**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 dayof November, 2005, by and between Silicon Valley Bank (“Bank”) and Intraware, Inc.a Delaware corporation (“Borrower”) whose address is 25 Orinda Way, Orinda, CA94563.

 

**RECITALS**

 

**A.**                                    Bank and Borrowerhave 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 Bankand Borrower dated as of September 20, 2004, and that certain LoanModification 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 extendedcredit to Borrower for the purposes permitted in the Loan Agreement.

 

**C.**                                    Borrower hasrequested that Bank amend the Loan Agreement to add a new equipment facility.

 

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

 

**AGREEMENT**

 

**NOW, THEREFORE,** inconsideration of the foregoing recitals and other good and valuableconsideration, the receipt and adequacy of which is hereby acknowledged, andintending to be legally bound, the parties hereto agree as follows:

 

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

 

**2.****                                      Amendmentsto Loan Agreement.**

 

**2.1****                               Section 2.1.4(Equipment 3 Advances).** Section 2.1.4 is hereby incorporated to readas follows:

 

----

 

**2.1.4****                     Equipment 3Advances.**

 

(a)                                  ThroughNovember 30, 2006 (the “Equipment 3 Availability End Date”), Bank willmake 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 Equipmentpurchased on or after 120 days before the date of each Equipment 3 Advance.

 

(b)                                 Interestaccrues from the date of each Equipment 3 Advance at the rate in Section 2.2.4.  Each Equipment 3 Advance shall immediatelyamortize and is payable in 24 equal monthly installments of principal, plusaccrued interest, beginning on the 1st of each month following the respectiveEquipment 3 Advance and ending 24 months thereafter (each, the “Equipment 3Maturity Date”).  Equipment 3 Advanceswhen repaid may not be reborrowed.

 

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

 

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

 

#### **2.2.4**                     Equipment 3 Advances

#### ** **

#### **(a)**                                  Interest.  Each Equipment 3 Advance accrues interest on the outstanding principalbalance at a per annum rate equal to the greater of (i) 1 percentage pointabove the Prime Rate or (ii) 7%. After an Event of Default, Obligationsaccrue interest at 5 percentage point above the rate effective immediatelybefore the Event of Default. The interest rate increases or decreases when thePrime Rate changes. Interest is computed on a 360 day year for the actualnumber of days elapsed.

 

(b)                                 Payments.   Bank may debit any of Borrower’s depositaccounts including account number 3300400250 for principal and interestpayments owing to Bank.  Bank willpromptly notify Borrower when it debits Borrower’s accounts.  These debits are not a set-off.  Payments received after 12:00 noon Pacifictime are considered received at the opening of business on the next BusinessDay.  When a payment is due on a day thatis not a Business Day, the payment is due the next Business Day and additionalinterest shall accrue.

 

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

 

#### **(iv) as soon as available, but at leastannually within 30 days after the end of each fiscal year end of Borrower andin all cases no later than 15 days following board approval, a copy of Borrower’sboard-approved projections for the following year, and**

#### ** **

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

 

----

 

#### **(b) Borrower willmaintain, 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 proceedsof the Digital River transaction).**

#### ** **

**2.5****                               Section 13(Definitions).**The following terms and their respective definitions setforth in Section 13.1 are hereby amended or incorporated to read asfollows:

 

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

 

**“Credit Extension”**is each Equipment Advance, Equipment 2 Advance, Equipment 3 Advance or anyother 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**” isdefined in Section 2.1.4.

 

“**Equipment 3 Maturity Date**” is 24 monthsfrom each Equipment 3 Advance, but no later than November 1, 2008, withrespect to the last Equipment 3 Advance.

 

“**Tangible Net Worth**” is, on any date,the consolidated total assets of Borrower minus, (i) any amountsattributable to (a) goodwill, (b) intangible items such asunamortized debt discount and expense, patents, trade and service marks andnames, copyrights and research and development expenses except prepaidexpenses, and (c) reserves not already deducted from assets, and (ii) TotalLiabilities.

 

“**Total****Liabilities**”is on any day, obligations that should, under GAAP, be classified asliabilities on Borrower’s consolidated balance sheet, including allIndebtedness, and current portion Subordinated Debt allowed to be paid, butexcluding all other Subordinated Debt.

 

**3.****                                      Limitationof Amendments.**

 

**3.1****                              **Theamendments set forth in **Section 2**,above, are effective for the purposes set forth herein and shall be limitedprecisely as written and shall not be deemed to (a) be a consent to anyamendment, waiver or modification of any other term or condition of any LoanDocument, or (b) otherwise prejudice any right or remedy which Bank maynow have or may have in the future under or in connection with any LoanDocument.

 

**3.2****                              **ThisAmendment shall be construed in connection with and as part of the LoanDocuments and all terms, conditions, representations, warranties, covenants andagreements set forth in the Loan Documents, except as herein amended, arehereby ratified and confirmed and shall remain in full force and effect.

 

----

 

**4.****                                      Representationsand Warranties.**  To induce Bank toenter into this Amendment, Borrower hereby represents and warrants to Bank asfollows:

 

**4.1****                              **Immediatelyafter giving effect to this Amendment (a) the representations andwarranties contained in the Loan Documents are true, accurate and complete inall material respects as of the date hereof (except to the extent suchrepresentations and warranties relate to an earlier date, in which case theyare true and correct as of such date), and (b) no Event of Default hasoccurred and is continuing;

 

**4.2****                              **Borrowerhas the power and authority to execute and deliver this Amendment and toperform its obligations under the Loan Agreement, as amended by this Amendment;

 

**4.3****                              **Exceptfor (i) the Certificate of Designation of Rights, Preferences andPrivileges of Series D Participating Preferred Stock of Intraware, Inc.,effective September 23, 2003, (ii) the Certificate of Elimination ofthe Series B-1 Preferred Stock and Series C Preferred Stock ofIntraware, Inc., effective October 28, 2005, and (iii) theCertificate of Designations, Preferences and Rights of Series BConvertible 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, supplementedor restated and are and continue to be in full force and effect;

 

**4.4****                              **Theexecution and delivery by Borrower of this Amendment and the performance byBorrower of its obligations under the Loan Agreement, as amended by thisAmendment, have been duly authorized;

 

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

 

**4.6****                              **Theexecution and delivery by Borrower of this Amendment and the performance byBorrower of its obligations under the Loan Agreement, as amended by thisAmendment, do not require any order, consent, approval, license, authorizationor validation of, or filing, recording or registration with, or exemption byany governmental or public body or authority, or subdivision thereof, binding oneither Borrower, except as already has been obtained or made; and

 

**4.7****                              **ThisAmendment has been duly executed and delivered by Borrower and is the bindingobligation of Borrower, enforceable against Borrower in accordance with itsterms, except as such enforceability may be limited by bankruptcy, insolvency,reorganization, liquidation, moratorium or other similar laws of generalapplication and equitable principles relating to or affecting creditors’rights.

 

----

 

**5.****                                      Counterparts.**  This Amendment may be executed in any numberof counterparts and all of such counterparts taken together shall be deemed toconstitute one and the same instrument.

 

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

 

**IN WITNESS WHEREOF,** theparties hereto have caused this Amendment to be duly executed and delivered asof 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         |
|                                         |                      |                                      |  |  |  |  |

 

----