaries, and each Optionee will, by virtue of
entering into an Option Agreement, be deemed to have agreed (and to cause any
investment advisers to whom the Optionee proposes to make such information
available to agree) to keep such information confidential and not to use,
disclose or copy such information for any purpose whatsoever other than
determining whether to exercise an Option. The Company deems such financial
statements to be the valuable trade secrets of the Company, and in the event
of any wrongful use, disclosure or other breach of the obligation to maintain
the confidentiality of such financial information, the Company may seek to
enforce all of its available legal and equitable rights and remedies, and may
notify local law enforcement officials that a criminal misappropriation of
the Company's trade secrets has taken place.
13. NO SHAREHOLDER RIGHTS. No rights or privileges of a shareholder in
the Company are conferred by reason of the granting of an Option. No
Optionee will become a shareholder in the Company with respect to any Option
Shares unless and until the Option has been properly exercised and the Option
Price fully paid as to the portion of the Option exercised.
14. COPIES OF PLAN. A copy of this Plan will be delivered to each
Optionee at or before the time he, she or it executes an Option Agreement.
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Date Plan Adopted by Board of Directors: August 10, 1999
Date Plan Approved by the Shareholders: August 10, 1999
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MERGENT SYSTEMS, INC.
1999 STOCK OPTION PLAN
EXHIBIT A
DEFINITIONS
1. "10% SHAREHOLDER" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions set forth in
Section 424(d) of the Code at the time he or she is granted an Option, stock
possessing more than 10% of the total combined voting power or value of all
classes of stock of the Company and/or of its Subsidiaries.
2. "1933 ACT" means the Securities Act of 1933, as amended.
3. "ADMINISTRATOR" has the meaning set forth in section 5 of the Plan.
4. "BOARD" has the meaning set forth in section 1 of the Plan.
5. "BUSINESS COMBINATION" has the meaning set forth in section 6.9 of
the Plan.
6. "CHANGE OF CONTROL TRANSACTION" has the meaning set forth in
section 6.9 of the Plan.
7. "CLOSING" has the meaning set forth in section 6.9 of the Plan.
8. "CODE" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to Sections
of the Code as enacted at the time of the Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor provisions of
the Code resulting from recodification, renumbering or otherwise).
9. "COMPANY" has the meaning set forth in section 1 of the Plan.
10. "COMPLETED TRANSFER NOTICE" has the meaning set forth in section
6.8(b) of the Plan.
11. "DISABILITY" means any physical or mental disability which results
in a Termination of Eligibility Status under applicable law, except that for
purposes of section 6.1(c) of the Plan, the term "disability" means permanent
and total disability within the meaning of Section 22(e)(3) of the Code.
12. "DONATIVE TRANSFER" with respect to Option Shares means any
voluntary Transfer by a transferor other than for value or the payment of
consideration to the transferor.
13. "ELIGIBLE PARTICIPANTS" has the meaning set forth in section 3 of
the Plan.
<PAGE>
14. "FAIR MARKET VALUE" means, with respect to the Shares and as of the
date that is relevant to such a determination (e.g., on the Grant Date), the
market price per share of such Shares determined by the Administrator,
consistent with the requirements of Section 422 of the Code and to the extent
consistent therewith, as follows: (a) if the Shares are traded on a stock
exchange on the date in question, then the Fair Market Value will be equal to
the closing price reported by the applicable composite-transactions report
for such date; (b) if the Shares are traded over-the-counter on the date in
question and are classified as a national market issue, then the Fair Market
Value will be equal to the last-transaction price quoted by the NASDAQ system
for such date; (c) if the Shares are traded over-the-counter on the date in
question but are not classified as a national market issue, then the Fair
Market Value will be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for such
date; and (d) if none of the foregoing provisions is applicable, then the
Fair Market Value will be determined by the Administrator in good faith on
such basis as it deems appropriate, taking into consideration the provisions
of Section 260.140.50 of Title 10 of the California Code of Regulations.
15. "GRACE PERIOD" has the meaning set forth in section 5(c)(v) of the
Plan.
16. "GRANT DATE" means, with respect to an Option, the date on which
the Option Agreement evidencing that Option is entered into between the
Company and the Optionee, or such other date as may be set forth in that
Option Agreement as the "Grant Date" which will be the effective date of that
Option Agreement.
17. "HOLDER" means the holder of any Option Shares.
18. "INITIAL PUBLIC OFFERING" means the closing of the first sale of
securities of the Company, or of any Successor Entity, to the public, through
a firm commitment underwriting, for an aggregate price (exclusive of
underwriters' discounts and commissions and expenses of the offering) of at
least fifteen million dollars ($7,500,000), pursuant to an effective
registration statement filed with the Securities and Exchange Commission
under the 1933 Act.
19. "INVOLUNTARY TRANSFER" with respect to Option Shares includes,
without limitation, any of the following: (A) an assignment of the Shares for
the benefit of creditors of the transferor; (B) a Transfer by operation of
law; (C) an execution of judgment against the Shares or the acquisition of
record or beneficial ownership of Shares by a lender or creditor; (D) a
Transfer pursuant to any decree of divorce, dissolution or separate
maintenance, any property settlement, any separation agreement or any other
agreement with a spouse (except for BONA FIDE estate planning purposes) under
which any Shares are Transferred or awarded to the spouse of the transferor
or are required to be sold; or (E) a Transfer resulting from the filing by
the transferor of a petition for relief, or the filing of an involuntary
petition against the transferor, under the bankruptcy laws of the United
States or of any other nation.
20. "ISO" means an "incentive stock option" as defined in Section 422
of the Code.
21. "OFFERED PRICE" has the meaning set forth in section 6.8(a) of the
Plan.
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22. "OFFERED TERMS" has the meaning set forth in section 6.8(a) of the
Plan.
23. "OPTION AGREEMENT" has the meaning set forth in section 1 of the
Plan.
24. "OPTION POOL" has the meaning set forth in section 4 of the Plan.
25. "OPTION PRICE" has the meaning set forth in section 5(c)(iii) of
the Plan.
26. "OPTION SHARES" has the meaning set forth in section 1 of the Plan,
provided that for purposes of section 6.7 and section 6.8 of the Plan, the
term "Option Shares" includes all Shares issued by the Company to a Holder
(or his, her or its predecessor) by reason of such holdings, including any
securities which may be acquired as a result of a stock split, stock
dividend, and other distributions of Shares in the Company made upon, or in
exchange for, other securities of the Company.
27. "OPTION TERM" has the meaning set forth in section 5(c)(iv) of the
Plan.
28. "OPTIONEE" has the meaning set forth in section 1 of the Plan.
29. "OPTIONS" has the meaning set forth in section 1 of the Plan.
30. "PERMITTED TRANSFER" has the meaning set forth in section 6.7(c) of
the Plan.
31. "PLAN" has the meaning set forth in section 1 of the Plan.
32. "PROPOSED TRANSFER NOTICE" has the meaning set forth in section
6.8(a) of the Plan.
33. "SHARES" has the meaning set forth in section 1 of the Plan.
34. "SUBSIDIARY" has the same meaning as "subsidiary corporation" as
defined in Section 424(f) of the Code.
35. "SUCCESSOR ENTITY" means a corporation or other entity that
acquires all or substantially all of the assets of the Company, or which is
the surviving or parent entity resulting from a Business Combination, as that
term is defined in section 6.9 of the Plan.
36. "TAX WITHHOLDING LIABILITY" in connection with the exercise of any
Option means all federal and state income taxes, social security tax, and any
other taxes applicable to the compensation income arising from the
transaction required by applicable law to be withheld by the Company.
37. "TERMINATION OF ELIGIBILITY STATUS" means (i) in the case of any
employee of the Company and/or any of its Subsidiaries, a termination of his
or her employment, whether by the employee or employer, and whether voluntary
or involuntary, including without limitation as a result of the death or
disability of the employee, (ii) in the case of any advisor, consultant, or
independent contractor of the Company and/or any of its Subsidiaries, the
termination of the services relationship
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pursuant to any contract between the parties or otherwise under applicable
law, and (iii) in the case of any director of the Company and/or any of its
Subsidiaries, the death of or resignation by the director or his or her
removal from the board in the manner provided by the articles of
incorporation, bylaws or other organic instruments of the Company or
Subsidiary or otherwise in accordance with applicable law.
38. "TERMINATION FOR CAUSE" means (i) in the case of an Optionee who is
an employee of the Company and/or any of its Subsidiaries, a termination by
the employer of the Optionee's employment for "cause" as defined by
applicable law, by any contract of employment or the Option Agreement, or if
not defined therein, pursuant to the "For Cause Standard" set forth below,
(ii) in the case of an Optionee who is or which is an advisor, consultant or
independent contractor to the Company and/or any of its Subsidiaries, a
termination of the services relationship by the hiring party for "cause" or
breach of contract, as defined by applicable law, by any contract between the
parties or the Option Agreement, or if not defined therein, pursuant to the
"For Cause Standard" set forth below, and (iii) in the case of an Optionee
who is a director of the Company and/or any of its Subsidiaries, removal of
him or her from the board of directors by action of the shareholders or, if
permitted by applicable law and the articles, bylaws or other organic
documents of the Company or the Subsidiary, as the case may be, or pursuant
to applicable law, by the other directors), in connection with the good faith
determination of the board of directors (or of the Company's or Subsidiary's
shareholders if so required, but in either case excluding the vote of the
subject individual if he or she is a director or a shareholder) that the
Optionee has engaged in any acts which breach any fiduciary duty to the
Company, any of its Subsidiaries or their shareholders, or in any acts
involving dishonesty or moral turpitude or in any acts that materially and
adversely affect the business, affairs or reputation of the Company or any of
its Subsidiaries (the "For Cause Standard").
39. "TRANSFER" with respect to Option Shares, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment or levy of those Shares, including any Involuntary Transfer,
Donative Transfer or transfer by will or under the laws of descent and
distribution.
40. "TRANSFEREE" has the meaning set forth in section 6.8(b) of the
Plan.
41. "TRANSFERRED SHARES" has the meaning set forth in section 6.8(b) of
the Plan.
42. "UNVESTED OPTION" has the meaning set forth in section 5(c)(vii) of
the Plan.
43. "UNVESTED SHARES" has the meaning set forth in section 5(c)(viii)
of the Plan.
44. "VESTED OPTION" has the meaning set forth in section 5(c)(vii) of
the Plan.
45. "VESTED SHARES" has the meaning set forth in section 5(c)(viii) of
the Plan.
-4-
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Mergent Systems, Inc. 1999 Stock
Option Plan of Commerce One, Inc. of our report dated March 5, 1999 (except
for Note 8, as to which the date is June 25, 1999) with respect to the
consolidated financial statements and financial statement schedule of
Commerce One, Inc. as of December 31, 1997 and 1998 and for each of the three
years in the period ending December 31, 1998 and our report dated March 5,
1999 with respect to the financial statements of VEO Systems, Inc. as of
December 31, 1998 and for the year then ended, included in the Registration
Statement (Form S-1, No. 333-76987), as amended, and the related Prospectus
of Commerce One, Inc., filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Walnut Creek, California
January 19, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated May 8, 1998, except
for the last paragraph of Note 10, as to which the date is August 21, 1998,
relating to the financial statements of VEO Systems, Inc., which appear in
Form S-1 (File No. 333-76987) of Commerce One, Inc.
PRICEWATERHOUSECOOPERS LLP
San Jose, California
January 21, 2000
