Document:

Prepared by MERRILL CORPORATION

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Exhibit 4.2    
  

 
 

THIS
WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 

INTRAWARE, INC.  

No. 

WARRANT TO PURCHASE  

 SHARES OF COMMON STOCK  

void
after August  , 2006 

    This
certifies that for value            , or registered assigns ("Holder"), is entitled, subject to the terms set forth below, at any time from and after August
  , 2001 (the "Original Issuance Date") and before 5:00 P.M., Eastern Time, on August  , 2006, to purchase from Intraware, Inc., a Delaware corporation
(the "Company"),            shares (subject to adjustment as described herein), of the Common Stock, par value $0.0001 per share (which authorized class of shares is herein called the
"Common
Stock") of the Company, as constituted on the Original Issuance Date, upon surrender hereof, at the principal office of the Company referred to below, with a duly executed subscription form in the
form attached hereto as Exhibit A and simultaneous payment therefor in lawful money of the United States or otherwise as hereinafter provided, at the price per share (the "Purchase Price")
equal to $.01 per share. The number and character of such shares of Common Stock are subject to further adjustment as provided below, and the term "Common Stock" shall include, unless the context
otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant. This Warrant, together with like warrants constituting in the aggregate
warrants to purchase up to an aggregate of 7,700,000 shares of Common Stock (the "Warrants"), was originally issued in connection with a private placement of the Company's securities through
Commonwealth Associates, L.P. (the "Bridge Financing") pursuant to a placement agency agreement dated August  , 2001 (the "Agency Agreement"). The term "Warrants" as used herein shall
include the Warrants and any warrants delivered in substitution or exchange therefor as provided herein. 

    1.  Exercise.  

    A.  Subject
to the limitation set forth in Section 1(B) and the redemption provisions of Section 14, this Warrant may be exercised at any time or from
time to time from and after the Original Issuance Date and before 5:00 P.M., Eastern Time, on August  , 2006, on any business day, for the full number of shares of Common Stock
called for hereby, by surrendering it at the principal office of the Company, at 25 Orinda Way, Orinda CA 94563, with the subscription form duly executed, together with payment in an amount equal to
(a) the number of shares of Common Stock called for on the face of this Warrant, as adjusted in accordance with the preceding paragraph of this Warrant (without giving effect to any further
adjustment herein) multiplied (b) by the Purchase Price. Payment of this amount may be made at Holder's choosing either (1) by payment in cash or by bank draft, certified check or money
order, payable to the order of the Company, or (2) by the Company not issuing that number of shares of Common Stock subject to this Warrant having a Fair Market Value (as defined below) on the
date of exercise equal to such sum. This Warrant may be exercised for less than the full number of shares of Common Stock at 

 

the time called for hereby, except that the number of shares receivable upon the exercise of this Warrant as a whole, and the sum payable upon the exercise of this Warrant as a whole, shall be
proportionately reduced. Upon a partial exercise of this Warrant in accordance with the terms hereof, this Warrant shall be surrendered, and a new Warrant of the same tenor and for the purchase of the
number of such shares not purchased upon such exercise shall be issued by the Company to Holder
without any charge therefor. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of such shares of record as of the close of business on such date. Within two
business days after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, together with cash, in lieu of any fraction of a share, equal to such fraction of the then Fair Market Value on the date of exercise of one full share of Common Stock. 

    "Fair
Market Value" shall mean, as of any date, (i) if shares of the Common Stock are listed on a national securities exchange, the average of the closing prices as reported
for composite transactions during the ten (10) consecutive trading days preceding the trading day immediately prior to such date or, if no sale occurred on a trading day, then the mean between
the closing bid and asked prices on such exchange on such trading day; (ii) if shares of the Common Stock are not so listed but are traded on the Nasdaq National Market ("NNM"), the average of
the closing prices as reported on the NNM during the ten (10) consecutive trading days preceding the trading day immediately prior to such date or, if no sale occurred on a trading day, then
the mean between the highest bid and lowest asked prices as of the close of business on such trading day, as reported on the NNM; or if applicable, the Nasdaq SmallCap Market, or if not then included
for quotation on the NNM or the Nasdaq SmallCap Market, the average of the highest reported bid and lowest reported asked prices as reported by the OTC Bulletin Board or the National Quotations
Bureau, as the case may be, or (iii) if the shares of the Common Stock are not then publicly traded, the fair market price, not less than book value thereof, of the Common Stock as determined
in good faith by the independent members of the Board of Directors of the Company (the "Board"). 

    B.  Exercise Limitation.  In the event that more than 5,600,000 Warrants (the "Maximum Amount") are
issued in the Bridge Financing, then until such time as the Company shall have obtained shareholder approval of the Bridge Financing (the "Shareholder Approval"), the Holder shall be entitled to
exercise this Warrant only to the extent of the number of Warrant Shares obtained by multiplying the total number of Warrant Shares for which this Warrant is exercisable by a fraction, the numerator
of which is the Maximum Amount and the denominator of which is the total number of Warrant Shares issuable upon exercise of all of the Warrants issued in the Bridge Financing. 

    2.  Payment of Taxes.  All shares of Common Stock issued upon the exercise of a Warrant shall be validly
issued, fully paid and non-assessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof. 

    3.  Transfer and Exchange.  This Warrant and all rights hereunder are transferable, in whole or in part,
on the books of the Company maintained for such purpose at its principal office referred to above by Holder in person or by duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached as Exhibit B and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. Upon any partial
transfer, the Company will issue and deliver to Holder a new Warrant or Warrants with respect to the shares of Common Stock not so transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant when endorsed in blank shall be deemed 

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negotiable and that when this Warrant shall have been so endorsed, the holder hereof may be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder hereof as the owner for all purposes. 

    This
Warrant is exchangeable at such office for Warrants for the same aggregate number of shares of Common Stock, each new Warrant to represent the right to purchase such number of
shares as the Holder shall designate at the time of such exchange. 

    4.  Adjustment for Dividends in Other Stock and Property; Reclassifications.  

    A.  In
case at any time or from time to time the holders of the Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of
this Warrant) shall have received, or, on or after the record date fixed for the determination of eligible shareholders, shall have become entitled to receive, without payment therefor, 

    (1) other
or additional stock or other securities or property (other than cash) by way of dividend, 

    (2) any
cash or other property paid or payable out of any source other than retained earnings (determined in accordance with generally accepted accounting principles),
or 

    (3) other
or additional stock or other securities or property (including cash) by way of stock-split, spin-off, reclassification, combination of shares or
similar corporate rearrangement, (other than (x) additional shares of Common Stock or any other stock or securities into which such Common Stock shall have been changed, (y) any other
stock or securities convertible into or exchangeable for such Common Stock or such other stock or securities or (z) any Stock Purchase Rights, issued as a stock dividend or stock-split), then
and in each such case Holder, upon the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property (including cash in the cases
referred to in clauses (2) and (3) above) which such Holder would hold on the date of such exercise if on the Original Issuance Date Holder had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant, as adjusted in accordance with the first paragraph of this Warrant, and had thereafter, during the period from the Original Issuance Date
to and including the date of such exercise, retained such shares and/or all other or additional stock and other securities and property (including cash in the cases referred to in clause (2)
and (3) above) receivable by it as aforesaid during such period, giving effect to all adjustments called for during such period by Sections 4.A, 4.B and 4.C. 

    B.  Adjustment for Reorganization, Consolidation and Merger.  In case of any reorganization of the
Company (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) after the Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into another corporation or entity or convey all or substantially all its assets to another corporation or entity, then and in
each such case Holder, upon the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon the exercise of this Warrant prior to such consummation, the stock or other securities or property to which such Holder
would have been entitled upon such consummation if Holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Sections 4.A, 4.B, and 4.C; in each
such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation. 

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    C.  Adjustment for Certain Dividends and Distributions.  If the Company at any time or from time to time
makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such
event the number of shares of Common Stock receivable upon the full exercise of this Warrant (the "Aggregate Number") then in effect shall be increased as of the time of such issuance or, in the event
such record date is fixed, as of the close of business on such record date, by multiplying the Aggregate Number then in effect by a fraction (A) the denominator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (B) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date as the case may be, plus the number of shares of
Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Aggregate Number shall be recomputed accordingly as of the close of business on such record date, and thereafter the Aggregate Number shall be adjusted pursuant to this
Section 4.C as of the time of actual payment of such dividends or distributions. 

    D.  Stock Split and Reverse Stock Split.  If the Company at any time or from time to time effects a stock
split or subdivision of the outstanding Common Stock, the Aggregate Number then in effect immediately before that stock split or subdivision shall be proportionately increased. If the Company at any
time or from time to time effects a reverse stock split or combines the outstanding shares of Common Stock into a smaller number of shares, the Aggregate Number then in effect immediately before that
reverse stock split or combination shall be proportionately decreased. Each adjustment under this Section 4.D shall become effective at the close of business on the date the stock split,
subdivision, reverse stock split or combination becomes effective. 

    E.  No Impairment.  The Company will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the Holders of the Warrants against impairment. 

    F.  Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of
a Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request
at any time of any holder of a Warrant, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) Aggregate Number at
the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the exercise of the Warrant. 

    5.  Notices of Record Date.  In case 

    A.  the
Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of the Warrants) for the
purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other
right, or 

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    B.  of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into
another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation, or 

    C.  of
any voluntary dissolution, liquidation or winding-up of the Company, 

then,
and in each such case, the Company will mail or cause to be mailed to each holder of a Warrant at the time outstanding a notice specifying, as the case may be, (a) the date on which a
record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is expected to take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or
securities at the time receivable upon the exercise of the Warrants) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up, such notice shall be mailed at least 30 days prior
to the date therein specified. 

    6.  Stock Purchase Rights.  If at any time or from time to time, the Company grants or issues to all the
record holders of the Common Stock any options, warrants or subscription rights (collectively, the "Stock Purchase Rights") entitling a holder to purchase Common Stock or any security convertible into
or exchangeable for Common Stock or to purchase any other stock or securities of the Company, the Holder shall be entitled to acquire, upon the terms applicable to such Stock Purchase Rights, the
aggregate Stock Purchase Rights which Holder could have acquired if Holder had been the record holder of the maximum number of shares of Common Stock issuable upon exercise of this Warrant on both
(x) the record date for such grant or issuance of such Stock Purchase Rights, and (y) the date of the grant or issuance of such Stock Purchase Rights. 

    7.  Loss or Mutilation.  Upon receipt by the Company of evidence satisfactory to it (in the exercise of
reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of any Warrant and (in the case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof a new Warrant of like tenor. 

    8.  Reservation of Common Stock.  The Company shall at all times reserve and keep available for issue
upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. 

    9.  Subscription Agreement and Registration Rights Agreement.  This Warrant has been issued pursuant to
the Subscription Agreement dated as of August 31, 2001 between the Company and the original holder hereof (the "Subscription Agreement"), and the transferability of this Warrant and the Common
Stock issuable upon the exercise hereof are subject to the Subscription Agreement. In addition, the Holder of this Warrant and the Common Stock issuable upon the exercise hereof are entitled to have
such Common Stock registered under the Securities Act of 1933 in accordance with the Registration Rights Agreement referred to in the Subscription Agreement and to such remedies for breaches of, or
defaults under, such Registration Rights Agreement. 

    10.  Notices.  All notices and other communications from the Company to the Holder of this Warrant shall
be mailed by first-class registered or certified mail, postage prepaid, to the address furnished to the Company in writing by the last holder of this Warrant who shall have furnished an address to the
Company in writing. 

    11.  Change; Waiver.  The provisions of this Warrant may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to in writing by the Company and the holders of at least a majority of the Warrants then outstanding. 

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    12.  Headings.  The headings in this Warrant are for purposes of convenience in reference only, and shall
not be deemed to constitute a part hereof. 

    13.  Law Governing.  This Warrant shall be construed and enforced in accordance with and governed by the
internal laws, and not the law of conflicts of laws, of the State of New York. 

    14.  Redemption.  In the event that (a) prior to the 17th day ("Day 17") following
the initial closing of the Bridge Financing (the "Initial Closing"), the Company enters into a definitive merger or acquisition agreement with the entity set forth in Schedule 1 to the Agency
Agreement pursuant to which such entity acquires more than 50% of the Company at a price per share greater than $1.00, and (b) as a result of such acquisition or other agreement with such
entity the outstanding principal amount of, and accrued interest on, the notes issued in the Bridge Financing (the "Notes") is repaid in full on or prior to the 90th day after the
Initial Closing ("Day 90"), then the Company shall have the right to redeem 50% of the Warrants (or, if previously exercised, the Warrant Shares), on a pro-rata basis, at a price of $.01
per Warrant. The Company must exercise its redemption right within thirty (30) days after repayment of the Notes in accordance with clause (b) above. Warrant Shares issued upon exercise
of Warrants (x) prior to Day 17 or (y) after Day 17, provided the event referenced in clause (a) occurs and prior to the earlier of repayment of the Notes or Day 90, shall bear a
legend referencing the Company's right of redemption under this Section 14. 

    15.  Voting of Warrant Shares.  The Warrant Shares issuable hereunder may not be voted on the three
proposals set forth in Section 4(j) of the Agency Agreement. The Company may place a legend on the certificates representing the Warrant Shares for this purpose. 

	DATED:        , 2001	 	 	 
	

 	
 	

INTRAWARE, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:

6

EXHIBIT A  

 SUBSCRIPTION FORM  

(To
be executed only upon exercise of Warrant) 

    1.
The undersigned registered owner of this Warrant irrevocably exercises this Warrant and purchases      of the number of shares of Common Stock of
Intraware, Inc., purchasable with this Warrant, and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant. 

    2.
The undersigned elects to exercise the within Warrant on a cashless basis pursuant to the provisions of the Warrant by checking below: 

      
check if cashless exercise; or 

    3.
The undersigned encloses herewith a bank draft, certified check or money order payable to the Company in payment of the exercise price determined under, and on the terms specified
in, the Warrant. 

	DATED:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 (Signature of Registered Owner)
	

 	
 	

 	
 	

 (Street Address)
	

 	
 	

 	
 	

 (City)              (State)  (Zip)

EXHIBIT B  

 FORM OF ASSIGNMENT  

    FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the
undersigned under the within Warrant, with respect to the number of shares of Common Stock set forth below: 

	Name of Assignee	 	Address	 	No. of Shares

    and
does hereby irrevocably constitute and appoint                    Attorney to make such transfer on the books of Intraware, Inc., maintained for
the purpose, with full
power of substitution in the premises. 

	DATED:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 (Signature)
	

 	
 	

 	
 	

 (Witness)

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Exhibit 4.2

FORM OF WARRANTPrepared by MERRILL CORPORATION

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Exhibit 4.3    
  

 
 

GENERAL SECURITY AGREEMENT    
    
    (Floating Lien)    
  

    SECURITY AGREEMENT, dated as of August 31, 2001, between Intraware, Inc., a Delaware corporation with its principal executive office located at
25 Orinda Way, Orinda, California 94563 (the "Debtor"), and Commonwealth Associates, L. P., a New York limited partnership with offices at 830 Third Avenue, New York, New York 10022, as agent (the
"Agent") for the investors (the "Investors") from time to time set forth on Annex I hereto (the Agent, acting in such capacity, the "Secured Party"); 

W
I T N E S S E T H: 

    WHEREAS,
Debtor and the Investors are parties to a series of 8% senior secured promissory notes in the aggregate principal amount of up to $7,000,000 issued by Debtor from time to
time in a private placement through the Agent, as placement agent (herein collectively, as at any time amended, extended, restated, renewed or modified, the "Notes"); 

    WHEREAS,
it is a condition to the willingness of the Investors to make the loan evidenced by the Notes that Debtor enter into this Agreement and grant to the Secured Party, for the
ratable benefit of the Investors, the security interest provided for herein. 

    NOW,
THEREFORE, FOR VALUE RECEIVED, IT IS AGREED: 

    Section 1.  Terms.  Unless otherwise defined herein, capitalized terms used in this Agreement
shall have the meaning specified therefor in the Notes. As used herein the following terms shall have the meanings specified and shall include in the singular number the plural and in the plural
number the singular: 

    "Assigned Agreements" shall mean all contracts and agreements of the Debtor. 

    "Collateral" means all of the Debtor's right, title and interest in and under or arising out of each and all of the following: 

    All
personal property and fixtures of the Debtor of any type or description, wherever located and now existing or hereafter arising or acquired, including but not limited to the
following: 

     (i) all
of the Debtor's goods including, without limitation: 

    (a) all
inventory, including without limitation, equipment held for lease, whether raw materials, in process or finished, all material or equipment usable in processing
the same and all documents of title covering any inventory (as such term is defined in the Uniform Commercial Code, as in effect from time to time in the State of New York (the "NYUCC")) (all of the
foregoing, "Inventory"), including without limitation that located at the locations listed on Schedule 1 annexed hereto; 

    (b) all
equipment (the "Equipment") employed in connection with the Debtor's business, together with all present and future additions, attachments and accessions
thereto and all substitutions therefor and replacements thereof, including without limitation that located at the locations listed on Schedule 1 annexed hereto; 

    (ii) all
of the Debtor's present and future accounts, accounts receivable, general intangibles, as such terms are defined in the NYUCC, and all contracts and contract
rights (herein sometimes referred to as "Receivables"), including but not limited to the Debtor's rights (including rights to payment) under all Assigned Agreements, together with 

    (a) all
claims, rights, powers or privileges and remedies of the Debtor relating thereto or arising in connection therewith including, without limitation, all rights of
the Debtor to make determinations, to exercise any election (including, but not limited to, election of remedies) or 

 

option or to give or receive any notice, consent, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or any property
which is the subject of the Assigned Agreements, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action which (in the opinion of the Secured Party)
may be necessary or advisable in connection with any of the foregoing, 

    (b) all
liens, security, guaranties, endorsements, warranties and indemnities and all insurance and claims for insurance relating thereto or arising in connection
therewith, 

    (c) all
rights to property forming the subject matter of the Receivables including, without limitation, rights to stoppage in transit and rights to returned or
repossessed property, 

    (d) all
writings relating thereto or arising in connection therewith including without limitation, all notes, contracts, security agreements, guaranties, chattel paper
and other evidence of indebtedness or security, all powers-of-attorney, all books, records, ledger cards and invoices, all credit information, reports or memoranda and all
evidence of filings or registrations relating thereto, 

    (e) all
catalogs, computer and automatic machinery software and programs, and the like pertaining to operations by the Debtor in, on or about any of its plants or
warehouses, all sales data and other information relating to sales or service of products now or hereafter manufactured on or about any of its plants, and all accounting information pertaining to
operations in, on or about any of its plants, and all media in which or on which any of the information or knowledge or data is stored or contained, and all computer programs used for the compilation
or printout of such information, knowledge, records or data, and 

    (f)  all
accounts, contract rights, general intangibles and other property rights of any nature whatsoever arising out of or in connection with the foregoing, including
without limitation, payments due and to become due, whether as repayments, reimbursements, contractual obligations, indemnities, damages or otherwise; 

    (iii) all
other personal property of the Debtor of any nature whatsoever, including, without limitation, all accounts, bank accounts, deposits, credit balances,
contract rights, inventory, general intangibles, goods, equipment, instruments, chattel paper, machinery, furniture, furnishings, fixtures, tools, supplies, appliances, plans and drawings, together
with all customer and supplier lists and records of the business, and all property from time to time described in any financing statement signed by the Debtor naming the Agent as secured party; 

    (iv) all
of the Debtor's right, title, and market in and to any shares of capital stock of any subsidiary corporation and the certificates representing any such shares; 

    (v) any
and all of Debtor's right, title and interest in its intellectual property, including, without limitation, (a) each of the Trademarks (as hereinafter
defined), and the goodwill of the business symbolized by each of the Trademarks, all customer lists and other records of the Debtor relating to the distribution of products bearing the Trademarks and
each of the registrations described in Schedule 2-A hereto; (b) each of the Patents (as hereinafter defined) and each of the registrations listed on
Schedule 2-B hereto; (c) all of the tradenames listed on Schedule 1 hereto (the "Tradenames") and (d) any and all proceeds of the foregoing, including, without
limitation, any claims by Debtor against third parties for infringement of the Trademarks or the Patents (collectively, the "Intellectual Property"); 

    (vi) all
additions, accessions, replacements, substitutions or improvements and all products and proceeds including, without limitation, proceeds of insurance, of any
and all of the Collateral described in clauses (i) through (iv) above; and 

2

 

   (vii) any consideration received from the sale, exchange, lease or other disposition of any asset or property which constitutes Collateral, any other value received as
a consequence of the possession of any Collateral and any payment received from any insurer or other person or entity as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property that constitutes Collateral. 

Notwithstanding
the foregoing, the term "Collateral" does not include any license or contract rights to the extent the granting of a security interest in it would be contrary to applicable law. 

    "Instrument" shall have the meaning specified in Article 3 of the NYUCC and shall also include any other writing which evidences
a right to the payment of money and is not itself a security agreement or lease and is of a type which is in the ordinary course of business transferred by delivery with any necessary endorsement or
assignment. 

    "Lien" means any mortgage, pledge, hypothecation, assignment, security interest, deposit arrangement, encumbrance (including any
easement, right of way, zoning restriction and the like), lien (statutory or other) or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing
statement under the NYUCC or comparable law of any jurisdiction). 

    "Patents" shall mean (i) all letters patent of the United States or any other country, all right, title and interest therein and
thereto, and all applications, registrations and recordings thereof, including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any state or province thereof or any other country or any political subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule 2-B annexed hereto and made a part hereof, and (ii) all reissues, continuations,
continuations-in-part, extensions or divisionals thereof and all licenses thereof. 

    "Permitted Liens" means: 

    (a) Liens
for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books; 

    (b) Liens
of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being contested in good
faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books; 

    (c) Liens
(other than Liens arising under the Employee Retirement Income Security Act of 1974, as amended, or Section 412(n) of the Internal Revenue Code of
1986, as amended) incurred in the ordinary course of business in connection with workers' compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; 

    (d) judgment
Liens in existence less than 60 days after the entry thereof or with respect to which execution has been stayed; 

    (e) ground
leases in respect of real property on which facilities owned or leased by the Debtor or any of its subsidiaries are located; 

3

 

    (f)  easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering
in any material respect with the business of the Debtor and its subsidiaries taken as a whole; 

    (g) any
interest or title of a lessor secured by a lessor's interest under any lease of real property on which facilities owned or leased by the Debtor or any of its
subsidiaries are located; 

    (h) leases
or subleases and licenses or sublicenses granted to others not interfering in any material respect with the business of the Debtor and its subsidiaries taken
as a whole; 

    (i)  a
Lien on any asset securing indebtedness (including capitalized lease obligations) incurred or assumed for the purpose of financing the purchase price (including
capitalized lease payments in the nature thereof) of such asset, provided that such Lien attaches only to the asset acquired with the proceeds of such indebtedness and attaches concurrently with or
within ten (10) days following the acquisition thereof; and 

    (j)  Liens
existing on the date hereof as disclosed on Schedule (2) hereto. 

    "Person" means any natural person, corporation, firm, association, partnership, joint venture, limited liability company, joint-stock
company, trust, unincorporated organization, government, governmental agency or subdivision, or any other entity, whether acting in an individual, fiduciary or other capacity. 

    "Receivables" has the meaning specified therefor in clause (ii) of the definition of Collateral. 

    "Secured Obligations" means all obligations of the Debtor, whether for fees, expenses or otherwise, now existing or hereafter arising
under this Agreement and the Notes, including, without limitation, full and prompt payment and performance of (i) all principal and interest on the Notes when and as due, whether at maturity,
by acceleration, or otherwise and (ii) all obligations of the Debtor at any time and from time to time under this Agreement. 

    "Trademarks" shall mean (i) all trademarks, trade names, trade styles, service marks, prints and labels on which said
trademarks, trade names, trade styles and service marks have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all right, title and
interest therein and thereto, and all applications, registrations and recordings thereof, including, without limitation, applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any state or province thereof, or any other country or any political subdivision thereof, all whether now owned or hereafter
acquired
by Debtor, including, but not limited to, those described in Schedule 2-B annexed hereto and made a part hereof, and (ii) all reissues, extensions or renewals thereof and all
licenses thereof. 

    Section 2.  Security Interests.  

    (a) As
security for the payment and performance of all Secured Obligations, and subject to the last sentence of this Section 2, the Debtor does hereby create,
grant and assign to the Secured Party, for its own benefit and for the ratable benefit of the Investors, a continuing security interest in all of the Collateral, whether now existing or hereafter
arising or acquired and wherever located, subject to the priority, if any, of Permitted Liens (the "Security Interest"). Without limiting the foregoing, the Secured Party is hereby authorized to file
one or more financing statements, continuation statements or such other documents, including, without limitation, the Assignment of Security (Trademarks) attached hereto as Exhibit 1, for the
purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest. 

    (b) The
Debtor hereby assigns to the Secured Party all of Debtor's right, title and interest in and to any and all moneys which may become due and payable with respect
to the Collateral under any policy insuring the Collateral (except proceeds relating to tangible personal property which are applied 

4

 

to restoration or replacement), including return of unearned premium, and shall cause any such insurance company to make payment directly to the Secured Party for application to amounts outstanding
under the Notes in accordance with the terms of the Notes and, to the extent not provided therein, in such order as the Secured Party shall determine. 

    Section 3.  General Representations, Warranties and Covenants.  The Debtor represents, warrants
and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows: 

    (a) This
Agreement is made with full recourse to the Debtor and pursuant to and upon all the warranties, representations, covenants, and agreements on the part of the
Debtor contained herein, in the Notes and otherwise made in writing in connection herewith or therewith. 

    (b) Except
for the Security Interest of the Secured Party therein, the Debtor is, and as to Collateral acquired from time to time after the date hereof the Debtor will
be, the owner of all the Collateral free from any lien, security interest, encumbrance or other right, title or interest of any Person (other than Permitted Liens) and the Debtor shall defend the
Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the Secured Party (other than Permitted Liens). 

    (c) There
is no financing statement, assignment of trademark, or assignment of patent (or similar statement or instrument of registration under the law of any
jurisdiction) now on file or registered in any public office covering any interest of any kind in the Collateral, or, to the knowledge of Debtor intended to cover any such interest, which has not been
terminated or released by the secured party named therein and so long as the Notes remain outstanding or any of the Secured Obligations of the Debtor remain unpaid, the Debtor will not execute and
there will not be on file in any public office any financing statement, assignment of trademark, or assignment of patent (or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except (i) financing statements, assignment of trademark, or assignment of patent filed or to be filed in respect of and covering the
Security Interest of the Secured Party hereby granted and provided for and (ii) with respect to Permitted Liens. 

    (d) The
chief executive office and chief place of business of the Debtor is located at the address of the Debtor listed on the signature page hereof, and the Debtor
will not move its chief executive office and chief place of business except to such new location as the Debtor may establish in accordance with the last sentence of this Section 3(d). The
originals of all Assigned Agreements and all documents (as well as all duplicates thereof) evidencing all Receivables and all other contract rights or accounts and other property of the Debtor and the
only original books of account and records of the Debtor relating thereto are, and will continue to be, kept at such chief executive office or at such new location as the Debtor may establish in
accordance with the last sentence of this Section 3(d). The Debtor shall establish no such new location until (i) it shall have given to the Secured Party not less than 30 days'
prior written notice of its intention to do so, clearly describing such new location and providing such other information in connection therewith as the Secured Party may reasonably request, and
(ii) with respect to such new location, it shall have taken such action, satisfactory to the Secured Party (including, without limitation, all action required by Section 7 hereof), to
maintain the Security Interest of the Secured Party in the Receivables intended to be granted at all times fully perfected and in full force and effect. 

    (e) Substantially
all of the Collateral is located inside the State of California or the State of Pennsylvania or other states in which inventory may be held on
consignment. 

    (f)  The
name of the Debtor is as set forth on the signature page hereto and the Debtor shall not change such name, conduct its business in any other name or take title
to the Collateral in any 

5

 

other name while this Agreement remains in effect. The Debtor has never had any name, or conducted business under any name in any jurisdiction, other than its name set forth on the signature page
hereto, during the past six years other than as set forth in Schedule 2 annexed hereto. 

    (g) At
the Debtor's own expense, the Debtor will: (i) without limiting the provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by fire and other risks, casualties and contingencies and in such manner and to the same extent that like properties are
customarily so insured by other entities engaged in the same or similar businesses similarly situated and keep adequate insurance at all times against liability on account of damage to persons and
properties and under all applicable workers' compensation laws, by financially sound and reputable insurers and in amounts usually carried by similar businesses, for the benefit of the Debtor and the
Secured Party, (ii) upon request by the Secured Party, promptly deliver the insurance policies or certificates thereof to the Secured Party, and (iii) keep the Collateral in good
condition at all times (normal wear and tear excepted). Upon any failure of the Debtor to comply with its obligations pursuant to this Section 3(g), the Secured Party may at its option and
after 20 days' prior written notice to Debtor, and without affecting any of its other rights or remedies provided herein or as a secured party under the NYUCC, procure the insurance protection
it deems necessary to be made to the Collateral and the cost of either or both of which shall be a lien against the Collateral added to the amount of the indebtedness secured hereby and payable on
demand with interest at a rate per annum equal to 8%. 

    (h) The
Debtor will not use the Collateral in material violation of any statute or ordinance or applicable insurance policy and will promptly pay all material taxes and
assessments levied against the Collateral; provided that the Debtor shall not be required to pay any such tax or assessment that is being contested in good faith and by proper proceedings and as to
which appropriate reserves are being maintained. 

    (i)  The
Debtor will not sell, transfer, change the registration, if any, dispose of, attempt to dispose of, substantially modify (other than in the ordinary course of
business) or abandon the Collateral or any material part thereof other than (i) sales of Inventory in the ordinary course of business, (ii) the disposition of obsolete or
worn-out Equipment in the ordinary course of business, and (iii) the sale of Collateral where the proceeds of such sale are equal to or greater than the then outstanding principal
amount and accrued interest on the Notes and the Notes are repaid in full directly from the purchaser as a condition to, and simultaneously with, the consummation of such sale. 

    (j)  The
Debtor will not assert against the Secured Party any claim or defense which the Debtor may have against any seller of the Collateral or any part thereof or
against any other Person with respect to the Collateral or any part thereof. 

    (k) The
Debtor will indemnify and hold the Secured Party harmless from and against any loss, liability, damage, costs and expenses whatsoever arising from the Debtor's
use, operation, ownership or possession of the Collateral or any part thereof other than liabilities arising as a result of Secured Party's gross negligence or willful misconduct. 

    (l)  The
Debtor will maintain the confidentiality of all customer lists and not sell or otherwise dispose of such lists except (i) that the Debtor shall deliver
copies thereof to the Secured Party upon its request,
which may be made at any time and from time to time after an Event of Default (as such term is defined in the Notes) and (ii) in accordance with Section 3(i) herein. 

6

 

    (m) In addition to, and not in limitation of, the foregoing, with respect to the Intellectual Property, the Debtor hereby represents and warrants: 

     (i) Debtor
has the sole, full and clear title to the Trademarks shown on Schedule 2-A hereto for the goods and services covered by the registrations
thereof and such registrations are valid and subsisting. 

    (ii) Debtor
will perform all acts and execute all documents, to the extent reasonable, including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, substantially in the forms of Exhibits 1 and 2 hereof, respectively, requested by the Secured Party at any time to evidence, perfect,
maintain, record and enforce the Secured Party's interest in the Patents and Trademarks or otherwise in furtherance of the provisions of this Agreement, and Debtor hereby authorizes the Secured Party
to execute and file one or more financing statements (and similar documents) or copies thereof or of this Agreement with respect to the Intellectual Property signed only by the Secured Party. 

    (iii) None
of the Trademarks have been abandoned or invalidated, and, except to the extent that the Secured Party, upon 10 days' prior written notice by the
Debtors, shall consent, and except to the extent such Debtor has a valid business purpose for doing otherwise (so long as any action on the part of any such Debtor would not have a material adverse
effect on Debtor's business), Debtor (either itself or through licensees) will continue to use the Trademarks on each and every trademark class of goods in order to maintain the Trademarks in full
force free from any claim of abandonment for nonuse and Debtor will not (nor will it permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Trademark may become
abandoned or invalidated, and Debtor shall notify the Secured Party immediately if it knows of any reason or has reason to know that any pending application or issued Trademark may become abandoned or
invalidated. 

    (iv) Debtor
has the sole, full and clear title to each of the Patents shown on Schedule 2-B hereto and the issued Patents are subsisting. None of the
Patents has been abandoned or dedicated, and, except to the extent that the Secured Party, upon 10 days' prior written notice by the Debtor, shall consent, and except to the extent such Debtor
has a valid business purpose for doing otherwise (so long as any action on the part of any such Debtor would not have a material adverse effect on Debtor's business), Debtor will not do any act, or
omit to do any act, whereby the Patents may become abandoned or dedicated and shall notify the Secured Party immediately if it knows of any reason or has reason to know that any pending application or
issued Patent may become abandoned or dedicated. 

    (v) In
no event shall Debtor, either itself or through any agent, employee, licensee or designee, (A) file an application for the registration of any Patent or
Trademark with the United States Patent and Trademark Office or any similar office or agency of the United States, any state or province thereof, any other country or any political subdivision thereof
or (B) file any assignment of any patent or trademark, which Debtor may acquire from a third party, with the United States Patent and Trademark Office or any similar office or agency of the
United States, any state or province thereof, any other country or any political subdivision thereof, unless Debtor shall promptly notify the Secured Party thereof, and, upon request of the Secured
Party, execute and deliver any and all assignments, agreements, instruments, documents and papers as the Secured Party may reasonably request to evidence the Secured Party's interest in such Patent or
Trademark and the goodwill and general intangibles of Debtor relating thereto or represented thereby, and Debtor hereby constitutes the Secured Party its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all 

7

 

acts of such attorney being hereby ratified and confirmed, such power being coupled with an interest is irrevocable until the Secured Obligations are paid in full. 

    (vi) Except
(i) to the extent that the Secured Party, upon prior written notice from Debtor, shall consent (which consent shall not be unreasonably withheld) or
(ii) in accordance with Section 3(i) herein, Debtor will not assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security interest in or lien upon, encumber,
grant an exclusive or non-exclusive license (except in the ordinary course of business), or otherwise dispose of any of the Intellectual Property, and nothing in this Agreement shall be
deemed a consent by the Secured Party to any such action except as expressly permitted herein. 

   (vii) As
of the date hereof neither Debtor nor any affiliate or subsidiary thereof owns any Patents or Trademarks registered in, or the subject of pending applications
in, the United States Patent and Trademark Office or any similar office or agency of the United States, any state or province thereof, any other country or any political subdivision thereof, other
than those described in Schedules 2-A and 2-B hereto. 

   (viii) Except
to the extent Debtor has a valid business purpose for doing otherwise (so long as any action on the part of Debtor would not have a material adverse
effect on Debtor's business), Debtor will take all necessary steps in any proceeding before the United States Patent and Trademark Office or any similar office or agency of the United States, any
state or province thereof, any other country or any political subdivision thereof, to maintain each application and registration of the Trademarks and Patents, including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings (except to the extent that dedication, abandonment or invalidation is permitted
under paragraphs (ii) and (iii) hereof). 

    (ix) Debtor
agrees that the Secured Party does not assume, and shall have no responsibility for, the payment of any sums due or to become due under any agreement or
contract included in the
Intellectual Property or the performance of any obligations to be performed under or with respect to any such agreement or contract by Debtor, and the Debtor hereby agrees to indemnify and hold the
Secured Party harmless with respect to any and all claims by any person relating thereto. 

    (x) Debtor
agrees that if it, or any affiliate or subsidiary thereof, learns of any use by any person of any term or design likely to cause confusion with any
Trademark, it shall promptly notify the Secured Party of such use and, if requested by the Secured Party, shall join with the Secured Party, at the Secured Party's expense, in such action as the
Secured Party, in its reasonable discretion may deem advisable for the protection of the Secured Party's interest in and to such Trademarks. 

    (xi) All
licenses of Trademarks and Patents which Debtor has granted to third parties are set forth in Schedule C hereto. 

   (xii) If
Debtor shall acquire title to any new Trademarks or Patents, the provisions of this Agreement shall automatically apply thereto. Debtor shall promptly notify
the Secured Party in writing of any rights to any new Trademarks or Patents acquired by Debtor after the date hereof and of any registrations issued or applications for registration made after the
date hereof. Concurrently with the filing of an application for registration for any Trademarks or Patents, Debtor shall execute, deliver and record in all places where this Agreement is recorded an
appropriate agreement, substantially in the form hereof, with appropriate insertions, or an amendment to this Agreement, in form and substance reasonably satisfactory to the Secured Party, pursuant to
which Debtor shall grant a security interest to the extent of its interest in such registration as provided herein to the Secured Party. 

8

 

    Section 4.  Special Provisions Concerning Assigned Agreements.  The Debtor represents, warrants
and agrees as follows: 

    (a) The
Assigned Agreements constitute the legal, valid and binding obligations of the Debtor and, to the best of its knowledge, the other parties thereto, enforceable
in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights or by the effect of general equitable principles. 

    (b) The
Debtor will use best efforts to abide by, perform and discharge each and every material obligation, covenant and agreement to be performed by the Debtor under
the Assigned Agreements. 

    (c) At
the request of the Secured Party, and at the sole cost and expense of the Debtor, the Debtor will use best efforts to enforce or secure the performance of each
and every material obligation, covenant, condition and agreement contained in the Assigned Agreements to be performed by the other parties thereto. 

    (d) The
Debtor will not modify, amend or agree to vary any of the Assigned Agreements in any material respect other than in the ordinary course of business or in
accordance with Section 3(i) herein, or otherwise act or fail to act in a manner likely (directly or indirectly) to entitle any party thereto to claim that the Debtor is in material
default under the terms thereof. 

    (e) The
Debtor will not terminate or permit the termination of any material Assigned Agreement, except in accordance with its terms, other than in the ordinary course
of business or in accordance with Section 3(i) herein. 

    (f)  Without
the prior written consent of the Secured Party, the Debtor will not, other than in the ordinary course of business or in accordance with
Section 3(i) herein, waive or in any manner release or discharge any party to any material Assigned Agreement from any of the material obligations, covenants, conditions and agreements
to be performed by it under such Assigned Agreement including, without limitation, the obligation to make all payments in the manner and at the time and places specified. 

    (g) If
the Secured Party so requests after the occurrence and continuance of an Event of Default and, if prior to the Maturity Date (as such term is defined in the
Notes), acceleration of the Notes ("Acceleration"), the Debtor will hold any payments received by it which are assigned and set over to the Secured Party by this Agreement for and on behalf of the
Secured Party and turn them promptly over to the Secured Party forthwith in the same form in which they are received (together with any necessary endorsement) for application to amounts outstanding
under the Notes in accordance with the terms of the Notes and, to the extent not provided therein, in such order as the Secured Party shall determine. 

    (h) The
Debtor will appear in and defend every action or proceeding arising under, growing out of or in any manner connected with the Assigned Agreements or the
obligations, duties or liabilities of the Debtor and any assignee thereunder. 

    (i)  Should
the Debtor fail to make any payment or to do any act as herein provided after 30 days' notice by the Secured Party, the Secured Party may (but
without obligation on the Secured Party's part to do so and without notice to or demand on the Debtor and without releasing the Debtor from any obligation hereunder) make or do the same in such manner
and to such extent as the Secured Party may deem reasonably necessary to protect the Security Interests provided hereby, including specifically, without limiting the general powers, the right to
appear in and defend any action or proceeding purporting to affect the Security Interests provided hereby and the Debtor, and the Secured Party may also perform and discharge each and every
obligation, 

9

 

covenant and agreement of the Debtor contained in any Assigned Agreement and, in exercising any such powers, pay necessary costs and expenses, employ counsel and incur and pay reasonable attorneys'
fees. 

    (j)  Upon
the request of the Secured Party, the Debtor will send to the Secured Party copies of all material notices, documents and other papers furnished or received
by it with respect to any of the Assigned Agreements. 

    Section 5.  Special Provisions Concerning Receivables.  

    (a) As
of the time when each Receivable arises, the Debtor shall be deemed to have warranted as to each such Receivable that such Receivable and all papers and
documents relating thereto are genuine and in all respects what they purport to be, and that all papers and documents relating thereto: 

     (i) will
be signed by the account debtor named therein (or such account debtor's duly authorized agent) or otherwise be binding on the account debtor; 

    (ii) will
represent the genuine, legal, valid and binding obligation of the account debtor evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services or the sale and delivery of merchandise or both; 

    (iii) to
the extent evidenced by writings, will be the only original writings evidencing and embodying such obligation of the account debtor named therein; and 

    (iv) will
be in compliance and will conform, in all material respects, with all applicable federal, state and local laws (including applicable usury laws) and
applicable laws of any relevant foreign jurisdiction. 

    (b) The
Debtor will keep and maintain at the Debtor's own cost and expense satisfactory and complete records of the Receivables, including, but not limited to, records
of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and the Debtor will make the same available to the Secured Party, at the Debtor's own
cost and expense, at any and all reasonable times during the existence of an Event of Default upon demand of the Secured Party. The
Debtor shall, at the Debtor's own cost and expense, deliver the Receivables (including, without limitation, all documents evidencing the Receivables) and such books and records to the Secured Party or
to its representatives upon its demand at any time during the existence of an Event of Default and, if prior to the Maturity Date, Acceleration. If the Secured Party shall so request during the
existence of an Event of Default, the Debtor shall legend, in form and manner satisfactory to the Secured Party, the Receivables and other books, records and documents of the Debtor evidencing or
pertaining to the Receivables with an appropriate reference to the fact that the Receivables have been assigned to the Secured Party and that the Secured Party has a security interest therein. 

    (c) Except
in the ordinary course of business prior to an Event of Default and, if prior to the Maturity Date, Acceleration or in accordance with
Section 3(i) herein, the Debtor will not rescind or cancel any indebtedness evidenced by any Receivable or modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any dispute, claim, suit or legal proceeding relating thereto, or sell any Receivable or interest therein, without the prior written consent of the Secured
Party, except that the Debtor may (i) grant discounts in connection with the prepayment of any Receivable in an amount which is customary in the line of business in which the Debtor is engaged
and consistent with the Debtor's past practices and (ii) extend the payment period of up to $250,000 of Receivables in any one instance and $1,000,000 of Receivables in the aggregate, by up to
180 days. 

    (d) The
Debtor will duly fulfill all obligations on its part to be fulfilled under or in connection with the Receivables and will do nothing to impair the rights of the
Secured Party in the Receivables. 

10

 

    (e) The Debtor shall endeavor to collect or cause to be collected from the account debtor named in each Receivable, as and when due (including, without limitation,
Receivables which are delinquent, such Receivables to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Receivable,
and credit forthwith (on a daily basis) upon receipt thereof all such amounts as are so collected to the outstanding balance of such Receivable. The costs and expenses (including attorney's fees) of
collection, whether incurred by the Debtor or the Secured Party, shall be borne by the Debtor. 

    (f)  If
any of the Receivables becomes evidenced by an Instrument (other than a check received in payment of a Receivable and deposited in the ordinary course of
business), the Debtor will notify the Secured Party thereof, and, upon request by the Secured Party after an Event of Default, promptly deliver such Instrument to the Secured Party appropriately
endorsed to the order of the Secured Party as further security for the satisfaction in full of the Secured Obligations. 

    (g) Upon
request of the Secured Party, at any time when an Event of Default and, if prior to the Maturity Date, Acceleration shall exist, the Debtor shall promptly
notify (in manner, form and
substance satisfactory to the Secured Party) all Persons who are at any time obligated under any Receivable that the Secured Party possesses a Security Interest in such Receivable and that all
payments in respect thereof are to be made to such account as the Secured Party directs. 

    Section 6.  Special Provisions Concerning Equipment.  The Debtor will do nothing to impair the
rights of the Secured Party in the Equipment except in accordance with Section 3(i) herein. The Debtor shall cause the Equipment to at all times constitute and remain personal property.
The Debtor retains all liability and responsibility in connection with the Equipment and the liability of the Debtor to pay the Secured Obligations shall in no way be affected or diminished by reason
of the fact that such Equipment may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to the Debtor. 

    Section 7.  Financing Statements; Documentary Stamp Taxes.  

    (a) The
Debtor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Secured Party from time to time such lists, descriptions and
designations of Inventory, warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the Security Interest
hereby granted, which the Secured Party reasonably deems appropriate or advisable to perfect, preserve or protect its Security Interest in the Collateral. The Debtor hereby constitutes the Secured
Party its attorney-in-fact to execute and file in the name and on behalf of the Debtor such additional financing statements as the Secured Party may reasonably request, such
acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until the Secured Obligations are paid in full. Further, to the extent permitted
by applicable law, the Debtor authorizes the Secured Party to file any such financing statements without the signature of the Debtor and Secured Party shall use reasonable efforts to notify Debtor of
any such filings. The Debtor will pay all applicable filing fees and related expenses in connection with any such financing statements. 

    (b) The
Debtor agrees to procure, pay for, affix to any and all documents and cancel any documentary tax stamps required by and in accordance with, applicable law and
the Debtor will indemnify and hold the Secured Party harmless against any liability (including interest and penalties) in respect of such documentary stamp taxes. 

    Section 8.  Special Provisions Concerning Remedies and Sale.  In addition to any rights and
remedies now or hereafter granted under applicable law and not by way of limitation of any such rights and remedies, during the existence of an Event of Default and, if prior to the Maturity Date, 

11

 

Acceleration, the Secured Party shall have all of the rights and remedies of a secured party under the NYUCC as enacted in any applicable jurisdiction in addition to the rights and remedies provided
herein, in the Notes and in any other agreement executed in connection with the Notes whereby the Debtor has granted any Lien to the Secured Party. Without in any way limiting the foregoing, upon the
giving of notice to the Debtor of Secured Party's intent to pursue any one or all of the following or any other remedies the Secured Party shall have the right, in the name of the Debtor or in the
name of the Secured Party or otherwise: 

     (i) to
ask for, demand, collect, receive, compound and give acquittance for the Receivables or any part thereof; 

    (ii) to
extend the time of payment of, compromise or settle for cash, credit or otherwise, but only upon commercially reasonable terms and conditions, any of the
Receivables; 

    (iii) to
endorse the name of the Debtor on any checks, drafts or other orders or instruments for the payment of moneys payable to the Debtor which shall be issued in
respect of any Receivable; 

    (iv) to
file any claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by the Secured Party necessary or advisable for the purpose of
collecting or enforcing payment of any Receivable; 

    (v) to
make test verifications of the Receivables or any portion thereof; 

    (vi) to
notify any or all account debtors under any or all of the Receivables to make payment thereof directly to the Secured Party for the account of the Secured Party
and to require the Debtor to forthwith give similar notice to the account debtors; 

   (vii) to
require the Debtor forthwith to account for and transmit to the Secured Party in the same form as received all proceeds (other than physical property) of
collection of Receivables received by the Debtor and, until so transmitted, to hold the same in trust for the Secured Party and not commingle such proceeds with any other funds of the Debtor; 

   (viii) to
take possession of any or all of the Collateral and, for that purpose, to enter, with the aid and assistance of any Person or Persons and with or without
legal process, any premises where the Collateral, or any part thereof, are, or may be, placed or assembled, and to remove any of such Collateral; 

    (ix) to
execute any instrument and do all other things necessary and proper to protect and preserve and realize upon the Collateral and the other rights contemplated
hereby; 

    (x) upon
notice to such effect, to require the Debtor to deliver, at the Debtor's expense, any or all Collateral to the Secured Party at a place designated by the
Secured Party; 

    (xi) without
obligation to resort to other security, at any time and from time to time, to sell, re-sell, assign and deliver all or any of the Collateral,
in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash, upon credit or
for future delivery, and at such price or prices and on such terms as the Secured Party may determine, with the amounts realized from any such sale to be applied to the Secured Obligations in the
manner determined by the Secured Party; 

   (xii) to
enforce (and shall have the exclusive right to enforce), at any time (without assuming any liability or obligation thereunder), against any licensee or
sublicensee, all rights and remedies of Debtor in, to and under any one or more license agreements with respect to the Intellectual Property, and take or refrain from taking any action under any
thereof, and Debtor hereby releases the Secured Party from, and agrees to hold the Secured Party free and harmless from and 

12

 

against any claims arising out of, any action taken or omitted to be taken with respect to any such license agreement; 

   (xiii) in
addition to the foregoing, in order to implement the assignment, sale or other disposal of any of the Intellectual Property pursuant to this Agreement, the
Secured Party may, at any time, pursuant to the authority granted in the Power of Attorney described herein (such authority becoming effective on the occurrence or continuation as hereinabove provided
of an Event of Default), execute and deliver on behalf of the applicable Debtor, one or more instruments of assignment of the Patents or Trademarks (or any application or registration thereof), in
form suitable for filing, recording or registration in any country. Debtor agrees to pay when due all reasonable costs incurred in any such transfer of the Patents or Trademarks, including any taxes,
fees and reasonable attorneys' fees, and all such costs shall be added to the Secured Obligations. 

    In
the event of any license, assignment, sale or other disposition of the Intellectual Property, or any of it, after the occurrence or continuation as hereinabove provided of an Event
of Default, Debtor shall supply its know-how and expertise relating to the manufacture and sale of the products bearing or in connection with the Trademarks or Patents, and its customer
lists and other records relating to the Trademarks or Patents and to the distribution of said products, to the Secured Party or its designee. 

    The
Secured Party shall not be obligated to do any of the acts hereinabove authorized, but in the event that the Secured Party elects to do any such act, the Secured Party shall not
be responsible to the Debtor except for its gross negligence or willful misconduct. 

    (b) The
Secured Party may take legal proceedings for the appointment of a receiver or receivers (to which the Secured Party shall be entitled as a matter of right) to
take possession of the Collateral pending the sale thereof pursuant either to the powers of sale granted by this Agreement or to a judgment, order or decree made in any judicial proceeding for the
foreclosure or involving the enforcement of this Agreement. If, after the exercise of any or all of such rights and remedies, any of the Secured Obligations shall remain unpaid, the Debtor shall
remain liable for any deficiency. After the indefeasible payment in full of the Secured Obligations, any proceeds of the Collateral received or held by the Secured Party shall be turned over to the
Debtor and the Collateral shall be reassigned to the Debtor by the Secured Party without recourse to the Secured Party and without any representations, warranties or agreements of any kind. 

    (c) Upon
any sale of any of the Collateral, whether made under the power of sale hereby given or under judgment, order or decree in any judicial proceeding for the
foreclosure or involving the enforcement of this Agreement: 

     (i) the
Secured Party may, to the extent permitted by law, bid for and purchase the property being sold, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property in its own absolute right without further accountability, and may, in paying the purchase money therefor, deliver any Notes or claims for interest thereon and any
other instruments evidencing the Secured Obligations or agree to the satisfaction of all or a portion of the Secured Obligations in lieu of cash in payment of the amount which shall be payable
thereon, and the Notes and such instruments, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Secured Party after being appropriately stamped
to show partial payment; 

    (ii) the
Secured Party may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the
property sold; 

    (iii) the
Secured Party is hereby irrevocably appointed the true and lawful attorney-in-fact of the Debtor in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold and for such other purposes as are necessary or desirable to effectuate the provisions (including,
without limitation, this Section 8) of this 

13

 

Agreement, and for that purpose it may execute and deliver all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more Persons with like power, the
Debtor hereby ratifying and confirming all that its said attorney, or such substitute or substitutes, shall lawfully do by virtue hereof; but if so requested by the Secured Party or by any purchaser,
the Debtor shall ratify and confirm any such sale or transfer by executing and delivering to the Secured Party or to such purchaser all property, deeds, bills of sale, instruments or assignment and
transfer and releases as may be designated in any such request; 

    (iv) all
right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Debtor of, in and to the property so sold shall be
divested; such sale shall be a perpetual bar both at law and in equity against the Debtor, its successors and assigns, and against any and all Persons claiming or who may claim the property sold or
any part thereof from, through or under the Debtor, its successors or assigns; 

    (v) the
receipt of the Secured Party or of the officer thereof making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or
their purchase money, and such purchaser or purchasers, and his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Secured
Party or of such officer therefor, be obliged to see to the application of such purchase money or be in any way answerable for any loss, misapplication or nonapplication thereof; and 

    (vi) to
the extent that it may lawfully do so, and subject to any legal requirement that the Secured Party act in a commercially reasonable manner, the Debtor agrees
that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption laws, or any law
permitting it to direct the order in which the Collateral or any part thereof shall be sold, now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance or
enforcement of this Agreement, the Notes or any other agreement executed in connection with the Notes whereby the Debtor has granted any Lien to the Secured Party, and the Debtor hereby expressly
waives all benefit or advantage of any such laws and covenants that it will not hinder, delay or impede the execution of any power granted or delegated to the Secured Party in this Agreement, but will
suffer and permit the execution of every such power as though no such laws were in force. In the event of any sale of Collateral pursuant to this Section, the Secured Party shall, at least
10 days before such sale, give the Debtor written, telecopied or telex notice of its intention to sell. 

    Section 9.  Application of Moneys.  

    (a) Except
as otherwise provided herein or in the Notes, all moneys which the Secured Party shall receive, in accordance with the provisions hereof, shall be applied
(to the extent thereof) in the following manner: First, to the payment of all costs and expenses reasonably incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this Agreement or any of the reasonable expenses and disbursements of the Secured Party (including, without limitation, the
reasonable fees and disbursements of its counsel and agents); Second, to the payment of all Secured Obligations arising out of the Notes in accordance
with the terms of the Notes and, if not therein
provided, in such order as the Secured Party may determine; and Third, to the payment of all other Secured Obligations in such order as the Secured
Party may determine. 

    (b) If
after applying any amounts which the Secured Party has received in respect of the Collateral any of the Secured Obligations remain unpaid, the Debtor shall
continue to be liable for any deficiency, together with interest. 

    Section 10.  Fees and Expenses, etc.  Any and all reasonable fees, costs and expenses of whatever
kind or nature, including but not limited to the reasonable attorneys' fees and legal expenses incurred by the Secured Party in connection with this Agreement, the filing or recording of any documents 

14

 

(including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, counsel fees, maintenance fees, fees and other costs relating to the encumbrances or otherwise
protecting, maintaining, preserving the Collateral, or in defending or prosecuting any actions or proceedings arising out of or related to the Collateral, shall be borne and paid by the Debtor on
written demand by the Secured Party setting forth in reasonable detail the nature of such expenses and until so paid shall be added to the principal amount of the Secured Obligations and shall bear
interest at the rate accruing thereon. In addition, the Debtor will pay, and indemnify and hold the Secured Party harmless from and against, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the Collateral, including (without limitation) claims of patent or trademark
infringement and any claim of unfair competition or anti-trust violation, other than liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements arising as a result of Secured Party's gross negligence or willful misconduct. 

    Section 11.  Power of Attorney.  

    Concurrently
with the execution and delivery hereof, the Debtor is executing and delivering to the Secured Party, in the form of Exhibit 3 hereto, three originals of a Power of
Attorney for the implementation of the assignment, sale or other disposal of the Collateral, including the Trademarks and Patents pursuant to this Agreement and Debtor hereby releases the Secured
Party from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Secured Party under the powers of attorney granted
herein, other than actions taken or omitted to be taken through the gross negligence or willful misconduct of the Secured Party. 

    Section 12.  Miscellaneous.  

    (a) All
notices, communications and distributions hereunder shall be in writing (including telecopied communication) and mailed by certified mail, telecopied,
personally delivered or delivered by Federal Express or other reputable overnight courier service, if to the Debtor addressed to it at its address set forth opposite its signature below, if to the
Secured Party, addressed to it at its address set forth opposite its signature below, or as to either party at such other address as shall be designated by such party in a written notice to such other
party complying as to delivery with the terms of this Section. All such notices and other communications shall be effective (i) if mailed by certified mail, three days after the date of deposit
thereof with the U.S. Postal Service, properly addressed with postage prepaid, (ii) if telecopied, upon receipt by the addressee, (iii) if personally delivered, upon such delivery and
(iv) if delivered by overnight courier service, on the business day following delivery thereof to such courier service in time for next-business-day delivery. 

    (b) No
delay on the part of the Secured Party in exercising any of its rights, remedies, powers and privileges hereunder or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Debtor and the
Secured Party. No notice to or demand on the Debtor in any case shall entitle the Debtor to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the
rights of the Secured Party to any other or further action in any circumstances without notice or demand. 

    (c) The
obligations of the Debtor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Debtor; (ii) any exercise or non-exercise, or any waiver of, any right, remedy,
power or privilege under or in respect of the Notes, this Agreement or any other agreement executed in connection with the Notes whereby the Debtor has granted any Lien to the Secured Party or any
other agreement executed in connection with any of the foregoing, the Secured Obligations or any security for any of the Secured Obligations; or (iii) any amendment to or modification of any of
the foregoing; whether or not the Debtor shall have notice or knowledge of 

15

 

any of the foregoing. The rights and remedies of the Secured Party herein provided are cumulative and not exclusive of any rights or remedies which the Secured Party would otherwise have. 

    (d) This
Agreement shall be binding upon the Debtor and its successors and assigns and shall inure to the benefit of the Secured Party and its successors and assigns,
except that the Debtor may not transfer or assign any of its obligations, rights or interest hereunder without the prior written consent of the Secured Party and any such purported assignment by the
Debtor shall be void. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement. 

    (e) The
descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement. 

    (f)  Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. 

    (g) All
rights, remedies and powers provided by this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision
of law, and the provisions hereof are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they will not
render this Agreement invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under the provisions of any applicable law. 

    (h) This
Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and be governed by the laws of the State of New York
except to the extent that matters of title, or creation, perfection and priority of the Security Interests created hereby, or procedural issues of foreclosure are required to be governed by the laws
of the state in which the Collateral, or part thereof, is located. 

    (i)  It
is expressly agreed, anything herein, in the Notes or in any other agreement or instrument executed in connection with the Notes to the contrary
notwithstanding, that the Debtor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Secured Party shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Secured Party be required or obligated in any manner to perform or fulfill any of the
obligations of the Debtor under or pursuant to any or in respect of any Collateral. 

    (j)  This
Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which counterparts taken together shall be deemed to constitute one and the same instrument. 

16

 

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. 

	 	 	INTRAWARE, INC.

as Debtor
	

 	
 	

By:	

/s/ PETER H. JACKSON   
 Name: Peter H. Jackson

Title: Chief Executive Officer
	

 	
 	

COMMONWEALTH ASSOCIATES, as Agent,

as Secured Party
	

 	
 	

By:	

Commonwealth Associates Management Co., Inc.
	

 	
 	

By:	

/s/ JOSEPH P. WYNNE   
 Name: Joseph P. Wynne

Title: Secretary

17

 
 
 

Schedule 1    
    
    LOCATION OF CERTAIN INVENTORY AND EQUIPMENT COLLATERAL    
  

Current place(s) of business of the Debtor:  

Corporate Headquarters:  

25 Orinda Way

Orinda, California 94563 

Locations of Inventory and Equipment:  

18

 
  
 

    Schedule 2    
    
    EXISTING FINANCING STATEMENTS    
  

	Secured Party
	 	Date of Financing Statement
	 	Number of Financing Statement
	 	Location Filed
	 	Description of Collateral
	 	Amount of Indebtedness Secured

	 	 	 	 	 	 	 	 	 	 	 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

OTHER NAMES UNDER WHICH DEBTOR HAS CONDUCTED BUSINESS  

19

 
  
 

    Schedule 2-A    
    
    TRADEMARKS    
  

	Trademark
	 	Reg. Date
	 	Serial Number

 
 

Schedule 2-B    
    
    PATENTS    
  

	Title
	 	Date Issued
	 	Patent No.

20

 
 
 

Schedule B    
    
    LICENSES    
  

21

 

Exhibit 1 to Security Agreement 

 
 

SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY    
    
    (TRADEMARKS)    
  

    WHEREAS, Intraware, Inc., a Delaware corporation (herein referred to as "Assignor"), has adopted, used and is using the trademarks listed on  Schedule 1-A annexed hereto as part hereof (the "Trademarks"); 

    WHEREAS,
Assignor is obligated to Commonwealth Associates, L.P., a New York limited partnership, as agent (referred to herein as the
"Assignee") for the investors to whom Assignor has issued a series of secured promissory notes pursuant to a private placement of up to $5,000,000 and
Assignor has entered into a Security Agreement dated the date hereof (the "Agreement") in favor of Assignee; and 

    WHEREAS,
pursuant to the Agreement, Assignor has assigned to Assignee and granted to Assignee a security interest in, and mortgage on, all right, title and interest of Assignor in and
to the Trademarks, together with the goodwill of the business symbolized by the Trademarks and the applications and registrations thereof, and all proceeds thereof, including, without limitation, any
and all causes of action which may exist by reason of infringement thereof (the "Collateral"), to secure the payment, performance and observance of the
Secured Obligations (as defined in the Agreement); 

    NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Assignor does hereby further assign unto Assignee and grant to Assignee a security
interest in, and mortgage on, the Collateral to secure the prompt payment, performance and observance of the Secured Obligations. 

    Assignor
does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment of, security interest in and mortgage on the Collateral
made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein. 

    Assignee's
address is 25 Orinda Way, Orinda, California 94563. 

    IN
WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of the day of August  , 2001. 

	 	 	INTRAWARE, INC.
	

 	
 	

By	

 	

 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	

	 	 	 	Title:	 
	 	 	 	 	

22

 
 
 

SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY    
    
    TRADEMARKS    
  

	Trademark
	 	Reg. Date
	 	Serial Number

23

 

Exhibit 2 to

Security Agreement 

 
 

SPECIAL POWER OF ATTORNEY    
  

	STATE OF CALIFORNIA	 	)
	 	 	: ss.:
	COUNTY OF	 	)

    KNOW
ALL MEN BY THESE PRESENTS, THAT Intraware, Inc., a Delaware corporation with its principal office at 25 Orinda Way, Orinda, California 94563 (hereinafter called
"Assignor") hereby appoints and constitutes Commonwealth Associates, L.P., a New York limited partnership (referred to herein as the
"Assignee") for the investors to whom Assignor has issued a series of secured promissory notes pursuant to a private placement of up to $5,000,000 its
true and lawful attorney, with full power of substitution, and with full power and authority to perform the following acts on behalf of Assignor: 

    1.  For
the purpose of assigning, selling, licensing or otherwise disposing of all right, title and interest of Assignor in and to any letters patent of the United
States or any other country or political subdivision thereof, and all registrations, recordings, reissues, continuations, continuations-in-part and extensions thereof, and all
pending applications therefor, and for the purpose of the recording, registering and filing of, or accomplishing any other formality with respect to, the foregoing, to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary or advisable to effect such purpose; 

    2.  For
the purpose of assigning, selling, licensing or otherwise disposing of all right, title and interest of Assignor in and to any trademarks, trade names, trade
styles and service marks, and all registrations, recordings, reissues, extensions and renewals thereof, and all pending applications therefor, and for the purpose of the recording, registering and
filing of, or accomplishing any other formality with respect to, the foregoing, to execute and deliver any and all agreements, documents, instruments of assignment or other papers necessary or
advisable to effect such purpose; 

    3.  To
execute any and all documents, statements, certificates or other papers necessary or advisable in order to obtain the purposes described above as Assignee may in
its sole discretion determine. 

    This
power of attorney is made pursuant to a Security Agreement, dated the date hereof, between Assignor and Assignee and takes effect solely for the purposes of sections 8
(xv) and (xvi) thereof and is
subject to the conditions thereof and may not be revoked until the payment in full of all "Secured Obligations" as defined in such Security Agreement. 

Dated:
August  , 2001 

24

 

	[Corporate Seal]	 	INTRAWARE, INC.
	

 	
 	

By	

 	

 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	

	 	 	 	Title:	 
	 	 	 	 	

	STATE OF CALIFORNIA	 	)
	 	 	: ss.:
	COUNTY OF	 	)

    On
this    day of August 2001, before me personally appeared [            ], to me known, who, being by me duly sworn, did depose
and say that he resides at            and that he is            of Intraware, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was affixed pursuant to authority of the Board of Directors of said corporation, and that
he signed his name thereto pursuant to such authority. 

	

	
 	

Notary Public
 

25

QuickLinks

Exhibit 4.3

GENERAL SECURITY AGREEMENT (Floating Lien)

Schedule 1 LOCATION OF CERTAIN INVENTORY AND EQUIPMENT COLLATERAL

Schedule 2 EXISTING FINANCING STATEMENTS

Schedule 2-A TRADEMARKS

Schedule 2-B PATENTS

Schedule B LICENSES

SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY (TRADEMARKS)

SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY TRADEMARKS

SPECIAL POWER OF ATTORNEY

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