<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 8)
CARDIODYNAMICS INTERNATIONAL CORPORATION
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(NAME OF ISSUER)
COMMON STOCK
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(TITLE OF CLASS OF SECURITIES)
141597104
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(CUSIP NUMBER)
CARDIODYNAMICS HOLDINGS, LLC
C/O STEVE DECHANT
DEL MAR COUNTRY CLUB
P.O. BOX 9660
RANCHO SANTA FE, CA 92067
(619) 759-5990
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
JUNE 4, 1999
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(DATE OF EVENT WHICH REQUIRES FILING
OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_| .
Check the following box if a fee is being paid with the statement |_|. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
(Continued on following pages)
<PAGE> 2
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CUSIP NO. 141597104 13D PAGE 2 OF 17 PAGES
- ------------------- ------------------
- -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CARDIODYNAMICS HOLDINGS, LLC
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
AF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
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(7) SOLE VOTING POWER
NUMBER OF 4,124,490
SHARES -----------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 0
REPORTING -----------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
102,243
-----------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,124,490
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES*
[ ]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
12.8%
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(14) TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 17
<PAGE> 3
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CUSIP NO. 141597104 13D PAGE 3 OF 17 PAGES
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(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ALLEN PAULSON
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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(7) SOLE VOTING POWER
NUMBER OF 10,746,734
SHARES -----------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,124,490
REPORTING -----------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
10,848,977
-----------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,871,224
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES*
[ ]
- -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
37.2%
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(14) TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 17
<PAGE> 4
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CUSIP NO. 141597104 13D PAGE 4 OF 17 PAGES
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- -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JAMES GILSTRAP
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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(7) SOLE VOTING POWER
NUMBER OF 3,248,654
SHARES -----------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,124,490
REPORTING -----------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
3,248,654
-----------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,373,144
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES*
[ ]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
18.5%
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(14) TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 17
<PAGE> 5
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CUSIP NO. 141597104 13D PAGE 5 OF 17 PAGES
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(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NICHOLAS DIACO
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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(7) SOLE VOTING POWER
NUMBER OF 639,306
SHARES -----------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,124,490
REPORTING -----------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
639,306
-----------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,763,796
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES*
[ ]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.9%
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(14) TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 17
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CUSIP NO. 141597104 13D PAGE 6 OF 17 PAGES
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(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOSEPH DIACO
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -------------------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 405,306
SHARES -----------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,124,490
REPORTING -----------------------------------------------------------
PERSON WITH (9) SOLE DISPOSITIVE POWER
405,306
-----------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,529,796
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES*
[ ]
- -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.3%
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(14) TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 17
<PAGE> 7
ITEM 1. SECURITY AND ISSUER
The class of securities to which this Statement relates is the common stock
(the "Common Stock") of CardioDynamics International Corporation, a California
corporation ("Issuer"), whose address is 6175 Nancy Ridge Drive, Suite 300, San
Diego, California 92121.
ITEM 2. IDENTITY AND BACKGROUND
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act of
1934, as amended (the "Act"), the undersigned hereby jointly file this amended
statement on Schedule 13D ("Statement") on behalf of CardioDynamics Holdings,
LLC ("LLC"), a California limited liability company, Allen Paulson, a Member of
LLC, James Gilstrap, a Member of LLC, Nicholas Diaco, a Member of LLC, and
Joseph Diaco, a Member of LLC. The foregoing persons are sometimes hereinafter
referred to collectively as the "Reporting Persons." The Reporting Persons are
making this single, joint filing to comply with the reporting requirements with
respect to Common Stock of the Issuer that each beneficially owns. With respect
to Mr. Paulson's 10,746,743 privately beneficially-owned shares of Common Stock,
this is also a group filing (Paulson and LLC).
A. CardioDynamics Holdings, LLC
(a) CardioDynamics Holdings, LLC.
(b) LLC's business address is c/o Del Mar Country Club, P.O. Box 9660,
Rancho Santa Fe, California 92067.
(c) LLC's business is to acquire and own the Common Stock and other
securities of Issuer as reported in this Statement.
(d)-(e) LLC has not, during the last five years, been convicted in any
criminal proceeding, excluding traffic violations or similar misdemeanors, nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which it was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) LLC is a limited liability company formed under the laws of
California.
B. Allen Paulson -- Member of LLC
(a) Allen Paulson.
(b) Business address: 6001 Clubhouse Drive, P. O. Box 9660, Rancho Santa
Fe, CA 92067.
Page 7 of 17
<PAGE> 8
(c) Present principal occupation: private investor.
(d)-(e) Allen Paulson has not, during the last five years, been convicted
in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
C. James Gilstrap -- Member of LLC
(a) James Gilstrap.
(b) Residence address: 5067 Shore Drive, Carlsbad, CA 92008.
(c) Present principal occupation: private investor.
(d)-(e) James Gilstrap has not, during the last five years, been convicted
in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
D. Nicholas Diaco -- Member of LLC
(a) Nicholas Diaco.
(b) Business address: 1301 20th St., Suite 400, Santa Monica, CA 90404.
(c) Present principal occupation: Physician; Cardiology Consultants of
Santa Monica, 1301 20th St., Suite 400, Santa Monica, CA 90404.
(d)-(e) Nicholas Diaco has not, during the last five years, been convicted
in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
Page 8 of 17
<PAGE> 9
E. Joseph Diaco -- Member of LLC
(a) Joseph Diaco.
(b) Business address: 4700 N. Habana, Suite 403, Tampa, FL 33614.
(c) Present principal occupation: Physician.
(d)-(e) Joseph Diaco has not, during the last five years, been convicted in
any criminal proceeding, excluding traffic violations or similar misdemeanors,
nor been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship: USA.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
LLC used $25,408 contributed by its four Members (from their personal
funds) to purchase the securities set forth in the first paragraph of Item 5(a)
of this Statement. This $25,408 figure is net of $2,849,592 (from their personal
funds) attributable to securities which were acquired by LLC and then on
September 9, 1997 distributed to the four Members.
Allen Paulson used $1,156,500 of his personal funds to directly purchase
4,626,000 shares of outstanding Common Stock, of which he subsequently sold
3,015,000 shares for a total of $757,500. Approximately $2,200,000 of his
personal funds, which is less than the larger amount he contributed to LLC, is
attributable to the 12,088,734 shares of Common Stock distributed by LLC to him
on September 9, 1997. He subsequently sold 3,000,000 of those shares for
$3,600,000 pursuant to an agreement dated June 4, 1999. Any exercises of
outstanding stock options would be from his personal funds.
James Gilstrap used $219,000 of his personal funds to directly purchase
876,000 of the shares of outstanding Common Stock. Also, he earlier received
150,000 shares of Common Stock from Issuer as a fee for services in connection
with LLC's February 1995 investment in Issuer. Approximately $500,000 of his
personal funds, which is less than the larger amount he contributed to LLC, is
attributable to the 2,780,654 shares of Common Stock distributed by LLC to him
on September 9, 1997. In December 1997, he gifted 5,000 shares of Common Stock
to his daughters and contributed 1,015,000 shares of Common Stock to the Jim and
Sue Gilstrap Family Limited Partnership. On February 19, 1999 he gifted 600,000
shares of Common Stock to his daughters. Any exercises of outstanding stock
options would be from his personal funds.
Nicholas Diaco used $1,500 of his personal funds to directly purchase 6,000
of the shares of outstanding Common Stock. Also, he earlier received 150,000
shares of Common Stock from Issuer as a fee for services in connection with
LLC's February 1995
Page 9 of 17
<PAGE> 10
investment in Issuer. Approximately $75,000 of his personal funds, which is less
than the larger amount he contributed to LLC, is attributable to the 405,306
shares of Common Stock distributed by LLC to him on September 9, 1997. On June
10, 1998, he gifted 30,000 shares of Common Stock to friends. On January 6,
1999, he gifted 20,000 shares of Common Stock to his daughters, and on June 15,
1999, he gifted 24,000 shares of Common Stock to his daughters. Any exercises of
outstanding stock options would be from his personal funds.
Approximately $75,000 of Joseph Diaco's personal funds, which is less than
the larger amount he contributed to LLC, is attributable to the 405,306 shares
of Common Stock distributed by LLC to him on September 9, 1997.
ITEM 4. PURPOSE OF TRANSACTION
LLC acquired control of Issuer through election of a majority of Issuer's
Board of Directors on May 15, 1995, and it and its Members retain that control.
The individual Reporting Persons' acquisitions of securities have been for
investment purposes. The September 9, 1997 distribution of Issuer shares by LLC
to its Members may be deemed to have placed control of Issuer in Allen Paulson.
The purpose of the distribution was to give the Members more flexibility in
utilizing and controlling the Issuer shares which they formerly indirectly owned
through LLC (e.g., Mr. Paulson's pledge of shares and subsequent sale of certain
shares; see Item 6(l) and Item 6(r)).
(a) Regarding LLC: See Items 6(d), 6(h), and 6(i), which are incorporated
herein by reference. Regarding Allen Paulson, James Gilstrap and Nicholas Diaco:
See Item 5(c)(5), which is incorporated herein by reference. Issuer is likely to
require further third-party equity capitalization.
On December 9, 1997, James Gilstrap transferred 1,015,000 shares of Issuer
Common Stock to the Jim and Sue Gilstrap Family Limited Partnership. As Mr.
Gilstrap and his wife are the sole general partners of the partnership, and he
is the managing general partner of the partnership, he retains sole voting and
dispositive power. However, the economic benefit of 95.0495% of the partnership,
in the form of limited partner interests, was donated later in December 1997 to
the Jim and Sue Gilstrap Family Foundation, which is a supporting organization
for Scripps Research Institute. Accordingly, Mr. Gilstrap disclaims any
pecuniary interest in the 964,752 shares of Issuer Common Stock (95.0495% of the
partnership's 1,015,000 shares) corresponding to the foundation's 95.0495%
limited partner interest in the partnership
On July 24, 1998, Issuer amended its Articles of Incorporation to authorize
18,000,000 shares of "blank check" preferred stock. On August 21, 1998, Issuer
filed a Certificate of Determination of Preferences of Series A Convertible
Preferred Stock, creating 3,000 shares of Series A Convertible Preferred Stock
which were then sold (together with 123,000 Common Stock warrants) for
$3,000,000 to persons not affiliated with the Reporting Persons. The Series A
Convertible Preferred Stock has since all been converted into a total of
2,462,568 shares of Common Stock.
Page 10 of 17
<PAGE> 11
On May 28, 1999, Issuer sold 5,221,500 shares of Common Stock for
$5,221,500 to persons not affiliated with the Reporting Persons.
(b) None.
(c) None.
(d) See original Statement and previous amendments. At Issuer's annual
meeting of shareholders to be held on July 15, 1999, directors Nicholas Diaco,
Stephenson Dechant, Richard Otto and Michael Padilla will not be standing for
re-election. They are not being replaced; instead, the size of the Board of
Directors is being reduced.
(e) See Item 4(a).
(f) None.
(g) None.
(h) None.
(i) None.
(j) None.
The Members of LLC have no such plans or proposals, or purposes, apart from
LLC's or as stated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) LLC beneficially owns 2,243 shares of Common Stock outright, and
beneficially owns (by virtue of its sole voting power) an additional 4,022,247
shares of Common Stock owned by others which LLC holds irrevocable proxies to
vote. This does not include as beneficially owned, 500,000 shares which had been
subject to a proxy in favor of LLC, but which LLC has been informed that Dr.
L.S. Smith and his affiliate Dallas Gold & Silver Exchange, Inc. have, to date,
sold to bona fide purchasers without notice (thereby freeing them of the proxy
restrictions). LLC also beneficially owns, by virtue of its right to acquire
them from Issuer, 100,000 shares of Common Stock issuable upon conversion of the
Amended and Restated Secured Convertible Promissory Note. Together, all this
represents 10.3% of the Common Stock under the Rule 13d-3(d)(1) calculation
(with 39,809,811 shares outstanding at June 30, 1999).
Other than through LLC, the Members have no such beneficial ownership of
Common Stock except for 10,746,734 shares beneficially owned by Mr. Paulson,
3,248,654 shares beneficially owned by Mr. Gilstrap, 639,306 shares beneficially
owned by Mr. N. Diaco and 405,306 shares beneficially owned by Mr. J. Diaco.
Together, LLC and its Members beneficially own 47.7% of the Issuer's Common
Stock.
Page 11 of 17
<PAGE> 12
The total number of shares of Issuer Common Stock beneficially owned by
each respective Reporting Person, followed in parentheses by the percentage of
the class and the number of such shares--included in the total--which the
Reporting Person has the right to acquire, is:
<TABLE>
<S> <C> <C>
LLC: 4,124,490 (10.3%,100,000)
Allen Paulson: 14,871,224 (37.2%; 47,000 plus LLC's 100,000)
James Gilstrap: 7,373,144 (18.5%; 47,000 plus LLC's 100,000)
Nicholas Diaco: 4,763,796 (11.9%; 152,000 plus LLC's 100,000)
Joseph Diaco: 4,529,796 (11.3%; LLC's 100,000)
</TABLE>
Together, LLC and Mr. Paulson beneficially own 37.2% of the Issuer's Common
Stock.
(b) The Reporting Persons' voting and dispositive power is set forth in
the cover pages under items 7-10 on pages 2-6 of this Statement. Each of Mr.
Paulson, Mr. Gilstrap, Mr. N. Diaco and Mr. J. Diaco has sole voting power and
sole dispositive power for his respective Issuer shares. In addition, each
Member of LLC has given Mr. Paulson a proxy to vote his own respective LLC
interests. Mr. Paulson has a sufficient interest in the LLC, even without the
proxies, to control the disposition of LLC's Issuer shares.
(c) No other transactions in the Common Stock were effected by LLC, Mr.
Paulson or any of the other Members since the filing of Amendment No. 7 to
Schedule 13D, except for the following:
(1) On June 4, 1999, Allen Paulson entered into a letter agreement
with Domain Associates to sell 3,000,000 shares of Issuer Common Stock for
$3,600,000 to accounts managed by Domain Associates. This sale was consummated
on June 7, 1999.
(2) On February 19, 1999, James Gilstrap gifted a total of 600,000
shares of Issuer Common Stock to his three adult daughters.
(3) On January 6, 1999, Nicholas Diaco gifted a total of 20,000
shares of Issuer Common Stock to his two adult daughters, and on June 15, 1999
he gifted a total of 24,000 shares of Issuer Common Stock to his two adult
daughters.
(4) On September 29, 1998, Issuer granted Nicholas Diaco a
discretionary stock option to purchase 10,000 shares of Common Stock. 5,000
option shares are currently vested and are deemed beneficially owned by Dr.
Diaco; the other 5,000 option shares will not vest until more than 60 days after
this Amendment and therefore are not deemed to be beneficially owned.
(5) Pursuant to Issuer's 1995 Stock Option/Stock Issuance Plan, each
of Messrs. Paulson, Gilstrap and N. Diaco has, on the last day of each month
beginning August 1995, been automatically granted options to purchase 1,000
shares of Issuer Common Stock, with an exercise price equal to the fair market
value of such stock as of each such date, in respect of his service as a
non-employee director. Such automatic
Page 12 of 17
<PAGE> 13
option grants were not considered to constitute beneficial ownership of the
underlying shares until June 12, 1996, when Issuer's shareholders voted to
approve such Plan. Through June 30, 1999, each of Messrs. Paulson, Gilstrap and
N. Diaco has received automatic option grants for a per-person total of 47,000
shares. Beginning in October 1997, new automatic option grants to 10%
shareholders (i.e., Mr. Paulson and Mr. Gilstrap) have had an exercise price
equal to 110% of the fair market value of the stock as of the grant date.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
(a) The relationship among the Members of LLC is governed by the Operating
Agreement of LLC, as amended from time to time.
(b) Purchase Agreement. See Item 7(c).
(c) Amendment of Purchase Agreement. See Item 7(m).
(d) Sixth Amended and Restated Secured Convertible Promissory Note
(convertible into Common Stock at $0.25 per share). See Item 7(q).
(e) Agreement and Irrevocable Proxy (five-year proxy to LLC from DaVinci
Scientific Corporation -- 3,902,956 shares of Common Stock; includes an
agreement to vote such shares so as to cause the election of one nominee of
DaVinci Scientific Corporation as a director of Issuer). See Item 7(e). Now
applicable to those shares in the hands of various transferees.
(f) Agreement and Irrevocable Proxy (five-year proxy to LLC from Dr. L.S.
Smith -- 96,291 shares of Common Stock currently outstanding and 120,365 shares
of Common Stock issuable upon exercise of warrants). See Item 5(a). See Item
7(f).
(g) Agreement and Irrevocable Proxy (five-year proxy to LLC from Dallas
Gold & Silver Exchange, Inc. -- 523,000 shares of Common Stock). See Item 5(a).
See Item 7(g).
(h) Agreement of Right of First Refusal (Dr. L.S. Smith in favor of LLC
for three years). See Item 7(h).
(i) Agreement of Right of First Refusal (Dallas Gold & Silver Exchange,
Inc. in favor of LLC for three years). See Item 7(i).
(j) Investment Agreement. See Item 7(l).
Page 13 of 17
<PAGE> 14
(k) 1995 Stock Option/Stock Issuance Plan of Issuer, as amended through
October 8, 1997 (entitling each non-employee director of Issuer to automatic
grants of 1,000 stock options on the last day of each month of service beginning
August 1995). Messrs. Paulson, Gilstrap and N. Diaco are non-employee directors
of Issuer. See Item 7(r).
(l) Pledge Agreement (Allen Paulson, in favor of Madeleine,
L.L.C.--13,310,734 shares of Common Stock). See Item 7(s). The 3,000,000 shares
sold by Mr. Paulson on June 7, 1999 (see Items 5(c)(1), 6(r) and 7 (ee)) were
duly released from pledge.
(m) Limited Partnership Agreement of Jim and Sue Gilstrap Family Limited
Partnership. See Item 7(t).
(n) On March 11, 1998, Mr. Paulson and Mr. Gilstrap entered into a Private
Line of Credit Agreement with Issuer pursuant to which they agreed to, upon
requests by Issuer, lend to Issuer up to $3,000,000. All of such loans would be
funded 85% by Mr. Paulson and 15% by Mr. Gilstrap, would bear interest at 10%
per annum, and would mature on September 30, 1999. This Agreement was amended on
February 5, 1999 to extend the private line of credit from September 30, 1999 to
September 30, 2000. See Items 7(u), 7(v), 7(w) and 7(bb).
(o) On May 14, 1998, Mr. Paulson and Mr. Gilstrap guaranteed the repayment
of loans of up to $4,000,000 from Imperial Bank to Issuer. See Items 7(x) and
7(y).
(p) On August 19, 1998, upon Issuer's request, Mr. Paulson and Mr.
Gilstrap loaned Issuer $1,000,000 under the Private Line of Credit Agreement.
This was used to pay down a portion of the guaranteed Imperial Bank loan which
was thereafter capped at a principal balance of $2,000,000.
(q) On April 26, 1999, Mr. Paulson and Mr. Gilstrap guaranteed (as of
February 25, 1999) the repayment of loans of up to $2,000,000 from City National
Bank to Issuer. See Items 7(cc) and 7(dd).
(r) On June 4, 1999, Mr. Paulson entered into a letter agreement with
Domain Associates to sell 3,000,000 shares of Issuer Common Stock for $3,600,000
to accounts managed by Domain Associates. See Item 7(ee). The sale was
consummated on June 7, 1999.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Letter dated January 6, 1995 from Messrs. Paulson, Gilstrap and
Walters to Messrs. Tate and Schmeltzer (previously filed).
(b) Letter dated February 6, 1995 from Arter & Hadden to Messrs. Paulson,
Gilstrap and Walters (previously filed).
Page 14 of 17
<PAGE> 15
(c) Purchase Agreement dated February 7, 1995 between LLC and Issuer
(previously filed).
(d) Secured Convertible Promissory Note dated February 7, 1995 from Issuer
to LLC (previously filed).
(e) Agreement and Irrevocable Proxy dated February 2, 1995 between LLC and
DaVinci Scientific Corporation (previously filed).
(f) Agreement and Irrevocable Proxy dated February 7, 1995 between LLC and
Dr. L.S. Smith (previously filed).
(g) Agreement and Irrevocable Proxy dated February 7, 1995 between LLC and
Dallas Gold & Silver Exchange, Inc. (previously filed).
(h) Agreement of Right of First Refusal dated February 7, 1995 between LLC
and Dr. L.S. Smith (previously filed).
(i) Agreement of Right of First Refusal dated February 7, 1995 between LLC
and Dallas Gold & Silver Exchange, Inc. (previously filed).
(j) First Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended March 30, 1995 (previously filed).
(k) Second Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended May 19, 1995 (previously filed).
(l) Investment Agreement, as amended, dated as of April 12, 1995 between
Issuer and LLC (previously filed).
(m) Amendment of Purchase Agreement, dated March 31, 1996 between LLC and
Issuer (previously filed).
(n) Third Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended March 31, 1996 (previously filed).
(o) Fourth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of June 30, 1996 (previously filed).
(p) Fifth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of February 1, 1997 (previously filed).
(q) Sixth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of August 15, 1998 (previously filed).
(r) 1995 Stock Option/Stock Issuance Plan of Issuer, as amended through
October 8, 1997 (previously filed).
Page 15 of 17
<PAGE> 16
(s) Pledge Agreement between Allen Paulson and Madeleine, L.L.C., dated
September 18, 1997 (previously filed).
(t) Agreement of Limited Partnership of Jim and Sue Gilstrap Family
Limited Partnership (previously filed).
(u) Private Line of Credit Agreement, dated March 11, 1998, among Allen
Paulson, James Gilstrap and Issuer (previously filed via incorporation by
reference to Issuer's Form 10-QSB for the quarter ended May 31, 1998).
(v) Optional Advance Note dated March 11, 1998 (Paulson) (previously
filed).
(w) Optional Advance Note dated March 11, 1998 (Gilstrap) (previously
filed).
(x) Commercial Guaranty dated May 14, 1998 (Paulson) (previously filed).
(y) Commercial Guaranty dated May 14, 1998 (Gilstrap) (previously filed).
(z) Certificate of Amendment of Issuer's Restated Articles of
Incorporation, as filed July 24, 1998 (previously filed via incorporation by
reference to Issuer's Form 8-K for an event of August 21, 1998, filed September
3, 1998).
(aa) Certificate of Determination of Preferences of Series A Convertible
Preferred Stock, as filed August 21, 1998 (previously filed via incorporation by
reference to Issuer's Form 8-K for an event of August 21, 1998, filed September
3, 1998).
(bb) Amendment of Private Line of Credit Agreement, dated February 5, 1999,
among Allen Paulson, James Gilstrap and Issuer (incorporated by reference to
Issuer's Form 10-QSB for the quarter ended February 28, 1999).
(cc) Limited Guaranty dated April 26, 1999 (as of February 25, 1999)
(Paulson).
(dd) Limited Guaranty dated April 26, 1999 (as of February 25, 1999)
(Gilstrap).
(ee) Letter agreement between Allen Paulson and Domain Associates, on
behalf of Domain Partners IV, L.P. and DP IV Associates, L.P., dated June 4,
1999 (incorporated by reference to Schedule 13D for an event of June 7, 1999,
with respect to Issuer, filed by Domain Partners IV, L.P. and DP IV Associates,
L.P. on June 16, 1999).
(ff) Agreement of Joint Filing, dated July 1, 1999 among LLC and Messrs. A.
Paulson, J. Gilstrap, N. Diaco and J. Diaco.
Page 16 of 17
<PAGE> 17
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 1, 1999 CARDIODYNAMICS HOLDINGS, LLC
By: /s/ Allen Paulson
-----------------------------------
Allen Paulson, Member
By: /s/ James Gilstrap
-----------------------------------
James Gilstrap, Member
/s/ Allen Paulson
-----------------------------------
ALLEN PAULSON
/s/ James Gilstrap
-----------------------------------
JAMES GILSTRAP
/s/ Nicholas Diaco
-----------------------------------
NICHOLAS DIACO
/s/ Joseph Diaco
-----------------------------------
JOSEPH DIACO
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (see 18 U.S.C. 1001).
<PAGE> 18
EXHIBIT INDEX
7(bb) Amendment of Private Line of Credit Agreement, dated February 5, 1999,
among Allen Paulson, James Gilstrap and Issuer (incorporated by
reference to Issuer's Form 10-QSB for the quarter ended February 28,
1999).
7(cc) Limited Guaranty dated April 26, 1999 (as of February 25, 1999)
(Paulson).
7(dd) Limited Guaranty dated April 26, 1999 (as of February 25, 1999
(Gilstrap).
7(ee) Letter agreement between Allen Paulson and Domain Associates, on
behalf of Domain Partners IV, L.P. and DP IV Associates, L.P., dated
June 4, 1999 (incorporated by reference to Schedule 13D for an event
of June 7, 1999, with respect to Issuer, filed by Domain Partners IV,
L.P. and DP IV Associates, L.P. on June 16, 1999).
7(ff) Agreement of Joint Filing.
<PAGE> 1
EXHIBIT 7.cc
LIMITED GUARANTY
CITY NATIONAL
BANK
LOAN NO. 32692
CUSTOMER NO. 637864
For valuable consideration, the undersigned, ALLEN E. PAULSON ("Guarantor"),
unconditionally guarantees and promises to pay CITY NATIONAL BANK, a national
banking association ("CNB"), or order, on demand, in lawful money of the United
States, any and all Indebtedness of CARDIODYNAMICS INTERNATIONAL CORPORATION, A
CALIFORNIA CORPORATION ("Borrower") to CNB under that certain Promissory Note
dated February 25, 1999, executed by Borrower in favor of CNB, in the original
principal amount of TWO MILLION AND NO/100 Dollars ($2,000,000.00), and any and
all renewals and extensions thereof ("Note"). The word "Indebtedness" as used
herein means all obligations and liabilities of Borrower to CNB under the Note
(whether recovery upon the Note may be or become barred by any statute of
limitations or otherwise unenforceable), including the principal amount thereof,
all interest thereon and all costs and expenses incurred in enforcing or
collecting this Guaranty, the Indebtedness or any security for the Indebtedness
or this Guaranty.
CNB may permit the total of all of Borrower's obligations to CNB to exceed
Guarantor's liability hereunder. The amount of Guarantor's liability hereunder
and under any other agreement now or at any time hereafter in force between
Guarantor and CNB, including any other guaranty executed by Guarantor relating
to any obligations of Borrower to CNB, shall be cumulative and not alternative.
Any payment by Guarantor shall not reduce Guarantor's maximum obligation
hereunder, unless written notice to that effect has been actually received by
CNB at or prior to the time of such payment.
The obligations hereunder are independent of the obligations of Borrower, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or whether Borrower is joined in any
such action or actions; and Guarantor waives the benefit of any statute of
limitations affecting Guarantor's liability hereunder or the enforcement
thereof.
Guarantor authorizes CNB, without notice or demand and without affecting
Guarantor's liability hereunder, from time to time, to (a) renew, compromise,
extend, accelerate or otherwise change any of the terms of the Indebtedness or
any part thereof, including changing the rate of interest thereon or the time
for payment thereof (but not including any change which would increase the
principal amount of the Note); (b) take and hold security for the payment of
this Guaranty or the Indebtedness, and exchange, enforce, waive and release any
such security; (c) apply such security and direct the order or manner of sale or
other disposition thereof as CNB in its discretion may determine; (d) apply
payments received from Borrower or Guarantor, or any of them, to the
Indebtedness in such order as CNB may determine in its sole discretion; and (e)
release or substitute any Person liable on the Indebtedness, any other guarantor
of the Indebtedness, or any other Person providing support for the Indebtedness
to CNB, this Guaranty, or any other guaranty. As used in this Guaranty, "Person"
means any individual or entity.
Guarantor waives any right to require CNB to (a) proceed against Borrower,
Guarantor or any other guarantor; (b) proceed against or exhaust any security or
other support for the Indebtedness granted by Borrower, Guarantor, or any other
guarantor or Person; or (c) pursue any other remedy in CNB's power whatsoever.
Guarantor waives any defense arising by reason of (i) any disability or other
defense of Borrower; (ii) the cessation from any cause whatsoever of the
liability of Borrower for the Indebtedness for any reason other than payment in
full and final satisfaction; or (iii) the non-perfection of any security or
support for the Indebtedness. Until all indebtedness has been paid to CNB,
Guarantor shall have no right of subrogation to and waives any right to enforce
any remedy
EXHIBIT 7CC-1
<PAGE> 2
which CNB now has or may hereafter have against Borrower, and waives any benefit
of, any right to participate in, and any right to direct the application of any
security for the Indebtedness, this Guaranty or any other guaranty of the
Indebtedness now or hereafter held by CNB, whether any of the foregoing rights
arise in equity, at law or by contract. Without limiting the generality of the
foregoing, Guarantor waives all rights and defenses arising out of an election
of remedies by the creditor, even though that election of remedies, such as
non-judicial foreclosure with respect to security for a guaranteed obligation,
has destroyed guarantor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise. For purposes of the waiver just given, the "creditor"
referred to therein is CNB and the "principal" is the Borrower. Guarantor waives
all presentments, demands for performance, notices of nonperformance, or other
defaults, protests, notices of protest, notices of dishonor, and notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness of Borrower to CNB. Guarantor assumes the
responsibility for being and keeping itself informed of the financial condition
of Borrower and of all other circumstances bearing upon the risk of nonpayment
of the Note or other indebtedness of Borrower to CNB which diligent inquiry
would reveal, and agrees that CNB shall have no duty to advise Guarantor of
information known to CNB regarding such condition or circumstances.
Without limiting any waiver of rights of subrogation contained herein, any
indebtedness of Borrower now or hereafter held by Guarantor is hereby
subordinated to the Indebtedness; and such indebtedness of Borrower to
Guarantor, if CNB so requests, shall be collected, enforced and received by
Guarantor as trustee for CNB and be paid over to CNB on account of the
Indebtedness but without reducing or affecting in any manner the liability of
Guarantor under the other provisions of this Guaranty. CNB shall have rights of
setoff against, and bankers' liens upon all monies, securities and other
properties of Guarantor to the extent provided by law.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the Indebtedness by Borrower or any other
guarantor is avoided as a preference, or on any other grounds provided by law,
or must otherwise be returned by CNB as a result of an order for relief being
entered with respect to Borrower or any other guarantor under the United States
Bankruptcy Code, or as a result of Borrower's or any other guarantor's
assignment for the benefit of creditors.
Where Borrower is a corporation or partnership, it is not necessary for CNB to
inquire into the powers of Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf and any Indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
Guarantor has entered into this Guaranty with the understanding that CNB may
rely upon it to the exclusion of any other guaranties. CNB has not, nor has
Borrower represented that there are or may be other guarantors. Nothing in this
Guaranty, however, shall bind CNB to seek other guarantors, separate and apart
from the undersigned. Guarantor understands that CNB may already have, or
concurrently herewith may have obtained or hereafter may obtain other guarantors
(one or more, several or joint) of the Indebtedness. Such guarantors,
heretofore, herewith, or hereafter obtained, shall in no way affect Guarantor's
complete liability hereunder for the full amount of the Indebtedness. Nothing
herein shall require CNB to sue all of the guarantors severally or together or
to sue more than one or to prorate the above liability among the guarantors or
any of them. Guarantor agrees that CNB may, in its sole and uncontrolled
discretion, sue any one or more of the guarantors for all of the Indebtedness;
and within its sole and uncontrolled discretion CNB may take judgment against
any one of the guarantors for all of the Indebtedness, plus interest, costs and
attorneys' fees, or within its sole discretion CNB may prorate such judgment
between or among one or more of the guarantors.
Guarantor agrees to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred by CNB (or allocable to CNB's in-house counsel)
in the enforcement of this Guaranty, or the collection of any Indebtedness,
irrespective of whether suit is filed.
When there is more than one Borrower named herein, or when this Guaranty is
executed by more than one Guarantor, the word "Borrower" and the word
"Guarantor" respectively shall mean all and any one or more of them and each
promise and obligation set forth herein shall be joint and several.
This Guaranty shall benefit CNB, its successors and assigns, and shall bind
Guarantor's successors and assigns. This Guaranty is assignable by CNB with
respect to all or any portion of the Indebtedness and obligations
EXHIBIT 7CC-2
<PAGE> 3
guaranteed hereunder, and when so assigned Guarantor shall be liable to the
assignees under this Guaranty without in any manner affecting Guarantor's
liability hereunder with respect to any Indebtedness or obligations retained by
CNB.
If any term, provision, covenant or condition of this Guaranty is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of California and venue and jurisdiction with respect hereto shall be
with any court of competent jurisdiction located in the county in the State of
California where the Indebtedness is payable.
Any notice to CNB required hereunder shall not be effective against CNB unless
it is given in writing and actually received by CNB to the attention of
"Manager" at the address where the Note is payable, with a copy to: City
National Bank, 400 North Roxbury Drive, Beverly Hills, California 90210,
Attention: General Counsel.
This Guaranty is intended by Guarantor and CNB as the final expression of
Guarantor's obligations and liabilities to CNB described herein and is intended
as a complete statement of their agreement concerning the subject matter hereof.
This Guaranty may be amended only by a writing signed by Guarantor and agreed to
by CNB.
This Guaranty is secured by three (3) Deeds of Trust given by Allen E. Paulson,
Trustee of the Allen E. Paulson Living Trust dated December 23, 1986, as
amended, to Chicago Title Insurance Company as Trustee on property located 47355
Las Cascadas Court, Indian Wells, County of Riverside, State of California and
31257 Via Maria Elena, Bonsal and 166.53 acres, and 91.83 acres on the north
side of Camino Del Rey south of Via Marposa Sur and west of Rancho Amigos Road,
Bonsal and 14497 Emerald Lane, Solana Beach and Lot 56, unimproved land lying
adjacent to this Property , County of San Diego, State of California.
The Deed of Trust securing this Guaranty contains the following provision:
SHOULD THE TRUSTOR OR HIS SUCCESSOR IN INTEREST WITHOUT THE PRIOR WRITTEN
CONSENT OF THE BENEFICIARY SELL, TRANSFER, MORTGAGE, PLEDGE, HYPOTHECATE, ASSIGN
OR ENCUMBER, HIS INTEREST IN THE PROPERTY (OR ANY PART THEREOF), WHETHER
VOLUNTARILY OR INVOLUNTARILY, THEN BENEFICIARY MAY AT ITS ELECTION DECLARE ALL
SUMS SECURED HEREBY IMMEDIATELY DUE AND PAYABLE. THIS PROVISION SHALL APPLY TO
EACH AND EVERY SALE, TRANSFER, MORTGAGE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR
ENCUMBRANCE REGARDLESS WHETHER OR NOT BENEFICIARY HAS CONSENTED TO, OR WAIVED,
ITS RIGHT HEREUNDER, WHETHER BY ACTION OR NON-ACTION, IN CONNECTION WITH ANY
PREVIOUS SALE,TRANSFER, MORTGAGE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR
ENCUMBRANCE, WHETHER ONE OR MORE.
This Limited Guaranty is executed by Guarantor this 26th day of April, 1999.
"Guarantor"
/s/ Allen E. Paulson
- -------------------------------------
###-##-####
- -------------------------------------
(S.S. or Tax I.D. No.)
Address: P.O. Box 9660
Rancho Santa Fe, CA 92067
EXHIBIT 7CC-3
<PAGE> 4
- ---------------
BANK USE ONLY
- ---------------
- ---------------
DO NOT DESTROY: WHEN PAID, THIS GUARANTY WITH DEED OF TRUST SECURING SAME, MUST
BE SURRENDERED TO TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE CAN BE MADE.
EXHIBIT 7CC-4
<PAGE> 1
EXHIBIT 7.dd
LIMITED GUARANTY
CITY NATIONAL BANK
LOAN NO. 32692
CUSTOMER NO. 637864
For valuable consideration, the undersigned, JAMES GILSTRAP ("Guarantor"),
unconditionally guarantees and promises to pay CITY NATIONAL BANK, a national
banking association ("CNB"), or order, on demand, in lawful money of the United
States, any and all Indebtedness, UP TO A MAXIMUM PRINCIPAL AMOUNT OF
$300,000.00, of CARDIODYNAMICS INTERNATIONAL CORPORATION, A CALIFORNIA
CORPORATION ("Borrower") to CNB under that certain Promissory Note dated
February 25, 1999, executed by Borrower in favor of CNB, in the original
principal amount of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00), and any and
all renewals and extensions thereof ("Note"). The word "Indebtedness" as used
herein means all obligations and liabilities of Borrower to CNB under the Note
(whether recovery upon the Note may be or become barred by any statute of
limitations or otherwise unenforceable), including the principal amount thereof,
all interest thereon and all costs and expenses incurred in enforcing or
collecting this Guaranty, the Indebtedness or any security for the Indebtedness
or this Guaranty.
CNB may permit the total of all of Borrower's obligations to CNB to exceed
Guarantor's liability hereunder. The amount of Guarantor's liability hereunder
and under any other agreement now or at any time hereafter in force between
Guarantor and CNB, including any other guaranty executed by Guarantor relating
to any obligations of Borrower to CNB, shall be cumulative and not alternative.
Any payment by Guarantor shall not reduce Guarantor's maximum obligation
hereunder, unless written notice to that effect has been actually received by
CNB at or prior to the time of such payment.
The obligations hereunder are independent of the obligations of Borrower, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or whether Borrower is joined in any
such action or actions; and Guarantor waives the benefit of any statute of
limitations affecting Guarantor's liability hereunder or the enforcement
thereof.
Guarantor authorizes CNB, without notice or demand and without affecting
Guarantor's liability hereunder, from time to time, to (a) renew, compromise,
extend, accelerate or otherwise change any of the terms of the Indebtedness or
any part thereof, including changing the rate of interest thereon or the time
for payment thereof (but not including any change which would increase the
principal amount of the Note); (b) take and hold security for the payment of
this Guaranty or the Indebtedness, and exchange, enforce, waive and release any
such security; (c) apply such security and direct the order or manner of sale or
other disposition thereof as CNB in its discretion may determine; (d) apply
payments received from Borrower or Guarantor, or any of them, to the
Indebtedness in such order as CNB may determine in its sole discretion; and (e)
release or substitute any Person liable on the Indebtedness, any other guarantor
of the Indebtedness, or any other Person providing support for the Indebtedness
to CNB, this Guaranty, or any other guaranty. As used in this Guaranty, "Person"
means any individual or entity.
Guarantor waives any right to require CNB to (a) proceed against Borrower,
Guarantor or any other guarantor; (b) proceed against or exhaust any security or
other support for the Indebtedness granted by Borrower, Guarantor, or any other
guarantor or Person; or (c) pursue any other remedy in CNB's power whatsoever.
Guarantor waives any defense arising by reason of (i) any disability or other
defense of Borrower; (ii) the cessation from any cause whatsoever of the
liability of Borrower for the Indebtedness for any reason other than payment in
full and final satisfaction; or (iii) the non-perfection of any security or
support for the Indebtedness. Until all indebtedness has been paid to CNB,
Guarantor shall have no right of subrogation to and waives any right to enforce
any remedy which CNB now has or may hereafter have against Borrower, and waives
any benefit of, any right to participate
EXHIBIT 7DD-1
<PAGE> 2
in, and any right to direct the application of any security for the
Indebtedness, this Guaranty or any other guaranty of the Indebtedness now or
hereafter held by CNB, whether any of the foregoing rights arise in equity, at
law or by contract. Without limiting the generality of the foregoing, Guarantor
waives all rights and defenses arising out of an election of remedies by the
creditor, even though that election of remedies, such as non-judicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
guarantor's rights of subrogation and reimbursement against the principal by the
operation of Section 580d of the California Code of Civil Procedure or
otherwise. For purposes of the waiver just given, the "creditor" referred to
therein is CNB and the "principal" is the Borrower. Guarantor waives all
presentments, demands for performance, notices of nonperformance, or other
defaults, protests, notices of protest, notices of dishonor, and notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness of Borrower to CNB. Guarantor assumes the
responsibility for being and keeping itself informed of the financial condition
of Borrower and of all other circumstances bearing upon the risk of nonpayment
of the Note or other indebtedness of Borrower to CNB which diligent inquiry
would reveal, and agrees that CNB shall have no duty to advise Guarantor of
information known to CNB regarding such condition or circumstances.
Without limiting any waiver of rights of subrogation contained herein, any
indebtedness of Borrower now or hereafter held by Guarantor is hereby
subordinated to the Indebtedness; and such indebtedness of Borrower to
Guarantor, if CNB so requests, shall be collected, enforced and received by
Guarantor as trustee for CNB and be paid over to CNB on account of the
Indebtedness but without reducing or affecting in any manner the liability of
Guarantor under the other provisions of this Guaranty. CNB shall have rights of
setoff against, and bankers' liens upon all monies, securities and other
properties of Guarantor to the extent provided by law.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the Indebtedness by Borrower or any other
guarantor is avoided as a preference, or on any other grounds provided by law,
or must otherwise be returned by CNB as a result of an order for relief being
entered with respect to Borrower or any other guarantor under the United States
Bankruptcy Code, or as a result of Borrower's or any other guarantor's
assignment for the benefit of creditors.
Where Borrower is a corporation or partnership, it is not necessary for CNB to
inquire into the powers of Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf and any Indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
Guarantor has entered into this Guaranty with the understanding that CNB may
rely upon it to the exclusion of any other guaranties. CNB has not, nor has
Borrower represented that there are or may be other guarantors. Nothing in this
Guaranty, however, shall bind CNB to seek other guarantors, separate and apart
from the undersigned. Guarantor understands that CNB may already have, or
concurrently herewith may have obtained or hereafter may obtain other guarantors
(one or more, several or joint) of the Indebtedness. Such guarantors,
heretofore, herewith, or hereafter obtained, shall in no way affect Guarantor's
complete liability hereunder for the full amount of the Indebtedness. Nothing
herein shall require CNB to sue all of the guarantors severally or together or
to sue more than one or to prorate the above liability among the guarantors or
any of them. Guarantor agrees that CNB may, in its sole and uncontrolled
discretion, sue any one or more of the guarantors for all of the Indebtedness;
and within its sole and uncontrolled discretion CNB may take judgment against
any one of the guarantors for all of the Indebtedness, plus interest, costs and
attorneys' fees, or within its sole discretion CNB may prorate such judgment
between or among one or more of the guarantors.
Guarantor agrees to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred by CNB (or allocable to CNB's in-house counsel)
in the enforcement of this Guaranty, or the collection of any Indebtedness,
irrespective of whether suit is filed.
When there is more than one Borrower named herein, or when this Guaranty is
executed by more than one Guarantor, the word "Borrower" and the word
"Guarantor" respectively shall mean all and any one or more of them and each
promise and obligation set forth herein shall be joint and several.
This Guaranty shall benefit CNB, its successors and assigns, and shall bind
Guarantor's successors and assigns. This Guaranty is assignable by CNB with
respect to all or any portion of the Indebtedness and obligations guaranteed
hereunder, and when so assigned Guarantor shall be liable to the assignees under
this Guaranty
EXHIBIT 7DD-2
<PAGE> 3
without in any manner affecting Guarantor's liability hereunder with respect to
any Indebtedness or obligations retained by CNB.
If any term, provision, covenant or condition of this Guaranty is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of California and venue and jurisdiction with respect hereto shall be
with any court of competent jurisdiction located in the county in the State of
California where the Indebtedness is payable.
Any notice to CNB required hereunder shall not be effective against CNB unless
it is given in writing and actually received by CNB to the attention of
"Manager" at the address where the Note is payable, with a copy to: City
National Bank, 400 North Roxbury Drive, Beverly Hills, California 90210,
Attention: General Counsel.
This Guaranty is intended by Guarantor and CNB as the final expression of
Guarantor's obligations and liabilities to CNB described herein and is intended
as a complete statement of their agreement concerning the subject matter hereof.
This Guaranty may be amended only by a writing signed by Guarantor and agreed to
by CNB.
This Limited Guaranty is executed by Guarantor this 25th day of February, 1999.
"Guarantor"
/s/ James Gilstrap
- -------------------------------------
###-##-####
- -------------------------------------
(S.S. or Tax I.D. No.)
Address: 5067 Shore Drive
Carlsbad, CA 92008
- ---------------
BANK USE ONLY
- ---------------
- ---------------
EXHIBIT 7DD-3
<PAGE> 1
EXHIBIT 7.ff
Agreement of Joint Filing
The undersigned hereby agree that they are filing jointly pursuant to Rule
13d-1(f)(1) of the Securities Exchange Act of 1934, as amended, the Statement
dated July 1, 1999 containing the information required by Schedule 13D, for the
shares of Common Stock of CardioDynamics International Corporation, held by
CardioDynamics Holdings, LLC, a California limited liability company, and by the
undersigned individuals.
July 1, 1999 CARDIODYNAMICS HOLDINGS, LLC
By: /s/ Allen Paulson
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Allen Paulson, Member
By: /s/ James Gilstrap
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James Gilstrap, Member
/s/ Allen Paulson
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ALLEN PAULSON
/s/ James Gilstrap
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JAMES GILSTRAP
/s/ Nicholas Diaco
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NICHOLAS DIACO
/s/ Joseph Diaco
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JOSEPH DIACO
EXHIBIT 7FF-1
