EX-99.(E) 7 dex99e.txt LETTER AGREEMENTS (11/5/2001) EXHIBIT 7(e)1 Ascend Partners, LP c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Ascend Partners, LP, a Delaware limited partnership (the "Purchaser"). --------- Capitalized terms used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified party") shall ----------------- promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------- circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------- Name: Nicholas Diaco Title: Co-Trustee ASCEND PARTNERS, LP By:________________________________ Name: Title: Address for Notice: Ascend Partners, LP c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 Tel.: 415-217-7733 Fax: 415-217-7699 Attn: Chief Financial Officer Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Ascend Partners, LP 48,000 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Ascend Partners, LP: DTC#: 773 Institutional ID: 94115 Agent Bank #: 94115 Tax ID #: 56-205-8405 Internal Account #: 37 Tax I.D. No. of Purchaser: 880431210 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)2 Ascend Partners Sapient, LP c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Ascend Partners Sapient, LP, a Delaware limited partnership (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings --------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be ---------------- suffered or incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------ Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------- Name: Nicholas Diaco Title: Co-Trustee ASCEND PARTNERS SAPIENT, LP By:_____________________________________ Name: Title: Address for Notice: Ascend Partners Sapient, LP c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 Tel.: 415-217-7733 Fax: 415-217-7699 Attn: Chief Financial Officer Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Ascend Partners Sapient, LP 48,000 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Ascend Partners Sapient, LP: DTC#: 773 Institutional ID: 94115 Agent Bank #: 94115 Tax ID #: 56-205-8405 Internal Account #: 37 Tax I.D. No. of Purchaser: 94-3388960 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)3 Ascend Offshore Fund, Ltd. c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Ascend Offshore Fund, Ltd., a company organized under the laws of the British Virgin Islands (the "Purchaser"). Capitalized terms used in this --------- Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite -------------------------- power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which ----------------------------- Registered Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller ------------ as set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------ Name: Nicholas Diaco Title: Co-Trustee ASCEND OFFSHORE FUND, LTD. By:_____________________________________ Name: Title: Address for Notice: Ascend Offshore Fund, Ltd. c/o Ascend Capital LLC One Montgomery, Suite 330 San Francisco, CA 94104 Tel.: 415-217-7733 Fax: 415-217-7699 Attn: Chief Financial Officer Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Ascend Offshore Fund, Ltd. 204,000 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Ascend Offshore Fund, Ltd.: DTC#: 773 Institutional ID: 94115 Agent Bank #: 94115 Tax ID #: 56-205-8405 Internal Account #: 37 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)4 AIM Funds Group 11 Greenway Plaza, Suite 100 Houston, TX 77046 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and AIM Funds Group, a Delaware business trust (the "Purchaser"). Capitalized -------- terms used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which ----------------------------- Registered Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its ---------------- shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified party") shall ----------------- promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------- circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------------- Name: Nicholas Diaco Title: Co-Trustee AIM FUNDS GROUP, ON BEHALF OF ITS PORTFOLIO, AIM SMALL CAP EQUITY FUND By:____________________________________ Name: Title: Address for Notice: AIM Funds Group 11 Greenway Plaza, Suite 100 Houston, TX 77046 Tel.: 713-214-1191 Fax: 713-993-9185 Attn: General Counsel Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- ---------------------------- AIM Funds Group 300,000 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- AIM Funds Group: Custodian Bank: State Street Bank and Trust Co. Agent ID Number: 20997 Agent's DTC Participation Number: 997 Agent's Internal Account Number: KG69 Institution Number: 57949 Tax ID Number: 76-0649197 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)5 Blue Coast Partners II, L.P. One Montgomery Street San Francisco, CA 94104 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Blue Coast Partners, L.P., a California limited partnership (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings --------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which ----------------------------- Registered Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee BLUE COAST PARTNERS II, L.P. By:_____________________________________ Name: Title: Address for Notice: Blue Coast Partners II, L.P. c/o Fort Point Capital Management LLC One Montgomery Street San Francisco, CA 94104 Tel.: 415-394-0450 Fax: 415-394-0456 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Blue Coast Partners II, L.P. 26,500 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- DTC #0773 Banc of America Securities LLC A/C#: 118-15601 A/C NAME: BLUE COAST PARTNERS II, L.P. ATTN: SAHLE DENEKE TaxID 94-3401865 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)6 Citi Fort Point Ltd. c/o CIBC Bankard Trust Company Edward Street Grand Cayman, Cayman Islands British West Indies November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Citi Fort Point Ltd., a company formed under the laws of the Cayman Islands (the "Purchaser"). Capitalized terms used in this Agreement shall have the --------- meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee CITI FORT POINT LTD. By:_____________________________________ Name: Title: Address for Notice: Citi Fort Point Ltd. c/o CIBC Bankard Trust Company Edward Street Grand Cayman, Cayman Islands British West Indies Tel.: 415-394-0450 & 345-914-9452 Fax: 415-394-0456 With a copy to: Fort Point Capital Management LLC One Montgomery Street San Francisco, CA 94104 Tel.: 415-394-0450 Fax: 415-394-0456 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Citi Fort Point Ltd. 12,390 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- DTC #0773 Banc of America Securities LLC A/C#: 313-15398 A/C NAME: CITI FORT POINT LTD. ATTN: SAHLE DENEKE Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)7 Bramwell Capital Corp. c/o Icaza, Gonzales-Ruiz & Aleman P.O. Box 873 Road Town, Tortola, British Virgin Islands November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Bramwell Capital Corp., a company organized under the laws of the British Virgin Islands (the "Purchaser"). Capitalized terms used in this Agreement shall --------- have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or incurred by it as ---------------- a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified party") shall ----------------- promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------ Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------ Name: Nicholas Diaco Title: Co-Trustee BRAMWELL CAPITAL CORP. By:_____________________________________ Name: Title: Address for Notice: Bramwell Capital Corp. c/o Icaza, Gonzales-Ruiz & Aleman P.O. Box 873 Road Town, Tortola, British Virgin Islands Fax: 809-49-45880 If via Federal Express: Bramwell Capital Corp. c/o Icaza, Gonzales-Ruiz & Aleman Vanterpool Plaza Wickhams Cay I With a copy to: Robinson Silverman Pearce Aronsohn & Berman LLP 1290 Avenue of the Americas New York, New York 10104 Attn: Kenneth L. Henderson Fax: 212-541-1357 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Bramwell Capital Corp. 200,000 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Bramwell Capital Corp. Bear, Stearns & Co. DTC # 352 For the account of Bramwell Capital Corp., Account # 102-26302. Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)8 The Children's Institute of Pittsburgh c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and The Children's Institute of Pittsburgh, a Pennsylvania not-for-profit corporation (the "Purchaser"). Capitalized terms used in this Agreement shall --------- have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, and, ---------- simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to be ---------- delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee THE CHILDREN'S INSTITUTE OF PITTSBURGH By:_____________________________________ Name: Title: Address for Notice: The Children's Institute of Pittsburgh c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- The Children's Institute of Pittsburgh 14,925 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- The Children's Institute of Pittsburgh: DTC # 2616 Agent Bank # 27817 Account # 010010596930 Tax ID # 25-0965405 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)9 William Blair Small Cap Growth Fund c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and William Blair Small Cap Growth Fund, a Massachusetts business trust registered under the Investment Act of 1940 (the "Purchaser"). Capitalized terms --------- used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1 (b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee WILLIAM BLAIR SMALL CAP GROWTH FUND By:_____________________________________ Name: Title: Address for Notice: William Blair Small Cap Growth Fund c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- William Blair Small Cap Growth Fund 112,580 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- William Blair Small Cap Growth Fund: DTC # 2212 Agent Bank # 26580 Account # 77303 Tax ID # 36-4325841 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust EXHIBIT 7(e)10 Kentucky State District Council of Carpenters c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Kentucky State District Council of Carpenters, an state employee pension plan organized under the laws of Kentucky (the "Purchaser"). Capitalized terms --------- used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee KENTUCKY STATE DISTRICT COUNCIL OF CARPENTERS By:_____________________________________ Name: Title: Address for Notice: Kentucky State Council District of Carpenters c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Kentucky State Council District of Carpenters 16,820 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Kentucky State Council District of Carpenters: DTC # 2669 Agent Bank # 20290 Account # 1781063B Tax ID # 61-6040103 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)11 Pensionskasse SBB c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Pensionskasse SBB, a railway employee pension plan organized under the laws of Switzerland (the "Purchaser"). Capitalized terms used in this Agreement shall --------- have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee PENSIONSKASSE SBB By:_____________________________________ Name: Title: Address for Notice: Pensionskasse SBB c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Pensionskasse SBB 123,100 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Pensionskasse SBB: DTC # 012 Agent Bank # 03798 Account # 95400141 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust EXHIBIT 7(e)12 Rush Presbyterian St. Luke's Pension & Retirement c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Rush Presbyterian St. Luke's Pension & Retirement, an Illinois pension plan (the "Purchaser"). Capitalized terms used in this Agreement shall have the --------- meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------ Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------ Name: Nicholas Diaco Title: Co-Trustee RUSH PRESBYTERIAN ST. LUKE'S PENSION & RETIREMENT By:_____________________________________ Name: Title: Address for Notice: Rush Presbyterian St. Luke's Pension & Retirement c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Rush Presbyterian St. Luke's Pension & Retirement 39,085 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Rush Presbyterian St. Luke's Pension & Retirement: DTC # 2669 Agent Bank 20290 Account # 2282270 Tax ID # 36-2174823 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)13 Rush Presbyterian St. Luke's Endowment c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Rush Presbyterian St. Luke's Endowment, an Illinois not-for-profit (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings --------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------ Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------ Name: Nicholas Diaco Title: Co-Trustee RUSH PRESBYTERIAN ST. LUKE'S ENDOWMENT By:_____________________________________ Name: Title: Address for Notice: Rush Presbyterian St. Luke's Endowment c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Rush Presbyterian St. Luke's Endoqment 42,500 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Rush Presbyterian St. Luke's Endowment: DTC # 2669 Agent Bank # 20290 Account # 2682276 Tax ID # 36-2174823 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)14 Children's Institute of Pittsburgh -- Pension c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Children's Institute of Pittsburgh -- Pension, a Pennsylvania pension plan (the "Purchaser"). Capitalized terms used in this Agreement shall have the --------- meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or incurred by it as ---------------- a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified party") shall ----------------- promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------- circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee CHILDREN'S INSTITUTE OF PITTSBURGH -- PENSION By:_____________________________________ Name: Title: Address for Notice: Children's Institute of Pittsburgh -- Pension c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Children's Institute of Pittsburgh -- Pension 3,290 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Children's Institute of Pittsburgh -- Pension: DTC # 2816 Agent Bank # 27817 Account # 100021043344 Tax ID # 25-0965405 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)15 MacNeal Health Foundation c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and MacNeal Health Foundation, an Illinois not-for-profit corporation (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings --------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ----------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ----------------------------- Name: Nicholas Diaco Title: Co-Trustee MACNEAL HEALTH FOUNDATION By:_____________________________________ Name: Title: Address for Notice: MacNeal Health Foundation c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- MacNeal Health Foundation 22,800 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- MacNeal Health Foundation: DTC # 2669 Agent Bank # 20290 Account # 2606949 Tax ID # 36-4324067 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust EXHIBIT 7(e)16 CF Industries c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and CF Industries, an Illinois corporation (the "Purchaser"). Capitalized terms -------- used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------ Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------ Name: Nicholas Diaco Title: Co-Trustee CF INDUSTRIES By:_____________________________________ Name: Title: Address for Notice: CF Industries c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- CF Industries 13,300 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- CF Industries: DTC # 2669 Agent Bank # 20290 Account # 2638949 Tax ID # 13-3895900 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)17 Canton of Zurich c/o William Blair & Company, L.L.C. 22 W. Adams Street Chicago, IL 60606 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Canton of Zurich, a canton organized under the laws of Switzerland (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings --------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power --------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------- Name: Nicholas Diaco Title: Co-Trustee CANTON OF ZURICH By:_____________________________________ Name: Title: Address for Notice: Canton of Zurich c/o William Blair & Company, L.L.C. 222 W. Adams Street Chicago, Illinois 60606 Tel.: (312) 364-8262 Fax: (312) 551-4646 Attn: Gregory B. Campbell, Esq. Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Canton of Zurich 211,600 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- Canton of Zurich: DTC # 997 Agent Bank # 29796 Account # U9B0 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)18 Goldman Sachs GDP 2000 Master Fund Ltd. - Fort Point Capital Mgmt LLC c/o Maples & Calder P.. Box 309 Ugland House S. Church Street Georgetown, Grand Cayman British West Indies November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Goldman Sachs GDP 2000 Master Fund Ltd. - Fort Point Capital Mgmt LLC, a company organized under the laws of the Cayman Islands (the "Purchaser"). --------- Capitalized terms used in this Agreement shall have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite -------------------------- power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which ----------------------------- Registered Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller ------------ as set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived ------------------- or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ----------------- jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------- Name: Nicholas Diaco Title: Co-Trustee GOLDMAN SACHS GDP 2000 MASTER FUND LTD. - FORT POINT CAPITAL MGMT. LLC By:_____________________________________ Name: Title: Address for Notice: Goldman Sachs GDP 2000 Master Fund Ltd. - Fort Point Capital Mgmt LLC c/o Maples & Calder P.. Box 309 Ugland House S. Church Street Georgetown, Grand Cayman British West Indies Tel.: 415-394-0450 & 609-497-5500 Fax: 415-394-0456 With a copy to: Fort Point Capital Management LLC One Montgomery Street San Francisco, CA 94104 Tel.: 415-394-0450 Fax: 415-394-0456 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Goldman Sachs GDP 2000 Master Fund Ltd. - Fort Point Mgmt LLC 7,070 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- DTC #0773 Banc of America Securities LLC A/C#: 313-15199 A/C NAME: GOLDMAN SACHS GDP 2000 MASTER FUND LTD. - FORT POINT CAPITAL MGMT LLC ATTN: SAHLE DENEKE Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)19 Blue Coast Partners, L.P. One Montgomery Street San Francisco, CA 94104 November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Blue Coast Partners, L.P., a California limited partnership (the "Purchaser"). Capitalized terms used in this Agreement shall have the meanings -------- set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ----------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to obtain ---------------------- any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all delivery --------------------- requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which Registered ----------------------------- Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be ------------------- waived or amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, ------------- validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and -------- covenants contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent ------------ jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------- Name: Nicholas Diaco Title: Co-Trustee BLUE COAST PARTNERS, L.P. By:_____________________________________ Name: Title: Address for Notice: Blue Coast Partners, L.P. c/o Fort Point Capital Management LLC One Montgomery Street San Francisco, CA 94104 Tel.: 415-394-0450 Fax: 415-394-0456 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Blue Coast Partners, L.P. 16,380 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- DTC #0773 Banc of America Securities LLC A/C#: 118-14009 A/C NAME: BLUE COAST PARTNERS, L.P. ATTN: SAHLE DENEKE TaxID 94-3354853 Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust Exhibit 7(e)20 Green Coast Offshore Limited c/o Citco Fund Services (Curacao) N.V. P.O. Box 31106 SMB West Bay Road, Grand Cayman, Cayman Islands British West Indies November 5, 2001 The Allen E. Paulson Living Trust Paulson Enterprises P.O. Box 9660 Rancho Santa Fe, CA 92067 Attn: J. Michael Paulson and Nicholas Diaco Re: CardioDynamics International Corporation ---------------------------------------- Ladies and Gentlemen: This letter agreement (this "Agreement"), dated as of November 5, 2001, is --------- between The Allen E. Paulson Living Trust, a California trust (the "Seller"), ------ and Green Coast Offshore Limited, a mutual fund formed under the laws of the Cayman Islands (the "Purchaser"). Capitalized terms used in this Agreement shall --------- have the meanings set forth in the attached Schedule B. ---------- (1) Purchase and Sale of Registered Shares. -------------------------------------- (a) The Purchaser shall purchase from the Seller and the Seller shall sell to the Purchaser, the number of registered shares of Common Stock set forth on Schedule A hereto ("Registered Shares") for an aggregate purchase ---------- ----------------- price equal to the product of the number of Registered Shares multiplied by ------------- $4.35 (such product, the "Purchase Price"). -------------- (b) No later than ten (10) Business Days following the date on which the supplement to the prospectus and registration statement, dated September 26, 2001, shall become effective (the "Registered Shares Sale Date"): (i) the Purchaser shall, in accordance with and in the amounts set forth on Schedule E hereto (as the same may be amended from time to time ---------- with the mutual consent of the Purchaser and the Seller), pay the Purchase Price for the Registered Shares to the parties set forth on Schedule E, ---------- and, simultaneously therewith, (ii) the Seller shall, pursuant to the account instructions on Schedule C hereto, cause the Registered Shares to ---------- be delivered to the Purchaser's account through the Depository Trust Company DWAC system. (2) Representations, Warranties and Covenants of the Purchaser. The ---------------------------------------------------------- Purchaser represents, warrants and covenants to the Seller as follows: (a) Organization; Authority. The Purchaser is an entity duly ----------------------- organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Purchaser of Registered Shares hereunder has been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms. (b) Access to Information. The Purchaser acknowledges that it has --------------------- reviewed all necessary information concerning the Seller (including, without limitation, the registration statement and prospectus, dated September 26, 2001, with respect to the Registered Shares, the supplement thereto and the most recent quarterly statement of the Company on Form 10-Q on file with the Commission), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Registered Shares and the merits and risks of investing in the Registered Shares; and (ii) the opportunity to obtain such additional information which the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Purchaser and the consummation by the Purchaser of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Purchaser is a party or by which any property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Purchaser. (d) Consents and Approvals. The Purchaser is not required to ---------------------- obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of this Agreement. (e) Delivery Requirements. The Purchaser shall satisfy all --------------------- delivery requirements under the Securities Act of 1933, as amended, with respect to any resales of the Registered Shares to subsequent purchasers. (3) Representations and Warranties of the Seller. The Seller hereby -------------------------------------------- represents and warrants to the Purchaser as follows: (a) Authorization; Enforcement. The Seller has the requisite power -------------------------- and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Seller and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Seller and no further action is required by the Seller. This Agreement has been duly executed by the Seller and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. The Seller is not in violation of any of the provisions of its organizational or charter documents as a result of the transactions contemplated in this Agreement. (b) No liens on Registered Shares. As of the date on which ----------------------------- Registered Shares are delivered to the Purchaser pursuant to the terms hereof, the Seller will be the sole beneficial owner of the Registered Shares and at the time that Registered Shares are delivered to the Purchaser such Registered Shares will not be subject to any liens, pledges, encumbrances, security interests, or other restrictions. (c) No Conflicts. The execution, delivery and performance of this ------------ Agreement by the Seller and the consummation by the Seller of the transaction contemplated hereby do not and will not (i) conflict with or violate any provision of the Seller's organizational or charter documents (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement or other instrument or other understanding to which the Seller is a party or by which any property or asset of the Seller is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Seller is subject (including federal and state securities laws and regulations), or by which any property or asset of the Seller is bound or affected, except to the extent that any such violation would not have a material adverse effect on the Seller. (d) Consents and Approvals. The Seller is not required to obtain any ---------------------- consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Seller of this Agreement, other than reports of beneficial ownership to applicable governmental authorities, which the Seller agrees to promptly make. (e) Certain Fees. Except for certain fees payable by the Seller as ------------ set forth in Schedule D hereto, no fees or commissions will be payable by the ---------- Seller to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. (f) Disclosure. The Seller confirms that neither it nor any other ---------- Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material non-public information. The Seller understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions with respect to the Registered Shares. (4) Indemnification. --------------- (a) The Seller agrees to indemnify and hold harmless the Purchaser, its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and expenses) which may be suffered or incurred by any of them as a result of a breach of any representation, warranty or covenant made by the Seller in this Agreement. (b) The Purchaser agrees to indemnify the Seller and its shareholders, officers, directors, employees, agents and representatives against any damages, claims, losses, liabilities and expenses (including reasonable counsel fees and other expenses) ("Purchaser Losses") which may be suffered or ---------------- incurred by it as a result of any breach of any representation, warranty, or covenant made by the Purchaser in this Agreement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section, such Person (the "indemnified ----------- party") shall promptly notify the Person against whom such indemnity may be ----- sought (the "indemnifying party") in writing of the occurrence of the facts and ------------------ circumstances giving rise to such claim. The failure of any Person to deliver the notice required by this Section shall not in any way affect the indemnifying party's indemnification obligation hereunder except and only to the extent that the indemnifying party is actually prejudiced thereby. In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel or pay its own expenses. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceedings (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent may not be unreasonably withheld) but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment and the indemnifying party shall obtain a full release of the indemnified party. (5) Entire Agreement. This Agreement contains the entire understanding of ---------------- the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect thereto. (6) Notices. Any and all notices or other communications or deliveries ------- required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (California time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (California time) on any date, and (iii) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Seller The Allen E. Paulson Living Trust by U.S. mail or Paulson Enterprises facsimile transmission: P.O. Box 9660 Rancho Santa Fe, CA 92067 Facsimile Numbers.: 858-756-3194 Attn: J. Michael Paulson and Nicholas Diaco If to the Seller The Allen E. Paulson Living Trust by courier service: c/o Del Mar Country Club 6001 Clubhouse Drive Rancho Santa Fe, CA 92067 With a copy to: Gibson, Dunn & Crutcher LLP 2029 Century Park East Century City, CA 90067-3026 Facsimile No.: 310-551-8741 Telephone No.: 310-552-8500 Attn: Shari Leinwand, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature pages hereto (7) Amendments; Waivers. No provision of this Agreement may be waived or ------------------- amended except in a written instrument signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. (8) Headings. The headings herein are for convenience only, do not -------- constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. (9) Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties and their successors and permitted assigns. Neither the Seller nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser or the Seller, respectively. (10) No Third-Party Beneficiaries. This Agreement is intended for the ---------------------------- benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. (11) Governing Law. All questions concerning the construction, validity, ------------- enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in the Central District of the City of Los Angeles (the "California Courts"). Each party hereto hereby irrevocably submits to the ------------------ jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or that such California Courts are inconvenient or will be an improper forum for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (12) Survival. The representations, warranties, agreements and covenants -------- contained herein shall survive the closing until the date on which the Registered Shares are delivered to the Purchaser pursuant to Section 1(b). (13) Execution. This Agreement may be executed in two or more --------- counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. (14) Severability. In the event that any court of competent jurisdiction ------------ shall determine that any provision, or any portion thereof, contained in this Agreement is unenforceable in any respect, then such provision shall be deemed limited to the extent such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall be the interpreted as if such provision were so excluded and shall nevertheless remain in full force and effect. With regard to any provision, or portion thereof deemed wholly unenforceable, the parties shall attempt to agree upon a valid and enforceable provision or portion thereof, which shall be a reasonable substitute therefor, and upon such agreement, shall incorporate such substitute provision or portion thereof in this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -- SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. THE ALLEN E. PAULSON LIVING TRUST By: /s/ John Michael Paulson ------------------------------------- Name: John Michael Paulson Title: Co-Trustee By: /s/ Nicholas Diaco ------------------------------------- Name: Nicholas Diaco Title: Co-Trustee GREEN COAST OFFSHORE LIMITED By:_____________________________________ Name: Title: Address for Notice: Green Coast Offshore Limited c/o Citco Fund Services (Curacao) N.V. P.O. Box 31106 SMB West Bay Road, Grand Cayman, Cayman Islands British West Indies Tel.: 415-394-0450 & 011-5999-732-2222 Fax: 415-394-0456 With a copy to: Fort Point Capital Management LLC One Montgomery Street San Francisco, CA 94104 Tel.: 415-394-0450 Fax: 415-394-0456 Schedule A ---------- Registered Shares Purchased by Purchaser ---------------------------------------- Purchaser Registered Shares Purchased --------- --------------------------- Green Coast Offshore Limited 37,660 Schedule B ---------- "Affiliate" means, with respect to any Person, any other Person that --------- directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with ------- respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings ---------- ----------- ---------- correlative to the foregoing. "Business Day" shall mean any day except Saturday, Sunday and any day which ------------ shall be a legal holiday or a day on which banking institutions in New York City or California are authorized or required by law or other governmental action to close. "Commission" shall mean the United States Securities and Exchange ---------- Commission. "Common Stock" shall mean the shares of common stock, no par value per ------------ share of CardioDynamics International Corporation. "Company" shall mean CardioDynamics International Corporation. ------- "Person" means an individual or corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. Schedule C ---------- Purchaser DTC Account Instructions ---------------------------------- DTC #0773 Banc of America Securities LLC A/C#: 313-14766 A/C NAME: GREEN COAST OFFSHORE LIMITED ATTN: SAHLE DENEKE Schedule D ---------- Schedule of Fees Payable by Seller ---------------------------------- In connection with the purchase of Registered Shares under this Agreement, the Seller shall pay (i) to Gruntal & Co., L.L.C., a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser and for the Registered Shares and (ii) to the Company, a dollar amount equal to 2.00% of the gross purchase price paid by the Purchaser for the Registered Shares. Schedule E ---------- Wire Transfer Instructions -------------------------- 1. The sum equal to 2.00% of the Purchase Price shall be paid to the Company by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: CardioDynamics International Corporation's Wire Transfer Instructions --------------------------------------------------------------------- Comerica Bank San Diego Regional Office San Diego, CA 92101 Phone (858) 338-1500 Account number 1891661462 Routing/ABA Number 121137522 In favor of: CardioDynamics International Corporation 6175 Nancy Ridge Drive, Suite 300 San Diego, CA 92121 2. The sum equal to 2.00% of the Purchase Price shall be paid to Gruntal & Co., L.L.C. by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: Gruntal & Co., L.L.C. Wire Transfer Instructions ------------------------------------------------ Pershing - Chase Manhattan Bank NYC - ABA# 021000021 - Pershing A/C# 930-1-032992 - Re: Cardio Dynamics - FFC BondInvest A/C# 75F-891578 3. The remainder of the Purchase Price shall be paid to the Seller by wire transfer of immediately available funds, pursuant to the following wire transfer instructions: The Allen E. Paulson Living Trust's Wire Transfer Instructions -------------------------------------------------------------- DTC #352 Citibank 111 Wall Street New York, NY Routing/ABA Number 021000089 Bear Stearns Account Number 0925-3186 For Further Credit To: Account Number 720-51920 FBO: Allen E. Paulson Living Trust