Document:

Prepared by MERRILL CORPORATION

Exhibit 10.2  

  

 INTRAWARE, INC.  

1996 STOCK OPTION PLAN  

(as amended on September 25, 2000)  

    1.  Purposes of the Plan. The purposes of this Stock Option Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business.
Options granted under the Plan may be incentive stock options (as defined under Section 422 of the Code) or nonstatutory stock options, as determined by the Administrator at the time of grant
of an option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder. 

    2.  Definitions. As used herein, the following definitions shall apply: 

    (a) "Administrator" means the Board or any of its Committees appointed pursuant to Section 4 of the Plan. 

    (b) "Board" means the Board of Directors of the Company. 

    (c) "Code" means the Internal Revenue Code of 1986, as amended. 

    (d) "Committee" means a Committee appointed by the Board of Directors in accordance with Section 4 of the Plan. 

    (e) "Common Stock" means the Common Stock of the Company. 

    (f)  "Company" means Intraware, Inc., a Delaware corporation. 

    (g) "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or
advisory services and is compensated for such services, and any director of the Company whether compensated for such services or not. If and in the event the Company registers any class of any equity
security pursuant to the Exchange Act, the term Consultant shall thereafter not include directors who are not compensated for their services or are paid only a director's fee by the Company. 

    (h) "Continuous Status as an Employee or Consultant" means that the employment or consulting relationship with the
Company, any Parent or Subsidiary is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract, including Company policies. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. 

 

    (i)  "Employee" means any person, including officers and directors, employed by the Company or any Parent or Subsidiary
of the Company. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company. 

    (j)  "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

    (k) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

    (i)  If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market of the
National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; 

    (ii) If
the Common Stock is quoted on the NASDAQ System (but not on the Nasdaq National Market thereof) or regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of
determination, or; 

    (iii) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

    (l)  "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code. 

    (m) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

    (n) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder. 

    (o) "Option" means a stock option granted pursuant to the Plan. 

    (p) "Optioned Stock" means the Common Stock subject to an Option. 

    (q) "Optionee" means an Employee or Consultant who receives an Option. 

    (r) "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the
Code. 

    (s) "Plan" means this 1996 Stock Option Plan. 

    (t)  "Share" means a share of the Common Stock, as adjusted in accordance with Section 11 below. 

    (u) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in
Section 424(f) of the Code. 

    3.  Stock Subject to the Plan. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number
of shares which may be optioned and sold under the Plan is 7,719,869 Shares (as adjusted to reflect the two-for-one, forward split of the Company's Common Stock in
February 1999), plus an annual increase to be added on the first day of the Company's fiscal year beginning in 2000 equal to the lesser of (i) 3,000,000 Shares, (ii) 6% of the
outstanding shares on such date or (iii) a lesser amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock. 

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    If an Option should expire or become unexercisable for any reason without having been exercised in full, the unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan. 

    4.  Administration of the Plan. 

    (a) Initial Plan Procedure. Prior to the date, if any, upon which the Company becomes subject to the Exchange Act, the
Plan shall be administered by the Board or a committee appointed by the Board. 

    (b) Plan Procedure after the Date, if any, upon Which the Company becomes Subject to the Exchange Act. 

    (i)  Administration with Respect to Directors and Officers. With respect to grants of Options to Employees who are also
officers or directors of the Company, the Plan shall be administered by (A) the Board if the Board may administer the Plan in compliance with Rule 16b-3 promulgated under the
Exchange Act or any successor thereto ("Rule 16b-3") with respect to a plan intended to qualify thereunder as a discretionary plan, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted in such a manner as to permit the Plan to comply with Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary plan. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and thereafter directly administer the Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan. 

    (ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan may be administered by
different bodies with respect to directors, non-director officers and Employees who are neither directors nor officers. 

    (iii) Administration With Respect to Consultants and Other Employees. With respect to grants of Options to Employees or
Consultants who are neither directors nor officers of the Company, the Plan shall be administered by (A) the Board or (B) a committee designated by the Board, which committee shall be
constituted in such a manner as to satisfy the legal requirements relating to the administration of incentive stock option plans, if any, of California corporate and securities laws, of the Code, and
of any applicable stock exchange (the "Applicable Laws"). Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however
caused, and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws. 

    (c) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific
duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any stock exchange upon which the Common Stock is
listed, the Administrator shall have the authority, in its discretion: 

    (i)  to
determine the Fair Market Value of the Common Stock, in accordance with Section 2(k) of the Plan; 

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    (ii) to select the Consultants and Employees to whom Options may from time to time be granted hereunder; 

    (iii) to
determine whether and to what extent Options are granted hereunder; 

    (iv) to
determine the number of shares of Common Stock to be covered by each such award granted hereunder; 

    (v) to
approve forms of agreement for use under the Plan; 

    (vi) to
determine the terms and conditions of any award granted hereunder; 

    (vii) to
determine whether and under what circumstances an Option may be settled in cash under subsection 9(f) instead of Common Stock; 

    (viii) to
amend the terms of any Option previously granted under the Plan; and 

    (ix) to
construe and interpret the terms of the Plan and awards granted pursuant to the Plan. 

    (d) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees and any other holders of any Options. 

    5.  Eligibility. 

    (a) Nonstatutory
Stock Options may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees. An Employee or Consultant who has
been granted an Option may, if otherwise eligible, be granted additional Options. 

    (b) Each
Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market Value: 

    (i)  of
Shares subject to an Optionee's Incentive Stock Options granted by the Company, any Parent or Subsidiary, which 

    (ii) become
exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) 

exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 

    (c) The
Plan shall not confer upon any Optionee any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere
in any way with his or her right or the Company's right to terminate his or her employment or consulting relationship at any time, with or without cause. 

    (d) Upon
the Company or a successor corporation issuing any class of common equity securities required to be registered under Section 12 of the Exchange Act or
upon the Plan being assumed by a corporation having a class of common equity securities required to be registered under Section 12 of the Exchange Act, the following limitations shall apply to
grants of Options to Employees: 

    (i)  No
Employee shall be granted, in any fiscal year of the Company, Options to purchase more than 1,000,000 Shares. 

    (ii) The
foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 11. 

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    (iii) If an Option is canceled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in
Section 11), the canceled Option will be counted against
the limit set forth in Section 5(d)(i). For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new
Option. 

    6.  Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or
its approval by the shareholders of the Company, as described in Section 17 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan. 

    7.  Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided, however, that
the term shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from
the date of grant thereof or such shorter term as may be provided in the Option Agreement. 

    8.  Option Exercise Price and Consideration. 

    (a) The
per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Board, but shall be subject
to the following: 

    (i)  In
the case of an Incentive Stock Option 

    (A) granted
to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

    (B) granted
to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant. 

    (ii) In
the case of a Nonstatutory Stock Option 

    (A) granted
to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant. 

    (B) granted
to any person, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 

    (b) The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option have been owned by the Optionee for more than six months on the date of surrender and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (5) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration 

5

 

to accept, the Board shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 

    9.  Exercise of Option. 

    (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times and
under such conditions as determined by the Board, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan. 

    An
Option may not be exercised for a fraction of a Share. 

    An
Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 11 of the Plan. 

    Exercise
of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised. 

    (b) Termination of Employment or Consulting Relationship. In the event that an Optionee's Continuous Status as an
Employee or Consultant terminates (but not in the event of a change of status from Employee to Consultant (in which case an Employee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option on the ninety-first (91st) day following such change of status) or from Consultant to Employee), other than upon the Optionee's death or disability, the Optionee may exercise
his or her Option, but only within such period of time as is determined by the Administrator (but in no event less than thirty (30) days after the date of termination), and only to the extent
that the Optionee was entitled to exercise it at the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant). If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

    (c) Disability of Optionee. In the event of termination of an Optionee's consulting relationship or Continuous Status as
an Employee as a result of his or her disability, Optionee may, but only within six (6) months from the date of such termination (and in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the day three months and one day following such termination. To the extent that Optionee is not entitled to exercise the Option at the date of termination, or if 

6

 

Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

    (d) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within twelve
(12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise
the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

    (e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the Exchange Act must
comply with Rule 16b-3 and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions. 

    (f)  Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 

    10. Non-Transferability of Options. Options may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 

    11. Adjustments Upon Changes in Capitalization or Merger. 

    (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. 

    (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Board shall
notify the Optionee at least fifteen (15) days prior to such proposed action. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation
of such proposed action. 

    (c) Merger or Asset Sale. In the event of a merger of the Company (other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into 

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voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation) with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option may be assumed or an equivalent option or
right may be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation; provided that, whether or not such Options are so assumed or substituted, each outstanding
Option shall become vested and exercisable to the extent of the Shares that would have become vested and exercisable upon December 31 of the year in which the merger or sale of assets is
consummated. If an Option becomes vested and exercisable in the event of a merger or sale of assets for that remaining period between the date of the merger or sale of assets and December 31 of
the same year, the Administrator shall notify the Optionee that the Option shall be exercisable for a period of fifteen (15) days from the date of such notice, and the Option will terminate
upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets was not solely common stock of the successor or
its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject
to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale
of assets. 

    12. Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date as is determined by the Board. Notice of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant. 

    13. Amendment and Termination of the Plan. 

    (a) Amendment and Termination. The Board may at any time amend, alter, suspend or discontinue the Plan, but no
amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the
extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other applicable law or regulation, including the
requirements of the
NASD or an established stock exchange), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. 

    (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Options already
granted, and such Options shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company. 

    14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and the 

8

 

requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

    As
a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law. 

    15. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

    The
inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained. 

    16. Agreements. Options shall be evidenced by written agreements in such form as the Board shall approve from time to
time. 

    17. Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months before or after the date the Plan is adopted. Such shareholder
approval shall be obtained in the degree and manner required under applicable state and federal law and the rules of any stock exchange upon which the Common Stock is listed. 

9

 
INTRAWARE, INC.  

1996 STOCK OPTION PLAN  

STOCK OPTION AGREEMENT  

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

I. NOTICE OF STOCK OPTION GRANT  

                            , 

    You
have been granted an option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows: 

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

 Vesting Schedule:  

    Subject to accelerated vesting as set forth below, this Option may be exercised, in whole or in part, in accordance with the following schedule: 

    1/4th
of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter,
subject to the Optionee continuing to be an Employee or Consultant on such dates. 

 Termination Period:  

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

II. AGREEMENT  

A. Grant of Option. 

    The
Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement (the "Optionee") an option (the "Option")
to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 13 of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail. 

    If
designated in the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code.
However, if this Option is 

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intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO"). 

B. Exercise of Option. 

    (a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the
Notice of Grant and the applicable provisions of the Plan and this Option Agreement. 

    (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice, in the form attached as
Exhibit A (the "Exercise Notice"), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to the Stock
Administrator of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price. 

    No
Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes
the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares. 

C. Method of Payment. 

    Payment
of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: 

    1.  cash;
or 

    2.  check;
or 

    3.  consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; or 

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

D. Non-Transferability of Option. 

    This
Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 

E. Term of Option. 

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

11

 

F. Tax Consequences. 

    Some
of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 

G. Exercising the Option. 

    1.  Nonstatutory Stock Option. The Optionee may incur regular federal income tax liability upon exercise of a NSO. The
Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares
if such withholding amounts are not delivered at the time of exercise. 

    2.  Incentive Stock Option. If this Option qualifies as an ISO, the Optionee will have no regular federal income tax
liability upon its exercise, although the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price will be treated as an adjustment
to alternative minimum taxable income for federal tax purposes and may subject the Optionee to alternative minimum tax in the year of exercise. In the event that the Optionee ceases to be an Employee
but remains a Service Provider, any Incentive Stock Option of the Optionee that remains unexercised shall cease to qualify as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option on the date three (3) months and one (1) day following such change of status. 

    3.  Disposition of Shares. 

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

    (b) ISO. If the Optionee holds ISO Shares for at least one year after exercise and two years after the grant date, any
gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the lesser of
(A) the difference between the Fair Market Value of the Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference between the sale price of such
Shares and the aggregate Exercise Price. Any additional gain will be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were held. 

    (c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, the Optionee shall immediately notify the Company in
writing of such disposition. The Optionee agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares
by payment in cash or out of the current earnings paid to the Optionee. 

12

 

H. Entire Agreement; Governing Law. 

    The
Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. 

I. NO GUARANTEE OF CONTINUED SERVICE. 

    OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE
COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS AN EMPLOYEE OR CONSULTANT AT ANY TIME, WITH OR WITHOUT CAUSE. 

    By
your signature and the signature of the Company's representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the
Plan and this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator
upon any questions relating to the Plan and Option Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 

	OPTIONEE:	 	INTRAWARE, INC.
	

 Signature	
 	

 Signature
	

 Print Name	
 	

 Name
	

 Residence Address	
 	

 Title
	

	
 	

 

13

 
CONSENT OF SPOUSE  

    The undersigned spouse of Optionee has read and hereby approves the terms and conditions of the Plan and this Option Agreement (Grant #      ). In
consideration of the Company's granting his or her spouse the right to purchase Shares as set forth in the Plan and this Option Agreement, the undersigned hereby agrees to be irrevocably bound by the
terms and conditions of the Plan and this Option Agreement and further agrees that any community property interest shall be similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise of rights under the Plan or this Option Agreement. 

	 	 	
 Spouse of Optionee

14

 
EXHIBIT A  

INTRAWARE, INC.  

1996 STOCK OPTION PLAN  

EXERCISE NOTICE  

Intraware, Inc.

25 Orinda Way

Orinda, California 94563 

Attention:
Stock Administrator 

    1.  Exercise of Option. Effective as of today,             ,
      , the undersigned ("Purchaser") hereby elects to purchase              shares (the "Shares") of the Common Stock of
Intraware, Inc. (the "Company") under and pursuant to the 1996 Stock Option Plan (the "Plan") and the Stock Option Agreement dated,        (the "Option
Agreement"). The purchase price for the Shares shall be $      , as required by the Option Agreement. 

    2.  Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price for the Shares. 

    3.  Representations of Purchaser. Purchaser acknowledges that Purchaser has received, read and understood the Plan and
the Option Agreement and agrees to abide by and be bound by their terms and conditions. 

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

    5.  Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of
Purchaser's purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition
of the Shares and that Purchaser is not relying on the Company for any tax advice. 

    6.  Entire Agreement; Governing Law. The Plan and Option Agreement are incorporated herein by reference. This Agreement,
the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser's interest except by means of a writing signed by the Company 

15

 

and Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. 

	Submitted by:	 	Accepted by:
	

PURCHASER:	
 	

INTRAWARE, INC.
	

 Signature	
 	

 Signature
	

 Print Name	
 	

 Name and Title
	

Address:	
 	

Address:
	

 	
 	

Intraware, Inc.

25 Orinda Way

Orinda, California 94563
	

 	
 	

 Date Received

16Prepared by MERRILL CORPORATION

Exhibit 10.4  

  

 INTRAWARE, INC.  

1998 DIRECTOR OPTION PLAN

(as amended September 25, 2000)  

    1.  Purposes of the Plan.  The purposes of this 1998 Director Option Plan are to attract and retain the
best available personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board. 

    All
options granted hereunder shall be nonstatutory stock options. 

    2.  Definitions.  As used herein, the following definitions shall apply: 

    (a) "Board" means the Board of Directors of the Company. 

    (b) "Code" means the Internal Revenue Code of 1986, as amended. 

    (c) "Common Stock" means the common stock of the Company. 

    (d) "Company" means Intraware, Inc., a Delaware corporation. 

    (e) "Director" means a member of the Board. 

    (f)  "Disability" means total and permanent disability as defined in section 22(e)(3) of the Code. 

    (g) "Employee" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary
of the Company. The payment of a Director's fee by the Company shall not be sufficient in and of itself to constitute "employment" by the Company. 

    (h) "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

    (i)  "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

    (i)  If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination as reported in The Wall Street Journal or such other source as the Administrator
deems reliable; 

    (ii) If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock
shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or 

    (iii) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. 

    (j)  "Inside Director" means a Director who is an Employee. 

 

    (k) "Option" means a stock option granted pursuant to the Plan. 

    (l)  "Optioned Stock" means the Common Stock subject to an Option. 

    (m) "Optionee" means a Director who holds an Option. 

    (n) "Outside Director" means a Director who is not an Employee. 

    (o) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the
Code. 

    (p) "Plan" means this 1998 Director Option Plan. 

    (q) "Share" means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan. 

    (r) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(f) of the Internal Revenue Code of 1986. 

    3.  Stock Subject to the Plan.  Subject to the provisions of Section 10 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is 350,000 Shares (the "Pool"). The Shares may be authorized, but unissued, or reacquired Common Stock. 

    If
an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale
under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the
Plan. 

    4.  Administration and Grants of Options under the Plan.  

    (a)  Procedure for Grants.  All grants of Options to Outside Directors under this Plan shall be automatic
and nondiscretionary and shall be made strictly in accordance with the following provisions: 

     (i) No
person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of Shares to be covered by Options. 

    (ii) Each
Outside Director shall be automatically granted an Option to purchase 15,000 Shares (the "First Option") on the date on which such person first becomes an
Outside Director, whether through election by the shareholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside
Director but who remains a Director shall not receive a First Option. 

    (iii) Each
Outside Director shall be automatically granted an Option to purchase 7,500 Shares (a "Subsequent Option") on the date of the annual meeting of the
stockholders of each year provided he or she is then an Outside Director and if as of such date, he or she shall have served on the Board for at least the preceding six (6) months. 

    (iv) Notwithstanding
the provisions of subsections (ii) and (iii) hereof, any exercise of an Option granted before the Company has obtained shareholder
approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such shareholder approval of the Plan in accordance with Section 16 hereof. 

    (v) The
terms of a First Option granted hereunder shall be as follows: 

    (A) the
term of the First Option shall be ten (10) years. 

    (B) the
First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. 

2

 

    (C) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option. 

    (D) subject
to Section 10 hereof, the First Option shall become exercisable as to 12.5% of the Shares subject to the First Option on the six-month
anniversary of its date of grant, and as to 1/48 of the Shares subject to the First Option each month thereafter, provided that the Optionee continues to serve as a Director on such dates. 

    (vi) The
terms of a Subsequent Option granted hereunder shall be as follows: 

    (A) the
term of the Subsequent Option shall be ten (10) years. 

    (B) the
Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. 

    (C) the
exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option. 

    (D) subject
to Section 10 hereof, the Subsequent Option shall become exercisable as to 25% of the Shares subject to the Subsequent Option on the
six-month anniversary of its date of grant, and as to 1/24 of the Shares subject to the Subsequent Option each month thereafter, provided that the Optionee continues to serve as a Director
on such dates. 

   (vii) In
the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the number of Shares previously purchased
under Options to exceed the Pool, then the remaining Shares available for Option grant shall be granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made
until such time, if any, as additional Shares become available for grant under the Plan through action of the Board or the shareholders to increase the number of Shares which may be issued under the
Plan or through cancellation or expiration of Options previously granted hereunder. 

    5.  Eligibility.  Options may be granted only to Outside Directors. All Options shall be automatically
granted in accordance with the terms set forth in Section 4 hereof. 

    The
Plan shall not confer upon any Optionee any right with respect to continuation of service as a Director or nomination to serve as a Director, nor shall it interfere in any way
with any rights which the Director or the Company may have to terminate the Director's relationship with the Company at any time. 

    6.  Term of Plan.  The Plan shall become effective upon the earlier to occur of its adoption by the Board
or its approval by the shareholders of the Company as described in Section 16 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan. 

    7.  Form of Consideration.  The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of Shares acquired upon exercise of an option, have
been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or
(v) any combination of the foregoing methods of payment. 

3

 

    8.  Exercise of Option.  

    (a)  Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be exercisable
at such times as are set forth in Section 4 hereof; provided, however, that no Options shall be exercisable until shareholder approval of the Plan in accordance with Section 16 hereof
has been obtained. 

    An
Option may not be exercised for a fraction of a Share. 

    An
Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. 

    Exercise
of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised. 

    (b)  Termination of Continuous Status as a Director.  Subject to Section 10 hereof, in the event
an Optionee's status as a Director terminates (other than upon the Optionee's death or Disability), the Optionee may exercise his or her Option, but only within three (3) months following the
date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall terminate. 

    (c)  Disability of Optionee.  In the event Optionee's status as a Director terminates as a result of
Disability, the Optionee may exercise his or her Option, but only within twelve (12) months following the date of such termination, and only to the extent that the Optionee was entitled to
exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the
date of termination, or if he or she does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. 

    (d)  Death of Optionee.  In the event of an Optionee's death, the Optionee's estate or a person who
acquired the right to exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following the date of death, and only to the extent that the
Optionee was entitled to exercise it on the date of death (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of death, and to the extent that the Optionee's estate or a person who acquired the right to exercise such Option does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate. 

    9.  Non-Transferability of Options.  The Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 

4

 

    10.  Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.  

    (a)  Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the
number of Shares covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as the price per Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company after the
closing of the Company's first firmly underwritten public offering of its Common Stock; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. 

    (b)  Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company,
to the extent that an Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action. 

    (c)  Merger or Asset Sale.  In the event of a merger of the Company with or into another corporation or
the sale of substantially all of the assets of the Company, outstanding Options may be assumed or equivalent options may be substituted by the successor corporation or a Parent or Subsidiary thereof
(the "Successor Corporation"). If an Option is assumed or substituted for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the
Optionee serves as a Director or a director of the Successor Corporation. Following such assumption or substitution, if the Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the Optionee, the Option or option shall become fully exercisable, including as to Shares for which it would not otherwise be
exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(b) through (d) above. 

    If
the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall become fully vested and exercisable, including as to
Shares for which it would not otherwise be exercisable. In such event the Board shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the
date of such notice, and upon the expiration of such period the Option shall terminate. 

    For
the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares). If such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of
assets. 

5

 

    11.  Amendment and Termination of the Plan.  

    (a)  Amendment and Termination.  The Board may at any time amend, alter, suspend, or discontinue the
Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable law, regulation or stock exchange rule, the Company shall obtain shareholder approval of any Plan amendment in such a
manner and to such a degree as required. 

    (b)  Effect of Amendment or Termination.  Any such amendment or termination of the Plan shall not affect
Options already granted and such Options shall remain in full force and effect as if this Plan had not been amended or terminated. 

    12.  Time of Granting Options.  The date of grant of an Option shall, for all purposes, be the date
determined in accordance with Section 4 hereof. 

    13.  Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

    As
a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law. 

    Inability
of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 

    14.  Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

    15.  Option Agreement.  Options shall be evidenced by written option agreements in such form as the Board
shall approve. 

    16.  Shareholder Approval.  The Plan shall be subject to approval by the shareholders of the Company
within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under applicable state and federal law and any stock
exchange rules. 

6

 
INTRAWARE, INC.  

DIRECTOR OPTION AGREEMENT  

    Intraware, Inc., (the "Company"), has granted to              (the "Optionee"), an option to purchase a total of
[             (        )] shares of the Company's Common Stock (the "Optioned Stock"), at the price
determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Company's 1998 Director Option Plan (the "Plan") adopted by the Company which is incorporated
herein by reference. The terms defined in the Plan shall have the same defined meanings herein. 

    1.  Nature of the Option.  This Option is a nonstatutory option and is not intended to qualify for any
special tax benefits to the Optionee. 

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

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

    (a)  Right to Exercise.  

     (i) This
Option shall become exercisable in installments cumulatively with respect to              percent
(    %) of the Optioned Stock one year after the date of grant, and as to an additional              percent
(  %) of the Optioned Stock on each anniversary of the date of grant, so that one hundred percent (100%) of the Optioned Stock shall be exercisable
[  ] years after the date of grant; provided, however, that in no event shall any Option be exercisable prior to the date the
stockholders of the Company approve the Plan. 

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

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

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

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

    (a) cash;

    (b) check;
or 

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

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

    5.  Restrictions on Exercise.  This Option may not be exercised if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulations, or if such issuance would not
comply with the requirements of any stock exchange upon which the Shares may then be listed. As a 

7

 

condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. 

    6.  Non-Transferability of Option.  This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee. 

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

    8.  Taxation Upon Exercise of Option.  Optionee understands that, upon exercise of this Option, he or she
will recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise price paid for such Shares. Since the Optionee is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain limited circumstances the measurement and timing of such income (and the commencement of any capital
gain holding period) may be deferred, and the Optionee is advised to contact a tax advisor concerning the application of Section 83 in general and the availability a Section 83(b)
election in particular in connection with the exercise of the Option. Upon a resale of such Shares by the Optionee, any difference between the sale price and the Fair Market Value of the Shares on the
date of exercise of the Option, to the extent not included in income as described above, will be treated as capital gain or loss. 

	DATE OF GRANT:                         	 	 	 	 
	

 	
 	

INTRAWARE, INC.,

a Delaware corporation
	

 	
 	

By:	
 	

  

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

	Dated:
                                    	 	 
	

 	
 	

  
 Optionee

8

 
EXHIBIT A

DIRECTOR OPTION EXERCISE NOTICE  

INTRAWARE, INC.

25 Orinda Way

Orinda, CA 94563 

Attention:
Corporate Secretary 

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

    2.  Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood
the Agreement. 

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

    4.  Tax Consequences.  Optionee understands that Optionee may suffer adverse tax consequences as a result
of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems advisable in connection with the purchase or disposition
of the Shares and that Optionee is not relying on the Company for any tax advice. 

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

    6.  Entire Agreement.  The Agreement is incorporated herein by reference. This Exercise Notice and the
Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.
This Exercise Notice and the Agreement are governed by California law except for that body of law pertaining to conflict of laws. 

	Submitted by:	 	Accepted by:
	

OPTIONEE:	
 	

INTRAWARE, INC.
	

 	
 	

By:	
 	

  

	

 	
 	

Its:	
 	

  

	Address:	 	 	 	 
	

Dated:	
 	

  
	
 	

Dated:	
 	

  

9

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