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Home : Press Releases : Form 8-K for CARDIMA INC

Form 8-K for CARDIMA INC

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet

Item 2.03 Creation of a Direct Financial Obligation

On January 15, 2007, Cardima, Inc. (the "Company") entered into a new loan facility term sheet with Apix International Limited ("Apix" or the "Lender"), which provides for the roll-over of prior loan facilities and an additional loan facility between the parties (the "New Facility"). As previously disclosed, on August 26, 2005, Cardima entered into a $3,000,000 secured loan agreement with Apix (the "First Facility"). Subsequently, on February 14, 2006, the Company entered into a loan facility term sheet with Apix which provided for the roll-over of the First Facility and the grant of an additional loan facility in the amount of $660,000 (the "Second Facility"). Following completion of the Second Facility, Apix continued to make additional advances to Cardima (the "Further Advances")(the First Facility, Second Facility, and the Further Advances shall collectively be referred to as the "Prior Facilities"). Through December 14, 2006, the outstanding balance owing to Apix, including accrued interest, exceeds $9,000,000 (the "Outstanding Balance").

The New Facility provides for the following terms and conditions:

• Additional Loan Facility. Apix has granted Cardima an additional loan facility in the amount of $5,625,000. Advances pursuant to the additional facility shall be made on a bi-monthly basis in denominations of $225,000 per advance (the "New Draw Downs").
• New Maturity Date. The maturity date of the New Facility and Prior Facilities is the earlier of (i) December 31, 2007 or (ii) the date that Apix makes a demand for payment. o Interest Rate. The Outstanding Balance and the New Draw Downs shall bear interest at the rate of 10% per annum.
• Facility Fee adjustment. The aggregate facility fee for the Prior Facilities and the New Facility shall be $500,000 (the "Facility Fee").
• Exit Fees. The aggregate exit fees for the Prior Facilities and the New Facility shall be $2,800,000. In addition, for each New Draw Down, there shall be an additional exit fee of $80,000.
• Preferred Stock. In full and final satisfaction of the Facility Fee, and in consideration of waiving existing defaults and extending the maturity date of the outstanding loan amounts, Cardima shall issue five (5) million shares of preferred stock to Apix (the "Preferred Stock"). The Preferred Stock shall carry the following minimum preferences:
• 28 votes per share at any general or extraordinary meeting of the common shares of the company convened by the Company or its shareholders for a total of 140 million votes at any such meeting;
• Convertible into common shares of the Company at any time at the sole and absolute discretion of the holder on the basis of two (2) common shares for each preferred share tendered for conversion for a total of ten (10) million common shares in the event all preferred shares are tendered for conversion.
• Price Adjustment to Existing Warrant and New Warrants. Pursuant to the Prior Facilities, the Company agreed to issue to Apix warrants to purchase 118,800,000 shares of the Company's common stock at an exercise price of $0.06 per share (the "Existing Warrants"). Pursuant to the New Facility, the exercise price of the Existing Warrants has been adjusted to $0.04 per share. In addition, the Company has agreed to issue to Apix additional warrants at an exercise price of $0.03 per share, as follows (i) 20,000,000 warrants for making the Further Advances and entering into the New Facility, and (ii) 3,800,000 warrants for each New Draw Down. All warrants have a term of ten years.
• Conversion Price Adjustment. The Outstanding Balance, New Draw Downs, Interest, and Exit Fees are convertible into shares of the Company's common stock at a conversion price of $0.04 per share.
• Registration Rights. The Company agrees to register a percentage of the shares underlying the loan principal, facility fees, and warrants on a registration statement that is to be filed no later than March 15, 2007.

Item 9.01 Financial Statements and Exhibits.

3. Exhibits.

Contact:

Cardima, Inc.
Gabriel B. Vegh
510-354-0300
http://www.cardima.com/

Source: Cardima, Inc.