**Exhibit 10.1**

 

Note:   The **** symbol indicates that material hasbeen omitted pursuant to a request for confidential treatment.  A copy of this document without omissions hasbeen filed separately with the Securities and Exchange Commission.

 

## **ASSET PURCHASE AGREEMENT**

 

This AssetPurchase Agreement (the “Agreement”) is made and entered into as of October 28,2005 by and between Intraware, Inc., a Delaware corporation having itsprincipal place of business at 25 Orinda Way, Orinda, CA 94563 (“Intraware”)and FusionStorm (“FusionStorm”), a Delaware corporation having itsprincipal place of business at 620 Old West Center Street, Franklin, MA 02038.

 

**RECITALS**

 

WHEREAS,

 

A.            Intraware is in the business ofassisting Software Spectrum, Inc., the successor-in-interest to CorpSoft, Inc.,(“Spectrum”) as an alliancepartner in reselling certain Sun Microsystems, Inc. software products, andIntraware is also in the business of providing hosted electronic software andlicense delivery and management services;

 

B.           FusionStorm is in the businessof providing technology solutions, including but not limited to third-partysoftware products, to enterprises; and

 

C.           FusionStorm wishes to purchaseand acquire from Intraware information that Intraware has developed about purchasersand prospective purchasers of such Sun software products, and Intraware wishesto sell and transfer such customer information to FusionStorm, subject to theconditions herein.

 

**AG R E E M E N T**

 

NOW, THEREFORE, in consideration of theforegoing and the mutual covenants and agreements contained herein, the partiesagree as follows:

 

ARTICLE I

DEFINITIONS

 

As used herein, the following terms shallhave the following meanings:

 

1.1           “Closing Date” shall mean sixty-six (66)days after the Effective Date or such other date that the parties may agreeupon in writing.

 

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1.2           “Damages” shall mean any claim, demand,loss, liability, damage or expense including, without limitation, interest,penalties, and reasonable attorneys’, accountants’ and experts’ fees and costsof investigation incurred as a result thereof.

 

1.3           “Effective Date” shall mean the date ofexecution of this Agreement.

 

1.4           “Employee Trigger Date” will have themeaning given to it in Section 7.2.

 

1.5           “Gross Profit” shall mean, with respect to aperiod, the cumulative aggregate of all amounts paid or payable to FusionStormor any of its affiliates for sales of, licenses or other rights to use oraccess Sun Software, less fees paid by FusionStorm to Sun or Sun’s distributorfor such Sun Software and excluding any sales taxes collected by FusionStormwith respect to those sales.  GrossProfit shall not be reduced by the amount of any bad or uncollected debt,warranty expense or charge or other payments, fees, taxes (other than salestaxes), expenses, costs, penalties, liabilities or charges and shall not beincreased by any rebates.  It is theparties’ intent that Gross Profit be determined in a manner consistent the trueamount charged and paid by FusionStorm and its affiliates for the Sun Software.  In furtherance but not in limitation of theforegoing, Gross Profit shall be increased to the extent that FusionStorm orits affiliates charge a reduced amount for the Sun Software in return forcharging an increased amount for another product or service offered by FusionStorm or its affiliates, as well as to the extent that FusionStorm or itsaffiliates pays an increased amount to Sun or its distributors for the SunSoftware in return for a discount on other products or services offered by Sunor its distributors.

 

1.6           “Key Employees” shall have the meaning setforth in Section 7.2.

 

1.7           “Purchased Assets” shall mean the SunCustomer List.

 

1.8           “Sales Services Employees” shall mean theindividuals identified on **Schedule 1.8**hereto.

 

1.9           “Serious Payment Default” shall have themeaning set forth in Section 7.4.

 

1.10         “Services Agreement” shall mean the Services Agreement for Intraware’s provisionof the SubscribeNet service to FusionStorm, which the parties are executingcontemporaneously with the execution of this Agreement.

 

1.11         “SpectrumAlliance Agreement” will mean the Alliance Agreement dated as of August 1,2005, and any related confidentiality agreement, between Intraware andSpectrum.

 

1.12         “Sun” shall mean Sun Microsystems, Inc.and any successor.

 

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1.13         “Sun Customer List” shall mean the list of Sun Software customers andprospective customers developed by Intraware as of the Closing, as furtherdescribed in Section 4.5 below.

 

1.14         “Sun Software” shall mean only the Sunsoftware products currently marketed under the brands SunOne, Sun JavaEnterprise Suite, Sun Studio, Sun Development Tools, Sun Star Office andTarantella, including successor products, as they may be re-branded by Sun fromtime to time, and licenses, maintenance and support services for such softwareproducts.

 

ARTICLE II

SALE AND PURCHASE

 

2.1           Sale and Purchase.  Effective as of the Closing Date and subjectto the terms and conditions contained herein, Intraware hereby sells,transfers, assigns, conveys and delivers to FusionStorm, and FusionStorm herebypurchases and accepts from Intraware, all right, title and interest in and tothe Purchased Assets.

 

2.2           Purchase Price.  The purchase price of the Purchased Assets tobe sold to FusionStorm as provided herein shall be:

 

(a)           $400,000, which shall be paid by FusionStorm toIntraware on the Closing Date; and

 

(b)           $200,000, which shall be paid by FusionStorm withinthirteen (13) months after the Closing Date, if Gross Profit exceeds $****during the twelve (12) months beginning on the Closing Date and ending twelve (12)months after the Closing Date.

 

2.3           Method of Payment.  Payments under Section 2.2 aboveshall be made by wire transfer of funds to Intraware’s account.  Instructions for wire transfer of funds toIntraware’s account are set forth in Schedule 2.3 hereto.

 

2.4           Transfer Taxes.  FusionStorm shall be liable for, and shallpay when due, all sales, use, excise, VAT, registration, stamp or other taxes (“TransferTaxes”), if any, incurred in connection with the sale, purchase or transferof the Purchased Assets.

 

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****            Indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  A copy of this documentwithout omissions has been filed separately with the Securities and ExchangeCommission.

 

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ARTICLE III

CLOSING;DELIVERIES

 

3.1           Closing. The closing of this transaction (the “Closing”) shall be held onthe Closing Date at or about 2:00 P.M. at Intraware’s offices at 25 OrindaWay, Orinda, CA 94563 or at such other time and place as the parties may agree.

 

3.2           Conditions to FusionStorm’s Obligations.  FusionStorm’s obligation hereunder topurchase and pay for the Purchased Assets is subject to the satisfaction, on orbefore the Closing Date, of the following conditions, any of which may bewaived, in whole or in part, by FusionStorm in its sole discretion, and bothparties shall use commercially reasonable efforts to cause such conditions tobe fulfilled:

 

(a)           Transferred Employees.  At least five (5) Key Employees who haveaccepted offers of employment from FusionStorm on or before the third (3rd)business day after the Effective Date, in accordance with Section 7.2,have not withdrawn such acceptances.

 

(b)           Representations, Warranties and Covenants.  The representations and warranties ofIntraware contained in this Agreement shall be true and correct in all materialrespects when made and on and as of the Closing Date. Intraware shall have inall material respects duly and properly performed, complied with and observedeach of its covenants, agreements and obligations contained in this Agreementto be performed, complied with and observed on or before the Closing Date.FusionStorm shall have received a certificate to the effect that this conditionhas been satisfied, signed by a duly authorized officer of Intraware.

 

(c)           Sale Permitted by Applicable Laws. The saleand transfer of the Purchased Assets by Intraware hereunder shall not beprohibited by any applicable law or governmental regulation and shall notsubject FusionStorm to any material penalty, liability or other onerouscondition under or pursuant to any applicable law or governmental regulation.

 

(d)           No Adverse Decision.  There shall be no action, suit, investigationor proceeding pending or, to the knowledge of Intraware, threatened by orbefore any court, arbitrator or administrative or governmental body which seeksto restrain, enjoin, prevent the consummation of or otherwise affect the transactionscontemplated by this Agreement or questions the validity or legality of anysuch transactions or seeks to recover damages or to obtain other relief inconnection with any such transactions.

 

3.3           Conditions to Intraware’s Obligations.  The obligation of Intraware to consummate thetransactions contemplated hereby is subject to the fulfillment of the following

 

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conditions onor prior to the Closing Date, any of which may be waived, in whole or in part,by Intraware in its sole discretion, and both parties shall use theirreasonable best efforts to cause such conditions to be fulfilled:

 

(a)           Representations and Warranties Correct;Performance. The representations and warranties of FusionStorm contained inthis Agreement shall be true and correct in all material respects when made andon and as of the Closing Date. FusionStorm shall have in all material respects duly and properlyperformed, complied with and observed each of its covenants, agreements andobligations contained in this Agreement to be performed, complied with andobserved on or before the Closing Date. Intraware shall have received a certificate to the effect that thiscondition has been satisfied, signed by a duly authorized officer of FusionStorm.

 

(b)           Purchase Permitted by Applicable Laws. Thepurchase of and payment for the Purchased Assets to be purchased by FusionStormhereunder shall not be prohibited by any applicable law or governmentalregulation and shall not subject Intraware to any material penalty, liabilityor other onerous condition under or pursuant to any applicable law orgovernmental regulation.

 

(c)           No Adverse Decision.  There shall be no action, suit, investigationor proceeding pending or, to the knowledge of Fusionstorm, threatened by orbefore any court, arbitrator or administrative or governmental body which seeksto restrain, enjoin, prevent the consummation of or otherwise affect thetransactions contemplated by this Agreement or questions the validity or legalityof any such transactions or seeks to recover damages or to obtain other reliefin connection with any such transactions.

 

3.4           Deliverables.  At the Closing, Intraware shall deliver orcause to be delivered to FusionStorm the Sun Customer List and such otherdocuments and instruments of transfer as may be necessary or appropriate toconvey title to the Purchased Assets to FusionStorm.  At the Closing, FusionStorm shall deliver toIntraware the Purchase Price provided for in Section 2.2(a) above,in accordance with Section 2.3 above, and such other documents andinstruments of transfer as may be necessary or appropriate to consummate thetransactions contemplated hereby.

 

ARTICLE IV

INTRAWARE’SREPRESENTATION AND WARRANTIES

 

Except as set forth in the DisclosureSchedules attached hereto as Exhibit A, Intraware hereby representsand warrants that as of the Effective Date and at Closing:

 

4.1           Organization and Good Standing.   Intraware is a corporation duly organized,validly existing and in good standing under the laws of its jurisdiction ofincorporation and has all corporate powers and all material governmentallicenses, authorizations, consents and approvals to carry on its business asnow conducted.

 

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4.2           Corporate Authority.  Intraware has full authority to execute,deliver and perform this Agreement in accordance with its terms.  The execution and delivery of this Agreementand the consummation of the transactions contemplated hereby does not and willnot result in a breach, violation or default or give rise to an event whichwith the giving of notice or after the passage of time, would result in abreach, violation or default of any of the terms or provisions of Intraware’sCertificate of Incorporation, as amended, or by-laws or of any indenture,agreement, judgment, decree or other instrument or restriction to whichIntraware is a party or by which Intraware or any of the Purchased Assets maybe bound or affected, except where the breach, violation or default will nothave a material adverse effect on FusionStorm’s use and enjoyment of thePurchased Assets.  The execution anddelivery of this Agreement and the consummation of the transactionscontemplated hereby have been duly authorized by all requisite corporate actionon the part of Intraware and no further authorization or approval, whether ofthe stockholders or directors of Intraware or governmental bodies or otherwise,is necessary in order to enable Intraware to enter into and perform the same.

 

4.3           Rights to Purchased Assets.  None of the Purchased Assets or the usethereof: (i) is subject to any easements, restrictions, mortgages, liens,pledges, charges, encumbrances, encroachments or rights of others, (ii) violatesany confidentiality or trade secret rights of a third party, including but notlimited to Spectrum, or otherwise encroaches or infringes on the property orrights of Spectrum or any other person in any material respect or that wouldmaterially adversely affect FusionStorm’s use of the Purchased Assets ascontemplated hereunder, or (iii) contravenes any applicable law orordinance or any administrative regulation or violates any restrictivecovenant, the enforcement of which would result in any liability to the ownerof all or any part of the Purchased Assets or would in any respect interferewith or prevent the present and continued use of all of the Purchased Assetsfor the purposes for which they are now being used or would affect the valuethereof.  There are no agreements orarrangements between Intraware and Spectrum or any other third person whichhave any material effect upon Intraware’s rights respecting the PurchasedAssets.  This representations andwarranties in this Section 4.3 shall not be limited by the disclosures inthe attached Disclosure Schedules, notwithstanding the preamble to this Article IV.

 

4.4           Compliance With Law.  Intraware is not in violation of any laws,governmental orders, rules or regulations, whether federal, state orlocal, to which the Purchased Assets are subject that would materiallyadversely affect FusionStorm’s use of the Purchased Assets as contemplatedhereunder.

 

4.5           Customers. The Sun Customer List is a true and complete list of (i) allcustomers that have purchased Sun Software from Intraware, (ii) to thebest of Intraware’s knowledge and belief, all customers that have purchased SunSoftware from Spectrum since July 1, 2001, and (iii) all prospectivecustomers on Intraware’s prospect list for sales of Sun Software; provided,however, such Sun Customer List excludes (x) customers of whom Intrawarefirst became aware as existing or prospective Sun Software customers as aresult of information provided by

 

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Spectrum and(y) prospective customers that Intraware added to its prospect list as a resultof information provided by Spectrum.  Asof the Effective Date, the Sun Customer List consists of **** customers thathave purchased Sun Software since July 1, 2001, and **** prospectivecustomers that have been added to the Sun Customer List since July 1, 2001.  To the best of Intraware’s knowledge andbelief, based on information provided by Spectrum to Intraware, customerpurchases of Sun Software from Spectrum during Intraware’s most recent fiscalyear, ended February 28, 2005, and its two most recent fiscal quarters,ended May 31 and August 31, 2005, totaled approximately $**** ingross sales and $**** in gross margin.

 

4.6           Litigation. There is no litigation currently pending or to Intraware’s knowledge threatenedthat does or might affect Intraware’s interest in the Purchased Assets or itsability to convey to FusionStorm the Purchased Assets.

 

4.7           No Untrue or Inaccurate Representation orWarranty.  To the best of Intraware’sknowledge, no representation or warranty by Intraware, nor any statement, schedule orexhibit furnished or to be furnished to FusionStorm under this Agreement,contains or will contain any untrue statement of material fact, or omits orwill omit to state a material fact necessary to make the statements in it notmisleading.

 

4.8           No Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV,INTRAWARE HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. WITHOUT LIMITING THE FOREGOING, INTRAWARE DOES NOT WARRANT OR REPRESENTTHAT CUSTOMERS OR PROSPECTIVE CUSTOMERS IDENTIFIED ON THE SUN CUSTOMER LISTWILL PURCHASE ANY PARTICULAR AMOUNT OF SUN SOFTWARE FROM FUSIONSTORM OR FROMANY OTHER COMPANY IN THE FUTURE.

 

ARTICLE V

REPRESENTATIONSAND WARRANTIES OF FUSIONSTORM

 

FusionStorm hereby represents and warrants toIntraware as follows as of the Effective Date and at Closing:

 

5.1           Organization and Good Standing.  FusionStorm is a corporation duly organized,validly existing and in good standing under the laws of the State of Delaware.

 

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****                    Indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  A copy of this document withoutomissions has been filed separately with the Securities and ExchangeCommission.

 

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5.2           CorporateAuthority. FusionStorm has full authority to execute and to perform thisAgreement in accordance with its terms. The execution and delivery of this Agreement and the consummation of thetransactions contemplated hereby does not and will not result in a breach,violation or default or give rise to an event which, with the giving of noticeor after the passage of time, would result in a breach, violation or default ofany of the terms or provisions of FusionStorm’s Certificate of Incorporation,as amended, or by-laws or of any indenture, agreement, judgment, decree orother instrument or restriction to which FusionStorm is a party or by whichFusionStorm may be bound or affected. The execution and delivery of this Agreement and consummation of thetransactions contemplated hereby have been duly authorized by all requisitecorporate action on the part of FusionStorm and no further authorization orapproval, whether of the stockholders or directors of FusionStorm orgovernmental bodies or otherwise, is necessary in order to enable FusionStormto enter into and perform the same.

 

5.3           NoUntrue or Inaccurate Representation or Warranty.  To the best of FusionStorm’s knowledge, norepresentation or warranty by FusionStorm, nor any statement, schedule orexhibit furnished or to be furnished to Intraware under this Agreement,contains or will contain any untrue statement of material fact, or omits orwill omit to state a material fact necessary to make the statements in it notmisleading.

 

ARTICLE VI

COVENANTS

 

7.1           Operation of Business.  Except as otherwise contemplated by thisAgreement, from the Effective Date hereof to the Closing Date, Intraware shallnot do any of the following with respect to the Purchased Assets without theprior written consent of FusionStorm:

 

(a)           mortgage, pledge or subject to any lien, charge,security interest or encumbrance any of the Purchased Assets;

 

(b)           sell, assign, transfer, convey or otherwise disposeor agree to sell any of the Purchased Assets; or

 

(c)           grant any rights or licenses with respect to thePurchased Assets.

 

7.2           Employees. Immediately on the Effective Date Intraware shall allow FusionStormreasonable access to the Sales Services Employees to enable FusionStorm toevaluate such employees for potential hiring by FusionStorm.  Within one (1) business day after EffectiveDate, FusionStorm shall present written offers of employment to the SalesServices Employees selected by FusionStorm (the “Key Employees”).  If at least five (5) of such KeyEmployees (or such lesser number of Key Employees as there may be) have not haveaccepted offers of employment from FusionStorm by the third (3rd)business day after the Effective Date, FusionStorm may

 

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terminate thisAgreement by delivering written notice of termination to Intraware no laterthan such third (3rd) business day after the Effective Date.  The above-mentioned employment offers shallprovide that any employment of the respective Key Employee with FusionStormshall not commence until on or after the Closing Date, except as may otherwiseby agreed in writing by Intraware and FusionStorm.  FusionStorm will have the right to make thoseoffers conditioned on the Closing of this Agreement.  In addition, such employment offers shallinclude retention bonuses that total no less that $100,000 in theaggregate.  To each Key Employee who acceptssuch an employment offer from FusionStorm, FusionStorm shall pay the respectivebonus(es) within one (1) year of the commencement of such Key Employee’semployment with FusionStorm, unless such Key Employee voluntarily resigns fromFusionStorm or is terminated by FusionStorm for good cause prior to the bonuspayment date agreed upon between FusionStorm and such Key Employee.  If FusionStorm terminates a Key Employeebecause FusionStorm is enjoined by a court from reselling Sun Software based ona claim related to this Agreement, then any such bonus payment made byFusionStorm upon such termination shall be considered Damages of FusionStormfor purposes of Intraware’s indemnification obligations under Article IXbelow.   Within thirteen (13) monthsafter the Closing Date, FusionStorm shall deliver a report to Intrawaredetailing all such retention bonuses paid by FusionStorm to Key Employeesduring the first twelve (12) months after the Closing Date.

 

7.3           Non-Competition.  In consideration of the purchase pricepayable by FusionStorm to Intraware under this Agreement, Intraware agrees thatit shall not, during the term of the Services Agreement and for two (2) yearsafter any termination or expiration of such term, (i) use the Sun CustomerList to solicit or attempt to solicit the resale, or assist any third party insoliciting or attempting to solicit the resale, of third party softwareproducts or maintenance services, or (ii) provide its SubscribeNet serviceto Spectrum for delivery of Sun Software.

 

7.4           Payment Obligations.  For purposes of this Section, a “SeriousPayment Default” shall occur when either:

 

(i)            the portion of the purchase pricedescribed in Section 2.2(b) is owing by FusionStorm 60 or moredays after the date on which such amount became due and payable and 30 or moredays after Intraware gave notice to FusionStorm that such amount is past dueand owing; or

 

(ii)           FusionStorm has failed to pay all ofthe retention bonuses required to be paid to the Key Employees under Section 7.2within one year after the commencement of such Key Employees’ employment withFusionStorm, and such payment failure has continued for thirty (30) days afterIntraware has notified FusionStorm in writing thereof; or

 

(iii)          Intraware has the right to acceleratepayments under Section 7 of the Services Agreement, Intraware hasexercised that right in accordance with the Services Agreement, and FusionStormhas not paid all past-due amounts and accelerated amounts

 

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under the Services Agreement within 10 daysafter Intraware has given written notice to FusionStorm under the ServicesAgreement of such acceleration.

 

In the event a Serious Payment Default occurs, then, notwithstandinganything to the contrary in this Agreement, (x) FusionStorm shall not solicit,attempt to solicit, or enter into any arrangement with a third party regardingsolicitation of, any sales or resales of Sun Software to any entity identifiedon the Sun Customer List, until the date which is two years after the ClosingDate, (y) FusionStorm shall not solicit, attempt to solicit, or enter into anyarrangement with a third party regarding solicitation of, any sales or resalesof any other software, support or maintenance services to any entity identifiedon the Sun Customer List unless such entity was a customer of FusionStorm priorto the Closing Date; and (z) Intraware’s obligations under Section 7.3shall immediately terminate.

 

7.5           Publicity. Each party agrees that no publicity release or announcement concerningthe transactions contemplated hereby shall be issued without the advancewritten approval of the form and substance thereof by the other party (whichapproval shall not be unreasonably withheld or delayed); except as such releaseor announcement may be required by law or the rules or regulations of anynational securities exchange or automated quotation system, in which case theparty required to make the release or announcement shall allow the other partyreasonable time to comment on such release or announcement in advance of suchissuance.

 

7.6           Further Assurances.  Each party agrees that, upon request by theother party from time to time, it will do, execute, acknowledge and deliver, orwill cause to be done, executed, acknowledged and delivered, all such furtheracknowledgments, deeds, assignments, bills of sale, transfers, conveyances,instruments, consents and assurances as may reasonably be required toconsummate the transactions contemplated by this Agreement, and for the betterassigning, transferring, granting, conveying, assuring and confirming toFusionStorm, its successors and assigns, the Purchased Assets to be sold orassigned to FusionStorm as provided herein.

 

7.7           Payments Received by Seller.  Intraware hereby covenants that it willpromptly deliver to FusionStorm any and all checks received by Intraware afterthe Closing that relate to sales by FusionStorm of the Sun Software.

 

7.8           No Employment of Key Employees.  Intraware hereby covenants that it will not,for a period of two years after the Closing Date, directly or indirectly, inany form or manner, solicit the employment of any Key Employee without thewritten consent of FusionStorm, unless this Agreement is terminated on orbefore the Closing Date.  The foregoingobligation shall not apply to any Key Employee who has not been employed byFusionStorm during the twelve (12) months prior to any solicitation.

 

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ARTICLE VIII

LICENSE

 

8.1           UponTermination of Non-Competition Obligation.  FusionStorm hereby grants to Intraware a perpetual, irrevocable,non-exclusive, fully paid-up license, beginning only on the termination (inaccordance with Section 7.3 (Non-Competition) or 7.4(Payment Under Services Agreement above) of Intraware’s obligations under Section 7.3(Non-Competition) above, to use the Sun Customer List to sell and resellsoftware, support and maintenance services, and to solicit such sales andresales, but only to those customers on the Sun Customer List as in effect atClosing.  Intraware shall use reasonablecare to maintain the confidentiality of such information, including by limitingdisclosure of such information to Intraware personnel and third parties who areinvolved in or who support such sales, resales or solicitations, and byensuring that all such Intraware personnel and third parties have signedwritten agreements obligating them to maintain the confidentiality of suchinformation.

 

8.2           FeesDerived from Exercise of Licenses. As between Intraware and FusionStorm, all fees, revenues and otheramounts derived by Intraware from its exercise of the licenses described in Section 8.1above shall belong to and be retained by Intraware exclusively.

 

ARTICLE IX

SURVIVAL;INDEMNIFICATION; ARBITRATION

 

9.1           Survival of Representations and Warranties.  All of the representations and warranties setforth in this Agreement shall survive the Closing and remain in full force andeffect for a period of 26 months thereafter, except that Intraware’srepresentations with respect to its agreement(s) with Spectrum will survive forfour years after the termination of such agreements.

 

9.2           Indemnification by Intraware.  Intraware hereby agrees to indemnify and holdFusionStorm harmless from and against any Damages arising or resulting from anybreach of any representation or warranty or default in the performance byIntraware of any covenant or agreement of Intraware contained herein, and anybreach of warranty or inaccurate representation made by Intraware herein.

 

9.3           Indemnification by FusionStorm.  FusionStorm hereby agrees to indemnify andhold Intraware harmless from and against any Damages arising or resulting fromany breach of any representation or warranty or default in the performance byFusionStorm of any covenant or agreement of Intraware contained herein, and anybreach of warranty or inaccurate representation made by FusionStorm herein.

 

9.4           Claims for Indemnity.

 

(a)           Whenever a claim for Damages shall arise for whichone party (“Indemnitee”) shall be entitled to indemnification hereunder,Indemnitee shall notify the other party or parties (each, an “Indemnitor”)in writing within thirty (30) days of the first receipt of notice of suchclaim, and in any event within such shorter period as may be

 

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necessary forIndemnitor to take appropriate action to resist such claim; providedthat the failure to give notice as herein provided shall not relieve Indemnitorof its obligation to indemnify Indemnitee except to the extent that Indemnitorshall have been materially prejudiced in its ability to defend such claim.  Such notice shall specify all material factsknown to Indemnitee giving rise to such indemnity rights and shall estimate theamount of the liability arising therefrom. The right of Indemnitee to indemnification and the estimated amountthereof, as set forth in this notice, shall be deemed agreed to by Indemnitorunless, within thirty (30) days after the mailing of such notice, Indemnitorshall notify Indemnitee in writing that it disputes the right of Indemnitee toindemnification, or that Indemnitor elects to defend such claim in the mannerprovided in Section 9.4(b) below.

 

(b)           Defense of Claims.  Upon receipt by Indemnitor of a notice fromIndemnitee with respect to any claim of a third party against Indemnitee, andacknowledgment by Indemnitor (whether after resolution of a dispute orotherwise) of Indemnitee’s right to indemnification hereunder with respect tosuch claim, Indemnitor shall assume the defense of such claim with counselreasonably satisfactory to Indemnitee, with the fees and expenses of suchcounsel to be paid by Indemnitor, and Indemnitee shall cooperate to the extentreasonably requested by Indemnitor in defense or prosecution thereof and shallfurnish such records, information and testimony and attend all suchconferences, discovery proceedings, hearings, trials and appeals as may bereasonably requested by Indemnitor in connection therewith.  If Indemnitor shall acknowledge Indemnitee’sright to indemnification and elect to assume the defense of such claim,Indemnitee shall have the right to employ its own counsel in any such case, butthe reasonable fees and expenses of such counsel shall be at the expense ofIndemnitee.  If Indemnitor has assumedthe defense of any claim against Indemnitee, Indemnitor shall have the right tosettle any claim for which indemnification has been sought and is availablehereunder; provided that, to the extent that such settlement requiresIndemnitee to take, or prohibits Indemnitee from taking, any action or purportsto obligate Indemnitee, then Indemnitor shall not settle such claim without theprior written consent of Indemnitee.  IfIndemnitor does not assume the defense of a third party claim for whichIndemnitee is entitled to indemnification hereunder and Indemnitor disputesIndemnitee’s right to indemnification for such claim, Indemnitee shall have theright to participate in the defense of such claim through counsel of itschoice, at Indemnitor’s expense (such expenses to be paid on a timely,as-accrued basis), and Indemnitee shall have control over the litigation andauthority to resolve such claim subject to this Article IX.

 

9.5           Limitationson Liability.

 

(a)           Intraware shall have no obligation to indemnifyFusionStorm for Damages claims made pursuant to Section 9.2 aboveuntil the aggregate amount of Damages incurred by FusionStorm with respect tosuch claims exceeds $25,000 except that it will

 

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be zero forany penalty or fine, at which point Intraware shall be responsible forindemnifying FusionStorm for all such Damages including the $25,000.

 

(b)           FusionStorm shall have no obligation to indemnifyIntraware for Damages claims made pursuant to Section 9.3 aboveuntil the aggregate amount of Damages incurred by Intraware with respect tosuch claims exceeds $25,000 except that it will be zero for any penalty orfine, at which point FusionStorm shall be responsible for indemnifyingIntraware for all such Damages including the $25,000 (other than with respectto claims relating to payment of the purchase price of the Purchased Assets orthe payment of Transfer Taxes).

 

(c)           Intraware’s liability to FusionStorm for any claimsmade pursuant to Section 9.2 or arising from or related to thisAgreement and the transactions contemplated hereby (whether in contract, tortor otherwise) shall be limited to $2,500,000.

 

9.6           Effect on Spectrum Alliance Agreement.  If FusionStorm is enjoined by a court fromreselling all or substantially all of the Sun Software to all or substantiallyall of the entities identified on the Sun Customer List, based on a claimrelated to this Agreement, then FusionStorm’s obligation to make the “Base Fee”under Section 2.1 of Exhibit A to the Services Agreement will besuspended immediately, and Intraware will be entitled only to the “Variable Fee”under Section 2.1 of Exhibit A to the Services Agreement until the injunctionis terminated or dissolved, at which time the Base Fee will resume for futureperiods.  During the period in which anysuch injunction is in effect, the “Variable Fee” shall mean ****% of the GrossProfit (as defined in Section 4 of Exhibit A to the ServicesAgreement) from Sun Software sales in the applicable month, and the quarterlylimit on such Variable Fee shall be $****, notwithstanding anything to thecontrary in Section 2.1 of Exhibit A of the Services Agreement.

 

9.7           Arbitration. Any controversy or claim arising out of or relating to this Agreement orthe Purchased Assets shall be settled by binding arbitration before a singlearbitrator in accordance with the Commercial Arbitration Rules of JAMSthen in effect and the substantive laws of California, and judgment upon theaward rendered by the arbitrators may be entered in any court havingjurisdiction. Any such arbitration shall be conducted in San Francisco,California.  The arbitrators shall beselected from a panel of persons having experience with and knowledge ofcomputers and the computer business. The arbitrators shall have no authority tomake any ruling, finding or award that does not conform to the terms andconditions of this Agreement. Either party, before or during any arbitration,may apply to a court having jurisdiction for a temporary restraining order orpreliminary injunction where such relief is

 

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****            Indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  A copy of this documentwithout omissions has been filed separately with the Securities and ExchangeCommission.

 

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necessary to protect its interests pending completion of thearbitration proceedings. Arbitration shall not be required for actions forrecovery of specific property, such as actions for replevin. Neither party northe arbitrator may disclose the existence or results of any arbitration withoutthe prior written consent of both parties, except as may be required by law.Prior to initiation of arbitration or any other form of legal or equitableproceeding, the aggrieved party shall give the other party written noticedescribing the claim and amount as to which it intends to initiate action.

 

ARTICLE X

CONFIDENTIALITY

 

10.1         Confidentiality. At all times after theClosing Date, Intraware shall keep the information in the Sun Customer List inconfidence, and shall not use such information for its benefit or for thebenefit of others, except as provided in Article VIII (Licenses)above.

 

ARTICLE XI

GENERALPROVISIONS

 

11.1         Notices. All notices, requests, demands and other communications hereunder shallbe in writing, shall refer to this Agreement and the provision of thisAgreement that is the subject of the notice and shall be effective when (a) deliveredpersonally, (b) one day after sent by Federal Express or other privatecourier (if a confirmation of delivery is obtained), or (c) five daysafter sent by United States certified or registered mail, return receiptrequested and postage prepaid.  Allnotices shall be directed to:

 
|   | (a)    | in the case of notices to Intraware: |
|--------|--------|--------------------------------------|
|   |   |                                 |   |
|   |   |                                 | Wendy A. Nieto |
|   |   |                                 | Chief Financial Officer |
|   |   |                                 | Intraware, Inc. |
|   |   |                                 | 25 Orinda Way |
|   |   |                                 | Orinda, CA 94563 |
|   |   |                                 |   |
|   | (b)    | with  a copy to:                     | John  J. Moss |
|   |   |                                 | Senior  Vice President and General Counsel |
|   |   |                                 | Intraware, Inc. |
|   |   |                                 | 25 Orinda Way |
|   |   |                                 | Orinda, CA 94563 |
|   |   |                                 |   |
|   | (c)    | in the case of FusionStorm to:       |

 

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|   |   |   | Daniel R.  Serpico               |
|--------|--------|--------|----------------------------------|
|   |   |   | Chief  Financial Officer         |
|   |   |   | FusionStorm                      |
|   |   |   | 620 Old West  Center Street      |
|   |   |   | Franklin, MA  02038              |
|   |   |   |                             |
|   |   |   | with a copy to:                  |
|   |   |   | George N. Buffington, Esq.  |
|   |   |   | Buffington & Aaron, ALC |
|   |   |   | 388 Market St.,  Suite 820  |
|   |   |   | San Francisco, CA 94111          |

 

or to such other address or to such other person as FusionStorm orIntraware shall have last designated by written notice given as hereinprovided.

 

11.2         Governing Law. This Agreement shall be governed by and construed and enforced inaccordance with the laws of the State of California (excluding its conflict oflaws provisions).

 

11.3         Jurisdiction and Venue. The parties agree thatany action or arbitration arising under or relating to this Agreement shall belocated in San Francisco, California.  Ifeither party is compelled to seek judicial enforcement of its rights under thisAgreement, the prevailing party in any such action shall be entitled to recoverits costs incurred in such action, including reasonable attorneys’ fees.

 

11.4         No Third Party Beneficiaries.  Nothing contained in this Agreement shall beconstrued to confer upon or give to any person or entity other than the partieshereto and their successors and assigns any rights or remedies under or byreason of this Agreement.

 

11.5         Binding Effect; Assignment.  Neither party to this Agreement shall assignany of its rights or obligations hereunder without the other party’s priorwritten consent, which shall not be unreasonably withheld.  Notwithstanding the foregoing, either partymay assign its rights and obligations hereunder pursuant to a merger,consolidation or sale of substantially all of its assets related to thisAgreement, provided it promptly notifies the non-assigning party inwriting of the assignment and the assignee agrees in writing to be bound by theterms of this Agreement.  This Agreementshall be binding upon and inure to the benefit of the parties and theirsuccessors and permitted assigns.

 

11.6         Counterparts; Headings.  This Agreement may be executed simultaneouslyin any number of counterparts, each of which shall be deemed an original butall of which together shall constitute one and the same instrument.  The paragraph headings in this Agreement arefor convenience of reference only and shall not be deemed to alter or affectany provision hereof.

 

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11.7         Termination. This Agreement may be terminated by FusionStorm (i) in accordancewith Section 7.2, or (ii) on the Closing Date if the closingconditions in Section 3.2 are not satisfied and Intraware has notdelivered the deliverables it is required to deliver under Section 3.4.  This Agreement may be terminated by Intrawareon the Closing Date if the closing conditions in Section 3.3 arenot satisfied and FusionStorm has not delivered the deliverables it is requiredto deliver under Section 3.4.

 

11.8         Transaction Expenses.  Notwithstanding anything else in thisAgreement to the contrary, the parties hereto shall each be responsible for thepayment of (and shall indemnify and hold the other party or parties heretoharmless against) any and all of its own expenses, including without limitationthe fees and expenses of counsel, accountants and other advisers, arising outof or relating directly or indirectly to the transactions contemplated by thisAgreement, whether or not such transactions are consummated in whole or inpart.

 

11.9         Waiver; Severability.  The waiver of one breach or default hereundershall not constitute the waiver of any other or subsequent breach ordefault.  If one or more of theprovisions of this Agreement are deemed void by law, then the remainingprovisions will continue in full force and effect.

 

11.10       No Agency. This Agreement shall not constitute either party the legalrepresentative or agent of the other, nor shall either party have the right orauthority to assume, create, or incur any liability or any obligation of anykind, express or implied, against or in the name of or on behalf of the otherparty.

 

11.11       Entire Agreement; Amendment.  This Agreement (including the Exhibits andSchedules annexed hereto), the Services Agreement, and the documents orinstruments or other agreements referenced herein or therein contain the entireagreement between the parties hereto and supersede all prior negotiations,agreements and understandings, whether written or oral, including but notlimited to the Outline of Proposed Transaction dated as of October 10,2005, among the parties with respect to the subject matter hereof and thereof,and there are no agreements, warranties or representations which are not setforth herein or therein.  This Agreementmay not be modified or amended except by an instrument in writing duly executedby authorized officers of both parties.

 

IN WITNESS WHEREOF, the undersigned haveexecuted this Agreement.

 
| **Intraware, Inc.**       | **FusionStorm**     |
|--------------------------------|---------------------|
|                           |                |
|                           |                |
| By:                            | /s/ WENDY NIETO     |   | By: | /s/ JOHN G. VAREL |   |
| Name: Wendy Nieto              | Name: John G. Varel |
| Title: Chief Financial Officer | Title: President    |
|                                |                     |  |  |  |  |

 

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| By:                                        | /s/ JOHN J. MOSS    |   | By: | /s/ JOHN G. VAREL |   |
|--------------------------------------------|---------------------|--------|-----|-------------------|--------|
| Name: John J. Moss                         | Name: John G. Varel |
| Title: SVP, General  Counsel and Secretary | Title: Secretary    |

 

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Schedule 1.8

 

Sales ServicesEmployees

 

Director

Account Manager

Account Manager

Account Manager

Account Manager

Account Manager

Account Manager

Systems Engineer

Sales Operations Specialists

 

(All Key Employees are membersof Intraware’s Sales Services Division)

 

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Schedule 2.3

 

Wire TransferInstructions

 

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