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:


 





















 


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:


 





















 


(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.


 





















 


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.


 





















 


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