Exhibit 10.1
 
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:

1.           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 18,518,518 Shares at a
price equal to $1.08 per Share (the “Share Price”) for the aggregate
subscription amount set forth on the signature page hereto.  The Company will
issue to Subscriber a warrant (“Warrant”) to purchase an aggregate of 5,555,555
shares of the common stock of the Company, par value $0.001 per share (“Warrant
Shares”).  The exercise price of the Warrant shall be $1.25.  The 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 $1.08 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 shall be paid in
U.S. Dollars by cash, wire transfer (pursuant to the instructions set on forth
on the signature pages) or check.  Notwithstanding the foregoing, the Company
and the Subscriber acknowledges and agrees that the Subscriber has previously
advanced the principal amount of Six Million ($6,000,000) Dollars to the Company
pursuant to the terms of that certain Loan Commitment Letter dated November 11,
2008 and hereby agrees that such amount shall be converted into subscription of
Shares pursuant to the terms of this subscription agreement.
 
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2.           Covenants, Representations and Warranties of
Subscriber.  Subscriber covenants with, represents and warrants to, the Company
and the Placement Agent as follows:

(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.
 
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(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.

(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.

(l)           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.
 
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(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 his/her 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.
 
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(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.

(f) 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.
 
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(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
____________ 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 ____________ shares
are issued and outstanding.  All ____________ 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, quarterly reports on Form 10-Q 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.
 
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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.

 
(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://www1.oecd.org/fatf/Members_en.htm.
 
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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 non-cooperative 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://www1.oecd.org/fatf/NCCT_en.htm for FATF’s list
of non-cooperative 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.
 
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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.           Intentionally Omitted.

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.: John R. Cheney, Chief Executive Officer
 
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           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
be 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.

(l)           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]

 
11

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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.

 
$16,000,000($1.18 per Share)
 
________13,559,322_________
Purchase Price
 
Number of Shares
 
 
_________4,067,797_________
 
Entitled to Warrants for Number of Warrant Shares
   
____________________________________
___________________________________
Print or Type Name
 
Print or Type Name (Joint-owner)
 
____________________________________
___________________________________
Signature
 
Signature (Joint-owner)
 
___________________________________
__________________________________
Date
 
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:____________________)

12

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Wiring Instructions:
 
TO:
SILICON VALLEY BANK  
3003 TASMAN DRIVE
 
SANTA CLARA, CA 95054
   
ROUTING & TRANSIT:
121140399
   
FOR CREDIT OF:
CARDIMA
   
CREDIT ACCOUNT #:
0272686670
   
BY ORDER OF:
{NAME OF SENDER}

 
 
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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.
 
$ _20,000,000_______________($1.08 per Share)
 
_18,518,518____________________
Total Purchase Price      Number of Shares           5,555,555      Entitled to
Warrants for Number of Warrant Shares             Print or Type Name of Entity  
              Address                 Telephone Number                 Fax
Number                 Email Address                 Taxpayer I.D. No. (if
applicable)     Date             By:   Print or Type Name and Indicate
Signature:   Title or Position with Entity Name:          Title:                
  Signature (other authorized signatory)         Print or Type Name and Indicate
    Title or Position with Entity      

 
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:____________________)
 
14

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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:
SILICON VALLEY BANK   3003 TASMAN DRIVE   SANTA CLARA, CA 95054    
ROUTING & TRANSIT:
121140399
   
FOR CREDIT OF:
CARDIMA
   
CREDIT ACCOUNT #:
0272686670
   
BY ORDER OF:
{NAME OF SENDER}

 
15

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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: February_____, 2009
By:
/s/        Name        Title           

 

 

 
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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 Peter Yuan (the “Holder”), for value received is entitled to
purchase from Cardima, Inc., a Delaware corporation (the “Company”), Four
Million Sixty Seven Thousand, Seven Hundred and Ninety Seven (4,067,797) fully
paid and nonassessable shares of the Company’s Common Stock (the “Warrant
Shares”) at a price of $ 1.25  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”).
 
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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.
 
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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.
 
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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
 
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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 Form 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 $1.18, 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 $1.68 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 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.
 
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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 may be amended only with the written approval of the Company and
the Holder of this Warrant.
 
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 this ____ day of February, 2009.
 

 

 
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 is ________________________________
__________________________________________________________.
 
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 GUARANTEE]          
_______________________________________
     
(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  ___
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  ___
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)
               

 
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)
               

 
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:
                       

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

 
 
(c
For all subscribers, please list types of prior investments:                    
   

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

YES
   
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
   
Never
   

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

YES
   
NO
 

 
(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
 

 
(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
   
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
   
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)
(d)           Partnership
(e)           Tenants in Common
(f)           Limited Liability Company
(g)          Corporation
(h)          Trust
(i)           Other

(4)           NASD Affiliation.

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

YES
   
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 o                                                   No o

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 o                                                   No o

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 o                                                   No o

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 o                                                   No o

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 o                                                   No o

2.           IRREVOCABLE TRUSTS

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

Trustee Name: ________________________________________

Trustee Name: ________________________________________

Does the trust have assets greater than $5 million?

Yes o                                                   No o

Indicate how often you invest in:

Marketable Securities

Often o                      Occasionally
o                                           Seldom
o                                Never o

Restricted Securities

Often o                      Occasionally
o                                           Seldom
o                                Never o

Venture Capital Companies

Often o                      Occasionally
o                                           Seldom
o                                Never o

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:                      ________________________                         _______________________________
Name of Individual
(Please type or print)

_______________________________
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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