EXECUTION COPY
GUARANTY
This GUARANTY (together with all amendments, if any, from time to time
hereto, this "Guaranty"), dated as of December 31, 2003, is made by and among
COMMERCE ONE OPERATIONS, INC. (the "Guarantor"), a Delaware corporation and
wholly-owned subsidiary of Commerce One, Inc. (the "Seller"), COMVEST INVESTMENT
PARTNERS II LLC, a Delaware limited liability company ("ComVest") and DCC
VENTURES, LLC, a Nevada limited liability company ("DCC" and together with
ComVest, the "Purchasers"). Any capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
W I T N E S S E T H:
WHEREAS, the Seller has offered for sale to the Purchasers, and the
Purchasers have purchased from the Seller, (i) Senior Secured Non-Convertible
Promissory Notes of the Seller in the aggregate principal amount of Five Million
Dollars ($5,000,000) (the "Notes") and (ii) Warrants to purchase shares of
common stock, par value $.0001 per share, of the Seller (the "Warrants") under
the terms of the Purchase Agreement;
WHEREAS, under the terms and conditions of the Purchase Agreement, the
Purchasers have purchased the Notes and Warrants dated the date hereof and as
set forth in Exhibits A and B, respectively, annexed hereto and made a part
hereof, with payment of the Notes and any other obligations of Seller to the
Purchasers, and each of them, to be secured as provided for in the Purchase
Agreement;
WHEREAS, under the terms and conditions of the Purchase Agreement, in
order to induce the Purchasers to purchase the Notes and Warrants, the Guarantor
agreed to execute and deliver to the Purchasers (i) this Guaranty, pursuant to
which the Guarantor shall agree to guarantee the full repayment of the Notes
and all other obligations of the Seller under the Purchase Agreement and other
Closing Documents (the "Guaranteed Obligations"), and (ii) a Security Agreement
granting the Purchasers a first perfected priority lien and security interest in
the Collateral (as defined therein) to secure all of the Guarantor's and the
Seller's respective obligations under the Purchase Agreement, the Notes and
other Closing Documents, as set forth in more detail in the Security Agreement
(collectively, the "Obligations").
WHEREAS, Guarantor will derive actual, direct and indirect economic
benefits from the sale of the Notes and Warrants; and
WHEREAS, in order to induce the Purchasers to purchase the Notes and
Warrant and enter into the Purchase Agreement and other Closing Documents, the
Guarantor has agreed to guarantee payment of the Guaranteed Obligations;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. Definitions. Capitalized terms used herein (including terms used in
the Recitals) shall have the meanings assigned to them in the Purchase
Agreement, unless otherwise defined herein.
References to this "Guaranty" shall mean this Guaranty, including all
amendments, modifications and supplements and any annexes, exhibits and
schedules to any of the foregoing, and shall refer to this Guaranty as the same
may be in effect at the time such reference becomes operative.
2. The Guaranty.
2.1 Guaranty of Obligations. The Guarantor hereby
unconditionally guarantees to Purchasers and its successors, endorsees,
transferees and assigns, the prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of the Guaranteed Obligations.
Guarantor agrees that this Guaranty is a guaranty of payment and performance and
not of collection, and that their obligations under this Guaranty shall be
primary, absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity,
enforceability or any future amendment of, or change in this Guaranty,
any other Closing Document or any other agreement, document or
instrument to which Guarantor is or may become a party;
(b) the absence of any action to enforce this
Guaranty or any other Closing Document or the waiver or consent by
Purchasers with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure
to perfect the lien and security interest granted by Guarantor and
Seller under the Security Agreement, any Collateral for the Guaranteed
Obligations or any action, or the absence of any action, by Purchasers
in respect thereof (including, without limitation, the release of any
such security);
(d) the insolvency of Purchasers; or
(e) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor,
it being agreed by the Guarantor that its obligations under this Guaranty shall
not be discharged until the Satisfaction Date (as defined in the Pledge
Agreement). The Guarantor shall be regarded, and shall be in the same position,
as principal debtor with respect to the Guaranteed Obligations. The Guarantor
agrees that any notice or directive given at any time to Purchasers which is
inconsistent with the waiver in the immediately preceding sentence shall be null
and void and may be ignored by Purchasers, and, in addition, may not be pleaded
or introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless Purchasers have specifically agreed otherwise in
writing. It is agreed among the Guarantor and Purchasers that the foregoing
waivers are of the essence of the transactions contemplated by the Closing
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Documents and that, but for this Guaranty and such waivers, Purchaser would
decline to enter into the Purchase Agreement and other Closing Documents.
2.2 Demand by Purchasers. In addition to the terms of the
Guaranty set forth in Section 2.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at any
time, the outstanding principal amount of the Guaranteed Obligations (including
all accrued interest thereon) is declared to be immediately due and payable,
then Guarantor shall, without demand, pay to the Purchasers the entire
outstanding Guaranteed Obligations due and owing to such holders. Payment by
Guarantor shall be made to Purchasers in immediately available Federal funds to
an account designated by Purchasers for the giving of notice to Purchasers or at
any other address that may be specified in writing from time to time by
Purchasers, and shall be credited and applied to the Guaranteed Obligations.
2.3 Enforcement of Guaranty. In no event shall Purchasers have
any obligation (although it is entitled, at its option) to proceed against the
Seller or any Collateral pledged to secure Guaranteed Obligations before seeking
satisfaction from the Guarantor, and Purchasers may proceed, prior or subsequent
to, or simultaneously with, the enforcement of Purchasers' rights hereunder, to
exercise any right or remedy which it may have against any Collateral, as a
result of any lien it may have as security for all or any portion of the
Guaranteed Obligations.
2.4 Waiver. In addition to the waivers contained in Section
2.1 hereof, Guarantor waives, and agrees that it shall not at any time insist
upon, plead or in any manner whatever claim or take the benefit or advantage of,
any appraisal, valuation, stay, extension, marshaling of assets or redemption
laws, or exemption, whether now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance by Guarantor of its
Guaranteed Obligations under, or the enforcement by Purchasers of, this
Guaranty. Guarantor hereby waives diligence, presentment and demand (whether for
non-payment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Guaranteed Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of, the Guaranteed Obligations, notice of adverse change
in Seller's financial condition or any other fact which might increase the risk
to Guarantor) with respect to any of the Guaranteed Obligations or all other
demands whatsoever and waives the benefit of all provisions of law which are or
might be in conflict with the terms of this Guaranty. Guarantor represents,
warrants and agrees that, as of the date of this Guaranty, its obligations under
this Guaranty are not subject to any offsets or defenses against Purchasers,
Seller or Guarantor of any kind. Guarantor further agrees that its obligations
under this Guaranty shall not be subject to any counterclaims, offsets or
defenses against Purchasers, Seller or Guarantor of any kind which may arise in
the future.
2.5 Benefit of Guaranty. The provisions of this Guaranty are
for the benefit of Purchasers and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair the obligations
of Seller or the Guarantor under the Purchase Agreement and the other Closing
Documents. In the event all or any part of the Guaranteed Obligations are
transferred, indorsed or assigned by Purchasers to any Person or Persons, any
reference to "Purchasers " herein shall be deemed to refer equally to such
Person or Persons.
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2.6 Modification of Guaranteed Obligations, Etc. The Guarantor
hereby acknowledges and agrees that Purchasers may at any time or from time to
time, with or without the consent of, or notice to, Guarantor:
(a) change or extend the manner, place or terms of
payment of, or renew or alter all or any portion of, the Guaranteed
Obligations;
(b) take any action under or in respect of the Note
or Warrantin the exercise of any remedy, power or privilege contained
therein or available to it at law, equity or otherwise, or waive or
refrain from exercising any such remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the
Note or Warrant;
(d) extend or waive the time for Seller's or
Guarantor's performance of, or compliance with, any term, covenant or
agreement on its part to be performed or observed under the Purchase
Agreement or any other Closing Documents, or waive such performance or
compliance or consent to a failure of, or departure from, such
performance or compliance;
(e) take and hold Collateral of the Seller for the
payment of the Guaranteed Obligations guaranteed hereby or sell,
exchange, release, dispose of, or otherwise deal with, any property
pledged, mortgaged or conveyed, or in which Purchasers have been
granted a lien, to secure any Guaranteed Obligations;
(f) modify or terminate the terms of any
intercreditor or subordination agreement pursuant to which claims of
other creditors of Guarantor or Seller are subordinated to the claims
of Purchasers; and/or
(g) apply any sums by whomever paid or however
realized to any amounts owing by Guarantor or Seller to Purchasers in
such manner as Purchasers shall reasonably determine in its discretion;
and Purchasers shall not incur any liability to Guarantor as a result thereof,
and no such action shall impair or release the Guaranteed Obligations of
Guarantor under this Guaranty.
2.7 Reinstatement. Until the Satisfaction Date, this Guaranty
shall remain in full force and effect and continue to be effective should any
petition be filed by or against Seller or Guarantor for liquidation or
reorganization, should Seller or Guarantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of Seller's or Guarantor's, as the
case may be, assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Guaranteed
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by Purchasers,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
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2.8 Deferral of Subrogation, Etc. Notwithstanding
anything to the contrary in this Guaranty, or in any other Closing Document,
the Guarantor hereby:
(a) expressly and irrevocably waives, on behalf of
itself and its successors and assigns (including any surety) until the
Satisfaction Date, any and all rights at law or in equity to
subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to
a surety against a principal, to a guarantor against a principal, to a
guarantor against a maker or obligor, to an accommodation party against
the party accommodated, to a holder or transferee against a maker, or
to the holder of any claim against any Person, and which Guarantor may
have or hereafter acquire against Seller in connection with or as a
result of Guarantor's execution, delivery and/or performance of this
Guaranty, or any other documents to which Guarantor is a party or
otherwise; and
(b) acknowledges and agrees (i) that this waiver is
intended to benefit Purchasers and shall not limit or otherwise effect
any Guarantor's liability hereunder or the enforceability of this
Guaranty, and (ii) that Purchasers and its successors and assigns are
intended third-party beneficiaries of the waivers and agreements set
forth in this Section 2.8 and their rights under this Section 2.8 shall
survive payment in full of the Guaranteed Obligations.
2.9 Election of Remedies. If Purchasers may, under applicable
law, proceed to realize benefits under any of the Closing Documents giving
Purchasers a lien upon any Collateral owned by Guarantor or Seller, either by
judicial foreclosure or by non-judicial sale or enforcement, Purchasers may, at
their sole option, determine which of such remedies or rights it may pursue
without affecting any of such rights and remedies under this Guaranty. If, in
the exercise of any of its rights and remedies, Purchasers shall forfeit any of
their respective rights or remedies, including its right to enter a deficiency
judgment against Seller or Guarantor, whether because of any applicable laws
pertaining to "election of remedies" or the like, Guarantor hereby consents to
such action by Purchasers and waives any claim based upon such action, even if
such action by Purchasers shall result in a full or partial loss of any rights
of subrogation which Guarantor might otherwise have had but for such action by
Purchasers. Any election of remedies which results in the denial or impairment
of the right of Purchasers to seek a deficiency judgment against Guarantor or
Seller shall not impair Guarantor's obligation to pay the full amount of the
Guaranteed Obligations. In the event Purchasers shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Closing Documents,
Purchasers may bid all or less than the amount of the Guaranteed Obligations and
the amount of such bid need not be paid by Purchasers but shall be credited
against the Guaranteed Obligations. To the extent permitted by applicable law,
the amount of the successful bid at any such sale shall be conclusively deemed
to be the fair market value of the collateral and the difference between such
bid amount and the remaining balance of the Guaranteed Obligations shall be
conclusively deemed to be the amount of the Guaranteed Obligations guaranteed
under this Guaranty, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Purchasers might otherwise be entitled but for such bidding at
any such sale.
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2.10 Funds Transfers. If Guarantor shall engage in any
transaction as a result of which Seller is required to make a mandatory
prepayment with respect to the Guaranteed Obligations under the terms of the
Closing Documents, Guarantor shall deliver to the Seller an amount equal to the
mandatory prepayment required under the terms of the Closing Documents.
3. Deliveries. In a form satisfactory to Purchasers, Guarantor shall
deliver to Purchasers concurrently with the execution of this Guaranty, the
other Closing Documents and other instruments, certificates and documents as are
required to be delivered by Guarantor to Purchasers under the Purchase
Agreement.
4. Representations and Warranties. To induce Purchasers to purchase the
Notes and Warrants under the Purchase Agreement, the Guarantor makes, to the
extent applicable and as indicated in the Purchase Agreement), the
representations and warranties contained in the Purchase Agreement, which, to
the extent applicable to the Guarantor, are incorporated herein by reference, to
Purchasers, and which, to the extent applicable to the Guarantor, shall survive
the execution and delivery of this Guaranty.
5. Further Assurances. Guarantor agrees, upon the written request of
Purchasers, to execute and deliver to Purchasers, from time to time, any
additional instruments or documents reasonably considered necessary by
Purchasers to cause this Guaranty to be, become or remain valid and effective in
accordance with its terms.
6. Payments Free and Clear of Taxes. All payments required to be made
by Guarantor hereunder shall be made to Purchasers free and clear of, and
without deduction for, any and all present and future taxes. If Guarantor shall
be required by law to deduct any taxes from or in respect of any sum payable
hereunder, (a) the sum payable shall be increased as much as shall be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 6), Purchaser receive an amount equal
to the sum it would have received had no such deductions been made, (b)
Guarantor shall make such deductions, and (c) Guarantor shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of taxes,
Guarantor shall furnish to Purchasers the original or a certified copy of a
receipt evidencing payment thereof. Guarantor shall indemnify and, within ten
(10) days of demand therefor, pay Purchasers for the full amount of taxes
(including any taxes imposed by any jurisdiction on amounts payable under this
Section 6) paid by Purchasers in connection with the transactions contemplated
by this Guaranty, the Purchase Agreement and other Closing Documents (other than
income taxes), and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such taxes were
correctly or legally asserted. Purchasers hereby agree to cooperate at
Guarantor's cost and expense with Guarantor's reasonable requests in any action
brought by Guarantor to contest the accuracy, applicability or legality of any
taxes so paid.
7. Other Terms.
7.1 Entire Agreement. This Guaranty, together with the other
Closing Documents, constitutes the entire agreement between the parties with
respect to the subject
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matter hereof and supersedes all prior agreements relating to a guaranty of the
Notes and/or the Guaranteed Obligations.
7.2 Headings. The headings in this Guaranty are for
convenience of reference only and are not part of the substance of this
Guaranty.
7.3 Severability. Whenever possible, each provision of this
Guaranty shall be interpreted in such a manner to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
7.4 Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give or serve upon another any such
communication with respect to this Guaranty, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
shall be addressed to the party to be notified at the address set forth in the
Purchase Agreement (or such other address as may be substituted by notice given
in the manner required by the Purchase Agreement), and given in the manner
required by Section 14(e) Purchase Agreement.
7.5 Successors and Assigns. This Guaranty and all obligations
of Guarantor hereunder shall be binding upon the successors and assigns of
Guarantor (including a debtor-in-possession on behalf of such Guarantor) and
shall, together with the rights and remedies of Purchasers hereunder, inure to
the benefit of Purchasers, all future holders of any instrument evidencing any
of the Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Guaranteed Obligations or any
portion thereof or interest therein shall in any manner affect the rights of
Purchasers hereunder. Guarantor may not assign, sell, hypothecate or otherwise
transfer any interest in or obligation under this Guaranty.
7.6 No Waiver; Cumulative Remedies; Amendments. Purchasers
shall not by any act, delay, omission or otherwise be deemed to have waived any
of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Purchasers in accordance with Section 9 of the Security
Agreement and then only to the extent therein set forth. A waiver by Purchasers
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Purchasers would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of Purchasers, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Guaranty may be waived, altered, modified,
supplemented or amended except by an instrument in writing, duly executed by
Purchasers (in accordance with Section 9 of the Security Agreement) and
Guarantor.
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7.7 Termination. This Guaranty is a continuing guaranty and
shall remain in full force and effect until the Satisfaction Date. Upon payment
and performance in full of the Guaranteed Obligations, Purchasers shall deliver
to Guarantor such documents as Guarantor may reasonably request to evidence such
termination.
7.8 Counterparts. This Guaranty may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.
7.9 Limitation on Guaranteed Obligations.
Notwithstanding any provision herein contained to the contrary,
Guarantor's liability hereunder shall be limited to an amount not to
exceed the aggregate principal amount of the Note plus all accrued
interest thereon.
8. Governing Law. This Guaranty shall be governed by, construed under
and interpreted and enforced in accordance with laws of the State of New York,
without giving effect to principles of choice of law. Any action or proceeding
arising out of or relating to this Guaranty shall be commenced in a federal or
state court having competent jurisdiction in the State of New York, and for the
purpose of any such action or proceeding, each of the parties and any assignees
thereof submits to the personal jurisdiction of the State of New York. The
parties hereby irrevocably consents to the exclusive personal jurisdiction of
any state or federal court for New York County in the State of New York or the
Southern District of New York. The parties hereby waive any objection to venue
and any objection based on a more convenient forum in any action instituted
under this Guaranty.
9. Security. To secure payment of Guarantor's obligations under this
Guaranty, concurrently with the execution of this Guaranty, Guarantor has
entered into a Security Agreement pursuant to which Guarantor and Seller have
granted to Purchasers a security interest in the Collateral and Guarantor has
entered into a Pledge Agreement pursuant to which the Guarantor has pledged the
Perfect Commerce Note to Purchasers.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Guaranty as of the date first above written.
COMMERCE ONE, INC.
By /s/Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
COMVEST INVESTMENT PARTNERS II LLC
By:/s/Xxxxxx Blue
-------------------------------
Name: Xxxxxx Blue
Title: President
DCC VENTURES, LLC
By:/s/Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary and Treasurer
