Document:

Securities Purchase Agreement

 EXHIBIT 4.1 
 CARDIODYNAMICS INTERNATIONAL CORPORATION 
 SECURITIES PURCHASE AGREEMENT 
 This SECURITIES PURCHASE AGREEMENT (this “Agreement”), is made and entered
into as of April 11, 2006, by and among CardioDynamics International Corporation, a California corporation (the “Company”), and the purchasers listed on Schedule A attached hereto (collectively, the “Purchasers” and
individually, a “Purchaser”). 
 1. Authorization of Sale of the Securities. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale of the senior subordinated convertible notes of the Company in the form attached hereto as Exhibit A (together with any senior subordinated convertible notes issued in replacement thereof in accordance
with the terms thereof, the “Notes”), which Notes shall be convertible into shares of the Company’s Common Stock (the “Common Stock”) (as converted, the “Conversion Shares”), in accordance with the terms of the
Notes. The Notes and the Conversion Shares are hereinafter collectively referred to as the “Securities.” 
 2. Agreement to Sell
and Purchase the Securities. 
 2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, each
Purchaser severally agrees to purchase, and the Company agrees to sell and issue to each Purchaser, at the Closing (as defined below) a principal amount of Notes set forth opposite such Purchaser’s name on Schedule A attached hereto (which
aggregate principal amount for all Purchasers shall be $5,250,000). 
 2.2 Purchase Price. The purchase price for each
Purchaser (the “Purchase Price”) of the Notes to be purchased by each such Purchaser at the Closing shall be equal to $1.00 for each $1.00 of principal amount of Notes being purchased by such Purchaser at the Closing. 
 2.3 Form of Payment. On the Closing Date, (i) each Purchaser shall pay its Purchase Price to the Company for the Notes to be
issued and sold to such Purchaser at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, and (ii) the Company shall deliver to each Purchaser the Notes (in the principal
amounts as such Purchaser shall request or, if no such request is made, a single Note with a principal amount equal to the aggregate principal amount of Notes to be purchased by such Purchaser) which such Purchaser is then purchasing, duly executed
on behalf of the Company and registered in the name of such Purchaser or its designee. 
 2.4 Closing Date.
The Closing shall occur on the date hereof (the “Closing Date”). 

 2.5 (a) Restricted Language. Certificates evidencing the Securities will contain
the following legend, as applicable, until such time as they are not required: 
 NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OR
EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. 
 b. The Company shall as soon as practicable (but not later than five business days after the registration statement has been deemed
effective by the SEC, remove the restrictive legends specified above in this Section and all Shares subsequently issued shall not bear the restrictive legend specified above in this Section. The Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent promptly after the Effective Date if required by the Company’s transfer agent to effect the removal of the legend hereunder. The Company shall issue a blanket letter of instruction to its transfer
agent placing a “stop transfer” order on the Shares, which stop transfer order may be lifted upon receipt by the transfer agent of written certification that the Shares are being sold pursuant to an effective registration statement and a
duly delivered prospectus. 
 c. The Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant
to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares o a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if
required under the terms of such arrangement, the Purchaser may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company. Further, no notice shall be required of
such pledge. The Company will execute and deliver such documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder, provided that the Company may first require a legal opinion of legal
counsel of the pledgee, secured party or pledgor in connection therewith and with regard to the exemption from registration under the Securities Act claimed with respect to such transfer or pledge. 
 d. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the failure of the Company and its transfer agent to
deliver certificates representing any Shares as 

  

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required hereby, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity, including, without limitation, a decree
of specific performance and/or injunctive relief. 
 2.6 Anti-dilution. To maintain the Purchaser’s fractional
ownership in the Company and to reduce the Purchaser’s average cost per share to the price paid by new investors, the protections set forth in this paragraph 2.6 are being provided to the Purchaser. If on or after the date of issuance of
the Notes, the Company issues or sells any shares of Common Stock for no consideration, or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith)
less than the Conversion Price on the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to a price determined by multiplying the Conversion Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i) the numerator of which is an amount equal to the sum of (x) the number of shares of Common Stock actually outstanding immediately prior to the Dilutive Issuance, plus
(y) the quotient of the aggregate consideration, received by the Company upon such Dilutive Issuance divided by the Closing market price in effect immediately prior to the Dilutive Issuance, and (ii) the denominator of which is the
total number of shares of Common Stock Deemed Outstanding immediately after the Dilutive Issuance. “Common Stock Deemed Outstanding” shall mean the number of shares of Common Stock actually outstanding (not including shares of Common Stock
held in the treasury of the Company), and the total number of shares of Common Stock issued or issuable under the Dilutive Issuance. However, no adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding on the date of issuance of the Notes; (ii) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the independent members of the Board of Directors of the Company or a majority of the members
of a committee of independent directors established for such purpose; or (iii) upon the conversion of the Notes. 
 Representations, Warranties and Covenants of the Company. Except as set forth in the Schedule of Exceptions attached hereto as Exhibit B, the Company hereby represents and warrants to the Purchasers as follows: 
 2.6 Organization. The Company is duly organized and validly existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries (as defined in Rule 405 under the Securities Act) has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and as described
in the documents filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end of its most recently completed fiscal year through the date hereof (the “Exchange Act Documents”) and
is registered or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the location of the properties owned or leased by it requires such qualification and where the failure to be
so qualified would have a material adverse effect upon the condition (financial or otherwise) of the Company and its Subsidiaries, considered as one enterprise (a “Material Adverse Effect”), and no proceeding has 

  

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been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification. 
 2.7 Due Authorization and Valid Issuance. The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Transaction Documents, and the Transaction Documents have been duly authorized and validly executed and delivered by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law). The issuance of the Notes is duly authorized and, upon issuance of the Notes in accordance with the terms hereof, the Notes shall be free from all taxes, liens and charges with
respect to the issue thereof. As of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance equal to the maximum number of shares issuable upon conversion of the Notes to be issued at Closing. Upon
conversion or issuance in accordance with the Notes, the Conversion Shares will be validly issued, fully-paid and nonassessable. 
 2.8 Non-Contravention. The execution and delivery of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby will not (A) conflict with or constitute a violation of, or default (with
the passage of time or otherwise) under, (i) any contract, agreement or other instrument filed or incorporated by reference as an exhibit to any of the Exchange Act Documents (any such contract, agreement or instrument, an “Exchange Act
Exhibit”) (ii) the charter, by-laws or other organizational documents of the Company or any Subsidiary, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company or any Subsidiary or their respective properties, except in the case of clauses (i) and (iii) for any such conflicts, violations or defaults which are not reasonably likely to have a Material Adverse
Effect or (B) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any Subsidiary (except as contemplated hereby) or an
acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any Exchange Act Exhibit. Except for (i) the filing of a Form 8-K in connection with the transactions contemplated by the Transaction Documents and
(ii) the Registration Statement, Form D and any related state “Blue Sky” filings required to be filed with respect to the Securities pursuant to Section 6 hereof, no consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States or any other person is required for the execution and delivery of the Transaction Documents, and the valid
issuance and sale of the Securities to be sold pursuant to this Agreement, and the valid issuance of the Conversion Shares in accordance with the Notes, other than such as have been made or obtained, and except for any post-closing securities
filings or notifications required to be made under federal or state securities laws. 
 2.9 Capitalization. The
capitalization of the Company as of February 28, 2006 is as set forth in the most recent applicable Exchange Act Documents, increased as set forth in the next 

  

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sentence. The Company has not issued any capital stock since that date other than pursuant to (i) employee benefit plans disclosed in the Exchange Act
Documents, or (ii) outstanding warrants, options or other securities disclosed in the Exchange Act Documents; furthermore there were warrants issued of $327,000 and $2,027,000 in 2005, 2004 and 2003, respectively, as described in the
Company’s annual report filed on Form 10-K (the “Warrants”). The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth in or contemplated by the Exchange Act Documents and for the Warrants, there
are no outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party or of which the Company has knowledge and relating to the issuance or sale of any capital stock of the Company or any
Subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options. Without limiting the foregoing, no preemptive right, co-sale right, right of first refusal, registration right, or other similar right exists with
respect to the Securities or the issuance and sale thereof. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities. The Company owns the entire
equity interest in each of its Subsidiaries, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest, other than as described in the Exchange Act Documents. Except as disclosed in the Exchange Act Documents,
there are no stockholders agreements, voting agreements or other similar agreements with respect to the Common Stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 2.10 Legal Proceedings. There is no legal or governmental proceeding pending or, to the knowledge of the Company,
threatened to which the Company or any Subsidiary is or may be a party or of which the business or property of the Company or any Subsidiary is subject that is not disclosed in the Exchange Act Documents, and which proceeding, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise between the accountants, auditors and lawyers formerly or presently
employed by the Company. 
 2.11 No Violations. Neither the Company nor any Subsidiary is (i) in violation of its
charter, bylaws, or other organizational document, (ii) in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any Subsidiary or
(iii) in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in any material respect in the performance of any Exchange Act Exhibit. 
 2.12 Governmental Permits, Etc. With the exception of the matters which are dealt with separately in Sections 3.1, 3.12, 3.13,
and 3.14, each of the Company and its Subsidiaries has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries as currently conducted and as described in the Exchange Act Documents. 
  

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 2.13 Intellectual Property. Except as specifically disclosed in the Exchange Act
Documents, and except as set forth on Exhibit B hereto (i) each of the Company and its Subsidiaries owns or possesses sufficient rights to use all material patents, patent rights, trademarks, copyrights, licenses, inventions, trade secrets,
trade names and know-how (collectively, “Intellectual Property”) described or referred to in the Exchange Act Documents as owned or possessed by it or that are necessary for the conduct of its business as now conducted or as proposed to be
conducted as described in the Exchange Act Documents (ii) to the knowledge of the Company, neither the Company nor any of its Subsidiaries is infringing any rights of a third party with respect to any Intellectual Property that
(iii) neither the Company nor any of its Subsidiaries has received any notice of, or has any knowledge of, any asserted infringement by the Company or any of its Subsidiaries of, any rights of a third party with respect to any Intellectual
Property and (iv) neither the Company nor any of its Subsidiaries has received any notice of, or has any knowledge of, infringement by a third party with respect to any Intellectual Property rights of the Company or of any Subsidiary.

 2.14 Financial Statements. The financial statements of the Company and the related notes contained in the Exchange
Act Documents present fairly, in accordance with generally accepted accounting principles, the financial position of the Company and its Subsidiaries as of the dates indicated, and the results of its operations and cash flows for the periods therein
specified consistent with the books and records of the Company and its Subsidiaries except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which are not expected to be material in
amount. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified, except as may be disclosed in the
notes to such financial statements, or in the case of unaudited statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act and except as disclosed in the Exchange Act Documents. The other financial information contained in
the Exchange Act Documents has been prepared on a basis consistent with the financial statements of the Company. 
 2.15 No
Material Adverse Change. Except as disclosed in the Exchange Act Documents, since February 28, 2006, there has not been (i) any event affecting the Company or its Subsidiaries that has had a Material Adverse Effect, (ii) any
obligation, direct or contingent, that is material to the Company and its Subsidiaries considered as one enterprise, incurred by the Company, except obligations incurred in the ordinary course of business, (iii) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company or any of its Subsidiaries, or (iv) any loss or damage (whether or not insured) to the physical property of the Company or any of its Subsidiaries which has been sustained
which has a Material Adverse Effect; provided, however, that changes in the ordinary course of business, including but not limited to the use of cash and increases in liabilities in the ordinary course of business, shall not be deemed to be a
material adverse change or to have a Material Adverse Effect. 
 2.16 Disclosure. The representations and warranties of
the Company contained in this Section 3 and the Other Information (as defined below) as of the date hereof do not and as of the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Except with respect to (i) the material 

  

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terms and conditions of the transaction contemplated by the Transaction Documents, which shall be publicly disclosed by the Company on a Form 8-K, and
(ii) such other information that is being provided to the Purchasers that the Company covenants it shall publicly disclose no later than April 18, 2006 (the “Other Information”), the Company confirms that neither it nor any
person acting on its behalf has provided the Purchasers with any information that the Company believes constitutes material, non-public information, except as set forth in this paragraph. At Purchaser’s request, the Company has provided the
Purchaser with certain requested non-public information in accordance with that certain Confidentiality Agreement between the Purchaser and the Company dated March 14, 2006 (“Confidentiality Agreement”), which confidential information
shall not be publicly disclosed. The Company understands and confirms that the Purchasers will rely on the foregoing representations in effecting transactions in the securities of the Company after the public disclosures referenced in (i) and
(ii) in the immediately preceding sentence. 
 2.17 NASDAQ Compliance. The Company’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock Market, Inc. National Market (the “Nasdaq National Market”), and the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or de-listing the Common Stock from the Nasdaq National Market, nor has the Company received any notification that the SEC or the National Association of Securities Dealers,
Inc. (“NASD”) is currently contemplating terminating such registration or listing. 
 2.18 Reporting Status.
The Company has filed in a timely manner all documents that the Company was required to file under the Exchange Act during the 12 months preceding the date of this Agreement. Pursuant to General Instruction I.B.3 of Form S-3, the Company is eligible
to use Form S-3 to register the Conversion Shares to be offered for the account of the Purchasers. The following documents complied in all material respects with the SEC’s requirements as of their respective filing dates, and the information
contained therein as of the date thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they
were made not misleading: 
 (a) Annual Report on Form 10-K for the year ended November 30, 2005, and Quarterly Report on
Form 10-Q for the quarter ended February 28, 2006 and Forms 8-K filed on December 2, 2005, December 12, 2005, February 13, 2006, March 3, 2006, March 9, 2006, and March 22, 2006; and 

(b) all other documents, if any, filed by the Company with the SEC during the one-year period preceding the date of this Agreement
pursuant to the reporting requirements of the Exchange Act. 
 2.19 Listing. The Company shall comply with all
requirements of the NASD with respect to the issuance of the Conversion Shares, and the listing of the Conversion Shares on the Nasdaq National Market. 
 2.20 No Manipulation of Stock. Pursuant to the requirement of the Purchaser, certain executives of the Company will be required to purchase shares of the Company’s Common 

  

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Stock on the open market. Except as set forth in the preceding sentence, the Company has not taken and will not, in violation of applicable law, take, any
action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Notes or the Conversion Shares. 
 2.21 Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its
behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 
 2.22 Taxes. The Company has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all
taxes shown as due thereon. 
 2.23 Private Offering. Assuming the correctness of the representations and warranties of
the Purchasers set forth in Section 4 hereof, the offer and sale of Notes hereunder is and, in accordance with the terms of the Notes, the issuance of the Conversion Shares will be exempt from registration under the Securities Act. The Company
has not distributed and will not distribute prior to the Closing Date any offering material in connection with this Offering and sale of the Securities other than the Transaction Documents of which this Agreement is a part or the Exchange Act
Documents. The Company has not in the past nor will it hereafter take any action to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Securities as contemplated by this
Agreement, or the issuance of the Conversion Shares in accordance with the terms of the Notes, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4
of the Securities Act. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale
only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act. 
 2.24 Transactions With Affiliates. Except as disclosed in the Exchange Act Documents, none of the current officers or directors of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments
to or from any officer or director or, to the knowledge of the Company, any entity in which any officer or director has a substantial interest or is an officer, director, trustee or partner. 
 2.25 No Registration Rights. Other than the Purchasers, no person has the right, which right has not been waived, to require the
Company or any Subsidiary to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the SEC or the issuance and sale of the Notes or Conversion Shares. 
  

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 2.26 Ranking of Notes. Except for the Existing Debt and Future Debt (as defined in
the Convertible Note term sheet attached as Exhibit A hereto), no indebtedness of the Company is senior to or ranks pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest damages or upon
liquidation or dissolution or otherwise. 
 3. Representations, Warranties and Covenants of the Purchasers. 
 3.1 Securities Law Representations and Warranties. Each Purchaser severally and not jointly represents, warrants and covenants to
the Company as follows: 
 (a) The Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities representing an investment decision like that involved in the purchase of the Securities, including investments in securities issued by the Company, and has requested, received, reviewed and
considered all information it deems relevant in making an informed decision to purchase the Securities. 
 (b) The Purchaser
is acquiring the principal amount of Notes set forth in Section 2 above in the ordinary course of its business and for its own account for investment only and has no present intention of distributing any of the Securities nor any arrangement or
understanding with any other persons regarding the distribution of such Securities within the meaning of Section 2(11) of the Securities Act, except as contemplated in Section 6 of this Agreement; provided, however, that in making such
representation, such Purchaser does not agree to hold the Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and
with Federal and state securities laws applicable to such sale, transfer or disposition. 
 (c) The Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Securities except in compliance with the Securities Act and the rules and
regulations promulgated thereunder (the “Rules and Regulations”). 
 (d) The Purchaser has, in connection with its
decision to purchase the principal amount of Notes set forth in Section 2 above, relied solely upon the Exchange Act Documents, and the information provided pursuant to the Confidentiality Agreement and the representations and warranties of the
Company contained in this Agreement. 
 (e) The Purchaser believes it has received all information it considers necessary or
appropriate for deciding whether to purchase the Securities. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities
and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 3 of this Agreement or the right of the Purchasers to
rely on such representations and warranties. 
 (f) As of the date hereof, in the event of the conversion of the Notes, each
Purchaser would own that number of shares of Common Stock noted in Schedule A hereto. 
  

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 (g) The Purchaser is an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act. 
 3.2 Resales of Securities. Each Purchaser agrees to the
following: 
 (a) If the Purchaser shall propose to sell any Securities, the Purchaser shall notify the Company of its intent
to do so on or before one (1) business day prior to the date of such sale (the “Notice of Sale”), and the provision of the Notice of Sale to the Company shall conclusively be deemed to establish an agreement by such Purchaser to
comply with the registration provisions herein described. The Notice of Sale shall be deemed to constitute a representation that any information previously supplied by such Purchaser is accurate as of the date of such Notice of Sale. 
 (b) The Notice of Sale in substantially the form attached as Exhibit I to Appendix II shall be given in accordance with the provisions of
Section 4.2(a) hereof. However, the Purchaser may give the Notice of Sale orally by telephoning the current Chief Financial Officer at the Company at (858)-535-0202. An oral Notice of Sale shall be deemed to have been received only at such time
as the selling Purchaser speaks directly with the current Chief Financial Officer. In addition, an oral Notice of Sale shall only be deemed effective if it is followed by a written Notice of Sale received by the Company by personal delivery or
facsimile within 24 hours after giving the oral Notice of Sale. 
 (c) The Company may refuse to permit the Purchaser to
resell any Securities for a period of time not to exceed 30 days; provided, however, that in order to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that the Registration Statement in its then
current form contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. During any suspension
period (each a “Suspension”) as contemplated by this Section 4.2(c), of which there shall be no more than two in any 12-month period, the Company will not allow any of its officers or directors to buy or sell shares of the
Company’s securities. 
 3.3 Certain Trading Limitations. Each Purchaser represents and warrants that it has not
directly or indirectly, nor has any person or entity acting on behalf of or pursuant to any understanding with such Purchaser, engaged in any purchases or sales in the securities of the Company (including, without limitations, any short sales
involving the Company’s securities) since the date on which such Purchaser entered into a confidentiality or similar agreement or understanding with the Company in connection with such Purchaser’s participation in the transactions
contemplated by this Agreement. 
 3.4 Due Execution, Delivery and Performance. Each Purchaser represents and warrants
that: 
 (a) This Agreement has been duly executed and delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser and the Company, enforceable against the Purchaser in accordance with its terms. 
  

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 (b) The execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby and the fulfillment of the terms of the Transaction Documents have been duly authorized by all necessary corporate or LLC action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to, any contract, indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust or other instrument or agreement to which the Purchaser is a party or by which it may be bound, or to which any of the property or assets of the Purchaser is subject, nor will such action result in any violation of the
provisions of the charter or bylaws, or other organizational documents, of the Purchaser or any applicable statute, law, rule, regulation, ordinance, decision, directive or order applicable to the Purchaser or its property or assets. 
 4. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement, all
representations and warranties made by the Company and the Purchasers in this Agreement shall survive for one (1) year from the execution of this Agreement. 
 5. Form D Filing; Registration; Compliance with the Securities Act; Covenants. 
 5.1 Form D Filing; Registration of Shares. 
 5.1.1 Registration Statement; Expenses. The Company
shall: 
 (a) file as soon as practicable, but in no event later than 15 days after the date of the Closing, a Form D
relating to the sale of the Securities under this Agreement, pursuant to Regulation D under the Securities Act. 
 (b) as
soon as practicable after the Closing Date, but in no event later than the 45th day following the Closing Date, prepare and file with the Commission a Registration Statement on Form S-3 (or, if the Company is ineligible to use Form S-3, then on Form
S-1) relating to the sale of the Conversion Shares (and all shares issuable in respect thereof, whether as stock dividends, pursuant to Section 6.1.2 or otherwise) by the Purchasers from time to time on the Nasdaq National Market (or the
facilities of any national securities exchange on which the Company’s Common Stock is then traded) or in privately negotiated transactions (the “Registration Statement”); 
 (c) the Company shall use its best efforts to cause such Registration Statement to become effective, and, keep such Registration
Statement effective for a period of up to two years from the Closing Date, or such lesser period of time as all of the Conversion Shares have been sold or can be sold without restriction under Rule 144; 
 (d) subject to receipt of necessary information from the Purchasers, use its best efforts to cause the Commission to notify the Company
of the Commission’s willingness to declare the Registration Statement effective on or before 100 days (or 130 days in the event the Registration Statement is reviewed by the Commission) after the initial filing of the Registration Statement
(the “Required Effectiveness Date”); 
  

 - 11 - 

 (e) notify Purchasers promptly upon the Registration Statement, or any post-effective
amendment thereto, being declared effective by the Commission; 
 (f) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the Prospectus (as defined in Section 6.3.1 below) and take such other action, if any, as may be necessary to keep the Registration Statement effective until the earlier of (i) the second
anniversary of the Closing Date and (ii) the date on which the Conversion Shares can be sold by non-affiliates of the Company without registration under Rule 144(k) under the Securities Act (such period, the “Effectiveness Period”);

 (g) promptly furnish to the Purchasers with respect to the Conversion Shares registered under the Registration Statement
such reasonable number of copies of the Prospectus, including any supplements to or amendments of the Prospectus, in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchasers; 
 (h) during the period when copies of the Prospectus are required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the rules and regulations promulgated thereunder; 
 (i) file documents required of the Company for customary Blue Sky clearance in all states requiring Blue Sky clearance; provided,
however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and 
 (j) bear all expenses of the Company in connection with the procedures in paragraphs (a) through (i) of this Section 6.1.1
and the registration of the Conversion Shares pursuant to the Registration Statement. 
 5.1.2 The Company hereby agrees that
the following circumstances shall constitute an Event of Default as set forth in Section 4 of the Form of Convertible Senior Note attached hereto as Exhibit A and that the Purchaser shall be entitled to the remedy set forth therein: (a) if
the Registration Statement is not filed by the Company on or prior to 45 days after the Closing Date (such an event, a “Filing Default”); (b) if the Registration Statement is not declared effective by the SEC by the Required
Effectiveness Date (either such event, an “Effectiveness Default”); or (c) if the Registration Statement (after its effectiveness date) ceases to be effective and available to the Purchaser for any reason without being succeeded
within ten trading days by an amendment to such Registration Statement or by a subsequent Registration Statement filed with and declared effective by the Commission (such an event, a “Suspension Default” and together with a Filing Default,
an Effectiveness Default and a Suspension Default, a “Registration Default”); provided, however, that in the event of a Suspension as contemplated in Section 4.2(c), a Suspension Default shall be deemed to have occurred only once
(i) more than two Suspensions have occurred in any 12-month period, or (ii) any single Suspension exceeds 30 days. Notwithstanding the foregoing, the Purchaser shall be entitled to specific performance and any other remedies at law or in
equity in the event the Company fails to comply with the provisions of Section 6.1.1 or 6.2. 
  

 - 12 - 

 5.2 Transfer of Conversion Shares After Registration. Each Purchaser agrees that
it will not effect any disposition of the Securities that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 6.1 or as otherwise permitted by, or
exempted by, law (including Rule 144 or any exemption from registration), and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its plan of distribution.

 5.3 Indemnification. For the purpose of this Section 6.3, the term “Registration Statement” shall
include any preliminary or final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 6.1. 
 5.3.1 Indemnification by the Company. The Company will indemnify and hold harmless each of the Purchasers and each person, if any,
who controls any Purchaser within the meaning of the Securities Act, against any losses, claims, direct damages, liabilities or reasonable expenses, joint or several, to which such Purchasers or such controlling person become subject, under the
Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company, which
consent shall not be unreasonably withheld), insofar as such losses, claims, direct damages, liabilities or reasonable expenses (or actions in respect thereof as contemplated below) (i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the
Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the “Prospectus”), or any amendment or supplement
thereto, or (ii) arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which
they were made, not misleading, or (iii) arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform its material
obligations under this Agreement or under law (the events in clauses (i), (ii), or (iii), collectively are referred to herein as the “Company Indemnification Events”), and shall reimburse each Purchaser and each such controlling person as
the case may be, for the indemnifiable amounts provided for herein on demand as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon any Purchaser Indemnification Event (as defined below). 
 5.3.2 Indemnification by the
Purchaser. The Purchaser will indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act,
against any actual and direct losses, claims, direct damages, liabilities or reasonable expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person become subject, under the
Securities Act, the Exchange Act, or any other 

  

 - 13 - 

 
federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with
the written consent of such Purchaser, which consent shall not be unreasonably withheld) insofar as such actual and direct losses, claims, direct damages, liabilities or reasonable expenses (or actions in respect thereof as contemplated below) arise
out of or are based upon (i) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 4.2 or 6.2 of this Agreement respecting the sale of the Securities or (ii) the inaccuracy of any representation
made by such Purchaser in this Agreement or the Questionnaires or (iii) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement to the
Registration Statement or Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser expressly for use therein (the events in clauses (i), (ii), or (iii), collectively are referred to herein as the “Purchaser Indemnification Events”), and shall
reimburse the Company or such officer, director or controlling person, as the case may be, for the indemnifiable amounts provided for herein on demand as such expenses are incurred; provided, however, that the Purchaser shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any negligence or misconduct of the Company of a Company Indemnification Event. 
 5.3.3 Indemnification Procedure. 
 (a) Promptly after receipt by an indemnified party under this Section 6.3 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 6.3, promptly notify the indemnifying party in writing of the claim; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party
for contribution or otherwise under the indemnity agreement contained in this Section 6.3 or to the extent it is not prejudiced as a result of such failure. 
 (b) In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from
an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof; provided, however, if
the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such action, the indemnifying party will not be liable to such indemnified party under this 

  

 - 14 - 

 
Section 6.3 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless: 

(i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the
proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party representing all of the indemnified parties who
are parties to such action) or 
 (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. 

5.3.4 Contribution. If a claim for indemnification under this Section 6.3 is unavailable to an indemnified party (by reason
of public policy or otherwise), then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or
expenses referred to in this Agreement, in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions, statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such indemnifying party or indemnified party, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any losses, claims, damages, liabilities or expenses shall
be deemed to include, subject to the limitations set forth in this Section 6.3, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. 
 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.3 were determined by pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding paragraph. No party to this Agreement guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any other party to this Agreement who was not guilty of such fraudulent misrepresentation. 
 5.4
Termination of Conditions and Obligations. The restrictions imposed by Section 4 or this Section 6 upon the transferability of the Securities shall cease and terminate as to any particular number of the Securities upon the passage
of two years from the Closing Date or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

  

 - 15 - 

 5.5 Rule 144 Information. For two years after the date of this Agreement, the
Company shall use its best efforts to file all reports required to be filed by it under the Securities Act, the Rules and Regulations and the Exchange Act and shall take such further action to the extent required to enable the Purchasers to sell the
Securities pursuant to Rule 144 under the Securities Act (as such rule may be amended from time to time). 
 5.6 Legend
Removal. The Company shall, and shall use its best efforts to cause its transfer agent to, promptly process requests for transfer or de-legending of Securities or certificates representing Conversion Shares in compliance with this Agreement.

 6. Notices. All notices, requests, consents and other communications under this Agreement shall be in writing, shall be mailed by
first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be delivered as addressed as follows: 
 (a) if to the Company, to: 
 Steve P. Loomis 
 Chief Financial Officer 
 6175 Nancy Ridge Drive, 
 San Diego, CA 92121 
 with a copy to: 
 David R. Snyder 
 101 West Broadway, Suite 1800 
 San Diego, CA 92101 
 or to such other person at such other place as the Company shall designate to the Purchaser in writing; and 
 (b) if to a Purchaser, at its address as set forth on Schedule A to this Agreement, or at such other address or addresses as may have been furnished to the Company in writing. 
 Such notice shall be deemed effectively given upon confirmation of receipt by facsimile, or two business days after deposit with such overnight courier.

 7. Modification; Amendment. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the
Company and Purchasers holding at least a majority of the Securities issued and sold pursuant to this Agreement (excluding Securities that have been resold to the public or otherwise transferred by the Purchasers). 
 8. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed
to be part of this Agreement. 
  

 - 16 - 

 9. Severability. If any provision contained in this Agreement should be held to be invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby. 
 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of New York, without reference to
conflict of laws, and the federal law of the United States of America. 
 11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original (whether an actual original or a facsimile), but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been
signed by each party to this Agreement and delivered to the other parties. 
 12. 8-K Filing and Publicity. Following the Closing
Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transactions contemplated by this Agreement and attaching this Agreement and the press release referred to below as exhibits to such filing (the
“8-K Filing”). Neither the Company nor any Purchaser shall issue any press releases or any other public statements with respect to the transactions contemplated by this Agreement; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as required by
applicable law. 
 13. Stock Splits, Dividends and other Similar Events. The provisions of this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend, reorganization or other similar event that may occur with respect to the Company after the date hereof. 
 [Signature pages follow] 
  

 - 17 - 

 IN WITNESS WHEREOF, the parties to
this Agreement have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. 
  

			
	CARDIODYNAMICS INTERNATIONAL CORPORATION
		
	By:	 	/s/ Steve P. Loomis
	Name:	 	Steve P. Loomis
	Its:	 	Chief Financial Officer
	Fax No.:	 	(858) 623-8415

 IN WITNESS WHEREOF, the parties to this Agreement have
caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. 
  

			
	[HOLDER].
		
	By:	 	/s/ Scott H. Schroeder
	Name:	 	Scott H. Schroeder
	Its:	 	Authorized Signatory

 Schedule A 
 PURCHASERS 
  

							
	 Name and Address of Purchaser
	  	Principal Amount of Notes	  	Aggregate Purchase Price
	 Atlas Master Fund, Ltd.*
 c/o Balyasny Asset
 Management L.P.
 650 Madison Avenue – 19th Floor
 New York,
NY 10022
 Attention: Legal Dept.
	  	$	1,698,707	  	$	1,698,707
	 Visium Balanced Fund, LP
 c/o Balyasny Asset
 Management L.P.
 650 Madison Avenue-19th Floor
 New York, NY
10022
 Attention: Allen Silberstein
	  	$	933,747	  	$	933,747
	 Visium Balanced Fund Offshore, Ltd.
 c/o Balyasny Asset
 Management L.P.
 650 Madison Avenue-19th Floor
 New York, NY
10022
 Attention: Allen Silberstein
	  	$	1,395,510	  	$	1,395,510
	 Visium Long Bias Fund, LP
 c/o Balyasny Asset
 Management L.P.
 650 Madison Avenue-19th Floor
 New York, NY
10022
 Attention: Allen Silberstein
	  	$	280,786	  	$	280,786
	 Visium Long Bias Fund Offshore, Ltd.
 c/o Balyasny Asset Management L.P.
 650 Madison Avenue-19th Floor
 New York, NY 10022
 Attention: Allen Silberstein
	  	$	941,250	  	$	941,250
	 Total
	  	$	5,250,000	  	$	5,250,000

  

	*	As of the date hereof, the total number of shares of Common Stock that will be owned by the Purchaser upon the Conversion of the Notes is: 

 EXHIBIT A 
 FORM OF NOTEForm of $5,250,000 8.0% Convertible Subordinated Notes

 Exhibit 10.1 
 FORM OF SENIOR SUBORDINATED CONVERTIBLE NOTE 
 NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON
CONVERSION OR EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. 
 ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3 AND 13 HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,
ACCORDINGLY, THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE. 
  

 -1- 

 CARDIODYNAMICS INTERNATIONAL CORPORATION 
 NOTE ## 
 SUBORDINATED CONVERTIBLE NOTE 
  

					
	 Issuance Date: April 11, 2006
	 		 	Principal: U.S. $[Amount]

 FOR VALUE RECEIVED, CARDIODYNAMICS INTERNATIONAL CORPORATION, a California corporation (the
“Company”), hereby promises to pay to the order of [Holder]. or registered assigns (“Holder”) the amount set out above as the Principal (as reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on
any outstanding Principal at the rate of 8% per annum, subject to periodic adjustment pursuant to Section 2 (the “Interest Rate”), from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon an Interest Date (as defined below), the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Subordinated Convertible Note
(including all Subordinated Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is issued on the Issuance Date pursuant to the Securities Purchase Agreement (as defined below). Certain capitalized
terms are defined in Section 24. 
  

 -2- 

 1. MATURITY. On the Maturity Date, the Holder shall surrender this Note to the Company and the Company shall pay
to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest, if any. The “Original Maturity Date” shall be April 11, 2009, as may be adjusted at the option of the Holder in the event that,
and for so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing or any event shall have occurred and be continuing which with the passage of time and the failure to cure would result in a Conversion
Failure. 
 2. INTEREST; INTEREST RATE. Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a
365/366-day year and actual days elapsed and shall be payable in arrears semi-annually and on the Maturity Date during the period beginning on the Issuance Date and ending on, and including, the Maturity Date (each, an “Interest
Date”) with the first Interest Date being October 12, 2006. Interest shall be payable on each Interest Date in cash. Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate. From
and after the occurrence of an Event of Default, the Interest Rate shall be increased to 14%. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the
date of such cure; provided that the Interest as calculated at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default. 
 3. CONVERSION OF NOTES. This Note shall be convertible into shares of the Company’s
common stock, at $1.15 per share (the “Common Stock”), on the terms and conditions set forth in this Section 3. 
 (a)
Conversion Right. The Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the
Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay to the Holder
an amount in cash equal to the value of such fractional share based on the closing price of the Common Stock on the last trading day prior to the conversion. The Company shall pay any and all documentary, stamp and similar taxes that may be payable
with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer of Securities involved in the issue
and delivery of the Common Stock in any name other than that of the Holder. Upon conversion, the Company shall pay all accrued and unpaid Interest on the Conversion Amount being converted. 
  

 -3- 

 (b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”). 
 (i) “Conversion Amount” means the Principal to be converted, redeemed or otherwise with respect to which this
determination is being made. Such amount shall not be less than $100,000. 
 (ii) “Conversion Price” means,
as of any Conversion Date (as defined below) or other date of determination, and subject to adjustment as provided herein, $1.15. 
 (c) Mechanics of Conversion. 
 (i) Optional Conversion. To convert any Conversion Amount into shares
of Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. On or before the close of the business on the first Business Day following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the seventh Business Day following the date of receipt of a
Conversion Notice (the “Share Delivery Date”), the Company’s transfer agent shall issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal being
converted, then the Company shall as soon as practicable and in no event later than seven Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note representing the outstanding Principal not
converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 (ii) Company’s Failure to Timely Convert. If the Company shall fail to issue a certificate to the Holder or
credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon conversion of any Conversion Amount on or prior to the date which is seven (7) Business Days after the Conversion
Date (a “Conversion Failure”), then (A) the Company shall pay damages to the Holder for each day of such Conversion Failure in an amount equal to 1.0% of the product of (I) the number of shares of Common Stock not issued
to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, times (II) the Closing Sale Price of the Common Stock on the Share Delivery Date and (B) the Holder, upon written notice to the Company, may void its
Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to such Conversion Notice; provided that the voiding of any conversion notice shall halt the accrual of
any claims for damages pursuant to this Section 3(c)(ii); provided, further, that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice
pursuant to this Section 3(c)(ii) or otherwise. 
 (iii) Book-Entry. Notwithstanding anything to the contrary set
forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is
being converted or (B) the Holder has provided the Company with prior 

  

 -4- 

 
written notice (which notice may be included in a Conversion Notice) requesting physical surrender and reissue of this Note. The Holder and the Company shall
maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

 4. RIGHTS UPON EVENT OF DEFAULT. 
 (a)
Event of Default. Each of the following events shall constitute an “Event of Default”: 
 (1) a
Registration Default as set forth in the Securities Purchase Agreement; 
 (2) default in the payment of the Principal and
unpaid accrued Interest of this Note within three (3) Business Days of becoming due and payable; 
 (3) any other
material default by the Company of the performance of any of its obligations or any material breach by the Company of any representations or covenants (provided that a default of any such covenant is not otherwise defined as an Event of Default
under this Section 4(a)) hereunder or under the Securities Purchase Agreement (provided that the representations and warranties under the Securities Purchase Agreement shall only survive for one year from the date of execution of the Securities
Purchase Agreement) upon 10 days notice from the Holder to the Company; 
 (4) the Company shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, consent to entry of an order for relief against it in an involuntary case, be adjudicated insolvent or bankrupt, petition or apply to any tribunal for the appointment of any receiver, trustee or
similar official for it or a substantial part of its assets, or commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter
in effect; there shall occur the appointment of a receiver, trustee, assignee, liquidator, custodian or similar official of it or a substantial part of its assets; or there shall have been filed any such petition or application or any such
proceeding shall have been commenced against it, which remains undismissed for a period of 30 days or more; the Company by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding
or the appointment of any trustee for it or any substantial part of any of its properties; 
 (5) a court of competent
jurisdiction shall enter an order or decree under any Bankruptcy Law that is for relief against the Company in an involuntary case, appoints a receiver, trustee, assignee, liquidator or similar official of the Company or for any substantial part of
its property, or orders the liquidation of the Company; and the order or decree remains unstayed and in effect for 30 days; 
 (b) if at any
time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of
shares of Common Stock equal to the Required Reserve Amount (as defined below); 
  

 -5- 

 (c) Redemption Right Upon Event of Default. Promptly after the occurrence of an Event of Default
with respect to this Note or any Other Note, the Company shall deliver written notice thereof via facsimile and overnight courier (an “Event of Default Notice”) to the Holder and the holders of the Other Notes. At any time after the
earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem all or any portion of the Notes by delivering written notice thereof (the
“Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of the Notes that the Holder is electing to cause to be redeemed. 
 5. RIGHTS UPON CERTAIN CORPORATE EVENTS. Prior to the consummation of any recapitalization, reorganization, consolidation, merger, spin-off or other business
combination (including, without limitation, a Change of Control) pursuant to which holders of Common Stock are entitled to receive securities or other assets with respect to or in exchange for Common Stock (a “Corporate Event”), the
holder shall have the ability to convert this Note and the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note, (i) in addition to the shares of Common
Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such
Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received
by the holders of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the
Holders with Notes representing a majority in interest of the Principal outstanding (the “Required Holders”). The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied
without regard to any limitations on the conversion or redemption of this Note. In the event of a Change of Control, if the Holder does not convert within 10 days of the Company providing written notice of a Change of Control, the Company may elect
to prepay all or a portion of the Notes at 105% of par plus accrued interest. Each of the following events shall constitute a “Change of Control”: 
 any sale of all or substantially all of the assets of the Company to a third party; 
 any merger of the
Company with or into another corporation in which holders of Common Stock immediately prior to the consummation of the merger do not control 50% of the voting power of the surviving corporation; or 
 the acquisition by any “person” or “group” of persons (as such terms are used in Section 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended, and the related regulations) who have an expressed intent to control the affairs of the Company of more than 50% of the outstanding Common Stock of the Company. 
  

 -6- 

 6. RIGHTS UPON ISSUANCE OF OTHER SECURITIES. 
 (a) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Closing Date
subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will
be proportionately reduced. If the Company at any time on or after the Closing Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be proportionately increased. 
 (b) Other Events. If any event
occurs of the type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity
features, but not including stock options or other equity awards granted under a shareholder approved equity compensation plan), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect
the rights of the Holder under this Note; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 6. 
 7. PREPAYMENT. With respect to each Holder, this Note may only be prepaid in whole or in part upon the consent of such Holder (the “Prepayment Consent”), which shall be in such Holder’s
absolute discretion; provided, however, that if the Holder consents to such prepayment, the Company shall pay to the Holder a fee equal to 10% of the Principal then outstanding and prepaid (the “Prepayment Fee”). 
 8. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good
faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. 
 9.
RESERVATION OF AUTHORIZED SHARES. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to 100% of the Conversion Rate with respect to the Principal
of each such Note as of the Issuance Date. Thereafter, the Company, so long as any of the Notes are outstanding, shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Notes, 100% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding (the “Required Reserve Amount”). 

10. HOLDER’S REDEMPTIONS. In the event that the Holder has sent an Event of Default Redemption Notice to the Company pursuant to Section 4(c) (a
“Redemption Notice”), the Holder shall promptly submit this Note to the Company. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within 10 Business Days after the Company’s receipt of
the 

  

 -7- 

 
Holder’s Redemption Notice. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be
issued and delivered to the Holder a new Note representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the Event of Default Redemption Price (the “Redemption Price”), to the
Holder (or deliver any Common Stock to be issued pursuant to a Redemption Notice) within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price (and issues any Common Stock required pursuant to a
Redemption Notice) in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for
which the applicable Redemption Price (or any Common Stock required to be issued pursuant to a Redemption Notice) has not been paid. Upon the Company’s receipt of such notice, (x) the Redemption Notice shall be null and void with respect
to such Conversion Amount and (y) the Company shall immediately return this Note, or issue a new Note to the Holder representing such Conversion Amount. 
 11. STATUS OF DEBT. 
 (a) Rank. The Notes rank junior to the Comerica Debt, the existing Medis mortgage of $350,000
and the Vermont (VEDA) loan of $450,000, and senior to future non-bank indebtedness. Upon the request of Comerica Bank, the Holder agrees to enter into a subordination agreement in form and substance reasonably satisfactory to Comerica Bank. All
existing Senior Debt and future Senior Debt, excluding however, the Comerica Debt, may only be increased by an additional $5,000,000 if the Purchaser approves of such increase in a written notice to the Company, signed by an authorized signatory of
the Purchaser. Nothing in this paragraph is intended to, or shall, prevent the Company from incurring reasonable unsecured trade indebtedness in the ordinary course of its business. 
 (b) Liquidation; Dissolution; Bankruptcy. 
 (i) The Holder shall be entitled to the Holder’s Rights in the event of any distribution to creditors of any of the Company or its Subsidiaries (each, a “Credit Party”) in (A) any sale,
liquidation, winding-up or dissolution of such Credit Party; (B) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Credit Party or its property; (C) any assignment by such Credit Party for the
benefit of its creditors; or (D) any marshaling of any Credit Party’s assets and liabilities (each a “Bankruptcy Event”). 
 (ii) In the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of any Credit Party or the proceeds
thereof to creditors of any Credit Party upon any Indebtedness of such Credit Party, by reason of any Bankruptcy Event, then and in any such event, any payment or distribution of any kind or character, either in cash, securities or other property,
which shall be payable or deliverable to the Holder upon or with respect to any or all Subordinated Indebtedness shall be paid or delivered directly to an agent for the Senior Debt or Future Permitted Senior Debt (the “Agent”) for
application against the Senior Debt or Future Permitted Senior Debt, whether due or not due, in a manner which the Agent, in its sole discretion, shall determine, until such Senior Debt or Future Permitted Senior Debt shall have been fully paid in
cash and all commitments thereunder have terminated. The Holder hereby irrevocably authorizes and empowers the Agent to ask for, demand, 

  

 -8- 

 
sue for, collect, and receive for every such payment or distribution and give acquittance therefore, and to file claims (and proofs of claims) and take such
other actions in the Agent’s own name or in the name of the Holder as the Agent may deem necessary or advisable for the enforcement of the terms of this Section 11. 
 (iii) The Holder agrees to execute, verify, deliver and file any proofs of claim in respect of Subordinated Indebtedness requested by the
Agent in connection with any Bankruptcy Event and hereby irrevocably authorizes, empowers and appoints Agent as its agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of the Holder promptly
to do so prior to 5 Business Days before the expiration of the time to file any such proof of claim and (ii) vote such claim in any such Bankruptcy Event upon the failure of the Holder to do so prior to 5 Business Days before the expiration of
the time to vote any such claim; provided the Agent shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that the Agent votes any claim in accordance with the authority granted hereby, the
Holder shall not be entitled to change or withdraw such vote. 
 (c) Redemption upon Event of Default. The Holder shall give the Agent
at least 3 Business Days’ prior notice of its intention to exercise its redemption rights upon the occurrence of an Event of Default. 
 (d) No Amendment of Subordinated Indebtedness. Neither the Holder nor any Credit Party will, without the prior written consent of the Agent, amend or modify (i) this Section 11 or the definition of any capitalized term used
in this Section 11 or (ii) any provision of the Securities Purchase Agreement or the other Securities Purchase Documents if such amendment or modification would (A) move forward the date of any redemption or payment or increase the
principal amount of or the rate of interest applicable to the Subordinated Indebtedness or (B) result in the covenants contained therein being materially more restrictive in the aggregate on the Holder or any Credit Party prior to the
effectiveness of such amendment or modification. 
 (e) Conversion Rights. Nothing contained in this Section 11 or elsewhere in
this Note is intended to or shall impair, as among the Company, its creditors, including the holders of Existing Debt and future Senior Debt, and the Holder, the right, which is absolute and unconditional, of the Holder to convert this Note into
shares of Common Stock or rights to acquire shares of Common Stock in accordance with the terms hereof. 
 (f) Rights of Holder
Unimpaired. The provisions of this Section 11 are and are intended solely for the purposes of defining the relative rights of the Holder and the holders of Senior Debt and Future Permitted Senior Debt and nothing in this Section 11
shall impair, as between the Company and the Holder, the obligation of the Company, which is unconditional and absolute, to pay to the Holder the Principal (and premium, if any) and Interest, in accordance with the terms of this Note. 
 (g) Subordination May Not Be Impaired by any Credit Party. No right of any holder of Permitted Indebtedness to enforce the subordination of the
Subordinated Indebtedness shall be impaired by any act or failure to act by any Credit Party or the Holder or by the failure of any Credit Party or the Holder to comply with the terms of this Section 11. 
  

 -9- 

 (h) Reliance by Holder. Upon any payment or distribution of assets of any Credit Party referred to
in this Section 11, the Holder shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of the Agent or of the liquidating trustee or agent or other Person making any distribution to
the Holder for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Permitted Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section 11. 
 (i) Applicability. The terms of this
Section 11 shall be applicable both before and after the filing of any petition by or against any Credit Party under any Bankruptcy Law, and all allocations of payments between the holders of the Senior Debt and Future Permitted Senior Debt, on
the one hand, and the Holder, on the other hand, shall continue to be made after the filing thereof in accordance with this Section 11. 
 12. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law, including but not limited to the General Corporation Law of the State of California, and as expressly provided in this Note. 
 13. TRANSFER. This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject to the Securities Act of 1933, as
amended, and the Rules and Regulations promulgated thereunder and the Securities Purchase Agreement. 
 14. VOTE TO ISSUE, OR CHANGE THE TERMS OF,
NOTES. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting, of the Required Holders, shall be required for any change, amendment or waiver related to this Note ; provided, however, that no such
change, amendment or waiver, as applied to any particular holder of Notes, shall, (i) without the consent of that particular holder, extend the maturity of the Note, reduce the interest rate, extend the time of payment of interest thereon, or
reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption or repurchase thereof or affect any amounts due to any holder or (ii) without the consent of the holders of all Notes then outstanding,
reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such change, amendment or waiver. 
 15. REISSUANCE OF THIS
NOTE. 
 (a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being
transferred, a new Note to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) and this
Section 16(a), following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note. The Company shall not be obligated to pay any
documentary, stamp or similar taxes that may be payable with respect to any transfer under this Section 16(a). 
  

 -10- 

 (b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in customary form (which shall not include posting a bond) and, in the case of
mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal. 
 (c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in principal amounts of at least $100,000)
representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender. 
 (d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor
with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 16(a) or Section 16(d), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued Interest
on the Principal and Interest of this Note, from the Issuance Date. 
 16. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and the Securities Purchase Agreement, at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. The Company
shall pay the Holder for any costs associated in obtaining such injunction or remedy if the Holder successfully prevails in obtaining such injunction or other remedy, and the Holder shall pay the Company for any costs associated in defending such
injunction or remedy if the Company successfully prevails in defending such injunction or other remedy. 
 17. PAYMENT OF COLLECTION, ENFORCEMENT AND
OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of 

  

 -11- 

 
the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs
incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements. 
 18. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers (as defined in the Securities Purchase
Agreement) and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. 
 19. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 
 20. NOTICES; PAYMENTS. 
 (a) Notices. Whenever notice is required to be given under this Note,
unless otherwise provided herein, such notice shall be given in accordance with Section 6 of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note,
including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion
Price (the “Conversion Price Notice”), setting forth in reasonable detail, and certifying, the calculation of such adjustment, which shall be conclusive absent manifest error, as commercially reasonably determined by the Holder in
good faith, and provided that if the Holder determines any manifest error, the Holder shall provide written notice of such error within two Business Days of receiving the Conversion Price Notice, and (ii) at least 20 days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights
to vote with respect to any Change of Control, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder. 
 (b) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful
money of the United States of America via wire transfer of immediately available funds pursuant to the Holder’s wire transfer instructions, which are being provided to the Company on the Issuance Date. Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date. 
  

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 21. CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed on this Note have been
paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued. 
 22.
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the
Securities Purchase Agreement. 
 23. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. 
 24. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings: 
 (a) “Bankruptcy Code”
means Title 11 of the United States Code (11 U.S.C. 101 et seq.), as amended from time to time (including any successor statute) and all rules and regulations promulgated thereunder. 
 (b) “Bankruptcy Law” means the Bankruptcy Code of the United States and all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, fraudulent conveyance or transfer, reorganization, or similar state or Federal debtor relief laws, statutes, rules, regulations, orders, or ordinances of the United
States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. 
 (c)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed. 
 (d) “Comerica Debt” means all of the Company’s present and future indebtedness, claims, debts, liabilities or other obligations
owing to Comerica Bank or its successors and assigns. 
 (e) “Equity Interests” means, with respect to any Person, all of
the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit
interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person
of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options,
rights or other interests are outstanding on any date of determination. 
 (f) “GAAP” means generally accepted accounting
principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial 

  

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Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are
applicable to the circumstances as of the date of determination, consistently applied. 
 (g) “Guarantee” means, as to any
Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness
to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. 
 (h)
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: 
 (i) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; 
 (ii) all direct or contingent obligations of such Person arising under letters of
credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments; 
 (iii) net obligations of such
Person under any Swap Contract; 
 (iv) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business); 
 (v) indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; 
 (vi) capitalized leases and Off-Balance Sheet Obligations; 
 (vii) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest
in such Person or any other Person, 

  

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valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and 
 (viii) all Guarantees of such Person in respect of any of the foregoing. 
 For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer in an amount proportionate to such Person’s interest therein, unless such Indebtedness is expressly made non-recourse to
such Person or except to the extent such Indebtedness is owed by such partnership or joint venture to such Person; provided that the pledge of any Equity Interest in such joint venture shall not constitute recourse to such Person for the purposes of
this definition. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capitalized lease or Off-Balance Sheet Obligation as of any date shall
be deemed to be the amount of attributable Indebtedness in respect thereof as of such date. 
 (i) “Issuance Date” means
April 11, 2006. 
 (j) “Off-Balance Sheet Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). No monetary obligations under true operating leases shall be included in Off-Balance Sheet Obligations. 
 (k) “Permitted Indebtedness” means (i) this Note, (ii) the Senior Debt, (iii) the Future Permitted Senior Debt up to 5
mm; and (iv) reasonable unsecured trade indebtedness incurred in the ordinary course of the Company’s business. 
 (l)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof. 
 (m) “Principal Market” means The Nasdaq Stock Market. 
 (n) “SEC” means the United States Securities and Exchange Commission. 
 (o)
“Securities Purchase Agreement” means that certain securities purchase agreement between the Company and the Holders of the Notes pursuant to which the Company issued the Note. 
 (p) “Securities Purchase Documents” means that the Securities Purchase Agreement, this Note, and all other agreements, documents and
instruments executed from time to time in connection therewith, as the same may be amended, restated, supplemented or otherwise modified from time to time. 
 (q) “Senior Debt” means the Comerica Debt and all obligations, liabilities and indebtedness of every nature of the Company from time to time owed to the other parties to the 

  

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following agreements: (i) Notes payable to Vermont Economic Development Authority, and (ii) Secured bank mortgage loans payable to Sparkasse
Arnstadt – Ilmenau Germany. 
 (r) “Subsidiary” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power
only by reason of the happening of a contingency) are at the time beneficially owned by such Person. 
 (s) “Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, rate hedging agreements, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the
foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any Master
Agreement. 
 (t) “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account
the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may include any lender or any affiliate of a lender). 
 (u)
“Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New
York Time). 
 [Signature Page Follows] 
  

 -16- 

 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date
set out above. 
  

									
	 NOTE ##
  
 [Holder].
	 		 	 CARDIODYNAMICS INTERNATIONAL
 CORPORATION

					
		 		 		 	 By:
	 	 /s/ Steve P. Loomis

		 		 		 	 Name:
	 	 Steve P. Loomis

		 		 		 	 Title:
	 	 Chief Financial Officer

  

 -17- 

 EXHIBIT I to 
 Form of Note 
 CARDIODYNAMICS INTERNATIONAL CORPORATION 
 CONVERSION NOTICE 
 Reference is made
to the Subordinated Convertible Note (the “Note”) issued to the undersigned by CardioDynamics International Corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock (the “Common Stock”), of the Company as of the date specified below. 
 Date of Conversion: _________________________________________________________________________________ 
 Aggregate Conversion Amount to be converted: ____________________________________________________________ 
 Please confirm the following information: 
 Conversion
Price: ____________________________________________________________________________________ 
 Number of shares of Common Stock to be issued:
__________________________________________________________ 
 Please issue the Common Stock into which the Note is being converted in the following name and
to the following address: 
 Issue to: ____________________________________________________________________________________________

 ___________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________ 
 Facsimile Number: ____________________________________________________________________________________ 
 Authorization: ________________________________________________________________________________________ 
 By: _________________________________________________________________________________________________ 
 Title: _______________________________________________________________________________________________ 
 Dated: _______________________________________________________________________________________________ 
  

 -18- 

 ACKNOWLEDGMENT 
 The Company hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer and Trust to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent
Instructions, dated             , 200    , from the Company and acknowledged and agreed to by American Stock Transfer and Trust. 
  

			
	CARDIODYNAMICS INTERNATIONAL CORPORATION
		
	 By:
	 	  
	 Name:
	 	
	 Title:
	 	

  

 -19-

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