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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 2000
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from _________________ to _____________________.
Commission File Number: 0-22419
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CARDIMA, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3177883
- ---------------------------------- ---------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
47266 Benicia Street, Fremont, CA 94538-7330
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (510) 354-0300
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days. X Yes No
------- -------
As of April 28, 2000, there were 21,471,420 shares of Registrant's Common Stock
outstanding.
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CARDIMA, INC.
INDEX
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<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION.................................................................... 3
ITEM 1. FINANCIAL STATEMENTS................................................................... 3
Condensed Balance Sheets as of March 31, 2000 and December 31, 1999............................ 3
Condensed Statements of Operations for the three months ended March 31, 2000 and 1999.......... 4
Condensed Statements of Cash Flows for the three months ended March 31, 2000 and 1999.......... 5
NOTES TO CONDENSED FINANCIAL STATEMENTS........................................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS... 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.............................. 15
PART II. OTHER INFORMATION....................................................................... 16
ITEM 1. LEGAL PROCEEDINGS....................................................................... 16
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................... 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................... 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................... 16
ITEM 5. OTHER INFORMATION....................................................................... 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................ 16
SIGNATURES....................................................................................... 17
INDEX TO EXHIBITS FOR FORM 10-Q.................................................................. 18
Exhibit 10.28...................................................................................
Exhibit 10.29...................................................................................
Exhibit 27.1....................................................................................
</TABLE>
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PART I.
ITEM 1. FINANCIAL STATEMENTS
CARDIMA, INC.
CONDENSED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- ------------------
ASSETS (unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents................................................. $ 8,416 $ 423
Short-term investments.................................................... --- 497
Accounts receivable, net of allowances for doubtful accounts
of $98 at March 31, 2000 and $92 at December 31, 1999................. 551 669
Inventories............................................................... 1,238 1,268
Other current assets...................................................... 259 251
----------------- ------------------
Total current assets.................................................. 10,464 3,108
Property and equipment, net.................................................. 2,282 2,512
Notes receivable............................................................. 370 365
Other assets................................................................. 120 104
----------------- ------------------
$ 13,236 $ 6,089
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable.......................................................... $ 1,183 $ 1,436
Accrued compensation...................................................... 817 1,041
Other current liabilities................................................. 69 60
Capital lease obligation - current portion................................ 743 776
Line of credit obligation - current portion............................... 1,120 1,088
----------------- ------------------
Total current liabilities....................................... 3,932 4,401
Deferred rent................................................................ 7 1
Capital lease obligation - noncurrent portion................................ 926 1,012
Line of credit obligation - noncurrent portion............................... 803 1,095
Stockholders' equity (net capital deficiency):
Common stock, $0.001 par value; 25,000,000 shares authorized,
21,471,420 shares issued and outstanding at March 31, 2000: 16,356,355
as of December 31, 1999; at amount paid in............................. 71,349 60,441
Deferred compensation........................................................ (175) (225)
Accumulated deficit.......................................................... (63,606) (60,636)
----------------- ------------------
Total stockholders' equity (net capital deficiency)..................... 7,568 (420)
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$ 13,236 $ 6,089
================= ==================
</TABLE>
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CARDIMA, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
(unaudited)
-------------------------------------
<S> <C> <C>
2000 1999
---------------- ----------------
Net sales....................................................... $ 669 $ 775
Cost of goods sold.............................................. 846 677
---------------- ----------------
Gross profit (loss)....................................... (177) 98
Operating expenses:
Research and development.................................. 1,166 1,637
Selling, general and administrative....................... 1,569 1,849
---------------- ----------------
Total operating expenses............................ 2,735 3,486
---------------- ----------------
Operating loss.................................................. (2,912) (3,388)
Interest and other income....................................... 53 99
Interest expense................................................ (111) (140)
---------------- ----------------
Net loss........................................................ $(2,970) $(3,429)
================ ================
Net loss per share.............................................. $(0.16) $(0.24)
================ ================
Shares used in computing basic and diluted net loss per
share.......................................................... 18,674 14,178
================ ================
</TABLE>
See accompanying notes to financial statements
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CARDIMA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
(unaudited)
---------------------------------------
<S> <C> <C>
2000 1999
----------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................. ($2,970) ($3,429)
Adjustments to reconcile net loss to net cash provided by operations:
Depreciation and amortization........................................... 252 307
Amortization of deferred compensation................................... 50 63
Loss on disposal of assets.............................................. -- 5
Changes in operating assets and liabilities:
Accounts receivable................................................... 118 (77)
Inventories........................................................... 30 2
Other current assets.................................................. (8) 78
Restricted cash....................................................... -- 24
Notes receivable...................................................... (5) (5)
Other assets.......................................................... (16) 94
Accounts payable...................................................... (253) (842)
Accrued compensation.................................................. (224) (99)
Other current liabilities............................................. 9 29
Deferred rent......................................................... 6 (13)
----------------- ----------------
Net cash used in operating activities......................... (3,011) (3,863)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments....................................... -- (6,993)
Maturities and sales of short-term investments............................ 497 3,513
Capital expenditures...................................................... (22) (227)
Proceeds from disposal of assets.......................................... -- 2
----------------- ----------------
Net cash (used) provided in investing activities...................... 475 (3,705)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital leases................................... (213) (236)
Principal payments under credit line...................................... (260) (78)
Net proceeds from sale of common stock and warrant exercises.............. 10,908 14,402
Proceeds from sale/leaseback of capital equipment......................... 94 150
----------------- ----------------
Net cash provided by financing activities............................. 10,529 14,238
----------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................... 7,993 6,670
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................ 423 645
----------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................................. $ 8,416 $ 7,315
================= ================
</TABLE>
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CARDIMA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
the Company according to the rules and regulations of the Securities and
Exchange Commission for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the financial information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000 or for future operating results. The accompanying
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1999. The accompanying balance sheet
at December 31, 1999 has been derived from these audited financial statements.
2. MANAGEMENT'S PLANS
On January 26, 2000, the Company signed an exclusive three year distribution
agreement with St. Jude Medical Corporation ("St. Jude") whereby St. Jude's Daig
Division will distribute Cardima's diagnostic products in the U.S. The
distribution agreement included an equity investment by St. Jude. The Company
retains the rights for all other geographic areas and maintains worldwide
control of its therapeutic products. The Company continues to enroll patients
in its AF study and intends to further expand the study into a pivotal study and
use the data as the basis for the Premarket Approval application ("PMA")
submission with the FDA.
As of March 31, 2000 the Company has approximately $8,416,000 in cash, cash
equivalents and marketable securities, working capital of $6,531,000 and an
accumulated deficit of $63,606,000. In the course of its development
activities, the Company expects such losses to continue over the next several
quarters. Management plans to continue to finance operations with a combination
of revenue from product sales, funds from equity or debt offerings, funds from
potential corporate alliances and technology licenses. The Company expects its
existing capital resources will permit it to meet its capital and operational
requirements through December 2000.
3. PRIVATE PLACEMENTS
In February 2000, the Company sold a total of 4,666,611 shares of common stock
at $2.25 per share in a private placement transaction to accredited investors.
The transaction included warrants to investors exercisable for 933,322 shares of
common stock at an exercise price of $2.48 per share. As commission
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for the transaction, the Company paid approximately $525,000 in cash. In
addition, the Company issued warrants, exercisable for 233,329 shares of common
stock at an exercise price of $2.48 per share as commission for the transaction.
The Company's net proceeds, after expenses of the placement, were approximately
$9,900,000.
4. BALANCE SHEET COMPONENTS
Certain balance sheet components are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
<S> <C> <C>
2000 1999/1/
------------------- -------------------
Inventories:
Raw materials......................... $ 599 $ 616
Work-in-process...................... 176 107
Finished goods....................... 463 545
------------------- -------------------
$ 1,238 $ 1,268
=================== ===================
Property and equipment:
Equipment............................ 5,514 5,492
Leasehold improvements............... 109 109
------------------- -------------------
$ 5,623 $ 5,601
Less accumulated depreciation........ (3,341) (3,089)
------------------- -------------------
$ 2,282 $ 2,512
=================== ===================
</TABLE>
5. NET LOSS PER SHARE
Basic net loss per share has been computed using the weighted average number of
shares of common stock outstanding during the period. The Company has excluded
all convertible debt, convertible preferred stock, warrants, and stock options
from the computation of basic and diluted earnings per share because all such
securities are anti dilutive for all periods presented.
- ----------------------------------------
/1/ The information in this column was derived from the Company's audited
financial statements as of December 31, 1999.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q, including management's discussion and analysis of financial
condition and results of operations, contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including,
without limitation, statements regarding regulatory approvals, operating results
and capital requirements. Except for historical information, the matters
discussed in this Form 10-Q, are forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. Such factors include the Company's ability to
conduct successful clinical trials, obtain timely regulatory approvals and gain
acceptance from the marketplace for its products, as well as the risk factors
discussed below in "Factors Affecting Future Results" and those listed from time
to time in the Company's SEC reports. The Company assumes no obligation to
update the forward-looking statements included in this Form 10-Q.
OVERVIEW
Since its incorporation in November 1992, Cardima has been engaged in the
design, research, development, manufacturing and testing of microcatheter
systems for the mapping (diagnosis) and ablation (treatment) of cardiac
arrhythmias. Cardima has generated revenues of approximately $9.0 million from
inception to March 31, 2000. Until January 1997, these revenues were primarily
in Europe and Japan from sales of the Cardima Pathfinder and Tracer
microcatheter systems for diagnosing VT and the Revelation microcatheter system
for diagnosing AF, as well as ancillary products such as the Venaport guiding
catheters. Subsequent to 1997, United States sales consists primarily of
Pathfinder and Revelation lines of microcatheters for diagnosis of VT and AF
following FDA 510(k) clearance. To date, the Company's international sales have
been made primarily through distributors who sell the Company's products to
physicians and hospitals. European sales consist primarily of the Revelation and
Revelation Tx microcatheters for treatment of AF following receipt of CE Marking
in August and December 1998, respectively.
Revenues are recognized when products are shipped. In December 1999, the
Securities and Exchange Commission issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB 101"). We are evaluating
the effects, if any, that the adoption of SAB 101, in the second quarter of
2000, may have on the results of our operations or our financial position.
The Company has obtained the right to affix the CE Mark to its Cardima
Pathfinder, Pathfinder mini and Tracer microcatheter systems for mapping VT and
its Revelation, Revelation Tx and Revelation T-Flex microcatheter systems for
both mapping and ablation of AF, permitting the Company to market these products
in the member countries of the EU. The Company received 510(k) clearances for
the Revelation microcatheter for mapping of AF, the Pathfinder mini
microcatheter and the Tracer microcatheter for mapping VT, for the Vueport
balloon guiding catheter in July 1998 and the Naviport deflectable guiding
catheter in August 1999. The Company will be required to conduct clinical
trials, demonstrate safety and effectiveness and obtain PMA approval from the
FDA in order to sell any of the Company's products designed for treatment of AF
or VT in the United States. Specifically, PMA approval will be required
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prior to the introduction in the United States of the Revelation Tx
microcatheter system for treatment of AF or Therastream microcatheter system for
treatment of VT.
The Company has a limited history of operations and has experienced significant
operating losses since inception. The Company expects that its operating losses
will continue for the foreseeable future as the Company continues to invest
substantial resources in product development, preclinical and clinical trials,
obtaining regulatory approval, sales and marketing and manufacturing.
RESULTS OF OPERATIONS - MARCH 31, 2000 AS COMPARED TO MARCH 31, 1999
Net Sales
Net sales for the quarter ended March 31, 2000 decreased 14% to $669,000 from
$775,000 for the same period in 1999. The decrease in net sales was
attributable to the Company's transitioning from a direct sales force to that of
using distributors, particularly in the United States, where a sales and
distribution agreement was recently announced with St. Jude Medical, Inc. (St.
Jude). United States sales for the quarter ended March 31, 2000 decreased 16%
to $282,000 from $335,000 in the same period in 1999. International sales for
the quarter ended March 31, 2000 decreased 12% to $387,000 from $440,000 in the
same period in 1999 as the Company transitioned some of its direct selling
efforts to distributors in certain European countries.
Cost of Goods Sold
Cost of goods sold primarily includes raw materials costs, catheter fabrication
costs, system assembly, test costs and manufacturing overhead. Cost of goods
sold for the quarter ended March 31, 2000 increased 25% to $846,000 from
$677,000 for the same period in 1999. The increase was due primarily to the
additional hiring and training of manufacturing personnel.
Research and Development Expenses
Research and development expenses include product development, clinical testing
and regulatory expenses. Research and development expenses for the quarter
ended March 31, 2000 decreased 29% to $1,166,000 from $1,637,000 for the same
period in 1999. The decrease was due primarily to staff reductions in research
and development as a result of the Company's restructuring in January 1999, the
Company's efforts to focus on key research and development projects and the
transition of all animal studies from out of state to a local firm which reduced
costs for research and development product testing.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended March 31,
2000 decreased 15% to $1,569,000 from $1,849,000 for the same period in 1999.
Selling expenses for the quarter ended March 31, 2000 decreased 23% to $698,000
from $907,000 for the same period in 1999. The decrease was due primarily to
the reduction in workforce in January 1999 and the reduction in direct sales
expenses due to the U.S. distribution agreement with St. Jude in January 2000.
General and administrative expenses for the quarter ended March 31, 2000
decreased 5% to $648,000 from $682,000 for the same period in 1999. Marketing
expenses for the quarter ended March 31, 2000 decreased 14% to $223,000 from
$260,000 for
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the same period in 1999. The decrease was due primarily to the reduction in
workforce in January 1999, decreased expenses for trade shows, and the reduction
in direct marketing expenses due to the U.S. distribution agreement with St.
Jude in January 2000.
Interest and Other Income
Interest and other income for the quarter ended March 31, 2000 decreased 46% to
$53,000 from $99,000 for the same period in 1999. The decrease was due
primarily to lower cash balances and balances in short term investments.
Interest Expense
Interest expense for the quarter ended March 31, 2000 decreased to $111,000 from
$140,000 for the same period in 1999. The decrease was primarily due the
expiration of two capital equipment leases at the end of 1999 and the reduced
interest rate on the re-lease of this equipment.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date principally through private
placements of equity securities, an initial public offering of Common Stock in
June 1997, borrowings under a $3,000,000 line of credit and equipment leases to
finance certain capital equipment which have provided proceeds in the amount of
$4,600,000. As of March 31, 2000, the Company had approximately $8,400,000 in
cash, cash equivalents and short-term investments.
Net cash used in operating activities was approximately $3,000,000 and
$3,900,000 for the three months ended March 31, 2000 and 1999, respectively.
The decrease was primarily due from the decrease of operating losses incurred
and the decrease in the disbursement of accounts payable over the same period
last year. Net cash provided by investing activities of $475,000, for the three
months ended March 31, 2000, was primarily provided by the maturities and sales
of short-term investments. Net cash used in investing activities of $3,700,000,
for the three months ended March 31, 1999, was used primarily for purchases of
short-term investments and capital expenditures. Net cash provided by financing
activities was approximately $10,500,000 and $14,200,000 for the three months
ended March 31, 2000 and 1999, respectively, resulting primarily from the sale
of equity securities in private placement transactions during such periods.
In May 1999, the Company entered into an equipment lease that permits the
Company to borrow up to $1,000,000 for the purchase of office and manufacturing
equipment, software and custom-built equipment. As of March 31, 2000, the
Company has drawn $635,000 against the equipment leaseline. In January and
February 1999, the Company sold a total of 7,500,000 shares of common stock at
$2.00 per share in a private placement transaction to accredited investors. As
commission, the Company issued 354,806 shares of its common stock to the
placement agent and paid approximately $490,000 in cash. In addition the
Company issued 750,000 warrants, exercisable for 750,000 shares of common stock
at an exercise price of $2.20 as a commission for the transaction. The
Company's net proceeds, after expenses of the placement, were approximately
$14,300,000. In February 2000, the Company sold a total of 4,666,611 shares of
common stock at $2.25 per share in a private placement transaction to accredited
investors. The transaction included warrants to investors exercisable for
933,322 shares of common stock
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at an exercise price of $2.48 per share. As commission for the transaction, the
Company paid approximately $525,000 in cash. In addition, the Company issued
warrants, exercisable for 233,329 shares of common stock at an exercise price of
$2.48 per share as commission for the transaction. The Company's net proceeds,
after expenses of the placement, were approximately $9,900,000.
The Company's future liquidity and capital requirements will depend upon
numerous factors, including sales and marketing activities, the progress of the
Company's product development efforts, the progress of the Company's clinical
trials, actions relating to regulatory matters, the costs and timing of
expansion of product development, manufacturing, the extent to which the
Company's products gain market acceptance and competitive developments. The
Company believes that available cash will be sufficient to meet the Company's
cash requirements at least through December 2000. There can be no assurance,
however, that the Company will not require additional financing during that
period, or that if required, such additional financing will be available on
terms acceptable to the Company, if at all. The Company may seek to raise
additional funds through public or private financing, collaborative
relationships or other arrangements. There can be no assurance that such
additional capital will be available on terms acceptable to the Company, or at
all. Furthermore, any additional equity financing is expected to be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants. Collaborative arrangements, if necessary to raise additional funds,
may require the Company to relinquish its rights to certain of its technologies,
products or marketing territories. The failure of the Company to raise capital
when needed will have a material adverse effect on the Company's business,
financial condition and results of operations.
ADDITIONAL FACTORS AFFECTING FUTURE RESULTS
We have a history of losses. Our ability to achieve or, if achieved, sustain
profitability, is highly uncertain.
We have experienced losses since we began our operations and we expect to
experience substantial net losses for the foreseeable future. To date, sales of
our microcatheter systems have been limited. We had net losses of approximately
$14.0 million, $16.2 million and $12.3 million for the fiscal years ended 1999,
1998 and 1997, respectively. As of March 31, 2000, we had an accumulated
deficit of approximately $63.6 million. We expect to incur substantial net
operating losses for the foreseeable future as a result of research and product
development, clinical trials, manufacturing, sales, marketing and other expenses
expected to be incurred as we further develop, seek regulatory approvals, test
and distribute our products. Our limited operating history makes accurate
prediction of future operating results difficult or impossible. There can be no
assurance that we will ever generate substantial revenue or achieve
profitability on a sustained basis. Our failure to generate substantial
revenues would have a material adverse effect on our business, results of
operations and financial condition.
We will need to raise capital in the future. Future financings could have a
dilutive effect on our stockholders.
Our future capital uses and requirements will depend on numerous factors,
including:
. the progress of our clinical research and product development programs,
. the time required to obtain and the receipt of regulatory clearances and
approvals,
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. the costs and timing of product development, manufacturing and sales and
marketing activities,
. the extent to which our products gain market acceptance,
. competitive developments, and
. the cost of filing, prosecuting, and enforcing patent claims and other
intellectual property rights.
In order to commercialize our products, we will require additional capital that
may not be available on terms acceptable to us, or at all. In addition, if
unforeseen difficulties arise in the course of developing our products,
performing clinical trials, obtaining necessary regulatory clearances and
approvals or other aspects of our business, we may be required to spend greater-
than-anticipated funds. As a consequence, we will be required to raise
additional capital through public or private equity or debt financings,
collaborative relationships, bank facilities or other arrangements. There can
be no assurance that such additional capital will be available on terms
acceptable to us, or at all. Any additional equity financing is expected to be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants. We have financed our operations to date primarily
through private sales of equity securities, proceeds from our initial public
offering in June 1997, and loan-facilities. As of March 31, 2000, cash, cash
equivalents and short-term investments totaled $8.4 million. We believe that
our existing cash, cash equivalents and short-term investments along with cash
generated from the sales of our products and from financings, will be sufficient
to fund our operating expenses, debt obligations and capital requirements
through December 31, 2000.
Our future capital uses and requirements depend on numerous factors, including:
. our ability to establish collaborative arrangements,
. the level of product revenues,
. the possible acquisition of new products and technologies, and
. the development of commercialization activities.
There can be no assurance that additional funding will be available for us to
finance our ongoing operations when needed or that adequate funds for our
operations, whether from financial markets, collaborative or other arrangements
with corporate partners or from other sources, will be available when needed, if
at all, or on terms attractive to us. Our inability to obtain sufficient funds
may require us to delay, scale back or eliminate some or all of our research and
product development programs, to limit the marketing of our products, or to
license to third parties the rights to commercialize products or technologies
that we would otherwise seek to develop and market ourselves. This would have a
material adverse effect on our business, financial condition and results of
operations.
We are dependent on St. Jude to commercialize our diagnostic products in the
U.S.
On January 26, 2000, we announced that we had signed an exclusive three-year
distribution agreement for our diagnostic products in the United States with St.
Jude, which included an investment by St. Jude. If St. Jude fails to
successfully commercialize our diagnostic products, we may have to restructure
or significantly curtail our business.
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Our stock price may be volatile.
There can be no assurance that there will be an active trading market for our
common stock or that the market price of the common stock will not decline below
its present market price. The market prices for securities of biotechnology
companies have been, and are likely to continue to be, highly volatile. Factors
that have had, and are expected to continue to have, a significant impact on the
market price of our common stock include:
. announcements regarding the results of regulatory approval filings,
. our clinical studies or other testing,
. our technological innovations or new commercial products or those of our
competitors,
. government regulations, developments concerning proprietary rights,
. public concern as to safety of technology, and
. variations in operating results.
Our stock may become subject to penny stock rules, which may make it more
difficult for you to sell your shares.
If we are delisted from the Nasdaq Smallcap Market, our common stock will be
considered a penny stock under regulations of the Securities and Exchange
Commission and would therefore be subject to rules that impose additional sales
practice requirements on broker-dealers who sell our securities. The additional
burdens imposed upon broker-dealers by these requirements could discourage
broker-dealers from effecting transactions in our common stock, which could
severely limit the market liquidity of the common stock and your ability to sell
our securities in the secondary market. We cannot assure you that we will be
able to maintain our listing on the Nasdaq Smallcap Market.
We do not intend to pay cash dividends on our stock.
We have never paid cash dividends on our capital stock and do not anticipate
paying cash dividends in the foreseeable future. Instead, we intend to retain
future earnings for reinvestment in our business. Our credit agreement requires
the approval of our bank to declare or pay cash dividends.
Our operating results may fluctuate from period to period in the future.
We believe that a quarter to quarter or annual comparison of our operating
results is not a good indication of our future performance. It is likely that
at some future time our results will be below market expectations. As a result,
our common stock price will likely fall. Our results of operations have
fluctuated significantly in the past and we expect them to vary significantly
from quarter to quarter or year to year depending upon a number of factors,
including:
. actions relating to regulatory matters,
. progress of pre-clinical and clinical trials,
. the extent to which our products gain market acceptance,
. the scale-up of manufacturing capabilities,
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. the expansion of sales and marketing activities,
. competition,
. the timing of new product introductions by us or our competitors,
. our ability to successfully market our products in the United States and
internationally, and
. general economic conditions and economic conditions specific to the
biotechnology field.
Although all microcatheter systems are labeled for single use only, we are aware
that some physicians are reusing these products. Reuse of our microcatheter
systems would reduce revenues from product sales and could have a material
adverse effect on our future performance and periodic operating results. Due to
such fluctuations in operating results, period to period comparisons of our
revenues and operating results are not necessarily meaningful and should not be
relied upon as indicators of likely future performance or annual operating
results.
There are risks associated with international sales of our products.
A number of risks are inherent in international transactions. International
sales may be limited or disrupted by
. the imposition of government product or currency controls,
. export license requirements,
. economic or political instability,
. domestic or international trade restrictions,
. changes in tariffs,
. exchange rate fluctuation, or
. difficulties in staffing and management.
The financial condition, expertise and performance of our international
distributors and any future international distributors could affect sales of our
products internationally and could have a material adverse effect on our
business, financial condition and results of operations. The regulation of
medical devices in a number of such jurisdictions, particularly in the EU,
continues to develop, and there can be no assurance that new laws or regulations
will not have a material adverse effect on our business, financial condition and
results of operations. Foreign regulatory agencies often establish product
standards different from those in the United States and any inability to obtain
foreign regulatory approvals on a timely basis could have a material adverse
effect on our international business and our financial condition and results of
operations. In addition, the laws of certain foreign countries do not protect
our intellectual property rights to the same extent as do the laws of the United
States. There can be no assurance that we will be able to successfully manage a
remote sales force, comply with such foreign laws or regulations, or protect our
intellectual property. There also can be no assurance that we will be able to
successfully commercialize any of our current microcatheter products, including
the Cardima Pathfinder, Pathfinder mini, Revelation, Revelation Tx and Tracer
microcatheter systems, or any future products in any foreign market, which could
have a material adverse effect on our business, financial condition and results
of operations.
14
<PAGE>
The adoption of the Euro presents uncertainties for our international business.
In January 1999, the new "Euro" currency was introduced in certain European
countries that are part of the European Monetary Union ("EMU"). Beginning in
2003, all EMU countries are expected to be operating with the Euro as their
single currency. A significant amount of uncertainty exists as to the effect
the Euro will have on the marketplace generally. In particular, the
participating countries' adoption of a single currency may likely result in
greater price transparency, making the EMU a more competitive environment for
our products. In addition, some of the rules and regulations relating to the
governance of the currency have not yet been defined and finalized. As a
result, companies operating in or conducting business in Europe will need to
ensure that their financial and other software systems are capable of processing
transactions and properly handling the Euro.
We are currently assessing the effect the introduction of the Euro will have on
our internal accounting systems and the potential sales of our products. We
will take appropriate corrective actions based on the results of such
assessment. We have not yet determined the costs related to addressing this
issue. This issue and its related costs could have a material adverse effect on
our business, financial condition and results of operations.
We are dependent upon our key personnel and will need to hire additional key
personnel in the future.
Our ability to operate successfully depends in significant part upon the
continued service of certain key scientific, technical, clinical, regulatory and
managerial personnel, and our continuing ability to attract and retain
additional highly qualified personnel in these areas. Competition for such
personnel is intense, especially in the San Francisco Bay Area. There can be no
assurance that we can retain such personnel or that we can attract or retain
other highly qualified scientific, technical, clinical, regulatory and
managerial personnel in the future, including key sales and marketing personnel.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Since the Company did not have any short-term investments and a variable
interest rate line of credit obligation as of March 31, 2000, the Company does
not have any material quantitative or qualitative disclosures about market risk.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities and Use of Proceeds
On March 19, 1999, a Registration Statement on Form S-3 (No. 333-
74753) was filed with the Securities and Exchange Commission pursuant
to which the Company proposes to register 8,604,806 shares of Common
Stock (which includes Common Stock issuable upon exercise of the
warrants) for sale to the public by the certain accredited investors
and the placement agent.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Index to Exhibits.
(b) No reports on Form 8-K were filed in the quarter ended March 31,
2000.
16
<PAGE>
CARDIMA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 15, 2000 CARDIMA, INC.
/s/ Phillip C. Radlick, Ph.D.
--------------------------------------------------
PHILLIP C. RADLICK, Ph.D.
President, Chief Executive Officer and Director
/s/ Ronald E. Bourquin
--------------------------------------------------
RONALD E. BOURQUIN
Vice President, Chief Financial Officer and
Secretary
17
<PAGE>
CARDIMA, INC.
INDEX TO EXHIBITS FOR FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2000
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
10.28 St. Jude Medical Investment Agreement
10.29* Exclusive Distribution Agreement between Daig Corporation and
Cardima, Inc.
27.1 Financial Data Schedule
* Confidential Treatment Requested
18
<PAGE>
EXHIBIT 10.28
January 25, 2000
Phillip Radlick, Ph.D.
President/CEO
Cardima Incorporated
47266 Benicia Street
Fremont, CA 94538
Dear Phil:
Attached to this letter agreement is an executed distribution agreement between
Cardima Incorporated ("Cardima") and St. Jude Medical, Inc. ("St. Jude"). In
conjunction with the effectiveness of this distribution agreement, St. Jude
agrees as follows:
1. Subject to the conditions precedent that follow, St. Jude will invest three
million dollars ($3,000,000) in the equity of Cardima ("the Investment") at
such time as the conditions precedent are satisfied;
2. St. Jude will not be obligated to make the Investment unless and until
Cardima has legally binding commitments for at least an additional six
million dollar equity investment from third parties to be funded at the same
time as the St. Jude investment ("the Financing Round");
3. St. Jude will agree to a valuation for the Investment equal to the valuation
at which the remainder of the Financing Round commits, up to a maximum share
price of $2.50/share, so long as the investors providing at least 50% of the
Financing Round are "independent" of Cardima (i.e. not directly or
indirectly under Cardima's control);
4. At the sole discretion of St. Jude, and subject to appropriate and
sufficient Cardima collateral being provided, in the event that sufficient
funds are committed to the subject Financing Round, St. Jude will provide up
to one (out of the three) million dollars of bridge financing, if necessary
to carry Cardima to the closing of the Financing Round; and,
5. In the event that the Financing Round has not been funded and completed as
specified above on or before March 31, 2000, all of St. Jude's obligations
set forth herein shall terminate.
<PAGE>
I look forward to hearing from you as the Financing Round progresses, and to our
mutual success pursuant to the Distribution Agreement.
Best regards,
/s/ Robert Cohen
Robert Cohen
AGREED TO AND
ACCEPTED BY:
/s/ Phillip Radlick
- -------------------------------
Phillip Radlick
President/CEO
Cardima Incorporated
<PAGE>
EXHIBIT 10.29
EXCLUSIVE DISTRIBUTION AGREEMENT
THIS AGREEMENT is made effective the 25th day of January, 2000, by and
between Daig Corporation, a Minnesota Corporation whose principal place of
business is at 14901 DeVeau Place, Minnetonka, Minnesota ("Distributor") and
Cardima Incorporated whose principal place of business is at 47266 Benicia St.,
Fremont, California ("Manufacturer").
The Parties, intending to be legally bound, agree as follows:
1. DISTRIBUTORSHIP TERMS
1.01 Appointment and Acceptance. Manufacturer hereby appoints Distributor
as its exclusive distributor of Products in the Territory. Distributor
accepts this appointment. Manufacturer shall not directly or indirectly
sell or offer to sell any of the Products in the Territory to any third
party. In the event Manufacturer receives requests for information relating
to, or purchase orders for, Products from customers or potential customers
within the Territory, Manufacturer shall promptly forward such requests or
orders to Distributor. Distributor shall have the right to appoint sub-
distributors at its discretion.
1.02 Products Defined. Products are those described in Schedule A
(including all modifications, new versions or replacements therefor),
together with such other electrophysiology catheter products and
accessories intended for diagnostic use that Manufacturer develops during
the term of this Agreement in the Field of Use. Distributor acknowledges
that the Products shall not include any electrophysiology catheter products
that are intended primarily for therapeutic use. In the event that the
overall unit sales of Distributor exceed the original forecasts given to
Manufacturer by Distributor (attached as Schedule E) for any calendar year
by ***** or greater, Manufacturer may increase the transfer price of the
Products to Distributor by five (5) percentage points for the following
calendar year (e.g. if the then current transfer price is ***** off list
price, the transfer price may be increased to ***** off list price). This
increase may be taken one time only. All price increases thereafter shall
be governed by Section 2.03 herein below.
1.03 Territory Defined. The Territory is defined to be the United States
of America (including its territories and possessions), exclusive only of
hospitals in the states of ***** and ***** with ship to addresses
containing the zip codes outlined in Schedule B. During the term of this
Agreement, Distributor shall have the first right of refusal at its option
to expand the Territory in order to distribute the Products on an exclusive
basis in all other countries of the world. Manufacturer shall give
Distributor written notice and the terms under which it intends to permit
distribution, or the terms of any offer or request from a third party for
rights to distribute, any of the Products in any country not then included
in the Territory. Distributor shall accept or reject such offer in writing
within thirty (30) days after receipt thereof, and, if Distributor accepts
such offer, the Territory shall be
_________
Confidential treatment has been requested with respect to certain portions of
this agreement. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as *****. A complete version
of this exhibit has been filed separately with the Securities and Exchange
Commission.
<PAGE>
appropriately expanded.
1.04 Field of Use Defined. The Field of Use is catheter-based cardiac
electrophysiology.
1.05 Manufacturing Materials Defined. Manufacturing Materials shall mean
all items necessary for Distributor or Distributor's designated party to
manufacture and sell the Products, including, but not be limited to: design
specifications and documents; manufacturing specifications, procedures and
documents; quality assurance and quality control procedures and documents;
written transfer of regulatory documents such as 510(k) approvals and other
approvals such as CE marks, to the extent permitted; rights to all patents,
trademarks, trade secrets and confidential information, worldwide;
specifications for all equipment used in the manufacture of the Products;
and, text specifications for all labeling and packaging.
1.06 No Activities Outside the Territory. Distributor shall not solicit
sales of Product or promote the sale of Products outside the Territory.
Distributor shall not establish an office or warehouse outside the
Territory for the sale of Products.
1.07 Distributor's Right to Distribute Other Products. During the term of
this Agreement and afterwards, Distributor shall have the right to
manufacture, market, distribute and sell any and all products in the
Territory, regardless of whether such products compete with the Products.
2. PRICES AND TERMS
2.01 Prices. Manufacturer shall sell Products to Distributor in such
quantities and at such times as Distributor may reasonably request.
Distributor shall submit written orders to Manufacturer. Manufacturer
shall, at Distributor's option, ship directly to Distributor or a
purchasing customer(s) at the ship to address provided by Distributor.
Product pricing is contained in Schedule A. Shipping terms and credit terms
are listed on Schedule C.
2.02 Claim for Shortage. Distributor shall submit in writing to
Manufacturer all claims for shortages in shipments within thirty (30)
business days of receipt of notice by customers of a shortage.
2.03 Price Changes. Manufacturer may change the list price of Products only
once a year on the anniversary of the Agreement, subject to consultation
with Distributor in advance, by giving Distributor written notice sixty
days in advance of such price change. Manufacturer list price increases to
Distributor of greater than 2% for any given Product in a given year must
be by mutual consent, unless Manufacturer's average selling price ("ASP")
for any product over the course of the prior year has increased by more
than 2% in which case the Distributor price increase may equal 75% of the
relevant ASP percentage increase.
<PAGE>
2.04 Return Policy. Manufacturer's return policy is contained in
Schedule C.
2.05 Promotional Material. Non-sterile product samples and promotional
materials shall be made available to Distributor by Manufacturer at prices
outlined in Schedule D. New materials may be developed and added to this
list of available promotional materials from time to time. Upon purchase,
these materials become property of Distributor.
2.06 Resale Prices. Distributor shall solely determine the prices at which
it resells the Products in the Territory.
2.07 Governing Document. This Agreement, together with its Schedules, shall
supersede any conflicting or additional terms used by Manufacturer or
Distributor in the ordering, shipment and receiving of Products, unless
such terms have been agreed to in writing by the parties.
3. DISTRIBUTOR'S DUTIES
3.01 Distributor's Efforts. Distributor shall use commercially reasonable
efforts to promote the sale of Products in the Territory. Distributor shall
not knowingly detract from the good name of Manufacturer or the reputation
of Products.
3.02 Payment of Account. Distributor shall promptly pay its account with
Manufacturer when due. Terms are net 30 days due, with 1.5% per month late
fee on past due invoices.
3.03 Sales Quotas. Distributor shall maintain its exclusive right to
distribute the Products in the Territory so long as the minimum purchase
quotas established in Schedule E are met or exceeded in each year of the
Agreement. If Distributor fails to meet the minimum purchase quotas in the
first year or in any given six month period thereafter, then Manufacturer
shall give Distributor written notice of such failure, and Distributor
shall have ninety (90) days after its receipt of such notice to correct
such failure (i.e., through submission of purchase orders to Manufacturer
for additional units of the Products). If Distributor fails to correct such
failure in a timely manner, then Manufacturer shall have the option to
convert Distributor's appointment granted in Section 1.1 hereof to a non-
exclusive appointment in the Territory, notwithstanding anything to the
contrary in Section 1.1, provided that Manufacturer gives Distributor
written notice of such conversion within thirty (30) days.
3.04 Compliance With Law. Distributor shall comply with all laws and
regulations affecting its business.
3.05 Recalls. In the event Manufacturer recalls any Products sold by
Distributor in the Territory, Distributor shall reasonably assist
Manufacturer with such recall. Manufacturer agrees to give prompt notice to
Distributor in the event that Manufacturer recalls any
<PAGE>
Product, or ceases or suspends the sale of any Product due to any problem
which relates to such Product's efficacy or patient safety. Manufacturer
shall reimburse Distributor for reasonable expenses incurred by Distributor
at the request of Manufacturer to effect a recall, and the value of all
Products purchased by Distributor and recalled shall count towards the
minimum purchase quotas described in Section 3.03. In order to assist
Manufacturer in the event of a recall, Distributor shall maintain a
complete and current listing of the locations of all sterile Products in
Distributor's inventory, and the names of customers who have purchased
Products from Distributor. Manufacturer shall maintain a complete and
current listing of the locations of all sterile Products in Manufacturers
inventory, and the names of customers who have received shipments from
Manufacturer, together with the reorder numbers, lot numbers or other
identifying characteristics of Products purchased and the date of such
purchase.
3.06 Traceability. Distributor shall comply with all reasonable
traceability programs of Manufacturer to the extent it is apprised of them
by Manufacturer.
3.07 Training. Distributor shall be responsible for training all of its
personnel who promote Products so that they are knowledgeable about the
Products and can adequately represent the Products. Manufacturer shall
cooperate in effecting such training.
3.08 Product Warranty. Manufacturer hereby authorizes Distributor to pass
on the Manufacturer standard warranty set forth in Schedule C to
Distributor's customers in the Territory. In addition, Manufacturer
warrants to Distributor that the Products purchased by Distributor shall be
in saleable condition with a minimum of eighteen (18) months shelf life
from the date of shipment (based on the present understanding that the
total shelf life for the Product from the date of manufacturer currently is
twenty-four (24) months). In the event that Manufacturer receives approval
from authorities for a shelf life for the Product from the date of
manufacture in excess of twenty-four (24) months (the "Date of Manufacture
Shelf Life"), Manufacturer agrees that it shall warrant that Product
purchased by Distributor shall be in a saleable condition with a minimum
shelf life from the date of shipment of no less than the lessor of thirty-
six (36) months or six (6) months less than the Date of Manufacture Shelf
Life.
3.09 Distributor's Expenses. All costs, including salaries, commissions,
bonuses, contributions to social security or other welfare system payments,
benefits, severance pay and other expenses incurred by Distributor in
connection with its performance of this Agreement shall be borne solely by
Distributor.
3.10 Non Binding Forecast. At the end of each calendar quarter,
Distributor shall provide Manufacturer with a non-binding forecast of
Distributor's purchases for the next four quarters .
4. OBLIGATIONS OF MANUFACTURER
4.01 Compliance with Laws. Manufacturer shall comply with the laws and
regulations
<PAGE>
which govern its business.
4.02 Insurance. Manufacturer shall carry reasonable amounts of insurance,
whether through self-insurance or otherwise, to cover its responsibilities
with respect to indemnification under Section 7 below. Distributor shall
have the right to examine the policies of insurance of Manufacturer upon
request.
4.03 Regulatory Registrations and Approvals. Manufacturer shall obtain and
maintain all regulatory authorizations required for the sale of the
Products in all countries in the Territory as requested by Distributor, and
Manufacturer shall be responsible for all costs and expenses incurred in
this regard. Manufacturer shall make available to Distributor complete
copies of all applications and all registrations and approvals obtained
therefrom relating to the Products and provide Distributor with any other
information or material it requests to enable Distributor to sell the
Products in the Territory.
4.04 Quality Control/Product Complaints. Manufacturer agrees to maintain
ongoing quality assurance and testing procedures sufficient to satisfy
applicable regulatory requirements. Manufacturer shall be responsible for
responding to all product complaints, including whatever response may be
required to any governmental or certification authority, subject to the
reasonable cooperation of Distributor as set forth in Section 3.06 hereof.
4.05 Scientific and Technical Information Manufacturer shall provide to
Distributor scientific and technical information available to Manufacturer
and required to obtain registrations, licenses, and permits required for
the sale and distribution of Products in the Territory, or to respond to
inquiries from customers, or governmental or regulatory authorities.
4.06 Training. Manufacturer shall provide training for Distributor's
employees and sub-distributors relating to the use and application of the
Products. Such training shall be conducted at least once per year, if
requested by Distributor, and shall be provided without charge to
Distributor. Notwithstanding the above, all expenses incurred by
Distributor's personnel in connection with such training, including,
without limitation, travel and housing expenses, shall be borne by
Distributor.
4.07 Support. Manufacturer, at its own expense, and as deemed reasonable
by Manufacturer, shall provide consultation to Distributor in a timely
fashion concerning technical aspects and use of the Products as requested
by Distributor.
4.08 Telephone Service. Manufacturer shall provide a telephone number in
the United States during Manufacturer's normal business hours for
Distributor's use in placing telephone orders and in obtaining telephone
advice and support from Manufacturer regarding the Products.
<PAGE>
5. TRADEMARKS
5.01 Use of Manufacturer's Trademarks. Manufacturer hereby grants to
Distributor, and Distributor accepts from Manufacturer, a non-exclusive,
royalty-free, sublicensable right and license, during the term of this
Agreement, to indicate to the public that it is an authorized distributor
of the Products and to advertise only within the Territory such Products
under the trademarks and trade names that Manufacturer may adopt from time
to time ("Manufacturer Trademarks"). Distributor shall not alter or remove
any Manufacturer Trademarks applied to the Products by Manufacturer.
Nothing herein shall grant to Distributor any right, title, or interest in
Manufacturer Trademarks, subject to the foregoing limited license. Upon
termination of this Agreement, Distributor shall cease using all trademarks
of Manufacturer.
5.02 Distributor's Use of Trademark. Distributor shall use Manufacturer
Trademarks only in the manner authorized by Manufacturer.
6. CONFIDENTIAL INFORMATION
6.01 Confidentiality. The parties acknowledge that by reason of their
relationship to each other hereunder, each shall have access to certain
information and materials concerning the other's business, plans,
customers, technology, and/or products that is confidential and of
substantial value to that party, which value would be impaired if such
information were disclosed to third parties. Except as required in order to
perform its obligations hereunder, each party agrees that it shall not use
in any way for its own account or the account of any third party, nor
disclose to any third party, any such confidential information revealed to
it by the other party and shall take every reasonable precaution to protect
the confidentiality of such information during the term of this Agreement
and for one (1) year thereafter. Each party shall advise the other whether
or not it considers any particular information or materials to be
confidential by marking on it "Confidential", "Proprietary" or some similar
designation.
6.02 Confidentiality Exceptions. The provisions of Section 6.01 shall not
apply to confidential information to the extent that:
(i) such information was generally known or otherwise in the public
domain prior to to disclosure hereunder, or becomes so known
subsequent to such disclosure through no fault of the receiving
party;
(ii) such information was received without restriction from a third
party not under an obligation to the non-receiving party not to
disclose it and otherwise not in violation of the non-receiving
party's rights; or
(iii) such information is disclosed pursuant to the order or
requirement of a court, administrative agency, or other
governmental body; provided,
<PAGE>
however, that the disclosing party shall provide prompt notice
thereof to the non-disclosing party to enable such party to seek
a protective order or otherwise prevent such disclosure.
(iv) such information was developed independently by the parties
without use of the confidential information of the disclosing
party.
(v) such information was known by a party prior to its disclosure by
the other party.
6.03 Publications. Except as required by law or regulation, or as provided
herein, no announcement, news release, public statement, publication, or
presentation relating to the existence of this Agreement, the subject
matter herein, or either party's performance hereunder (collectively, a
"Publication") shall be made without the other party's prior written
approval. Each party agrees to submit each Publication it proposes to make
to the other party for purposes of such other party's review, comment and
approval. Each party further agrees to respond as promptly as reasonably
practicable and agrees that it shall not unreasonably withhold approval of
such Publication. The parties agree that they shall use reasonable efforts
to coordinate the initial announcement or press release relating to the
existence of this Agreement so that such initial announcement or press
release by each is made contemporaneously. The parties recognize that
researchers may publish research findings concerning the Products and that
neither Distributor or Manufacturer may have power to approve the contents
of such publication even when Distributor and/or Manufacturer participate
in the funding of such research.
6.04 Use of Names. Except as provided in Section 5.1, neither party shall,
without the prior written consent of the other party, use in advertising,
publicity, promotional materials or otherwise, any tradename, trademark,
trade device, service mark, symbol, or any abbreviation, contraction or
simulation thereof owned by the other party.
7. INDEMNIFICATION; DISCLAIMERS OF LIABILITY
7.01 Notwithstanding any other provisions of this Agreement, Manufacturer
shall indemnify and hold harmless Distributor and its affiliated companies,
and their respective officers, directors, employees, agents,
subdistributors and customers (collectively, the "Indemnitees"), from and
against all costs, expenses, claims, demands, causes of action, damages and
judgements, including without limitation attorney's fees whether or not
suit is actually commenced, which might be imposed upon or brought against
an Indemnitee as a result of the manufacture, distribution, import,
promotion, marketing, sale or offering for sale of Products in breach of
the obligations contained in Section 4 herein or as permitted hereunder,
including but not limited to: 1) any product liability for personal
injuries or death and/or property damages, or 2) any infringement of any
third party's intellectual property rights. Excluded from this provision
are any costs, expenses, claims, demands, causes of action, damages and
judgments which are the result of:
<PAGE>
A. any warranty, express or implied, that is made by Distributor
different from or in addition to those made in writing by
Manufacturer which accompany the Products;
B. bodily injury, property damage, or death arising out of
(1) any physical or chemical change in the form of the
Product made intentionally by the Distributor,
(2) mishandling of the Product by the Distributor, including
but not limited to repacking or removal of the Product from
its original packaging or canister, or
(3) Products which after distribution or sale by Manufacturer
to Distributor have been labeled or relabeled in manner not
authorized by Manufacturer.
7.02 Indemnification by Distributor. Distributor shall indemnify and hold
Manufacturer harmless from all costs, expenses, claims, demands, causes of
action, damages and judgements, including without limitation attorney's
fees whether or not suit is actually commenced, which might be imposed upon
or brought against Manufacturer as a result of a third party claim A)
relating to liability of Distributor as an employer for claims by
Distributor's employees or agents; B) arising from warranties made by
Distributor different from or in addition to those made in writing by
Manufacturer which accompany the Product; or C) as a result of or arising
from the events detailed in subsections 7.01(B)(1), (2) or (3) hereinabove.
7.03 Conditions of Indemnification. Manufacturer shall not be obligated to
indemnify an Indemnitee under Section 7.01, and Distributor shall not be
obligated to indemnify Manufacturer under Section 7.02, unless:
A. the party seeking indemnification gives the indemnifying party
prompt written notice of any claim for which it seeks
indemnification;
B. the party seeking indemnification cooperates with the indemnifying
party in the defense of the claim;
C. the indemnifying party shall have the sole right to manage the
defense of any such claim in the manner it deems advisable,
including using counsel of its choice, and;
D. the indemnifying party shall have the sole right to settle any
such claim provided any such settlement completely releases the
parties seeking indemnification, and
<PAGE>
requires no action by, or financial participation from, the party
seeking indemnification.
7.04 Disclaimer of Consequential Damages. EXCEPT IN THE EVENT OF
INDEMNIFICATION CLAIMS UNDER SECTION 7.01 OR WARRANTY CLAIMS UNDER SECTION
3.08 , NEITHER PARTY SHALL HAVE ANY LIABILITY OF ANY KIND FOR ANY PUNITIVE,
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGES UNDER OR AS
A RESULT OF THIS AGREEMENT, EVEN IF SUCH PARTY SHALL HAVE BEEN ADVISED OF
THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE.
7.05 Distributor Disclaimer. MANUFACTURER ACKNOWLEDGES AND AGREES THAT
DISTRIBUTOR DISCLAIMS ANY WARRANTY, REPRESENTATION OR GUARANTEE THAT
DISTRIBUTOR'S DISTRIBUTION OF THE PRODUCTS AS PERMITTED HEREUNDER SHALL
GENERATE ANY PARTICULAR LEVEL OF ACTUAL SALES OR REVENUE TO MANUFACTURER,
AND DISTRIBUTOR, ITS DIRECTORS, OFFICERS, EMPLOYEES, SUBDISTRIBUTORS,
AGENTS AND AFFILIATES SHALL HAVE NO LIABILITY OF ANY KIND OR NATURE
(INCLUDING, WITHOUT LIMITATION, DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL OR
ANY OTHER TYPE OF DAMAGES), REGARDLESS OF THE FORM OF ACTION, FOR ANY
FAILURE TO ACHIEVE ANY PARTICULAR LEVEL OF SALES OR REVENUE TO
MANUFACTURER.
7.06 Survival. The provisions of this Section 7 shall survive any
termination or expiration of this Agreement.
7.07 Product Liability Insurance. At all times during the term of this
Agreement and any renewals or extensions thereof, Manufacture shall
maintain adequate product liability insurance relating to the Products,
shall name Distributor as an additional named insured under such insurance
policy, and shall provide Distributor with written evidence of such
actions.
8. TERM AND TERMINATION
8.01 Term. The term of this Agreement shall be 3 year(s) beginning
February 1, 2000, and ending on January 31, 2003, subject to earlier
termination as described below in this Section 8. There shall be no
obligation to renew.
8.02 Termination For Fault With Right To Cure. Either party may terminate
this Agreement prior to its normal expiration in the event the other party
materially breaches its obligations under this Agreement by giving the
breaching party written notice describing the breach in detail and giving
the breaching party sixty (60) days to cure the breach. If the breach has
not been cured within the sixty days notice period, then the party giving
notice of breach may immediately terminate the Agreement.
<PAGE>
8.03 Effect of Termination or Expiration. Upon termination or expiration
of this Agreement:
A. Neither party shall be released from the obligation to make
payment of any and all amounts due and payable pursuant to this
Agreement, including but not limited to those then due and
thereafter to become due.
B. The rights of each party against the other which may have accrued
up to or after the date of such termination or expiration, and
the provisions of this Agreement that are by their nature
continuing (including but not limited to respective obligations
regarding non-use and non-disclosure under Section 6.1 and
obligations regarding indemnification under Section 7) shall
remain in force after the termination or expiration of this
Agreement.
C. It is expressly understood and agreed that the termination rights
set forth in this Agreement are absolute and that the parties
have considered the possibility of the making of expenditures by
one or both of the Parties hereto in preparing for and in the
actual performance of this Agreement and have considered the
possibility of loss and damage resulting from the non-renewal or
termination hereof. It is the express intent and agreement of the
Parties that neither shall be liable to the other for damages or
otherwise by reason of the non-renewal of this Agreement or its
termination as provided in this Section 8, provided that such
non-renewal or termination shall not operate to discharge or
release either party of obligations assumed by it prior to such
non-renewal or termination.
D. Neither party shall be liable to the other for damages or
otherwise by reason of the termination of this Agreement as
provided in this Section 8. The parties agree that, subject to
the provisions of this Agreement that are by their nature
continuing, and without prejudice to any other remedies at law or
in equity that either party may have in respect of any breach of
this Agreement, neither party shall be entitled to or claim that
it is entitled to any compensation or like payment as a result of
or arising out of any termination in accordance with this Section
8, whether claimed as loss of goodwill, foregone profits, lost
investments, or otherwise.
E. If Distributor has exercised the license granted to it in Section
9.01 prior to the expiration or termination of this Agreement,
then such license shall continue, and Distributor shall continue
to have the right to market, promote and distribute the Products,
for such time period as is necessary in order for Distributor to
fulfill binding agreements with customers entered into prior to
the effective date of expiration or termination of this
Agreement.
<PAGE>
F. Upon expiration of this Agreement, or termination of this
Agreement for any reason, Manufacturer shall have the option, at
its sole discretion, to purchase back from Distributor, and by
doing so require Distributor to sell to Manufacturer, any unsold
inventory of the Products in Distributor's possession or control
that Distributor purchased from Manufacturer, provided that such
Products are unopened and in saleable condition and the
expiration date of sterility of such Products is at least ninety
(90) days beyond the effective termination date of this
Agreement. The price to be paid by Manufacturer for the purchase
of such inventory shall be the purchase price actually paid by
Distributor for the Products, increased by the cost for the
transportation of the Products. In the event that Manufacturer
does not repurchase all unsold inventory of the Products as
specified above, Distributor shall be permitted to sell said
unpurchased inventory for a period of one year following the
termination or expiration of the Agreement pursuant to any terms
deemed appropriate by Distributor.
8.04 Bankruptcy. THE PARTIES INTEND FOR THIS AGREEMENT AND THE
RIGHTS GRANTED HEREIN TO COME WITHIN SECTION 365(n) OF THE U.S. BANKRUPTCY
CODE AND, NOTWITHSTANDING THE BANKRUPTCY OR INSOLVENCY OF MANUFACTURER,
THIS AGREEMENT AND THE RIGHTS GRANTED HEREIN SHALL REMAIN IN FULL FORCE AND
EFFECT SO LONG AS DISTRIBUTOR IS IN MATERIAL COMPLIANCE WITH THE TERMS AND
CONDITIONS HEREOF.
9. MANUFACTURING LICENSE.
9.01 Grant of License. Manufacturer hereby grants to Distributor a non-
exclusive, perpetual license, with a right of sublicense, to all
intellectual property rights anywhere in the territory (including, without
limitation, all rights in and to all patents, present and future
copyrights, moral and publicity rights, mask works, trade secrets, know-how
and confidential business information), in and to the Products and all
tangible materials that are necessary or helpful in the manufacture of the
Products, including, without limitation, all manuals and other materials
that describe the manufacturing processes and procedures for the Products,
all designs, drawings, sketches, data, computer programs, test results, and
information or items of a like nature (collectively, the "Manufacturing
Materials"), so that Distributor or its designee may manufacture, use,
import, offer for sale, sell the Products (including all improvements,
additions or new versions thereof) in the Territory if any of the following
events occur:
A. (1) the entry of an order for relief in a proceeding in
bankruptcy (other than Chapter 11 of Title 11 of the U.S. Code,
as the same may be amended) in which Manufacturer is the named
debtor; (2) Manufacturer's making of an assignment for the
benefit of Manufacturer's creditors, (3) the appointment of a
receiver for Manufacturer; (4) the filing of (i) any bankruptcy
proceeding
<PAGE>
against Manufacturer, other than Chapter 11 of Title 11 of the
U.S. Code, or (ii) any proceeding for an assignment for the
benefit of Manufacturer's creditors, or (iii) any proceeding for
appointment of a receiver or custodian of the assets and property
of Manufacturer, which proceeding shall be consented to or
acquiesced to by Manufacturer or has not been discharged or
terminated within ninety (90) days; or (iv) the rejection by
Manufacturer or any trustee of Manufacturer of this Agreement
pursuant to 11 U.S.C. (S)365; or (v) following the filing of a
proceeding under Chapter 11 of Title 11 of the United States
Code, the failure by Manufacturer or its trustee to perform its
obligations under this Agreement;
B. Manufacturer ceases to operate as a business for a period of
thirty (30) days;
C. Manufacturer or any successor thereto has materially breached
this Agreement, and has failed to cure such breach within sixty
(60) days written notice thereof from Distributor or, if such
breach is not susceptible of cure within such period, has failed
to commence such cure within such period; or
D. The material failure by Manufacturer to fill purchase orders for
the Products, including the failure to meet agreed shipping dates
or Volume Requirements, (i) where such failure continues for a
period of three (3) months, or (ii) such that less than seventy-
five percent (75%) of the total units of the Products ordered are
actually shipped by Manufacturer during any consecutive three (3)
month period. For the purposes of this subsection, "Volume
Requirements" shall mean twenty-five percent (25%) more units of
Product, by Product type, than that submitted by Distributor to
Manufacturer as the rolling forecast referred to in Section 3.10
hereinabove;
E. The material failure by Manufacturer to manufacture the Products
to meet the applicable specifications, such that fifteen percent
(15%) of the total units of the Products ordered by Distributor
during any consecutive three (3) month period do not meet the
applicable specifications;
F. Manufacturer discontinues a particular Product without the prior
written consent of Distributor, or fails to make available
hereunder a reasonably acceptable replacement product for such
discontinued Product.
9.02 Exercise of License. If any of the events described in Section 9.01
occur, then Distributor shall give written notice to Manufacturer of such
event (including notice of the specific Products to which such event(s)
apply) and, within fifteen (15) days after Manufacturer's receipt of such
notice, Manufacturer shall deliver or caused to be delivered to Distributor
or its designee copies of the then-current Manufacturing Materials for the
applicable Products.
<PAGE>
9.03 Technical Assistance. Manufacturer shall provide all engineering and
technical assistance needed in order to transfer to Distributor or its
designee all such Manufacturing Materials, so that Distributor may fully
exercise the license granted in Section 9.01. Pursuant to such license,
Distributor may copy, display, distribute and create derivative works of
any copyrightable materials included in the Manufacturing Materials
released to Distributor.
9.04 Royalty. If any of the events listed in Section 9.01 (A), (B) or (F)
occur, then the license granted to Distributor under Section 9.01 shall be
royalty-free. If any of the events listed in Section 9.01 (C), (D), or (E)
occur, then the parties shall negotiate in good faith the royalty
percentage from the applicable Product (including all improvement,
additions and new versions thereof) that Distributor shall be required to
pay to Manufacturer for the license granted to Distributor under Section
9.1, which percentage shall be based on the value of the Manufacturing
Materials to Distributor and taking into account such factors as, without
limitation, cost to prepare to manufacture the Products; provided, however,
that in no event shall the royalty percentage exceed five percent (5%) for
any particular Product.
9.05 Escrow of Materials. As mutually agreed to by the parties, the
parties, along with a mutually acceptable, professional escrow agent, may
enter into an agreement in order to establish and maintain in escrow during
the term of this Agreement, copies of the Manufacturing Materials. Such
agreement shall establish, at a minimum, the times at which Manufacturer is
required to update the Manufacturing Materials, the release conditions that
entitle Distributor to obtain such Manufacturing Materials (in addition to
Section 9.01 hereof), and the costs to maintain such account. Such costs
shall be reasonable, and shall be the responsibility of Distributor.
10. GENERAL PROVISIONS.
10.01 Notices. Any notice, request, or other document to be given to a
Party under this Agreement shall be in writing and A) sent by registered or
certified mail, postage prepaid, B) hand delivered, C) sent by express mail
or other overnight delivery service which provides documentation of
receipt, or D) sent by telecopy, telex or telegram, addressed as follows:
If to Distributor:
Daig Corporation
14901 DeVeau Place
Minnetonka, Minnesota 55345
Attention: President
<PAGE>
With a copy to:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, Minnesota 55117
Attention: General Counsel
If to Manufacturer:
Cardima, Inc.
47266 Benicia
Fremont, CA 94538
Attention: President/CEO
Any party may change its address for receiving notices, requests or other
documents by giving written notice of the change to the other party.
10.02 Entire Agreement. The Schedule, Attachments, and Exhibits referred
to in this Agreement are considered to be part of this Agreement. This
Agreement contains the entire agreement between the Parties with respect to
its subject matter and supersedes all previous agreements and
understandings, whether written or oral between the parties regarding its
subject matter.
10.03 No Oral Modification. This Agreement may not be modified except in
writing signed by an officer of the Parties.
10.04 No Implied Waivers. The failure of one Party to require performance
by the other of any provision of this Agreement shall not affect the right
to require performance at a later time. The waiver by one Party of a breach
by the other of any provision of this Agreement shall not be a waiver of
any later breach of the provision.
10.05 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
Distributor may assign this Agreement, without Manufacturer's consent, to
any subsidiary or affiliate of Distributor. Distributor's rights and
obligations under this Agreement shall automatically transfer in connection
with a merger, consolidation, reorganization involving Distributor or sale
of substantially all of Distributor's assets. Manufacturer may assign this
Agreement, without Distributor's consent, to any subsidiary or affiliate of
Manufacturer. Manufacturer's rights and obligations under this Agreement
shall automatically transfer in connection with a merger, consolidation,
reorganization involving Manufacturer or sale of substantially all of
Manufacturer's assets. Any attempted assignment in violation of this
provision shall be null and void.
<PAGE>
10.06 Relationship of Parties. The relationship established by this
Agreement is a buyer-seller relationship and not an agency, employment,
joint venture, franchise, or partnership relationship. Neither Party has
the authority to bind the other.
10.07 Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provisions of this Agreement.
10.08 No Goodwill. The Parties recognize that the creation of goodwill in
the market is based upon the high quality of Manufacturer's Products and
Distributor's domestic advertising and marketing. No claim for goodwill may
be made by either party.
10.09 Force Majeure. Non-performance by either party hereunder, other than
an obligation to pay money, shall be excused to the extent that performance
is rendered impossible by strike, fire, flood, governmental acts, orders or
restrictions, or any other reason to the extent that the failure to perform
is beyond the control of the non-performing party.
10.10 Headings. The Section headings contained in this Agreement are for
reference purpose only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.11 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Minnesota without regard to
such state's principles of conflicts of law.
10.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
<PAGE>
To evidence their agreement the Parties have signed below.
DAIG CORPORATION CARDIMA INCORPORATED
By:/s/ MICHAEL COYLE By:/s/ PHILLIP RADLICK
------------------ --------------------
Michael Coyle Phillip Radlick, Ph.D.
President President and CEO
Date: Jan. 25, 2000 Date: Jan. 21, 2000
------------- -------------
<PAGE>
SCHEDULE A
TRANSFER PRICE LIST
(EFFECTIVE FEBRUARY 1, 2000)
INTRAVASCULAR EP (IVEP) MICROCATHETERS
<TABLE>
<CAPTION>
Product # Description Unit Price
- ----------- ----------- ----------
<C> <S> <C>
01-04 1003 PATHFINDER(TM) . 4 (4 electrodes, 9-9-9)/150cm length/2.3F *****
01-04 1007 PATHFINDER(TM) . 4 (2 electrode pairs, 2-6-2)/150cm length/2.3F *****
01-08 1003 PATHFINDER(TM) . 8 (8 electrode pairs, 9-9-9)/150cm length/2.3F *****
01-08 1007 PATHFINDER(TM) . 8 (4 electrode pairs, 2-6-2)/150cm length/2.3F *****
01-16 1003 PATHFINDER(TM) . 16 (8 electrode pairs, 2-6-2)/150cm length/2.5F *****
01-04 3011 PATHFINDER mini(TM) . 4 (4 electrodes, 1-1-1)/135cm length/1.5F *****
01-04 3012 PATHFINDER mini(TM) . 4 (4 electrodes, 2-2-2)/135cm length/1.5F *****
01-04 3013 PATHFINDER mini(TM) . 4 (2 electrode pairs, 2-5-2)/135cm length/1.5F *****
01-04 3014 PATHFINDER mini(TM) . 4 (4 electrodes, 1-1-1)/170cm length/1.5F *****
01-04 3015 PATHFINDER mini(TM) . 4 (4 electrodes, 2-2-2)/170cm length/1.5F *****
01-04 3016 PATHFINDER mini(TM) . 4 (2 electrode pairs, 2-5-2)/170cm length/1.5F *****
01-04 3019 PATHFINDER mini(TM) . 4 (2 electrode pairs, 2-5-2)/150cm length/1.5F *****
02-16 1002 TRACER(TM) . 16 (8 electrode pairs, 2-5-2)/145cm length/3.4F *****
</TABLE>
ENDOCARDIAL EP MICROCATHETERS
<TABLE>
<CAPTION>
Product # Description Unit Price
- --------- ----------- ----------
<S> <C> <C>
01-08 2001 REVELATION(TM)(8 3mm electrodes, 2-2-2)/135cm length/3.3F *****
</TABLE>
- ---------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<CAPTION>
CS GUIDING CATHETERS
Product # Description Unit Price
- ----------- ----------- ----------
<C> <S> <C>
08-00 1000 VENAPORT(R) Damato-type, 90cm, 6F OD *****
08-00 1001 VENAPORT(R) Damato-type, 65cm, 6F OD *****
08-00 1002 VENAPORT(R)-LR Damato-type, 90cm, 6F OD *****
08-00 1003 VENAPORT(R)-LR Damato-type, 65cm, 6F OD *****
08-00 1005 VENAPORT(R) Hockey-type, 90cm, 6F OD *****
08-00 1006 VENAPORT(R) Hockey-type, 65cm, 6F OD *****
08-00 1007 VENAPORT(R)-LR Hockey-type, 90cm, 6F OD *****
08-00 1008 VENAPORT(R)-LR Hockey-type, 65cm, 6F OD *****
08-00 1010 VENAPORT(R) Josephson-type, 90cm, 6F OD *****
08-00 1011 VENAPORT(R) Josephson-type, 65cm, 6F OD *****
08-00 1012 VENAPORT(R)-LR Josephson-type, 90cm, 6F OD *****
08-00 1013 VENAPORT(R)-LR Josephson-type, 65cm, 6F OD *****
08-00 1015 VENAPORT(R) Multipurpose-type, 90cm, 6F OD *****
08-00 1016 VENAPORT(R) Multipurpose-type, 65cm, 6F OD *****
08-00 1017 VENAPORT(R)-LR Multipurpose-type, 90cm, 6F OD *****
08-00 1018 VENAPORT(R)-LR Multipurpose-type, 65cm, 6F OD *****
08-00 1020 VENAPORT(R) Cournand-type, 90cm, 6F OD *****
08-00 1021 VENAPORT(R) Cournand-type, 65cm, 6F OD *****
08-00 1025 VENAPORT(R) CS-type, 90cm, 6F OD *****
08-00 1026 VENAPORT(R) CS-type, 65cm, 6F OD *****
</TABLE>
____________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
2
<PAGE>
BALLOON OCCLUSION GUIDING CATHETERS
<TABLE>
<CAPTION>
Product # Description Unit Price
- ----------- ----------- ----------
<C> <S> <C>
08-00 2000 VUEPORT(TM) Damato-type, 90cm, 8F OD *****
08-00 2001 VUEPORT(TM) Damato-type, 65cm, 8F OD *****
08-00 2005 VUEPORT(TM) Hockey-type, 90cm, 8F OD *****
08-00 2006 VUEPORT(TM) Hockey-type, 65cm, 8F OD *****
08-00 2010 VUEPORT(TM) Cournand-type, 90cm, 8F OD *****
08-00 2011 VUEPORT(TM) Cournand-type, 65cm, 8F OD *****
08-00 2015 VUEPORT(TM) Multipurpose-type, 90cm, 8F OD *****
08-00 2016 VUEPORT(TM) Multipurpose-type, 65cm, 8F OD *****
08-00 2020 VUEPORT(TM) CS-type, 90cm, 8F OD *****
08-00 2021 VUEPORT(TM) CS-type, 65cm, 8F OD *****
08-00 2025 VUEPORT(TM) Amplatz-type, 90cm, 8F OD *****
08-00 2026 VUEPORT(TM) Amplatz-type, 65cm, 8F OD *****
</TABLE>
DEFLECTABLE TIP GUIDING CATHETERS
<TABLE>
<CAPTION>
Product # Description Unit Price
- --------- ------------ ----------
<S> <C> <C>
08-003001 Naviport, 30 CRV, 90cm, 8F *****
08-003045 Naviport, 10 CRV, 90cm, 9F *****
</TABLE>
____________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
3
<PAGE>
CONNECTING CABLES
<TABLE>
<CAPTION>
Product # Description Unit Price
- --------- ----------- ----------
<S> <C> <C>
10-01 1001 EP SELECT(TM) 1-1 Connecting Cable (White) *****
10-01 1002 EP SELECT(TM) 1-1 Connecting Cable (Blue) *****
10-01 1003 EP SELECT(TM) 1-1 Connecting Cable (Black) *****
10-01 1004 EP SELECT(TM) 1-1 Connecting Cable (Red) *****
10-01 1005 EP SELECT(TM) 1-1 Connecting Cable (4 pk, 1 of each color) *****
10-08 1001 8 pin Connecting Cable, Distal (1-8), Bare Pin *****
10-08 1002 8 pin Connecting Cable, Proximal (9-16), Bare Pin *****
10-08 1003 8 pin Connecting Cable, Distal (1-8), Retractable Pin *****
10-08 1004 8 pin Connecting Cable, Proximal (9-16), Retractable Pin *****
10-08 1013 EP SELECT(TM), ECG Cable, Retractable Pin *****
10-08 1014 EP SELECT(TM), ECG Cable, Bare Pin *****
10-16 1001 16 pin Connecting Cable, Bare Pin *****
10-16 1002 16 pin Connecting Cable, Retractable Pin *****
CONNECTING CABLES
Product # Description *****
- --------- -----------
11-08 1002 EP SELECT(TM) Switchbox *****
</TABLE>
____________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
4
<PAGE>
SCHEDULE B
*****
*****
*****
___________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Schedule C
1. APPLICABLE TERMS AND CONDITIONS: The acknowledgment of any order by CARDIMA,
INC. shall constitute the purchaser's acceptance of CARDIMA's terms and
conditions. No terms or conditions stated by the purchaser shall be binding
on CARDIMA unless such terms or conditions are expressly accepted in writing
by CARDIMA prior to commencement under this order. CARDIMA's terms of sale
are net 30 payable within 30 days or subject to service charges under
Section 2 for domestic shipments and net 60 payable within 60 days or
subject to service charges under Section 2 for foreign shipments.
2. SERVICE CHARGES: In the event that the purchaser does not pay the amount due
within the days specified from the due date, CARDIMA may assess service
charges of one and one-half (1.5%) percent per month on the amount due. Such
amount is the reasonable estimate of fair compensation for any loss that
CARDIMA may sustain. Such amount for each month that the purchase price
remain unpaid has been agreed to in advance because of the impracticability
of fixing actual damages. In the event legal or other costs are incurred to
collect on any unpaid balance, the purchaser will be charged for all
collection costs, including attorney's fees. Also, CARDIMA reserves the
rights to charge for priority freight expenses.
3. TAXES: CARDIMA is required to comply with any and all state and local taxes
where applicable unless a properly executed resale or exempt certificate has
been received from the purchaser.
4. PAYMENTS INSTRUCTIONS: All payments shall reference the CARDIMA invoice
number so that the correct amount of credit will be applied.
PAYMENTS BY CHECKS SHALL BE FORWARDED TO:
ATTN: ACCOUNTS RECEIVABLE
CARDIMA, INC.
BOX 14172
FREMONT, CA 94539-1372
PAYMENTS BY SWIFT WIRE TRANSFER SHALL BE ROUTED TO:
CREDIT TO: CHASE MANHATTAN BANK, NY, USA
SWIFT CODE: CHASEUS33
BENEFICIARY: FC-SILICON VALLEY BANK
LAKESIDE DRIVE
SANTA CLARA, CA 95054
ROUTING #: \\FW:121140399
FOR CREDIT OF: CARDIMA, INC.
CREDIT ACCT. #: FNC 02-726866-70
1
<PAGE>
5. INQUIRIES: For questions regarding your order, please call our Customer
Service Department at (800) 354-0102, or send fax to (510) 354-0103. For
questions regarding your invoice, please call our Accounting Department at
(888) 354-0300, or fax to (510) 657-4476.
6. LIMITED WARRANTY: CARDIMA warrants each new product sold by CARDIMA to be
free from defects in material and workmanship under normal use and service.
The sole obligation and liability of CARDIMA under this warranty is limited
to, at its option, the refund of the purchase price of, or the replacement
at its factory of any such product which proves defective within 60 days
after delivery to the first end user, and is found to be defective in
material or workmanship by CARDIMA inspection.
7. APPLICABLE LAW: These terms and conditions of sale and invoice will be
governed by the laws of the State of California.
CERTIFICATE OF CONFORMANCE
CARDIMA, INC. CERTIFIES THAT DOCUMENTARY EVIDENCE IN THE FORM OF TEST REPORTS
AND INSPECTION RECORDS ON THIS MATERIAL AND/OR ASSOCIATED PROCESSES INDICATING
CONFORMANCE TO APPLICABLE SPECIFICATIONS ARE ON FILE AND AVAILABLE FOR REVIEW AT
ITS HOME OFFICE.
IN THE EVENT THAT ANY OF THE TERMS OF THIS SCHEDULE C CONFLICT WITH ANY OF THE
TERMS IN THE BODY OF THIS EXCLUSIVE DISTRIBUTION AGREEMENT, THE TERM(S) OF THE
EXCLUSIVE DISTRIBUTION AGREEMENT SHALL PREVAIL.
2
<PAGE>
SCHEDULE D
PRICES FOR PROMOTIONAL MATERIALS
Manufacturer shall transfer reasonable quantities of any promotional materials
relating to, or useful in the marketing of, the products at manufactures cost
upon the request of distributor.
<PAGE>
SCHEDULE E
ANNUAL MINIMUMS
As described in Section 3.03, in order to maintain its exclusive right to
distribute product in the Territory, Distributor must purchase the following
minimum amounts of the Products during the specified time periods:
<TABLE>
<CAPTION>
<C> <S> <C>
1. February 1, 2000 - January 31, 2001 *****
2. February 1, 2001 - January 31, 2002 *****
3. February 1, 2002 - January 31, 2003 *****
</TABLE>
___________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 8,416 7,315
<SECURITIES> 0 3,480
<RECEIVABLES> 649 634
<ALLOWANCES> (98) (45)
<INVENTORY> 1,238 1,975
<CURRENT-ASSETS> 10,464 13,728
<PP&E> 5,623 5,483
<DEPRECIATION> (3,341) (2,405)
<TOTAL-ASSETS> 13,236 17,230
<CURRENT-LIABILITIES> 3,932 4,359
<BONDS> 0 0
0 0
0 0
<COMMON> 71,349 60,312
<OTHER-SE> (63,781) (50,452)
<TOTAL-LIABILITY-AND-EQUITY> 13,236 17,230
<SALES> 669 775
<TOTAL-REVENUES> 669 775
<CGS> 846 677
<TOTAL-COSTS> 846 677
<OTHER-EXPENSES> 2,735 3,486
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (111) (140)
<INCOME-PRETAX> (2,970) (3,429)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,970) (3,429)
<EPS-BASIC> (0.16) (0.24)
<EPS-DILUTED> (0.16) (0.24)
</TABLE>
