Document:

ex101.htm

    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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

               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

        
          

        

      

      
         

      

    

    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

        
          

        

      

      
        
        

      

    

    
 

    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}

                          

                  

                   

                   

                  
                    
                      
                      

                    

                    
                      13

                      
                        

                      

                    

                    
                      
                      

                    

                  

                   

                

              

            

          

        

      

    

    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

        
          

        

      

      
        
        

      

    

    

    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

        
          

        

      

      
        
        

    

    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 	 
	 	 	 	 

        

      

     

    

    

     

    

    

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    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”).

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    

     

    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:
      _____________________________	 
	 	 	 	 

          

        

      

    

    
 

    

    

     

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    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)	 

                    

                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

     

    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)	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    

     

    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.

            

    

    
 

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  	

                          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)
	 	 
	 	 
	 	 
	 	 

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

    
      
        	
                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:
	 	 	 
	 	 	 
	 	 	 
	 	 	 

        

      

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 
      

              	
                (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

            	 
      

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    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:

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    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.

    

    

    

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    

    

    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)

     

     

    35ex44.htm

    
      

      

    

     

    
 

    SECOND
AMENDMENT

    TO

    AMENDED
AND RESTATED

    RIGHTS AGREEMENT

    

    THIS SECOND AMENDMENT
(this “Amendment”) is made as of March 4, 2009 between Bioscrip, Inc.
(f/k/a/ MIM Corporation), a Delaware corporation (the “Company”), and American
Stock Transfer & Trust Company, a New York corporation (the “Rights Agent”).
This Amendment amends the Amended and Restated Rights Agreement, dated as of
December 3, 2002, between the Company and the Rights Agent (the “Rights
Agreement”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Rights Agreement.

     

    WHEREAS, the Rights Agreement
provides for the occurrence of certain events on the Distribution Date if a
Person becomes the Beneficial Owner of 15% or more of the shares of Company
Common Stock then outstanding or 20% or more of the shares of Company Common
Stock then outstanding in the case of Heartland Advisors, Inc.
(“Heartland”);

     

    WHEREAS, based on information
contained in an amended Schedule 13G filed by Heartland with the Securities and
Exchange Commission on February 11, 2009, Heartland currently owns 18.9% of the
outstanding shares of Company Common Stock;

     

    WHEREAS, Heartland would like
to acquire additional shares of Company Common Stock such that Heartland’s
ownership would exceed 20% of the outstanding shares of Company Common Stock;
and

     

    WHEREAS, the Company desires
to further amend the Rights Agreement in accordance with Section 26 thereof
to allow for such acquisition by Heartland without Heartland being deemed an
Acquiring Person under the Rights Agreement.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual agreements set forth herein, the
parties hereby agree to amend the Rights Agreement as follows:

     

    1.
     Amendment of Section 1,
definition of “Acquiring Person”. The definition of “Acquiring Person” in
Section 1 of the Rights Agreement is amended to read as
follows:

     

    ““Acquiring
Person” shall mean any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan acting in
such capacity) who or which, alone or together with all Affiliates and
Associates of such Person, is the Beneficial Owner of 15% or more of the shares
of Company Common Stock then outstanding; provided, however, that Heartland
Advisors, Inc. (“Heartland”) shall not be deemed to be an Acquiring Person
unless it is, alone or together with its Affiliates and Associates, the
Beneficial Owner of 22.5% or more of the shares of Company Common Stock then
outstanding. Notwithstanding the foregoing, (i) no Person shall become an
“Acquiring Person” as a result of an acquisition of Company Common Stock by the
Company which, by reducing the number of shares of the Company Common Stock
outstanding, increases the proportionate number of shares Beneficially Owned by
such Person to 15% or more (or 22.5% or more in the case of Heartland) of the
Company Common Stock then

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
 outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more (or 22.5% or more in the case of Heartland) of the Company Common Stock by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Company Common
Stock other than as a direct or indirect result of any corporate action taken by
the Company, then such Person shall be deemed to be an “Acquiring Person”; and
(ii) if a majority of the Board determines in good faith that a Person who
would otherwise be an “Acquiring Person,” as defined pursuant to the first
sentence of this definition, has become such inadvertently (including, without
limitation, because (a) such Person was unaware that it Beneficially Owned
15% or more (or 22.5% or more in the case of Heartland) of the Company Common
Stock or (b) such Person was aware of the extent of such Beneficial
Ownership but such Person acquired Beneficial Ownership of such shares of
Company Common Stock without the intention to change or influence the control of
the Company and without actual knowledge of the consequences of such Beneficial
Ownership under this Agreement), and such Person divests itself as promptly as
practicable of a sufficient number of shares of Company Common Stock so that
such Person would no longer be an “Acquiring Person,” as defined pursuant to the
first sentence of this definition, then such Person shall not be deemed to be,
or have been, an “Acquiring Person” for any purposes of this Agreement, and no
Stock Acquisition Date shall be deemed to have occurred. All questions as to
whether a Person who would otherwise be an Acquiring Person has become such
inadvertently shall be determined in good faith by the Board, which
determination shall be conclusive for all purposes.”

    

     

    2.     
Effectiveness.
This Amendment shall be deemed effective as of the date first written above.
Except as expressly amended hereby, all of the terms and provisions of the
Rights Agreement are and shall remain in full force and effect and shall be
otherwise unaffected by this Amendment.

     

    3.     
Severability.
If any term, provision, covenant or restriction of this Amendment is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

     

    4.
     Governing Law. This
Amendment shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.

     

    5.     
Counterparts.
This Amendment may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

     

    6.     
Descriptive
Headings. Descriptive headings of the several Sections of this Amendment
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed as of the date
first above written.

    

    

    

                               BIOSCRIP, INC.

                

    
 

                               By:  /s/ Barry A. Posner                                                                                   

                                        Name:
Barry A. Posner

                                        Title:  Executive
Vice President, Secretary

                          
               
and General
Counsel                                                        

     

    

    

                               AMERICAN STOCK TRANSFER
& TRUST
COMPANY

    

    

    

                               By:  /s/ Joseph Wolf                                                                                   

                                        Name: Joseph
Wolf

                                        Title: Vice
President

     

     

    3

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