SCHEDULE 14A
(RULE 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a- 6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
COMMERCE ONE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
N/A
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(2) Aggregate number of securities to which transaction
applies:
N/A
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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</TABLE>
PRELIMINARY PROXY
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 31, 2000 AT 11:00 A.M.
TO OUR STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders of Commerce
One, Inc., ("Commerce One" or the "Company") will be held at the Carr America
Conference Center, Tassajara Conference Room, 4400 Rosewood Avenue, Pleasanton,
CA 94588 on Wednesday, May 31, 2000 at 11:00 a.m. local time for the following
purposes:
1. To elect three Class I directors of Commerce One, to serve a term of three
years and hold office until their respective successors have been elected
and qualified or until their earlier resignation or removal. Commerce One's
board of directors intends to present the following nominees for election as
directors:
Thomas J. Gonzales, II
Robert M. Kimmitt
Jay M. Tenenbaum
2. To amend the Company's 1997 Incentive Stock Option Plan to increase the
number of shares of common stock available for issuance thereunder by
3,500,000 shares to an aggregate of 34,371,926 shares;
3. To amend the Company's 1999 Employee Stock Purchase Plan to: (a) increase
the number of shares of common stock available for issuance thereunder by
3,700,000 shares to an aggregate of 9,346,924 shares; and (b) to increase
the amount of the annual increase, effective January 1, 2001, in the number
of shares available for grant thereunder to the least of (i) 5,000,000
shares, (ii) 3% of the outstanding shares of Common Stock of Commerce One,
or (iii) a number of shares determined by Commerce One's board of directors;
4. To amend the Company's Amended and Restated Certificate of Incorporation to:
(a) increase the authorized number of shares of common stock by 700 million
shares to an aggregate of 950 million shares; and (b) increase the
authorized number of shares of preferred stock by 40 million shares to an
aggregate of 50 million shares;
5. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000; and
6. To transact any other business that may properly come before the annual
meeting or any adjournment or postponements thereof.
These proposals are discussed in more detail in the attached proxy
statement. Please read the attached proxy statement carefully. Only stockholders
of record at the close of business on April 7, 2000, the record date, are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting.
By Order of the Board of Directors
/s/ Mark B. Hoffman
Mark B. Hoffman
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Pleasanton, California
April 28, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE.
2
COMMERCE ONE, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The accompanying proxy is solicited by the Board of Directors of Commerce
One, Inc., a Delaware corporation, for use at the annual meeting of stockholders
to be held on May 31, 2000, at 11:00 a.m. local time, or at any adjournment or
postponement thereof. The meeting will be held at the Carr America Conference
Center, Tassajara Conference Room, 4400 Rosewood Avenue, Pleasanton, CA 94588.
Commerce One's telephone number at that address is (925) 520-6000. At the
meeting, only stockholders of record at the close of business on April 7, 2000
will be entitled to vote. On that date, Commerce One's outstanding capital stock
consisted of 155,118,220 shares of common stock, held by approximately 920
stockholders, which does not include additional beneficial holders. At the
meeting, the stockholders will be asked:
1. To elect three Class I directors of Commerce One, to serve a term of three
years and hold office until their respective successors have been elected
and qualified or until their earlier resignation or removal. Commerce One's
board of directors intends to present the following nominees for election as
directors:
Thomas J. Gonzales, II
Robert M. Kimmitt
Jay M. Tenenbaum
2. To amend the Company's 1997 Incentive Stock Option Plan to increase the
number of shares available for issuance thereunder by 3,500,000 shares to an
aggregate of 34,371,926 shares;
3. To amend the Company's 1999 Employee Stock Purchase Plan to: (a) increase
the number of shares of common stock available for issuance thereunder by
3,700,000 shares to an aggregate of 34,371,926 shares; and (b) to increase
the amount of the annual increase, effective January 1, 2001, in the number
of shares available for grant thereunder to the least of (i) 5,000,000
shares, (ii) 3% of the outstanding shares of Common Stock of Commerce One,
or (iii) a number of shares determined by Commerce One's board of directors;
4. To amend the Company's Amended and Restated Certificate of Incorporation to:
(a) increase the authorized number of shares of common stock by 700 million
shares to an aggregate of 950 million shares, and (b) increase the
authorized number of shares of preferred stock by 40 million shares to an
aggregate of 50 million shares;
5. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000; and
6. To transact any other business that may properly come before the annual
meeting or any adjournment or postponements thereof.
This proxy statement and form of proxy were first sent or given to
stockholders entitled to vote at the annual meeting on or about April 28, 2000,
together with Commerce One's 1999 annual report to stockholders.
VOTE AND QUORUM REQUIRED
Holders of Commerce One common stock are entitled to one vote for each share
held as of the record date. The presence, in person or by proxy, of the holders
of a majority of the shares entitled to be voted generally at the annual meeting
is necessary to constitute a quorum at the annual meeting.
3
ELECTION OF DIRECTORS
Holders of all outstanding shares of Commerce One common stock, voting
together as a single class, have the right to elect all of the Class I directors
to the board of directors. Directors will be elected by a plurality of the votes
of the shares of Commerce One common stock present in person or represented by
proxy at the meeting. A majority in total voting power of the shares of Commerce
One common stock represented in person or by proxy at the meeting will
constitute a quorum for the purposes of electing the directors.
ALL OTHER PROPOSALS
Approval or ratification of each of the other proposals scheduled to be
voted on by the stockholders requires the affirmative vote of a majority of the
total voting power of the shares of Commerce One common stock represented in
person or by proxy at the meeting and entitled to vote on the proposal, voting
together as a single class.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS
On the record date, directors, executive officers and affiliates of Commerce
One as a group beneficially owned 33,702,920 shares of Commerce One common
stock. Such shares constituted approximately 21.7% of all of the outstanding
Commerce One common stock and approximately 21.7% of the voting power of
Commerce One common stock, as of the record date.
STOCK SPLITS
The Company effected a three-for-one stock split on December 23, 1999 and a
two-for-one stock split on April 19, 2000. All of the information presented
herein is on a post-split basis, except where specifically indicated otherwise.
ABSTENTIONS; BROKER NON-VOTES
For all proposals, abstentions will be included in determining the number of
shares present and voting at the meeting and will have the same effect as a vote
for the proposal. In the event that a broker, bank, custodian, nominee or other
record holder of Commerce One common stock indicates on a proxy that it does not
have discretionary authority to vote certain shares on a particular matter,
which is called a broker non-vote, those shares will not be considered for
purposes of determining the number of shares entitled to vote with respect to a
particular proposal on which the broker has expressly not voted, but will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business.
EXPENSES OF PROXY SOLICITATION
Commerce One will pay the expenses of soliciting proxies to be voted at the
meeting. Following the original mailing of the proxies and other soliciting
materials, Commerce One and its agents may also solicit proxies by mail,
telephone, telegraph or in person. Following the original mailing of the proxies
and other soliciting materials, Commerce One will request brokers, custodians,
nominees and other record holders of Commerce One common stock to forward copies
of the proxy and other soliciting materials to persons for whom they hold shares
of Commerce One common stock and to request authority for the exercise of
proxies. In such cases, Commerce One upon the request of the record holders will
reimburse such holders for their reasonable expenses.
VOTING OF PROXIES; REVOCABILITY OF PROXIES
The proxy accompanying this proxy statement is solicited on behalf of the
Commerce One board of directors for use at the meeting. Please complete, date
and sign the accompanying proxy and promptly
4
return it in the enclosed envelope. Voting may also be accomplished
electronically or by telephone, as described below. All properly signed proxies
that Commerce One receives prior to the vote at the meeting and that are not
revoked will be voted at the meeting according to the instructions indicated on
the proxies or, if no direction is indicated, the shares will be voted in favor
of the proposals. You may revoke your proxy at any time before it is exercised
at the meeting by taking any of the following actions:
- delivering to the secretary of Commerce One, by any means, including
facsimile, a written notice, bearing a date later than the date of the
proxy, stating that the proxy is revoked;
- if voting electronically or by telephone, voting again by use of the same
procedures, as described below;
- signing and delivering a proxy relating to the same shares and bearing a
later date prior to the vote at the meeting; or
- attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy. Please note, however, that if
your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must bring to the meeting a letter from
the broker, bank or other nominee confirming your beneficial ownership of
the shares.
Commerce One's board of directors does not know of any matter that is not
referred to herein to be presented for action at the meeting. If any other
matters are properly brought before the meeting, the persons named in the
proxies will have discretion to vote on such matters in accordance with their
best judgment.
VOTING ELECTRONICALLY OR BY TELEPHONE
Instead of submitting your vote by mail on the enclosed proxy card, you can
vote electronically by submitting your proxy through the Internet or by
telephone. PLEASE NOTE THAT THERE ARE SEPARATE ARRANGEMENTS FOR USING THE
INTERNET AND TELEPHONE DEPENDING ON WHETHER YOUR SHARES ARE REGISTERED IN THE
COMPANY'S STOCK RECORDS IN YOUR NAME OR IN THE NAME OF A BROKERAGE FIRM OR BANK.
The Internet and telephone voting procedures are designed to authenticate
your identity as a Commerce One stockholder, to allow you to vote your shares
and to confirm that your instructions have been properly recorded. Commerce One
has been advised by counsel that the procedures that have been put in place are
consistent with the requirements of applicable law. Stockholders voting by means
of the Internet through Boston EquiServe, the Company's transfer agent, should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that may
be borne by each individual stockholder.
SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER
Stockholders with shares registered directly in their name in Commerce One's
stock records maintained by Boston EquiServe, may vote their shares:
- by submitting their proxy through the Internet at the following address on
the World Wide Web: http://www.eproxyvote.com/cmrc;
- by making a toll-free telephone call from the United States and Canada to
Boston EquiServe at 1-877-779-8683 or outside the United States and Canada
at 1-201-536-8073; or
- by mailing their signed proxy card. Specific instructions to be followed
by registered stockholders are set forth on the enclosed proxy card.
Proxies submitted through the Internet or by telephone through Boston
EquiServe as described above must be received by midnight E.S.T. on
May 30, 2000.
5
SHARES REGISTERED IN THE NAME OF A BROKERAGE FIRM OR BANK
A number of brokerage firms and banks are participating in a program
provided through ADP Investor Communication Services that offers telephone and
Internet voting options. That program is different from the program provided by
Boston EquiServe for shares registered in the name of the stockholder. If your
shares are held in an account at a brokerage firm or bank participating in the
ADP Program, you may vote those shares by calling the telephone number which
appears on your voting form or through the Internet in accordance with
instructions set forth on the voting form. If you have any questions regarding
the proposals or how to execute your vote, please contact our proxy solicitor,
Beacon Hill Partners, at 1-800-357-8212.
REVOCATION OF PROXIES SUBMITTED ELECTRONICALLY OR BY TELEPHONE
To revoke a proxy previously submitted electronically through the Internet
or by telephone, you may simply vote again at a later date, but prior to
midnight E.S.T. on May 30, 2000, using the same procedures, in which case your
later submitted vote will be recorded and your earlier vote revoked.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of Commerce One's stockholders that are intended to be presented
by such stockholders at Commerce One's 2001 annual meeting of stockholders must
be received by Commerce One at its corporate offices, no later than January 12,
2001 in order to be considered for possible inclusion in the proxy statement and
form of proxy relating to the 2001 annual meeting. If a stockholder intends to
submit a proposal at the 2001 annual meeting of stockholders which is not
submitted in time to be eligible for inclusion in the proxy statement relating
to that meeting, the stockholder must give notice to Commerce One not less than
60 days nor more than 90 days prior to the meeting in accordance with the
requirements set forth in the Securities Exchange Act of 1934 and Commerce One's
bylaws. If a stockholder fails to comply with the foregoing notice provisions,
the proposal may not be brought before the meeting.
6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS
The board of directors is currently comprised of 11 members, divided into
three classes with overlapping three-year terms. Any additional directorships
resulting from an increase in the number of directors will be distributed among
the three classes so that, as nearly as possible, each class will consist of an
equal number of directors. Unless otherwise instructed, the proxy holders will
vote the proxies received by them for the three nominees named below, all of
whom are currently directors of Commerce One. In the event that any nominee of
Commerce One is unable or declines to serve as a director at the time of the
annual meeting, the proxies will be voted for any nominee who shall be
designated by the present board of directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner as will
ensure the election of as many of the nominees listed below as possible. The
term of office of each person elected as a director will continue until the next
annual meeting of stockholders or until his successor has been duly elected and
qualified or until his earlier death, resignation or removal. It is not expected
that any nominee will be unable or will decline to serve as a director.
NOMINEES FOR CLASS I DIRECTORS
Three Class I directors are to be elected at the annual meeting for a
three-year term ending in 2003. The board of directors has nominated THOMAS J.
GONZALES, II, ROBERT M. KIMMITT, and JAY M. TENENBAUM for election as Class I
directors. Unless otherwise instructed, the persons named in the enclosed proxy
intend to vote proxies received by them for the election of Messrs. Gonzales,
Kimmitt and Tenenbaum. Commerce One expects that all such persons will accept
such nomination. In the event that either any nominee is unable or declines to
serve as a director at the time of the annual meeting, proxies will be voted for
a substitute nominee or nominees designated by the present board of directors.
The term of office of the persons elected as directors will continue until such
director's term expires in 2003 or until such director's successor has been
elected and qualified.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE.
VOTE REQUIRED
The nominees receiving the highest number of affirmative votes of the shares
present or represented and entitled to be voted for them shall be elected as
directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but they have no legal effect under Delaware law.
INFORMATION REGARDING NOMINEES AND OTHER DIRECTORS
Set forth below is certain information as of the record date regarding the
nominees for Class I directors and each other director of Commerce One whose
term of office continues after the annual meeting.
7
NOMINEES FOR CLASS I DIRECTORS FOR A TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- --------------------------------------------------------
<S> <C> <C>
Thomas J. Gonzales, II...... 33 Director, Senior Vice President and Chief Technology
Officer
Robert M. Kimmitt........... 52 Vice Chairman of the Board and President
Jay M. Tenenbaum............ 56 Director, Senior Vice President and Chief Scientist
</TABLE>
THOMAS J. GONZALES, II co-founded Commerce One in January 1994. In
February 2000, he was promoted to Senior Vice President and Chief Technology
Officer. He served as Vice President and Chief Technology Officer from
September 1996 through January 2000. He has also been a member of the Board of
Directors since April 1998. From January 1994 to September 1996, Mr. Gonzales
served as President and Chairman of the Board of Directors of Commerce One.
Mr. Gonzales attended the University of California, Berkeley.
ROBERT M. KIMMITT joined Commerce One in December 1999 as a member of the
board of directors and in February 2000 he became Vice Chairman of the Board and
Chief Operating Officer. In March 2000, he was promoted to President while
remaining Vice Chairman of the Board. Prior to joining Commerce One,
Mr. Kimmitt was a partner in the law firm of Wilmer, Cutler & Pickering from
1997 to 2000. He was Managing Director of Lehman Brothers Inc. from 1993 to
1997. Prior to joining Lehman Brothers, he was the American Ambassador to
Germany from 1991 to 1993. He also served as Under Secretary of State for
Political Affairs from 1989 to 1991. Mr. Kimmitt currently serves on the boards
of Allianz Life Insurance Co. of North America, Mannesmann AG, Siemens AG and
United Defense Industries, Inc. He received a B.S. degree in Engineering from
the U.S. Military Academy at West Point and a J.D. degree from Georgetown
University.
JAY M. TENENBAUM joined Commerce One as Chief Scientist and a member of the
board of directors in January 1999. In February 2000, he became Senior Vice
President and Chief Scientist. Prior to joining Commerce One, Dr. Tenenbaum was
the Chairman of the board of directors and Chief Scientist of VEO Systems, Inc.
from January 1998 to January 1999. Prior to joining VEO Systems, Inc.,
Dr. Tenenbaum formed CommerceNet, an industry association for Internet commerce,
where he served as Chairman of the Board of Directors and Chief Executive
Officer from May 1996 to January 1998. Prior to founding CommerceNet,
Dr. Tenenbaum served as Vice President of Strategic Technology for
VeriFone, Inc. from November 1995 to May 1996. In February 1991, Dr. Tenenbaum
founded E.I.T., a company that engages in security and payment solutions for the
Internet, where he served as Chairman of the Board of Directors and Chief
Executive Officer, until November 1995. He holds B.S. and M.S. degrees in
Electrical Engineering from the Massachusetts Institute of Technology and a
Ph.D. in Electrical Engineering and Computer Science from Stanford University.
INCUMBENT CLASS II DIRECTORS WHOSE TERM EXPIRES IN 2001
<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- --------
<S> <C> <C>
Kenneth C. Gardner.......................................... 49 Director
William J. Harding.......................................... 52 Director
David H. J. Furniss......................................... 41 Director
Noriyoshi Osumi............................................. 47 Director
</TABLE>
KENNETH C. GARDNER has served as a member of the board of directors of
Commerce One since September 1996. Since June 1995, Mr. Gardner has been
President and Chief Executive Officer of Sagent Technology, Inc. Prior to his
tenure at Sagent, Mr. Gardner served as Vice President of Products at Borland
International from April 1994 to June 1995. He is on the board of directors of
Data Sage and
8
ObjectSwitch Corporation. Mr. Gardner received a B.S. degree in Finance from the
University of Louisville.
WILLIAM J. HARDING has served as a member of the board of directors of
Commerce One since December 1996 and as a member of Commerce One's audit
committee since April 1999. Since 1994, Dr. Harding has been a General Partner
of Morgan Stanley Dean Witter Venture Partners. Prior to joining Morgan Stanley
Dean Witter, Dr. Harding was a General Partner of J.H. Whitney & Co. from 1985
to 1993. Dr. Harding currently serves on the board of Duet Technologies, Blaze
Software, Persistence Software, Interwave Communications, Inter Nap Network
Services, Respond.com, The Industry Standard Corp., Form Factor, Inc., and
SendMail, Inc. Dr. Harding received a B.S. degree in Engineering Mathematics and
an M.S. degree in Systems Engineering from the University of Arizona and a Ph.D.
degree in Engineering from Arizona State University.
DAVID H. J. FURNISS has served as a member of the board of directors of
Commerce One since November 1999. Since October 1999, Mr. Furniss has been
General Manager, Electronic Business of British Telecommunications plc. From
1997 to 1999, he was the Sales and Marketing Director at Demon Internet, a
leading consumer and business-to-business ISP. Prior to his position at Demon
Internet, Mr. Furniss worked in senior sales and marketing roles with Compaq.
Mr. Furniss received a B.S. degree in Business Studies from Leeds Metropolitan
University.
NORIYOSHI OSUMI has served as a member of the board of directors since
July 1999. In 1980, Dr. Osumi joined NTT Basic Research Labs as a research
scientist. He has been Vice President of NTT America, Inc. since July 1998.
Prior to this appointment he was Senior Research Manager from April 1988 to
July 1998. From 1985 to 1986, Dr. Osumi was a visiting scholar at the University
of California, Berkeley. In 1977 and in 1980, respectively, Dr. Osumi received
Masters and PH.D degrees in Electronic Engineering from the Tokyo Institute of
Technology, and in 1992, he obtained an M.B.A. degree from Cornell University.
INCUMBENT CLASS III DIRECTORS WHOSE TERM EXPIRES IN 2002
<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- --------------------------------------------------------
<S> <C> <C>
Mark B. Hoffman............. 53 Chairman of the Board and Chief Executive Officer
John V. Balen............... 39 Director
William B. Elmore........... 46 Director
Jeffrey T. Webber........... 47 Director
</TABLE>
MARK B. HOFFMAN has served as President, Chief Executive Officer and
Chairman of the Board of Directors of Commerce One since December 1996. In
March 2000, he became Chairman of the Board and Chief Executive Officer. Prior
to joining Commerce One, Mr. Hoffman served as Chief Executive Officer and
President of Sybase, Inc., a company which he co-founded in 1984. Mr. Hoffman
currently serves on the board of directors and compensation committee of
Intraware, Inc. He also serves on the boards of The Fantastic Corp., Pacific
Research Institute, Quong Hop and Strata Biosciences. Mr. Hoffman earned a B.S.
degree in Engineering from the U.S. Military Academy at West Point and an M.B.A.
degree from the University of Arizona.
JOHN V. BALEN has served as a member of the board of directors of Commerce
One since December 1996 and as a member of Commerce One's compensation committee
since April 1999. Mr. Balen joined Canaan Partners, a national venture capital
investment firm, in September 1995, where he is currently a general partner.
From June 1985 to June 1995, Mr. Balen served as a Managing Director of Horsley
Bridge Partners, a private equity investment management firm. Mr. Balen
currently serves on the board of directors and compensation audit committees of
E-Stamp Corporation and Intraware, Inc. He also serves
9
on the board of directors of Command Audio, Echo Pass, Everdream, Gazooba,
Mslide, Restaurantpro.com and Voice Web. Mr. Balen has a B.S. degree in
Electrical Engineering and an M.B.A. degree from Cornell University.
WILLIAM B. ELMORE has served as a member of the board of directors of
Commerce One since October 1997 and as a member of Commerce One's audit
committee since April 1999. Since December 1995, Mr. Elmore has been a Manager
of Foundation Capital Management, L.L.C., the general partner of Foundation
Capital, L.L.P., a venture capital firm focused on early-stage information
technology companies. From 1987 to 1995, he was a General Partner of Inman &
Bowman, a venture capital firm. Mr. Elmore serves on the boards of directors of
Onyx Software, Wind River Systems, Inc., Shoreline Teleworks, SuccessFactor.com,
Dejacube, Wherenet, eALITY and T-Span Systems. Mr. Elmore received a B.S. degree
and an M.S. degree in Electrical Engineering from Purdue University and an
M.B.A. degree from Stanford University.
JEFFREY T. WEBBER has served as a member of the board of directors and
compensation committee of Commerce One since 1995. Mr. Webber co-founded R.B.
Webber & Company, a company which provides strategic planning consulting
services to high technology companies, where he has served as President since
1991. He also serves as a General Partner of The Entrepreneurs' Fund, an early
stage venture capital fund, which position he has held since 1997. Mr. Webber
also serves on the board of directors of Sagent Technology, Inc., Persistence
Software, Avantgo, eGlyphs, gForce Systems, NetAcumen, Spear Technologies and
enCommerce. Mr. Webber holds a B.A. degree from Yale University.
CLASSIFIED BOARD
Commerce One's Amended and Restated Certificate of Incorporation provides
for a classified board of directors consisting of three classes of directors,
each serving staggered three-year terms. As a result, a portion of Commerce
One's board of directors will be elected each year. At the Company's initial
public offering in July 1999, to implement the classified structure, two of the
nominees to the board were elected to one-year terms, two were elected to
two-year terms and three were elected to three-year terms. Thereafter, directors
will be elected for three-year terms. Messrs. Gonzales, Kimmitt and Tenenbaum
had been designated Class I directors whose terms expire at the 2000 annual
meeting of stockholders. Mr. Asim Abdullah previously a Class I director
resigned from the board of directors effective on January 31, 2000.
Messrs. Gardner, Harding, Furniss and Osumi were designated Class II directors
whose terms expire at the 2001 annual meeting of stockholders. Messrs. Balen,
Elmore, Hoffman and Webber were designated Class III directors whose terms
expire at the 2002 annual meeting of stockholders.
Executive officers are appointed by the board of directors on an annual
basis and serve until their successors have been duly elected and qualified.
There are no family relationships among any of our directors, officers or key
employees.
BOARD MEETINGS AND COMMITTEES
The board of directors of Commerce One held a total of twelve (12) meetings
during the year ended December 31, 1999, which is Commerce One's last fiscal
year. With the exception of Messrs. Elmore, Gonzales and Gardner, all incumbent
directors who served as a director during the last fiscal year attended no less
than 75% of the aggregate of all meetings of the board of directors and any
committees of the board on which he served, if any, during the last fiscal year.
Mr. Elmore attended eight of the twelve meetings held during the last fiscal
year. Messrs. Gonzales and Gardner attended seven of the twelve meetings held
during the last fiscal year. The board of directors has an audit committee and a
compensation committee, but does not have a nominating committee or a committee
performing the functions of a nominating committee.
10
BOARD COMMITTEES
Commerce One established an audit committee in April 1999 and a compensation
committee in October 1996. Commerce One's audit committee consists of
Messrs. Elmore and Harding. The audit committee reviews our internal accounting
procedures and consults with and reviews the services provided our independent
accountants. The audit committee held no meetings in fiscal 1999. Commerce One's
compensation committee currently consists of Messrs. Balen and Webber. The
compensation committee reviews and recommends to the board of directors the
compensation and benefits of our employees. The compensation committee held
twelve (12) meetings in fiscal 1999 and both Messrs. Balen and Webber attended
all of the meetings.
DIRECTOR COMPENSATION
Directors do not currently receive any cash compensation from Commerce One
for their service as members of the board of directors, except for the
reimbursement of certain expenses in connection with attendance at board and
committee meetings. Under the Company's 1999 Director Stock Option Plan,
non-employee directors are eligible to receive an automatic grant of 90,000
shares of common stock on the date on which such person becomes an outside
director. In addition, the non-employee director shall automatically be granted
an additional option to purchase 45,000 shares each year on the date of our
annual stockholders meeting, if on such date he or she shall have served on the
board for at least six months. Each option shall have a term of ten years, and
shall be fully vested and exercisable as of the date of grant. The exercise
price of all options shall be 100% of the fair market value per share of the
common stock, generally determined with reference to the closing price of the
common stock as reported on the Nasdaq National Market on the date of grant.
Options granted under the plan must be exercised within three months of the
end of the optionee's tenure as a director, or within twelve months after such
director's termination by death or disability, but not later than the expiration
of the option's ten year term.
During 1995, the board granted options to purchase an aggregate of 450,000
shares to Mr. Webber at an exercise price per share of $0.02335. During 1996,
the board granted options to purchase an aggregate of 225,000 and 2,889,378
shares to Messrs. Gardner and Hoffman, respectively, at an exercise price per
share of $0.03335 and $0.0307, respectively. During 1998, the board granted
options to purchase an aggregate of 90,000 shares to Mr. Hoffman at an exercise
price per share of $0.23335. In 1999, the board granted options to purchase an
aggregate of 90,000 each to Messrs. Hoffman, Gardner, Kimmitt and Webber at
exercise prices of $0.6667 for Mr. Hoffman, $67.5415 for Mr. Kimmitt and $3.50
for Messrs. Gardner and Webber.
11
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO 1997 INCENTIVE STOCK OPTION PLAN
Commerce One's board of directors and stockholders have previously adopted
and approved its 1997 Incentive Stock Option Plan. A total of 30,871,926 shares
of common stock are presently reserved for issuance under the stock option plan.
On March 31, 2000, the board of directors approved an amendment to the stock
option plan, subject to stockholder approval, to increase the shares reserved
for issuance thereunder by 3,500,000 shares, bringing the total number of shares
issuable under the stock option plan to 34,371,926. At the annual meeting, the
stockholders are being asked to approve this same amendment to the stock option
plan.
With respect to the amendment to the stock option plan, Commerce One
believes that grants of stock options motivate high levels of performance and
provide an effective means of recognizing employee contributions to the success
of Commerce One. At present, all newly hired full-time employees are granted
options. Commerce One believes that this policy will continue to be of great
value in recruiting and retaining highly qualified technical and other key
personnel. The board of directors believes that the ability to grant options
will be important to the future success of Commerce One by allowing it to remain
competitive in attracting and retaining such key personnel. As of February 29,
2000, 5,661,578 shares were available for future grant under the stock option
plan.
In September 1999, the board of directors adopted and approved the 1999
Nonstatutory Stock Option Plan. A total of 3,000,000 shares of common stock were
originally reserved for issuance under the 1999 Nonstatutory Stock Option Plan.
On March 31, 2000, the board of directors approved an amendment to the 1999
Nonstatutory Stock Option Plan to increase the shares reserved for issuance
thereunder by 8,500,000 to 11,500,000. As of February 29, 2000, options to
purchase 2,921,548 shares of common stock had been issued under the 1999
Nonstatutory Stock Option Plan, and 82,780 shares were available for future
grant under the plan.
VOTE REQUIRED
The approval of the amendment to increase the number of shares available for
issuance requires the affirmative vote of a majority of shares present in person
or represented by proxy and entitled to vote on the proposal at the annual
meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT
OF THE 1997 INCENTIVE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES FOR
ISSUANCE THEREUNDER.
DESCRIPTION OF STOCK OPTION PLAN
The essential terms of the stock option plan, as proposed to be amended, are
as follows:
PURPOSE
The purpose of the stock option plan is to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants, and to promote the
success of the Company's business. The stock option plan will continue in effect
for a term of ten years until November 2007 unless terminated earlier pursuant
to the terms of the stock option plan.
12
STOCK SUBJECT TO THE STOCK OPTION PLAN
The maximum aggregate number of shares of common stock that may be granted
under the stock option plan is 23,371,926 shares, plus an annual increase to be
added on the first day of the fiscal year beginning in 2000 equal to the least
of (i) 7,500,000 shares, (ii) 5% of the outstanding shares on such date or
(iii) an amount determined by the board. The shares may be authorized, but
unissued, or reacquired common stock. If an option or stock purchase right
expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an option exchange program, the unexercised shares that
were subject thereto will become available for future grant or sale under the
stock option plan.
ADMINISTRATION
The stock option plan is administered by the administrator, which can be
either the board of directors of Commerce One and/or the compensation committee
of the board of directors. Subject to the provisions of the stock option plan,
the administrator has the authority, in its discretion: (i) to determine the
fair market value of the common stock of Commerce One; (ii) to select the
employees, directors or consultants to whom options and stock purchase rights
may be granted under the stock option plan; (iii) to determine the number of
shares of common stock to be covered by each option and stock purchase right
granted under the stock option plan; (iv) to approve forms of agreement for use
under the stock option plan; (v) to determine the terms and conditions of any
option or stock purchase right granted under the stock option plan such as the
exercise price, the time or times when options or stock purchase rights may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions; (vi) to reduce the exercise price of any
option or stock purchase right to the then current fair market value; (vii) to
institute an option exchange program; (viii) to construe and interpret the terms
of the stock option plan and awards granted pursuant to the stock option plan;
(ix) to prescribe, amend and rescind rules and regulations relating to the stock
option plan; (x) to modify or amend each option or stock purchase right;
(xi) to allow optionees to satisfy withholding tax obligations by electing to
have Commerce One withhold from the shares to be issued upon exercise of an
option or stock purchase right that number of shares having a fair market value
equal to the amount required to be withheld; (xii) to authorize any person to
execute on behalf of Commerce One any instrument required to effect the grant of
an option or stock purchase right previously granted by the administrator; and
(xiii) to make all other determinations deemed necessary or advisable for
administering the stock option plan.
ELIGIBILITY
All employees, directors and consultants are eligible to participate in the
stock option plan. Stock options intended to qualify as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code may be
granted only to employees. Nonstatutory stock options, which are options not
intended to qualify as incentive stock options, and stock purchase rights may be
granted to employees, directors and consultants of Commerce One. No optionee may
be granted, in any fiscal year of Commerce One, options to purchase more than
600,000 shares; provided that, in connection with his or her initial service, an
optionee may be granted options to purchase up to an additional 600,000 shares
that shall not count against such limit.
TERMS AND CONDITIONS OF OPTIONS
Each option granted pursuant to the stock option plan is evidenced by a
written stock option agreement between the optionee and Commerce One and is
subject to the following terms and conditions:
TERM OF OPTION. The term of each option is stated in each option agreement.
In the case of an incentive stock option, the term is ten years from the date of
grant or such shorter terms as may be provided in the option agreement. In the
case of an incentive stock option granted to an optionee who, at the time the
incentive stock option is granted, owns stock representing more than ten percent
of the total
13
combined voting power of all classes of stock of Commerce One or any parent or
subsidiary, the term of the incentive stock option is five years from the date
of grant or such shorter term as may be provided in the option agreement.
EXERCISE PRICE. The per share exercise price for the shares to be issued
pursuant to the exercise of an option is determined by the administrator,
subject to the following: (i) in the case of an incentive stock option
(A) granted to an employee who, at the time the incentive stock option is
granted, owns stock representing more than ten percent of the voting power of
all classes of stock of Commerce One or any parent or subsidiary, the per share
exercise price may be no less than 110% of the fair market value per share on
the date of grant and (B) granted to any employee other than an employee
described in (A) immediately preceding, the per share exercise price may be no
less than 100% of the fair market value per share on the date of grant; (ii) in
the case of a nonstatutory stock option, the per share exercise price may be
determined by the administrator; and (iii) in the case of a nonstatutory stock
option intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code, the per share exercise
price may be no less than 100% of the fair market value per share on the date of
grant. Notwithstanding the foregoing, options may be granted with a per share
exercise price of less than 100% of the fair market value per share on the date
of grant pursuant to a merger or other corporate transaction.
WAITING PERIOD AND EXERCISE DATES. At the time an option is granted, the
administrator fixes the period within which the option may be exercised and
determines any conditions that must be satisfied before the option may be
exercised.
FORM OF CONSIDERATION. The administrator determines the acceptable form of
consideration for exercising an option, including the method of payment. In the
case of an incentive stock option, the administrator determines the acceptable
form of consideration at the time of grant. Such consideration may consist
entirely of cash, check, promissory note, other shares that (a) in the case of
shares acquired upon exercise of an option, have been owned by the optionee for
more than six months on the date of surrender, and (b) have a fair market value
on the date of surrender equal to the aggregate exercise price of the shares as
to which such option is exercised, consideration received by Commerce One under
a cashless exercise program implemented by Commerce One in connection with the
stock option plan, a reduction in the amount of any Commerce One liability to
the optionee, including any liability attributable to the optionee's
participation in any Commerce One-sponsored deferred compensation program or
arrangement, any combination of the foregoing methods of payment, or any other
consideration and method of payment for the issuance of shares to the extent
permitted by applicable laws.
EXERCISE OF OPTION. Any option granted under the stock option plan is
exercisable according to the terms of the Stock option plan and at such times
and under such conditions as determined by the administrator and set forth in
the option agreement. Unless the administrator provides otherwise, vesting of
options granted under the stock option plan are tolled during any paid leave of
absence that exceeds 90 days.
TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an optionee ceases to
be an employee or consultant, other than upon the optionee's death or
disability, the optionee may exercise his or her option within such period of
time as is specified in the option agreement to the extent that the option is
vested on the date of termination (but in no event later than the expiration of
the term of such option as set forth in the option agreement). In the absence of
a specified time in the option agreement, the option remains exercisable for
three months following the optionee's termination. If, on the date of
termination, the optionee is not vested as to his or her entire option, the
shares covered by the unvested portion of the option revert to the stock option
plan. If, after termination, the optionee does not exercise his or her option
within the time specified by the administrator, the option terminates, and the
shares covered by such option revert to the stock option plan.
14
DISABILITY OF OPTIONEE. If an optionee ceases to be an employee or
consultant as a result of the optionee's disability, the optionee may exercise
his or her option within such period of time as is specified in the option
agreement to the extent the option is vested on the date of termination (but in
no event later than the expiration of the term of such option as set forth in
the option agreement). In the absence of a specified time in the option
agreement, the option will remain exercisable for twelve months following the
optionee's termination. If, on the date of termination, the optionee is not
vested as to his or her entire option, the shares covered by the unvested
portion of the option revert to the stock option plan. If, after termination,
the optionee does not exercise his or her option within the time specified
herein, the option will terminate, and the shares covered by such option revert
to the stock option plan.
DEATH OF OPTIONEE. If an optionee dies while an employee, director or
consultant, the option may be exercised within such period of time as is
specified in the option agreement (but in no event later than the expiration of
the term of such option as set forth in the option agreement), by the optionee's
estate or by a person who acquires the right to exercise the option by bequest
or inheritance, but only to the extent that the option is vested on the date of
death. In the absence of a specified time in the option agreement, the option
will remain exercisable for twelve months following the optionee's termination.
If, at the time of death, the optionee is not vested as to his or her entire
option, the shares covered by the unvested portion of the option will revert to
the stock option plan. The option may be exercised by the executor or
administrator of the optionee's estate or, if none, by the person(s) entitled to
exercise the option under the optionee's will or the laws of descent or
distribution. If the option is not so exercised within the time specified, the
option terminates, and the shares covered by such option revert to the stock
option plan.
STOCK PURCHASE RIGHTS
RIGHTS TO PURCHASE. Stock purchase rights may be issued either alone, in
addition to, or in tandem with other awards granted under the stock option plan
and/or cash awards made outside of the stock option plan. After the
administrator determines that it will offer stock purchase rights under the
stock option plan, it will advise the offeree in writing or electronically, by
means of a notice of grant, of the terms, conditions and restrictions related at
the offer, including the number of shares that the offeree will be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer. The offer will be accepted by execution of a restricted stock
purchase agreement in the form determined by the administrator.
REPURCHASE OPTION. Unless the administrator determines otherwise, the
restricted stock purchase agreement will grant Commerce One a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with Commerce One for any reason (including death or disability). The
purchase price for shares repurchased pursuant to the restricted stock purchase
agreement will be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to Commerce One. The
repurchase option will lapse at a rate determined by the administrator.
OTHER PROVISIONS. The restricted stock purchase agreement will contain such
other terms, provisions and conditions not inconsistent with the stock option
plan as may be determined by the administrator in its sole discretion.
RIGHTS AS A STOCKHOLDER. Once the stock purchase right is exercised, the
purchaser will have the rights equivalent to those of a stockholder, and will be
a stockholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of Commerce One.
NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS
An option or stock purchase right may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the optionee, only by the optionee.
15
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE
CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of Commerce One, the number of shares of common stock covered by
each outstanding option and stock purchase right, and the number of shares of
common stock that have been authorized for issuance under the plan but as to
which no options or stock purchase rights have yet been granted or that have
been returned to the stock option plan upon cancellation or expiration of an
option or stock purchase right, as well as the price per share of common stock
covered by each such outstanding option or stock purchase right, will be
proportionately adjusted for any increase or decrease in the number of issued
shares of common stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the common stock, or any other
increase or decrease in the number of issued shares of common stock effected
without receipt of consideration by Commerce One.
DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of Commerce One, the administrator will notify each optionee as soon
as practicable prior to the effective date of such proposed transaction. The
administrator in its discretion may provide for an optionee to have the right to
exercise his or her option until ten days prior to such transaction as to all of
the optioned stock covered thereby, including shares as to which the option
would not otherwise be exercisable. In addition, the administrator may provide
that any Commerce One repurchase option applicable to any shares purchased upon
exercise of an option or stock purchase right will lapse as to all such shares,
provided the proposed dissolution or liquidation take place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
option or stock purchase right will terminate immediately prior to the
consummation of such proposed action.
MERGER OR ASSET SALE. In the event of a merger of Commerce One with or into
another corporation, or the sale of substantially all of the assets of Commerce
One, each outstanding option and stock purchase right will be assumed or an
equivalent option or right substituted by the successor corporation or a parent
or subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option or stock purchase
right, the optionee will fully vest in and have the right to exercise the option
or stock purchase right as to all of the optioned stock, including shares as to
which it would not otherwise be vested or exercisable. If an option or stock
repurchase right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the administrator will
notify the optionee in writing or electronically that the option or stock
purchase right shall be fully vested and exercisable for a period of fifteen
days from the date of such notice, and the option or stock purchase right shall
terminate upon the expiration of such period.
AMENDMENT AND TERMINATION OF THE STOCK OPTION PLAN
The board of directors may at any time amend, alter, suspend or terminate
the stock option plan; provided that Commerce One is required to obtain
stockholder approval of any stock option plan amendment to the extent necessary
and desirable to comply with applicable laws.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long- term capital gain or loss. If these holding periods are
not satisfied, irrespective of any election made under section 83(b) of the
Internal Revenue Code, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or
16
short-term capital gain or loss, depending on the holding period. A different
rule for measuring ordinary income upon such a premature disposition may apply
if the optionee is also an officer, director, or 10% stockholder of Commerce
One. Commerce One is entitled to a deduction in the same amount as the ordinary
income recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of Commerce One is subject to tax withholding by Commerce One. Commerce One is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.
STOCK PURCHASE RIGHTS. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Internal Revenue Code. As a result, the
purchaser will not recognize ordinary income at the time of purchase. Instead,
the purchaser will recognize ordinary income on the dates when a stock ceases to
be subject to a substantial risk of forfeiture. The stock will generally cease
to be subject to a substantial risk of forfeiture when it is no longer subject
to Commerce One's right to repurchase the stock upon the purchaser's termination
of employment with Commerce One. At such times, the purchaser will recognize
ordinary income measured as the difference between the purchase price and the
fair market value of the stock on the date the stock is no longer subject to a
substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Internal Revenue
Code. In such event, the ordinary income recognized, if any, is measured as the
difference between the purchase price and the fair market value of the stock on
the date of purchase, and the capital gain holding period commences on such
date. The ordinary income recognized by a purchaser who is an employee will be
subject to tax withholding by Commerce One. Different rules may apply if the
purchaser is also an officer, director, or 10% stockholder of Commerce One.
The foregoing is only a summary of the effect of federal income taxation
upon optionees, holders of stock purchase rights, and Commerce One with respect
to the grant and exercise of options and stock purchase rights under the stock
option plan. It does not purport to be complete, and does not discuss the tax
consequences of the employee or consultant's death or the provisions of the
income tax laws of any municipality, state or foreign country in which the
employee or consultant may reside.
PARTICIPATION IN THE STOCK OPTION PLAN
The following table sets forth certain information regarding options to
purchase common stock issued during the fiscal year ended December 31, 1999 to
each of the executive officers named in the Summary Compensation Table on
page 30 who participated in the stock option plan, all current executive
officers as
17
a group, all current directors (who are not executive officers) as a group and
all other employees who participated in the stock option plan as a group:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME OF INDIVIDUAL AND POSITION UNDERLYING OPTION(#) DOLLAR VALUE($)(1)
------------------------------- -------------------- ------------------
<S> <C> <C>
Mark B. Hoffman.......................................... 90,000 $ 6,656,247
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mark S. Biestman......................................... 180,000 13,249,494
SENIOR VICE PRESIDENT, WORLDWIDE SALES
Charles J. Donchess...................................... 390,000 28,633,737
EXECUTIVE VICE PRESIDENT AND CHIEF STRATEGY OFFICER
Samuel C. Prather........................................ 525,000 38,895,622
SENIOR VICE PRESIDENT, ENGINEERING
Kirby B. Coryell......................................... 180,000 13,249,494
SENIOR VICE PRESIDENT, SERVICES
All current executive officers as a group (11 persons)... 2,205,000 156,950,843
All current directors (who are not executive officers) as
a group (7 persons).................................... 180,000 12,802,500
All other employees who participated in the stock option
plan as a group (excluding consultants)................ 19,214,892 1,151,137,200
</TABLE>
------------------------
(1) Calculated by determining the difference between the fair market value of
the securities underlying the option at March 31, 2000 ($74.625 per share)
and the exercise price of the option.
18
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE 1999 EMPLOYEE STOCK PURCHASE PLAN
The board of directors and stockholders have previously adopted and approved
the 1999 Employee Stock Purchase Plan. A total of 6,300,000 shares of common
stock are presently reserved for issuance under the stock purchase plan.
In April 2000, the board of directors approved an amendment to the purchase
plan, subject to stockholder approval, to increase the shares reserved for
issuance thereunder by 3,700,000 shares, bringing the total number of shares
issuable under the purchase plan to 9,346,924. At the annual meeting, the
stockholders are being asked to approve this same amendment to the purchase
plan.
Also in April 2000, the board of directors approved another amendment to the
purchase plan to provide for annual increases, to occur automatically on
January 1 of each year, beginning in 2001, for the duration of the purchase
plan, in the number of shares reserved for issuance thereunder by the evergreen
amendment, that is, the least of (i) 5,000,000 shares, (ii) 390 of the
outstanding shares of common stock of Commerce One or (iii) a number of shares
determined by the board of directors. At the annual meeting, the stockholders
are being requested to approve the evergreen amendment. This evergreen amendment
is proposed in order to ensure enough options are available, in the long term,
to provide for continued growth of Commerce One.
With respect to the amendments to the purchase plan, Commerce One believes
that grants of options under the purchase plan motivates high levels of
performance and provides an effective means of recognizing employee
contributions to the success of Commerce One. At present, all newly hired
full-time employees are eligible to participate in the purchase plan. Commerce
One believes that the purchase plan will continue to be of great value in
recruiting and retaining highly qualified technical and other key personnel. As
of March 31, 2000, 5,646,924 shares were available for future grant under the
purchase plan.
VOTE REQUIRED
The approval of the amendment to increase the number of shares available for
issuance and change the evergreen provision to the purchase plan requires the
affirmative vote of a majority of shares present in person or represented by
proxy and entitled to vote on the proposal at the annual meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT
OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES FOR
ISSUANCE THEREUNDER.
DESCRIPTION OF THE PURCHASE PLAN
GENERAL
The purpose of the purchase plan is to provide employees with an opportunity
to purchase common stock of Commerce One at a discount through payroll
deductions.
ADMINISTRATION
The purchase plan may be administered by the board of directors or a
committee of members of the board appointed by the board. All questions of
interpretation or application of the purchase plan are determined by the board
or its appointed committee, and its decisions are final and binding upon all
participants.
19
ELIGIBILITY
Each employee of Commerce One (including officers), whose customary
employment with Commerce One is at least 20 hours per week and more than five
months in any calendar year, is eligible to participate in an offering period
(as defined below); provided, however, that no employee shall be granted an
option under the purchase plan (i) to the extent that, immediately after the
grant, such employee would own 5% of either the voting power or value of the
stock of Commerce One, or (ii) to the extent that his or her rights to purchase
stock under all employee stock purchase plans of Commerce One accrues at a rate
which exceeds $25,000 worth of stock (determined at the fair market value of the
shares at the time such option is granted) for each calendar year. Eligible
employees generally become participants in the purchase plan by filing with
Commerce One a subscription agreement authorizing payroll deductions prior to
the beginning of each offering period. As of the date of this proxy statement,
approximately 790 Commerce One employees were eligible to participate in the
purchase plan.
PARTICIPATION IN AN OFFERING
The purchase plan is implemented by consecutive overlapping offering periods
generally lasting for two years, with a new offering period commencing on the
first trading day on or after May 15 and November 15 of each year. Each offering
period generally consists of four six-month purchase periods. Common stock may
be purchased under the purchase plan at the end of each purchase period, unless
the participant withdraws or terminates employment earlier. To the extent the
fair market value of the common stock on any exercise date in an offering period
is lower than the fair market value of the common stock on the first day of the
offering period, then all participants in such offering period will be
automatically withdrawn from such offering period immediately after the exercise
of their options on such exercise date and automatically re-enrolled in the
immediately following offering period as of the first day thereof. The board of
directors may change the duration of the purchase periods or the length or date
of commencement of an offering period. To participate in the purchase plan, each
eligible employee must authorize payroll deductions pursuant to the purchase
plan. Such payroll deductions may not exceed 15% of a participant's
compensation. Once an employee becomes a participant in the purchase plan, the
employee will automatically participate in each successive offering period until
such time as the employee withdraws from the purchase plan or the employee's
employment with Commerce One terminates. At the beginning of each offering
period, each participant is automatically granted options to purchase shares of
Commerce One common stock. The option expires at the end of the purchase period
or upon termination of employment, whichever is earlier, but is exercised at the
end of each purchase period to the extent of the payroll deductions accumulated
during such purchase period. Participation in the purchase plan is voluntary and
is dependent on each eligible employee's election to participate and his or her
respective determination as to the level of payroll deductions. Accordingly,
future purchases under the purchase plan are not determinable as of the date
hereof.
PURCHASE PRICE; SHARES PURCHASED
Participants may purchase shares of Commerce One common stock under the
purchase plan at a price not less than 85% of the lesser of the fair market
value of the common stock of Commerce One on (i) the first day of the offering
period or (ii) the last day of the purchase period. The "fair market value" of
the common stock on any relevant date will be the closing sales price per share
as reported on The Nasdaq National Market (or the closing bid price, if no sales
were reported) as quoted on such exchange or reported in The Wall Street
Journal. The number of shares of common stock a participant purchases in each
purchase period is determined by dividing the total amount of payroll deductions
withheld from the participant's compensation during that purchase period by the
purchase price; provided, however, that the number of shares subject to the
option may not exceed 30,000 shares of Commerce One's common stock per purchase
period.
20
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
disability or death, or the failure of the participant to remain in the
continuous scheduled employ of Commerce One for at least 20 hours per week,
cancels his or her option and participation in the purchase plan immediately. In
such event, the payroll deductions credited to the participant's account will be
returned to him or her or, in the case of death, to the person or persons
entitled thereto as provided in the purchase plan.
WITHDRAWAL
Generally, a participant may withdraw from an offering period at any time
without affecting his or her eligibility to participate in future offering
periods. However, once a participant withdraws from a particular offering, that
participant may not participate again in the same offering.
ADJUSTMENT UPON CHANGE IN CAPITALIZATION
In the event that the stock of Commerce One is changed by reason of any
stock split, reverse stock split, stock dividend, combination, reclassification
or other change in the capital structure of Commerce One effected without the
receipt of consideration, appropriate proportional adjustments shall be made in
the number and class of shares of stock subject to the purchase plan, the number
and class of shares of stock subject to options outstanding under the purchase
plan, and the exercise price of any such outstanding options. Any such
adjustment shall be made by the board of directors, whose determination shall be
conclusive.
DISSOLUTION OR LIQUIDATION
In the event of a proposed dissolution or liquidation, the offering period
then in progress will be shortened and a new exercise date will be set.
MERGER OR ASSET SALE
In the event of a merger of Commerce One with or into another corporation or
a sale of substantially all of Commerce One's assets, each outstanding option
may be assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set.
AMENDMENT AND TERMINATION OF THE PURCHASE PLAN
The board of directors may at any time terminate or amend the purchase plan.
An offering period may be terminated by the board of directors at the end of any
purchase period if the board of directors determines that termination of the
purchase plan is in the best interests of Commerce One and its shareholders. No
amendment shall be effective unless it is approved by the holders of a majority
of the votes cast at a duly held shareholders' meeting, if such amendment would
require shareholder approval in order to comply with Section 423 of the Internal
Revenue Code; however, the board of directors may, without stockholder approval
or consent of plan participants modify or amend the plan in response to adverse
accounting consequences, including altering the purchase price, shortening an
offering period and allocating shares. The purchase plan will terminate in 2009.
FEDERAL TAX INFORMATION FOR PURCHASE PLAN
The purchase plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code. Under these provisions, no income will be taxable
to a participant until the shares purchased under the purchase plan are sold or
otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject
21
to tax and the amount of the tax will depend upon the holding period. If the
shares are sold or otherwise disposed of more than two years from the first day
of the offering period and more than one year from the date of transfer of the
stock to the participant, then the participant will recognize ordinary income
measured as the lesser of (i) the excess of the fair market value of the shares
at the time of such sale or disposition over the purchase price, or (ii) an
amount equal to 15% of the fair market value of the shares as of the first day
of the offering period. Any additional gain will be treated as long-term capital
gain. If the shares are sold or otherwise disposed of before the expiration of
these holding periods, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period. Commerce One is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income is recognized by participants upon a sale or
disposition of shares prior to the expiration of the holding period(s) described
above.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE PARTICIPANT AND COMMERCE ONE WITH RESPECT TO THE SHARES PURCHASED UNDER
THE PURCHASE PLAN. REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE
INTERNAL REVENUE CODE. IN ADDITION, THE SUMMARY DOES NOT DISCUSS THE TAX
CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE INCOME TAX LAWS OF ANY STATE OR
FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
PARTICIPATION IN THE EMPLOYEE STOCK PURCHASE PLAN
The following table sets forth certain information regarding options to
purchase common stock issued during the fiscal year ended December 31, 1999 to
each of the executive officers named in the Summary Compensation Table on page
30 who participated in the stock option plan, all current executive officers as
a group and all other employees who participated in the stock option plan as a
group:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME OF INDIVIDUAL AND POSITION UNDERLYING OPTION(#) DOLLAR VALUE($)(1)
------------------------------- -------------------- ------------------
<S> <C> <C>
Mark B. Hoffman........................................... 4,116 $ 198,357
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mark S. Biestman.......................................... 6,678 321,824
SENIOR VICE PRESIDENT, WORLDWIDE SALES
Charles J. Donchess....................................... 4,326 208,477
EXECUTIVE VICE PRESIDENT AND CHIEF STRATEGY OFFICER
Samuel C. Prather......................................... 4,044 194,887
SENIOR VICE PRESIDENT, ENGINEERING
Kirby B. Coryell.......................................... 4,158 200,381
SENIOR VICE PRESIDENT, SERVICES
All current executive officers as a group (11 persons).... 40,782 1,965,353
All other employees who participated in the stock option
plan as a group (does not include consultants).......... 612,294 29,507,488
</TABLE>
------------------------
(1) Calculated by determining the difference between the fair market value of
the securities underlying the option of $51.1667 (the closing price on
November 12, 1999) and the purchase price of the option ($2.975).
22
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
Under the Company's Amended and Restated Certificate of Incorporation
currently in effect, there are 250,000,000 shares of common stock and 10,000,000
shares of preferred stock authorized for issuance. As of March 31, 2000, there
were 155,053,422 shares of common stock outstanding and no shares of preferred
stock outstanding. On March 31, 2000, Commerce One's board of directors approved
an amendment to the Amended and Restated Certificate of Incorporation subject to
stockholder approval, to increase: (i) the shares of common stock authorized for
issuance by 700,000,000 shares, bringing the total number of common shares
authorized to 950,000,000, and (ii) the shares of preferred stock authorized for
issuance by 40,000,000 shares, bringing the total number of preferred shares
authorized to 50,000,000. At the annual meeting, the stockholders are asked to
approve this amendment to the Amended and Restated Certificate of Incorporation.
With respect to this amendment, Commerce One believes that it will need to
increase the number of shares authorized to accommodate further grants of stock
options and stock purchase rights, as well as potential acquisitions. The board
of directors believes that the ability to issue stock is crucial to its future
success.
The full text of Article Fourth, as proposed to be amended, is set forth as
follows:
ARTICLE FOURTH: The Corporation is authorized to issue two classes of stock to
be designated respectively Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the Corporation has authority to issue is
One Billion (1,000,000,000), consisting of Nine Hundred Fifty Million
(950,000,000) shares of Common Stock, $0.0001 par value (the "Common Stock"),
and Fifty Million (50,000,000) shares of Preferred Stock, $0.0001 par value (the
"Preferred Stock"). The Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is hereby authorized subject to
limitations prescribed by law, to fix by resolution or resolutions the
designations, powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, of each such series of Preferred Stock,
including without limitation authority to fix by resolution or resolutions, the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, and liquidation preferences of any wholly unissued series of Preferred
Stock, and the number of shares constituting any such series and the designation
thereof, or any of the foregoing. The Board of Directors is further authorized
to increase (but not above the total number of authorized shares of the class)
or decrease (but not below the number of shares of any such series then
outstanding) the number of shares of any series, the number of which was fixed
by it, subsequent to the issue of shares of such series then outstanding,
subject to the powers, preferences and rights, and the qualifications,
limitations and restrictions thereof stated in the resolution of the Board of
Directors originally fixing the number of shares of such series. If the number
of shares of any series is so decreased, then the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
VOTE REQUIRED
The approval of the amendment to the Amended and Restated Certificate of
Incorporation requires the affirmative vote of a majority of the shares present
in person or represented by proxy and entitled to vote on the proposal at the
annual meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT
OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK AND PREFERRED STOCK AUTHORIZED FOR ISSUANCE.
23
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors has appointed Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of Commerce One for the
fiscal year ending December 31, 2000 and seeks ratification of such appointment.
In the event of a negative vote on such ratification, the board of directors
will reconsider its appointment.
The Company expects one or more representatives of Ernst & Young LLP will be
present at the annual meeting and will have the opportunity to make a statement
if they so desire to do so and to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the votes cast is
required to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2000.
24
OTHER INFORMATION
EXECUTIVE OFFICERS
In addition to Messrs. Hoffman, Gonzales, Kimmitt and Tenenbaum, the
following persons were executive officers of Commerce One as of the record date:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- -----------------------------------------------------
<S> <C> <C>
Charles J. Donchess.................... 46 Executive Vice President and Chief Strategy Officer
Peter F. Pervere....................... 52 Senior Vice President and Chief Financial Officer
Mark S. Biestman....................... 42 Senior Vice President, Worldwide Sales
Kirby B. Coryell....................... 50 Senior Vice President, Services
Samuel C. Prather...................... 45 Senior Vice President, Engineering
Carl O. Falk........................... 50 Senior Vice President, Global Trading Web
Robert M. Tarkoff...................... 31 Senior Vice President Corporate Development, General
Counsel and Secretary
</TABLE>
CHARLES J. DONCHESS was promoted in February 2000 to Executive Vice
President and Chief Strategy Officer. Prior to his promotion he had served as
Vice President, Marketing of Commerce One from December 1996 to February 2000.
Prior to joining Commerce One, Mr. Donchess was Vice President of Marketing and
Business Development at Aurum Software, Inc., a leading provider of sales
information software, from March 1995 to November 1996. Prior to his tenure at
Aurum Software, Inc., Mr. Donchess worked at Sybase, Inc. from August 1989 to
November 1994, most recently as Vice President and General Manager of workgroup
products from January 1994 to November 1994. Mr. Donchess holds a B.A. degree
from Brown University.
PETER F. PERVERE joined Commerce One in April 1997 as Vice President and
Chief Financial Officer. In February 2000, Mr. Pervere was promoted to Senior
Vice President and Chief Financial Officer. Prior to joining Commerce One,
Mr. Pervere was at Sybase, Inc. from October 1987 to April 1997, serving as Vice
President and Corporate Controller from 1991 to 1997. Mr. Pervere holds a B.A.
degree in History from Stanford University.
MARK S. BIESTMAN joined Commerce One in November 1997 as Vice President,
Worldwide Sales. In February 2000, Mr. Biestman was promoted to Senior Vice
President, Worldwide Sales. Prior to joining Commerce One, Mr. Biestman was Vice
President of Western United States Sales for Netscape Communications Corporation
from July 1995 to November 1997. Prior to his tenure of Netscape Communications
Corporation, Mr. Biestman served as Vice President of Telecommunication Sales of
Oracle Corporation from November 1994 to July 1995. From November 1993 to
November 1994, Mr. Biestman served as Vice President of Worldwide Sales of
Metaphor, Inc. Mr. Biestman serves as a member of the board of directors and
compensation committee of Prologic Management Systems, Inc. Mr. Biestman holds
an B.A. degree in Economics from the University of California, Berkeley.
KIRBY B. CORYELL was promoted in February 2000 to Senior Vice President,
Services. Prior to his promotion he served as Vice President, Operations of
Commerce One from January 1997 to February 2000. Prior to joining Commerce One,
Mr. Coryell was Vice President of Manufacturing at NEC Technologies, Inc. from
September 1995 to January 1997. From September 1993 to September 1995,
Mr. Coryell was Vice President of Worldwide Operations of AST Research, Inc.
Mr. Coryell holds a B.S. degree in Mechanical Engineering from the University of
Cincinnati.
SAMUEL C. PRATHER joined Commerce One as Vice President, Engineering in
December 1998. In February 2000, Mr. Prather was promoted to Senior Vice
President, Engineering. Prior to joining Commerce One, Mr. Prather was the Vice
President of Engineering at Resolute Software from February 1998 to
December 1998 where he built electronic commerce performance tools and products.
Prior to joining Resolute, Mr. Prather served as Senior Research and Development
Manager at Hewlett-Packard from October 1984 to February 1998, managing a wide
variety of software development programs and a
25
business-to-consumer electronic commerce service. Mr. Prather holds a B.S.
degree in Electrical Engineering from the University of Oklahoma.
CARL O. FALK joined Commerce One in May 1998 as Vice President, Product
Marketing and Procurement Solutions. In June 1999, he became Vice President,
Global Trading Web and in February 2000, he was promoted to Senior Vice
President, Global Trading Web. Prior to joining Commerce One, Mr. Falk was
President of ACQUION, Inc., the Internet procurement subsidiary of Harbinger
Corporation, a worldwide supplier of electronic commerce software and services,
from August 1997 to May 1998. Prior to his tenure at Harbinger Corporation,
Mr. Falk was Vice President and General Manager of Fluor Daniel, Inc. from
May 1989 to May 1994, when he founded ACQUION and became its President, a
position he held until August 1997 when ACQUION was sold to Harbinger. Mr. Falk
holds a B.S. degree in Mechanical Engineering from the University of Cincinnati
and a J.D. degree from Salmon Chase College of Law, N.K.U.
ROBERT M. TARKOFF joined Commerce One in January 1999 as Vice President,
General Counsel and Secretary. In February 2000, Mr. Tarkoff was promoted to
Senior Vice President, Corporate Development, General Counsel and Secretary.
Prior to joining Commerce One, Mr. Tarkoff was an Associate at the law firm of
Wilson Sonsini Goodrich & Rosati from August 1995 to January 1999 where he
served as outside counsel to Commerce One. Mr. Tarkoff received a B.A. degree
from Amherst College in Political Science and Economics and a J.D. degree from
Harvard University.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires Commerce
One's officers and directors, and persons who own more than ten percent (10%) of
a registered class of Commerce One's equity securities, to file certain reports
regarding ownership of, and transactions in, Commerce One's securities with the
Securities and Exchange Commission and with The Nasdaq Stock Market, Inc. Such
officers, directors, and 10% stockholders are also required to furnish Commerce
One with copies of all Section 16(a) forms that they file.
Based solely on its review of copies of Forms 3 and 4 and amendments thereto
furnished to Commerce One pursuant to Rule 16a3(e) and Forms 5 and amendments
thereto furnished to Commerce One with respect to the last fiscal year, and any
written representations referred to in Item 405(b)(2)(i) of Regulation SK
stating that no Forms 5 were required, Commerce One believes that, during the
last fiscal year, all Section 16(a) filing requirements applicable to Commerce
One's officers and directors were complied with, except that each of
Messrs. Osumi and Kimmitt did not timely file one statement.
TRANSACTIONS FROM WHICH DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
STOCKHOLDERS HAVE BENEFITED
Since January 1, 1999, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were or are to be
a party in which the amount involved exceeds $60,000 and in which any director,
executive officer or holder of more than 5% of our common stock had or will have
a director or indirect interest other than:
- compensation arrangements, which are described where required under
"Management;" and
- the transactions described below.
SERIES E PREFERRED STOCK FINANCING ROUND. In April 1999, Commerce One sold
shares of Series E preferred stock, at a purchase price of $9.06 per share, to
the following investors, among others:
- 110,375 shares to an entity affiliated with Canaan Partners;
- 33,113 shares to entities affiliated with Morgan Stanley Venture Partners;
- 30,352 shares to entities affiliated with Jeffrey Webber; and
26
- 662,252 shares to an entity affiliated with British Telecommunications,
our strategic partner. In addition, according to the terms of the
financing, British Telecommunications appointed to our board of directors
John Swingewood, its director of the Internet and multimedia group.
CONSULTING SERVICES RENDERED BY R.B. WEBBER & COMPANY. Commerce One
currently has a consulting agreement with R.B. Webber & Company, a management
consulting firm, of which Jeffrey Webber, a member of our board of directors, is
President. As of December 31, 1999, Commerce One did not owe any money to R.B.
Webber & Company for consulting services rendered in 1998 and 1999.
LOANS TO STOCKHOLDERS AND EXECUTIVE OFFICERS. On November 7, 1996, Commerce
One made a loan to Tom Gonzales, Sr., its former Executive Vice President, in
the amount of $56,000, at an interest rate of 9% per year. The loan was intended
to enable Mr. Gonzales, Sr. to repay certain personal tax liabilities. As of
December 31, 1999, this loan has been repaid in full. Mr. Gonzales, Sr. was
terminated in April 1998, at which time Commerce One executed a settlement
agreement providing that each Mr. Gonzales, Sr. and Commerce One release the
other from any and all claims in any way arising from or related to
Mr. Gonzales, Sr.'s former employment relationship with Commerce One.
In April 1999, Commerce One entered into a letter agreement with
Mr. Gonzales, Sr. in which Commerce One agreed to loan to Mr. Gonzales, Sr.
$5,000,000 as an inducement for Mr. Gonzales, Sr. to enter into a lock-up
agreement in connection with its initial public offering. By executing the
lock-up agreement, Mr. Gonzales, Sr. agreed that, with certain exceptions, he
would not offer, sell, contract to sell or otherwise dispose of any common stock
or any convertible securities for a period of 180 days after the date of the
prospectus for the Company's initial public offering without the prior written
consent of Credit Suisse First Boston Corporation. Commerce One loaned
Mr. Gonzales, Sr. the funds on July 2, 1999, and was repaid in full by
Mr. Gonzales, Sr. on October 29, 1999.
In conjunction with the hiring of Robert M. Kimmitt as Vice Chairman of the
Board and President, and his relocation to the San Francisco Bay Area, Commerce
One has agreed to enter into a loan agreement with Mr. Kimmitt for the purchase
of a residence. As of the date of this proxy statement, the details of this loan
agreement have not yet been finalized.
27
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT
AND DIRECTORS OF COMMERCE ONE
The table on the following page sets forth information regarding the
beneficial ownership of Commerce One's common stock as of the record date,
April 7, 2000, by the following individuals or groups:
- each person or entity who is known by Commerce One to own beneficially
more than 5% of Commerce One's outstanding stock;
- each of Commerce One's named executive officers;
- each of Commerce One's directors; and
- all directors and executive officers of Commerce One as a group.
Unless otherwise indicated, the address for each stockholder listed in the
following table is c/o Commerce One, Inc., 4440 Rosewood Drive, Pleasanton,
California 94588. Except as otherwise indicated and except for any rights these
persons' spouses may have, the persons named in the table have sole voting and
investment power for all shares of common stock held by them.
Applicable percentage ownership in the following table is based on
155,118,220 shares of common stock outstanding as of the record date, April 7,
2000.
Any shares issued upon exercise of options, warrants or other rights to
acquire our capital stock that are presently outstanding or granted in the
future or reserved for future issuance under our stock option plans will further
dilute new public investors.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME OWNED(1) OWNED
---- ------------ ------------
<S> <C> <C>
Mark S. Biestman............................................ 887,504 *
Kirby B. Coryell............................................ 791,312 *
Charles J. Donchess......................................... 886,842 *
Thomas J. Gonzales, II...................................... 4,601,406 2.96
Mark B. Hoffman(2).......................................... 3,661,372 2.35
Robert M. Kimmitt........................................... 1,800,000 1.14
Samuel C. Prather........................................... 466,198 *
Jay M. Tenenbaum(3)......................................... 3,077,944 1.98
John V. Balen(4)............................................ 3,681,234 2.37
William B. Elmore(5)........................................ 663,256 *
David H. J. Furniss(6)...................................... 3,973,512 2.56
Kenneth C. Gardner(7)....................................... 350,242 *
William J. Harding(8)....................................... 760,054 *
Noriyoshi Osumi(9).......................................... 4,528,170 2.92
Jeffrey T. Webber(10)....................................... 1,873,108 1.20
All directors and executive officers as a group (18
persons).................................................. 33,702,920 21.7
</TABLE>
------------------------
* Less than 1% of the outstanding shares of common stock.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities and includes
shares of common stock issuable pursuant to the exercise of stock options
that are immediately exercisable or exercisable within 60 days.
28
(2) Includes 1,632,514 shares held by Hoffman Family Trust dated October 25,
1985 and 8,100 shares held by each the Andrew Mark Hoffman 1993 Trust dated
March 30, 1999 and the Annie Eleanor Hoffman 1993 Trust dated March 30,
1999. Andrew and Annie Hoffman, beneficiaries of these trusts, are children
of Mr. Hoffman.
(3) Includes 216,042 shares held by Arlene B. Tenenbaum, spouse of
Mr. Tenenbaum, 2,160,450 shares held by Arlene B. Tenenbaum Irrevocable
Trust dated November 7, 1997 and 697,258 shares held by Arlene B. Tenenbaum
Revocable Trust dated January 24, 2000.
(4) Includes 180,284 shares owned by Canaan Capital Limited Partnership,
1,517,336 shares owned by Canaan Capital Offshore Limited Partnership,
C.V., and 1,954,956 shares owned by Canaan Equity, L.P. Mr. Balen is a
general partner of Canaan Equity Partners, L.P. whose affiliated companies
are Canaan Capital Limited Partnership and Canaan Capital Offshore Limited
Partnership, C.V.
(5) Includes 56,490 shares held by Elmore Family Investments, L.P., of which
Mr. Elmore is a General Partner, 273,588 shares held by The Entrepreneurs'
Fund, L.P., of which Mr. Elmore is a limited partner, and 333,178 shares
held by Elmore Family Trust dated July 7, 1990, of which Mr. Elmore is a
trustee.
(6) Mr. Furniss did not hold any shares of Commerce One's capital stock as of
April 7, 2000 and does not hold any options exercisable on or before
June 6, 2000. Mr. Furniss is a General Manager of Electronic Business of
British Telecommunications, plc. Mr. Furniss disclaims beneficial ownership
of the 3,973,512 shares held by Forres Holding Limited, a wholly owned
subsidiary of British Telecommunications, plc. Mr. Furniss is a member of
the board of directors of Commerce One.
(7) Includes 18,900 shares held by Delaware Charter Guarantee & Trust Company
Trustee FBO Kenneth C. Gardner.
(8) Includes 555,414 shares held by Morgan Stanley Venture Capital Fund II
Annex, L.P. and 75,960 shares held by Morgan Stanley Venture Investors
Annex, L.P. Dr. Harding is a general partner of Morgan Stanley Venture
Partners II, L.P., the general partner of Morgan Stanley Venture Capital
Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P.
(9) Mr. Osumi did not hold any shares of Commerce One's capital stock as of
April 7, 2000 and does not hold any options exercisable on or before
June 6, 2000. Mr. Osumi is a Vice President of NTT America, Inc. Mr. Osumi
disclaims beneficial ownership of the 4,528,170 shares held by NTT America,
Inc. a wholly owned subsidiary of NTT Communications. Mr. Osumi is a member
of the board of directors of Commerce One.
(10) Includes 750,000 shares held by Lighthouse Second Nineteen Hundred
Ninety-Nine Fund, a fund held for the benefit of Mr. Webber, 60,420 shares
held by Judith Jordan Webber, spouse of Mr. Webber, 273,588 shares held by
The Entrepreneurs' Fund, L.P., 19,980 shares held by BW Management, LLC,
of which he is a managing director and 33,000 shares held by RBW Alaska,
L.P. of which he is a limited partner. BW Management, LLC is the general
partner of The Entrepreneurs' Fund, L.P.
The shares shown above include shares issuable upon exercise of options to
purchase common stock exercisable within 60 days of April 7, 2000, some shares
of which may be repurchased by Commerce One should the holder terminate
employment with Commerce One as follows: (1) Mark S. Biestman, 181,250 shares,
of which 181,250 may be repurchased; (2) Kirby Coryell, 90,000 shares, of which
90,000 may be repurchased; (3) Charles Donchess, 631,634 shares, of which
108,752 shares may be repurchased; (4) Mark B. Hoffman, 180,000 shares, of which
108,752 shares may be repurchased; (5) Kenneth C. Gardner, 259,624 shares, of
which 9,376 shares may be repurchased; (6) Jeffrey T. Webber, 540,000 shares,
none of which may be repurchased; (7) Robert M. Kimmitt, 90,000 shares, none of
which may be repurchased; and (8) all directors and officers as a group,
2,427,508 shares.
29
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes the compensation earned for services rendered to
Commerce One in all capacities for the fiscal years ended December 31, 1998 and
1999 by Commerce One's named executive officers, specifically, the chief
executive officer and Commerce One's next four most highly compensated executive
officers who earned more than $100,000 during the fiscal year ended
December 31, 1999. The amounts listed under the column captioned "All Other
Compensation" represents group life insurance premiums paid by Commerce One.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
--------------------- -------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS(#) ($)
--------------------------- ----------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mark B. Hoffman.................................. 1999 $185,188 $ 30,000 90,000 $89
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER 1998 155,688 -- 90,000 107
Mark S. Biestman................................. 1999 175,000 99,223(1) 180,000 84
SENIOR VICE PRESIDENT, WORLDWIDE SALES 1998 175,000 162,829 840,000 107
Charles J. Donchess.............................. 1999 182,350 87,500 390,000 84
EXECUTIVE VICE PRESIDENT AND CHIEF STRATEGY
OFFICER 1998 164,333 -- 150,000 107
Samuel C. Prather................................ 1999 175,010 52,625 525,000 77
SENIOR VICE PRESIDENT, ENGINEERING 1998 -- -- -- --
Kirby B. Coryell................................. 1999 172,688 33,000 180,000 84
SENIOR VICE PRESIDENT, SERVICES 1998 156,563 -- 90,000 107
</TABLE>
------------------------------
(1) Includes the payment of commission to Mr. Biestman in the amount of $63,598.
OPTION GRANTS IN LAST FISCAL YEAR
The following table describes certain information regarding stock options
granted to each of the named executive officers in the fiscal year ended
December 31, 1999, including the potential realizable value over the ten-year
term of the options, based on assumed rates of stock appreciation of 5% and 10%,
compounded annually. These assumed rates of appreciation comply with the rules
of the Securities and Exchange Commission and do not represent Commerce One's
estimate of future stock price. Actual gains, if any, on stock option exercises
will be dependent on the future performance of Commerce One's common stock. In
addition, the deemed value for the date of grant was determined after the date
of grant solely for financial accounting purposes.
In the fiscal year ended December 31, 1999, Commerce One granted options to
purchase up to an aggregate of 18,075,742 shares to employees and consultants.
All options were granted under the 1997 Incentive Stock Option Plan at exercise
prices at the fair market value of Commerce One's common stock on the date of
grant, as determined in good faith by the board of directors. All options have a
term of ten years. Optionees may pay the exercise price by cash, check,
promissory note or delivery of already-owned shares of Commerce One's common
stock. All options are immediately exercisable upon grant; however, any unvested
shares may be repurchased by Commerce One at their cost if the optionee's
service
30
terminates. All option shares vest over four years, with 12.5% of the option
shares vesting six months after the option grant date, and the remaining option
shares vesting ratably each month for the next 42 months.
<TABLE>
<CAPTION>
DEEMED POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE VALUE AT ASSUMED
SECURITIES OPTIONS PER ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO SHARE PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE ON DATE FOR OPTION TERM
GRANTED IN LAST PRICE OF EXPIRATION ------------------------
NAME (#) FISCAL YEAR ($/SHARE) GRANT DATE 5% 10%
---- ----------- ------------ --------- -------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark B. Hoffman....................... 90,000 0.42% $0.67 $0.67 2/17/09 $ 37,735 $ 95,629
Mark S. Biestman...................... 90,000 0.42 0.67 0.67 2/17/09 37,735 95,629
90,000 0.42 1.37 1.37 4/23/09 77,355 196,034
Charles J. Donchess................... 90,000 0.42 0.67 0.67 2/17/09 37,735 95,629
300,000 1.39 1.37 1.37 4/23/09 257,851 653,448
Samuel C. Prather..................... 450,000 2.09 0.40 0.40 1/26/09 113,200 286,873
75,000 0.35 1.37 1.37 4/23/09 64,462 163,362
Kirby B. Coryell...................... 90,000 0.42 0.67 0.67 2/17/09 37,735 95,629
90,000 0.42 1.37 1.37 4/23/09 77,355 196,034
</TABLE>
------------------------------
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table describes for the named executive officers, their option
exercises for the fiscal year ended December 31, 1999, and exercisable and
unexercised options held by them as of December 31, 1999.
The "Value of Unexercised In-the-Money Options at Fiscal Year End" is based
on a value of $98.25 per share, the closing price of Commerce One's common stock
on The Nasdaq Stock Market's National Market, on December 31, 1999, less the per
share exercise price, multiplied by the number of shares issued upon exercise of
the option. All options were granted under the Company's 1997 Incentive Stock
Option Plan and Amended and Restated 1995 Stock Option Plan. All options are
immediately exercisable; however, as a condition of exercise, the optionee must
enter into a stock restriction agreement granting Commerce One the right to
repurchase the shares issuable by such exercise at their cost if the optionee's
employment terminates. The shares vest over four years, with 6/48 of the shares
vesting six months after the grant date and the remaining shares vesting ratably
each month thereafter.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END(#) FISCAL YEAR END($)
-------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISED EXERCISABLE UNEXERCISED
---- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Mark B. Hoffman....................................... 50,624 129,376 $ 4,953,868 $12,650,125
Mark S. Biestman...................................... 65,624 474,376 6,407,117 46,416,872
Charles J. Donchess................................... 538,912 411,872 52,671,013 40,231,099
Samuel C. Prather..................................... 125,004 239,996 12,219,557 39,079,189
Kirby B. Coryell...................................... 15,000 75,000 1,453,249 7,266,247
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to establishing the compensation committee, the board of directors as
a whole performed the functions delegated to the compensation committee. No
member of the board of directors or the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of Commerce One board of
directors or compensation committee.
31
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
Effective January 1999, Commerce One entered into an employment agreement
with Mr. Tenenbaum pursuant to which he is entitled to a base salary of $160,000
plus a bonus of up to 50% of his base salary. Under this agreement, if
Mr. Tenenbaum is terminated not for cause or as a result of constructive
termination, he will be entitled to the payment of six months of his base salary
and twelve months of vesting acceleration for his options.
Commerce One entered into change of control severance agreements with
Messrs. Hoffman, Pervere, Coryell, Donchess, Biestman, Tarkoff, Prather and Falk
which commenced in January 1999. The Company also entered into a change of
control severance agreement with Mr. Kimmitt in February 2000. These agreements
provide that if there is a change of control of Commerce One, and any of such
executive officers are involuntarily terminated without cause within
twelve months following the change of control or the announcement of such change
of control, Commerce One will provide the following to the executive officer:
- a cash payment equal to 50% of his annual compensation plus a pro rata
payment of the then current year bonus award based on the target bonus for
him;
- 100% of his health, dental and life insurance, including benefits paid to
any dependents, through the earlier of six months from the date of his
termination or the date he becomes covered by another employer's group
health, dental or life insurance plans providing comparable benefits and
coverage; and
- one year of additional vesting for his outstanding stock options.
In addition, Mr. Kimmitt's offer letter dated January 20, 2000 provides that
if at the conclusion of twelve months from his hire date, his vested options
have not realized an accumulated appreciation of at least $1 million, the
Company will grant him a one-time cash bonus of $1 million net of his total
vested stock option appreciation.
Under Commerce One's 1995 Plan, VEO Plan, 1997 Incentive Stock Option Plan
and 1999 Nonstatutory Option Plan, if the options outstanding under such plans
are not assumed or substituted in a change-of-control merger or asset sale, each
outstanding option will vest and become exercisable in full.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In 1999, the compensation committee (the "Committee") of Commerce One's
board consisted of Messrs. Balen and Webber, neither of whom was an employee or
former employee of Commerce One or any of its subsidiaries during the year. The
Committee has overall responsibility for Commerce One's executive compensation
policies and practices. The Committee's functions include:
- evaluating management's performance,
- determining the compensation of the Chief Executive Officer of Commerce
One,
- reviewing and approving all executive officers' compensation, including
salary and bonuses, and
- establishing and administering compensation plans including granting
awards under the Company's stock option plans to its employees.
The Committee has provided the following report on the compensation policies
of Commerce One as they apply to the executive officers including the Chief
Executive Officer and the relationship of Commerce One performance to executive
compensation.
32
OVERVIEW OF COMPENSATION POLICIES
The Company's compensation policies are designed to address a number of
objectives, including rewarding performance and motivating executive officers to
achieve significant returns for stockholders. To promote these policies, the
Committee implemented a compensation program that is comprised of the following
principal elements:
- Base salary;
- Cash incentives (such as bonuses);
- Equity incentives (such as stock awards); and
- Benefits.
When establishing salaries, bonus levels and stock-based awards for each of
the executive officers, the Committee considers the recommendations of the Chief
Executive Officer, the officer's role, responsibilities and performance during
the past year, and the amount of compensation paid to executive officers in
similar positions of comparable companies. To assist in this process, the
Committee reviews data from independent compensation consultants concerning the
compensation paid to officers at such companies. The Committee generally sets
the compensation of the officers at levels that are competitive with the
Company's competitors. When setting the compensation of each of the executive
officers, the Committee considers all of the factors set forth above, but does
not assign any specific weighting or apply any formula to these factors. The
Committee does, however, give significant consideration to the recommendations
of the Chief Executive Officer.
THE IMPORTANCE OF OWNERSHIP--A fundamental tenet of Commerce One's
compensation policy is that significant equity participation creates a vital
long-term partnership between management and other stockholders. Through its
employee stock plans and agreements, the benefits of equity ownership are
extended to executive officers and employees of Commerce One and its
subsidiaries. As of April 7, 2000, the directors and executive officers of
Commerce One owned an aggregate of 19,845,356 shares and had the right to
acquire an aggregate of 5,335,882 additional shares upon the exercise of
employee stock options, exercisable on or before June 6, 2000. Of the options
exercisable, approximately 77.7% of the shares are unvested shares and therefore
repurchasable by Commerce One in the event of a termination.
FISCAL 1999 EXECUTIVE OFFICER COMPENSATION PROGRAM
The components of the executive compensation program are described below:
BASE SALARY--Commerce One believes that base salary is frequently a
significant factor in attracting, motivating and retaining skilled executive
officers. Accordingly, the Committee reviews base salaries of executive officers
annually and generally sets the base salary of its executive officers at or near
the average of the levels paid by companies either engaged in the e-commerce
industry or located in the San Francisco Bay Area. In addition, the Committee
evaluates the specific job functions and past performance of individual
officers.
BONUS PROGRAM--Commerce One maintains a cash incentive bonus program to
reward executive officers for attaining defined performance goals. Although
bonuses are based primarily on company-wide performance targets, significant
weight is also given to individual performance and performance of particular
operations groups within Commerce One. The Committee sets target bonuses in the
first half of each year based upon the recommendation of the Chief Executive
Officer and bonuses are paid quarterly.
STOCK OPTION GRANTS--In 1999, the Committee granted an aggregate of
2,295,000 stock options under the 1997 Incentive Stock Option Plan to Commerce
One's executive officers. The Committee determined the number of options granted
to executive officers primarily by evaluating each officer's:
- respective job responsibilities;
33
- past performance;
- expected future contributions;
- existing stock and unvested option holdings;
- potential reward to the executive officer if the stock price appreciates
in the public market; and
- management tier classification.
Option grants may also be made to new executive officers upon commencement
of employment and, on occasion, to executive officers in connection with a
significant change in job responsibility. The Committee believes that these
stock option grants will more closely align the long-term interests of senior
management with those of stockholders and assist in the retention of key
executives.
BENEFITS--In 1999, the Company offered benefits to its executive officers
that were substantially the same as those offered to all of Commerce One's
regular employees.
In January 1997, Commerce One established a tax-qualified deferred
compensation plan, known as the Commerce One, Inc., 401(k) Profit Sharing Plan
covering all of Commerce One's eligible full-time employees. Under the 401(k)
Plan, participants may elect to contribute, through salary contributions, up to
15% of their annual compensation, subject to a statutory maximum. Commerce One
does not currently provide additional matching contributions under the 401(k)
Plan, but may do so in the future. The 401(k) Plan is designed to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended, so that
contributions by employees or by Commerce One to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the plan, and so that contributions by Commerce One, if any, will be deductible
by Commerce One when made.
CHIEF EXECUTIVE OFFICER'S COMPENSATION--In 1999, Mark B. Hoffman served as the
Company's President, Chief Executive Officer and Chairman of the Board of
Directors.
In 1999, the Committee increased Mr. Hoffman's salary from $150,000 to
$185,187, and awarded him a bonus of $30,000, and granted him options to
purchase 90,000 shares of the Company's common stock. In determining
Mr. Hoffman's salary, bonus and stock grants, the Committee considered the same
criteria it considered with respect to the other executive officers. The
committee noted that in 1999, under Mr. Hoffman's leadership, the Company:
- Successfully completed the initial public offering of its common stock,
- Established strategic relationships with a number of key companies,
including British Telecom, NTT Communications, Banamex, Cable & Wireless
Optus and Deutsche Telekom,
- Hosted a MarketSite in Germany and Swisscom AG,
- Released significant new versions of the Company's MarketSite and BuySite
products,
- Increased revenues from $33,557,000 to $2,563,000 in 1998,
In setting Mr. Hoffman's salary, the Committee also noted that Mr. Hoffman's
salary had not been increased significantly since 1997.
TAX LAW LIMITS ON EXECUTIVE COMPENSATION AND POLICY ON DEDUCTIBILITY OF
COMPENSATION--Section 162(m) of the Internal Revenue Code of 1986, provides that
a company may not take a tax deduction for that portion of the annual
compensation paid to an executive officer in excess of $1 million, unless
certain exemption requirements are met. The 1997 Incentive Stock Option Plan was
designed to meet the exemption requirements of Section 162(m). The Committee has
determined at this time not to seek to qualify Commerce One's remaining
executive officer compensation programs under Section 162(m). None of the
compensation paid to the Company's executive officers in 1999 was subject to
Section 162(m).
34
CONCLUSION--All aspects of Commerce One's executive compensation are subject
to change at the discretion of the Committee. The Committee will monitor
Commerce One's executive compensation on an ongoing basis to ensure that it
continues to support a performance-oriented environment and remains properly
integrated with Commerce One's annual and long-term strategic objectives.
Members of the Compensation Committee
John V. Balen
Jeffrey T. Webber
35
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, from the effective date of
the initial public offering of Commerce One's common stock (July 1, 1999)
through March 31, 2000 for the NASDAQ Composite Index and the Hambrecht & Quist
Internet Index (the "H&Q Internet Index"). The graph assumes that $100 was
invested in Commerce One's common stock (at the initial public offering price of
$21.00 per share), and the above indices on July 1, 1999. Historic stock price
performance is not necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
07/01/1999 09/30/1999 12/31/1999 03/31/2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commerce One......................... 100 160 967 734
NASDAQ Composite Index............... 100 102 151 169
H&Q Internet Index................... 100 102 198 206
</TABLE>
[COMPARISON OF CUMULATIVE TOTAL RETURN AMONG COMMERCE ONE, THE NASDAQ
COMPOSITE INDEX AND THE H&Q INTERNET INDEX]
Commerce One effected its initial public offering on July 1, 1999 at a split
adjusted per share price of $3.50. The graph above, however, commences with the
split-adjusted closing price of $10.17 on July 1, 1999, the date Commerce One's
common stock commenced public trading.
OTHER BUSINESS
At this time management knows of no other matters that may be brought before
the meeting. However, if any other matters are properly brought before the
meeting, the proxy holders named in the accompanying proxy intend to vote the
proxies on such matters in accordance with their best judgment.
An annual report on Form 10-K (excluding exhibits) for the fiscal year ended
December 31, 1999 is enclosed with this Proxy Statement.
<TABLE>
<S> <C>
By Order of the Board of Directors
/s/ Mark B. Hoffman
Mark B. Hoffman
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER
</TABLE>
April 28, 2000
36
ANNEX A
1997 INCENTIVE STOCK OPTION PLAN
COMMERCE ONE, INC.
1997 INCENTIVE STOCK OPTION PLAN
(AS AMENDED AND RESTATED APRIL 9, 1999)
1. PURPOSES OF THE PLAN. The purposes of this 1997 Incentive Stock Option
Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws
of any foreign country or jurisdiction where Options or Stock Purchase
Rights are, or will be, granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Commerce One, Inc., a California corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed
by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. Neither service as a Director nor payment of
a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(p) "NOTICE OF GRANT" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
(q) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "OPTION" means a stock option granted pursuant to the Plan.
(s) "OPTION AGREEMENT" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "OPTIONED STOCK" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "OPTIONEE" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 1997 Incentive Stock Option Plan.
(y) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted
Stock Purchase Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.
2
(aa) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(bb) "SECTION 16(B)" means Section 16(b) of the Exchange Act.
(cc) "SERVICE PROVIDER" means an Employee, Director or Consultant.
(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 3,692,925 Shares, plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 2000 equal to the lesser of
(i) 1,250,000 Shares, (ii) 5% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be administered by
different Committees with respect to different groups of Service
Providers.
(ii) SECTION 162(M). To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section 162(m) of the Code.
(iii) RULE 16B-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption
under Rule 16b-3.
(iv) OTHER ADMINISTRATION. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by
the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
3
(iii) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights
may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or
the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was
granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined on
the date that the amount of tax to be withheld is to be determined. All
elections by an Optionee to have Shares withheld for this purpose shall
be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase
Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year
(under all plans of the
4
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall
be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the Shares shall
be determined as of the time the Option with respect to such Shares is
granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 100,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 100,000
Shares which shall not count against the limit set forth in subsection
(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described
in Section 13.
(iv) If an Option is cancelled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against
the limits set forth in subsections (i) and (ii) above. For this purpose,
if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten
(10) years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) EXERCISE PRICE. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.
B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify
5
as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per
Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
(v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by
the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned
Stock,
6
notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Shares are issued, except as provided in
Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as
to his or her entire Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in
the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by
bequest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, at the time of death, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. The
Option may be exercised by the executor or administrator of the Optionee's
estate or, if none, by the person(s) entitled to exercise the Option under
the Optionee's will or the laws of descent or distribution. If the Option is
not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to buy
out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of
Grant, of the terms, conditions and
7
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time
within which the offeree must accept such offer. The offer shall be accepted
by execution of a Restricted Stock Purchase Agreement in the form determined
by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate
determined by the Administrator.
(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but
as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase
Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option until ten
(10) days prior to such transaction as to all of the
8
Optioned Stock covered thereby, including Shares as to which the Option
would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares
purchased upon exercise of an Option or Stock Purchase Right shall lapse as
to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have
the right to exercise the Option or Stock Purchase Right as to all of the
Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If an Option or Stock Purchase Right becomes fully
vested and exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
fully vested and exercisable for a period of fifteen (15) days from the date
of such notice, and the Option or Stock Purchase Right shall terminate upon
the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.
14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such
termination.
9
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required.
17. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
10
ANNEX B
1999 EMPLOYEE STOCK PURCHASE PLAN
COMMERCE ONE, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN (ESPP)
The following constitute the provisions of the 1999 Employee Stock Purchase
Plan of Commerce One, Inc.
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the common stock of the Company.
(d) "COMPANY" shall mean Commerce One, Inc. and any Designated
Subsidiary of the Company.
(e) "COMPENSATION" shall mean all base straight time gross earnings,
plus bonus payments, plus paid commissions, but exclusive of payments for
overtime, shift premium, and other compensation.
(f) "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible
to participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and who is anticipated to work more than
five (5) months in any rolling one-year period.. For purposes of the Plan,
the employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by contract,
the employment relationship shall be deemed to have terminated on the 91st
day of such leave.
(h) "ENROLLMENT DATE" shall mean the first Trading Day of each Offering
Period.
(i) "EXERCISE DATE" shall mean the last Trading Day of each Purchase
Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day on the date of such determination,
as reported in THE WALL STREET JOURNAL or such other source as the Board
deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in THE WALL
STREET JOURNAL or such other source as the Board deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Board; or
(iv) For purposes of the Enrollment Date of the first Offering Period
under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock
(the "Registration Statement").
(k) "OFFERING PERIODS" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan
may be exercised, commencing on the first Trading Day on or after May 15 and
November 15 of each year and terminating on the last Trading Day in the
periods ending twenty-four months later; provided, however, that the first
Offering Period under the Plan shall commence with the first Trading Day on
or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and ending on the last
Trading Day on or before May 15, 2001. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan.
(l) "PLAN" shall mean this 1999 Employee Stock Purchase Plan.
(m) "PURCHASE PERIOD" shall mean the approximately six-month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence
on the Enrollment Date and end with the next Exercise Date.
(n) "PURCHASE PRICE" shall mean 85% of the Fair Market Value of a share
of Common Stock on the Enrollment Date or on the Exercise Date, whichever is
lower; provided however, that the Purchase Price may be adjusted by the
Board pursuant to Section 20.
(o) "RESERVES" shall mean the number of shares of Common Stock covered
by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(p) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "TRADING DAY" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. ELIGIBILITY.
(a) Any Employee who shall be employed by the Company up to five
business days prior to a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights
to purchase stock under all employee stock purchase plans of the Company and
its subsidiaries accrues at a rate which exceeds Twenty-Five Thousand
Dollars ($25,000) worth of stock (determined at the fair market value of the
shares at the time such option is granted) for each calendar year in which
such option is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 15 and November 15
2
each year, or on such other date as the Board shall determine, and continuing
thereafter until terminated in accordance with Section 20 hereof; provided,
however, that the first Offering Period under the Plan shall commence with the
first Trading Day on or after the date on which the Securities and Exchange
Commission declares the Company's Registration Statement effective and ending on
the last Trading Day on or before May 15, 2001. The Board shall have the power
to change the duration of Offering Periods (including the commencement dates
thereof) with respect to future offerings without shareholder approval if such
change is announced at least five (5) days prior to the scheduled beginning of
the first Offering Period to be affected thereafter.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a Subscription Agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll
office prior to the subscription deadline date for each applicable
Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during
the Offering Period in an amount not exceeding fifteen percent (15%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate; provided, however, that a participant may increase
or decrease the rate of his or her payroll deductions only once during each
six-month Purchase Period. The change in rate shall be effective with the
first full payroll period following five (5) business days after the
Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A
participant's subscription agreement shall remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof. The
Board may, in its discretion, limit the number of participation rate changes
during any Offering or Purchase Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during
a Purchase Period. Payroll deductions shall recommence at the rate provided
in such participant's subscription agreement at the beginning of the first
Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise
upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but shall not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to
3
make available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by the Employee.
7. GRANT OF OPTION. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than 5,000
shares of the Company's Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. The Board may, for future
Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of the Company's Common Stock an Employee may purchase during
each Purchase Period of such Offering Period. Exercise of the option shall occur
as provided in Section 8 hereof, unless the participant has withdrawn pursuant
to Section 10 hereof. The option shall expire on the last day of the Offering
Period.
8. EXERCISE OF OPTION.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or
her account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase
a full share shall be retained in the participant's account for the
subsequent Purchase Period or Offering Period, subject to earlier withdrawal
by the participant as provided in Section 10 hereof. Any other monies left
over in a participant's account after the Exercise Date shall be returned to
the participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the number
of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under
the Plan on the Enrollment Date of the applicable Offering Period, or
(ii) the number of shares available for sale under the Plan on such Exercise
Date, the Board may in its sole discretion (x) provide that the Company
shall make a pro rata allocation of the shares of Common Stock available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as
uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Exercise Date, and continue all Offering
Periods then in effect, or (y) provide that the Company shall make a pro
rata allocation of the shares available for purchase on such Enrollment Date
or Exercise Date, as applicable, in as uniform a manner as shall be
practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and terminate any or all Offering Periods then in effect
pursuant to Section 20 hereof. The Company may make pro rata allocation of
the shares available on the Enrollment Date of any applicable Offering
Period pursuant to the preceding sentence, notwithstanding any authorization
of additional shares for issuance under the Plan by the Company's
shareholders subsequent to such Enrollment Date.
9. DELIVERY. As promptly as practicable after each Exercise Date on which
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of the shares purchased upon exercise of his or her
option.
4
10. WITHDRAWAL.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his
or her option under the Plan at any time up to 30 days before an Exercise
Date by giving written notice to the Company in the form of Exhibit B to
this Plan. All of the participant's payroll deductions credited to his or
her account shall be paid to such participant promptly after receipt of
notice of withdrawal and such participant's option for the Offering Period
shall be automatically terminated, and no further payroll deductions for the
purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at
the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from
which the participant withdraws.
11. TERMINATION OF EMPLOYMENT.
Upon a participant's ceasing to be an Employee (i.e., termination date), for
any reason, he or she shall be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated.
12. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. STOCK.
(a) Subject to adjustment upon changes in capitalization of the Company
as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 750,000 shares, plus an annual increase to be added on the first
day of the Company's fiscal year beginning in 2000 equal to the lesser of
(i) 300,000 shares, (ii) 1.5% of the outstanding shares on such date or
(iii) a lesser amount determined by the Board.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant
and his or her spouse.
14. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise
Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required
for such designation to be effective.
5
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company
may designate.
16. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. REPORTS. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as
well as the price per share and the number of shares of Common Stock covered
by each option under the Plan which has not yet been exercised shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company after the closing
of the Company's first firmly underwritten public offering of its Common
Stock; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, the Offering Period then in progress shall be
shortened by setting a new Exercise Date (the "New Exercise Date"), and shall
terminate immediately prior to the consummation of such proposed dissolution or
liquidation, unless provided otherwise by the Board. The New Exercise Date shall
be before the date of the Company's proposed dissolution or liquidation. The
Board shall notify each participant in writing, at least ten (10) business days
prior to the New Exercise Date, that the Exercise Date for the participant's
option has been changed to the New Exercise Date and that the participant's
option shall be exercised automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn from the Offering Period as provided
in Section 10 hereof.
6
(c) MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed
or an equivalent option substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase
Periods then in progress shall be shortened by setting a new Exercise Date
(the "New Exercise Date") and any Offering Periods then in progress shall
end on the New Exercise Date. The New Exercise Date shall be before the date
of the Company's proposed sale or merger. The Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date
the participant has withdrawn from the Offering Period as provided in
Section 10 hereof.
20. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Offering Period or
the Plan is in the best interests of the Company and its shareholders.
Except as provided in Section 19 and this Section 20 hereof, no amendment
may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to comply
with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as
required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
limit the frequency and/or number of changes in the amount withheld during
an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding
in excess of the amount designated by a participant in order to adjust for
delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly correspond
with amounts withheld from the participant's Compensation, and establish
such other limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent with the
Plan.
(c) In the event the Board determines that the ongoing operation of the
Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including,
but not limited to:
(i) altering the Purchase Price for any Offering Period including an
Offering Period underway at the time of the change in Purchase Price;
(ii) shortening any Offering Period so that Offering Period ends on a
new Exercise Date, including an Offering Period underway at the time of
the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder approval or
the consent of any Plan participants.
7
21. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received via email or in any other form specified by the Company at
the location, or by the person, designated by the Company for the receipt
thereof.
22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
23. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 20 hereof.
24. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
8
EXHIBIT A
COMMERCE ONE, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
<TABLE>
<S> <C>
Original Application Enrollment Date:
Change in Payroll Deduction Rate
Change of Beneficiary(ies)
</TABLE>
1. hereby elects to participate in the Commerce
One, Inc. 1999 Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
% of my Compensation on each payday (from 1 to 15%) during the
Offering Period in accordance with the Employee Stock Purchase Plan. (Please
note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I understand
that if I do not withdraw from an Offering Period, any accumulated payroll
deductions will be used to automatically exercise my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my ability
to exercise the option under this Subscription Agreement is subject to
shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in a form as determined by the Company.
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the Offering
Period during which I purchased such shares) or one year after the Exercise
Date, I will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to the
excess of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I HEREBY AGREE
TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY
DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL,
STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE
DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to
make available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by me. If I dispose of such shares
at any time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such income
will be taxed as ordinary income only to the extent of an amount equal to
the lesser of (1) the excess of the fair market value of the shares at the
time of such disposition over the purchase price which I paid for the
shares, or (2) 15% of the fair market value of the shares on the first day
of the Offering Period. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan.
The effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
<TABLE>
<S> <C>
BENEFICIARY DESIGNATIONS FOR:
--------------------------------------------
Your Name (please print)
1. ------------------------------------------ --------------------------------------------
first middle last street address
-------------------------------------------- --------------------------------------------
relationship city state zip country
2. ------------------------------------------ --------------------------------------------
first middle last street address
-------------------------------------------- --------------------------------------------
relationship city state zip country
3. ------------------------------------------ --------------------------------------------
first middle last street address
-------------------------------------------- --------------------------------------------
relationship city state zip country
</TABLE>
<TABLE>
<S> <C>
Employee's Name (please print)
----------------------------------------------------
Employee's Social Security Number:
----------------------------------------------------
Employee's Address:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
</TABLE>
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
<TABLE>
<S> <C>
Dated: --------------------------- -------------------------------------------------------
Signature of Employee
-------------------------------------------------------
Spouse's Signature (If beneficiary other than spouse)
</TABLE>
2
EXHIBIT B
COMMERCE ONE, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Commerce
One, Inc. 1999 Employee Stock Purchase Plan which began on , 19 (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
<TABLE>
<S> <C>
Name and Address of Participant:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Signature:
--------------------------------------------
Date: ---------------------------------------
</TABLE>
[1592 - COMMERCE ONE, INC.] [FILE NAME: COM79B.ELX] [VERSION - 1] [04/12/00]
[orig 04/12/00]
DETACH HERE
PROXY
COMMERCE ONE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON
WEDNESDAY, MAY 31, 2000
The undersigned hereby appoints Peter F. Pervere and Robert M. Tarkoff,
or either of them, as proxies and attorneys-in-fact, each with full power of
substitution, to represent the undersigned at the Annual Meeting of
Stockholders of Commerce One, Inc. (the "Company") to be held at the Carr
America Conference Center, Tassajara Conference Room, 4400 Rosewood Avenue,
Pleasanton, CA 94588 on May 21, 2000 at 11:00 a.m., local time, any
adjourments or postponements thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present at the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, 4, AND 5, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THE PROXY WILL BE VOTED IN ACCORDANCE THEREWITH. In their discretion,
the proxies are authorized to vote upon such other business as may properly come
before the meeting or any adjournment thereof to the extent authorized by Rule
14a-4(c) promulgated by the Securities and Exchange Commission.
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
<TABLE>
<S> <C>
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient and immediate! It's fast, convenient, and your vote is
Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
------------------------------------------------------- -----------------------------------------------------
FOLLOW THESE FOUR EASY FOLLOW THESE FOUR EASY
STEPS: STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT 1. READ THE ACCOMPANYING PROXY STATEMENT
AND PROXY CARD. AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
(1-877-779-8683) HTTP://WWW.EPROXYVOTE.COM/CMRC
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER 3. ENTER YOUR 14-DIGIT VOTER
LOCATED ON YOUR PROXY CARD CONTROL NUMBER
ABOVE YOUR NAME. LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
------------------------------------------------------- -----------------------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
CALL 1-877-779-8683 ANYTIME! GO TO HTTP://WWW.EPROXYVOTE.COM/CMRC ANYTIME!
</TABLE>
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
/X/ Please mark votes
as in this example
MANAGEMENT HAS PROPOSED AND RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR DIRECTOR
LISTED BELOW AND A VOTE FOR PROPOSALS 2, 3, 4, AND 5.
<TABLE>
------------------------------------------------------- -----------------------------------------------------------
<S> <C>
FOR AGAINST ABSTAIN
2. To amend Commerce / / / / / /
One's 1997
Incentive Stock
Option Plan to
increase the number
of shares
available.
3. To amend Commerce / / / / / /
One's 1999 Employee
Stock Purchase Plan
to increase the
number of shares
available and to
provide for certain
annual increases.
4. To amend Commerce One's / / / / / /
Amended and Restated
Certificate of Incorporation
to increase the
number of
authorized shares
of common stock to
950 million shares
and preferred stock
to 50 million
shares
5. To ratify the / / / / / /
selection of Ernst
& Young LLP as
Commerce One's
independent
auditors for 2000
MARK HERE FOR / / MARK / /
ADDRESS CHANGE HERE IF
AND NOTE AT LEFT YOU PLAN
TO ATTEND
THE MEETING
Sign exactly as your name(s) appears on your
1. To elect directors to hold office for three years certificate. If shares of stock stand of record in
or until their successors are elected. the names of two or more persons or in the name of
Nominees: (01) Thomas J. Gonzales, II (02) husband and wife, whether as joint tenants or otherwise,
Robert M. Kimmitt and (03) Jay M. Tenenbaum both or all of such persons should sign this Proxy. If
shares of stock are held record by a
FOR ALL / / / / WITHHELD corporation, the Proxy should be executed by the
NOMINEES FROM ALL President or Vice President, and by the Secretary
NOMINEES or Assistant Secretary, Executors or administrators or
other fiduciaries who execute the above Proxy for a
deceased Stockholder should give their full
/ / _____________________________ title. Please date the Proxy.
For all nominees except as noted above
Signature_____________________ Date:_________ Signature_____________________ Date:_________
</TABLE>