**Exhibit 10.37**

 

March 30, 2005

 

Dr. Richard J.Northing

Intraware, Inc.

25 Orinda Way

Orinda, CA 94563

 

Dear Richard:

 

We aredelighted to promote you to the position of Intraware’s Executive VicePresident and Chief Operating Officer. This letter documents certain aspects of your compensation as EVP/COO, perour recent discussions.

 

1.               BaseSalary.  Your base salary will be$200,000 per annum.

 

2.               EmployeeRetention Bonus.** **In consideration for your decisionto remain at Intraware and accept the position of EVP/COO, Intraware will payyou an employee retention bonus of $10,000 within 30 days after your signatureof this letter.

 

3.               CustomerRetention Bonus.  If, on February 28,2006, Intraware’s total annual contract value for its SubscribeNet customersthat were Intraware SubscribeNet customers on February 28, 2005 (i.e.,excluding customers acquired after February 28, 2005), is at least [*], Intrawarewill pay you a bonus of $10,000, payable within 30 days after Intrawarepublicly releases its earnings for its 2006 fiscal year.

 

4.               TerminationOther Than For Cause.

 

a.               SeveranceTermination.  If your employment withIntraware as Chief Operating Officer terminates as a result of an InvoluntaryTermination (as defined below) other than for Cause (as defined below), then,subject to Section 3(d) below, you will be entitled to the following:

 

i.                  CashPayment.  You shall receive a cashpayment in an amount equal to fifty percent (50%) of your then-current annualbase salary, plus 50% of your annualized commissions (annualized commissionsshall be determined by reference to the commissions earned by you under yoursales commission plan with Intraware for the six months preceding theTermination Date or the period such plan has been in effect, which ever isshorter), plus a pro rata payment of the current fiscal year bonus award basedon your target bonus amount.  Any suchpayment to which you are entitled will be paid by Intraware to you within 30days after the Termination Date (as defined below), subject to withholding ofapplicable income and employment taxes.

 

ii.               OptionAccelerated Vesting.  You shallreceive vesting of all of your outstanding stock options to the extent of theshares that would have become vested and exercisable upon December 31 ofthe year following the year in which the Termination Date falls (but, in noevent, shall any option become vested and exercisable as to more than onehundred percent (100%) of the shares subject to

 

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*      Denotesmaterial has been omitted pursuant to a request for confidential treatmentfiled with the Securities and Exchange Commission (“SEC”).  This material has been filed separately withthe SEC. 

 

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suchoption).  The vested portion of youroptions (including the portion of such options which becomes vested pursuant tothis Section) shall remain exercisable for such period of time as is prescribedin the respective stock option agreements.

 

b.              VoluntaryResignation; Termination For Cause; Disability; Death.  You will not be entitled to receive severanceif your employment terminates by reason of your voluntary resignation (and isnot an Involuntary Termination), or your employment is terminated for Cause, orIntraware terminates your employment as a result of your Disability (as definedbelow), or your employment is terminated due to your death, or by reason of anytermination or other action of Intraware after you have voluntarily changedyour position at Intraware from Chief Operating Officer to a different position.

 

c.               AttorneyFees, Costs and Expenses.  Intrawarewill reimburse you for reasonable attorney fees, costs and expenses incurred byyou in connection with any action brought by you to enforce your rightshereunder, provided such action is not decided in favor of Intraware.

 

d.              Limitationon Payments.

 

i.                  Inthe event that the severance provided for in this Section 3 (i) constitutesa “parachute payment” within the meaning of Section 280G of the InternalRevenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 3(d),would be subject to the excise tax imposed by Section 4999 of the Code,then your severance under Section 3(a) shall be either

 

(A)                              deliveredin full, or

 

(B)                                deliveredas to such lesser extent which would result in no portion of such severancebenefits being subject to excise tax under Section 4999 of the Code,

 

## whichever of theforegoing amounts, taking into account the applicable federal, state and localincome taxes and the excise tax imposed by Section 4999, results in thereceipt by you on an after-tax basis, of the greatest amount of severance,notwithstanding that all or some portion of such severance benefits may betaxable under Section 4999 of the Code. Any taxes due under Section 4999 shall be your responsibility.

##  

ii.               UnlessIntraware and you otherwise agree in writing, any determination required underthis Section 3(d) shall be made in writing by Intraware’s accountants,whose determination shall be conclusive and binding upon the you and Intrawarefor all purposes.  For purposes of makingthe calculations required by this Section 3(d), Intraware’s accountantsmay, after taking into account the information provided by you, make reasonableassumptions and approximations concerning applicable taxes and may rely onreasonable, good faith interpretations concerning the application of Sections280G and 4999 of the

 

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Code.  Intraware and you shall furnish to Intraware’saccountants such information and documents as the accountants may reasonablyrequest in order to make a determination under this Section.  Intraware shall bear all costs the accountantsmay reasonably incur in connection with any calculations contemplated by this Section 3(d)(iii).

 

e.               Definitionof Terms.  The following termsreferred to in this Section 3 shall have the following meanings:

 

i.                  Cause.  “Cause” shall mean (A) any act ofpersonal dishonesty taken by you in connection with your responsibilities as anemployee and intended to result in your substantial personal enrichment, (B) theconviction of a felony, (C) a willful act by you that constitutes grossmisconduct and that is injurious to Intraware, or (D) for a period of notless than thirty (30) days following delivery to you of a written demand forperformance from Intraware that describes the basis for Intraware’s belief thatyou have not substantially performed your duties, continued violations by youof your obligations to Intraware that are demonstrably willful and deliberateon your part.  Any dismissal for cause inaccordance with Subsection (D) of this Section 3(e) must beapproved by Intraware’s Board of Directors prior to the dismissal date.

 

ii.               Disability.  “Disability” shall mean that you have beenunable to perform your Intraware duties as the result of your incapacity due tophysical or mental illness, and such inability, at least twenty-six (26) weeksafter its commencement, is determined to be total and permanent by a physicianselected by Intraware or its insurers and acceptable to you or your legalrepresentative (such agreement as to acceptability not to be unreasonablywithheld).  Termination resulting fromDisability may only be effected after at least thirty (30) days’ written noticeby Intraware of its intention to terminate your employment.  In the event that you resume the performanceof substantially all of your duties hereunder before the termination of youremployment becomes effective, the notice of intent to terminate shallautomatically be deemed to have been revoked.

 

iii.            InvoluntaryTermination.  “Involuntary Termination”shall mean (i) without your express written consent, the significantreduction of your duties, authority or responsibilities, relative to yourduties, authority or responsibilities as in effect immediately prior to suchreduction, or the assignment to you of such reduced duties, authority orresponsibilities; (ii) without your express written consent, a substantialreduction, without good business reasons, of the facilities and perquisites(including office space and location) available to you immediately prior tosuch reduction; (iii) a reduction by Intraware in your base salary ortarget bonus as in effect immediately prior to such reduction; (iv) amaterial reduction by Intraware in the kind or level of employee benefits,including bonuses, to which you were entitled immediately prior to suchreduction with the result that your overall benefits package is significantlyreduced; (v) your relocation to a facility or a location more thantwenty-five (25) miles from your present location, without your express writtenconsent; (vi) any purported termination of your employment by Intrawarethat is not effected for Disability or for Cause, or any purported

 

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terminationfor which the grounds relied upon are not valid; (vii) the failure of Intrawareto obtain the assumption of this Section 3 by any successors contemplatedin Section f(i) below; or (viii) any act or set of facts orcircumstances that would, under California case law or statute, constitute aconstructive termination of your employment.

 

iv.           TerminationDate.  “Termination Date” shall mean (i) ifyour employment is terminated by Intraware for Disability, 30 days after noticeof termination is given to you (provided that you shall not have returned to theperformance of your duties on a full-time basis during such 30-day period), (ii) ifyour employment is terminated by Intraware for any other reason, the date onwhich a notice of termination is given, provided that if within 30 days after Intrawaregives you notice of termination, you notify Intraware that a dispute existsconcerning the termination or severance payments due pursuant to this Section 3,then the Termination Date shall be the date on which such dispute is finallydetermined, either by mutual written agreement of the parties, or a by finaljudgment, order or decree of a court of competent jurisdiction (the time forappeal therefrom having expired and no appeal having been perfected), or (iii) ifyour employment is terminated by you, the date on you deliver the notice oftermination to Intraware.

 

f.                 Successors.

 

i.                  Intraware’sSuccessors.  Subject to Section 3(g) below,any successor to Intraware (whether direct or indirect and whether by purchase,merger, consolidation, liquidation or otherwise) to all or substantially all ofIntraware’s business and/or assets shall assume the obligations under this Section 3and agree expressly to perform the obligations under this Section 3 in thesame manner and to the same extent as Intraware would be required to performsuch obligations in the absence of a succession.  For all purposes under this Section 3,the term “Intraware” shall include any successor to Intraware’s business and/orassets which executes and delivers the assumption agreement described in this Section 3(f)(i) orwhich becomes bound by the terms of this Section 3 by operation of law.

 

ii.               YourSuccessors.  The terms of this Section 3and all your rights hereunder shall inure to the benefit of, and be enforceableby, your personal or legal representatives, executors, administrators,successors, heirs, distributees, devisees and legatees.

 

g.              Changeof Control.  In the event you becomeentitled to benefits under the Change of Control Severance Agreement dated May 5,2004, between you and Intraware, you will not be entitled to benefits underthis Section 3.

 

h.              Notice.

 

i.                  General.  Notices and all other communicationscontemplated by this Section 3 shall be in writing and shall be deemed tohave been duly given when personally delivered or when mailed by U.S.registered or certified mail, return receipt

 

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requestedand postage prepaid.  In your case,mailed notices shall be addressed to you at the home address which you mostrecently communicated to Intraware in writing. In the case of Intraware, mailed notices shall be addressed to itscorporate headquarters, and all notices shall be directed to the attention of itsGeneral Counsel.

 

ii.               Noticeof Termination.  Any termination by Intrawarefor Cause or by you as a result of a voluntary resignation or an InvoluntaryTermination shall be communicated by a notice of termination to the other partyhereto given in accordance with Section 3(h)(i).  Such notice shall indicate the specifictermination provision in this Section 3 relied upon, shall set forth inreasonable detail the facts and circumstances claimed to provide a basis fortermination under the provision so indicated, and shall specify the terminationdate (which shall be not more than 30 days after the giving of suchnotice).  Your failure to include in thenotice any fact or circumstance which contributes to a showing of InvoluntaryTermination shall not waive any right you have hereunder or preclude you fromasserting such fact or circumstance in enforcing your rights hereunder

 

i.                  NoDuty to Mitigate.  You shall not berequired to mitigate the amount of any payment contemplated by this Section 3,nor shall any such payment be reduced by any earnings that you may receive fromany other source.

 

j.                  Waiver.  No provision of this Section 3 shall bemodified, waived or discharged unless the modification, waiver or discharge isagreed to in writing and signed by you and by an authorized officer of Intraware(other than you).  No waiver by eitherparty of any breach of, or of compliance with, any condition or provision of thisSection 3 by the other party shall be considered a waiver of any othercondition or provision or of the same condition or provision at another time.

 

5.               WholeAgreement. This letter represents the entire understanding of the partieshereto with respect to the aspects of your compensation discussed herein, andsupersedes all prior arrangements and understandings regarding same. Noagreements, representations or understandings (whether oral or written andwhether express or implied) which are not expressly set forth in this Section 3have been made or entered into by either party with respect to such aspects ofyour compensation.

 
| Very truly  yours,                               |   |                     |
|--------------------------------------------------|--------|--------------------------|
|                                             |   |                     |
| /s/ PETER H.  JACKSON                            |   |                     |   |
|                                             |   |                     |
| Peter H. Jackson                                 |   |                     |
| Chairman, Chief  Executive Officer and President |   |                     |
|                                             |   |                     |
|                                             |   |                     |
|                                             |   | Accepted and  Agreed:    |
|                                             |   |                     |
|                                             |   | /s/ RICHARD J.  NORTHING |
|                                             |   | Richard J.  Northing     |
|                                                  |        |                          |  |

 

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