Exhibit 10.11
 
 
CARDIMA, INC.
 
SUBSCRIPTION AGREEMENT
 
The undersigned (hereinafter "Subscriber") hereby confirms his/her/its
subscription for the purchase of shares of common stock, par value $0.001 per
share, ("Shares") of Cardima Inc., a Delaware corporation (the "Company"), on
the terms described below.
In connection with this subscription, Subscriber and the Company agree as
follows: Purchase and Sale of the Shares.
 
(a) The Company hereby agrees to issue and to sell to Subscriber, and Subscriber
hereby agrees to purchase from the Company  6,666,666 Shares at a price equal to
$0.60 per Share (the "Share Price") for the aggregate subscription amount set
forth on the signature page hereto. For every twenty (20) Shares purchased by
Subscriber, the Company will issue to Subscriber a warrant ("Warrant") to
purchase three (3) shares of the common stock of the Company, par value $0.001
per share ("Warrant Shares"). The exercise price of each Warrant shall be $0.65.
Each Warrant shall be exercisable commencing six (6) months after the date of
issuance and expiring on the Expiration Date, as more fully described in the
Warrant. Further, in accordance with the terms of the Warrant, the number of
Warrant Shares subject to purchase shall be permanently reduced on a
share-for-share basis by the number of shares of common stock and other Company
securities (including short sales and sales or purchases of derivative
securities) sold by Subscriber during such six (6) month period after the date
of issuance. The Warrants are subject to a forced exercise by the Company at a
price of $0.001 per Warrant Share upon notice to record holders of the Warrants,
as more fully described in the Warrant and accompanying documents. The Warrants
are also subject to a mandatory exchange or termination in the case of certain
reorganizations, mergers, or divestitures. The form of Warrant is as annexed
hereto as Exhibit A. Upon acceptance of this Subscription Agreement by the
Company, the Company shall issue and deliver to Subscriber a stock certificate
and a Warrant evidencing the applicable number of Shares and Warrant Shares
subscribed for against payment in U.S. Dollars of the Purchase Price (as defined
below).
 
(b) Subscriber hereby agrees to pay the aggregate purchase price (the "Purchase
Price") set forth on the signature page hereof required to purchase the Shares
and Warrant subscribed for hereunder, which amount has been paid in U.S. Dollars
by cash, wire transfer or check. The wiring instructions are set forth on the
signature pages.
 
(c) Subscriber understands and acknowledges that this subscription is part of a
private placement by the Company of up to the maximum of 16,000,000 Shares and
2,400,000 Warrant Shares (the "Maximum Offering"). If this subscription is not
accepted, whether in whole or in part, or if the Company chooses to forego the
private placement, the subscription funds held by the Company will be returned
to the investor (in whole or in part, as appropriate) without interest or
deduction.
 
2.            Covenants, Representations and Warranties of Subscriber.
Subscriber covenants with, represents and warrants to, the Company and the
Placement Agent as follows:
 
 
 
 
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(a) The Confidential Purchaser Questionnaire, in the form attached hereto as
Exhibit B, completed by the Subscriber and submitted to the Company is, as of
the date thereof, true, complete, and correct in all respects.
 
(b) Subscriber is an "accredited investor" as defined by Rule 501 under the
Securities Act of 1933, as amended (the "Act"), and Subscriber is capable of
evaluating the merits and risks of Subscriber's investment in the Company and
has the capacity to protect Subscriber's own interests.
 
(c) Subscriber understands that the securities being subscribed to under this
Subscription Agreement (the "Securities") are not presently registered.
Subscriber further understands the Company may require the Subscriber (or holder
of the Warrant) to exercise the Warrant at such time and upon the terms as
described in the Warrant and that the required exercise by the Company may occur
at time when the Subscriber (or holder of the Warrant) may be unable, due to his
own personal financial condition, to exercise the Warrant.
 
(d) Subscriber acknowledges and understands that the Securities are being
purchased for investment purposes and not with a view to distribution or resale,
nor with the intention of selling, transferring or otherwise disposing of all or
any part thereof for any particular price, or at any particular time, or upon
the happening of any particular event or circumstances, except selling,
transferring, or disposing the Securities made in full compliance with all
applicable provisions of the Act, the rules and regulations promulgated by the
Securities and Exchange Commission ("SEC") thereunder, and applicable state
securities laws.
 
(e) Subscriber acknowledges the Securities must be held indefinitely until an
exemption from registration is available. Subscriber is aware of the provisions
of Rule 144 and Rule 144(b) promulgated under the Act which permit limited
resale of common stock purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the common stock, the availability of certain current
public information about the Company, the resale occurring not less than six
months after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in transactions directly
with a "market maker" and the number of shares of common stock being sold during
any three-month period not exceeding specified limitations.
 
(f) Subscriber acknowledges that Subscriber has had the opportunity to ask
questions of, and receive answers from the Company or any person acting on its
behalf concerning the Company and its business and to obtain any additional
information, to the extent possessed by the Company (or to the extent it could
have been acquired by the Company without unreasonable effort or expense)
necessary to verify the accuracy of the information received by Subscriber. In
connection therewith, Subscriber acknowledges that Subscriber has had the
opportunity to discuss the Company's business, management and financial affairs
with the Company's management or any person acting on its behalf. Without
limiting the generality of the foregoing, Subscriber has been furnished with or
has had the opportunity to acquire, and to review: (i) copies of all of the
Company's publicly available documents, and (ii) all information, both written
and oral, it desires with respect to the Company's business, management,
financial affairs
and prospects. In determining whether to make this investment, Subscriber has
relied solely on Subscriber's own knowledge and understanding of the Company and
its business based upon Subscriber's own due diligence investigations and the
information furnished pursuant to this paragraph. Subscriber understands that no
person has been authorized to give any information or to make any
representations which were not furnished pursuant to this paragraph and
Subscriber has not relied on any other representations or information.
 
(g) Subscriber has all requisite legal and other power and authority to execute
and deliver this Subscription Agreement and to carry out and perform
Subscriber's obligations under the terms of this Subscription Agreement. This
Subscription Agreement constitutes a valid and legally binding obligation of
Subscriber, enforceable in accordance with its terms, and subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
general principals of equity, whether such enforcement is considered in a
proceeding in equity or law.
 
 
 
 
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(h) Subscriber has carefully considered and has discussed with the Subscriber's
professional legal, tax, accounting and financial advisors, to the extent
Subscriber has deemed necessary, the suitability of this investment and the
transactions contemplated by this Subscription Agreement for the Subscriber's
particular federal, state, local and foreign tax and financial situation and has
determined that this investment and the transactions contemplated by this
Subscription Agreement are a suitable investment for the Subscriber. Subscriber
relies solely on such advisors and not on any statements or representations of
the Company or any of its agents. Subscriber understands that Subscriber (and
not the Company) shall be responsible for Subscriber's own tax liabilities which
may arise as a result of this investment or the transactions contemplated by
this Subscription Agreement.
 
(i) Neither this Subscription Agreement nor the Confidential Purchaser
Questionnaire contain any untrue statement of a material fact or omit any
material fact concerning Subscriber.
 
(j) There are no actions, suits, proceedings or investigations pending against
Subscriber or Subscriber's properties before any court or governmental agency
(nor, to Subscriber's knowledge, is there any threat thereof) which would impair
in any way Subscriber's ability to enter into and fully perform Subscriber's
commitments and obligations under this Subscription Agreement or the
transactions contemplated hereby.
 
(k) The execution, delivery and performance of and compliance with this
Subscription Agreement and the issuance of the Securities will not result in any
material violation of, or conflict with, or constitute a material default under,
any of Subscriber's articles of incorporation or bylaws, if applicable, or any
of Subscriber's material agreements nor result in the creation of any mortgage,
pledge, lien, encumbrance or charge against any of the assets or properties of
Subscriber or the Securities.
 
(1) Subscriber acknowledges the Securities are speculative and involve a high
degree of risk and that Subscriber can bear the economic risk of the purchase of
the Securities, including a total loss of his/her/its investment.

 
(m) Subscriber recognizes that no federal, state or foreign agency has
recommended or endorsed the purchase of the Securities.
 
(n) Subscriber is aware the Securities are and will be, when issued, "restricted
securities" as that term is defined in Rule 144 of the general rules and
regulations under the Act.
 
(o) Subscriber understands any and all certificates representing the Securities
and any and all securities issued in replacement thereof or in exchange
therefore shall bear the following legend or one substantially similar thereto,
which Subscriber has read and understands:
 
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE."
 
(p) Because of the restrictions imposed on resale, Subscriber understands the
Company shall have the right to note stop-transfer instructions in its stock
transfer records to prohibit transfer in violation with this Subscription
Agreement or with applicable securities laws, and Subscriber has been informed
of the Company's intention to do so. Any sales, transfers, or any other
dispositions of the Securities by Subscriber, if any, will be in compliance with
the Act.
 
(q) Subscriber represents: (i) Subscriber is able to bear the economic risks of
an investment in the Securities and to afford the complete loss of the
investment, and (ii) (A) Subscriber could be reasonably assumed to have the
capacity to protect his/her/its own interests in connection with this
subscription; or (B) Subscriber has a pre-existing personal or business
relationship with either the Company or any affiliate thereof of such duration
and nature as would enable a reasonably prudent purchaser to be aware of the
character, business acumen and general business and financial circumstances of
the Company or such affiliate and is otherwise personally qualified to evaluate
and assess the risks, nature and other aspects of this subscription.
 
(r) Subscriber further represents the address set forth in the Confidential
Purchaser Questionnaire is his/her principal residence (or, if Subscriber is a
company, partnership or other entity, the address of its principal place of
business); that Subscriber is purchasing the Securities for Subscriber's own
account and not, in whole or in part, for the account of any other person; and
Subscriber has not formed any entity for the purpose of purchasing the
Securities.
 
(s) Subscriber understands the Company shall have the unconditional right to
accept or reject each subscription, in whole or in part, for any reason or
without a specific reason, in the sole and absolute discretion of the Company
(even after receipt and clearance of Subscriber's funds). No subscription will
be binding upon any company until accepted by an authorized officer of the
Company. In the event the subscription is rejected, Subscriber's subscription
funds will be returned without interest thereon or deduction therefrom.
 
 
 
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(t) Subscriber represents that Subscriber is not subscribing for Securities as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over the Internet, television or radio or presented at any seminar or meeting.
 
(u) Subscriber has carefully read this Subscription Agreement and the Warrant,
and Subscriber has accurately completed the Confidential Purchaser Questionnaire
which accompanies this Subscription Agreement.
 
(v) Subscriber represents and warrants, to the best of its knowledge, that other
than the placement agent, if any, no finder, broker, agent, financial advisor or
other intermediary, nor any purchaser representative or any broker-dealer acting
as a broker, is entitled to any compensation in connection with the transactions
contemplated by this Subscription Agreement.
 
(w) If Subscriber is a trust, this investment, together with all other
securities of the
 
Company held by the trust, does not exceed 10% of the trust assets.
 
(x) Regulation S. The Subscriber is not acquiring the Securities for the account
or benefit of, directly or indirectly, any U.S. Person. The Subscriber is not a
U.S. Person. The Subscriber is acquiring the Securities for investment only and
not with a view to resale or distribution and, in particular, it has no
intention to distribute either directly or indirectly any of the Securities in
the United States or to U.S. Persons. The Subscriber acknowledges that the
Subscriber has not acquired the Securities as a result of, and will not itself
engage in, any "directed selling efforts" (as defined in Regulation S under the
1933 Act) in the United States in respect of the Securities which would include
any activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
the resale of the Securities; provided, however, that the Subscriber may sell or
otherwise dispose of the Securities pursuant to registration of the Securities
pursuant to the 1933 Act and any applicable state and provincial securities laws
or under an exemption from such registration requirements and as otherwise
provided herein.
 
3.            Covenants, Representations and Warranties of the Company. The
Company covenants with, and represents and warrants to, Subscriber as follows:
 
(a) The Company is duly organized and validly exists as a corporation in good
standing under the laws of the State of Delaware.
 
(b) The Company has all such corporate power and authority to enter into,
deliver and perform this Subscription Agreement and the Warrant.
 
(c) All necessary corporate action has been duly and validly taken by the
Company to authorize the execution, delivery and performance of this
Subscription Agreement and the Warrant by the Company, and the issuance and sale
of the Securities to be sold by the Company pursuant to this Subscription
Agreement and the Warrant. This Subscription Agreement and the Warrant have been
duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
 
(d) To its best knowledge, the Company has not infringed, is not infringing, nor
has received notice of any claim that the Company has infringed with respect to
asserted intellectual property rights (including, without limitation, copyright,
patent, trademark, trade dress, service mark and any other intellectual property
rights) of others. To the best knowledge of the Company, none of the patents,
patent applications, trademarks, service marks, trade names and copyrights, and
licenses and rights to the foregoing presently owned or held by the Company,
materially infringe upon any like right of any other person or entity. The
Company: (i) owns or has the right to use, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other restrictions
of any kind whatsoever, sufficient patents, trademarks, service marks, trade
names, copyrights, licenses and rights with respect to the foregoing, and (ii)
is not obligated or under any liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, trademark, service mark, trade name, copyright, know-how,
technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business as now conducted or otherwise. The
Company has direct ownership of title to all its intellectual property
(including all United States and foreign patent applications and patents), other
proprietary rights, confidential information and know-how; owns all the rights
to its intangibles assets as are currently used in or have potential for use in
its business.
 
(e) The Shares and Warrant Shares to be issued and sold to the undersigned as
provided in this Subscription Agreement have been duly authorized and when
issued and delivered against payment therefor, will be validly issued, fully
paid and non-assessable. The Warrants are exercisable for shares of the common
stock of the Company, par value $0.001 per share, and these shares of common
stock issuable upon exercise of the Warrants have been duly authorized and when
issued and delivered upon exercise and due payment therefor will be validly
issued, fully paid and non-assessable and there are no preemptive or other
rights to subscribe for or to purchase, no encumbrances or liens, nor any
restriction upon the voting or transfer of, any shares of common stock issuable
to Subscriber (whether issued directly as part of the Shares or upon exercise of
the Warrants) pursuant to the Company's certificate of incorporation or by-laws
or any agreement or other outstanding instrument to which the Company is a party
or is otherwise known to the Company. The Company has reserved sufficient shares
of Common Stock to be issued upon exercise of the Warrants.
 
 
 
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The Company shall provide for the transfer, upon request of the Subscriber, or
removal of any legends on the Securities, all as may be allowed in accordance
with SEC Rule 144, and provide any required opinions of counsel to the Company's
transfer agents, at no cost to Subscriber.
 
(g) As of the date of this Subscription Agreement, the Company's authorized
capital stock consists of (a) 300,000,000 shares of common stock of which
116,389,966 shares are issued and outstanding and (b) 10,000,000 shares of
Preferred Stock, par value $0.001 per share, of which 10,000,000 shares are
designated Series A Participating Preferred Stock, of which 5,000,000 shares are
issued and outstanding. All 116,389,966 shares of common stock of the Company
outstanding have been duly authorized and validly issued and are fully paid and
non-assessable.
 
(h) The Company has not taken any action inconsistent with the treatment of the
sale of the Shares and Warrants as a private placement exempt from the
registration requirements of the Act pursuant to the provisions of Section 4(2)
thereof and Regulation D thereunder or under Regulation S. Assuming the accuracy
of each Subscriber's representations and warranties, the offer, sale, and
issuance by the Company of the Shares and Warrants to the Subscribers as
contemplated herein constitute transactions exempt from the registration
requirements of Section 5 of the Act.
 
(i) All Company filings with the SEC, including, without limitation, annual
reports on Form 10-K[SB], quarterly reports on Form 10-Q[SB] and reports by the
Company on Form 8-K (the "SEC Documents"), conform in all material respects to
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the rules, regulations and instructions of
the SEC thereunder. The SEC Documents did not as of their dates contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. Except as may be indicated in the notes to the Financial
Statements, the Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied and fairly
present, in all material respects, the financial position of the Company at the
dates thereof and the results of its operations, stockholders' equity and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal, recurring adjustments).
 
(j) Except as set forth in the SEC Documents, (i) the Company has not incurred
any liabilities or obligations, contingent or otherwise, that are material in
the aggregate to the Company taken as a whole, except in the ordinary course of
business, (ii) there has been no material adverse change in the condition or
results of operations, financial or otherwise, of the Company, taken as a whole;
and (iii) there are no material legal proceedings to which the Company is a
party or of which property of the Company is the subject and, to the Company's
knowledge, no such proceedings are contemplated by governmental authorities or
others.
 
4.           Patriot Act Compliance. (Terms used in this section are defined in
paragraph (d) below.)
 
To induce the Company to accept the undersigned's investment, the undersigned
hereby makes the following representations, warranties and covenants to the
Company:

 
(a) The undersigned represents and warrants that no holder of any beneficial
interest in the undersigned's equity securities of the Company (each a
"Beneficial Interest Holder") and, no Related Person (in the case the
undersigned is an entity) is or will be:
 
(1)  
A person or entity whose name appears on the list of specially designated
nationals and blocked persons maintained by the Office of Foreign Asset Control
from time to time;

 
(2)  
A Foreign Shell Bank; or

 
 
(3) 
A person or entity resident in or whose subscription funds are transferred from
or through an account in a Non-Cooperative Jurisdiction.

 

 
(b) The undersigned represents that the bank or other financial institution (the
"Wiring Institution") from which the undersigned's funds will be wired is
located in a FATF Country.
 
(c)The undersigned represents that:
 
(1)  
Neither it, any Beneficial Interest Holder nor any Related Person (in the case
of the undersigned is an entity) is a Senior Foreign Political Figure, any
member of a Senior Foreign Political Figure's Immediate Family or any Close
Associate of a Senior Foreign Political Figure; or

 
(2)  
Neither it, any Beneficial Interest Holder nor any Related Person (in the case
the undersigned is an entity) is resident in, or organized or chartered under
the laws of, a jurisdiction designated by the Secretary of the Treasury under
Section 311 or 312 of the USA PATRIOT Act as warranting special measures due to
money laundering concerns.

 
  (3)
Its investment funds do not originate from, nor will they be routed through, an
account maintained at a Foreign Shell Bank, an "offshore bank," or a bank
organized or chartered under the laws of a Non-Cooperative Jurisdiction.

 
 
 
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(d) Definitions:
 
Close Associate: With respect to a Senior Foreign Political Figure, a person who
is widely and publicly known internationally to maintain an unusually close
relationship with the Senior Foreign Political Figure, and includes a person who
is in a position to conduct substantial domestic and international financial
transactions on behalf of the Senior Foreign Political Figure.
 
FATF: The Financial Action Task Force on Money Laundering.
 
FATF Country: A country that is a member of FATF. As of September 1, 2003, the
countries which are members of FATF are: Argentina; Australia; Austria; Belgium;
Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong; Iceland;
Ireland; Italy; Japan; Luxembourg;Mexico; Kingdom of the Netherlands; New
Zealand; Norway; Portugal;
 
Singapore; South Africa; Spain; Sweden; Switzerland; Turkey; United Kingdom and
United States. For a current list of FATF members see
http://wwwl.oecd.org/fatf/Members_en.htm.
 
Foreign Bank: An organization which (i) is organized under the laws of a country
outside the United States; (ii) engages in the business of banking; (iii) is
recognized as a bank by the bank supervisory or monetary authority of the
country of its organization or principal banking operations; (iv) receives
deposits to a substantial extent in the regular course of its business; and (v)
has the power to accept demand deposits, but does not include the U.S. branches
or agencies of a foreign bank.
 
Foreign Shell Bank: A Foreign Bank without a Physical Presence in any country,
but does not include a Regulated Affiliate.
 
Government Entity: Any government or any state, department or other political
subdivision thereof, or any governmental body, agency, authority or
instrumentality in any jurisdiction exercising executive, legislative,
regulatory or administrative functions of or pertaining to government.
 
Immediate Family: With respect to a Senior Foreign Political Figure, typically
includes the political figure's parents, siblings, spouse, children and in-laws.
 
Non-Cooperative Jurisdiction: Any foreign country or territory that has been
designated as non­cooperative with international anti-money laundering
principles or procedures by an intergovernmental group or organization, such as
FATF, of which the United States is a member and with which designation the
United States representative to the group or organization continues to concur.
See http://www I .oecd.org/fatf/NCCT_en.htm for FATF's list of non­cooperative
countries and territories.
 
Physical Presence: A place of business maintained by a Foreign Bank and is
located at a fixed address, other than solely a post office box or an electronic
address, in a country in which the Foreign Bank is authorized to conduct banking
activities, at which location the Foreign Bank: (a) employs one or more
individuals on a full-time basis; (b) maintains operating records related to its
banking activities; and (c) is subject to inspection by the banking authority
that licensed the Foreign Bank to conduct banking activities.
 
Publicly Traded Company: An entity whose securities are listed on a recognized
securities exchange or quoted on an automated quotation system in the U.S. or
country other than a Non-Cooperative Jurisdiction or a wholly-owned subsidiary
of such an entity.
 
Qualified Plan: A tax qualified pension or retirement plan in which at least 100
employees participate that is maintained by an employer organized in the U.S. or
is a U.S. Government Entity.
 
Regulated Affiliate: A Foreign Shell Bank that: (a) is an affiliate of a
depository institution, credit union or Foreign Bank that maintains a Physical
Presence in the U.S. or a foreign country, as applicable; and (b) is subject to
supervision by a banking authority in the country regulating such affiliated
depository institution, credit union or Foreign Bank.
 
Related Person: With respect to any entity, any interest holder, director,
senior officer, trustee, beneficiary or grantor of such entity; provided that in
the case of an entity that is a Publicly Traded Company or a Qualified Plan, the
term "Related Person" shall exclude any interest holder

 
holding less than 5% of any class of securities of such Publicly Traded Company
and beneficiaries of such Qualified Plan.
 
Senior Foreign Political Figure: A senior official in the executive,
legislative, administrative, military or judicial branches of a non-U.S.
government (whether elected or not), a senior official of a major non-U.S.
political party, or a senior executive of a non-U.S. government-owned
corporation. In addition, a Senior Foreign Political Figure includes any
corporation, business or other entity that has been formed by, or for the
benefit of a Senior Foreign Political Figure.
 
USA PATRIOT Act: The Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001
(Pub. L. No. 107-56).
 
5.            Independent Nature of Investor's Obligations and Rights. The
obligations of the Subscriber under this Agreement and any other documents
delivered in connection herewith and therewith (collectively, the "Transaction
Documents") are several and not joint with the obligations of any other
purchaser of Shares, and the Subscriber is not responsible in any way for the
performance of the obligations of any other purchaser of Shares under any
Transaction Document. The decision of the Subscriber to purchase Shares pursuant
to the Transaction Documents has been made by the Subscriber independently of
any other purchaser of Shares. Nothing contained herein or in any Transaction
Document, and no action taken by any purchaser of Shares pursuant thereto, shall
be deemed to constitute such purchasers as a partnership, an association, a
joint venture, or any other kind of entity, or create a presumption that the
purchasers of Shares are in any way acting in concert or as a group with respect
to such obligations or the transactions contemplated by the Transaction
Documents. The Subscriber acknowledges that no other purchaser of Shares has
acted as agent for the Subscriber in connection with making its investment
hereunder and that no other purchaser of Shares will be acting as agent of the
Subscriber in connection with monitoring its investment in the Shares or
enforcing its rights under the Transaction Documents. The Subscriber shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other purchaser of
Shares to be joined as an additional party in any proceeding for such purpose.
 
 
 
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6.            Miscellaneous.
 
(a) Subscriber agrees not to transfer or assign this Subscription Agreement or
any of Subscriber's interest herein and further agrees that the transfer or
assignment of the Securities acquired pursuant hereto shall be made only in
accordance with all applicable laws.
 
(b) Subscriber agrees that Subscriber cannot cancel, terminate or revoke this
Subscription Agreement or any agreement of Subscriber made hereunder, and this
Subscription Agreement shall survive the death or legal disability of Subscriber
and shall be binding upon Subscriber's heirs, executors, administrators,
successors and permitted assigns.
 
(c)Subscriber has read and accurately completed this entire Subscription
Agreement

 
(d) This Subscription Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and may be amended only
by a written execution by all parties.
 
(e) Subscriber acknowledges it has been advised to consult with his/her/its own
attorney regarding this subscription and Subscriber has done so to the extent
that Subscriber deems appropriate. Subscriber understands and agrees that
Subscriber has not been represented in this transaction by counsel to the
Company or the Placement Agent.
 
(f) Any notice or other document required or permitted to be given or delivered
to the Subscriber shall be in writing and sent: (i) by registered or certified
mail with return receipt requested (postage prepaid) or (ii) by a recognized
overnight delivery service (with charges prepaid).
 
If to the Company, at:
 
47266 Benicia Street
Fremont, CA 94538
(510) 354-0300
Attn.: Robert Cheney, Chief Executive Officer
 
If to the Subscriber, at its address set forth on the signature page to this
Subscription Agreement or such other address as it shall have specified to the
Company in writing.
 
(g) Failure of the Company to exercise any right or remedy under this
Subscription Agreement or any other agreement between the Company and the
Subscriber, or otherwise, or delay by the Company in exercising such right or
remedy, will not operate as a waiver thereof. No waiver by the Company will be
effective unless and until it is in writing and signed by the Company.
 
(h) This Subscription Agreement shall be enforced; governed and construed in all
respects in accordance with the laws of the State of California as such laws are
applied to agreements between California residents entered into and to be
performed entirely within California. The Subscriber hereby irrevocably submits
to the jurisdiction of any State or United States Federal court sitting in
Alameda or San Francisco counties in the State of California over any action or
proceeding arising out of or relating to this Subscription Agreement or any
agreement contemplated hereby, and the Purchaser hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such State or Federal court. The Subscriber further waives any objection to
venue in such State and any objection to an action or proceeding in such State
on the basis of a non-convenient forum. The Subscriber further agrees that any
action or proceeding brought against the Company shall he brought only in the
State or United States Federal courts sitting in Alameda or San Francisco
counties in the State of California. The Subscriber agrees to waive its right to
a jury trial on any claim or cause of action based upon or arising out of this
Subscription Agreement or any document or agreement contemplated hereby.

 
(i) If any provision of this Subscription Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified to conform to such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provisions hereof.
 
(j) The parties understand and agree money damages would not be a sufficient
remedy for any breach of the Subscription Agreement by the Company or the
Subscriber and that the party against which such breach is committed shall be
entitled to equitable relief, including injunction and specific performance, as
a remedy for any such breach. Such remedies shall not be deemed to be the
exclusive remedies for a breach by either party of the Subscription Agreement
but shall be in addition to all other remedies available at law or equity to the
party against which such breach is committed.
 
(k)   All pronouns and any variations thereof used herein shall be deemed to
refer to
 
the masculine, feminine, singular or plural, as identity of the person or
persons may require.
 
(1) This Subscription Agreement may be executed in counterparts and by
facsimile, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
 
[Signature Pages Follow]
 
 
 
 
7

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Signature Page for Individuals:
 
IN WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
executed as of the date indicated below.
 
 
 
 

  $4,000,000.00 ($0.60 per Share)   6,666,666     Purchase Price   Number of
Shares                             1,000,000        
 Entitled to Warrants for Number of Warrant
Shares
    Peter Yuan          Print or Type Name   DatePrint or Type Name
(Joint-owner)                           Signature   Signature (Joint-owner)     
                    Date    (Joint-owner)                                    IRS
Taxpayer Identification Number    
IRS Taxpayer Identification Number
(Joint-owner)
                        Address    Address (Joint-owner)                       
            Telephone Number    Telephone Number                               
    Fax Number    Fax Number                           E-mail Address    E-mail
Address   

 
 
 
 
Type of Ownership
Individual
Tenants in common
Joint tenants with right of survivorship
Community property (check only if resident of community property state)
Other (please specify:___________________________)
 
 
 
 
 
 
 
8

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Wiring Instructions:
 

TO: BANK OF AMERICA       45786 Mission Blvd       Fremont, CA 94539       USA  
                  ROUTING / SWIFT CODE: BOFAUS6S                     FOR CREDIT
OF: CARDIMA, INC.       47266 Benicia St.       Fremont, CA 94538       USA    
                CREDIT ACCOUNT #:   16621-14529                             BY
ORDER OF: {NAME OF SENDER}    

 
 
 
 
 
                                                                                  
 
9

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Partnerships, Corporations or Other Entities:
 
IN WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
executed as of the date indicated below.
 
 
 

  $                   ($0.60 per Share)         Purchase Price   Number of
Shares                                      
 Entitled to Warrants for Number of
Warrant Shares
   

 
($0.60 per Share)
Total Purchase Price
 
Number of Shares

 
 

--------------------------------------------------------------------------------

Print or Type Name of Entity
 
 

--------------------------------------------------------------------------------

Address
 

--------------------------------------------------------------------------------

 Telephone Number
 
 

--------------------------------------------------------------------------------

Fax Number
 
 

--------------------------------------------------------------------------------

 Email Address
 

      Taxpayer I.D. No. (if applicable)    Date                   By:     
Signature: Name:  
Print or Type Name and Indicate Title or Position with Entity
Title:                 Signature (other authorized signatory)   Print or Type
Name and Indicate Title or Position with Entity

 
 
Type of Ownership

o Individual
o Tenants in common
o Joint tenants with right of survivorship
o Community property (check only if resident of community property state)
o    Other (please specify:_____________)
 
 
 
 
10

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All subscriptions from partnerships, corporations, trusts or limited liability
companies must be accompanied by resolutions of the appropriate corporate
authority (board of directors, trustee or managing partner or members, as
applicable) and trust documents evidencing the authorization and power to make
the subscription.
 
Wiring Instructions:
 
 

TO: BANK OF AMERICA       45786 Mission Blvd       Fremont, CA 94539       USA  
                  ROUTING / SWIFT CODE: BOFAUS6S                     FOR CREDIT
OF: CARDIMA, INC.       47266 Benicia St.       Fremont, CA 94538       USA    
                CREDIT ACCOUNT #:  16621-14529                             BY
ORDER OF: {NAME OF SENDER}    

 
 
 
 
 
 
11

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SUBSCRIPTION ACCEPTANCE BY CARDIMA, INC.
 
IN WITNESS WHEREOF, the Company has caused this Subscription Agreement to be
executed, and the foregoing subscription accepted, as of the date indicated
below.
 

             
Date
By:
/s/        Name        Title           

 
 
 
 
12

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EXHIBIT A
Warrant No.
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS REGISTERED UNDER THE SECURITIES ACT AND QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS
BOUND BY THE TERMS OF A SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL PURCHASER
AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY).
 
REDEEMABLE WARRANT TO PURCHASE SHARES
 
OF COMMON STOCK OF CARDIMA, INC.
 
This certifies that  _________________  (the "Holder"), for value received is
entitled to purchase from Cardima, Inc., a Delaware corporation (the
"Company"),______________________________)1 fully paid and nonassessable shares
of the Company's Common Stock (the "Warrant Shares") at a price of $ 0.65 [which
exercise price shall be equal to 103% of the Purchase Price] per share (the
"Stock Purchase Price") at any time or from time to time on or after the
Commencement Date (as defined below) up to and including 5:00 p.m. (Pacific
time) on the Expiration Date (as defined below), upon surrender to the Company
at its principal office at 47266 Benicia Street, Fremont, California 94538 (or
at such other location as the Company may advise Holder in writing) of this
Warrant properly endorsed with the Form of Subscription attached hereto duly
filled in and signed and upon payment by cash, cashier's check or wire transfer
of immediately available funds of the aggregate Stock Purchase Price for the
number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof, such exercise to be conditioned upon the
accuracy of all representations and warranties contained in such Form of
Subscription. The Stock Purchase Price and the number of shares purchasable
hereunder are subject to adjustment as provided in Section 3 of this Warrant.
"Commencement Date" means the date which is six (6) months after the date of
issuance of this Warrant and "Expiration Date" means the earlier of (i) five (5)
years from the date hereof, (ii) the occurrence of an event, proposal of which
is described in subsection (d) of Section 3.4 which causes termination of this
Warrant under Section 3.4. or (iii) on the date specified in the Notice of
Redemption (as defined below) pursuant to Section 7. This Warrant is issued
pursuant to the Subscription Agreement between the Company and Holder dated as
of the date hereof (the "Subscription Agreement").
 
 
 
 
 
________________________________________
1 Insert a number of shares equal to 15% of the number of Common Stock purchased
under the Subscription Agreement.
 
 
 
 
 
13

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This Warrant is subject to the following terms and conditions:
 
1.             Exercise of Warrant
 
1.1             Issuance of Certificates. This Warrant is exercisable at the
option of Holder at any time or from time to time on or after the Commencement
Date and prior to or on the Expiration Date for all or a portion of the shares
of Warrant Shares which may be purchased hereunder but if this Warrant is to be
exercised only in part, not for less than the greater of (a) twenty-five (25%)
of the number of Warrant Shares which may initially be purchased hereunder or
(b) one thousand (1,000) Warrant Shares (in either case as adjusted for any
stock dividend, split, combination, recapitalization or the like with respect to
such shares). The Company agrees that the Warrant Shares purchased under this
Warrant shall be and are deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Subject to the
provisions of Section 2, certificates for the Warrant Shares so purchased,
together with any other securities or property to which Holder is entitled upon
such exercise, shall be delivered to Holder by the Company's transfer agent at
the Company's expense within a reasonable time after this Warrant has been
exercised. Each stock certificate so delivered shall be in such denominations of
Warrant Shares as may be requested by Holder and shall be registered in the name
of Holder or such other name as shall be designated by Holder, subject to the
limitations contained in Section 2. If, upon exercise of this Warrant, fewer
than all of the Warrant Shares evidenced by this Warrant are purchased prior to
the date of expiration of this Warrant, one or more new warrants substantially
in the form of, and on the terms in, this Warrant will be issued for the
remaining number of Warrant Shares not purchased upon exercise of this Warrant.
 
1.2             Payment. Payment of the Stock Purchase Price shall be made by
surrender to the Company of this Warrant properly endorsed with the Form of
Subscription attached hereto duly filled in and signed and payment by cash,
cashier's check or wire transfer of immediately available funds and specifying
the number of Warrant Shares to be purchased, during normal business hours on
any day that is not a Saturday or Sunday or a day on which banks are required or
permitted to be closed in the State of California.
 
2.             Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will use its best efforts to at all times have authorized
and reserved, for the purpose of issue or transfer upon exercise of this
Warrant, a sufficient number of shares of authorized but unissued Common Stock.
When and as required to provide for the exercise of the rights represented by
this Warrant, the Company will take all such action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
domestic securities exchange or automated quotation system upon which the Common
Stock may be listed.
 
 
 
 
 
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3.            Adjustment of Stock Purchase Price; Number of Shares. The Stock
Purchase
 
Price and the number of shares of Warrant Shares purchasable upon the exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 3.
 
3.1            Adjustment of Purchase Price. In the event that the Company at
any time or from time to time after the issuance of this Warrant shall declare
or pay, without consideration, any dividend on the Common Stock payable in
Common Stock or in any right to acquire Common Stock for no consideration, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or in the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the Stock Purchase Price in effect
immediately prior to such event shall, concurrently with the effectiveness of
such event, be proportionately decreased or increased, as appropriate. In the
event that the Company shall declare or pay, without consideration, any dividend
on the Common Stock payable in any right to acquire Common Stock for no
consideration, then the Company shall be deemed to have made a dividend payable
in Common Stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire Common Stock. Upon each
adjustment of the Stock Purchase Price pursuant to this Section 3.1, the holder
of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase
Price resulting from such adjustment, the number of shares of Common Stock
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable pursuant
hereto immediately prior to such adjustment, and dividing the product thereof by
the Stock Purchase Price resulting from such adjustment.
 
3.2            Adjustments for Reclassification and Reorganization. If the
Common Stock shall be changed into the same or a different number of shares of
any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 3.1), the Stock Purchase Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that this Warrant shall represent the right to
purchase, in lieu of the number of shares of Common Stock which this Warrant
would otherwise represent the right to purchase, a number of shares of such
other class or classes of stock equivalent to the number of shares of Common
Stock which this Warrant would have otherwise entitled the holder to purchase
immediately before that change.
 
3.3            Notice of Adjustment. Upon any adjustment of the Stock Purchase
Price or any increase or decrease in the number of shares of Common Stock
purchasable upon the exercise of this Warrant, the Company shall within five
business days give written notice thereof, by first class mail, postage prepaid,
(or by international delivery service, for international addresses) addressed to
the registered holder of this Warrant at the address of such holder as shown on
the books of the Company. The notice shall be signed by the Company's chief
financial officer and shall state the Stock Purchase Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
 
 
 
 
15

--------------------------------------------------------------------------------

 
 
3.4             Certain Termination Events; Other Notices. If at any time the
Company
 
shall propose to:
 
(a) declare any cash dividend upon its Common Stock;
 
(b) declare or make any dividend or other distribution to the holders of its
Common Stock, whether in cash, property or other securities;
 
(c) effect any reorganization or reclassification of the capital stock of the
Company or any consolidation or merger of the Company with or into another
corporation or any sale, lease or conveyance of all or substantially all of the
property of the Company; or
 
(d) effect a voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
 
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, or international delivery service for
international deliveries, addressed to the holder of this Warrant at the address
of such holder as shown on the books of the Company, (i) at least fifteen (15)
business days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend or distribution
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up, at least fifteen (15) business days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend or
distribution, the record date for such dividend or distribution, if after the
Commencement Date. Any notice given in accordance with clause (ii) above shall
also specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation/merger,
sale, lease, conveyance, dissolution, liquidation or winding up, as the case may
be and in connection with the occurrence of an event described in clause (d)
above such notice shall specify the anticipated net equity value that will
accrue to Common Stock holders so that the Holder can make an informed decision
whether or not to exercise this Warrant. In the event that the Holder of the
Warrant does not exercise this Warrant prior to the occurrence of an event
described in clause (a) or (b) above, the Holder shall not be entitled to
receive the benefits accruing to existing holders of the Common Stock in such
event. Upon the occurrence of an event described in clause (c) in which the
holders of the Company's voting securities of the Company immediately prior to
the event do not hold at least fifty percent (50%) of the voting securities of
the Company or the surviving entity (in a sale of assets, the Company shall be
the surviving entity) resulting from such event immediately after such event,
this Warrant shall terminate unless the Company has negotiated (which it is
under no obligation to do) for the assumption of this Warrant. Upon the
occurrence of an event described in clause (c) and, subject to the immediately
preceding sentence, the Holder shall be entitled thereafter, upon payment of the
Stock Purchase Price in effect immediately prior to such action, to receive upon
exercise of this Warrant the class and number of shares which the Holder would
have been entitled to receive after the occurrence of such event had this
Warrant been exercised immediately prior to such event. In connection with the
transactions described in clause (c) and provided that this Warrant does not
terminate as provided in the second sentence immediately preceding this
sentence, the Company will require each person (other than the Company) that may
be required to deliver any cash, stock, securities or other property upon the
exercise of this Warrant as provided herein to assume, by written instrument
delivered to the Holder of this Warrant (x) the obligations of the Company under
this Warrant and (y) the obligation to deliver to such Holder such cash, stock,
securities or other property as such Holder may be entitled to receive in
accordance with the provisions of this Section 3. Upon the occurrence of an
event the proposal of which is described in clause (d), this Warrant shall
terminate. Notwithstanding any other provision hereof, no Holder shall have the
right to obtain an injunction or restraining order or otherwise interfere with
or prevent the occurrence of any of the actions described in (a) - (d) above.
 
 
 
 
16

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3.5            Adjustment of Number of Warrant Shares. The number of Warrant
Shares
 
purchasable hereunder shall be reduced on a one-for-one basis by the number of
shares of Common Stock (or Common Stock equivalents) sold directly or
indirectly, including, without limitation, any short sale, third party short
sales or holdings of a "put equivalent position" (as defined in Rule 16a-1 of
the 1934 Act), of the Company's Common Stock by the Holder from the date hereof
until the Commencement Date. Prior to or simultaneously with the first exercise
of this Warrant by the Holder (or the transfer of this Warrant), the Holder
shall provide the Company with an affidavit and other reasonable supporting
materials as to the foregoing.
 
4.             Issue Tax. The issuance of certificates for the Warrant Shares
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder of the Warrant being exercised.
 
5.             No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder in
respect of meetings of stockholders for the election of directors of the Company
or any other matters or any rights whatsoever as a stockholder of the Company.
Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in
the event of a dividend on the Common Stock payable in shares of Common Stock,
no dividends or interest shall be payable or accrued in respect of this Warrant
or the interest represented hereby or the shares purchasable hereunder until,
and only to the extent that, this Warrant shall have been exercised. No
provisions hereof, in the absence of affirmative action by the Holder to
purchase shares of Warrant Shares, and no mere enumeration herein of the rights
or privileges of the Holder hereof, shall give rise to any liability of such
Holder for the Stock Purchase Price or as a stockholder of the Company whether
such liability is asserted by the Company or by its creditors.
 
6.            Restrictions on Transferability of Securities: Compliance with
Securities Act.
 
6.1            Restrictions on Transferability. The Warrant and the Warrant
Shares (collectively, the "Securities") shall not be transferable except upon
the conditions specified in the Subscription Agreement, which conditions are
intended to insure compliance with the provisions of the Securities Act and
applicable "blue sky" law.
 
6.2            Restrictive Legend. Each certificate representing the Securities
or any other securities issued in respect of the Securities upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event,
shall (unless otherwise permitted by the provisions of the Subscription
Agreement) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS REGISTERED UNDER THE SECURITIES ACT AND QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS
BOUND BY THE TERMS OF A SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL PURCHASER
AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY).
 
6.3            Exchange of Warrant. Subject to the terms and conditions hereof,
including the restrictions on transfer in this Section 6 and in the Subscription
Agreement, upon surrender of this Warrant to the Company with a duly executed
Assignment Foriii in the form attached hereto and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant or Warrants of like tenor in the name of the assignee named in such
Assignment Form and this Warrant shall promptly be canceled; provided, however,
that if the transfer is for less than all of this Warrant, the transferor shall
pay all reasonable costs of the Company in connection with a transfer of
Warrants to purchase less than the greater of (a) twenty-five percent (25%) of
the Warrant Shares which may initially be purchased hereunder or (b) one
thousand (1,000) Warrant Shares (in either case as adjusted for any stock
dividend, split, combination, recapitalization or the like with respect to such
shares). The term "Warrant" as used herein shall be deemed to include any
Warrants issued in exchange for this Warrant.
 
 
 
 
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6.4            Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in Section 6.3.
 
7.             Forced Exercise by the Company. At the option of the Company, the
Company may force the Holder to exercise the Warrant at a price per share equal
to $0.65, provided that (i) the average closing bid price of the Company's
Common Stock as reported by the National Association of Securities Dealers
Automated Quotation or the OTC Bulletin board shall have been equal to or
greater than $1.00 for a period of fifteen (15) consecutive trading days ending
on the date preceding the date on which the Holder receives a notice from the
Company in which it announces its intention to force the exercise of the
Warrants and (ii) a registration statement is in effect with respect to the
Warrant Shares. Upon Holder receipt of said notice, the Holder shall have
fifteen (15) Trading Days [This term is not defined] to submit to the Company a
completed Form of Subscription, together with a check for full payment in
accordance with the provisions of this Warrant. If the Company does not receive
payment within said time period, this Warrant shall expire immediately and the
Holder shall have no further rights hereunder.
 
8.             Modification and Waiver. Except as otherwise provided herein,
this Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.
 
9.             Notices. Except as otherwise provided herein, any notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed effectively given (a) upon personal delivery to the party to be
notified, (b) upon electronic confirmation of successful facsimile transmission,
(c) three (3) days after deposit with the United States mail, by registered or
certified mail, postage prepaid, or (d) one (1) business day after timely
delivery to an overnight air courier for next business day delivery, in each
case addressed (i) if to the Subscriber, at the address set forth on the
signature to the Subscription Agreement or at such other address as the
Subscriber shall have furnished the Company in writing, or (ii) if to the
Company, at its address set forth in the Subscription Agreement, or at such
other address as the Company shall have furnished to the Subscriber in writing.
 
10.             Descriptive Headings and Governing Law. The descriptive headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California
(without regard to its conflicts of law provisions). The Holder hereby
irrevocably submits to the jurisdiction of any State or United States Federal
court sitting in the Alameda or San Francisco counties in the State of
California over any action or proceeding arising out of or relating to this
Warrant or any agreement contemplated hereby, and the Holder irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such State or Federal court. The Holder further waives any
objection to venue in such State and any objection to an action or proceeding in
such State based on non-convenient forum. The Holder further agrees that any
action or proceeding brought against the Company shall be brought in the State
or United States Federal courts sitting in Alameda or San Francisco counties in
the State of California. The Holder agrees to waive its rights to a jury trial
or any claim for cause of action based upon or arising out of this Warrant or
any document or agreement contemplated hereby.
 
11.             Lost Warrants or Stock Certificates. The Company represents and
warrants to Holder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity and, if requested, bond reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant or stock certificate, the Company at its expense will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
 
12.            Amendment. This Warrant is one of a series of warrants (the
"Warrant Series") to purchase in the aggregate up to three million six hundred
thousand (3,600,000) shares of the Company's Common Stock. This Warrant may be
amended only with the written approval of the Company and (i) the Holder of this
Warrant or (ii) the holders of warrants representing a majority of the Warrant
Shares; provided, however, that any amendment affected pursuant to (ii) above
shall be made in the same manner to all warrants in the Warrant Series.
 
13.            Binding Effect; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company and the Holder and their respective
heirs, legal representatives, successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Holder, or their respective heirs, legal representatives,
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Warrant.
 
14.            Fractional Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the market price of the Common Stock on such exercise
date, which shall be, on such date, the closing price for the Common Stock or
the closing bid if no sales were reported, as quoted on the exchange or market
that is the primary trading market for the Company.
 
 
 
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officers, thereunto duly authorized thisday of, 2008.
 
 

  CARDIMA, INC., a Delaware corporation          
 
By:
/s/        Name        Title           

 
 
 
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FORM OF SUBSCRIPTION
 
 
(To be signed only upon exercise of Warrant)
 
To: Cardima, Inc.
 
The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise such Warrant for, and to purchase thereunder, _________________
(______) shares of
common                                                                                                                                      Stock
of [__________] Inc. (the "Company"), and herewith makes payment in the amount
of therefor. The certificates for such shares should be issued in the name of,
and delivered to, ______________  whose address
______________________________________________________________.
 
The undersigned represents, unless the exercise of this Warrant has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
that (i) the undersigned is acquiring such Common Stock for his or its own
account for investment and not with a view to or for sale in connection with any
distribution thereof (except for any resale pursuant to a registration statement
under the Securities Act), (ii) the undersigned has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the undersigned's investment in the shares of Common Stock,
(iii) the undersigned has received all of the information the undersigned
requested from the Company and the undersigned considers necessary or
appropriate for deciding whether to purchase the shares, (iv) the undersigned
has the ability to bear the economic risks of the undersigned's prospective
investment and (v) the undersigned is able, without materially impairing his
financial condition, to hold the shares of Common Stock for an indefinite period
of time and to suffer complete loss on the undersigned's investment.
 
The undersigned is an "accredited investor" as defined in Regulation D of the
Securities and Exchange Commission on the date hereof.
 
DATED:  ________________________________
 

             
 
 
       
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant)
                                              (Address)  

                                                               
 
 
 
 
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT.
 
ASSIGNMENT FORM
 
(To be executed only upon transfer of this Warrant)
 
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ______________________ (the "Assignee")
the right represented by such  Warrant to purchase ___________ Warrant Shares
and all other rights of the Holder with respect thereto under the within
Warrant, and appoints  as Attorney to make such transfer on the books of
Cardima, Inc. maintained for such purpose, with full power of substitution in
the premises.
 
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the Warrant Shares to be issued upon exercise
hereof are being acquired for investment and that the Assignee will not offer,
sell or otherwise dispose of this Warrant or any Warrant Shares to be issued
upon exercise hereof except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee has acknowledged that upon exercise of this Warrant,
the Assignee shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale.
 
Dated: _________________________.
 

[MEDALLION GUARANT]            
 
 
        (Signature)                        (Print Name)                      
 (Street Address)                               (City)       (State)      (Zip
Code)   

 
 
 
 
 
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EXHIBIT B
 
CONFIDENTIAL PURCHASER QUESTIONNAIRE
 
CONFIDENTIAL PURCHASER QUESTIONNAIRE
 
THIS QUESTIONNAIRE WILL BE USED IN CONNECTION WITH VARIOUS INVESTMENTS MADE BY
THE UNDERSIGNED FROM TIME TO TIME, WHICH SUCH INVESTMENTS SHALL BE BROUGHT TO
THE UNDERSIGNED BY, AND MADE THROUGH, SMH CAPITAL
 
THE COMPANY SHALL HAVE THE RIGHT TO FULLY RELY ON THE REPRESENTATIONS AND
WARRANTIES CONTAINED HEREIN UNTIL SUCH TIME AS THE UNDERSIGNED HAS FURNISHED AN
AMENDED CONFIDENTIAL PURCHASER QUESTIONNAIRE.
 
THIS QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED TO SMH CAPITAL
 
THE INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN STRICT
CONFIDENCE. NO INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT THAT SUCH
DISCLOSURE IS REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY PROPER LEGAL
PROCESS OR IN LITIGATION INVOLVING THE COMPANY IN WHICH YOU ARE INVESTING AND
ITS CONTROLLING PERSONS.
 
(1) The undersigned represents and warrants that he, she or it comes within at
least one category marked below, and that for any category marked, he, she or it
has truthfully set forth, where applicable, the factual basis or reason the
undersigned comes within that category. The undersigned agrees to furnish any
additional information which any issuer of securities deems necessary in order
to verify the answers set forth below.
 
Category  A ü
The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000.
 
Explanation: In calculating net worth you may include equity in personal
property and real estate, including your principal residence, cash, short-term
investments, stock and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt secured by
such property.

 
Category B ü
The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.

 
 
 
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Category C __
The undersigned is a director or executive officer of the company which is
issuing and selling the Securities.

 
 
 
Category D __
 
The undersigned is (i) a bank, as defined in Section 3(a)(2) of the

 
 
 
Securities Act of 1933, as amended (the "Act"); (ii) a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity; (iii) an insurance
company as defined in Section 2(13) of the Act; (iv) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; (v) a Small Business
Investment Company (SBIC) licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958; or
(vi) a plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000;
 
 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 
Category E __
The undersigned is an (i) employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, (ii) an employee benefit plan with total assets in excess of
$5,000,000, or (iii) a self-directed employee benefit plan (including a
self-directed individual retirement account or IRA, Keough or SEP plan) with
investment decisions made solely by persons that are accredited investors
(describe entity).
 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 
Category F __
The undersigned is a private business development company as defined in section
202(a) (22) of the Investment Advisors Act of 1940 (describe entity)
 

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Category G __
The undersigned is either a corporation, limited liability company, partnership,
Massachusetts business trust, or non-profit organization within the meaning of
Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the
specific purpose of acquiring the Securities and with total assets in excess of
$5,000,000. (describe entity)
 
 

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--------------------------------------------------------------------------------

 
 
 
Category H The undersigned is a trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities, where the
purchase is directed by a "sophisticated investor" as defined in Regulation
506(b)(2)(ii) under the Act. (must also answer Question 5 below).

 
Category I __
 
The undersigned is an entity (other than a trust) in which all of the equity

 
 
 
owners are "accredited investors" within one or more of the above categories. If
relying upon this category alone, each equity owner must complete a separate
copy of this Purchaser Questionnaire. (describe entity below)
 
 

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The undersigned agrees that the undersigned will notify SMH Capital at any time
in the event that the representations and warranties in this Purchaser
Questionnaire shall cease to be true, accurate and complete.
 
(2)    Suitability (please answer each question)
 
(a) 
For an individual, please describe your current employment, including the
company by which you are employed and its principal business:
 
Retired capital gains interact income, dividends, currency trading, etc.

 
 
 
(b)  
For an individual, please describe any college or graduate degrees held by you:
 
DBS College

 
 
(c)
For all subscribers, please list types) of prior investments:
 
Share, bonds, funds, currency, commodities, etc.

 
 
 
 
 
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(d)  
For all subscribers, please state whether you have you participated in other
private placements before:

 
 
YES __ü_____         NO  __________
 
 
(e)  
If your answer to question (d) above was "YES", please indicate frequency of
such prior participation in private placements of:

 

 

   
Public
Companies
 
 Private
Companies
                            Frequently           Occasionally  ü         Never  
     

 
 
 
(f)  
For individuals, do you expect your current level of income to significantly
decrease in the foreseeable future?

 
YES _______         NO  ____ü______
 
(g)  
For trust, corporate, partnership and other institutional subscribers, do you
expect your total assets to significantly decrease in the foreseeable future?

 
YES _______         NO  __________
 
(h)  
For all subscribers, do you have any other investments or contingent liabilities
which you reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you?

 
YES _______         NO  ____ü______
 
  (i)
For all subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the Securities for which you seek to
purchase?

 

YES ___ü____         NO  _________
 
(j)  
For all subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?

 
YES ___ü____         NO  _________
 
 
 
 
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(3)  
Manner in which title is to be held: (circle one)

 
(a)  
Individual Ownership

 
(b)  
Community Property

 
(c)  
Joint Tenant with Right of Survivorship (both parties must sign) Partnership

 
(d)  
Tenants in Common

 
(e)  
Limited Liability Company

 
(f)  
Corporation

 
(g)  
Trust

 
(h)  
Other

 
(4)  
NASD Affiliation.
 
Are you affiliated or associated with an NASD member firm (please check one):

 
YES ___ü____         NO  _________
 
 
If Yes, please describe:
 
_______________________________________________________________________
 
_______________________________________________________________________
 
_______________________________________________________________________
 
 
*If subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
 
The undersigned NASD member firm acknowledges receipt of the notice required by
the NASD Conduct Rules.
 
______________________________________________________________________
Name of NASD Member Firm
 
By:____________________________________________________________________
 
_______________________________________________________________________
Authorized Officer
 
Date:___________________________________________________________________
 
 
(5) For Trust Subscribers
 
A. Certain trusts generally may not qualify as accredited investors except under
special circumstances. Therefore, if you intend to hold securities in whole or
in part through a trust, please answer each of the following questions.
 
 
 
 
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Is the trustee of the trust a national or state bank that is acting in its
fiduciary capacity in making the investment on behalf of the trust?
 
Yes q No q
 
B. If the trust is a revocable trust, please complete Question 1 below. If the
trust is an irrevocable trust, please complete Question 2 below.
 
1. 
REVOCABLE TRUSTS
 
Can the trust be amended or revoked at any time by its grantors:
 
 
Yes r    No r
 
If yes, please answer the following questions relating to each grantor (please
add sheets if necessary):
 
Grantor Name: ____________________
 
Net worth of grantor (including spouse, if applicable), including home, home
furnishings and automobiles exceeds $1,000,000?
 
Yes q No q
 
OR
 
Income (exclusive of any income attributable to spouse) was in excess of
$200,000 for the prior two taxable years and is reasonably expected to be in
excess of $200,000 for the current taxable year?
 
Yes q No q
 
OR
 
Income (including income attributable to spouse) was in excess of $300,000 for
the prior two taxable years and is reasonably expected to be in excess of
$300,000 for the current taxable year?
 
Yes q    No q

 
 
 
2.
IRREVOCABLE TRUSTS
 
If the trust is an irrevocable trust, please answer the following questions:
 
Please provide the name of each trustee:
 

 
 
 
 
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Trustee
Name:   _______________________________                                                                                
 
Trustee
Name:   _______________________________                                                                                
 
Does the trust have assets greater than $5 million?
 
Yes q No q
 
Indicate how often you invest in:

 
Marketable Securities
 
Often q
Occasionally q
Seldom q
Never q
       

 
Restricted Securities

Often q
Occasionally q
Seldom q
Never q
       

Venture Capital Companies
 
Often q
Occasionally q
Seldom q
Never q

 
This completes the questions applicable to Trust Investors. Please sign below.
 
 
 
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The undersigned has been informed of the significance of the foregoing
representations and answers contained in this Confidential Purchaser
Questionnaire and such representations and answers have been provided with the
understanding that all companies in which you are purchasing securities through
the placement agent, will rely on them.
 

    Individual          
Date: __________________
 
Peter Yuan       Name of Individual       (Please type or print)              
/s/ Peter Yuan       Signature of Individual                       Name of Joint
Owner       (Please type or print)                       Signature (Joint Owner)
             
Partnership, Corporation or
Other Entity
         
Date: __________________
          Print or Type Entity Name               By:       Name:       Title:  
                    Signature (other authorized signatory, if any)  

 
 
 
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