EXHIBIT 10.6

 

THIRD AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of the 30th day of November, 2005, by and between Silicon Valley
Bank (“Bank”) and Intraware, Inc. a Delaware corporation (“Borrower”) whose
address is 25 Orinda Way, Orinda, CA 94563.

 

RECITALS

 

A.                                    Bank and Borrower have entered into that
certain Loan and Security Agreement dated as of August 1, 2003 as amended by
that certain Loan Modification Agreement by and between Bank and Borrower dated
as of September 20, 2004, and that certain Loan Modification Agreement by and
between Bank and Borrower dated as of February 28, 2005 (as the same may from
time to time be further amended, modified, supplemented or restated, the “Loan
Agreement”).

 

B.                                    Bank has extended credit to Borrower for
the purposes permitted in the Loan Agreement.

 

C.                                    Borrower has requested that Bank amend the
Loan Agreement to add a new equipment facility.

 

D.                                    Bank has agreed to so amend certain
provisions of the Loan Agreement, but only to the extent, in accordance with the
terms, subject to the conditions and in reliance upon the representations and
warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.                                      Definitions.  Capitalized terms used but
not defined in this Amendment shall have the meanings given to them in the Loan
Agreement.

 

2.                                      Amendments to Loan Agreement.

 

2.1                               Section 2.1.4 (Equipment 3 Advances).
Section 2.1.4 is hereby incorporated to read as follows:

 

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2.1.4                     Equipment 3 Advances.

 

(a)                                  Through November 30, 2006 (the “Equipment 3
Availability End Date”), Bank will make advances (“Equipment 3 Advance” and,
collectively, “Equipment 3 Advances”) not exceeding the Committed Equipment 3
Line.  The Equipment 3 Advances may only be used to finance Eligible Equipment
purchased on or after 120 days before the date of each Equipment 3 Advance.

 

(b)                                 Interest accrues from the date of each
Equipment 3 Advance at the rate in Section 2.2.4.  Each Equipment 3 Advance
shall immediately amortize and is payable in 24 equal monthly installments of
principal, plus accrued interest, beginning on the 1st of each month following
the respective Equipment 3 Advance and ending 24 months thereafter (each, the
“Equipment 3 Maturity Date”).  Equipment 3 Advances when repaid may not be
reborrowed.

 

(c)                                  To obtain an Equipment 3 Advance, Borrower
must notify Bank (the notice is irrevocable) by facsimile no later than
12:00 p.m. Pacific time 1 Business Day before the day on which the Equipment 3
Advance is to be made.  The notice in the form of Exhibit B (Payment/Advance
Form) must be signed by a Responsible Officer or designee and include a copy of
the invoice for the Equipment being financed.

 

2.2                               Section 2.2 (Interest Rate, Payments). 
Section 2.2.4 is hereby incorporated to read as follows:

 

2.2.4                     EQUIPMENT 3 ADVANCES

 

(A)                                  INTEREST.   EACH EQUIPMENT 3 ADVANCE
ACCRUES INTEREST ON THE OUTSTANDING PRINCIPAL BALANCE AT A PER ANNUM RATE EQUAL
TO THE GREATER OF (I) 1 PERCENTAGE POINT ABOVE THE PRIME RATE OR (II) 7%. AFTER
AN EVENT OF DEFAULT, OBLIGATIONS ACCRUE INTEREST AT 5 PERCENTAGE POINT ABOVE THE
RATE EFFECTIVE IMMEDIATELY BEFORE THE EVENT OF DEFAULT. THE INTEREST RATE
INCREASES OR DECREASES WHEN THE PRIME RATE CHANGES. INTEREST IS COMPUTED ON A
360 DAY YEAR FOR THE ACTUAL NUMBER OF DAYS ELAPSED.

 

(b)                                 Payments.   Bank may debit any of Borrower’s
deposit accounts including account number 3300400250 for principal and interest
payments owing to Bank.  Bank will promptly notify Borrower when it debits
Borrower’s accounts.  These debits are not a set-off.  Payments received after
12:00 noon Pacific time are considered received at the opening of business on
the next Business Day.  When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional interest shall
accrue.

 

2.3                               Section 6.2 (Financial Statements, Reports,
Certificates).  Section 6.2(a)(iv) is hereby amended to read as follows:

 

(IV) AS SOON AS AVAILABLE, BUT AT LEAST ANNUALLY WITHIN 30 DAYS AFTER THE END OF
EACH FISCAL YEAR END OF BORROWER AND IN ALL CASES NO LATER THAN 15 DAYS
FOLLOWING BOARD APPROVAL, A COPY OF BORROWER’S BOARD-APPROVED PROJECTIONS FOR
THE FOLLOWING YEAR, AND

 

2.4                               Section 6.7 (Financial Covenants). 
Section 6.7(b) is hereby amended in its entirety to read as follows:

 

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(B) BORROWER WILL MAINTAIN, AS OF THE LAST DAY OF EACH MONTH, A TANGIBLE NET
WORTH OF AT LEAST $5,000,000, TO BE INCREASED BY 50% OF ALL NEW EQUITY RAISED
(INCLUDING PROCEEDS OF THE DIGITAL RIVER TRANSACTION).

 

2.5                               Section 13 (Definitions). The following terms
and their respective definitions set forth in Section 13.1 are hereby amended or
incorporated to read as follows:

 

“Committed Equipment 3 Line” is an Equipment 3 Advance or Equipment 3 Advances
of up to $500,000.

 

“Credit Extension” is each Equipment Advance, Equipment 2 Advance, Equipment 3
Advance or any other extension of credit made by Bank to Borrower or for
Borrower’s benefit.

 

“Equipment 3 Advance” is defined in Section 2.1.4.

 

“Equipment 3 Availability End Date” is defined in Section 2.1.4.

 

“Equipment 3 Maturity Date” is 24 months from each Equipment 3 Advance, but no
later than November 1, 2008, with respect to the last Equipment 3 Advance.

 

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower
minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such
as unamortized debt discount and expense, patents, trade and service marks and
names, copyrights and research and development expenses except prepaid expenses,
and (c) reserves not already deducted from assets, and (ii) Total Liabilities.

 

“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

 

3.                                      Limitation of Amendments.

 

3.1                               The amendments set forth in Section 2, above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may have
in the future under or in connection with any Loan Document.

 

3.2                               This Amendment shall be construed in
connection with and as part of the Loan Documents and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.

 

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4.                                      Representations and Warranties.  To
induce Bank to enter into this Amendment, Borrower hereby represents and
warrants to Bank as follows:

 

4.1                               Immediately after giving effect to this
Amendment (a) the representations and warranties contained in the Loan Documents
are true, accurate and complete in all material respects as of the date hereof
(except to the extent such representations and warranties relate to an earlier
date, in which case they are true and correct as of such date), and (b) no Event
of Default has occurred and is continuing;

 

4.2                               Borrower has the power and authority to
execute and deliver this Amendment and to perform its obligations under the Loan
Agreement, as amended by this Amendment;

 

4.3                               Except for (i) the Certificate of Designation
of Rights, Preferences and Privileges of Series D Participating Preferred Stock
of Intraware, Inc., effective September 23, 2003, (ii) the Certificate of
Elimination of the Series B-1 Preferred Stock and Series C Preferred Stock of
Intraware, Inc., effective October 28, 2005, and (iii) the Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred Stock of
Intraware, Inc., effective November 9, 2005, the organizational documents of
Borrower delivered to Bank on August 1, 2003 remain true, accurate and complete
and have not been amended, supplemented or restated and are and continue to be
in full force and effect;

 

4.4                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, have been duly authorized;

 

4.5                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not and will not contravene (a) any
law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree
of any court or other governmental or public body or authority, or subdivision
thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority,
or subdivision thereof, binding on either Borrower, except as already has been
obtained or made; and

 

4.7                               This Amendment has been duly executed and
delivered by Borrower and is the binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.

 

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5.                                      Counterparts.  This Amendment may be
executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

6.                                      Effectiveness.  This Amendment shall be
deemed effective as of November 30, 2005 upon (a) the due execution and delivery
to Bank of this Amendment by each party hereto and (b) Borrower’s payment of a
loan fee in an amount equal to $5,000.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

 

BANK

 

BORROWER

 

 

 

Silicon Valley Bank

 

Intraware, Inc.

 

 

 

By:

/s/ Heather Hamilton

 

 

By:

/s/ Wendy Nieto

 

Name:  Heather Hamilton

 

Name:  Wendy Nieto

Title:  Senior Vice President

 

Title:  Chief Financial Officer

Dated: December 6, 2005

 

Dated: December 6, 2005

 

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