Exhibit 10.23


 


Silicon Valley Bank


 


IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF003963


 


DATED: FEBRUARY 03, 2006


 


BENEFICIARY:

LDS TEST AND MEASUREMENT, LLC

13515 BALLANTYNE CORPORATE PLACE

CHARLOTTE,  NC  28277


 


APPLICANT:

TRANSOMA MEDICAL, INC.

4211 LEXINGTON AVENUE N, SUITE 2244

ST. PAUL, MINNESOTA 55126


 


AMOUNT: 
US$250,000.00 (U.S. DOLLARS TWO HUNDRED FIFTY THOUSAND EXACTLY)


 


EXPIRATION DATE:    FEBRUARY 03,
2007


 


LOCATION:  
SANTA CLARA,  CA


 


DEAR SIR/MADAM:


 


WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF
CREDIT NO. SVBSF003963 IN YOUR FAVOR AVAILABLE BY YOUR DRAFT DRAWN ON US AT
SIGHT IN THE FORM OF EXHIBIT “B” ATTACHED AND ACCOMPANIED BY THE FOLLOWING
DOCUMENTS:


 


1.             THE
ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.


 


2.             A
DATED CERTIFICATION FROM THE BENEFICIARY, PURPORTEDLY SIGNED BY AN AUTHORIZED
OFFICER OF THE BENEFICIARY, FOLLOWED BY HIS/HER DESIGNATED TITLE, STATING ANY
OF THE FOLLOWING:


 


(A)          “WE
HEREBY CERTIFY THAT THE AMOUNT OF THE DRAFT DRAWN UNDER THE STANDBY LETTER OF
CREDIT REPRESENTS FUNDS CLAIMED BY THREE CLOVERLEAF PARKWAY, INC. IN A LETTER
DATED          , 20XX
[DATE MUST BE INDICATED AT THE TIME OF DRAWING] BECAUSE APPLICANT HAS DEFAULTED
UNDER THAT CERTAIN LEASE DATED MAY 2005, BY AND BETWEEN THREE CLOVERLEAF PARKWAY,
INC. AS LANDLORD AND TRANSOMA MEDICAL, INC. AS TENANT.”


 


OR


 


(B)           “WE
HEREBY CERTIFY THAT WE ARE ENTITLED TO DRAW ON THE ENTIRE AMOUNT OF THE STANDBY
LETTER OF CREDIT DUE TO THE FACT THAT THE APPLICANT HAS A PETITION IN
BANKRUPTCY FILED AGAINST IT, VOLUNTARILY OR INVOLUNTARILY, OR A RECEIVER OR
OTHER OFFICER HAS BEEN APPOINTED TO TAKE CHARGE OF THE WHOLE OR ANY PART OF
APPLICANT FOR THE PURPOSE OF WINDING UP THE AFFAIRS OF APPLICANT.”


 


OR


 


(C)           “WE
HEREBY CERTIFY THAT WE ARE ENTITLED TO DRAW ON THE ENTIRE AMOUNT OF THE STANDBY
LETTER OF CREDIT DUE TO THE FACT THAT THE APPLICANT HAS FAILED TO RENEW THE
STANDBY LETTER OF CREIDT WITHIN 30 DAYS FROM ITS EXPIRATION DATE.”


 


THE LEASE AGREEMENT MENTIONED ABOVE IS FOR
IDENTIFICATION PURPOSES ONLY AND IT IS NOT INTENDED THAT SAID LEASE AGREEMENT
BE INCORPORATED HEREIN OR FORM PART OF THIS LETTER OF CREDIT.


 


PARTIAL DRAWS ARE ALLOWED.  THIS LETTER OF CREDIT MUST ACCOMPANY ANY
DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED
TO THE BENEFICIARY UNLESS IT IS FULLY UTILIZED.


 


DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND
DATE OF THIS LETTER OF CREDIT.


 


3003 TASMAN DRIVE   SANTA CLARA, CA  95054  
408-654-7400   SVB.COM


 


1

















 


Silicon Valley Bank


 


IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF003963


 


THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED
FOR AN ADDITIONAL PERIOD OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT
AND/OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE
THEN CURRENT EXPIRATION DATE WE NOTIFY YOU BY OVERNIGHT COURIER SERVICE AT THE
ABOVE ADDRESS THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE
CURRENT EXPIRATION DATE.  IN NO EVENT
SHALL THIS LETTER OF CREDIT BE AUTOMATICALLY EXTENDED BEYOND SEPTEMBER 30,
2010.


 


THE AMOUNT OF THIS LETTER OF CREDIT SHALL BE DECREASED
WITHOUT AMENDMENT(S) TO THE NEW AGGREGATE AMOUNT(S) ON THE FOLLOWING EFFECTIVE
DATES, PROVIDED THAT THE AVAILABLE AMOUNT EXCEEDS THE FOLLOWING AGGREGATE
AMOUNT(S):


 


	
  EFFECTIVE DATE(S)

  	
  NEW AGGREGATE AMOUNT(S)

  
	
  AUGUST 2, 2008

  	
  USD150,000.00

  
	
  AUGUST 2, 2009

  	
  USD75,000.00

  



 


THIS LETTER OF CREDIT MAY ONLY BE TRANSFERRRED IN ITS
ENTIRETY BY THE ISSUING BANK, ASSUMING SUCH TRANSFER TO SUCH TRANSFERREE WOULD
BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATIONS, INCLUDING BUT NOT
LIMITED TO THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S.
DEPARTMENT OF COMMERCE, UPON OUR RECEIPT OF THE ATTACHED “EXHIBIT A” DULY
COMPLETED AND EXECUTED BY THE BENEFICIARY AND ACCOMPANIED BY THE ORIGINAL
LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.  THE PAYMENT OF OUR TRANSFER FEE 1⁄4 OF 1% OF THE
TRANSFER AMOUNT (MINIMUM USD250.00) IS FOR THE ACCOUNT OF APPLICANT.


 


ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF
THE ORIGINAL APPROPRIATE DOCUMENTS ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S
OFFICE”) AT:  SILICON VALLEY BANK,
3003 TASMAN DRIVE, SANTA CLARA, CA 95054, ATTENTION: STANDBY LETTER OF
CREDIT NEGOTIATION SECTION OR BY FACSIMILE TRANSMISSION AT: (408) 654-6211 OR
(408) 496-2418; AND SIMULTANEOUSLY UNDER TELEPHONE ADVICE TO: (408) 654-7120 OR
(408) 654-6349, ATTENTION: STANDBY LETTER OF CREDIT NEGOTIATION SECTION WITH
ORIGINALS TO FOLLOW BY OVERNIGHT COURIER SERVICE; PROVIDED, HOWEVER, THE BANK
WILL DETERMINE HONOR OR DISHONOR ON THE BASIS OF PRESENTATION BY FACSIMILE
ALONE, AND WILL NOT EXAMINE THE ORIGINALS.


 


WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND
BONAFIDE HOLDERS THAT THE DRAFTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION
TO THE DRAWEE, IF NEGOTIATED ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.


 


IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS
LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT
WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S.
REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER
SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFES A PERSON OR ENTITY
DIFFERENT FROM THE INTENDED PAYEE.


 


THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500.


 


SILICON VALLEY BANK,


 


 


	
                                 /S/
  John M. Dossantos

  	
   

  	
                                 /S/
  Evelio G. Barairo

  	
   

  
	
  AUTHORIZED SIGNATURE

  	
  AUTHORIZED SIGNATURE

  



 


3003 TASMAN DRIVE   SANTA CLARA, CA  95054  
408-654-7400   SVB.COM


 


2

















 


EXHIBIT “A”


 


DATE:


 


	
  TO:

  	
  SILICON VALLEY BANK

  	
   

  	
   

  
	
   

  	
  3003 TASMAN DDRIVE

  	
  RE:

  	
  IRREVOCABLE STANDBY LETTER OF CREDIT

  
	
   

  	
  SANTA CLARA, CA 95054

  	
   

  	
  NO.

  	
  ISSUED BY

  
	
   

  	
  ATTN: INTERNATIONAL DIVISION

  	
   

  	
  SILICON VALLEY BANK, SANTA CLARA

  
	
   

  	
               STANDBY
  LETTERS OF CREDIT

  	
   

  	
  L/C AMOUNT:

  



 


GENTLEMEN:


 


FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY
IRREVOCABLY TRANSFERS TO:


 


(NAME OF TRANSFEREE)

(ADDRESS)


 


ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW
UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS
OF THE DATE OF THIS TRANSFER.


 


BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED
BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE.  TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS
BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER
INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR
HEREAFTER MADE, ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE
WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.


 


THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETUREND HEREWITH,
AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT
DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.


 


	
  SINCERELY,

  	
  SIGNATURE AUTHENTICATED

  
	
   

  	
   

  
	
   

  	
   

  	
  The name(s),
  title(s), and signature(s) conform to that/those on

  
	
  (BENEFICIARY’S NAME)

  	
  file with us for
  the company and the signature(s) is/are

  
	
   

  	
  authorized to
  execute this instrument.

  
	
   

  	
   

  	
  We further
  confirm that the company has been identified

  
	
  (SIGNATURE OF
  BENEFICIARY)

  	
  applying the
  appropriate due diligence and enhanced due

  
	
   

  	
  diligence as
  required by BSA and all its subsequent

  
	
   

  	
   

  	
  amendments.

  
	
  (NAME AND TITLE)

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (Name of Bank)

  
	
   

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (Address of Bank)

  
	
   

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (City, State, ZIP Code)

  
	
   

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (Authorized Name and
  Title)

  
	
   

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (Authorized Signature)

  
	
   

  	
   

  
	
   

  	
                                                                    

  
	
   

  	
  (Telephone number)

  



 

















 


EXHIBIT “B”


 


 


 


	
   

  	
   

  
	
  DATE:                                                 

  	
  REF. NO.                                                        

  
	
   

  	
   

  
	
  AT SIGHT OF THIS DRAFT

  	
   

  
	
   

  	
   

  
	
  PAY TO THE ORDER OF                                                    

  	
  US$                                          

  
	
   

  	
   

  
	
  US DOLLARS                                                                                                                                                                       

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  DRAWN UNDER SILICON VALLEY BANK, SANTA CLARA,
  CALIFORNIA, STANDBY LETTER OF CREDIT

  
	
  NUMBER NO.                                                                     

  	
  DATED                                                                                      

  
	
  TO:      SILICON
  VALLEY BANK

  	
   

  
	
                3003 TASMAN DRIVE

  	
   

  
	
                SANTA CLARA, CA 
  95054

  	
   

  	
   

  
	
   

  	
  (BENEFICIARY’S NAME)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  
								



 


GUIDELINES TO PREPARE THE DRAFT


 


1.             DATE:  ISSUANCE DATE OF DRAFT.


2.             REF.
NO.: BENEFICIARY’S REFERENCE NUMBER, IF ANY.


3.             PAY
TO THE ORDER OF: NAME OF BNEEFICIARY AS INDICATED IN THE L/C (MAKE SURE
BENEFICIARY ENDORSES IT ON THE REVERSE SIDE).


4.             US$:
AMOUNT OF DRAWING IN FIGURES.


5.             USDOLLARS:
AMOUNT OF DRAWING IN WORDS.


6.             LETTER
OF CREDIT NUMBER: SILICON VALLEY BANK’S STANDBY L/C NUMBER THAT PERTAINS TO THE
DRAWING.


7.             DATED:
ISSUANCE DATE OF THE STANDBY L/C.


8.             BENEFICIARY’S
NAME: NAME OF BENEFICIARY AS INDICATED IN THE L/C


9.             AUTHORIZED
SIGNATURE: SIGNED BY AN AUTHORIZED SIGNER OF BENEFICIARY.


 


IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS
DRAFT, PLEASE CALL OUR L/C PAYMENT SECTION AND ASK FOR:


 


	
  ALICE DA LUZ:

  	
  xxx-xxx-xxxx

  
	
  EFRAIN TUVILLA:

  	
  xxx-xxx-xxxx