Services Agreement - Sun Microsystems Inc. and Intraware Inc.


                          INTRAWARE SERVICES AGREEMENT


         This SERVICES AGREEMENT is made and entered into to be effective as 
of July 1, 1999 (the 'Effective Date') between Sun Microsystems, Inc. 
('Sun'), a Delaware corporation with offices at 901 San Antonio Road, Palo 
Alto, CA 94303, and Intraware Inc., a Delaware corporation ('Intraware'), 
with offices at 25 Orinda Way, Orinda California 94563.

         WHEREAS, Sun is in the business of developing and offering for sale 
certain software products and related support services;

         WHEREAS, Intraware is in the business of developing and offering for 
sale worldwide proactive software update and management services to and users 
through its SubscribNet-Registered Trademark- service; and

         WHEREAS, Sun desires to obtain, and Intraware desires to provide, 
worldwide subscriptions of Intraware's SubscribNet-Registered Trademark- to 
Non-consumer Customers of Sun (as defined below):

         NOW THEREFORE, in consideration of the foregoing recitals, and for 
other good and valuable consideration, the receipt and sufficiency of which 
is hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         For purposes of this Agreement terms used and not otherwise defined
herein shall have the following meanings:

         'AGREEMENT' OR 'THIS AGREEMENT' shall mean this Services Agreement and
the following attachments:



         Attachment A               Web Site General Terms

         Attachment B               User Registration and Privacy

         Attachment C               Escrow Agreement

         Attachment D               Trademark Guidelines

         'CHANNEL DISTRIBUTOR' shall mean any Sun authorized distributor or
reseller of Sun Products, or any Sun authorized distributor or reseller of Third
Party Products on behalf of Sun, other than Intraware, who has purchased a
license from Sun to sell such Sun and Third Party Products.

         'CONFIDENTIAL INFORMATION' shall mean this Agreement and all
information about Intraware Products and Sun Products, as well as Intraware and
Sun services, customers, strategy, research. 



development, methods of manufacture, trade secrets, business plans, finances, 
personnel data, and other material or Information considered confidential by 
either party. Confidential information also includes any third party 
confidential information disclosed to either party under this Agreement.

         'END USERS' shall mean all Non-consumer Parties who have a Sun
maintenance subscription for their license to use Sun Products which they
acquired from Sun or a Channel Distributor, as well as all Non-consumer Parties
who obtain a maintenance subscription to Third Party Products for which they
currently own a license through Sun or a Channel Distributor.

         'EVENT OF DEFAULT' shall have the meaning contained in Section 9.1.

         'INTRAWARE CUSTOMER' shall mean any party who receives any product or
service directly or indirectly from Intraware or its non-Sun partners or who
becomes an Intraware Customer under Section 2.7.

         'INTRAWARE PRODUCTS' shall mean any Intraware software that 
Intraware will use in connection with the Services, including, without 
limitation, its SubscribNet-Registered Trademark- products, and any major and 
minor updates or functional supersets to any such products to the extent such 
products do not incorporate data received by Intraware in providing the 
services, as defined below.

         'SUN CUSTOMER DATA' shall have the meaning set forth in Section 2.7.

         'SUN PRODUCTS' shall mean all current, commercially available software
products provided by Sun to Intraware and listed in the then-current
Sun-Netscape Alliance price books for the Territory (Price Books) excluding
Third Party Products as defined below. If at any time during the Term, Sun
sells, assigns or otherwise transfers its right to distribute directly or
through Channel Distributors any such products listed on the applicable Price
Books, such Sun products shall cease to be 'Sun Products' under this Agreement.

         'SUN UPDATES' shall mean major and minor updates, if any, or any
functional supersets, to the Sun Products or to Third Party Products. 'Major
Updates' involve additions of substantial functionality while 'Minor Updates' do
not. Major Updates are designated by a change in the number to the left of the
decimal point of the number appearing after the product name while Minor Updates
are designated by a change in such number to the right of the decimal point.
Minor Updates shall also include bug patches and bug fixes as mutually agreed
upon. Sun is the sole determiner of the availability and designation of an
update as a Major or Minor Update. Major Updates exclude software releases which
are reasonably designated by Sun as new products. Where used herein, 'Sun
Updates' shall mean Major Updates and Minor Updates interchangeably.

         'SUN WEB SITE' shall mean the collection of Local Language HTML
documents targeted at end users in the Territory and currently accessible by the
public via the Internet at the URL for the Sun-Netscape Alliance and/or at such
other URL or locations as Sun may designate. Sun's Web Site does not include any
future technologies or future uses of existing technologies which might embody a
collection of documents (other than HTML documents) on the Internet.


                                       -2-


         'NON-CONSUMER CUSTOMER / NON-CONSUMER PARTY' shall mean any party or
customer who licenses 10 or more copies and/or seats of a Sun client product, or
a purchaser of any other Sun Product.

         'SERVICES' shall mean the services to be provided by Intraware in
accordance with Article 2, Article 4.

         'SUBSCRIBNET' shall mean Intraware's software subscription update
service for Non-consumer Customers.

         'SUBSCRIBNET UPDATES' shall mean enhancements to SubscribNet.

         'SUBSCRIPTION' shall mean an offering by Sun of SubscribNet that
entitles End Users, upon entering into a maintenance agreement with Sun, to
receive Sun Updates for the number of users for which each such End User has
received a license to a Sun or Third Party Product.

         'TERRITORY' shall mean worldwide.

         'THIRD PARTY PRODUCTS' shall mean all third party vendor products
currently distributed by Sun, or by a Channel Distributor from the worldwide
price book for the Sun-Netscape Alliance, as of the Effective Date, which is
provided by Sun to Intraware under this Agreement. If at any time during the
Term, Sun sells, assigns, ceases selling or otherwise transfers its right to
distribute directly or through Channel Distributors products form any third
party vendor in the Price Books for the Sun-Netscape Alliance such vendor's
products shall cease to be 'Third Party Products' under this Agreement.

                                    ARTICLE 2
                                    SERVICES

         2.1 GENERAL. Intraware shall perform the Services in accordance with
the terms and conditions set forth herein only for such Sun Products. Sun
reserves the right from time to time to exclude from the Services any particular
Sun Product, in each case upon consideration of such factors as the ease and
quality of electronic download or customer preferences. The Service will not be
disadvantaged, in terms of features, functionality and programming, as the
private label SubscribNet services that Intraware makes available to other
customers.

         2.2 [*] However, Sun reserves the right to for Sun or its strategic 
third party working through the Sun-Netscape Alliance provide for itself 
services similar to the Service.

         2.3 TERMS OF DISTRIBUTION. Sun and Intraware shall offer the
Subscription to End Users through Sun's maintenance agreement, and as soon as
practicable after the Effective Date such agreement will clearly state on behalf
of each party and for the benefit of Channel Distributors that maintenance
includes the SubscribNet service. End Users will be able to access the Services
through 


                                       -3-


the Sun Web Site through a URL to be mutually agreed, however, the URL will 
include a Sun domain for the Sun-Netscape Alliance. The Service may also be 
accessed through other URLs on Sun's Web Site, URLs contained in email 
notifications and/or through such other sites within Sun's Web Site as Sun 
may specify from time to time. For reporting purposes, all traffic on the 
site shall be considered to be Sun traffic, however, Intraware may use 
aggregated traffic data for the purposes of this Agreement and as directed by 
the Sun contact person identified at paragraph 16.12 below.

         2.4 SUBSCRIBNET UPDATES. [*] Such SubscribNet Updates will be 
distributed in the same manner as the Services are distributed under this 
Agreement.

         2.5 PERSONNEL. Each party shall provide adequate resources to assure
its performance under this Agreement. Towards this goal, the parties will
designate the resources set forth in this Section 2.5.

                  (A) SUN PERSONNEL. Sun will designate an Operations Program
Manager for the implementation of this Agreement and to insure the success of
the Services. Sun will further designate a marketing representative to approve
content and other marketing related issues.

                  (B) INTRAWARE PERSONNEL. Intraware will assign a dedicated
Operations Program Manager for the implementation of this Agreement and to
insure the success of the Services. Intraware will further assign a dedicated
marketing representative to approve content and other marketing related issues.

         2.6 MONTHLY REVIEWS. During the Initial Term, Sun and Intraware shall
meet to conduct monthly reviews at Intraware's and Sun's primary business
addresses in alternating order to discuss and adjust metrics and performance and
to coordinate management information systems or other operational processes
arising out of this Agreement. Each party will bear its own travel or other
costs associated with attending any such meetings. In any renewal Term, the
parties shall mutually agree upon the frequency and scope of periodic reviews.

         2.7      END USER DATA:

                  (A) Except as expressly provided in this subparagraph (A), 
all customer data, including channel transaction data, added to the 
Sun/SubscribNet Service or existing other data provided by Sun in connection 
therewith on the date hereof will be considered Sun data ('Sun Customer 
Data') and shall be solely owned by Sun, and [*]. If a Sun customer is also, 
independently, an Intraware Customer, and requests that its account be 
handled through Intraware, [*] such customer data shall be owned jointly by 
Intraware and Sun. All such data shall constitute 'Confidential Information' 
and shall be subject to the end user and privacy guidelines set forth in 
ATTACHMENT B.

                                       -4-


                  (B) Intraware will implement procedures reasonably acceptable
to Sun, and use reasonable commercial efforts, to distinguish channel
transaction data files between Sun Customers and Intraware Customers.

                  (C) [*]

         2.8 THIRD PARTIES. Notwithstanding anything in this Agreement to the
contrary, Intraware may perform Services hereunder for Third Party Products only
if and to the extent Sun is authorized to enable electronic download of Third
Party Products. The parties may mutually agree whether and the terms upon which
additional third party vendor products shall be added to the definition of
'Third Party Products' under this Agreement.

         2.9 CHANNEL DISTRIBUTORS. Notwithstanding anything in this Agreement to
the contrary, Sun's arrangements with its Channel Distributors may not permit
Intraware to electronically distribute Sun Products, in which case such
arrangement shall be excluded from the Services. In addition, Sun shall be
obligated to provide Intraware with information or access to Third Party data or
information hereunder only to the extent authorized by each Channel Distributor.

         2.10 END USERS. Should a Non-consumer Party obtain a license to a Third
Party Product through Sun or a Channel Distributor after the Effective Date, and
should such Non-consumer Party wish to acquire a maintenance subscription from
Sun or a Channel Distributor to receive the SubscribNet services, upon approval
by Intraware and receipt by Intraware of [*] (or such other percentage and terms
as the parties may agree) of the 'net Subscription sales price' from Sun for
each such Non-consumer Party, such additional Non-consumer Party will become an
End User. 'Net Subscription sales price' means the price indicated in an invoice
for any sale of a Sun Product, i.e., the gross sales price less applicable
discounts, but excluding rebates, if any.

         2.11 REPORTING/ACCESS. Sun will have full access to the systems data
records, and such records will be reasonably compatible with Sun systems.
Intraware will provide Sun with an online and flexible direct interface to this
data through a reporting tool.

                                    ARTICLE 3
                              TERM AND TERMINATION

         3.1 TERM. Unless sooner terminated in accordance with this Article or
Article 9 (Default), the term of this Agreement (the 'Term') shall commence on
the Effective Date and shall continue for a period ending on September 30, 2000.

                  (A) If prior to the expiration of the Term, Sun, by written 
notice to Intraware, elects to renew this Agreement for an additional term, 
but the parties fail to mutually agree upon renewal after the initial Term, 
then Intraware shall be obligated to continue to perform the Services for a 
period of [*] after the expiration of the Term and Sun will pay Intraware [*] 
of Sun's Subscription revenue of Sun Products covered during the period; and

                                       -5-


                  (B) If the parties agree on a renewal Term, the price for the
Services shall not exceed [*] of Sun's Subscription revenue over the
preceding Term.

         3.2      TERMINATION.

                  (A) For Convenience. This Agreement may be terminated by Sun
for convenience upon one hundred eighty (180) calendar days prior written notice
to Intraware, and in such event, Sun shall pay Intraware for the Services based
upon the pro rata portion of fees earned by Intraware through the effective date
of termination.

                  (B) WITH CAUSE. If this Agreement is terminated by Sun for
cause by reason of an Event of Default, as set forth in Article 9, Intraware
will pay to Sun on a pro-rate basis over the Term, the quarterly pre-payments
payable by Sun hereunder. Any termination, however, shall not relieve either
party from any obligations hereunder that survive termination under Section 16.3
hereof.

         3.3 TECHNOLOGY ESCROW. Intraware agrees that the entire source code for
SubscribNet and other Intraware Products, together with all related listings and
documentation, as it now exists or hereafter becomes available including, but
not limited to, the then current version(s) of such products being used by
Intraware in the performance of the Services, ('Escrow Materials') will be
deposited, maintained and updated at Sun's expense in escrow substantially in
the form of the Escrow Agreement attached hereto as ATTACHMENT C. Intraware
shall deposit the Escrow Materials within thirty (30) days of the Effective Date
or, in the case of updates to the Service, within thirty (30) days after
commercial release of such updates.

                                    ARTICLE 4
                            WEB SITE RESPONSIBILITIES

         4.1 TRADEMARKS AND BRANDING. A name using the format '[generic name ]
by SubscribNet, an authorized Sun-Netscape Alliance provider' will be mutually
agreed between the parties for use on the Sun/SubscribNet site and throughout
all communications and materials, including but not limited to marketing
materials and price lists. relating to the Services. All use of the SubscribNet
brand by Sun will be subject to mutually agreed to trademark guidelines provided
by Intraware to be attached in Attachment D, and all use of the 'Sun' or Sun
owned or Netscape or Netscape owned trademarks will be subject to the Sun
Trademark & Logo usage Requirements provided by Sun at
http://www.sun.com/policies/trademarks for Sun and in accordance with Netscape's
current trademark guidelines. Intraware shall not independently use the Sun name
without Sun's prior written consent unless such use occurs in connection with
Intraware's advertising sales and promotional efforts on behalf of the Service
in accordance with the Sun Trademark & Logo Usage Requirements. The use of the
Sun name or brands will be subject to Sun's then-current design guidelines to be
provided by Sun.

         4.2 TECHNICAL SUPPORT. Intraware will provide technical support to Sun
to ensure that content is correctly received and displayed by Sun. Intraware
shall provide technical support services for the Service to Sun on a timely
basis, appoint a technical contact to whom Sun may 


                                       -6-


address all technical questions relating to the Service, and use reasonable 
commercial efforts to promptly remedy any material malfunctioning of the 
Service. Intraware shall be solely responsible for the purchase, 
implementation, maintenance and support of all software and hardware required 
to fulfill its obligations under the Agreement.

         4.3 SERVICE IMPLEMENTATION. Intraware shall provide Services on the
Sun's web Site. All content supplied by Intraware for the Service will meet
specifications provided by Sun with regard to page size, loading speed and speed
of access to database driven content; provided that such obligations shall not
be materially more restrictive than the current features, unless the parties
otherwise mutually agree. Intraware shall be responsible for the production,
technology deployment, content programming, and creation of graphic user
interfaces of the Service; all in accordance with Sun's then-current guidelines.
The Service shall use substantially the same technology and advantages that
Intraware uses in its own proprietary SubscribNet service(s), if any, unless
otherwise mutually agreed by the parties. The Service shall not be disadvantaged
or suffer from inferior production, programming or performance relative to
Intraware's similar services, or any similar service that Intraware might make
available to, or operate on behalf of, third parties. The Service shall perform
substantially in accordance with the performance standards of its own
proprietary services, including, but not limited to, load time, timeliness of
content, and quality of programming. Intraware's obligation to produce the
Service, including production services, technology deployment and content
programming that meets or exceeds standards established by Intraware on
Intraware's Web Site or services (or any web site or services Intraware manages
for any third party) and general industry standards is a material obligation of
Intraware under this Agreement.

         4.4 LICENSE GRANT. During the Term, Intraware grants to Sun the
non-exclusive, worldwide and royalty-free right to store, display, perform, and
otherwise use the data, information, content or other intellectual property
provided by Intraware for use within the Service.

         4.5 WEB SITE GENERAL TERMS. The parties agree and accept the Web 
Site General Terms provided herewith as ATTACHMENT A.

                                    ARTICLE 5
                                  PAYMENT TERMS

         5.1 PRICE. In consideration for the Services performed hereunder and 
subject to the terms and conditions hereof, Sun shall pay Intraware [*] for 
the Services.

         5.2 PAYMENT TERMS. Sun will pay [*] of the total amount due to 
Intraware under this Agreement on a Sun fiscal year quarterly basis with any 
remainder amount due to be paid in the final payment. All payments by Sun 
will be forwarded within 30 days of Sun's receipt of the Intraware invoice 
during the Term of this Agreement until all payments due to Intraware have 
been made. Intraware may submit its invoice on the first day of each calendar 
month which begins a Sun fiscal year quarter during the Term of this 
Agreement. Payment shall be considered a pre-payment for Services to be 
provided by Intraware during that Sun fiscal year quarter. All payments made 
by Sun hereunder will be made by wire transfer to the bank

                                       -7-


specified by Intraware. A finance charge of one and one-half percent (1.5%) per
month, or the lawful limit if less, shall be assessed on all amounts that are
past due, and Intraware shall be responsible for collection costs if applicable.
Interest shall be calculated from the invoice due date to the date payment is
received.

         5.3 To the extent that Sun Products are added to the Price Books 
after August 31, 1999, Sun shall pay to Intraware [*] of the Subscription 
fees received by Sun for such Sun Product, not to exceed [*], which amount 
shall be the total amount due to Intraware from Sun for the addition of Sun 
Products as contemplated herein.

                                    ARTICLE 6
                          REPRESENTATIONS AND WARRANTY

         6.1 INTRAWARE'S REPRESENTATIONS AND WARRANTY. Intraware represents
and/or warrants to Sun, as appropriate as follows:

                  (A) NO RESTRICTIONS. Intraware represents that it is not under
any obligation or restriction which would in any way interfere with or be
inconsistent with its performance obligations under this Agreement.

                  (B) SERVICES. Intraware warrants that the Services, whether
performed by Intraware or subcontractors, shall be performed in a professional
and workmanlike manner, with all due skill and care, and will meet or exceed the
specifications set forth in the requirements of this Agreement and any
documentation provided by Intraware.

                  (C) INTRAWARE PRODUCTS. Intraware warrants that (i) the media
on which the Intraware Products are delivered will be free of defects in
material and workmanship, (ii) the Intraware Product(s) will function in
accordance with the specifications for the Intraware Product(s) in applicable
documentation, and (iii) any documentation provided with the Intraware
Product(s) shall be accurate in all material respects. This warranty will not
apply to Intraware Products that have been improperly installed or used in a
manner other than as authorized under this Agreement. Intraware does not warrant
that the Intraware Products will meet Sun's requirements except in accordance
with this Agreement, or that the Intraware Products will operate in the
combinations which Sun may select for users, or that the operation of the
Intraware Products or that all errors will be repaired. Any claim submitted
under this product warranty section must be submitted in writing to Intraware
within the warranty period. In the case of a breach of the warranties in this
subsection (C), Intraware shall repair or replace nonconforming, unsuitable or
inaccurate Intraware Product(s) or documentation within a reasonable period of
time (not to exceed ten (10) days) of receipt of written notice of such
condition.

                  (D) YEAR 2000. Intraware warrants that the current version of
the Intraware Products, including the SubscribNet software, contain
functionality, including the time-and-date-related code, needed for the December
31, 1999 to January 1, 2000 date change; provided the underlying operating
system of the host machine, and any non-Intraware-owned software provided with
or in the host machine or Product(s), also contain functionality, including the
time-and-date-


                                       -8-


related code, needed for the December 31, 1999 to January 1, 2000 date 
change. The sole and exclusive remedy for any breach of this warranty is 
repair or replacement of the affected Product(s), excluding any 
non-Intraware-owned software or underlying operating system. This warranty is 
null and void if Sun alters, modifies or misuses any portion of the 
Product(s).

         In the case of a breach of the warranty described in this subsection
(D), Intraware shall use reasonable efforts to modify the Intraware Products
such that the Intraware Product(s) is Year 2000 Compliant. [*]

                  (E) THE WARRANTIES CONTAINED IN THIS ARTICLE 6 ARE THE ONLY
WARRANTIES GIVEN TO SUN IN CONNECTION WITH THIS AGREEMENT AND THE SERVICES
PERFORMED HEREUNDER. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE DISCLAIMED.

         6.2 SUN'S REPRESENTATIONS AND WARRANTY. Sun represents and/or warrants
to Intraware, as appropriate, as follows:

                  (A) USE OF USER INTERFACE. At no time during the term of the
Agreement, or at any time thereafter, will Sun copy, modify or otherwise utilize
the SubscribNet user Interface.

                  (B) NO RESTRICTIONS. Sun represents that, except as provided
in Sections 2.8 and 2.9, it is not under any obligation or restriction that
would in any way interfere with or be inconsistent with its performance
obligations under this Agreement.

                                    ARTICLE 7
                            CONFIDENTIAL INFORMATION

         7.1 Each party agrees not to use directly or indirectly or reproduce
the Confidential Information of the other for any purpose except for carrying
out the terms of this Agreement and agrees not to disclose the Confidential
Information of the other to any third parties except in accordance with this
Agreement.

         7.2 Each party agrees to use its best efforts to protect such
Confidential Information from disclosure to third parties. Disclosures of the
Confidential Information shall be restricted to the parties' employees who are
directly participating in the efforts covered by this Agreement, have a need to
know such Confidential Information and are bound by the provisions of this
Article 7, except that the parties may disclose Confidential Information to
Netscape Communications Corporation employees who directly participate in the
efforts covered by this Agreement and agree to be bound by the terms herein.

         7.3 The limitations on reproduction, disclosure, and use of the
Confidential Information shall lapse upon the occurrence of one of the
following:


                                       -9-


               (1) If such Confidential Information is publicly available or 
later becomes publicly available other than through a breach of this 
Agreement; or

               (2) If the disclosing party generally furnishes its 
Confidential Information to a third party without similar confidentiality 
restrictions on the third party's rights; or

               (3) If disclosure of such Confidential information is 
compelled by court order or judicial or administrative process; or

               (4) If such Confidential Information is independently 
developed by the receiving party subsequent to such disclosure without use of 
Confidential Information disclosed hereunder; or

               (5) If such Confidential Information is lawfully obtained by 
the receiving party from a third party without obligations of confidentiality.

                                    ARTICLE 8
                                 INDEMNIFICATION

         8.1 Each party (the 'Indemnitor') will indemnify and hold harmless the
other party (the 'Indemnitee') from and against (a) losses, damages, judgments,
settlements, attorney's fees, costs, and expenses which the Indemnitee may
sustain, incur, or be required to pay, arising out of or in connection with
claims for personal injury or damage to real or tangible property resulting from
negligent action or inaction of the Indemnitor or a person employed by the
Indemnitor in the performance of this Agreement; (b) a breach of any of the
representations and warranties made by either party hereunder; or (c) in the
case of Intraware, any third party claim arising from the Service; and (d) any
material, content, or any content to which a party can link, supplied by either
party in connection with this Agreement.

         8.2 INTELLECTUAL PROPERTY INDEMNITY:

                  8.2.1 INTRAWARE INDEMNITY. Intraware shall defend or settle,
at its option, any action brought against Sun to the extent it is based on a
claim that use, reproduction or distribution by Sun of the Intraware portion of
the Intraware Products furnished hereunder within the scope of a license granted
hereunder directly infringes any valid U.S. copyright, U.S. patent or U.S. trade
secret. Intraware shall also defend any action brought against Sun to the extent
that it is based on a claim that the Intraware trademark(s) Sun is permitted to
use hereunder directly infringes any valid United States trademark. Intraware
will pay resulting costs, damages and legal fees finally awarded against Sun in
such action which are attributable to such claim provided that Sun: (a) promptly
notifies Intraware in writing of any such claim and Intraware has sole control
of the defense and all related settlement negotiations; and (b) cooperates with
Intraware, at Intraware's expense, in defending or settling such claim.

     Should an Intraware Produce become, or be likely to become in Intraware's
opinion, the subject of infringement of such U.S. patent, copyright or trade
secret, Intraware may 


                                       -10-


procure for Sun: (i) the right to continue using the same; or (ii) replace or 
modify it to make it non-infringing. In the event that Intraware shall 
reasonably determine that neither (i) nor (ii) above is commercially 
practicable, Intraware may terminate the license for the infringing Intraware 
Product and refund Sun for the fees that Sun has paid hereunder (excluding 
the initial payment) up to [*]. Intraware shall have no obligation or 
liability for, and Sun shall defend, indemnify and hold Intraware harmless 
from and against any claim based upon: (a) use of other than the then 
current, unaltered version of the Intraware Product, unless the infringing 
portion is also in the then current, unaltered release; (b) use, operation or 
combination of Intraware Products with non-Intraware programs, data, 
equipment or documentation is such infringement would have been avoided but 
for such use, operation or combination; (c) Sun's or its agent's activities 
after Intraware has notified Sun that Intraware believes such activities may 
result in such infringement; (d) compliance with Sun's designs, 
specifications or instructions; (e) any modifications or marking of the 
Intraware Products not specifically authorized in writing by Intraware; or 
(f) third party software. The foregoing states the entire liability of 
Intraware and the exclusive remedy of Sun with respect to infringement of any 
intellectual property rights, whether under theory of warranty, indemnity or 
otherwise.

                  8.2.2 SUN INDEMNITY. Sun shall defend or settle, at its
option, any action brought against Intraware to the extent it is based on a
claim that use, reproduction or distribution by Intraware of the Sun portion of
the Sun Products furnished hereunder within the scope of a license granted
hereunder directly infringes any valid U.S. copyright, U.S. patent or U.S. trade
secret. Sun will pay resulting costs, damages and legal fees finally awarded
against Intraware in such action which are attributable to such claim provided
that Intraware: (a) promptly (within twenty (20) days) notifies Sun in writing
of any such claim and Sun has sole control of the defense and all related
settlement negotiations; and (b) cooperates with Sun, at Sun's expense, in
defending or settling such claim.

     Should a Sun Product become, or be likely to become in Sun's opinion, 
the subject of infringement of such U.S. patent, copyright or trade secret, 
Sun may procure for Intraware: (i) the right to continue using the same; or 
(ii) replace or modify it to make it non-infringing. In the event that Sun 
shall reasonably determine that neither (i) nor (ii) above is commercially 
practicable, Sun may terminate the license for the Infringing Sun Product and 
pay Intraware an amount representing the fees that Sun has paid hereunder 
(excluding the initial payment) up to [*]. Sun shall have no obligation or 
liability for, and Intraware shall defend, indemnify and hold Sun harmless 
from and against any claim based upon: (a) use of other than the then 
current, unaltered version of the Sun Product, unless the infringing portion 
is also in the then current, unaltered release; (b) use, operation or 
combination of Sun Products with non-Sun programs, data, equipment or 
documentation if such infringement would have been avoided but for such use, 
operation or combination; (c) Intraware's or its agent's activities after Sun 
has notified Intraware that Sun believes such activities may result in such 
infringement; (d) compliance with Intraware's designs, specifications or 
instructions; (e) any modifications or marking of the Sun Products not 
specifically authorized in writing by Sun; or (f) third party software. The 
foregoing states the entire liability of Sun and the exclusive remedy of 
Intraware with respect to infringement of any intellectual property rights, 
whether under theory of warranty, indemnity or otherwise.

                                       -11-


                  8.2.3 Neither party will have any liability to the other for
any claim of infringement in this Section 8.2 based on (i) the other party's
continued use or distribution, as the case may be, of a superseded product after
the indemnifying party has given reasonable notice and a reasonable opportunity
to update its use, or an altered release, except for such alteration(s) or
modification(s) which have been made by the indemnifying party or under the
indemnifying party's direction, if such infringement would have been avoided by
the use of a current, unaltered release of such product, or (ii) the
combination, operation, or use of any Services furnished under this Agreement
with programs or data not created by the indemnifying party if such infringement
would have been avoided by the use of the Services without such programs or
data.

                                    ARTICLE 9
                                     DEFAULT

         9.1 EVENT OF DEFAULT. An 'Event of default' shall occur under any of
the following conditions:

                  (A) Either party fails to perform any material obligation to
be performed by it hereunder within thirty (30) days after written notice from
the other party that time for such performance has passed or, if no such time is
prescribed, within thirty (30) days after written notice from the other party.

                  (B) Either party becomes insolvent or unable to pay its debts
as they become due, makes an assignment for the benefit of creditors or files a
petition in any insolvency proceeding or in any bankruptcy, reorganization,
scheme of arrangement or reconstruction, or similar proceeding.

                  (C) A receiver, manager or liquidator is appointed for any of
a party's assets or a petition is filed in any insolvency, bankruptcy,
reorganization, scheme of arrangement, reconstruction or similar proceeding, and
such receiver, manager or liquidator is not discharged, or such petition is not
withdrawn, within ninety (90) days after such appointment or filing.

         9.2 REMEDY. If either party causes to occur an Event of Default as
specified in Section 9.1, then the non-defaulting party, at its option, shall
have the right to terminate this Agreement by written notice as provided in
Section 3 and pursue any other remedy hereunder or otherwise available to it at
law or in equity.

         9.3 COMPENSATION. The parties hereby expressly agree and acknowledge
that, except as provided in Section 3 and in this Section 9.3, termination of
this Agreement by either party shall not entitle it to any termination
compensation or to any payment in respect of any goodwill established by either
party during the Term or render Sun liable for damages on account of any loss of
prospective profits or on account of any expenditure, Investment or obligation
incurred or made by Intraware.


                                       -12-


                                   ARTICLE 10
                             LIMITATION OF LIABILITY

         EXCEPT FOR A BREACH OF SECTION 7 (CONFIDENTIALITY), 8 (INDEMNIFICATION)
AND 11 (OWNERSHIP):

         (A) EACH PARTY'S LIABILITY FOR DIRECT DAMAGES UNDER THIS AGREEMENT 
WILL IN NO EVENT EXCEED [*]; AND

         (B) NEITHER INTRAWARE NOR SUN WILL BE LIABLE FOR INDIRECT, INCIDENTAL
SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOST DATA OR
LOST PROFITS, HOWEVER, ARISING, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES OR FOR ANY SIMILAR CLAIM AGAINST LICENSEE BY ANY OTHER PARTY.

                                   ARTICLE 11
                                    OWNERSHIP

         11.1 SUN OWNERSHIP. Intraware shall acquire no rights in and to the Sun
Products or the Sun Customer Data, and all ownership rights in and to the Sun
Products, Sun Customer Data and any marketing or customer data generated
hereunder shall remain with Sun or its licensors, as appropriate. Intraware
agrees that it shall not (i) sell, transfer or assign any of same or any rights
or interest therein, or (ii) create or suffer to exist any liens with respect to
the Sun Products or its programs or publications, except in accordance with this
Agreement or the specific instructions of Sun or its licensor hereunder or
statutory or common law liens resulting from Sun's failure to pay Intraware
invoices. Intraware acknowledges that Sun (or its licensor) is the owner of all
intellectual and proprietary rights in the Sun Products or its programs and
publications, including source and object code, copyrights and patents relating
to the Sun Products or its programs and publications, and that neither this
Agreement nor the Sun Products or its programs and publications, and that
neither this Agreement nor performance of the Services hereunder shall directly
or indirectly create in or for Intraware any right, title or interest therein,
other than in accordance with the statutory or common law liens referenced
above.

         11.2 INTRAWARE OWNERSHIP. Sun shall acquire no rights in and to the
Intraware Products or the Intraware Customer data, and all ownership rights in
and to such Intraware Product, shall remain with Intraware or its licensors, as
appropriate. Sun agrees that it shall not (i) sell, transfer or assign any of
same or any rights or interest therein, or (ii) create or suffer to exist any
liens with respect to the Intraware Products or its programs or publications,
except in accordance with this Agreement or the specific instructions of
Intraware or its licensor hereunder or statutory or common law liens resulting
from Intraware's failure to pay Sun invoices. Sun acknowledges that Intraware
(or its licensor) is the owner of all intellectual and proprietary rights in
such Intraware Product, including source and object code, copyrights and patents
relating to the Intraware Products or its programs and publications, and that
neither this Agreement nor performance of the Services hereunder shall directly
or indirectly create in or for Intraware any right, title or interest therein,
other than in accordance with the statutory or common law liens referenced
above.


                                       -13-


                                   ARTICLE 12
                                    DISPUTES

         Should any dispute or differences arise from this Agreement or any
performance hereunder, the parties shall first attempt to arrive at an amicable
settlement, as follows. A party shall identify the existence of a dispute by
notifying the other party in writing. Upon such notice, the matter shall be
referred to a senior executive officer of each party whose responsibilities are
not in the profit center that is the subject of the dispute, for oral
presentations (with minimal written support such as briefing charts or summary
sheets). No outside counsel may appear during this informal process.

         If at the completion of such presentation such officers cannot resolve
this dispute within thirty days after escalation, then either party may seek any
available legal relief. This provision will not affect either party's right to
seek injunctive or other provisional relief at any time.

                                   ARTICLE 13
                                      TAXES

         All prices are in U.S. Dollars and are inclusive of any applicable
taxes. Intraware shall be responsible for filing all appropriate federal, state
and local tax forms related to payment for its Services under this Agreement.
Intraware shall be responsible for sales or use taxes which are due solely by
reason of Intraware's performance of Services hereunder other than taxes
assessed on Intraware's income. Each party shall cooperate with the other in
minimizing any applicable tax. In addition, each party shall reasonably
cooperate with the other in the event of a government audit.

                                   ARTICLE 14
                                     EXPORT

         Intraware shall comply fully with all then current applicable laws,
rules and regulations relating to the export of technical data, including, but
not limited to any regulations of the United States Office of export
Administration and other applicable governmental agencies and Intraware
acknowledges that by virtue of certain security technology embedded in the Sun
Products, that export of such software may not be legal.

                                   ARTICLE 15
                             MARKETING AND PROMOTION

         15.1 MARKETING COLLATERAL. Reasonable amounts of marketing collateral
(i.e., pamphlets, brochures, and the like) associated with the SubscribNet
service will be made available to Sun.

         15.2 OUTBOUND MARKETING. All outbound marketing content including all
electronic communication with End Users who are not Intraware Customers will be
approved by Sun. The parties will mutually agree upon the guidelines for
marketing materials.

         15.3 SUN MARKETING EFFORTS. Sun will use reasonable commercial efforts
to communicate and disseminate the details of the SubscribNet program to its
sales force, customer service 


                                       -14-


representatives, technical support representatives, Channel Distributors, 
third party partners and end user customers upon implementation, launch and 
on an ongoing basis.

         15.4 JOINT PRESS RELEASE. Sun and Intraware will jointly issue a press
release describing Sun usage of Intraware SubscribNet service. Such release will
be issued within 7 days of execution of this Agreement or as soon thereafter as
possible. Sun will support the release with timely and reasonably scheduled
press and analyst calls.

         15.5 RESPONSE TIMES. Sun shall respond to Intraware requests for
approval of marketing materials within 24 hours during a business day or as soon
as practicable thereafter, or as otherwise agreed to by the parties, to ensure
timely delivery of such materials to End Users, taking into consideration the
importance of timeliness to the SubscribNet brand.

                                   ARTICLE 16
                                  MISCELLANEOUS

         16.1 ORDER OF PRIORITY. In the event of a conflict between this
Agreement, the Statement of Work and any outstanding agreements between Sun and
Intraware, the order of priority of this Agreement shall be as follows:
(a) this Agreement, and (b) other exhibits hereto.

         16.2 FORCE MAJEURE. Neither party shall be liable for delays in its
performance of this Agreement occasioned by strikes, fires, accidents, or by
other causes beyond its control. In the event of a stoppage or delay suffered by
Intraware resulting form any such cause, Intraware shall perform such parts of
the work as Intraware is capable of performing and shall resume full performance
of the Services as soon as is reasonably practicable.

         16.3 SURVIVAL. The provisions of Sections 2.7 (A) and (C), 3.2
(Termination), 9.2 and 93. (Default), and Articles 10 (Limitation Of Liability),
11 (Ownership), 13 (Taxes), and 16 (Miscellaneous) shall survive termination of
this Agreement. The provisions of Articles 6 (Representations and Warranty) and
8 (Indemnification) shall survive termination for a period of four years
thereafter. The provisions of Article 7 (Confidentiality) shall survive
termination of this Agreement for a period of five years thereafter.

         16.4 ASSIGNMENT. Neither party to this Agreement shall assign any
rights hereunder without the prior written consent of the other party, which
consent shall not be unreasonably withheld.

         16.5 SEVERANCE. In the event that any provision of this Agreement shall
be held by a court of law or other governmental agency to be void, voidable, or
unenforceable, the remaining portions hereof shall remain in full force and
effect.

         16.6 RELATIONSHIP. Intraware is an independent contractor and nothing
contained herein shall be construed to create any other relationship between the
parties. Nothing in this Agreement shall be construed to constitute either party
as the agent of the other party for any purpose whatsoever, and neither party
shall bind or attempt to bind the other party to any contract or the 


                                       -15-


performance of any other obligation, or represent to any third party that it 
has the right to enter into any binding obligation on the other party's 
behalf.

         16.7 GOVERNING LAW. All questions concerning the validity and operation
of this Agreement and performance of the obligations imposed upon the parties
hereunder shall be governed by the substantive laws of the State of California.
Jurisdiction and venue shall be in Santa Clara County or the Northern District
of California. Choice of law rules of any jurisdiction and the United National
Convention on Contracts for the International Sale of Goods will not apply.

         16.8 HEADINGS. The headings and titles to the Articles and Sections of
this Agreement are inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any provision hereof.

         16.9 REMEDIES. Unless otherwise expressly provided herein, the rights
and remedies hereunder are in addition to, and not in limitation of, other
rights and remedies available to the parties, and exercise of one right or
remedy shall not be deemed a waiver of any other right or remedy.

         16.10 NO AMENDMENT OR WAIVER. No amendment, modification, deletion,
addition or other change in this Agreement or any provision hereof, or waiver of
any right or remedy herein provided, shall be effective for any purpose unless
specifically set forth in a writing signed by the party to be bound thereby. No
Waiver of any right or remedy in respect of any occurrence or event on one
occasion shall be deemed a waiver of such right or remedy in respect of such
occurrence or event on any other occasion.

         16.11 ENTIRE AGREEMENT. This Agreement supersedes all other agreements,
oral or written, heretofore made with respect to the subject matter hereof and
the transactions contemplated hereby and, with the Attachments hereto, contains
the entire agreement of the parties.

         16.12 NOTICES. Notices and communications required or permitted to be
given under this Agreement shall be written in English and shall be addressed as
set forth below.

         If to Sun:

                  Sun Microsystems, Inc.
                  901 San Antonio Road, MS _____
                  Palo Alto, CA 94303-4900
                  Attention: TBD
                  Title:
                  Telephone:
                  Fax:

                  And to


                                       -16-


                  Netscape Communications Corporation
                  501 E. Middlefield Road
                  Mountain View, CA 94043
                  Attention: Tony Weber
                  Title: Director
                  Telephone: 650/937-3095
                  Fax: 650-937-5421

         If to Intraware:

                  Intraware, Inc.
                  25 Orinda Way
                  Orinda CA 94563
                  Attention: Frost Prelow
                  Title: Vice President Business Development
                  Telephone: 925/253-6594
                  Fax: 925-253-4599

         Notice shall be sent by registered mail, postage prepaid, return
receipt requested, by reputable overnight courier, paid by the sender, or by
facsimile. The date of receipt shall be deemed to be the date on which such
notice was actually received. Each party shall promptly give the other party
written notice of any change of address or contract.

         16.13 COMPLYING WITH THE LAW. Intraware and Sun agree to comply fully
with all applicable federal, state and local laws.

         16.14 ATTORNEY'S FEES. The prevailing party in any dispute shall have
all court costs, expenses, reasonable attorneys' fees, and any other relief a
court orders paid by the other party.

         16.15 INSURANCE. Intraware, at its sole cost and expense, shall secure
and maintain adequate insurance coverage as is necessary, as a reasonable
prudent businessperson, for Intraware to bear all of its obligations under this
Agreement. On Sun's request, Intraware shall provide Sun with satisfactory
evidence of such insurance. Before any cancellation or material change in any
coverage, Intraware shall provide Sun with 30 days advance written notice.

         16.16 COUNTERPARTS. This Agreement may be executed in counterparts or
by facsimile, each of which shall be an original and all of which together with
constitute one and the same agreement.


                                       -17-


         IN WITNESS WHEREOF, authorized representatives of the parties hereto
have executed this Agreement as of the Effective Date.


                                            SUN MICROSYSTEMS, INC.

                                            By: /s/ Allen D. Page
                                                ------------------------------
                                                Print name:  Allen D. Page
                                                Print title:  V.P. Operations



                                            INTRAWARE INC.

                                            By: /s/ Donald M. Freed
                                                ------------------------------
                                                Print name:  Donald M. Freed
                                                Print title:  EVP/CFO


                                       -18-
 :  PAGE>

                                  ATTACHMENT A

                             WEB SITE GENERAL TERMS

UPTIME

         The Service will function substantially in accordance with the terms
set forth in this Agreement. In any given twenty-four hour period during the
Service Period, the Service shall have an uptime of at least 98% with industry
standard downtime for maintenance, provided that such downtime not occur at peak
traffic times. Intraware shall repair any malfunctions of the Service within a
reasonable period of time not to exceed (i) 2 days for material malfunctions of
the Service after written notice by any party of such condition, and (ii) 4 days
for any non-material malfunction of the Service after written notice by any
party of such condition or as otherwise agreed to by the parties.

MAIL TO LINK

        Notwithstanding the provisions below, Sun may in its discretion require
that the mail to link send certain help requests to Sun, as the parties shall
agree.


                                       A-1


                                  ATTACHMENT B

                          USER REGISTRATION AND PRIVACY

I.       DEFINITIONS

         'Registration' means the portion of the registration that s maintained,
hosted, and controlled by Sun and applies to multiple services across.
Registration includes the assignment of a user name, password, and the
collection of core user profile data including but not limited to: First name,
Last name, Address, City, State, Country, Zip Code, Email Address, Age and
Gender.

         Sun Registration means any registration that is maintained, hosted, and
controlled by Sun and applies to Sun's Web Site. Sun Registration includes the
assignment of a user name, password, and the collection of core user profile
data including but not limited to: First name, Last name, Address, City, State,
Country, Zip Code, Email Address, Age and Gender.

II.      REGISTRATION PROCESS

         To the extent that Intraware desires to offer a registration process,
Intraware will be responsible for the implementation of the Service Registration
and the integration of the Service with Registration. The functionality, design,
and integration of the Service Registration process and Registration will be
subject to Sun's approval, terms and conditions as defined in this Agreement.
Such specifications, terms and conditions may be revised by Sun from time to
time upon 30 days prior notice to Intraware. Intraware will implement changes
within a 30 day period unless the parties mutually agreed otherwise. The point
of entry to the registration area from the Service shall be hosted and
controlled by Sun unless otherwise determined by Sun.

III.     REGISTRATION FEATURES

         The Service Registration area shall have a look and feel which is
consistent with the implementation of the registration process in other sections
of Sun's Web Site, Intraware shall not launch the Service Registration until Sun
has notified Intraware in writing that Sun has accepted Intraware's
implementation. Intraware shall manage site access using site access models, as
such site access models shall be determined by Sun from time to time upon notice
to Intraware. Sun shall transfer to Intraware all data necessary to provide site
access to registered users. Intraware will make commercially reasonable efforts
to implement such changes within a 30 day period.

IV.      DATA COLLECTED BY INTRAWARE DURING SERVICE REGISTRATION PROCESS

         Sun will determine the data to be collected in the Service Registration
process considering Intraware's recommendations and technical restrictions. Sun
reserves the right to change such data requirements from time to time. Intraware
will make best efforts to implement those changes within 5 working days unless
mutually agreed to otherwise. If Sun implements a loyalty program, Intraware
shall also offer end user loyalty selections as part of the Service Registration
process at 


                                       B-1


Sun's request. Intraware shall deliver to Sun data collected pursuant to such 
loyalty programs in a format and timeframe as mutually agreed to by the 
parties.

V.       DATA TRANSFER

         Intraware shall use commercially reasonable efforts to transfer all end
user data collected during the Service Registration process and data collected
by any other means, to Sun in real time data transfer, unless otherwise agreed
to by the parties. Sun reserves the right to request any information collected
during the Service Registration to be supplied in a Sun specified format and
timeframe. If Intraware collects information about users accessing the Service
in addition to information supplied by the users during the registration
process, such information shall be made available to Sun in a format and
timeframe as the parties shall mutually agree.

V.       DATA TRANSFER

         Intraware shall use commercially reasonable efforts to transfer all end
user data collected during the Service Registration process and data collected
by any other means, to Sun in real time data transfer, unless otherwise agreed
to by the parties. Sun reserves the right to request any information collected
during the Service Registration to be supplied in a Sun specified format and
timeframe. If Intraware collects information about users accessing the Service
in addition to information supplied by the users during the registration
process, such information shall be made available to Sun in a format and
timeframe as the parties shall mutually agree.

         VI.      WEB SITE CONSIDERATIONS

         All third party programs participating in the Service within shall
register users with when the user completes an order, if such user is not
already registered with. If a user is a registered member, Intraware shall
pre-populate relevant customer data fields in the customer order form based on
information in the database or seamlessly pass this information to the third
party provider.

         VII.     USE OF PERSONAL DATA

         Ownership and use of customer data shall be as set forth in the
Agreement. Intraware: (i) shall have the right to aggregate such data and
information and use such data and information and use such aggregated data only
for marketing and reporting pertaining to the SubscribNet service and
specifically not for sales solicitation of customers, except as required for
legal, audit or tax purposes; (ii) shall not disclose to any third party such
end user data and information without Sun's prior written approval; and (iii)
may use information collected about the users during registration or from any
other means ('End User Information') only for the purpose of marketing programs
to the users. The parties shall treat all data pertaining to the Service,
including without limitation Sun Customer Data and Intraware Customer Data, as
Confidential Information. Intraware may not disclose any non-Intraware customer
data to any third party such end user data and information without Sun's prior
written approval.


                                       B-2


         It is a material obligation of this Agreement that Intraware shall
adhere to Sun's then-current privacy policy, set forth at
http://www.sun.com/privacy/ or at such other URL as Sun may designate from time
to time. The parties will cooperate to create guidelines for Intraware's
disclosure of aggregate statistical information concerning Service's
demographics and use to advertisers. Intraware shall not resell or disclose such
End User Information to any third party; provided however, that Intraware may
sell or disclose such End User Information to third parties upon prior notice to
and consent from such end users and written approval from Sun. If Sun determines
that Intraware or third party in contract with Intraware is not complying with
the terms of use of personal data published on Sun's Web Site for the
Sun-Netscape Alliance, or such other URL as Sun may determine from time to time,
Sun may terminate this Agreement upon written notice to Intraware if Intraware
is not in compliance within 5 days of written notice from Sun. After a given end
user has requested to be 'unsubscribed' from the Service, Intraware will
terminate all Services unless otherwise specified by the user and discontinue
any use of the End User information associated with the given user. After the
termination or expiration of the Service Period, Intraware will transfer all
non-Intraware customer data, including Sun Customer Data, to Sun and destroy all
copies of that data.


                                       B-3


                                  ATTACHMENT C

                                ESCROW AGREEMENT


         See Attached Pages.


                                       C-1


                                  ATTACHMENT D

                              TRADEMARK GUIDELINES

                               See Attached Pages.


                                       D-1