**Exhibit 10.4**

 

**INTRAWARE, INC.**

 

**DIRECTOR OPTION AGREEMENT**

 

 

Intraware, Inc., (the “Company”), has granted to                                                  (the “Optionee”), an option to purchase a total of fifteen thousand (15,000)shares of the Company’s Common Stock (the “Optioned Stock”), at the pricedetermined as provided herein, and in all respects subject to the terms,definitions and provisions of the Company’s 1998 Director Option Plan (the “Plan”)adopted by the Company which is incorporated herein by reference.  The terms defined in the Plan shall have thesame defined meanings herein.

 

1.             Natureof the Option.  This Option is anonstatutory option and is not intended to qualify for any special tax benefitsto the Optionee.

 

2.             ExercisePrice.  The exercise price is$          for each share ofCommon Stock.

 

3.             Exerciseof Option.  This Option shall beexercisable during its term in accordance with the provisions of Section 8of the Plan as follows:

 

(a)           Rightto Exercise.

 

(i)            ThisOption shall become exercisable in installments cumulatively with respect toone eighth (1/8) of the Optioned Stock six months after the date of grant, andas to an additional one forty-eighth (1/48) of the Optioned Stock at the end ofeach month thereafter, so that one hundred percent (100%) of the Optioned Stockshall be exercisable four (4) years after the date of grant.

 

(ii)           ThisOption may not be exercised for a fraction of a share.

 

(iii)          Inthe event of Optionee’s death, disability or other termination of service as aDirector, the exercisability of the Option is governed by Section 8 of thePlan.

 

(b)           Methodof Exercise.  This Option shall beexercisable by written notice which shall state the election to exercise theOption and the number of Shares in respect of which the Option is beingexercised.  Such written notice, in theform attached hereto as Exhibit A, shall be signed by the Optionee andshall be delivered in person or by certified mail to the Secretary of theCompany.  The written notice shall be accompaniedby payment of the exercise price.

 

4.             Methodof Payment.  Payment of the exerciseprice shall be by any of the following, or a combination thereof, at theelection of the Optionee:

 

(a)           cash;

 

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(b)           check;or

 

(c)           surrenderof other shares which (x) in the case of Shares acquired upon exercise ofan Option, have been owned by the Optionee for more than six (6) months on thedate of surrender, and (y) have a Fair Market Value on the date ofsurrender equal to the aggregate exercise price of the Shares as to which saidOption shall be exercised; or

 

(d)           deliveryof a properly executed exercise notice together with such other documentationas the Company and the broker, if applicable, shall require to effect anexercise of the Option and delivery to the Company of the sale or loan proceedsrequired to pay the exercise price.

 

5.             Restrictionson Exercise.  This Option may not beexercised if the issuance of such Shares upon such exercise or the method ofpayment of consideration for such shares would constitute a violation of anyapplicable federal or state securities or other law or regulations, or if suchissuance would not comply with the requirements of any stock exchange uponwhich the Shares may then be listed.  Asa condition to the exercise of this Option, the Company may require Optionee tomake any representation and warranty to the Company as may be required by anyapplicable law or regulation.

 

6.             Non-Transferabilityof Option.  This Option may not betransferred in any manner otherwise than by will or by the laws of descent ordistribution and may be exercised during the lifetime of Optionee only by theOptionee.  The terms of this Option shallbe binding upon the executors, administrators, heirs, successors and assigns ofthe Optionee.

 

7.             Termof Option.  This Option may not beexercised more than ten (10) years from the date of grant of this Option, andmay be exercised during such period only in accordance with the Plan and theterms of this Option.

 

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8.             TaxationUpon Exercise of Option.  Optioneeunderstands that, upon exercise of this Option, he or she will recognize incomefor tax purposes in an amount equal to the excess of the then Fair Market Valueof the Shares purchased over the exercise price paid for such Shares.  Since the Optionee is subject to Section16(b) of the Securities Exchange Act of 1934, as amended, under certain limitedcircumstances the measurement and timing of such income (and the commencementof any capital gain holding period) may be deferred, and the Optionee isadvised to contact a tax advisor concerning the application of Section 83 ingeneral and the availability a Section 83(b) election in particular inconnection with the exercise of the Option. Upon a resale of such Shares by the Optionee, any difference between thesale price and the Fair Market Value of the Shares on the date of exercise ofthe Option, to the extent not included in income as described above, will betreated as capital gain or loss.

 

INTRAWARE GRANT NO.:

 

DATE OF GRANT: 

 
|   | INTRAWARE, INC.,       |
|--------|------------------------|
|   | a Delaware corporation |
|   |                   |
|   |                   |
|   | By:                    |   |

 

 

Optioneeacknowledges receipt of a copy of the Plan, a copy of which is attached hereto,and represents that he or she is familiar with the terms and provisionsthereof, and hereby accepts this Option subject to all of the terms andprovisions thereof.  Optionee herebyagrees to accept as binding, conclusive and final all decisions orinterpretations of the Board upon any questions arising under the Plan.

 

 

|   | Dated: |   |     |   |   |
|--------|--------|--------|----------|--------|--------|
|   |   |   |     |   |
|   |   |   | Optionee |   |

 

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**EXHIBIT A**

 

**DIRECTOROPTION EXERCISE NOTICE**

 

 

INTRAWARE, INC.

25 Orinda Way

Orinda, CA  94563

 

Attention:  Corporate Secretary

 

 

1.             Exerciseof Option.  The undersigned (“Optionee”)hereby elects to exercise Optionee’s option to purchase           shares of the Common Stock (the “Shares”) of Intraware, Inc. (the “Company”)under and pursuant to the Company’s 1998 Director Option Plan and the DirectorOption Agreement dated                         (the “Agreement”).

 

2.             Representationsof Optionee.  Optionee acknowledgesthat Optionee has received, read and understood the Agreement.

 

3.             FederalRestrictions on Transfer.  Optioneeunderstands that the Shares must be held indefinitely unless they areregistered under the Securities Act of 1933, as amended (the “1933 Act”), orunless an exemption from such registration is available, and that thecertificate(s) representing the Shares may bear a legend to that effect.  Optionee understands that the Company isunder no obligation to register the Shares and that an exemption may not beavailable or may not permit Optionee to transfer Shares in the amounts or atthe times proposed by Optionee.

 

4.             TaxConsequences.  Optionee understandsthat Optionee may suffer adverse tax consequences as a result of Optionee’spurchase or disposition of the Shares. Optionee represents that Optionee has consulted with any taxconsultant(s) Optionee deems advisable in connection with the purchase ordisposition of the Shares and that Optionee is not relying on the Company forany tax advice.

 

5.             Deliveryof Payment.  Optionee herewithdelivers to the Company the aggregate purchase price for the Shares thatOptionee has elected to purchase and has made provision for the payment of anyfederal or state withholding taxes required to be paid or withheld by theCompany.

 

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6.             EntireAgreement.  The Agreement isincorporated herein by reference.  ThisExercise Notice and the Agreement constitute the entire agreement of theparties and supersede in their entirety all prior undertakings and agreementsof the Company and Optionee with respect to the subject matter hereof.  This Exercise Notice and the Agreement aregoverned by California law except for that body of law pertaining to conflictof laws.

 
| Submitted by: |   | Accepted by:    |
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| OPTIONEE:     |   | INTRAWARE, INC. |
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| Printed Name: |   |            | Its: |   |
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| Address:      |   |            | Dated: |   |
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