March 2007 SC TO-I Exhibit 99.(a)(1)(A)

EX-99.(A)(1)(A) 3 exh99-a1a.htm OFFER TO EXCHANGE March 2007 SC TO-I Exhibit 99.(a)(1)(A) Exhibit (a)(1)(A)

INTRAWARE, INC.

OFFER TO EXCHANGE
CERTAIN OUTSTANDING OPTIONS
FOR RESTRICTED STOCK UNITS

This document constitutes part of the prospectus relating
to the Intraware, Inc. 1996 Stock Option Plan and
the Intraware, Inc. 2006 Equity Incentive Plan
covering securities that have been registered under the Securities Act of 1933.
March 12, 2007
INTRAWARE, INC.

Offer to Exchange Certain
Outstanding Options for Restricted Stock Units

This offer and withdrawal rights will expire at 5:00 p.m., Pacific Time,

on April 9, 2007 unless we extend them.

By this offer, we are giving you the opportunity to exchange all of your outstanding and unvested options with an exercise price per share greater than or equal to $5.00 and granted under the Intraware, Inc. 1996 Stock Option Plan (the "1996 Plan") for restricted stock units. Restricted stock units are a promise by Intraware, Inc. (collectively referred to as "Intraware," "we," "us," or "our") to issue shares of our common stock in the future, provided the vesting criteria are satisfied. You may participate in this offer if you are an employee (including an officer) or consultant of Intraware and remain an employee or consultant of Intraware through the date the exchanged options are cancelled; provided, however, that we will not accept any options tendered by employees or consultants who have been notified that their service to Intraware will be terminated. Because the non-employee members of our board of directors have not received options under the 1996 Plan, they are not eligible to participate in this offer.

If you participate in this offer, you must exchange all outstanding, unvested options with an exercise price per share greater than or equal to $5.00 granted to you under the 1996 Plan (each an "eligible option"). If only a portion of an outstanding option with an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan is unvested, that portion is an "eligible option" but the vested portion is not.

If you participate in this offer, the number of restricted stock units you receive will depend on the exercise price of your exchanged options. By exchanged options, we mean any options that you exchange pursuant to this offer. The exchange ratios will be as follows:

Per Share Exercise Price of Eligible Option

Restricted Stock Units for Exchanged Options

$5.00 - $7.99

One (1) restricted stock unit for every two (2) exchanged options.

$8.00 - $12.99

One (1) restricted stock unit for every three (3) exchanged options.

$13.00 and higher

One (1) restricted stock unit for every four (4) exchanged options.

We will grant restricted stock units on the same business date on which we cancel the exchanged options. We refer to this date as the restricted stock unit grant date. We expect the restricted stock unit grant date to be April 9, 2007. Restricted stock units granted pursuant to this offer will be granted under the 2006 Equity Incentive Plan (the "2006 Plan") and will be subject to the terms and conditions of the 2006 Plan and a restricted stock unit agreement between you and Intraware.

The vesting schedule of the restricted stock units will be as follows:

None of the restricted stock units will be vested on the restricted stock unit grant date (expected to be April 9, 2007).

1/3^rd of the restricted stock units will vest on the one (1) year anniversary of the restricted stock unit grant date.

Thereafter, 1/12^th of the restricted stock units will vest every three (3) months following the one (1) year anniversary of the restricted stock unit grant date, so that all of the restricted stock units will be vested three (3) years from the restricted stock unit grant date.

The vesting schedule is detailed in Section 9 of this Offer to Exchange Certain Outstanding Options for Restricted Stock Units (the "Offer to Exchange"). Vesting is conditioned upon your continued service to Intraware through each applicable vesting date.

Our common stock is traded on the Nasdaq Capital Market under the symbol "ITRA." On
March 5, 2007, the closing price of our common stock was $5.06 per share. You should evaluate current market quotes for our common stock, among other factors, before deciding to participate in this offer.

See "Risks of Participating in the Offer" beginning on page * for a discussion of risks that you should consider before participating in this offer.

IMPORTANT

If you participate in this offer, you must deliver the completed election form by facsimile, e-mail, portable document format (PDF) or by hand delivery before 5:00 p.m., Pacific Time, on April 9, 2007 to:

Melinda Ericks
mericks@intraware.com
Fax: (925) 253-4518

Only responses that are complete, signed and actually received by Melinda Ericks by the deadline will be accepted. Responses submitted by any other means, including interoffice or United States mail (or other post) and overnight carrier are not permitted.

Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed judgment upon the accuracy or adequacy of this offer. Any representation to the contrary is a criminal offense.

You should direct questions about this offer or requests for additional copies of this Offer to Exchange and the other option exchange program documents to Paul Warenski, our Senior Vice President and General Counsel, at:

Intraware, Inc.
25 Orinda Way
Orinda, CA 94563
(925) 253-4515

Offer to Exchange Certain Outstanding Options for Restricted Stock Units dated March 12, 2007.

You should rely only on the information contained in this Offer to Exchange or documents to which we have referred you. We have not authorized anyone to provide you with different information. We are not making an offer of the restricted stock units in any jurisdiction where the offer is not permitted. However, we may, at our discretion, take any actions necessary for us to make the offer to option holders in any of these jurisdictions. You should not assume that the information provided in this Offer to Exchange is accurate as of any date other than the date as of which it is shown, or if no date is otherwise indicated, the date of this offer. This Offer to Exchange summarizes various documents and other information. These summaries are qualified in their entirety by reference to the documents and information to which they relate.

TABLE OF CONTENTS

1.
Eligibility. 25

2.
Number of options; expiration date. 25

3.
Purpose of the offer. 27

4.
Procedures for electing to exchange options. 28

5.
Withdrawal rights and change of election. 30

6.
Acceptance of options for exchange and issuance of restricted stock units. 31

7.
Conditions of the offer. 31

8.
Price range of shares underlying the options. 33

9.
Source and amount of consideration; terms of restricted stock units. 34

10.
Information concerning Intraware. 38

11.
Interests of directors and executive officers; transactions and arrangements concerning the options. 39

12.
Status of options acquired by us in the offer. 39

13.
Legal matters; regulatory approvals. 39

14.
Material United States federal income tax consequences. 40

15.
Extension of offer; termination; amendment. 42

16.
Fees and expenses. 43

17.
Additional information. 43

18.
Financial statements. 44

19.
Miscellaneous. 44

SCHEDULE A Information Concerning the Directors and Executive Officers of Intraware, Inc.
A-1

SCHEDULE B Financial Statements of Intraware, Inc.
B-1

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SUMMARY TERM SHEET

The following are answers to some of the questions that you may have about this offer. You should carefully read the entire Offer to Exchange, the accompanying letter from our Chief Financial Officer, Wendy Nieto, dated March 12, 2007, and the election and withdrawal forms together with their associated instructions. This offer is made subject to the terms and conditions of these documents as they may be amended. The information in this summary is not complete. Additional important information is contained in the remainder of this Offer to Exchange and the other offer documents. We have included in this summary references to other sections in this Offer to Exchange to help you find a more complete description of these topics.

Q1. What is the offer?

A1. This offer is a voluntary opportunity for eligible participants to exchange outstanding, unvested options with an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan for restricted stock units. The following are definitions of some of the terms used in this offer:

Terms Used in This Offer

"1996 Plan" refers to the Intraware, Inc. 1996 Stock Option Plan.

"2006 Plan" refers to the Intraware, Inc. 2006 Equity Incentive Plan.

"cancellation date" refers to the same United States business day as the expiration date. This is the date when exchanged options will be cancelled. We expect that the cancellation date will be April 9, 2007. If the expiration date is extended, then the cancellation date will be similarly extended.

"eligible options" refers to all outstanding, unvested options with an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan. If only a portion of an outstanding option with an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan is unvested, that portion is an "eligible option" but the vested portion is not an eligible option.

"eligible participant" refers to all employees (including officers) and consultants of Intraware if they are employees or consultants as of April 9, 2007, and remain an employee or consultant through the date the exchanged options are cancelled; provided, however, that we will not accept any options tendered by employees or consultants who have been notified that their service to Intraware will be terminated. To receive a restricted stock unit grant, you must remain an employee or consultant of Intraware through the restricted stock unit grant date. Because the non-employee members of our board of directors have not received options under the 1996 Plan, they are not eligible to participate in this offer.

"exchanged options" refers to all options that you exchange pursuant to this offer.

"executive officers" refers to those officers of Intraware listed on Schedule A to the Offer to Exchange, who are officers for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

"expiration date" refers to the date that this offer expires. We expect that the expiration date will be April 9, 2007 at 5:00 p.m., Pacific Time. We may extend the expiration date at our discretion. If we extend the offer, the term "expiration date" will refer to the time and date at which the extended offer expires.

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"offering period" or "offer period" refers to the period from the commencement of this offer to the expiration date. We expect that this period will commence on March 12, 2007 and end at 5:00 p.m., Pacific Time, on April 9, 2007.

"restricted stock unit grant date" refers to the date that is the same United States business date as the cancellation date. This is the date when restricted stock units will be granted. We expect that the restricted stock unit grant date will be April 9, 2007. If the expiration date is extended, then the restricted stock unit grant date will be similarly extended.

"restricted stock units" refers to the restricted stock units issued pursuant to this offer that replace your exchanged options. Restricted stock units are awards under which Intraware promises to issue shares of common stock in the future, provided the vesting criteria are satisfied. Restricted stock units granted in connection with this offer will be granted on the restricted stock unit grant date. We refer to this date as the restricted stock unit grant date. We expect that the restricted stock unit grant date will be April 9, 2007. Restricted stock units granted under this offer will be granted pursuant to the 2006 Plan and will be subject to the terms and conditions of a restricted stock unit agreement between you and Intraware.

Q2. How do I participate in this offer?

A2. If you choose to participate in this offer, you must do the following before 5:00 p.m., Pacific Time, on April 9, 2007:

You must deliver the completed election form by facsimile, e-mail, portable document format (PDF) or by hand delivery before 5:00 p.m., Pacific Time, on April 9, 2007 to:

Melinda Ericks
mericks@intraware.com
Fax: (925) 253-4518

You should note that this is an all or nothing offer. This means that if you elect to exchange any options in this offer, you must elect to exchange all of your eligible options (that is, all of your outstanding, unvested options with an exercise price per share greater than or equal to $5.00 and granted to you under the 1996 Plan, if any). To help you recall your outstanding eligible option grants and give you the tools to make an informed decision, we will distribute to you a summary of your outstanding and unvested stock options that have an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan by internal mail or e-mail.

This is a one-time offer, and we will strictly enforce the election period. We reserve the right to reject any options tendered for exchange that we determine are not in appropriate form or that we determine are unlawful to accept. Subject to the terms and conditions of this offer, we will accept all properly tendered options promptly after the expiration of this offer; provided, however, that if we have informed you prior to the expiration of the offer that your position with Intraware will be eliminated, we will not accept your tendered options and you will not receive any restricted stock units. Instead, you will keep the options you have tendered and they will expire pursuant to their terms. (See Section 4)

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We may extend this offer. If we extend this offer, we will issue a press release, e-mail or other communication disclosing the extension no later than 6:00 a.m., Pacific Time, on the United States business day following the previously scheduled expiration date.

The delivery of all documents, including election forms, is at your risk. We intend to confirm the receipt of your election form and/or any withdrawal form by e-mail within two (2) United States business days. If you have not received an e-mail confirmation, you must confirm that we have received your election form and/or any withdrawal form. Only responses that are complete, signed and actually received by Melinda Ericks by the deadline will be accepted. Responses submitted by any other means, including interoffice or United States mail (or other post) and overnight carrier, are not permitted. (See Section 4)

Q3. Why is Intraware making this offer?

A3. We are making this offer because we believe that this offer will foster retention of our valuable employees and consultants and better align the interests of our employees, consultants and stockholders to maximize stockholder value. We issued the currently outstanding options to attract and retain the best available personnel and to provide an additional incentive to our employees and consultants. Some of our outstanding, unvested options, which are currently exercisable, have exercise prices that are significantly higher than the current market price for our stock. These options are commonly referred to as being "underwater." By making this offer, we intend to provide eligible participants with the opportunity to own restricted stock units that over time may have a greater potential to increase in value. Because we prefer that most of our employees and consultants be subject to similar equity compensation structures, certain options that are not underwater also are eligible to be exchanged in this offer.

We believe that the structure of this offer will also help us use our employee compensation resources more efficiently. Stock options represent potential future issuance of shares, which results in dilution of stockholder interests. The measure of stock option usage is called "overhang," defined most simply as stock options granted as a percentage of the total shares outstanding. The exchange ratios selected for this offer are expected to decrease the total number of options outstanding and therefore reduce the potential dilution associated with our employee compensation. Additionally, the structure of the exchange program and the selected exchange ratios are such that the exchange will significantly reduce our equity-related compensation expenses for financial accounting purposes. (See Section 3)

Q4. Who may participate in this offer?

A4. You may participate in this offer if you are an eligible participant. You are an eligible participant if you are an employee (including an officer) or consultant of Intraware at the time of this offer and you remain an employee or consultant of Intraware or a successor entity through the cancellation date; provided, however, that we will not accept any options tendered by employees or consultants who have been notified that their service to Intraware will be terminated. To receive a restricted stock unit grant, you must remain an employee or consultant of Intraware through the restricted stock unit grant date. (See Section 1)

Q5. Which options are "eligible options" that may be exchanged in this offer?

A5 All options granted under our 1996 Plan that are outstanding and unvested as of the cancellation date with an exercise price per share greater than or equal to $5.00 are eligible for exchange. This means

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that options must be outstanding and unvested as of immediately prior to the cancellation of the options under this offer. For example, if a particular option grant expires after commencement of the offer or if a portion of a particular option grant vests after commencement of the offer, but before cancellation under the offer, that particular option grant or portion of the option grant is not eligible for exchange. (See Section 2)

If you participate in this offer, you must exchange all of your eligible options. (See Section 2)

Q6. How many restricted stock units will I receive for the options that I exchange?

A6. The number of restricted stock units that you receive will depend on the exercise price of your exchanged options, as follows:

For purposes of this offer, including the exchange ratios, the term "option" generally refers to an option to purchase one (1) share of our common stock. For purposes of applying the exchange ratios, fractional restricted stock units will be rounded up to the nearest whole restricted stock unit on a grant by grant basis.

Please note: The exchange ratios apply to each of your option grants separately. This means that the various options you have received may be subject to different exchange ratios. (See Section 2)

Example 1

If you exchange 5,000 options with an exercise price per share of $5.50, you will receive 2,500 restricted stock units.

Example 2

If you exchange 5,000 options with an exercise price per share of $9.25, you will receive 1,667 restricted stock units.

Example 3

If you exchange 5,000 options with an exercise price per share of $13.25, you will receive 1,250 restricted stock units.

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Example 4

If you exchange (i) 1,000 unvested options that were granted in January 2006 with an exercise price per share of $6.74, and (ii) 1,000 unvested options that were granted in February 2005 with an exercise price per share of $8.80, then all of the following apply:

If you wish to exchange your February 2005 option, you must exchange your January 2006 option as well.

In exchange for the options granted in January 2006, you will receive 500 restricted stock units.

In exchange for the options granted in February 2005, you will receive 334 restricted stock units.

(See Section 2)

Q7. Are there circumstances under which I would not be granted restricted stock units?

A7. Yes. If, for any reason, you are no longer an employee or consultant of Intraware on the restricted stock unit grant date, you will not receive any restricted stock units. Instead, you will keep your current eligible options and they will expire in accordance with their terms. In addition, if we have informed you prior to the expiration of the offer that your position with Intraware will be eliminated, you will keep your current eligible options and will not receive any restricted stock units. Your employment or service with Intraware will remain "at-will" regardless of your participation in the offer and can be terminated by you or us at any time, with or without cause or notice. (See Sections 1 and 4)

Moreover, even if we accept your exchanged options, we will not grant restricted stock units to you if we are prohibited from doing so by applicable laws. For example, we could become prohibited from granting restricted stock units as a result of changes in SEC or Nasdaq rules. We do not anticipate any such prohibitions at this time. (See Section 13)

Q8. Am I required to participate in this option exchange?

A8. No. Participation in this offer is completely voluntary. However, if you participate in this offer, you must exchange all of your outstanding, unvested options with an exercise price greater than or equal to $5.00 granted under the 1996 Plan, if any. (See Section 2)

Q9. Why isn't the exchange ratio simply one-for-one?

A9. Our stock option exchange program must balance the interests of our employees, consultants and stockholders. The exchange ratios selected for this offer will decrease the total number of options outstanding and will benefit stockholders by decreasing potential stockholder dilution. (See Section 3)

Q10. What will be the purchase price of my restricted stock units?

A10. The purchase price of your restricted stock units will be the par value of our common stock which is equal to one tenth of one cent ($0.001) and the par value will be deemed paid by your past services

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rendered to Intraware. As a result, you do not have to make any cash payment to Intraware to receive your restricted stock units. (See Section 9)

Q11. When will my restricted stock units vest?

A11. The vesting schedule of the restricted stock units will be as follows, subject to your continuing to be an employee or other service provider through each relevant vesting date:

None of the restricted stock units will be vested on the restricted stock unit grant date (expected to be April 9, 2007).

1/3^rd of the restricted stock units will vest on the one (1) year anniversary of the restricted stock unit grant date.

Thereafter, 1/12^th of the restricted stock units will vest every three (3) months following the one (1) year anniversary of the restricted stock unit grant date, so that all of the restricted stock units will be vested three (3) years from the restricted stock unit grant date.

Note, however, that:

If your service with us terminates (for any reason or no reason) before your restricted stock units vest, your restricted stock units will expire unvested, and you will not be issued any shares under your restricted stock unit award.

Vesting on any date is subject to your continued service to us through each relevant vesting date.

We will make minor modifications to the vesting schedule of any restricted stock units to eliminate fractional vesting (such that a whole number of restricted stock units will vest on each vesting date); this will be done by rounding down to the nearest whole number of restricted stock units that will vest on a particular vesting date. (See Section 9)

Example: An unvested option to purchase 5,000 shares at an exercise price of $5.50 is exchanged for an award of 2,500 restricted stock units granted on the scheduled restricted stock unit grant date of April 9, 2007. The restricted stock units will vest as follows (subject to your continued service to Intraware through each relevant vesting date):

Vested on restricted stock unit grant date: None

Restricted stock units that will vest on the one (1) year anniversary of the restricted stock unit grant date (expected to be April 9, 2007): 833

Restricted stock units that will vest one (1) year and three (3) months from the restricted stock unit grant date: 208

Restricted stock units that will vest one (1) year and six (6) months from the restricted stock unit grant date: 208

Restricted stock units that will vest one (1) year and nine (9) months from the restricted stock unit grant date: 209

Restricted stock units that will vest two (2) years from the restricted stock unit grant date: 208

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Restricted stock units that will vest two (2) years and three (3) months from the restricted stock unit grant date: 208

Restricted stock units that will vest two (2) years and six (6) months from the restricted stock unit grant date: 208

Restricted stock units that will vest two (2) years and nine (9) months from the restricted stock unit grant date: 209

Restricted stock units that will vest three (3) years from the restricted stock unit grant date: 209

Q12. If I participate in this offer, do I have to exchange all of my eligible options?

A12. Yes. You may not pick and choose which of your eligible options you wish to exchange. If you decide to participate in this offer, you must elect to exchange all of your eligible option grants. You should note that we are not accepting partial tenders of option grants. This means that you may not elect to exchange only some of the shares covered by any particular option grant. However, you may elect to exchange the remaining portion of an option grant that you have partially exercised or which is partially vested. (See Section 2)

Q13. What about my outstanding, vested options under the 1996 Plan?

A13. Any outstanding, vested options that you are hold, or any unvested options with an exercise price per share less than $5.00, are not eligible to be exchanged in this offer. Such options will remain outstanding in accordance with the terms of the 1996 Plan and the option agreement between you and Intraware. (See Section 2)

Q14. What happens if I have an option grant that is subject to a domestic relations order or comparable legal document as the result of the end of a marriage?

A14. If you have an eligible option grant that is subject to a domestic relations order (or comparable legal document as the result of the end of a marriage) and a person who is not an eligible participant beneficially owns a portion of the eligible option, you may accept this offer with respect to the entire remaining outstanding portion of the eligible option if so directed by the beneficial owner as to his or her portion in accordance with the domestic relations order or comparable legal documents. As noted above, this is an all or nothing offer, so your participation must be with respect to all or none of the eligible options legally owned by you. Because you are the legal owner of an eligible option, Intraware will respect an election properly made by you and accepted by Intraware and will not be responsible to you or the beneficial owner of the eligible option for any errors made by you with respect to such an election. (See Section 2)

Q15. When will my exchanged options be cancelled?

A15. Your exchanged options will be cancelled on the same United States business day as the expiration date. We refer to this date as the cancellation date. We expect that the cancellation date will be
April 9, 2007 unless the offer period is extended. (See Section 6)

Q16. Once I surrender my exchanged options, is there anything I must do to receive the restricted stock units?

A16. Once your exchanged options have been cancelled, there is nothing that you must do to receive your restricted stock units. Your restricted stock units will be granted to you on the same day that the

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exchanged options are cancelled. We expect that the restricted stock grant date will be April 9, 2007. In order to receive the shares covered by the restricted stock unit grant, you will need to remain an employee or service provider through the applicable vesting date, as described in Question and Answer 11. (See Section 1)

Q17. When will I receive restricted stock units?

A17. We will grant the restricted stock units on the restricted stock unit grant date. The restricted stock unit grant date will be the same United States business day as the date on which we cancel the options accepted for exchange. We expect the restricted stock unit grant date will be April 9, 2007. If the expiration date is delayed, the restricted stock unit grant date will be similarly delayed. You will receive your grant paperwork promptly after the expiration of the offer. You will receive the shares subject to the restricted stock unit award when and if your award vests. (See Section 6)

Q18. Can I exchange shares of Intraware common stock that I acquired upon exercise of Intraware options or vested Intraware options?

A18. No. This offer relates only to outstanding, unvested Intraware options with an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan. You may not exchange shares of Intraware common stock in this offer and you may not exchange vested Intraware options. (See Section 2)

Q19. Why can't you just grant me additional options?

A19. While Intraware could grant additional options today, the number of outstanding options in relation to our shares outstanding, the "overhang," is not favorable for our stockholders, and therefore should be reduced. We believe this program is in the best interests of our employees, consultants and stockholders to give incentive to our employees and consultants with appropriate equity grants, reduce the outstanding stock option overhang and conserve options for future grants. (See Section 3)

Q20. Will I be required to give up all of my rights under the cancelled options?

A20. Yes. Once we have accepted your exchanged options, your exchanged options will be cancelled and you will no longer have any rights under those options. We intend to cancel all exchanged options on the same United States business day as the expiration date. We refer to this date as the cancellation date. We expect that the cancellation date will be April 9, 2007. (See Section 6)

Q21. Will the terms and conditions of my restricted stock units be the same as my exchanged options?

A21. Restricted stock units are a different type of award than stock options, and so the terms and conditions of your restricted stock units will necessarily be different from your stock options. Further, your restricted stock units will be granted under the 2006 Plan, while your exchanged options have been granted under the 1996 Plan which may have different terms and conditions. However, such changes generally will not substantially and adversely affect your rights, except that the vesting schedule of your restricted stock units will be different. (See Section 9)

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Q22. What happens to my options if I choose not to participate or if my options are not accepted for exchange?

A22. If you choose not to participate or your options are not accepted for exchange, your existing options will (i) remain outstanding until they expire by their terms, (ii) retain their current exercise price and (iii) retain their current vesting schedule. (See Section 6)

Q23. How does Intraware determine whether an option has been properly tendered?

A23. We will determine, in our discretion, all questions about the validity, form, eligibility (including time of receipt) and acceptance of any options. Our determination of these matters will be final and binding on all parties. We reserve the right to reject any election form or any options tendered for exchange that we determine are not in appropriate form or that we determine are unlawful to accept. We will accept all properly tendered options that are not validly withdrawn, subject to the terms of this offer; provided, however, we will not accept any options tendered by employees or consultants who have been told that their service to Intraware will be terminated. No tender of options will be deemed to have been properly made until all defects or irregularities have been cured or waived by us. We have no obligation to give notice of any defects or irregularities in any election form and we will not incur any liability for failure to give any notice. (See Section 4)

Q24. Will I have to pay taxes if I participate in the offer?

A24. If you participate in the offer and are a citizen or resident of the United States, you generally will not be required under current United States law to recognize income for United States federal income tax purposes at the time of the exchange. On the restricted stock unit grant date, you generally will not be required under current law to recognize income for United States federal income tax purposes. However, you generally will have taxable income when your restricted stock units vest or when you sell the shares underlying the restricted stock unit. (See Section 14)

You should consult with your own tax advisor to determine the personal tax consequences to you of participating in this offer. If you are a resident of or subject to the tax laws in more than one country, you should be aware that there might be additional tax and social insurance consequences that may apply to you.

Q25. How do I pay any tax withholding obligations related to shares I receive upon vesting?

A25. Although not obligated to do so, Intraware intends to automatically redeem a sufficient number of shares of our common stock issued when restricted stock units vest to satisfy your tax withholding obligation. (See Section 14)

Q26. What if Intraware is acquired by another company?

A26. Although we are not anticipating any such merger or acquisition, if we merge or consolidate with or are acquired by another entity, prior to the expiration of the offer, you may choose to withdraw any options which you tendered for exchange and your options will be treated in accordance with the 1996 Plan under which they were granted and your option agreement. Further, if Intraware is acquired prior to the expiration of the offer, we reserve the right to withdraw the offer, in which case your options and your rights under them will remain intact and exercisable for the time period set forth in your option agreement and you will receive no restricted stock units in exchange for them. If Intraware is acquired prior to the expiration of the offer but does not withdraw the offer, we (or the successor entity) will notify you of any material changes to the terms of the offer or the restricted

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stock units, including any adjustments to the purchase price or number of shares that will be subject to the restricted stock units. Under such circumstances, the type of security and the number of shares covered by your restricted stock unit award would be adjusted based on the consideration per share given to holders of our common stock in connection with the acquisition. As a result of this adjustment, you may receive restricted stock units covering more or fewer shares of the acquiror's common stock than the number of shares subject to the eligible options that you tendered for exchange or than the number you would have received pursuant to the restricted stock units if no acquisition had occurred.

If we are acquired by or merge with another company, your cancelled options might be worth more than the restricted stock units that you receive in exchange for them.

A transaction involving us, such as a merger or other acquisition, could have a substantial effect on our stock price, including significantly increasing the price of our common stock. Depending on the structure and terms of this type of transaction, option holders who elect to participate in the offer might be deprived of the benefit of the appreciation in the price of our common stock resulting from the merger or acquisition. This could result in a greater financial benefit for those option holders who did not participate in this offer and retained their original options.

Finally, if another company acquires us, that company may, as part of the transaction or otherwise, decide to terminate some or all of our employees or consultants before the completion of this option exchange program. Termination of your service for this or any other reason before the restricted stock unit grant date means that the tender of your options will not be accepted, you will keep your tendered options in accordance with their original terms, and you will not receive any restricted stock units or other benefit for your tendered options.

If we are acquired after your tendered options have been accepted, cancelled, and exchanged for restricted stock units, your restricted stock units will be treated in the acquisition transaction in accordance with the terms of the transaction agreement or the terms of the 2006 Plan and your new restricted stock unit agreement. (See Section 9)

Q27. Will I receive a restricted stock unit agreement?

A27. Yes. All restricted stock units will be subject to a restricted stock unit agreement between you and Intraware, as well as to the terms and conditions of the 2006 Plan. (See Section 9)

Q28. Are there any conditions to this offer?

A28. Yes. The completion of this offer also is subject to a number of customary conditions that are described in Section 7 of this Offer to Exchange. If any of these conditions are not satisfied, we will not be obligated to accept and exchange properly tendered eligible options, though we may do so at our discretion. (See Sections 2 and 7)

Q29. If you extend the offer, how will you notify me?

A29. If we extend this offer, we will issue a press release, e-mail or other form of communication disclosing the extension no later than 6:00 a.m., Pacific Time, on the next United States business day following the previously scheduled expiration date. (See Sections 2 and 16)

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Q30. How will you notify me if the offer is changed?

A30. If we change the offer, we will issue a press release, e-mail or other form of communication disclosing the change no later than 6:00 a.m., Pacific Time, on the next United States business day following the day we change the offer. (See Sections 2 and 16)

Q31. Can I change my mind and withdraw from this offer?

A31. Yes. You may change your mind after you have submitted an election form and withdraw from the offer at any time before the expiration date. If we extend the expiration date, you may withdraw your election at any time until the extended offer expires. You may change your mind as many times as you wish, but you will be bound by the last properly submitted election or withdrawal form we receive before the expiration date. (See Section 5)

Q32. How do I withdraw my election?

A32. To withdraw your election, you must do the following before the expiration date:

You must deliver the completed withdrawal form by facsimile, e-mail, portable document format (PDF) or by hand delivery before 5:00 p.m., Pacific Time, on April 9, 2007 to:

Melinda Ericks
mericks@intraware.com
Fax: (925) 253-4518

(See Section 5)

Q33. What if I withdraw my election and then decide again that I want to participate in this offer?

A33. If you have withdrawn your election to participate and then decide again that you would like to participate in this offer, you may re-elect to participate by submitting a new properly completed election form before the expiration date that is signed and dated after the date of your withdrawal form. (See Question and Answer 2 and Section 5)

Q34. Are you making any recommendation as to whether I should exchange my eligible options?

A34. No. We are not making any recommendation as to whether you should accept this offer. We understand that the decision whether or not to exchange your eligible options in this offer will be a challenging one for many of our employees and consultants. The program does carry risk (see "Risks of Participating in the Offer" on page * for information regarding some of these risks), and there are no guarantees that you would not ultimately receive greater value from your eligible options than from the restricted stock units you will receive in exchange. As a result, you must make your own decision as to whether or not to participate in this offer. For questions regarding personal tax implications or other investment-related questions, you should talk to your own legal counsel, accountant and/or financial advisor. (See Section 3)

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Q35. Who can I talk to if I have questions about the offer, or if I need additional copies of the offer documents?

A35. For additional information or assistance, you should contact Paul Warenski, our Senior Vice President and General Counsel, at:

Intraware, Inc.
25 Orinda Way
Orinda, CA 94563
(925) 253-4515

(See Section 10)

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RISKS OF PARTICIPATING IN THE OFFER

Participating in the offer involves a number of risks, including those described below. This list and the risk factors under the heading entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our quarterly report on Form 10-Q for the fiscal quarter ended November 30, 2006, filed with the SEC highlight the material risks of participating in this offer. You should carefully consider these risks and are encouraged to speak with an investment and tax advisor as necessary before deciding to participate in the offer. In addition, we strongly urge you to read the sections in this Offer to Exchange discussing the tax consequences in the United States, as well as the rest of this Offer to Exchange for a more in-depth discussion of the risks that may apply to you before deciding to participate in the exchange offer.

In addition, this offer and our SEC reports referred to above include "forward-looking statements." When used in this Offer to Exchange, the words "anticipate," "believe," "estimate," "expect," "intend" and "plan" as they relate to us are intended to identify these forward-looking statements. All statements by us regarding our expected future financial position and operating results, our business strategy, our financing plans and expected capital requirements, forecasted trends relating to our services or the markets in which we operate and similar matters are forward-looking statements, and are dependent upon certain risks and uncertainties, including those set forth in this section and other factors elsewhere in this Offer to Exchange. You should carefully consider these risks, in addition to the other information in this Offer to Exchange and in our other filings with the SEC. The documents we file with the SEC, including the reports referred to above, discuss some of the risks that could cause our actual results to differ from those contained or implied in the forward-looking statements. The safe harbor afforded by the Private Securities Litigation Reform Act of 1995 to certain forward-looking statements does not extend to forward-looking statements made by us in connection with the offer.

The following discussion should be read in conjunction with the financial statements and notes to the financial statements attached as Schedule B, as well as our most recent Forms 10-K, 10-Q and 8-K. We caution you not to place undue reliance on the forward-looking statements contained in this Offer to Exchange, which speak only as of the date hereof.
Risks that are Specific to this Offer

If the price of our common stock increases after the date on which your options are cancelled, your cancelled options might be worth more than the restricted stock units that you receive in exchange for them.

Because the exchange ratio of this offer is not one-for-one with respect to any eligible options, it is possible that, at some point in the future, your old options would have been economically more valuable than the restricted stock units granted pursuant to this exchange offer. For example, if you exchange an option grant for 5,000 shares with an exercise price per share of $5.00, you would receive a grant of 2,500 restricted stock units. Assuming, for illustrative purposes only, that three (3) years after the restricted stock unit grant date the price of our common stock had increased to $11.00 per share. Under this example, if you had kept your exchanged options and sold them at $11.00 per share, you would have realized pre-tax gain of $30,000, but if you exchanged your options and sold the shares subject to the restricted stock unit grant, you would only realize a pre-tax gain of $27,500.

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If we are acquired by or merge with another company, your cancelled options might be worth more than the restricted stock units that you receive in exchange for them.

If your service terminates for any reason before your restricted stock units vest, you will not receive any value from your restricted stock units.

If you do not remain an employee or other service provider of Intraware for at least one (1) year from the restricted stock unit grant date, none of your restricted stock units will vest.

The restricted stock units will be subject to a one (1) year vesting cliff. If you do not remain an employee or service provider through the date your restricted stock units first vest, you will not be issued any shares pursuant to your restricted stock units. Instead, your restricted stock units will expire immediately upon your termination. As a result, you will receive no value from your restricted stock units.

Employees who do not participate in this exchange may be required to restart the measurement periods required to be eligible for favorable tax treatment for their incentive stock options.

In order to receive favorable tax treatment for incentive stock options, the shares subject to the option must be held more than two (2) years after the grant date and more than one (1) year after you exercise the option grant. If this offer is open for thirty (30) days or more, employees will not receive any credit for the time in which their eligible options were held. As a result, if this offer is open for thirty (30) or more, in order for your eligible options to be eligible for favorable United States federal tax treatment, you must wait to sell the shares subject to your stock option until the passage of more than two (2) years from the restricted stock unit grant date and more than one (1) year after the exercise of the option (even if you do not exchange your eligible options for restricted stock units). If these holding periods (and all other incentive stock option requirements) are met, the excess of the sale price of the option shares over the exercise price of the option will be treated as long-term capital gain. For more detailed information, please read the rest of the Offer to Exchange, and see the tax disclosure set forth under the section entitled "Material United States federal income tax consequences." If the offer expires on April 9, 2007, the scheduled expiration date, the offer will have been open less than thirty (30) days and this risk will not be realized.

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Tax effects of restricted stock units.

If you participate in the offer and are a citizen or resident of the United States, you generally will not be required under current United States law to recognize income for United States federal income tax purposes at the time of the exchange. On the restricted stock unit grant date, you generally will not be required under current law to recognize income for United States federal income tax purposes. However, you generally will have taxable income when your restricted stock units vest or when you sell the shares underlying the restricted stock unit. Although not obligated to do so, Intraware intends to automatically redeem a sufficient number of shares of our common stock issued when restricted stock units vest to satisfy the tax withholding obligation. We strongly recommend that you consult with your own advisors to discuss the consequences to you of participating in this offer.

Tax-related risks for tax residents of multiple countries.

If you are subject to the tax laws in more than one jurisdiction, you should be aware that there may be tax and social security consequences of more than one country that may apply to you. You should be certain to consult your own tax advisor to discuss these consequences.

Risks Relating to Our Business, Generally

We have a history of losses and negative cash flow, and we have yet to achieve sustained profitability or positive cash flow.

We have incurred significant losses since we were formed in 1996, totaling approximately $160 million, and have yet to achieve sustained profitability or positive cash flow. Also, with the exception of our quarters ended November 30, 2002, August 31, 2005, August 31, 2006 and November 30, 2006, we have not achieved positive cash flow from operations since our formation in 1996. We may not have positive cash flows from operations for our 2007 fiscal year. We cannot predict whether or when we will be able to achieve sustained profitability or positive cash flow in the future.

The market for our SubscribeNet electronic software and license delivery and management service is immature and volatile. If the market for our service does not develop, or develops more slowly than we expect, our business will be harmed.

The market for hosted digital delivery services is relatively unproven, and it is uncertain whether these services will achieve and sustain high levels of demand and market acceptance. Our success will depend to a substantial extent on the willingness of companies, large and small, to increase their use of hosted digital delivery services. If companies do not increase their use of hosted digital delivery services, our operating results will suffer. In addition, in this unproven market, we have limited insight into trends that may develop and affect our business. We may make errors in predicting and reacting to relevant business trends, which could harm our business.

We market our SubscribeNet electronic software and license delivery and management service principally to software companies. However, many software companies have invested substantial personnel and financial resources in developing their own electronic software and/or license delivery systems, and therefore may be unwilling to migrate to and pay for an outsourced service. In addition, some software companies have adopted automatic update, or "phone home," technology for delivering software updates, whereby an end-user's computer automatically contacts the software company's server to check whether updates are available and, if so, downloads and installs those updates. While SubscribeNet supports such an approach, this method for delivering software updates could be viewed by our potential and existing customers as an alternative to our digital delivery technology, and therefore any increased adoption of this automatic update technology could hurt our business and results of operations.

Further, some companies may be reluctant to use our SubscribeNet delivery services because they are concerned about the security capabilities of these services.

Competition from other electronic delivery and licensing providers, and potential customer development of in-house electronic delivery and/or licensing systems, could limit our revenue growth and reduce our gross margins.

The market for selling electronic delivery and licensing services is highly competitive. Some of our competitors have longer operating histories, greater financial, technical, marketing and other resources,

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broader product and service offerings, better name recognition, and a larger installed base of customers than we do. Some of our competitors also have well-established relationships with our potential customers and with third-party information technology or consulting firms that help market our competitors' services. We expect competition to intensify as current competitors expand and improve their service offerings and new competitors enter the market. In addition, our current and potential customers are primarily information technology companies with strong software development expertise. When considering their alternatives for implementing a system for electronic delivery of software or license keys, these companies sometimes elect to develop such systems in-house. While we believe our competitive position is strong against both external competitors and in-house development, we have at times experienced reduced prices, reduced gross margins and lost sales as a result of such competitive factors. Such competition is likely to intensify, which could limit the growth of our revenues and gross margins.

The loss of one or more of our key customers could cause our revenue growth to slow or cause our revenues to decline.

A substantial portion of the revenues from our SubscribeNet service comes from a relatively small number of customers. Our contracts with most of these customers are subject to renewal or cancellation annually. If any of these customers elected to cancel their agreements with us, our revenue growth would likely slow and our revenues could decline.

Mergers and acquisitions in the technology sector could harm us by causing cancellation of customer contracts where our customers are acquired, or by strengthening our competitors.

In recent years, there has been an increase in mergers and acquisitions among technology companies. This trend poses risks for us. First, our customers are technology companies, and any acquisitions of our customers could lead to cancellation of our contracts with those customers by the acquiring companies. Second, our competitors also are technology companies. Any acquisitions of other companies by our competitors, or acquisitions of our competitors by other companies, are likely to result in larger and stronger companies competing against us. Either of these types of events could reduce our revenue through loss of existing customers, or reduce our margins through increased price competition.

Our current strategy includes the use of strategic marketing relationships, which may prove unsuccessful.

We currently have marketing relationships in place with Digital River, Inc., Hewlett Packard, Corp., On Demand Delivery, Inc. dba Nextra, and Zomax, Inc. We also have a reseller relationship with Akamai Technologies, Inc., under which we resell the Akamai service to our SubscribeNet customers. Of particular importance to us is our joint marketing relationship with Digital River. We believe this relationship could help further expand our electronic delivery service into the consumer software market, where Digital River has a much larger presence than we do, while at the same time enabling us to offer e-commerce services to our existing installed base and to other prospective customers in the enterprise software market. We believe that gaining a greater presence in the consumer software market, and enhancing our offering to include e-commerce services can play an important role in our future growth. Our relationships with Zomax, On Demand Delivery, and Hewlett Packard have yet to produce significant revenue, however, and it is possible our more recent relationships with Digital River and Akamai Technologies will prove less beneficial than we currently expect, in which case our business could suffer.

Although our subscription-based sales model for our SubscribeNet service limits the volatility of our online services and technology revenue, other factors may cause our operating results, and therefore our stock price, to fluctuate.

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Our SubscribeNet service fees, which comprise most of our online services and technology revenues, are recognized ratably over contract terms of generally one year, thereby limiting the quarter-to-quarter volatility of those revenues. Nevertheless, certain factors may cause our online services and technology revenues to fluctuate. In addition to the other risk factors described in this section, factors that could cause such fluctuation include:

Deferral of SubscribeNet revenue recognition due to delays by customers in implementing the SubscribeNet service, due to new sales involving extensive implementations, or due to contract modifications adding significant future deliverables;
Unexpected increases in customer cancellations, which could result from service deficiencies, or from external conditions or circumstances beyond our control;
Lengthening of the sales cycle for our SubscribeNet service due to macroeconomic or other factors;
Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities and other items reflected in our consolidated financial statements or unaudited interim consolidated financial statements; and
Changes in accounting rules, such as recording expenses for employee stock option grants.

Consequently, operating results for a particular future period are difficult to predict, and prior results are not necessarily indicative of results to be expected in future periods. Any of these factors could materially adversely affect our results of operations and stock price.

The technological and functional requirements we must meet to stay competitive are subject to rapid change. If we are unable to quickly adapt to these changes and meet the demands of our current and potential customers, we will likely lose sales and market share and our revenue growth will be limited.

We market primarily to software publishers, who generally demand that a service like ours meet high technological and functional standards. To remain competitive in this market and meet the demands of current and prospective customers, we must continually adapt and upgrade our technology and functionality. We are a small company with limited resources available for enhancing and expanding our services. If we do not respond quickly enough to changing industry standards or the increased demands of customers and potential customers, we will likely lose sales and market share to competitors and our growth prospects will be limited. In addition, we could incur substantial costs to modify our services or infrastructure in order to adapt to changing standards and demands. If we incur such costs and our sales fail to increase commensurately, we may not be able to achieve sustained profitability and positive operating cash flow.

Defects in our SubscribeNet service could diminish demand for the service and subject us to substantial liability.

Our service is complex, and may have errors or defects that users identify after they begin using it, which could harm our reputation and our business. Internet-based services frequently contain undetected errors when first introduced or when new versions or enhancements are released. Despite taking precautions to avoid errors, we have found defects in our service from time to time, and we may find new errors in our existing service in the future. Because our customers use our service for important aspects of their business, any errors, defects or other performance problems with our service could hurt our reputation and may damage our customers' businesses. If that occurs, customers could elect not to renew their agreements with us, could

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be eligible for credits under our service level agreements, and could delay or withhold payment to us. We also could lose future sales, or customers may make warranty claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable, or the expense and risk of litigation.

Interruptions or delays in service from our third-party Web hosting facilities, or in our relationships with third party hardware and software vendors, could impair the delivery of our service and harm our business.

We provide our service through computer hardware that is currently located in third-party Web hosting facilities in Santa Clara, California operated by SAVVIS Communications, and in Ireland operated by Data Electronics. We do not control the operation of these facilities, and they are subject to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. While physical security measures are in place, they are also subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. Despite precautions taken at the facilities, the occurrence of a natural disaster, a decision to close a facility without adequate notice, or other unanticipated problems at a facility, could result in lengthy interruptions in our service. In addition, the failure by either facility to provide our required data communications capacity could result in interruptions in our service. We have an agreement with SBC E-Services, an affiliate of SBC Communications, Inc., to provide access to a geographically remote disaster recovery facility that would provide us access to hardware, software and Internet connectivity in the event the SAVVIS facility becomes unavailable. Even with this disaster recovery arrangement, however, our service would be interrupted during the transition. Any damage to, or failure of, our systems could result in interruptions in our service. Interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates. Our business will be harmed if our customers and potential customers believe our service is unreliable.

In addition, to a significant degree, we rely on various third-party software applications and hardware to deliver our service. If we experience disruptions in those vendor relationships and those software and hardware components become unavailable to us, or unavailable on commercially reasonable terms, our service could be interrupted and/or damaged, causing harm to our customer relationships, our reputation, and our overall business.

The market for our Digital Fastball service is unproven.

We continue to develop a production release of a new service called Digital Fastball, which we hope will leverage our digital delivery expertise to enable small and medium-sized businesses, as well as consumers, to send, receive and manage many types and sizes of digital files over the Internet quickly, easily and securely. We plan to market our Digital Fastball service principally to small and medium-sized companies that need to send large digital files as part of their businesses. However, many systems are already available for sharing files over the Internet, in some cases at little or no cost. In addition, some such systems have been the targets of widely publicized litigation by copyright holders, which may make some companies reluctant to use Internet- based digital delivery services such as Digital Fastball.

If our development or marketing efforts prove unsuccessful with respect to Digital Fastball, we may not generate any profit or even recover our investments in the Digital Fastball service, in which case our business could suffer.

We may raise additional capital to fund acquisitions, product development or general operations. Any such capital financing would dilute our shareholders' investments.

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We may raise additional capital in the future through private or public offerings of stock, or through other means. The purposes of any such financing would be to increase our cash reserves for potential use in acquiring other businesses, product development activities, funding our operations and generally strengthening our balance sheet. Any such additional financing would likely dilute the investments of our current shareholders and may not be available on favorable terms, if at all.

Our operating results could vary due to the methods, estimates and judgments we use in applying our accounting policies, particularly SFAS No. 123(R).

The methods, estimates and judgments we use in applying our accounting policies significantly impact our results of operations. Those methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. In particular, the calculation of share-based compensation expense under SFAS No. 123(R)-which we adopted as of the fiscal quarter beginning March 1, 2006-requires that we use valuation methodologies and a number of assumptions, estimates and conclusions regarding matters such as expected terms, expected forfeitures, expected volatility of our share price, the expected dividend rate with respect to our common stock and the exercise behavior of our employees. Furthermore, there are no means, under applicable accounting principles, to compare and adjust our expense if and when we learn of additional information that may affect our previous estimates, with the exception of changes in expected forfeitures of share-based awards. Over time, factors may arise that cause us to change our estimates and assumptions with respect to future share-based compensation arrangements, resulting in variability in our share-based compensation expense. In addition, any future accounting pronouncements, taxation rules, and new interpretations of existing accounting pronouncements or taxation rules, could also have a significant effect on our reported results, including our reporting of transactions completed before the effective date of the change.

Our new independent auditing firm may interpret accounting rules differently than our old independent auditing firm, which could require changes in the presentation of our financial data and/or cause us to restate prior financial reports.

In September of 2006, we dismissed our prior independent accounting firm and engaged a new one to serve in that role. Consequently, our new independent auditor will be reviewing our financial reporting in the future, and also will be reviewing our financial reports from earlier periods that previously were reviewed by our old auditing firm. Given the complexities of public-company accounting rules and the differences in how those rules are interpreted by various accounting firms, it is possible that our new independent auditor will require us to characterize certain transactions and/or present financial data differently than was approved by our former auditor. Similarly, it is possible that our new auditor will disagree with the way we have presented financial results in prior periods, in which case we may be required to restate those financial results. In either case, these changes could negatively impact our future financial results and/or previously reported financial results, could subject us to the expense and other consequences of restating our prior financial statements, and could lead to government investigation and/or shareholder litigation.

Provisions of our charter documents could make it more difficult for a third party to acquire us, even if the offer may be considered beneficial by our stockholders, which could depress the trading price of our common stock.

Our charter documents, as well as our Amended and Restated Preferred Stock Rights Agreement, contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. Among other things, these provisions:

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trigger certain shareholder rights in the event a person or entity acquires more than fifteen percent of our voting securities (or up to twenty percent in the case of Crosslink Capital, Inc.);
establish a classified board of directors so that not all members of our board are elected at one time;
require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws;
authorize the issuance of "blank check" preferred stock that our board could issue to increase the number of outstanding shares and to discourage a takeover attempt;
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15 percent or more of our common stock.

Viruses may hinder acceptance of Internet-based digital delivery, which could in turn limit our revenue growth.

The proliferation of software viruses is a key risk that could inhibit acceptance by information technology professionals of Web- based delivery of digital goods. Any well-publicized transmission of a computer virus by us or another company using digital delivery could deter information technology professionals from using, and deter software providers from outsourcing, digital delivery, thereby adversely affecting our business. Our SubscribeNet service enables our customers to upload their software products directly onto our systems for downloading by their end-users. Our systems automatically scan our customers' software products for known computer viruses on an ongoing basis while they are on our systems. However, it is possible that in spite of these periodic virus scans, our system could transmit the virus to one or more end-users. Any such virus transmission could result in disputes, litigation and negative publicity that could adversely affect our business and our stock price.

If our security measures are breached and unauthorized access is obtained to a customer's data, our service may be perceived as not being secure and customers may curtail or stop using our service.

Our service involves the storage and transmission of customers' proprietary information, and security breaches could expose us to a risk of loss of this information, litigation and possible liability. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to one of our customers' data, our reputation will be damaged, our business may suffer and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose sales and customers. Some companies may be

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reluctant to use either our SubscribeNet or Digital Fastball hosted digital delivery services because they are concerned about the security capabilities of these services.

Additional government regulations may harm demand for our services and increase our costs of doing business.

Our business has benefited from the tax laws of states in which purchases of software licenses are not taxable if the software is received only electronically. Some such states are considering whether to change their laws to broaden the taxability of transactions fulfilled over the Internet. Any new imposition of taxes on sales of software licenses, where the software is received electronically, could substantially harm demand for our services and thereby materially adversely affect our business, operating results and financial condition. We also have benefited from implementing our services in Ireland, which offers tax advantages to software companies distributing software from Ireland. Any regulatory change in Ireland or elsewhere that diminishes those advantages could harm our business. Other changes in government regulations, in areas such as privacy and export compliance, could also require us to implement changes in our services or operations that increase our cost of doing business and thereby hurt our financial performance.

Claims by third parties for intellectual property infringement could force us to stop selling our services, force us to pay royalties, and force us to indemnify our customers.

Our business involves a high risk that we will be the target of intellectual property infringement claims. These claims could take a number of forms, including:

Claims by other technology companies alleging that current or future components of our digital delivery service or related services infringe their intellectual property rights;
Claims by our customers' competitors alleging that our customers' software, which we store and electronically deliver for our customers, infringes those competitors' intellectual property rights (our customers would typically be required to defend and indemnify us against such claims, but the claims could nevertheless disrupt our business);
Claims that our use of the name Intraware violates the rights of other entities that are using the same name. We are aware that certain other companies are using the name "Intraware" as a company name or as a trademark or service mark. While we have received no notice of any claims of trademark infringement from any of those companies, we cannot assure you that these companies may not claim superior rights to "Intraware" or to other marks we use; or
Claims by our customers that we delivered their software to unauthorized third parties, thereby infringing our customers' intellectual property rights.

Industry consolidation is increasing the risk that we will become a target of the types of infringement claims described in the first two bullets above. Consolidation among companies providing digital delivery, licensing, e-commerce and related technologies is resulting in more direct competition among the surviving companies in that segment, heightening the risk of intellectual property infringement claims among those companies, including us. Similarly, consolidation in the enterprise software industry heightens the risk of intellectual property infringement claims among the companies remaining in that industry, including most of our customers.

These intellectual property claims could be made for patent, copyright or trademark infringement or for misappropriation of trade secrets. They could be made directly against us, or indirectly through our

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contractual indemnification obligations to our customers and channel partners. Any claims could result in costly litigation and be time-consuming to defend, divert management's attention and resources, or cause delays in releasing new or upgrading existing services. Royalty or licensing agreements, if required, may be available only on onerous terms, if at all. Although we carry general liability insurance, our insurance may not cover all potential claims or may not be adequate to protect us from all liability that may be imposed.

We believe we own the rights in, or have the rights required to use, our SubscribeNet technology. However, there can be no assurance that this technology does not infringe the rights of third parties. In addition, we take steps to verify that end-users who download our customers' software through our SubscribeNet service are entitled to deploy and use that software. However, there can be no assurance that this verification procedure will help us defend against claims by, or protect us against liability to, our customers whose software is downloaded.

If our export compliance system fails to prevent unauthorized exports of our customers' software, we could be sanctioned by the U.S. government.

Through our SubscribeNet service, we globally distribute software containing encryption technology and other technologies restricted by U.S. laws and regulations from exportation to certain countries, certain types of recipients, and certain specific end-users. Our SubscribeNet solution incorporates automated procedures to help ensure that the software we deliver electronically is not downloaded in violation of U.S. export laws and regulations. However, these procedures may not prevent unauthorized exports of restricted software in every case. If an unauthorized export of software occurs through the SubscribeNet service and the U.S. government determines that we have violated U.S. export laws or regulations, we could be sanctioned under those laws or regulations. Sanctions include fines, suspension or revocation of export privileges, and imprisonment.

If our key personnel left the company, our product development, sales, and corporate management could suffer.

Our future success depends upon the continued service of our executive officers and other key technology, sales, marketing and support personnel. None of our officers or key employees is bound by an employment agreement for any specific term. We do not maintain life insurance on any of our officers or key employees. If we lost the services of one or more of our key employees, or if one or more of our executive officers or key employees decided to join a competitor or otherwise compete directly or indirectly with us, this could significantly harm our business.

Financial and securities laws, especially the Sarbanes-Oxley Act of 2002, require that we evaluate our internal control structure. While we believe we currently have adequate internal controls in place, this exercise has no precedent available by which to measure the adequacy of our compliance, and in addition it may cause our operating expenses to increase.

The Sarbanes-Oxley Act of 2002 and newly proposed or enacted rules and regulations of the SEC and the Nasdaq Stock Market impose new duties on us and our executives, directors, attorneys and independent registered public accounting firms. In order to comply with the Sarbanes-Oxley Act and such new rules and regulations, we are evaluating our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, our internal control over financial reporting. We are performing the system and process evaluation and testing (and any necessary remediation) required in an effort to comply with the management certification and independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, we are incurring additional expenses and diversion of management's time, and we may be required to hire additional

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personnel and engage additional outside legal, accounting and advisory services. Any of these developments could materially increase our operating expenses and accordingly reduce our net income or increase our net loss. While we anticipate being able to fully implement the requirements relating to internal control over financial reporting and all other aspects of Section 404 in a timely fashion, we cannot be certain as to the outcome of our testing and resulting remediation actions or the impact of the same on our operations since there is little precedent available by which to measure compliance adequacy. If we are unable to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the Nasdaq Stock Market, and our reputation may be harmed. Any such action could adversely affect our financial results and the price of our common stock.

Moreover, our management, including our CEO and CFO, does not expect that our disclosure controls or our internal controls over our financial reporting will eliminate all risk of error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls or procedures could be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Our sales and marketing services arrangement with Software Spectrum, Inc. terminated on January 3, 2006. As a result, we stopped recognizing alliance and reimbursement revenues after January 3, 2006.

Until January 3, 2006, we provided sales and marketing services to Software Spectrum to assist in its resale and marketing of Sun Java Enterprise System and Sun One software licenses and maintenance, under a Sales Alliance Agreement between us and Software Spectrum. Under that agreement, Software Spectrum shared with us a portion of its gross profit from resales of licenses and maintenance for that Sun software, and paid us a SubscribeNet service fee for electronic delivery of that Sun software. This agreement accounted for substantially all of our alliance and reimbursement revenues, a significant portion of our online services and technology revenues, and more than 10% of our total revenues in our 2006 fiscal year.

Effective January 3, 2006, we terminated our Sales Alliances Agreement with Software Spectrum. We have signed a two-year SubscribeNet service agreement with FusionStorm to provide electronic software and license management services for their SunOne product sales, which we expect will partially offset the decline in our online services and technology revenues. We do not expect to offer sales and marketing services in the future to other customers as part of the SubscribeNet offering. We ceased recognizing any alliance and reimbursement revenues after January 3, 2006.

If we acquire any companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results.

We may acquire or make investments in complementary companies, services and technologies in the future. We are considerably smaller now than we were when we made our past acquisitions, and therefore any new acquisitions or investments could be more disruptive to our organization than in the past. Acquisitions and investments involve numerous risks, including:

difficulties in integrating operations, technologies, services and personnel;
diversion of financial and managerial resources from existing operations;
risk of entering new markets;

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potential write-offs of acquired assets;
potential loss of key employees;
inability to generate sufficient revenue to offset acquisition or investment costs; and
delays in customer purchases due to uncertainty.

In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted which could affect the market price of our stock. As a result, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects may be seriously harmed.

We could face claims in relation to our Employee Stock Purchase Plan ("ESPP").

We have maintained an ESPP program for the benefit of our employees since 1999. We recently determined that beginning in late 2001, we issued shares that were authorized under our ESPP plan but which exceeded the number of shares we had registered with the SEC on Form S-8. In October 2006, we registered additional ESPP shares with the SEC, but it is possible we could face claims for rescission of past purchases or other damages by former employees who lost money selling their ESPP shares. It is difficult to predict the overall size of these potential claims because we do not have data showing the extent to which employees or former employees continue to hold their shares or have sold them, or data showing any resulting losses. While we believe the aggregate amount of potential claims is small, we cannot assure you of this. We also believe we have valid defenses against any such claims, including without limitation applicable statutes of limitation, but the cost of litigating these issues could be expensive and we cannot assure you we would prevail on all of our defenses or avoid rescinding certain purchases under the ESPP and/or paying damages.

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THE OFFER

Eligibility.

You are an "eligible participant" if you are an employee (including an officer) or consultant of Intraware and you remain an employee or consultant of Intraware or a successor entity through the date on which the exchanged options are cancelled; provided, however, that if we have notified you prior to the expiration of the offer that your position with Intraware will be eliminated, we will not accept your tendered options and you will not receive any restricted stock units. Our directors who are also employees of Intraware and our executive officers, listed on Schedule A to this Offer to Exchange, are eligible to participate in this offer. Because the non-employee members of our board of directors have not received options under the 1996 Plan, they are not eligible to participate in this offer.

To receive a grant of restricted stock units, you must remain an employee or consultant of Intraware or a successor entity through the restricted stock unit grant date, which will be the same United States business day as the cancellation date. If you do not remain an employee or consultant of Intraware or a successor entity through the restricted stock unit grant date, you will keep your current eligible options and they will expire in accordance with their terms. If we do not extend the offer, the restricted stock unit grant date will be April 9, 2007. Your service with Intraware will remain "at-will" and can be terminated by you or us at any time, with or without cause or notice. In order to vest in your restricted stock units and receive the shares subject to the award, you must remain an employee or other service provider through each relevant vesting date.

Number of options; expiration date.

Subject to the terms and conditions of this offer, we will accept for exchange outstanding, unvested options with an exercise price per share greater than or equal to $5.00 that were granted under our 1996 Plan (the "eligible options"), that are held by eligible participants and that are properly elected to be exchanged, and are not validly withdrawn, before the expiration date. In order to be eligible, options must be outstanding and unvested as of immediately prior to the cancellation of the options under this offer. For example, if a particular option grant expires after commencement, or if a portion of a particular option grant vests after commencement, but before cancellation under the offer, that particular option grant or portion of the option grant is not eligible for exchange.

You may not pick and choose which of your eligible option grants you wish to exchange. Each option grant that you elect to exchange must be for the entire portion that is outstanding and unvested.

For example and except as otherwise described below, if you hold (1) an eligible option grant to purchase 1,000 shares, 700 of which have already vested, (2) an eligible option grant to purchase 1,000 shares, none of which has vested, and (3) an eligible option grant to purchase 2,000 shares, none of which has vested, you must either elect to exchange all outstanding and unvested options (the 300 unvested shares subject to the first option, and all of the shares subject to the second and third option) or none of your outstanding and unvested option grants. These are your only choices in the above example. You may not elect, for example, to exchange your first option grant with respect to options to purchase only 150 shares (or any other partial amount) under that grant or to exchange only the shares under the second and third option grants but not under the first option grant.

If you have an eligible option grant that is subject to a domestic relations order (or comparable legal document as the result of the end of a marriage) and a person who is not an eligible participant beneficially

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owns a portion of the eligible option, you may accept this offer with respect to the entire remaining outstanding portion of the eligible option if so directed by the beneficial owner as to his or her portion in accordance with the domestic relations order or comparable legal documents. As noted above, this is an all or nothing offer, so your participation must be with respect to all or none of the eligible options legally owned by you. Because you are the legal owner of an eligible option, Intraware will respect an election properly made by you and accepted by Intraware and will not be responsible to you or the beneficial owner of the eligible option for any errors made by you with respect to such an election.

The number of restricted stock units that you receive will depend on the exercise price of your exchanged options. Subject to the terms of this offer and upon our acceptance of your properly tendered options, your exchanged options will be cancelled and you will be granted restricted stock units as follows:

The exchange ratios apply to each of your option grants separately. This means that the various options you have received may be subject to different exchange ratios.

Example 1

If you exchange 5,000 options with an exercise price per share of $5.50, you will receive 2,500 restricted stock units.

Example 2

If you exchange 5,000 options with an exercise price per share of $9.25, you will receive 1,667 restricted stock units.

Example 3

If you exchange 5,000 options with an exercise price per share of $13.25, you will receive 1,250 restricted stock units.

Example 4

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If you wish to exchange your February 2005 option, you must exchange your January 2006 option as well.

In exchange for the options granted in January 2006, you will receive 500 restricted stock units.

In exchange for the options granted in February 2005, you will receive 334 restricted stock units.

All restricted stock units will be subject to the terms of our 2006 Plan, and to a restricted stock unit agreement entered into between you and Intraware. The current form of restricted stock unit agreement under the 2006 Plan is incorporated by reference as an exhibit to the Schedule TO with which this Offer to Exchange has been filed.

The expiration date for this offer will be 5:00 p.m., Pacific Time, on April 9, 2007, unless we extend the offer. We may, in our discretion, extend the offer, in which event the expiration date will refer to the latest time and date at which the extended offer expires. See Section 15 of this Offer to Exchange for a description of our rights to extend, terminate and amend the offer.

Purpose of the offer.

We are making this offer because we believe that this offer will foster retention of our valuable employees and consultants and better align the interests of our employees, consultants and stockholders to maximize stockholder value. We issued the currently outstanding options to attract and retain the best available personnel and to provide additional incentive to our employees and consultant. Some of our outstanding and unvested options have exercise prices that are significantly higher than the current market price for our stock. These options are commonly referred to as being "underwater." By making this offer, we intend to provide eligible participants with the opportunity to own restricted stock units that over time may have a greater potential to increase in value. Because we prefer that most of our employees be subject to similar equity compensation structures, certain options that are not underwater also are eligible to be exchanged in this offer.

Except as otherwise disclosed in this offer or in our SEC filings, we presently have no plans or proposals that relate to or would result in:

Any extraordinary transaction, such as a merger, reorganization or liquidation involving Intraware;

Any purchase, sale or transfer of a material amount of our assets;

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Any material change in our present dividend rate or policy, or our indebtedness or capitalization;

Any change in our present board of directors or management, including a change in the number or term of directors or to fill any existing board vacancies or to change any executive officer's material terms of employment;

Any other material change in our corporate structure or business;

Our common stock being delisted from the Nasdaq Capital Market or not being authorized for quotation in an automated quotation system operated by a national securities association;

Our common stock becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act;

The suspension of our obligation to file reports pursuant to Section 15(d) of the Exchange Act;

The acquisition by any person of an amount of our securities or the disposition of an amount of any of our securities, other than issuances of options and equity awards to service providers, exercises of outstanding equity awards, and shares purchased under our Employee Stock Purchase Plan; or

Any change in our certificate of incorporation or bylaws, or any actions that may impede the acquisition of control of us by any person.

Neither we nor our board of directors makes any recommendation as to whether you should accept this offer, nor have we authorized any person to make any such recommendation. You should evaluate carefully all of the information in this offer and consult your own investment and tax advisors. You must make your own decision about whether to participate in this offer.

Procedures for electing to exchange options.
Proper Election to Exchange Options.

Participation in this offer is voluntary. If you participate in this offer, you must deliver the completed election form by facsimile, e-mail, portable document format (PDF) or by hand delivery before 5:00 p.m., Pacific Time, on April 9, 2007 to:

Melinda Ericks
mericks@intraware.com
Fax: (925) 253-4518

The expiration date of the offer will be 5:00 p.m., Pacific Time, on April 9, 2007, unless we extend the offer.

This is an all or nothing offer, which means that if you participate in this offer, you must exchange all of your eligible options. To help you recall your outstanding eligible option grants and give you the tools to make an informed decision, we will distribute to you a summary of your outstanding and unvested stock options that have an exercise price per share greater than or equal to $5.00 granted under the 1996 Plan by internal mail or e-mail.

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Your election to participate becomes irrevocable after 5:00 p.m., Pacific Time, on April 9, 2007, unless the offer is extended past that time, in which case your election will become irrevocable after the new expiration date, except as provided in Section 5 of the Offer to Exchange. You may change your mind after you have submitted an election form and withdraw from the offer at any time before the expiration date, as described in Section 5. You may change your mind as many times as you wish, but you will be bound by the last properly submitted election or withdrawal form we receive before the expiration date.

Our receipt of your election form is not by itself an acceptance of your options for exchange. We will give oral or written notice to the option holders generally of our acceptance of options for exchange promptly after the expiration date. We may issue this notice of acceptance by press release, e-mail or other form of communication. Options accepted for exchange will be cancelled on the cancellation date, which we presently expect will be April 9, 2007.

Determination of Validity; Rejection of Options; Waiver of Defects; no Obligation to Give Notice of Defects.

We will determine, in our discretion, all questions as to the validity, form, eligibility (including time of receipt) and acceptance of any options. Our determination of these matters will be final and binding on all parties. We reserve the right to reject any election form or any options elected to be exchanged that we determine are not in appropriate form or that we determine are unlawful to accept. We will accept all properly tendered options that are not validly withdrawn; provided, however, that if we have informed you prior to the expiration of the offer that your position with Intraware will be eliminated, we will not accept your tendered options and you will not receive any restricted stock units. We also reserve the right to waive any of the conditions of the offer or any defect or irregularity in any tender of any particular options or for any particular option holder, provided that if we grant any such waiver, it will be granted with respect to all option holders and tendered options. No tender of options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering option holder or waived by us. Neither we nor any other person is obligated to give notice of any defects or irregularities in tenders, nor will anyone incur any liability for failure to give any notice. This is a one-time offer. We will strictly enforce the election period, subject only to an extension that we may grant in our discretion.

Our Acceptance Constitutes an Agreement.

Your election to exchange options through the procedures described above constitutes your acceptance of the terms and conditions of this offer. Our acceptance of your options for exchange will

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constitute a binding agreement between Intraware and you upon the terms and subject to the conditions of this offer.

Withdrawal rights and change of election.

You may withdraw all of the options that you previously elected to exchange only in accordance with the provisions of this section.

You may withdraw all of the options that you previously elected to exchange at any time before the expiration date, which is expected to be 5:00 p.m., Pacific Time, on April 9, 2007. If we extend the offer, you may withdraw your options at any time until the extended expiration date.

In addition, although we intend to accept all validly tendered options promptly after the expiration of this offer, if we have not accepted your options by 9:00 p.m., Pacific Time, on May 4, 2007, you may withdraw your options at any time thereafter.

To validly withdraw the options that you previously elected to exchange, you must deliver the completed withdrawal form by facsimile, e-mail, portable document format (PDF) or by hand delivery before 5:00 p.m., Pacific Time, on April 9, 2007 to:

Melinda Ericks
mericks@intraware.com
Fax: (925) 253-4518

You may change your mind as many times as you wish, but you will be bound by the last properly submitted election or withdrawal form we receive before the expiration date.

If you withdraw your eligible options, you may again elect to participate in the offer at any time before the expiration date. All options that you withdraw will be deemed not properly tendered for purposes of the offer, unless you properly re- elect to exchange all eligible options before the expiration date. To re-elect to exchange all of your eligible options, you must deliver a completed election form before the expiration date by following the procedures described in Section 4 of this Offer to Exchange. This new election form must be properly completed, signed and dated after your original election form and after your withdrawal form.

Neither we nor any other person is obligated to give you notice of any defects or irregularities in any withdrawal form or any new election form, nor will anyone incur any liability for failure to give any notice. We will determine, in our discretion, all questions as to the form and validity, including time of receipt, of withdrawal forms and new election forms. Our determination of these matters will be final and binding.

The delivery of all documents, including any withdrawal forms and any new election forms, is at your risk. We intend to confirm the receipt of your withdrawal form and/or any election form by e-mail within two (2) United States business days. If you have not received an e-mail confirmation, you must confirm that we have received your withdrawal form and/or any election form. Only responses that are complete, signed and actually received by Melinda Ericks by the deadline will be accepted. Responses submitted by any other means, including interoffice or United States mail (or other post) and overnight carrier, are not permitted.

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Acceptance of options for exchange and issuance of restricted stock units.

Upon the terms and conditions of this offer and promptly following the expiration date, we will accept for exchange and cancel all eligible options properly elected for exchange and not validly withdrawn before the expiration date; provided, however, that if we have informed you prior to the expiration of the offer that your position with Intraware will be eliminated, we will not accept your tendered options and you will not receive any restricted stock units. Once the options are cancelled, you no longer will have any rights with respect to those options. Subject to the terms and conditions of this offer, if your options are properly tendered by you for exchange and accepted by us, these options will be cancelled as of the cancellation date, which we anticipate to be April 9, 2007.

Subject to our rights to terminate the offer, discussed in Section 15 of this Offer to Exchange, we will accept promptly after the expiration date all properly tendered options that are not validly withdrawn. We will give oral or written notice to the option holders generally of our acceptance for exchange of the options. This notice may be made by press release, e-mail or other method of communication.

We will grant the restricted stock units on the restricted stock unit grant date, which is the same United States business day as the cancellation date. We expect the restricted stock unit grant date to be
April 9, 2007. All restricted stock units will be granted under our 2006 Plan and will be subject to a restricted stock unit agreement between you and Intraware. The number of restricted stock units you will receive will be determined in accordance with the exchange ratios described in Section 2 of this Offer to Exchange. Promptly after the expiration date, we will send you your restricted stock unit agreement. You will receive the shares subject to the restricted stock unit award when and if your award vests, in accordance with the vesting schedule described in Section 2 of this Offer to Exchange.

Options that we do not accept for exchange will remain outstanding until they expire by their terms and will retain their current exercise price and current vesting schedule.

Conditions of the offer.

If Intraware is acquired prior to the expiration date of the offer, we reserve the right to withdraw the offer, in which case your eligible options and your rights under them will remain intact and exercisable for the time period set forth in your option agreement and you will not receive any restricted stock units under this offer. Notwithstanding any other provision of this offer, we will not be required to accept any options tendered for exchange, and we may terminate the offer, or postpone our acceptance and cancellation of any options tendered for exchange, in each case, subject to Rule 13e-4(f)(5) under the Exchange Act, if at any time on or after the date this offer begins, and before the expiration date, any of the following events has occurred, or has been determined by us, in our reasonable judgment, to have occurred:

There will have been threatened or instituted or be pending any action, proceeding or litigation seeking to enjoin, make illegal or delay completion of the offer or otherwise relating in any manner, to the offer;

Any order, stay, judgment or decree is issued by any court, government, governmental authority or other regulatory or administrative authority and is in effect, or any statute, rule, regulation, governmental order or injunction will have been proposed, enacted, enforced or deemed applicable to the offer, any of which might restrain, prohibit or delay completion of the offer or impair the contemplated benefits of the offer to us (see Section 3 of this Offer to Exchange for a description of the contemplated benefits of the offer to us);

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There will have occurred:

any general suspension of trading in, or limitation on prices for, our securities on any national securities exchange or in an over-the-counter market in the United States,

the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States,

any limitation, whether or not mandatory, by any governmental, regulatory or administrative agency or authority on, or any event that, in our reasonable judgment, might affect the extension of credit to us by banks or other lending institutions in the United States,

in our reasonable judgment, any extraordinary or material adverse change in United States financial markets generally, including, a decline of at least 10% in either the Dow Jones Industrial Average, the Nasdaq Index or the Standard & Poor's 500 Index from the date of commencement of the exchange offer,

the commencement, continuation or escalation of a war or other national or international calamity directly or indirectly involving the United States, which could reasonably be expected to affect materially or adversely, or to delay materially, the completion of the offer, or

if any of the situations described above existed at the time of commencement of the exchange offer and that situation, in our reasonable judgment, deteriorates materially after commencement of the exchange offer;

A tender or exchange offer, other than this exchange offer by us, for some or all of our shares of outstanding common stock, or a merger, acquisition or other business combination proposal involving us, will have been proposed, announced or made by another person or entity or will have been publicly disclosed or we will have learned that:

any person, entity or "group" within the meaning of Section 13(d)(3) of the Exchange Act acquires more than 5% of our outstanding shares of common stock, other than a person, entity or group which had publicly disclosed such ownership with the SEC prior to the date of commencement of the exchange offer,

any such person, entity or group which had publicly disclosed such ownership prior to such date will acquire additional common stock constituting more than 1% of our outstanding shares, or

any new group will have been formed that beneficially owns more than 5% of our outstanding shares of common stock that in our judgment in any such case, and regardless of the circumstances, makes it inadvisable to proceed with the exchange offer or with such acceptance for exchange of eligible options;

There will have occurred any change, development, clarification or position taken in generally accepted accounting principles that could or would require us to record for financial reporting purposes compensation expense against our earnings in connection with the offer, other than as contemplated as of the commencement date of this offer (as described in Section 12 of this Offer to Exchange);

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A tender or exchange offer, other than this exchange offer by us, for some or all of our shares of outstanding common stock, or a merger, acquisition or other business combination proposal involving us, will have been proposed, announced or made by another person or entity or will have been publicly disclosed;

Any event or events occur that have resulted or is reasonably likely to result, in our reasonable judgment, in a material adverse change in our business or financial condition;

Any event or events occur that have resulted or may result, in our reasonable judgment, in a material impairment of the contemplated benefits of the offer to us (see Section 3 of this Offer to Exchange for a description of the contemplated benefits of the offer to us); or

Any rules or regulations by any governmental authority, the National Association of Securities Dealers, the Nasdaq Capital Market, or other regulatory or administrative authority or any national securities exchange have been enacted, enforced or deemed applicable to Intraware.

If any of the above events occur, we may:

Terminate the exchange offer and promptly return all tendered eligible options to tendering holders;

Complete and/or extend the exchange offer and, subject to your withdrawal rights, retain all tendered eligible options until the extended exchange offer expires;

Amend the terms of the exchange offer; or

Waive any unsatisfied condition and, subject to any requirement to extend the period of time during which the exchange offer is open, complete the exchange offer.

The conditions to this offer are for our benefit. We may assert them in our discretion regardless of the circumstances giving rise to them before the expiration date. We may waive any condition, in whole or in part, at any time and from time to time before the expiration date, in our discretion, whether or not we waive any other condition to the offer. Our failure at any time to exercise any of these rights will not be deemed a waiver of any such rights, but will be deemed a waiver of our ability to assert the condition that was triggered with respect to the particular circumstances under which we failed to exercise our rights. Any determination we make concerning the events described in this Section 7 will be final and binding upon all persons.

Price range of shares underlying the options.

The Intraware common stock that underlies your options is traded on the Nasdaq Capital Market under the symbol "ITRA." The following table shows, for the periods indicated, the high and low intraday sales price per share of our common stock as reported by the Nasdaq Capital Market.

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High

Low

For the quarter ended

     February 28, 2007

$6.83

$4.01

     November 30, 2006

$5.62

$3.52

     August 31, 2006

$6.25

$3.14

     May 31, 2006

$7.83

$5.66

For the quarter ended

     February 28, 2006

$8.46

$6.01

     November 30, 2005

$7.02

$2.60

     August 31, 2005

$5.90

$2.80

     May 31, 2005

$8.40

$3.80

On March 5, 2007, the last reported sale price of our common stock, as reported by the Nasdaq Capital Market was $5.06 per share.

You should evaluate current market quotes for our common stock, among other factors, before deciding whether or not to accept this offer.

Source and amount of consideration; terms of restricted stock units.
Consideration.

We will issue restricted stock units in exchange for eligible outstanding options properly elected to be exchanged by you and accepted by us for such exchange. Restricted stock units are awards under which Intraware promises to issue shares of common stock in the future, provided the vesting criteria are satisfied. Subject to the terms and conditions of this offer, upon our acceptance of your properly tendered options, you will be entitled to receive restricted stock units based on exchange ratios described in Section 2 of this Offer to Exchange and fractional restricted stock units will be rounded up to the nearest whole restricted stock unit on a grant by grant basis:

If we receive and accept tenders from eligible participants of all options eligible to be tendered, subject to the terms and conditions of this offer, we will grant restricted stock units to purchase a total of approximately 60,791 shares of our common stock, or approximately 1% of the total shares of our common stock outstanding as of February 28, 2007.

General Terms of Restricted Stock Units.

Restricted stock units will be granted under our 2006 Plan. All restricted stock units will be subject to the terms of the 2006 Plan and to a restricted stock unit agreement between you and Intraware. The terms and conditions of the restricted stock units may vary from the terms and conditions of the options that you tendered for exchange, but such changes generally will not substantially and adversely affect your rights. However, you should note that the vesting schedule of your restricted stock unit will differ from your exchanged option, as described below.

The following description summarizes the material terms of our 2006 Plan. Our statements in this Offer to Exchange concerning the 2006 Plan and the restricted stock units are merely summaries and do not purport to be complete. The statements are subject to, and are qualified in their entirety by reference to, the 2006 Plan, and the form of restricted stock unit agreement under the 2006 Plan, which have been incorporated by reference as exhibits to the Schedule TO of which this offer is a part. Please contact us at Intraware, Inc., 25 Orinda Way, Orinda, CA, 94563, Attention: Donna Bull (telephone: (925) 253-4525), to receive a copy of

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the 2006 Plan, and the form of restricted stock unit agreement thereunder. We will promptly furnish you copies of these documents upon request at our expense.

2006 Equity Incentive Plan.

The 2006 Plan permits the granting of incentive stock options, nonstatutory stock options, restricted stock, stock appreciation rights, performance shares, performance units, restricted stock units or dividend equivalents. The maximum number of common shares subject to awards currently outstanding under our 2006 Plan is approximately 22,500 shares. As of March 5, 2007, the maximum number of shares available for future issuance under the 2006 Plan was 470,948. The 2006 Plan is administered by our board of directors, or a committee appointed by our board of directors, which we refer to as the Administrator. Subject to the other provisions of the 2006 Plan, the Administrator has the power to determine the terms, conditions and restrictions of the restricted stock units granted, including the number of restricted stock units and the vesting criteria.

Purchase Price.

The purchase price, if any, of a restricted stock unit granted under the 2006 Plan generally is determined by the Administrator. The purchase price of a restricted stock unit granted under this offer will be the par value of our common stock which is equal to one tenth of one cent ($0.001) and the par value will be deemed paid by your past services rendered to Intraware. As a result, you do not have to make any cash payment to Intraware to receive your restricted stock units.

Vesting.

The vesting applicable to a restricted stock unit granted under the 2006 Plan generally is determined by the Administrator in accordance with the terms of the 2006 Plan.

The vesting schedule of the restricted stock units will be as follows:

None of the restricted stock units will be vested on the restricted stock unit grant date (expected to be April 9, 2007).

1/3^rd of the restricted stock units will vest on the one (1) year anniversary of the restricted stock unit grant date.

Thereafter, 1/12^th of the restricted stock units will vest every three (3) months following the one (1) year anniversary of the restricted stock unit grant date, so that all of the restricted stock units will be vested three (3) years from the restricted stock unit grant date.

If your service with us terminates (for any reason or no reason) before your restricted stock units vest, your restricted stock units will expire unvested, and you will not be issued any shares under your restricted stock unit award.

Vesting on any date is subject to your continued service to us through each relevant vesting date.

We will make minor modifications to the vesting schedule of any restricted stock units to eliminate fractional vesting (such that a whole number of restricted stock units will vest on each vesting date); this will be done by rounding down to the nearest whole number of restricted stock units that will vest on a particular vesting date.

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