Apix International Limited
Loan Facility Term Sheet
Loan Roll-Over and Facility Increase
Borrower:
Cardima Inc.
47266 Benicia Street
Fremont, California 94538-7330
Attn: Gabe Vegh
Lender:
Apix International Limited
Attn: Mr. Victor Lee
Attn: Mr. Robert Cheney
Facility:
$4,560,000.00 (loan amount provided to May 18, 2006 and fully drawn down)
$3,375,000.00 (additional advances made from May 18 to December 14, 2006 and
fully drawn down)
$5,625,000.00 New Loan Facility
Current Status:
Cardima Inc. (the "Borrower") has entered into a Loan Agreement and related
security agreements with Apix International Limited (the "Lender" and/or
"Apix"). The Borrower has borrowed the full amounts available under its loan
agreements and extensions and roll-overs thereof. The Borrower has also received
advances in addition to those provided for in the loan agreements. The Loan and
the related Fees, Interest and Expenses matured on 18 May, 2006 and are due and
owing in full. As at the date of this term sheet the consolidated amounts owing
by the Borrower to the Lender exceed $9 million dollars.
The Borrower has indicated to the Lender that it is unable to repay the Loan or
any part thereof. The Borrower has requested that the Lender extend the maturity
of the existing Loan and advances and provide an additional loan facility as set
forth herein.
The purpose of this Term Sheet is to set forth the mutually agreed terms for the
roll-over of the existing loan facility and the grant of an additional loan
facility to the Borrower.
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New Term/ Maturity Date:
Subject to the terms set forth herein the existing loan facility which matured
on May 18, 2006 will be rolled forward and a new loan facility will be provided
at the sole and absolute discretion of the Lender.
The principal amount advanced by the Lender to the Borrower under the Loan as at
May 18, 2006 was $4,560,000.00 (the "Principal Amount").
The further advances made by the Lender to the Borrower subsequent to May 18,
2006, total a further principal amount of $3,375,000.00 to December 14, 2006.
These advances are comprised of 15 separate bi-monthly advances of $225,000.00
(the "Further Advances").
The Further Advances shall and are hereby agreed to have been made on the same
terms in respect of fees, interest and all other material terms as if they had
been made pursuant to the prior term sheet which expired after May 18, 2006.
This means that in respect of each such advance there shall be an additional
Exit Fee payable of US $80,000.00 for total additional Exit Fees of
$1,200,000.00 in respect of all 15 advances. Additionally, each advance shall
require the issuance of 3.8 million additional warrants on the same terms as
provided for in the prior Term Sheet for a total of an additional 57 million
warrants in respect of all 15 advances.
The Further Advances shall be added to the Principal Amount of the loan
effective the date of receipt by the Borrower for the purposes of calculating
interest which shall be calculated on the basis that the funds were received
pursuant to the prior Term Sheet.
As advances are made under this current Term Sheet facility (the "New Facility")
they shall be added to the Principal Amount effective the date of receipt by the
Borrower for the purposes of calculating interest. Interest will be calculated
on the entire principal amount advanced from time to time on the terms provided
for herein.
The fees, warrants and rights of conversion granted will be as set forth herein.
In the event the Lender advances the total $5,625,000.00 additional facility
provided for herein (which shall be at the full and unfettered discretion of the
Lender) then the Maturity Date shall be not later than 31 December, 2007 (or the
earlier of the date demand is made by the Lender).
Fee Adjustment:
In recognition of the inability of the Borrower to repay the Loan and Fees as
due and owing and in consideration of the extra-ordinary risk the Lender is
undertaking in extending the facility the related fees shall be adjusted as
follows:
Facility Fee
The Facility Fee for providing the original loan facility, for rolling over and
increasing that facility and for now originating this New Facility of shall be
$500,000.00. This fee shall be in recognition of the roll-over of the original
and extended loan facility, for making the Further Advances and for granting the
New Facility.
The Facility Fee is partial compensation to the Lender for the economic benefit
provided to the Borrower. The Facility Fee is a material inducement for the
Lender's willingness to extend the loan facility to the Borrower and such fee is
not intended to reimburse the Lender for any costs or expenses associated with
or incurred by the Lender in connection with the loan transaction.
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The Lender notes, however, that the Borrower has been unable to reserve
sufficient authorized but un-issued shares to meet the requirements of the Term
Sheet and Loan Agreement. The Lender further notes the Borrower is severely
constrained in its abilities to pursue alternative financing opportunities or to
attract strategic investors or to provide incentive to its employees in the
current circumstances.
Issuance of Preferred Shares
Given the above circumstances and at the request of the Borrower, the Lender has
agreed to accept, in full and final satisfaction of the Facility Fee of
$500,000.00, and in consideration of waiving existing defaults and extending the
maturity date of the outstanding loan amounts, the issuance to the Lender of 5
million preferred shares of the Borrower. These preferred shares shall be issued
at a price of $0.10 per share and shall carry the following minimum preferences:
o 28 votes per share at any general or extraordinary meeting of the
common shares of the company convened by the Borrower or its
shareholders for a total of 140 million votes at any such meeting;
o convertible into common shares of the Borrower at any time at the sole
and absolute discretion of the holder on the basis of 2 common shares
for each preferred share tendered for conversion for a total of 10
million common shares in the event all preferred shares are tendered
for conversion;
o such other terms and preferences as are agreed between the Lender and
the Borrower;
The preferred shares shall be issued to the Lender on terms and at a date
acceptable to the Lender at its sole and absolute discretion. In the event no
agreement can be reached in respect of the preferred shares then the Facility
Fee shall remain due and owing under the terms hereof. The Borrower, however,
recognizes and agrees that time is of the essence in completing the issuance of
the preferred shares and affecting an increase in authorized capital and shall
act in a timely manner.
Exit Fee
The Exit Fee for providing the loan facility, for rolling that facility over and
extending a further facility at a critical time and now for making the Further
Advances and for providing the New Facility at a critical time and for
terminating the loan (on or before the Maturity Date) and releasing the security
shall be $2,800,000.00. This is comprised of $1.3 million provided for under the
prior term sheet together with $1.2 million accrued for the Further Advances
together with an increase for the New Facility grant of $0.30 million for a
total Exit Fee of $2,800,000.00.
The Exit Fee is additional consideration to the Lender for the economic benefit
provided to the Borrower. The Exit Fee is a material inducement for the Lender's
willingness to provide a further loan facility and to extend the maturity of the
original loan facility to the Borrower.
The Facility Fee and Exit Fee shall be payable on or before the new maturity
date being the date this loan is terminated by the Lender at its sole and
absolute discretion and/or the date of repayment by the Borrower.
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The Lender may elect to accept cash or shares of the company, or a combination
of cash and shares in any proportion, at its sole discretion, for satisfaction
of both the Facility Fee and Exit Fee. If the Lender elects to receive shares
for all, or a portion of the fees, the number of shares shall be calculated by
taking the amount of fees and using a price of four-cents per share ($0.04) and
dividing the fee amount by four cents. This would mean if the $2,800,000.00 of
Exit Fees were to be paid for in shares the Lender would receive 70 Million
shares of the Borrower. Any shares issued in satisfaction of fees shall be
registered by the Borrower as provided below.
The Facility Fee and Exit Fee shall be fully payable on the date this facility
is terminated by the Lender or discharged by the Borrower once this Term Sheet
has been executed by the Borrower and the Lender irrespective of the actual
amount of funds utilized by the Borrower under the facility or early or
pre-payment by the Borrower.
Loan Principal Convertible:
The Borrower hereby grants the Lender the right to convert all or any part of
the Principal Amount herein and all or any part of the Further Advances and all
or any part of the principal amounts advanced under this New Facility into
common shares of the Borrower on the same terms as the convertibility of the
Fees. The amount of principal elected to be converted by the Borrower shall be
converted into common shares of the Borrower using a price of four cents per
share ($0.04) and dividing the principal amount elected to be converted by four
cents. On this basis if the Lender elected to convert a Principal Amount of $8
million into common shares it would receive 200 million common shares.
Existing Warrant Adjustment:
The Borrower is currently obligated to deliver to the Lender Warrants as
follows:
o 30 million warrants under the original loan facility;
o 20 million warrants under the loan facility roll-over and increase on
February 14, 2006;
o 11.8 million warrant in respect of advances made under the February
14, 2006 Term Sheet which matured on May 18, 2006; o 57 million
warrants in respect of the Further Advances made subsequent to May 18,
2006 to the date hereof
Accordingly the Borrower is obligated to deliver to the Lender warrants
entitling the Lender to purchase 118.8 million common shares of the Borrower at
an exercise price of six-cents ($0.06) per share (the "Existing Warrants").
The Borrower hereby agrees to adjust the exercise price and date of the Existing
Warrants to four-cents ($0.04) and December 18, 2006 respectively. The Term of
the Existing Warrant shall be ten-years from December 18, 2006, with an exercise
price of $0.04 with all other terms to remain the same.
These Existing Warrants shall be issued in denominations of 10 million warrants
or such lesser amount as may be necessary to round out the total amount to be
issued and shall be exercisable in whole or in part at the sole discretion of
the holder. In the event a warrant is partially exercised the Borrower shall
deliver a warrant for the unexercised balance in the same form within 15 days.
Whereas to date the Borrower has not delivered the Existing Warrants to the
Lender the Borrower shall undertake to deliver a warrant in the amended terms as
provided for herein within 45 days from the execution of this term sheet.
New Warrant Grant
Whereas the roll-over of the existing loan facilities and amounts due and owing
is critical for the survival of the Borrower and the Borrower would be unable to
continue to operate without this roll-over and whereas the Lender has taken on
extraordinary risk in making the original loans and is taking further
substantial and material risks in rolling-over the existing loan facilities the
Borrower hereby offers and the Lender accepts as an additional material
inducement for the Lender to roll-over the facilities, for making the Further
Advances and to provide the New Facility and as additional consideration a
Warrant to purchase the capital stock ("Shares") of the Borrower on the
following terms:
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Number of Shares: 20 Million (20,000,000)
Strike Price: $0.03
Term: The Warrant (the "New Warrant") shall be delivered within 45 days
from the date the Term Sheet is executed and may be exercised commencing on
December 18, 2006 and shall be valid for a term of ten (10) years from December
18, 2006.
Denominations:
The warrants shall be issued in amounts divisible by units of 10,000,000 shares
or such lesser amount as is required to round out the total and shall be
exercisable in whole or in part at any time at the sole discretion of the
holder. In the event a warrant is partially exercised the Borrower shall deliver
a warrant for the unexercised balance in the same form within 15 days.
Registration Rights:
Borrower agrees to cause the Shares to be issued or issued to the Lender in
connection with the satisfaction of the Fees, Interest payable, or Principal
amounts of the loan or in connection with the exercise of the Warrants
(collectively the "Registrable Securities") to be registered under the
Securities Act on an effective and current registration on Form S-1 (the
"Registration Statement") by filing a registration statement with the SEC as
soon as reasonably practicable after the date of issuing this warrant, but in
any event no later than 5:00 pm Eastern Time on March 15, 2007 (the "Outside
Registration Date") shall cause the Registration Statement to be declared
effective; provided however, the Outside Registration Date shall be extended for
delays beyond Borrowers controls but only to the extent the Borrower has
promptly responded to all requests, requirements and orders of the SEC and/or
such government agencies with jurisdiction over such Registration Statement.
Borrower shall keep the Registration Statement effective and current and shall
obtain and maintain in full force and effect all related qualifications,
registrations or other compliances that may be necessary under the laws of any
applicable jurisdiction, including, without limitation, state securities or
"blue sky" laws, until such time as all of the shares issued for fees or under
the warrant have been sold or otherwise disposed of and the warrant has expired.
Notwithstanding the foregoing, if 130% of the Registrable Securities shall equal
or exceed 30% of the issued and outstanding common stock of the Company (less
any shares of common stock held by affiliates of the Company) on the actual
filing date of the initial registration statement, the initial registration
statement shall register a number of shares of common stock which is equal to
30% of the issued and outstanding shares of common stock of the Company (less
any shares of common stock held by affiliates of the company) on such actual
filing date minus 10,000 shares of common stock, and the remaining Registrable
Securities shall be included on a subsequent registration statement.
Availability of New Facility:
The Borrower has requested and the Lender has agreed to provide a new loan
facility in a total amount of up to US $5,625,000.00 as provided for herein.
The Borrower has requested loan draw-downs be made available on a basis of US
$225,000 for each bi-monthly period as set forth in Schedule "A" attached
hereto.
The Lender may, at its sole and absolute discretion, subject to an amended loan
agreement being executed in accordance with the terms of this Term Sheet,
advance further loan amounts of US $225,000 on a bi-monthly basis with each
advance expected to be made on or after the dates set forth in Schedule "A"
attached hereto.
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The loan advances detailed above shall be provided at the Lenders sole and
absolute discretion. The Lender shall have no obligation to act reasonably or
otherwise in exercising its discretion and may elect to terminate further loan
advances for any reason whatsoever or for no reason. The Lender at its sole and
absolute discretion may elect to terminate the loan facility at any time on or
after December 18, 2006 and all amounts then outstanding including principal,
interest, fees and expenses shall become immediately due and owing. In
exercising its discretion to terminate the loan facility and to make all amounts
immediately due and owing the Lender shall have no obligation to act reasonably
or otherwise in exercising its discretion and may make its decision for any
reason or for no reason whatsoever.
The new loan facility as provided for herein shall terminate on 31 December,
2007, when all amounts of principal, interest, fees and expenses and other
amounts provided for herein shall be due and owing in full unless this facility
is terminated at an earlier date.
Terms of New Loan Draw Downs
For each loan draw down of US $225,000.00 of the new facility the fees and
warrants shall be increased as follows:
Additional Exit Fee: $80,000.00
Additional Warrants: 3,800,000 on the same date and terms as provided for above
for the New Warrant (exercisable at $0.03).
Accordingly if all drawn downs are advanced to the Borrower under this new
facility then the Exit Fee will increase by an amount of $2,000,000 and the
Warrants will increase by an amount of 95 million.
The additional Exit Fees shall be convertible into shares of the Borrower, in
whole or in part, at the sole and absolute discretion of the Lender. The
conversion price shall be at the same rate as provided for principal and
interest herein, namely four cents per share ($0.04) such that if the entire
amount of Exit Fees ($2,000,000.00) were to be converted then the Lender would
receive 50 million shares.
Repayment Date:
It is the obligation of the Borrower to repay the Loan and all outstanding
interest and Fees in full on demand. In the event the total new loan facility
provided for herein is utilized by the Borrower and provided by the Lender then
this facility shall terminate on 31 December, 2007.
Closing:
The Closing Date shall be as soon as practical following the execution of this
Term Sheet subject to the absolute discretion of the Lender. The Lender accepts
no obligation whatsoever to extend the loan or to advance any funds to the
Borrower until both the Borrower and the Lender have agreed to and executed all
of the documents and agreements contemplated herein, namely, the Term Sheet; the
Amended Loan Agreement; the Intellectual Property Security Agreement; the
Warrant; and all additional documents and steps contemplated and referred to
therein required to be delivered on Closing.
Entering into the Term Sheet and advancing further funds shall not obligate the
Lender to advance any additional funds and the facility provided for herein
shall be made available at the sole and absolute discretion of the Lender.
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Interest Rate:
10% per annum calculated with simple interest on the outstanding balance.
Interest accrued during the loan term shall be payable in full on or before the
Maturity Date. The Lender may elect, at the Lender's sole and absolute
discretion, to accept shares of the Borrower in satisfaction of the outstanding
interest accrued and owing on the loan. In the event it elects to accept shares,
in whole or in part, in proportions it shall determine at the Lender's sole
discretion, then the number of shares shall be determined by dividing the amount
of interest to be satisfied with shares by four cents ($0.04) per share to
determine the total number of shares to be issued. Accordingly, $400,000.00 of
interest would require 1,000,000 shares to be issued for payment. The conversion
rate of four cents ($0.04) shall apply to all interest accrued in respect of the
initial loan facilities, the Further Advances and the New Facility.
Authorized Share Availability
The exercise by the Lender of the right to convert Fees, Interest or Principal
into shares of the Borrower and/or to exercise it warrants shall be subject to
the availability, in each instance, of sufficient authorized shares in the share
capital of the Borrower being available for this purpose. The Borrower
undertakes to use its best efforts to ensure sufficient share capital is
available to meet all of the terms contemplated herein. In the event the Lender
wishes to convert then it shall be entitled to convert until all authorized
shares have been utilized. Any portion of Fees, Interest or Principal not
capable of conversion shall be deferred for a period of 180 days. During the
period of deferral the Lender can elect (at any time) to either await an
increase in capital by the Borrower (the Borrower undertakes that it shall use
its best efforts to effect a capital increase sufficient to cover the conversion
rights of the Lender) or to accept a two-year warrant in an equal number of
shares at the same exercise price (the exercise of which shall be subject to an
increase in the authorized capital) and cash payment of the obligation in full.
During the term of such two-year warrant the Borrower shall use its best efforts
to increase the authorized capital in an amount of shares sufficient for the
exercise of the warrant and for any other share entitlements held by the Lender.
In the event the Lender elects to await an increase in the authorized capital
and such increase cannot occur for any reason within 6 months from the election
then the Lender may elect to accept cash payment together with the warrant for
this unconverted portion. The Borrower shall then be obligated to deliver cash
payment, in full, for the portion of funds owing not capable of conversion
together with a warrant to purchase an equal number of shares as would have been
issued had the conversion rights been effective with an exercise price the same
as the conversion price.
The Borrower hereby agrees to convene a shareholders meeting within 60 days of
the date of this Term Sheet and shall use its best efforts to ensure that the
preferred shares as provided for herein have been issued to the Lender prior to
the date of this meeting. The maters to be decided at the meeting shall include
an increase in authorized shares sufficient to meet all obligations of the
Borrower to the Lender as existing and as contemplated by the full terms of this
Term Sheet.
So long as the Lender holds rights of conversion or warrant exercise that cannot
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be met by existing authorized capital of the Borrower then the Lender shall be
entitled to maintain its full rights of security over the assets of the Borrower
as provided for in the Loan Agreement and the Intellectual Property Security
Agreement notwithstanding any payments made by the Borrower.
Term-Maturity Date:
The loan shall be a demand loan payable on demand at any time on or after 18
December, 2006.
Deposit Account
Control:
Lender and Borrower shall enter into a "deposit account control agreement" on
commercially reasonable terms in which all the Borrower's accounts with any
financial institution shall be subject to the Lender's right, in the event of
Borrower's default under the terms of the Loan Agreement, to direct such
institution to restrict the use of such accounts and to turn over the proceeds
from such accounts to Lender.
At Lender's election and sole discretion, upon seven (7) days written notice
following the event of Borrower's default under the terms of the Loan Agreement,
Borrower shall direct all accounts receivable payments and any payments due to
the Borrower whatsoever to be paid to an account controlled by the Lender.
Reporting:
The Borrower shall keep the Lender well informed of all material information
that can affect the Borrower's financial status, the ability to repay the loan
on time or at all and its general business prospects for continuing operations.
In addition to keeping the Lender well informed and current on all material
information, the Borrower will specifically provide the following:
1. Accounts Receivable and Payables monthly.
2. Notice of exceptional material events of any kind, as soon as
practicable by phone and email, but not more than 12 hours from the
time the Company becomes aware of said exceptional material event.
3. Company prepared financial statements monthly, within fifteen (15) days
of month end.
4. Bank statements to be faxed or emailed immediately upon receipt or the
Borrower may provide the Lender on-line "view only" access to such
accounts.
5. Year end financial statements and tax returns within 90 days of FYE.
6. Legal documents or demands served on the Borrower, liens or claims
filed in respect of the Borrower's assets, immediately by fax or email
with phone confirmation to follow.
Collateral:
As security for all the Borrower's obligations under the Loan Agreement and
related documents the Borrower shall grand to the Lender a first priority
security interest in all of the Borrower's assets now owned or hereafter
acquired (hereinafter referred to collectively as, the "Collateral"), including,
but not limited to: bank accounts, certificates of deposit, investment vehicles
or accounts, cash, accounts receivable, instruments, chattel, paper, and other
general intangibles, real estate, leases, leasehold improvements, inventory,
machinery, equipment, furniture, fixtures, tools, copyrights, patents, licenses,
trademarks, trade names, and any and all other forms of intellectual property
(all intellectual property being collectively referred to as "IP") owned or
licensed by Borrower. The recordation of a UCC- Financing Statement (and Deed of
Trust, if applicable) evidencing Lender's security interest in the Collateral
together with all other documents necessary to perfect Lender's security
interest in Borrower's IP shall be required before funding.
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Notwithstanding the foregoing, the Collateral shall exclude any equipment
subject to existing equipment leases or motor vehicles leases or equipment lines
of credit in place prior to the Closing and such other equipment or motor
vehicles subsequently acquired under such facilities.
The Borrower warrants and represents that at the time of the execution of this
Term Sheet there are no liens or claims against the Borrower's intellectual
property other than the claims made by Agility which shall be discharged
immediately with the proceeds of the Bridge Loan hereunder.
Prepayment:
Borrower may pay off the entire loan together with the fees and interest due and
owing without penalty. All payments will be applied first against all
obligations under the Loan Agreement other than interest and principal, then in
satisfaction of all accrued and unpaid interest through the date of such payment
and then against principal.
The Borrower shall give the Lender not less than thirty (30) days advance
written notice of the intention to prepay the loan and shall allow the Lender to
elect to receive cash or shares for any portion of the obligations for which the
Lender shall be entitled hereunder to elect shares.
Other Conditions:
1. The sale of any assets of the company in excess of US$20,000 in
value shall be subject to the approval of the Lender and the
Lender shall be given 21 days notice of any proposed sale to
consider the commercial fairness of the terms.
2. The Borrower shall not undertake any other form of loan or equity
financing without the express written consent of the Lender which
shall not be unreasonably withheld. The Borrower may enter into
discussions regarding loan or equity financing but shall keep the
Lender informed of such discussions and all material terms under
consideration.
3. The Borrower shall inform the Lender of any proposed issuance of
shares or granting of options.
4. No payments shall be made to the Directors or Senior Officers of
the Borrower other than those expressly approved under the loan
budget or payments for the reimbursement of incidental expenses
related to company authorized travel or the ordinary conduct of
the Borrower's business without the express written consent of the
Lender.
Debt Subordination:
Any and all loans or other obligations of the Borrower shall be subordinated to
interest of the Lender excepting there from only Borrower's obligations under
equipment leases existing prior to the date of the Closing, provided such
facilities are only secured by such equipment or related software and were
undertaken in the normal course of business.
The Borrower hereby warrants and represents that it currently has no outstanding
loans except the amounts owing to the Lender described herein.
The Lender further acknowledges that its rights may be subject to the statutory
legal rights of employees to compensation for termination as provided for by
law.
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Full Repayment::
The outstanding principal balance, all accrued interest unpaid and all other
amounts due and owing under the terms of the Loan Agreement shall be immediately
due and payable in full on demand.
TIME IS OF THE ESSENCE WITH RESPECT TO ANY PAYMENT DUE HEREUNDER. The Borrower
shall be in immediate default hereunder if any payment is not made in a timely
manner, without any right to cure unless such right to cure is granted by the
Lender in each instance, which consent shall be in the sole discretion of the
Lender and may be withheld for any reason or for no reason whatsoever.
The Lender is not in the ordinary business of extending loans to distressed
companies and it is agreed and acknowledged by the Borrower that the Lender
shall suffer substantial and material harm if the full amounts owing under the
terms of the Loan Agreement and related documents are not paid in full on
demand.
The Borrower shall give the Lender not less than thirty (30) full days written
notice prior to its intention to repay the amounts owing to the Lender in full
or in part and shall allow the Lender to elect during such 30 day period what
amounts shall be repaid in cash and which amounts the Lender shall elect to
accept payment for in shares.
Notwithstanding the Maturity Date, in the event the Borrower elects and the
Lender consents to:
1. a sale of the Borrower's surgical, EP or other product rights;
2. a sale of other assets for proceeds in excess of $1,000,000;
3. a new loan facility;
4. an equity financing with proceeds in excess of $1,000,000; 5. a sale of the
entire company or EP and Surgical rights;
Then all obligations under the Loan Agreement shall become immediately due and
payable in full (including all accrued interest through to the date of repayment
and such other amounts due and owing) and the loan facility shall be terminated
(the above events being referred to as a "Triggering Event").
Upon the occurrence of a Triggering Event, Lender shall be entitled to one
hundred percent (100%) of the proceeds of such transaction(s) after deducting
the reasonable non-operating out-of-pocket costs of such transaction until such
time as the loan facility has been indefeasibly repaid in full (including,
without limitation, all principal, accrued interest thereon, fees and other
amounts due the Lender). In the event the consideration payable to Borrower in
connection with such transaction(s) is other than cash in an amount sufficient
to indefeasibly satisfy all of the Borrower's obligations under the loan
facility, Lender shall be entitled to receive, in addition to such cash (or, at
Lender's election, unrestricted, publicly tradable marketable securities,
provided such securities are traded on a major public exchange and in regular
daily volume sufficient to allow immediate liquidation thereof without
negatively impacting the value of such non-cash consideration (after deducting
the reasonable non-operating out-of-pocket costs of sale) until full repayment.
In the event the Lender elects to receive such unrestricted, publicly tradable
marketable securities, Lender shall credit the then outstanding balance under
the loan facility, including without limitation, all accrued interest due
thereon, fees and other amounts payable to the Lender, with the fair market
value of such securities (based on the average closing price per share or unit
for the five (5) trading days immediately preceding the date the Lender receives
such securities. In the event the Borrower receives non-cash consideration in
connection with such transaction, Borrower shall sell, as soon as reasonably
practical, such non-cash consideration in a commercially reasonable manner in
order to maximize the proceeds of such sale until all amounts owing to the
Lender have been indefeasibly paid in full.
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Event of Dissolution:
Prior to the full repayment of the Borrower's obligations under the Loan
Agreement and related documents, upon the occurrence of any Event of Default (as
such term is defined in the various loan documents), including without
limitation;
1. Any action (voluntary or involuntary) to liquidate, dissolve and/or
wind down the business of Borrower; or
2. any action to suspend trading with respect to the Borrower's
securities by the Securities Exchange Commission or any other State or
Federal governmental agency; or
3. A legal demand being made on the company by any creditor or alleged
creditor demanding an amount of $40,000 or greater;
Then all amounts due and owing by the Borrower to the Lender shall become
immediately due and payable, including without limitation, all amounts of
principal, interest accrued to the date of payment, fees and other amounts
as may be due and owing under the Loan Agreement and together with any
shares the Lender elects to receive in payment and satisfaction of these
various obligations as is their right to elect hereunder.
Exit Fee and Facility Fee:
The Exit Fee and Facility Fee as provided for herein are additional
consideration and are a material inducement for the Lender to provide the
proposed loan facility. The Lender shall be entitled to payment of the Exit
Fee and Facility Fee in full upon the earlier of the termination of the
facility by the Lender, pre-payment by the Borrower, or the occurrence of a
Triggering Event or the occurrence of an Event of Default.
Financial Covenants:
None.
Documentation:
The Lender shall be entitled to review and approve at its sole and absolute
discretion all of the documents to be executed and/or delivered in
association with this loan transaction. These documents shall include:
1. Term Sheet;
2. IP Security Agreement;
3. Final Term Sheet;
4. Loan Agreement;
5. Final IP Security Agreement;
6. Warrant;
7. Bank Account Control Agreement;
And such other reasonable documents based upon the structure of the
transaction contemplated herein.
11
Expenses:
Borrower shall reimburse Lender on the Maturity Date for all of Lender's
costs in connection with the loan transaction and documenting and funding
the loan and this extension of the loan. These costs shall include, but are
not limited to, the following: a due-diligence fee of $50,000 and
documentation review and preparation fee of $275,000.00 together with any
actual attorneys fees paid to attorneys qualified in California for the
review and approval of all documentation, attorneys fees in respect of any
actions required to be taken in furtherance of the loan or recovery of any
amounts owing, or any matter in dispute with the Borrower, any direct out
of pocket expenses related to the loan transaction, any direct out of
pocket travel expenses to attend any meeting contemplated by the loan
transaction. The Lender will provide the Borrower a list of all such
expenses and amounts three (3) days prior to the Maturity Date. In the
event the Lender does not provide a list then the Borrower shall pay the
Lender the amount of $100,000.00.
Confidentiality:
This Term Sheet is confidential and proprietary to all parties. This Term
Sheet shall not be disclosed to third parties.
This Term Sheet is hereby agreed between the parties hereto subject to
execution of the Loan Agreement and execution and delivery of the various
documents contemplated hereby.
Apix International Limited Cardima Inc.
By: /s/ Robert Cheney By: /s/ Gabriel B. Vegh
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Dated this 16th day of January, 2007.