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.

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.

(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.

(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.

(t)           Subscriber represents that Subscriber is not subscribing for Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the Internet, television or radio or presented at any seminar or meeting.

(u)           Subscriber has carefully read this Subscription Agreement and the Warrant, and Subscriber has accurately completed the Confidential Purchaser Questionnaire which accompanies this Subscription Agreement.

(v)           Subscriber represents and warrants, to the best of its knowledge, that other than the placement agent, if any, no finder, broker, agent, financial advisor or other intermediary, nor any purchaser representative or any broker-dealer acting as a broker, is entitled to any compensation in connection with the transactions contemplated by this Subscription Agreement.

(w)           If Subscriber is a trust, this investment, together with all other securities of the Company held by the trust, does not exceed 10% of the trust assets.

(x)           Regulation S.  The Subscriber is not acquiring the Securities for the account or benefit of, directly or indirectly, any U.S. Person.  The Subscriber is not a U.S. Person. The Subscriber is acquiring the Securities for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons.  The Subscriber acknowledges that the Subscriber has not acquired the Securities as a result of, and will not itself engage in, any "directed selling efforts" (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Subscriber may sell or otherwise dispose of the Securities pursuant to registration of the Securities pursuant to the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements and as otherwise provided herein.

3.            Covenants, Representations and Warranties of the Company .  The Company covenants with, and represents and warrants to, Subscriber as follows:

(a)           The Company is duly organized and validly exists as a corporation in good standing under the laws of the State of Delaware.

(b)           The Company has all such corporate power and authority to enter into, deliver and perform this Subscription Agreement and the Warrant.

(c)           All necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Subscription Agreement and the Warrant by the Company, and the issuance and sale of the Securities to be sold by the Company pursuant to this Subscription Agreement and the Warrant.  This Subscription Agreement and the Warrant have been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(d)           To its best knowledge, the Company has not infringed, is not infringing, nor has received notice of any claim that the Company has infringed with respect to asserted intellectual property rights (including, without limitation, copyright, patent, trademark, trade dress, service mark and any other intellectual property rights) of others.  To the best knowledge of the Company, none of the patents, patent applications, trademarks, service marks, trade names and copyrights, and licenses and rights to the foregoing presently owned or held by the Company, materially infringe upon any like right of any other person or entity.  The Company: (i) owns or has the right to use, free and clear of all liens, charges, claims, encumbrances, pledges, security interests, defects or other restrictions of any kind whatsoever, sufficient patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing, , and (ii) is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright, know-how, technology or other intangible asset, with respect to the use thereof or in connection with the conduct of its business as now conducted or otherwise.  The Company has direct ownership of title to all its intellectual property (including all United States and foreign patent applications and patents), other proprietary rights, confidential information and know-how; owns all the rights to its intangibles assets as are currently used in or have potential for use in its business.

(e)           The Shares and Warrant Shares to be issued and sold to the undersigned as provided in this Subscription Agreement have been duly authorized and when issued and delivered against payment therefor, will be validly issued, fully paid and non-assessable. The Warrants are exercisable for shares of the common stock of the Company, par value $0.001 per share, and these shares of common stock issuable upon exercise of the Warrants have been duly authorized and when issued and delivered upon exercise and due payment therefor will be validly issued, fully paid and non-assessable and there are no preemptive or other rights to subscribe for or to purchase, no encumbrances or liens, nor any restriction upon the voting or transfer of, any shares of common stock issuable to Subscriber (whether issued directly as part of the Shares or upon exercise of the Warrants) pursuant to the Company's certificate of incorporation or by-laws or any agreement or other outstanding instrument to which the Company is a party or is otherwise known to the Company.  The Company has reserved sufficient shares of Common Stock to be issued upon exercise of the Warrants.

(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.

(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.

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:

(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:

(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.

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.

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

           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 Subs