**Exhibit 10.5**

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**INTRAWARE, INC.**

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**DIRECTOROPTION AGREEMENT**

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Intraware, Inc.,(the “Company”), has granted to                                                  (the “Optionee”), an option to purchase a total of seven thousand five hundred(7,500) shares of the Company’s Common Stock (the “Optioned Stock”), at theprice determined 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.             Nature of the Option.  This Option is a nonstatutory option and isnot intended to qualify for any special tax benefits to the Optionee.

 

2.             Exercise Price.  The exercise price is $          for each share of Common Stock.

 

3.             Exercise of Option.  This Option shall be exercisable during itsterm in accordance with the provisions of Section 8 of the Plan asfollows:

 

(a)           Right to Exercise.

 

(i)            This Option shall become exercisablein installments cumulatively with respect to one fourth (1/4) of the OptionedStock six months after the date of grant, and as to an additional onetwenty-fourth (1/24) of the Optioned Stock at the end of each month thereafter,so that one hundred percent (100%) of the Optioned Stock shall be exercisablefour (4) years after the date of grant.

 

(ii)           This Option may not be exercised fora fraction of a share.

 

(iii)          In the event of Optionee’s death,disability or other termination of service as a Director, the exercisability ofthe Option is governed by Section 8 of the Plan.

 

(b)           Method of Exercise.  This Option shall be exercisable by writtennotice which shall state the election to exercise the Option and the number ofShares in respect of which the Option is being exercised.  Such written notice, in the form attachedhereto as Exhibit A, shall be signed by the Optionee and shall bedelivered in person or by certified mail to the Secretary of the Company.  The written notice shall be accompanied bypayment of the exercise price.

 

4.             Method of Payment.  Payment of the exercise price shall be by anyof the following, or a combination thereof, at the election of the Optionee:

 

(a)           cash;

 

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(b)           check; or

 

(c)           surrender of other shares which(x) in the case of Shares acquired upon exercise of an Option, have beenowned by the Optionee for more than six (6) months on the date of surrender,and (y) have a Fair Market Value on the date of surrender equal to theaggregate exercise price of the Shares as to which said Option shall beexercised; or

 

(d)           delivery of a properly executedexercise notice together with such other documentation as the Company and thebroker, if applicable, shall require to effect an exercise of the Option and deliveryto the Company of the sale or loan proceeds required to pay the exercise price.

 

5.             Restrictions on Exercise.  This Option may not be exercised if theissuance of such Shares upon such exercise or the method of payment ofconsideration for such shares would constitute a violation of any applicablefederal or state securities or other law or regulations, or if such issuancewould not comply with the requirements of any stock exchange upon which theShares may then be listed.  As acondition 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-Transferability of Option.  This Option may not be transferred in anymanner otherwise than by will or by the laws of descent or distribution and maybe exercised during the lifetime of Optionee only by the Optionee.  The terms of this Option shall be bindingupon the executors, administrators, heirs, successors and assigns of the Optionee.

 

7.             Term of Option.  This Option may not be exercised more thanten (10) years from the date of grant of this Option, and may be exercisedduring such period only in accordance with the Plan and the terms of thisOption.

 

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8.             Taxation Upon Exercise of Option.  Optionee understands that, upon exercise ofthis Option, he or she will recognize income for tax purposes in an amountequal to the excess of the then Fair Market Value of the Shares purchased overthe exercise price paid for such Shares. Since the Optionee is subject to Section 16(b) of the SecuritiesExchange Act of 1934, as amended, under certain limited circumstances themeasurement and timing of such income (and the commencement of any capital gainholding period) may be deferred, and the Optionee is advised to contact a taxadvisor concerning the application of Section 83 in general and theavailability a Section 83(b) election in particular in connection with theexercise of the Option.  Upon a resale ofsuch Shares by the Optionee, any difference between the sale price and the FairMarket Value of the Shares on the date of exercise of the Option, to the extentnot included in income as described above, will be treated as capital gain orloss.

 

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.             Exercise of Option.  The undersigned (“Optionee”) hereby elects toexercise 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.             Representations of Optionee.  Optionee acknowledges that Optionee hasreceived, read and understood the Agreement.

 

3.             Federal Restrictions on Transfer.  Optionee understands that the Shares must beheld indefinitely unless they are registered under the Securities Act of 1933,as amended (the “1933 Act”), or unless an exemption from such registration isavailable, and that the certificate(s) representing the Shares may bear alegend to that effect.  Optioneeunderstands that the Company is under no obligation to register the Shares andthat an exemption may not be available or may not permit Optionee to transferShares in the amounts or at the times proposed by Optionee.

 

4.             Tax Consequences.  Optionee understands that Optionee may sufferadverse tax consequences as a result of Optionee’s purchase or disposition ofthe Shares.  Optionee represents thatOptionee has consulted with any tax consultant(s) Optionee deems advisable inconnection with the purchase or disposition of the Shares and that Optionee isnot relying on the Company for any tax advice.

 

5.             Delivery of Payment.  Optionee herewith delivers to the Company theaggregate purchase price for the Shares that Optionee has elected to purchaseand has made provision for the payment of any federal or state withholdingtaxes required to be paid or withheld by the Company.

 

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6.             Entire Agreement.  The Agreement is incorporated herein byreference.  This Exercise Notice and theAgreement constitute the entire agreement of the parties and supersede in theirentirety all prior undertakings and agreements of the Company and Optionee withrespect to the subject matter hereof. This Exercise Notice and the Agreement are governed by California lawexcept for that body of law pertaining to conflict of laws.

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