**Exhibit 10.3**

** **

**INTRAWARE,INC.**

 

**1996STOCK OPTION PLAN**

 

**STOCKOPTION AGREEMENT**

 

Unless otherwise defined herein, the terms defined inthe Plan shall have the same defined meanings in this Option Agreement.

 

**I.****              NOTICEOF STOCK OPTION GRANT**

 

                    .

 

You have been granted an option to purchase CommonStock of the Company, subject to the terms and conditions of the Plan and thisOption Agreement, as follows:

 

| Grant Number                    |   |                       |
|---------------------------------|--------|----------------------------|
|                            |   |                       |
| Date of Grant                   |   |                       |
|                            |   |                       |
| Vesting Commencement  Date      |   |                       |
|                            |   |                       |
| Exercise Price per  Share       |   | $                          |
|                            |   |                       |
| Total Number of Shares  Granted |   |                       |
|                            |   |                       |
| Total Exercise Price            |   | $                          |
|                            |   |                       |
| Type of Option:                 |   | Incentive Stock Option     |
|                            |   |                       |
|                            |   | Nonstatutory Stock  Option |
| Term/Expiration Date:           |   |                       |

 

Vesting Schedule:

 

This Option may be exercised, in whole or in part, inaccordance with the following schedule:

** **

**1/8th of the Shares subject to theOption shall vest six months after the Vesting Commencement Date, and 1/48 ofthe Shares subject to the Option shall vest each month thereafter, subject tothe Optionee continuing to be an Employee or Consultant on such dates.**

** **

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** **

Termination Period:

 

This Option may beexercised for three months after Optionee ceases to be an Employee orConsultant.  Upon the death or Disabilityof the Optionee, this Option may be exercised for twelve months after Optioneeceases to be an Employee or Consultant. In no event shall this Option be exercised later than theTerm/Expiration Date as provided above.

 

**II.****            AGREEMENT**

 

A.            Grantof Option.  

 

The Plan Administrator ofthe Company hereby grants to the Optionee named in the Notice of Grant attachedas Part I of this Agreement (the “Optionee”) an option (the “Option”) topurchase the number of Shares, as set forth in the Notice of Grant, at theexercise price per share set forth in the Notice of Grant (the “Exercise Price”),subject to the terms and conditions of the Plan, which is incorporated hereinby reference.  Subject to Section 13 ofthe Plan, in the event of a conflict between the terms and conditions of thePlan and the terms and conditions of this Option Agreement, the terms andconditions of the Plan shall prevail.

 

If designated in theNotice of Grant as an Incentive Stock Option (“ISO”), this Option is intendedto qualify as an Incentive Stock Option under Section 422 of theCode.  However, if this Option isintended to be an Incentive Stock Option, to the extent that it exceeds the$100,000 rule of Code Section 422(d) it shall be treated as a NonstatutoryStock Option (“NSO”).

 

B.            Exerciseof Option.

####  

#### (a)           Rightto Exercise.  This Option isexercisable during its term in accordance with the Vesting Schedule set out inthe Notice of Grant and the applicable provisions of the Plan and this OptionAgreement.

####  

#### (b)           Methodof Exercise.  This Option isexercisable by delivery of an exercise notice, in the form attached as ExhibitA (the “Exercise Notice”), which shall state the election to exercise theOption, the number of Shares in respect of which the Option is being exercised(the “Exercised Shares”), and such other representations and agreements as maybe required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be completed by theOptionee and delivered to the Stock Administrator****ofthe Company.  The Exercise Notice shallbe accompanied by payment of the aggregate Exercise Price as to all ExercisedShares.  This Option shall be deemed tobe exercised upon receipt by the Company of such fully executed Exercise Noticeaccompanied by such aggregate Exercise Price.

 

No Shares shall be issuedpursuant to the exercise of this Option unless such issuance and exercisecomplies with Applicable Laws.  Assumingsuch compliance, for income tax purposes the Exercised Shares shall beconsidered transferred to the Optionee on the date the Option is exercised withrespect to such Exercised Shares.

 

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C.            Methodof Payment.

 

Payment of the aggregateExercise Price shall be by any of the following, or a combination thereof, atthe election of the Optionee:

### 1.           cash;or

 

### 2.           check;or

 

### 3.           considerationreceived by the Company under a cashless exercise program implemented by theCompany in connection with the Plan; or

 

### 4.           surrenderof other Shares which (i) in the case of Shares acquired upon exercise of anoption, have been owned by the Optionee for more than six (6) months on the dateof surrender, and (ii) have a Fair Market Value on the date of surrender equalto the aggregate Exercise Price of the Exercised Shares.

 

D.            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 the Plan and thisOption Agreement shall be binding upon the executors, administrators, heirs,successors and assigns of the Optionee.

 

E.             Termof Option.

 

This Option may beexercised only within the term set out in the Notice of Grant, and may beexercised during such term only in accordance with the Plan and the terms ofthis Option Agreement.

 

F.             TaxConsequences.  

 

Some of the federal taxconsequences relating to this Option, as of the date of this Option, are setforth below.  THIS SUMMARY IS NECESSARILYINCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX ADVISERBEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

G.            Exercisingthe Option.

###  

### 1.           NonstatutoryStock Option.  The Optionee may incurregular federal income tax liability upon exercise of a NSO.  The Optionee will be treated as havingreceived compensation income (taxable at ordinary income tax rates) equal tothe excess, if any, of the Fair Market Value of the Exercised Shares on thedate of exercise over their aggregate Exercise Price.  If the Optionee is an Employee or a formerEmployee, the Company will be required to withhold from his or her compensationor collect from Optionee and pay to the applicable taxing authorities an amountin cash equal to a percentage of this compensation income at the time ofexercise, and may refuse to honor the exercise and refuse to deliver Shares ifsuch withholding amounts are not delivered at the time of exercise.

###  

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### 2.           IncentiveStock Option.  If this Optionqualifies as an ISO, the Optionee will have no regular federal income taxliability upon its exercise, although the excess, if any, of the Fair MarketValue of the Exercised Shares on the date of exercise over their aggregateExercise Price will be treated as an adjustment to alternative minimum taxableincome for federal tax purposes and may subject the Optionee to alternativeminimum tax in the year of exercise.  Inthe event that the Optionee ceases to be an Employee but remains a ServiceProvider, any Incentive Stock Option of the Optionee that remains unexercisedshall cease to qualify as an Incentive Stock Option and will be treated for taxpurposes as a Nonstatutory Stock Option on the date three (3) months and one(1) day following such change of status.

###  

### 3.           Dispositionof Shares.

####  

#### (a)           NSO.  If the Optionee holds NSO Shares for at leastone year, any gain realized on disposition of the Shares will be treated aslong-term capital gain for federal income tax purposes.

####  

#### (b)           ISO.  If the Optionee holds ISO Shares for at leastone year after exercise and two years after the grant date, any gain realizedon disposition of the Shares will be treated as long-term capital gain forfederal income tax purposes.  If theOptionee disposes of ISO Shares within one year after exercise or two yearsafter the grant date, any gain realized on such disposition will be treated ascompensation income (taxable at ordinary income rates) to the extent of theexcess, if any, of the lesser of (A) the difference between the Fair MarketValue of the Shares acquired on the date of exercise and the aggregate ExercisePrice, or (B) the difference between the sale price of such Shares and theaggregate Exercise Price.  Any additionalgain will be taxed as capital gain, short-term or long-term depending on theperiod that the ISO Shares were held.

####  

#### (c)           Noticeof Disqualifying Disposition of ISO Shares. If the Optionee sells or otherwise disposes of any of the Sharesacquired pursuant to an ISO on or before the later of (i) two years afterthe grant date, or (ii) one year after the exercise date, the Optioneeshall immediately notify the Company in writing of such disposition.  The Optionee agrees that he or she may besubject to income tax withholding by the Company on the compensation incomerecognized from such early disposition of ISO Shares by payment in cash or outof the current earnings paid to the Optionee.

####  

H.            EntireAgreement; Governing Law.

 

The Plan is incorporatedherein by reference.  The Plan and thisOption Agreement constitute the entire agreement of the parties with respect tothe subject matter hereof and supersede in their entirety all priorundertakings and agreements of the Company and Optionee with respect to thesubject matter hereof, and may not be modified adversely to the Optionee’sinterest except by means of a writing signed by the Company and Optionee.  This agreement is governed by the internalsubstantive laws, but not the choice of law rules, of California.

 

I.              NOGUARANTEE OF CONTINUED SERVICE.

 

OPTIONEE ACKNOWLEDGES ANDAGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF ISEARNED ONLY BY CONTINUING AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THECOMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR 

 

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PURCHASING SHARESHEREUNDER).  OPTIONEE FURTHERACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATEDHEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE ANEXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANTFOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITHOPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP ASAN EMPLOYEE OR CONSULTANT AT ANY TIME, WITH OR WITHOUT CAUSE.

 

By your signature and the signature of the Company’srepresentative below, you and the Company agree that this Option is grantedunder and governed by the terms and conditions of the Plan and this OptionAgreement.  Optionee has reviewed thePlan and this Option Agreement in their entirety, has had an opportunity toobtain the advice of counsel prior to executing this Option Agreement and fullyunderstands all provisions of the Plan and Option Agreement.  Optionee hereby agrees to accept as binding,conclusive and final all decisions or interpretations of the Administrator uponany questions relating to the Plan and Option Agreement.  Optionee further agrees to notify the Companyupon any change in the residence address indicated below.

 

 
| OPTIONEE:         |   | INTRAWARE, INC. |
|-------------------|--------|-----------------|
|              |   |            |
|              |   |            |
| Signature         |   | By              |
|              |   |            |
|              |   |            |
| Print Name        |   | Name            |
|              |   |            |
|              |   |            |
| Residence Address |   | Title           |
|              |   |            |
|              |   |            |

 

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**CONSENTOF SPOUSE**

 

 

The undersigned spouse of Optionee has read and herebyapproves the terms and conditions of the Plan and this Option Agreement (Grant#         ).  In consideration of the Company’s grantinghis or her spouse the right to purchase Shares as set forth in the Plan andthis Option Agreement, the undersigned hereby agrees to be irrevocably bound bythe terms and conditions of the Plan and this Option Agreement and furtheragrees that any community property interest shall be similarly bound.  The undersigned hereby appoints the undersigned’sspouse as attorney-in-fact for the undersigned with respect to any amendment orexercise of rights under the Plan or this Option Agreement.

 
|   |               |   |
|--------|--------------------|--------|
|   |               |   |
|   | Spouse of Optionee |   |

 

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**EXHIBITA**

 

**INTRAWARE,INC.**

 

**1996STOCK OPTION PLAN**

 

**EXERCISENOTICE**

 

Intraware, Inc.

25 Orinda Way

Orinda, California 94563

 

Attention:  Stock Administrator

 

 

1.             Exerciseof Option.  Effective as of today,                     ,       , the undersigned (“Purchaser”)hereby elects to purchase                     shares (the “Shares”) of the Common Stock of Intraware, Inc. (the “Company”)under and pursuant to the 1996 Stock Option Plan (the “Plan”) and the StockOption Agreement dated,         (the“Option Agreement”).  The purchase pricefor the Shares shall be $        , asrequired by the Option Agreement.

 

2.             Deliveryof Payment.  Purchaser herewithdelivers to the Company the full purchase price for the Shares.

 

3.             Representationsof Purchaser.  Purchaser acknowledgesthat Purchaser has received, read and understood the Plan and the OptionAgreement and agrees to abide by and be bound by their terms and conditions.

 

4.             Rightsas Shareholder.  Until the issuance(as evidenced by the appropriate entry on the books of the Company or of a dulyauthorized transfer agent of the Company) of the Shares, no right to vote orreceive dividends or any other rights as a shareholder shall exist with respectto the Optioned Stock, notwithstanding the exercise of the Option.  The Shares so acquired shall be issued to theOptionee as soon as practicable after exercise of the Option.  No adjustment will be made for a dividend orother right for which the record date is prior to the date of issuance, exceptas provided in Section 11 of the Plan.

 

5.             TaxConsultation.  Purchaser understandsthat Purchaser may suffer adverse tax consequences as a result of Purchaser’spurchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any taxconsultants Purchaser deems advisable in connection with the purchase or dispositionof the Shares and that Purchaser is not relying on the Company for any taxadvice.

 

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6.             EntireAgreement; Governing Law.  The Planand Option Agreement are incorporated herein by reference.  This Agreement, the Plan and the OptionAgreement constitute the entire agreement of the parties with respect to thesubject matter hereof and supersede in their entirety all prior undertakingsand agreements of the Company and Purchaser with respect to the subject matterhereof, and may not be modified adversely to the Purchaser’s interest except bymeans of a writing signed by the Company and Purchaser.  This agreement is governed by the internalsubstantive laws, but not the choice of law rules, of California.

 
| Submitted by: |   | Accepted by:              |
|---------------|--------|---------------------------|
|          |   |                      |
| PURCHASER:    |   | INTRAWARE, INC.           |
|          |   |                      |
|          |   |                      |
| Signature     |   | By                        |
|          |   |                      |
|          |   | Stock Administrator       |
| Print Name    |   | Its                       |
|          |   |                      |
| Address:      |   | Address:                  |
|          |   |                      |
|          |   | Intraware, Inc.           |
|          |   | 25 Orinda Way             |
|          |   | Orinda, California  94563 |
|          |   |                      |
|          |   |                      |
|          |   |                      |
|          |   | Date Received             |

 

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