Exhibit
10.32


 


FIFTH AMENDMENT

TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT


THIS FIFTH AMENDMENT to Amended and Restated
Loan and Security Agreement (this “Amendment”)
is entered into as of November 20, 2007, by and between Silicon Valley
Bank (“Bank”) and Transoma Medical, Inc., a Delaware corporation (“Borrower”)
whose address is 4211 Lexington Avenue North, Suite 2244, St. Paul, Minnesota
55126.


RECITALS


A.                                    Bank and Borrower have entered into that certain Amended and Restated
Loan and Security Agreement with an Effective Date of June 21, 2005 (as the
same has been and may from time to time be further amended, modified,
supplemented or restated in writing, 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 (i) revise the Tangible
Net Worth covenant and (ii) make certain other revisions to the Loan Agreement
as more fully set forth herein.


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 6.7(i) (Tangible Net
Worth). Section 6.7(i) of
the Loan Agreement reads as follows:


(i)                                     Tangible Net Worth. A Tangible Net Worth plus
Subordinated Debt and any class of Borrower’s
stock treated as a liability on Borrower’s balance sheet of at least the
following amounts for the following periods:


 


1

















 


	
  April 1, 2007
  through June 30, 2007

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  July 1, 2007 and
  thereafter

  	
   

  	
  $

  	
  12,000,000

  	
   

  



 


 


Said
Section 6.7(i) is hereby amended to read as follows:


 


(i)                                     Tangible Net Worth. A Tangible Net Worth plus
Subordinated Debt and any class of Borrower’s
stock treated as a liability on Borrower’s balance sheet of at least the
following amounts for the following periods:


 


	
  October 31, 2007
  through February 29, 2008

  	
   

  	
  $

  	
  7,675,000

  	
   

  
	
  March 1, 2008
  and thereafter

  	
   

  	
  $

  	
  6,175,000

  	
   

  



2.2              Section 13.1 (Tangible Net Worth
Definition).   For purposes of clarity, the parties hereby acknowledge and agree that “intangible
items” as used in the definition of “Tangible Net Worth” contained in Section
13.1 of the Loan Agreement includes deferred
costs related to Borrower’s proposed public offering and restricted cash.


2.3                                 Exhibit D (Compliance Certificate).   Exhibit D to the Loan Agreement is hereby replaced by Exhibit A hereto.


3.                                      Fee.   In consideration for Bank entering into this
Amendment, Borrower shall concurrently pay Bank a fee in the amount of $5,000,
which fee is deemed fully earned on the date hereof, and shall be
non-refundable and in addition to all interest and other fees payable to Bank
under the Loan Documents. Bank is authorized to charge said fee to Borrower’s
loan account.


4.                                      Limitation of Amendments.


4.1                               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.


4.2                               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.


 


2

















 


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


 


                                                                                                5.1                               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;


 


                                                                                                5.2                               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;


 


                                                                                                5.3                               The Second Amended and Restated
Certificate of Incorporation of Borrower filed with the Delaware Secretary of
State on February 26, 2007, remains true, accurate and complete and has not
been amended, supplemented or restated and is and continues to be in full force
and effect;


 


                                                                                                5.4                               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;


 


                                                                                                5.5                               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 for which Borrower has not
obtained from such Person an effective consent or waiver with respect thereto,
(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;


 


                                                                                                5.6                               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


 


                                                                                                5.7                               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.


 


                                                6.                                      Counterparts; Fees and Costs.   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. Without
limitation on the terms of the Loan


 


3

















 


Agreement, Borrower agrees to reimburse Bank for
all costs and fees (including attorneys’ fees) incurred in connection with this
Amendment and any documents contemplated
hereby.


7.                  Effectiveness.   This Amendment shall be
deemed effective upon (a) the due execution and delivery of this Amendment by each party
hereto, and (b) Bank’s receipt of the Acknowledgment of Amendment and
Reaffirmation of Guaranty substantially
in the form attached hereto as Schedule 1, duly executed and delivered by each
Guarantor, unless such Acknowledgment is waived in writing by Bank.


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

  	
   

  	
  Transoma Medical, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jay McNeil

  	
   

  	
  By:

  	
  /s/ Charles T. Coggin

  	
   

  
	
  Name:

  	
  Jay McNeil

  	
   

  	
  Name:

  	
  Charles T. Coggin

  	
   

  
	
  Title:

  	
  SRM

  	
   

  	
  Title:

  	
  VP & CFO

  	
   

  



 


4

















EXHIBIT A

TO

FIFTH AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  SILICON VALLEY BANK

  
	
   

  	
  3003 Tasman Drive

  
	
   

  	
  Santa Clara, CA 95054

  
	
   

  	
   

  
	
  FROM:

  	
  TRANSOMA MEDICAL, INC.

  



 


                                                The undersigned Responsible Officer of
TRANSOMA MEDICAL, INC. (“Borrower”) certifies that under the terms and
conditions of the Amended and Restated Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for
the period ending
                   
with all required covenants except as noted below and (ii) all representations
and warranties in the Agreement are true and correct in all material respects
on this date. In addition, the undersigned certifies that Borrower, and each
Subsidiary, has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP. Attached are the required
documents supporting the certification. The Officer certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Responsible Officer acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements + CC

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
  No

  
	
  Annual (Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes

  	
  No

  
	
  A/R & A/P Agings & Inventory Reports

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes

  	
  No

  
	
  Board of Director Projections

  	
   

  	
  Prior to FYE (June 30)

  	
   

  	
  Yes

  	
  No

  
	
  Borrowing Base Certificate

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
  No

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a monthly basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Tangible
  Net Worth

  	
   

  	
  *

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  Yes

  	
  No

  
	
  Minimum
  Liquidity Coverage

  	
   

  	
  **

  	
   

  	
   

  	
   

  	
  :1.00

  	
   

  	
  Yes

  	
  No

  



 






*A Tangible Net Worth plus Subordinated Debt and any class of Borrower’s
stock treated as a liability on Borrower’s balance sheet of at least $7,675,000
from October 31, 2007 through February 29, 2008, and $6,175,000 from March 1,
2008 and thereafter.


 


5

















 


** A ratio of unrestricted cash (and equivalents) plus accounts
receivables divided by outstanding Obligations of not less than 1.25 to 1.00.


 


Borrower only has deposit accounts located at the following
institutions:                                                       .


 


	
  Comments
  Regarding Exceptions: See Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
  Sincerely,

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  	
   

  
	
  TRANSOMA MEDICAL, INC.

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
  DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status:

  	
  Yes    No

  
							



 


6

















 


Schedule 1


 


ACKNOWLEDGMENT OF AMENDMENT


AND REAFFIRMATION OF GUARANTY


 


                                                Section 1.                                          Guarantor hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of the
Fifth Amendment to Loan and Security Agreement dated as of substantially even
date herewith (the “Amendment”).


 


                                                Section 2.                                          Guarantor hereby consents to the
Amendment and agrees that the Guaranty relating to the Obligations of Borrower
under the Loan Agreement shall continue in full force and effect, shall be
valid and enforceable and shall not be impaired or otherwise affected by the
execution of the Amendment or any other document or instrument delivered in
connection herewith.


 


                                                Section 3.                                          Guarantor represents and warrants that,
after giving effect to the Amendment, all representations and warranties
contained in the Guaranty are true, accurate and complete as if made the date
hereof.


 


 


Dated as of November 20, 2007


 


	
   

  	
  GUARANTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DATA SCIENCES UK, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian P. Brockway

  	
   

  
	
   

  	
  Name:

  	
  Brian P. Brockway

  	
   

  
	
   

  	
  Title:

  	
  President and CEO

  	
   

  



 


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