As filed with the Securities and Exchange Commission on
January 6, 1999
Registration No. 333-___________
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Cardiac Science, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or
organization)
33-0465681
(I.R.S. employer identification number)
1176 Main Street, Suite C
Irvine, California 92614
(Address of principal executive offices) (Zip code)
Cardiac Science, Inc. 1997 Stock Option/Stock Issuance
Plan
(Full title of the plan)
Raymond W. Cohen
Cardiac Science, Inc.
1176 Main Street
Suite C
Irvine, California 92614
(Name and address of agent for service)
(949) 587-0357
Telephone number, including area code, of agent for
service.
- copy to -
Howard S. Breslow, Esq.
Breslow & Walker, LLP
767 Third Avenue
New York, New York 10017
(212) 832-1930
<TABLE>
<CAPTION>
<PAGE>
CALCULATION OF REGISTRATION FEE
<S>
Title of
securities to
be registered<PAGE>
<C>Amount to be
registered(1)C
<PAGE>
Proposed
maximum
offering price
per share<PAGE>
<C>Proposed
maximum
aggregate
offering
priceC
<PAGE>
Amount of
registration
fee<PAGE>
Common Stock, par
value $.001 per share
("Common Stock")<PAGE>
705,000(2) -- $1,405,500 $414.63
</TABLE>
(1)In addition to this amount, such additional shares as may
be issuable in accordance with the terms of the Cardiac
Science, Inc. 1997 Stock Option/Stock Issuance Plan (the
"1997 Plan") as stock dividends or in the event of a stock
split, reorganization, merger, recapitalization or similar
event affecting the 705,000 shares being registered.
(2)Includes options previously granted to directors and
employees of the Registrant to purchase an aggregate of
705,000 shares of Common Stock (being all shares
available under the 1997 Plan) at an aggregate exercise
price of $1,405,500.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS
Item 1. Plan Information.
To be distributed to participants in
Registrant's 1997 Stock Option/Stock Issuance Plan (the
"1997 Plan").
Item 2. Registrant Information and Employee Plan
Annual Information.
To be distributed to participants in
Registrant's 1997 Plan.
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents of the Registrant
heretofore filed with the Securities and Exchange
Commission are hereby incorporated by reference:
(a) The Registrant's Annual Report on
Form 10-KSB for the year ended
December 31, 1997, which contains
audited financial statements for the
Registrant's latest fiscal year.
(b) Registrants Definitive Proxy
Statement filed April 14, 1998.
(c) Registrant's quarterly reports on
Form 10-QSB for the quarters ended
March 31, 1998, June 30, 1998 (as
amended on August 26, 1998) and
September 30, 1998.
(d) Registrant's reports on Form 8-K
filed May 7, 1998, May 29, 1998,
June 30, 1998, July 8, 1998, August
17, 1998, October 13, 1998,
November 2, 1998, December 14,
1998 and January 5, 1999.
(e) The description of the Common
Stock, par value $.001 per share
(the "Common Stock"), registered
under \Section 12(g) of the Securities
Exchange Act of 1934 (the
"Exchange Act"), as set forth in the
Registrant's Application for
Registration on Form 10, dated
October 2, 1991, including any
amendments thereto filed for the
purpose of updating such
description.
All other documents subsequently filed by the
Registrant with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining
unsold, shall be deemed incorporated by reference herein
and are a part hereof from the date of filing such
documents.
The aforementioned documents are available without
charge to each 1997 Plan participant, by written or oral
request of such person to Brett Scott, Chief Financial
Officer, Cardiac Science, Inc., 1176 Main Street, Suite C,
Irvine, CA 92614, telephone number (949) 587-0357.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the shares of Common Stock
offered hereunder will be passed upon for the Registrant by
Breslow & Walker, LLP. As of the date of this
Registration Statement Breslow & Walker, LLP owns
3,062 shares of Common Stock and warrants to purchase
an additional 262,500 shares of Common Stock.
Item 6. Indemnification of Directors and Officers.
The Company is incorporated under the laws of
Delaware. The general effect of Section 145 of the
Delaware General Corporation Law is to empower a
corporation organized thereunder to indemnify its officers
and directors against expenses (including attorneys' fees),
and in non-derivative suits against judgments, fines and
amounts paid in settlement resulting from actions, suits or
proceedings arising by reason of the fact of such officership
or directorship and to require indemnification for expenses
(including attorneys' fees) where such officer or director
has been successful on the merits in the defense of such
action. Among the limitations imposed by this statute are
that the party to be indemnified has acted in good faith and
in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and that absent a
court determination of fair and reasonable entitlement, no
indemnification may be made to him in respect of any
claim by or in the right of the corporation itself if he is
adjudged liable for negligence or misconduct. The
indemnification provided for by the statute is not exclusive
of any other rights to which those seeking indemnification
may be entitled under any by-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
The Registrant's By-Laws provide for
indemnification (to the fullest extent permitted by law) of
directors, officers or those serving at the request of the
Registrant as a director or executive officer of another
corporation, partnership, joint venture, trust, enterprise or
non-profit entity, including service with respect to
employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person.
The Registrant is required to indemnify a person in
connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors
of the Registrant. In addition, Article Eight of the
Certificate of Incorporation of the Registrant contains
provisions for the indemnification of directors, officers and
employees to the fullest extent permitted by applicable
Delaware and California law as it presently exists or may
be amended.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S>Exhibit
<PAGE>
<C>Description
C
<PAGE>
Sequentially
Numbered Page
Where Located
<PAGE>
4(a)Cardiac Science, Inc. 1997
Stock Option/Stock Issuance
Plan<PAGE>
94(b)Cardiac Science, Inc. Stock
Option Agreement<PAGE>
23
<PAGE>
4(c)Cardiac Science, Inc. Stock
Issuance Agreement<PAGE>
314(d)Cardiac Science, Inc. Stock
Purchase Agreement for
Shares Not Fully Vested <PAGE>
444(e)Cardiac Science, Inc. Stock
Purchase Agreement for Fully
Vested Shares<PAGE>
604(f)Certificate of Incorporation* --4(g)By-Laws* --5Opinion of Messrs. Breslow &
Walker, LLP as to the legality
of the securities being
registered<PAGE>
6923(a)Consent of Independent
Accountant's<PAGE>
7023(b)Reference is made to Exhibit 5
with respect to the Consent of
Messrs. Breslow & Walker,
LLP<PAGE>
--_______________
</TABLE>
*Incorporated by reference to the Registrant's
Application for Registration on Form 10 dated October
2, 1991.
Item 9. Undertakings.
A. Rule 415 offering. The undersigned
Registrant hereby undertakes:
(1) To file, during any period in
which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933
(the "Act");
(ii) To reflect in the prospectus
any facts or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
(iii) To include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change to such information in the registration
statement.
(2) That, for the purpose of
determining any liability under the Act, each such post -
effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration
by means of a post effective amendment any of the
securities being registered which remain unsold at the
termination of the offering.
B. Filings incorporating subsequent
Exchange Act
documents by reference.
The undersigned Registrant hereby
undertakes that, for purposes of determining any liability
under the Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
C. Filing of registration statement on Form
S-8.
Insofar as indemnification for liabilities
arising under the Act may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue. <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Irvine, State of
California, as of this 31st day of December, 1998.
CARDIAC SCIENCE, INC.
By:/s/ Raymond W. Cohen
Raymond W. Cohen, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Brett L. Scott
Brett L. Scott, Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act
of 1933, as amended, this Registration Statement has been
signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S>Signature<PAGE>
<C>Title<C>Date
<PAGE>
<PAGE>
/s/ Raymond W. Cohen
Raymond W. Cohen<PAGE>
Director<PAGE>
December 31, 1998
<PAGE>
/s/ Paul D. Quadros
Paul D. Quadros<PAGE>
DirectorDecember 31, 1998<PAGE>
/s/ Peter Crosby
Peter Crosby<PAGE>
Director<PAGE>
December 31, 1998<PAGE>
Howard L. Evers
<PAGE>
DirectorDecember 31, 1998
</TABLE>
<PAGE>
Exhibit 4(a)
CARDIAC SCIENCE INC
1997 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1997 Stock Option/Stock Issuance Plan
is intended to promote the interests of Cardiac Science Inc,
a Delaware corporation, by providing eligible persons with
the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the
service of the Corporation.
Capitalized terms herein shall have the
meanings assigned to such terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2)
separate equity programs:
(i) the
Option Grant Program under which
eligible persons may, at the
discretion of the Plan Administrator,
be granted options to purchase
shares of Common Stock, and
(ii) the
Stock Issuance Program under which
eligible persons may, at the
discretion of the Plan Administrator,
be issued shares of Common Stock
directly, either through the
immediate purchase of such shares
or as a bonus for services rendered
the Corporation (or any Parent or
Subsidiary).
B. The provisions of Articles One and
Four shall apply to both equity programs under the Plan
and shall accordingly govern the interests of all persons
under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the
Board. However, any or all administrative functions
otherwise exercisable by the Board may be delegated to the
Committee. Members of the Committee shall serve for
such period of time as the Board may determine and shall
be subject to removal by the Board at any time. The Board
may also at any time terminate the functions of the
Committee and reassume all powers and authority
previously delegated to the Committee.
B. The Plan Administrator shall have full
power and authority (subject to the provisions of the Plan)
to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to
make such determinations under, and issue such
interpretations of, the Plan and any outstanding options
thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Plan or
any option thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in
the Plan are as follows:
(i) Employees,
(ii) non-employee
members of the Board or the non-
employee members of the board of
directors of any Parent or
Subsidiary, and
(iii) consultants and other
independent advisors who provide
services to the Corporation (or any
Parent or Subsidiary).
B. The Plan Administrator shall have full
authority to determine, (i) with respect to the grants under
the Option Grant Program, which eligible persons are to
receive the option grants, the time or times when those
grants are to be made, the number of shares to be covered
by each such grant, the status of the granted option as
either an Incentive Option or a Non-Statutory Option, the
time or times when each option is to become exercisable,
the vesting schedule (if any) applicable to the option shares
and the maximum term for which the option is to remain
outstanding, and (ii) with respect to stock issuances under
the Stock Issuance Program, which eligible persons are to
receive such stock issuances, the time or times when such
issuances are to be made, the number of shares to be issued
to each Participant, the vesting schedule (if any) applicable
to the issued shares and the consideration to be paid by the
Participant for such shares.
C. The Plan Administrator shall have the
absolute discretion either to grant options in accordance
with the Option Grant Program or to effect stock issuances
in accordance with the Stock Issuance Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall
be shares of authorized but unissued or reacquired
Common Stock. The maximum number of shares of
Common Stock which may be issued over the term of the
Plan shall not exceed seven hundred five thousand
(705,000) shares.
B. Shares of Common Stock subject to
outstanding options shall be available for subsequent
issuance under the Plan to the extent (i) the options expire
or terminate for any reason prior to exercise in full or
(ii) the options are canceled in accordance with the
cancellation-regrant provisions of Article Two. Unvested
shares issued under the Plan and subsequently repurchased
by the Corporation, at the option exercise price or direct
issue price paid per share, pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or
direct stock issuances under the Plan.
C. Should any change be made to the
Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding
Common Stock as a class without the Corporation's receipt
of consideration, appropriate adjustments shall be made to
(i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of
securities and the exercise price per share in effect under
each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final,
binding and conclusive. In no event shall any such
adjustments be made in connection with the conversion of
one or more outstanding shares of the Corporation's
preferred stock into shares of Common Stock.
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or
more documents in the form approved by the Plan
Administrator; provided, however, that each such document
shall comply with the terms specified below. Each
document evidencing an Incentive Option shall, in addition,
be subject to the provisions of the Plan applicable to such
options.
A. Exercise Price.
1. The exercise price per share
shall be fixed by the Plan Administrator in accordance with
the following provisions:
(i) The exercise
price per share shall not be less than
eighty-five percent (85%) of the Fair
Market Value per share of Common
Stock on the option grant date.
(ii) If the person to
whom the option is granted is a 10%
Stockholder, then the exercise price
per share shall not be less than one
hundred ten percent (110%) of the
Fair Market Value per share of
Common Stock on the option grant
date.
2. The exercise price shall become
immediately due upon exercise of the option and shall,
subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the
Common Stock be registered under Section 12(g) of the
1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Common
Stock held for the requisite period
necessary to avoid a charge to the
Corporation's earnings for financial
reporting purposes and valued at
Fair Market Value on the Exercise
Date, or
(ii) to the extent the option
is exercised for vested shares,
through a special sale and remittance
procedure pursuant to which the
Optionee shall concurrently provide
irrevocable instructions (A) to a
Corporation-designated brokerage
firm to effect the immediate sale of
the purchased shares and remit to the
Corporation, out of the sale proceeds
available on the settlement date,
sufficient funds to cover the
aggregate exercise price payable for
the purchased shares plus all
applicable Federal, state and local
income and employment taxes
required to be withheld by the
Corporation by reason of such
exercise and (B) to the Corporation
to deliver the certificates for the
purchased shares directly to such
brokerage firm in order to complete
the sale.
Except to the extent such sale and remittance
procedure is utilized, payment of the exercise price
for the purchased shares must be made on
the Exercise Date.
B. Exercise and Term of Options. Each
option shall be exercisable at such time or times, during
such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the
documents evidencing the option grant. However, no
option shall have a term in excess of ten (10) years
measured from the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall
govern the exercise of any options held by the Optionee at
the time of cessation of Service or death:
(i) Should the
Optionee cease to remain in Service
for any reason other than Disability
or Misconduct, then the Optionee
shall have a period of three (3)
months following the date of such
cessation of Service during which to
exercise each outstanding option held
by such Optionee.
(ii) Should
Optionee's Service terminate by
reason of Disability, then the
Optionee shall have a period of
twelve (12) months following the
date of such cessation of Service
during which to exercise each
outstanding option held by such
Optionee.
(iii) If the Optionee
dies while holding an outstanding
option, then the personal
representative of his or her estate or
the person or persons to whom the
option is transferred pursuant to the
Optionee's will or the laws of
inheritance shall have a twelve (12)-
month period following the date of
the Optionee's death to exercise such
option.
(iv) Under no
circumstances, however, shall any
such option be exercisable after the
specified expiration of the option
term.
(v) During the
applicable post-Service exercise
period, the option may not be
exercised in the aggregate for more
than the number of vested shares for
which the option is exercisable on
the date of the Optionee's cessation
of Service. Upon the expiration of
the applicable exercise period or (if
earlier) upon the expiration of the
option term, the option shall
terminate and cease to be
outstanding for any vested shares for
which the option has not been
exercised. However, the option
shall, immediately upon the
Optionee's cessation of Service,
terminate and cease to be
outstanding with respect to any and
all option shares for which the
option is not otherwise at the time
exercisable or in which the Optionee
is not otherwise at that time vested.
(vi) Should
Optionee's Service be terminated for
Misconduct, then all outstanding
options held by the Optionee shall
terminate immediately and cease to
remain outstanding.
2. The Plan Administrator shall have the
discretion, exercisable either at the time an option is
granted or at any time while the option remains
outstanding, to:
(i) extend the period of
time for which the option is to
remain exercisable following
Optionee's cessation of Service or
death from the limited period
otherwise in effect for that option to
such greater period of time as the
Plan Administrator shall deem
appropriate, but in no event beyond
the expiration of the option term,
and/or
(ii) permit the option to be
exercised, during the applicable post-
Service exercise period, not only
with respect to the number of vested
shares of Common Stock for which
such option is exercisable at the time
of the Optionee's cessation of
Service but also with respect to one
or more additional installments in
which the Optionee would have
vested under the option had the
Optionee continued in Service.
D. Stockholder Rights. The holder of an
option shall have no stockholder rights with respect to the
shares subject to the option until such person shall have
exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Unvested Shares. The Plan
Administrator shall have the discretion to grant options
which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding
such unvested shares, the Corporation shall have the right
to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period
and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document
evidencing such repurchase right. The Plan Administrator
may not impose a vesting schedule upon any option grant
or the shares of Common Stock subject to that option
which is more restrictive than twenty percent (20%) per
year vesting, with the initial vesting to occur not later than
one (1) year after the option grant date. However, such
limitation shall not be applicable to any option grants made
to individuals who are officers of the Corporation, non-
employee Board members or independent consultants.
F. Limited Transferability of Options.
During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws
of descent and distribution following the Optionee's death.
G. Withholding. The Corporation's
obligation to deliver shares of Common Stock upon the
exercise of any options granted under the Plan shall be
subject to the satisfaction of all applicable Federal, state
and local income and employment tax withholding
requirements.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable
to all Incentive Options. Except as modified by the
provisions of this Section II, all the provisions of the Plan
shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options shall not
be subject to the terms of this Section II.
A. Eligibility. Incentive Options may
only be granted to Employees.
B. Exercise Price. The exercise price
per share shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair
Market Value of the shares of Common Stock (determined
as of the respective date or dates of grant) for which one or
more options granted to any Employee under the Plan (or
any other option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as
Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or
more such options which become exercisable for the first
time in the same calendar year, the foregoing limitation on
the exercisability of such options as Incentive Options shall
be applied on the basis of the order in which such options
are granted.
D. 10% Stockholder. If any Employee
to whom an Incentive Option is granted is a 10%
Stockholder, then the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION
A. The shares subject to each option
outstanding under the Plan at the time of a Corporate
Transaction shall automatically vest in full so that each
such option shall, immediately prior to the effective date of
the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock.
B. All outstanding repurchase rights shall
also terminate automatically, and the shares of Common
Stock subject to those terminated rights shall immediately
vest in full, in the event of any Corporate Transaction.
C. Immediately following the
consummation of the Corporate Transaction, all outstanding
options shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in
connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities
which would have been issuable to the Optionee in
consummation of such Corporate Transaction, had the
option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made
to (i) the number and class of securities available for
issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price
payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities
shall remain the same.
E. The Plan Administrator shall have the
discretion, exercisable either at the time the option is
granted or at any time while the option remains
outstanding, to provide for the automatic acceleration (in
whole or in part) of one or more outstanding options (and
the immediate termination of the Corporation's repurchase
rights with respect to the shares.
<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued
under the Stock Issuance Program through direct and
immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock
Issuance Agreement which complies with the terms
specified below.
A. Purchase Price.
1. The purchase price per share
shall be fixed by the Plan Administrator but shall not be
less than eighty-five percent (85 %) of the Fair Market
Value per share of Common Stock on the issue date.
However, the purchase price per share of Common Stock
issued to a 10% Stockholder shall not be less than one
hundred and ten percent (110%) of such Fair Market
Value.
2. Subject to the provisions of
Section I of Article Four, shares of Common Stock may be
issued under the Stock Issuance Program for any of the
following items of consideration which the Plan
Administrator may deem appropriate in each individual
instance:
(i) cash or check
made payable to the Corporation, or
(ii) past services
rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting Provisions.
1. Shares of Common Stock
issued under the Stock Issuance Program may, in the
discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or
more installments over the Participant's period of Service
or upon attainment of specified performance objectives.
However, the Plan Administrator may not impose a vesting
schedule upon any stock issuance effected under the Stock
Issuance Program which is more restrictive than twenty
percent (20%) per year vesting, with initial vesting to occur
not later than one (1) year after the issuance date. Such
limitation shall not apply to any Common Stock issuances
made to the officers of the Corporation, non-employee
Board members or independent consultants.
2. Any new, substituted or
additional securities or other property (including money
paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the
Participant's unvested shares of Common Stock by reason
of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration shall be issued
subject to (i) the same vesting requirements applicable to
the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. The Participant shall have full
stockholder rights with respect to any shares of Common
Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant's interest in those
shares is vested. Accordingly, the Participant shall have
the right to vote such shares and to receive any regular
cash dividends paid on such shares.
4. Should the Participant cease to
remain in Service while holding one or more unvested
shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be
attained with respect to one or more such unvested shares
of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the
Corporation shall repay to the Participant the cash
consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such
surrendered shares.
5. The Plan Administrator may in
its discretion waive the surrender and cancellation of one
or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such
shares. Such waiver shall result in the immediate vesting
of the Participant's interest in the shares of Common Stock
as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-
attainment of the applicable performance objectives.
II. CORPORATE TRANSACTION
Upon the occurrence of a Corporate
Transaction, all outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and
the shares of Common Stock subject to those terminated
rights shall immediately vest in full.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan
Administrator's discretion, be held in escrow by the
Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with
restrictive legends on the certificates evidencing those
unvested shares.
<PAGE>
ARTICLE FOUR
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any
Optionee or Participant to pay the option exercise price
under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance
Program by delivering a full-recourse, interest bearing
promissory note payable in one or more installments. The
terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the
Plan Administrator in its sole discretion. In no event may
the maximum credit available to the Optionee or Participant
exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares (less the
par value of those shares) plus (ii) any Federal, state and
local income and employment tax liability incurred by the
Optionee or the Participant in connection with the option
exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF
PLAN
A. The Plan shall become effective when
adopted by the Board, but no option granted under the Plan
may be exercised, and no shares shall be issued under the
Plan, until the Plan is approved by the Corporation's
stockholders. If such stockholder approval is not obtained
within twelve (12) months after the date of the Board's
adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding,
and no further options shall be granted and no shares shall
be issued under the Plan. Subject to such limitation, the
Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the
Plan and before the date fixed herein for termination of the
Plan.
B. The Plan shall terminate upon the
earliest of (i) the expiration of the ten (10)-year period
measured from the date the Plan is adopted by the Board,
(ii) the date on which all shares available for issuance
under the Plan shall have been issued as vested shares or
(iii) the termination of all outstanding options in connection
with a Corporate Transaction. All options and unvested
stock issuances outstanding at that time under the Plan shall
continue to have full force and effect in accordance with
the provisions of the documents evidencing such options or
issuances.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and
exclusive power and authority to amend or modify the Plan
in any or all respects. However, no such amendment or
modification shall adversely affect the rights and
obligations with respect to options or unvested stock
issuances at the time outstanding under the Plan unless the
0ptionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require
stockholder approval pursuant to applicable laws and
regulations.
B. Options may be granted under the
Option Grant Program and shares may be issued under the
Stock Issuance Program which are in each instance in
excess of the number of shares of Common Stock then
available for issuance under the Plan, provided any excess
shares actually issued under those programs shall be held
in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan. If
such stockholder approval is not obtained within twelve
(12) months after the date the first such excess shares are
made, then (i) any unexercised options granted on the basis
of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund
to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the
Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the
shares were held in escrow, and such shares shall
thereupon be automatically canceled and cease to be
outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the
Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate
purposes.
V. WITHHOLDING
The Corporation's obligation to deliver
shares of Common Stock upon the exercise of any options
or upon the vesting of any shares issued under the Plan
shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding
requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting
of any options under the Plan and the issuance of any
shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals
and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
VII. NO EMPLOYMENT OR SERVICE
RIGHTS
Nothing in the Plan shall confer upon the
Optionee or the Participant any right to continue in Service
for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such
person) or of the Optionee or the Participant, which rights
are hereby expressly reserved by each, to terminate such
person's Service at any time for any reason, with or
without cause.
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet
and an income statement at least annually to each individual
holding an outstanding option under the Plan, unless such
individual is a key Employee whose duties in connection
with the Corporation (or any Parent or Subsidiary) assure
such individual access to equivalent information.
<PAGE>
APPENDIX
The following definitions shall be in effect under
the Plan:
A. Board shall mean the Corporation's Board of
Directors.
B. Code shall mean the Internal Revenue Code
of 1986, as amended.
C. Committee shall mean a committee of two (2)
or more Board members appointed by the Board to exercise
one or more administrative functions under the Plan.
D. Common Stock shall mean the Corporation's
common stock.
E. Corporate Transaction shall mean either of
the following stockholder-approved transactions to which
the Corporation is a party:
(a) a merger or consolidation in
which securities possessing more than fifty
percent (50%) of the total combined voting
power of the Corporation's outstanding
securities are transferred to a person or
persons different from the persons holding
those securities immediately prior to such
transaction, or
(b) the sale, transfer or other
disposition of all or substantially all of the
Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. Corporation shall mean Cardiac Science Inc,
a Delaware corporation.
G. Disability shall mean the inability of the
Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical
evidence as the Plan Administrator deems warranted under
the circumstances.
H. Employee shall mean an individual who is in
the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and
the manner and method of performance.
I. Exercise Date shall mean the date on which
the Corporation shall have received written notice of the
option exercise.
J. Fair Market Value per share of Common
Stock on any relevant date shall be determined in
accordance with the following provisions:
(a) If the Common Stock is at the
time traded on the Nasdaq National
Market, then the Fair Market Value shall
be the closing selling price per share of
Common Stock on the date in question, as
such price is reported by the National
Association of Securities Dealers on the
Nasdaq National Market. If there is no
closing selling price for the Common Stock
on the date in question, then the Fair
Market Value shall be the closing selling
price on the last preceding date for which
such quotation exists.
(b) If the Common Stock is at the
time listed on any Stock Exchange, then
the Fair Market Value shall be the closing
selling price per share of Common Stock
on the date in question on the Stock
Exchange determined by the Plan
Administrator to be the primary market for
the Common Stock, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no closing selling price for the Common
Stock on the date in question, then the Fair
Market Value shall be the closing selling
price on the last preceding date for which
such quotation exists.
(c) If the Common Stock is at the
time neither listed on any Stock Exchange
nor traded on the Nasdaq National Market,
then the Fair Market Value shall be
determined by the Plan Administrator after
taking into account such factors as the Plan
Administrator shall deem appropriate.
K. Incentive Option shall mean an option which
satisfies the requirements of Code Section 422.
L. Involuntary Termination shall mean the
termination of the Service of any individual which occurs
by reason of:
(a) such individual's involuntary
dismissal or discharge by the Corporation
for reasons other than Misconduct, or
(b) such individual's voluntary
resignation following (A) a change in his
or her position with the Corporation which
materially reduces his or her level of
responsibility, (B) a reduction in his or her
level of compensation (including base
salary, fringe benefits and target bonuses
under any corporate-performance based
bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of
such individual's place of employment by
more than fifty (50) miles, provided and
only if such change, reduction or relocation
is effected without the individual's consent.
M. Misconduct shall mean the commission of
any act of fraud, embezzlement or dishonesty by the
Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets
of the Corporation (or any Parent or Subsidiary), or any
other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts
or omissions which the Corporation (or any Parent or
Subsidiary) may consider as grounds for the dismissal or
discharge of any Optionee, Participant or other person in
the Service of the Corporation (or any Parent or
Subsidiary).
N. 1934 Act shall mean the Securities Exchange
Act of 1934, as amended.
O. Non-Statutory Option shall mean an option
not intended to satisfy the requirements of Code
Section 422.
P. Option Grant Program shall mean the option
grant program in effect under the Plan.
Q. Optionee shall mean any person to whom an
option is granted under the Plan.
R. Parent shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in
the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
S. Participant shall mean any person who is
issued shares of Common Stock under the Stock Issuance
Program.
T. Plan shall mean the Corporation's 1997 Stock
Option/Stock Issuance Plan, as set forth in this document.
U. Plan Administrator shall mean either the
Board or the Committee acting in its capacity as
administrator of the Plan.
V. Service shall mean the provision of services
to the Corporation (or any Parent or Subsidiary) by a
person in the capacity of an Employee, a non-employee
member of the board of directors or a consultant or
independent advisor, except to the extent otherwise
specifically provided in the documents evidencing the
option grant.
W. Stock Exchange shall mean either the
American Stock Exchange or the New York Stock
Exchange.
X. Stock Issuance Agreement shall mean the
agreement entered into by the Corporation and the
Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
Y. Stock Issuance Program shall mean the stock
issuance program in effect under the Plan.
Z. Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
AA. 10% Stockholder shall mean the owner of
stock (as determined under Code Section 424(d)) possessing
more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation (or any
Parent or Subsidiary).<PAGE>
Exhibit 4(b)
CARDIAC SCIENCE INC
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the
purpose of retaining the services of selected Employees,
non-employee members of the Board or the board of
directors of any Parent or Subsidiary and consultants and
other independent advisors in the service of the Corporation
(or any Parent or Subsidiary).
B. Optionee is to render valuable services to the
Corporation (or a Parent or Subsidiary), and this
Agreement is executed pursuant to, and is intended to carry
out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall
have the meaning assigned to them in the attached
Appendix.
NOW, THEREFORE, it is hereby agreed as
follows:
1. Grant of Option. The Corporation
hereby grants to Optionee, as of the Grant Date, an option
to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in
Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have
a term of ten (10) years measured from the Grant Date and
shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance
with Paragraph 5 or 6.
3. Limited Transferability. During
Optionee's lifetime, this option shall be exercisable only by
Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution
following Optionee's death.
4. Dates of Exercise. This option shall
become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice. As the option
becomes exercisable for such installments, those
installments shall accumulate and the option shall remain
exercisable for the accumulated installments until the
Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term
specified in Paragraph 2 shall terminate (and this option
shall cease to be outstanding) prior to the Expiration Date
should any of the following provisions become applicable:
(a) Should Optionee cease to
remain in Service for any reason (other than death,
Disability or Misconduct) while this option is outstanding,
then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service)
during which to exercise this option, but in no event shall
this option be exercisable at any time after the Expiration
Date.
(b) Should Optionee die while this
option is outstanding, then the personal representative of
Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in
accordance with the laws of inheritance shall have the right
to exercise this option. Such right shall lapse, and this
option shall cease to be outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (ii) the Expiration
Date.
(c) Should Optionee cease Service
by reason of Disability while this option is outstanding,
then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service)
during which to exercise this option. In no event shall this
option be exercisable at any time after the Expiration Date.
Note: Exercise of this option
on a date later than three (3)
months following cessation of
Service due to Disability will
result in loss of favorable
Incentive Option treatment,
unless such Disability
constitutes Permanent
Disability. In the event that
Incentive Option treatment is
not available, this option will
be taxed as a Non-Statutory
Option upon exercise.
(d) During the limited period of
post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of Option Shares
in which Optionee is, at the time of Optionee's cessation of
Service, vested pursuant to the Vesting Schedule specified
in the Grant Notice or the special vesting acceleration
provisions of Paragraph 6. Upon the expiration of such
limited exercise period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the
option has not been exercised. To the extent Optionee is
not vested in the Option Shares at the time of Optionee's
cessation of Service, this option shall immediately
terminate and cease to be outstanding with respect to those
shares.
(e) Should Optionee's Service be
terminated for Misconduct, then this option shall terminate
immediately and cease to remain outstanding.
6. Accelerated Vesting.
(a) In the event of any Corporate
Transaction, the Option Shares at the time subject to this
option but not otherwise vested shall automatically vest in
full so that this option shall, immediately prior to the
effective date of the Corporate Transaction, become fully
exercisable for all of those Option Shares and may be
exercised for any or all of those Option Shares as fully-
vested shares of Common Stock.
(b) Immediately following the
Corporate Transaction, this option shall terminate and cease
to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with
the Corporate Transaction.
(c) If this option is assumed in
connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of
securities which would have been issuable to Optionee in
consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be
made to the Exercise Price, provided the aggregate
Exercise Price shall remain the same.
(d) The Option Shares may also
vest upon an accelerated basis in accordance with the terms
and conditions of any special addendum attached to this
Agreement.
(e) This Agreement shall not in
any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
7. Adjustment in Option Shares. Should
any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or
class of securities subject to this option and (ii) the
Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. Stockholder Rights. The holder of
this option shall not have any stockholder rights with
respect to the Option Shares until such person shall have
exercised the option, paid the Exercise Price and become
a holder of record of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option
with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or
any other person or persons exercising the option) must
take the following actions:
(i) Execute and deliver to
the Corporation a Purchase Agreement for the
Option Shares for which the option is exercised.
(ii) Pay the aggregate
Exercise Price for the purchased shares in one or
more of the following forms:
(A) cash or check.
made payable to the Corporation; or
(B) a promissory
note payable to the Corporation, but only to
the extent authorized by the Plan
Administrator in accordance with
Paragraph 14.
Should the Common Stock be
registered under Section 12(g) of the 1934
Act at the time the option is exercised, then
the Exercise Price may also be paid as
follows:
(C) in shares of
Common Stock held by Optionee (or any
other person or persons exercising the
option) for the requisite period necessary to
avoid a charge to the Corporation's earnings
for financial reporting purposes and valued
at Fair Market Value on the Exercise Date;
or
(D) to the extent
the option is exercised for vested Option
Shares, through a special sale and remittance
procedure pursuant to which Optionee (or
any other person or persons exercising the
option) shall concurrently provide
irrevocable instructions (a) to a Corporation-
designated brokerage firm to effect the
immediate sale of the purchased shares and
remit to the Corporation, out of the sale
proceeds available on the settlement date,
sufficient funds to cover the aggregate
Exercise Price payable for the purchased
shares plus all applicable Federal, state and
local income and employment taxes required
to be withheld by the Corporation by reason
of such exercise and (b) to the Corporation
to deliver the certificates for the purchased
shares directly to such brokerage firm in
order to complete the sale.
Except to the extent the sale and
remittance procedure is utilized in
connection with the option exercise, payment
of the Exercise Price must accompany the
Purchase Agreement delivered to the
Corporation in connection with the option
exercise.
(iii) Furnish to the
Corporation appropriate documentation that the
person or persons exercising the option (if other
than Optionee) have the right to exercise this
option.
(iv) Execute and deliver to
the Corporation such written representations as
may be requested by the Corporation in order for
it to comply with the applicable requirements of
Federal and state securities laws.
(v) Make appropriate
arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the
satisfaction of all Federal, state and local income
and employment tax withholding requirements
applicable to the option exercise.
(b) As soon as practical after the
Exercise Date, the Corporation shall issue to or on behalf
of Optionee (or any other person or persons exercising this
option) a certificate for the purchased Option Shares, with
the appropriate legends affixed thereto.
(c) In no event may this option be
exercised for any fractional shares.
10. REPURCHASE RIGHTS. ANY
UNVESTED OPTION SHARES ACQUIRED UPON
THE EXERCISE OF THIS OPTION SHALL BE
SUBJECT TO CERTAIN RIGHTS OF THE
CORPORATION AND ITS ASSIGNS TO
REPURCHASE THOSE SHARES IN ACCORDANCE
WITH THE TERMS SPECIFIED IN THE PURCHASE
AGREEMENT.
11. Compliance with Laws and
Regulations.
(a) The exercise of this option and
the issuance of the Option Shares upon such exercise shall
be subject to compliance by the Corporation and Optionee
with all applicable requirements of law relating thereto and
with all applicable regulations of any stock exchange (or
the Nasdaq National Market, if applicable) on which the
Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation
to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the
lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability
with respect to the non-issuance or sale of the Common
Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best
efforts to obtain all such approvals.
12. Successors and Assigns. Except to the
extent otherwise provided in Paragraphs 3 and 6, the
provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Corporation and its successors
and assigns and Optionee, Optionee's assigns and the legal
representatives, heirs and legatees of Optionee's estate.
13. Notices. Any notice required to be
given or delivered to the Corporation under the terms of
this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated
below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon
personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
14. Financing. The Plan Administrator
may, in its absolute discretion and without any obligation
to do so, permit Optionee to pay the Exercise Price for the
purchased Option Shares by delivering a full-recourse,
interest-bearing promissory note secured by those Option
Shares. The payment schedule in effect for any such
promissory note shall be established by the Plan
Administrator in its sole discretion.
15. Construction. This Agreement and
the option evidenced hereby are made and granted pursuant
to the Plan and are in all respects limited by and subject to
the terms of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising
under the Plan or this Agreement shall be conclusive and
binding on all persons having an interest in this option.
16. Governing Law. The interpretation,
performance and enforcement of this Agreement shall be
governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
17. Stockholder Approval. If the Option
Shares covered by this Agreement exceed, as of the Grant
Date, the number of shares of Common Stock which may
be issued under the Plan as last approved by the
stockholders, then this option shall be void with respect to
such excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of
Common Stock issuable under the Plan is obtained in
accordance with the provisions of the Plan.
18. Additional Terms Applicable to an
Incentive Option. In the event this option is designated an
Incentive Option in the Grant Notice, the following terms
and conditions shall also apply to the grant:
(a) This option shall cease to
qualify for favorable tax treatment as an Incentive Option
if (and to the extent) this option is exercised for one or
more Option Shares: (i) more than three (3) months after
the date Optionee ceases to be an Employee for any reason
other than death or Permanent Disability or (ii) more than
twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.
(b) This option shall not become
exercisable in the calendar year in which granted if (and to
the extent) the aggregate Fair Market Value (determined at
the Grant Date) of the Common Stock for which this option
would otherwise first become exercisable in such calendar
year would, when added to the aggregate value (determined
as of the respective date or dates of grant) of the Common
Stock and any other securities for which one or more other
Incentive Options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of
the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate.
To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years
thereafter in which the One Hundred Thousand Dollar
($100,000) limitation of this Paragraph 18(b) would not be
contravened, but such deferral shall in all events end
immediately prior to the effective date of a Corporate
Transaction in which this option is not to be assumed,
whereupon the option shall become immediately exercisable
as a Non-Statutory Option for the deferred portion of the
Option Shares.
(c) Should Optionee hold, in
addition to this option, one or more other options to
purchase Common Stock which become exercisable for the
first time in the same calendar year as this option, then the
foregoing limitations on the exercisability of such options
as Incentive Options shall be applied on the basis of the
order in which such options are granted.
APPENDIX
The following definitions shall be in effect under
the Agreement:
A. Agreement shall mean this Stock Option
Agreement.
B. Board shall mean the Corporation's Board of
Directors.
C. Code shall mean the Internal Revenue Code
of 1986, as amended.
D. Common Stock shall mean the Corporation's
common stock.
E. Corporate Transaction shall mean either of
the following stockholder-approved transactions to which
the Corporation is a party:
(i) a merger or consolidation in
which securities possessing more than fifty
percent (50%) of the total combined voting
power of the Corporation's outstanding
securities are transferred to a person or
persons different from the persons holding
those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other
disposition of all or substantially all of the
Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. Corporation shall mean Cardiac Science Inc,
a Delaware corporation.
G. Disability shall mean the inability of
Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment and shall be determined by the Plan
Administrator on the basis of such medical evidence as the
Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute
Permanent Disability in the event that such Disability is
expected to result in death or has lasted or can be expected
to last for a continuous period of twelve (12) months or
more.
H. Employee shall mean an individual who is in
the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and
the manner and method of performance.
I. Exercise Date shall mean the date on which
the option shall have been exercised in accordance with
Paragraph 9 of the Agreement.
J. Exercise Price shall mean the exercise price
payable per Option Share as specified in the Grant Notice.
K. Expiration Date shall mean the date on which
the option expires as specified in the Grant Notice.
L. Fair Market Value per share of Common
Stock on any relevant date shall be determined in
accordance with the following provisions:
(i) If the Common Stock is at the
time traded on the Nasdaq National
Market, then the Fair Market Value shall
be the closing selling price per share of
Common Stock on the date in question, as
the price is reported by the National
Association of Securities Dealers on the
Nasdaq National Market or any successor
system. If there is no closing selling price
for the Common Stock on the date in
question, then the Fair Market Value shall
be the closing selling price on the last
preceding date for which such quotation
exists.
(ii) If the Common Stock is at the
time listed on any Stock Exchange, then
the Fair Market Value shall be the closing
selling price per share of Common Stock
on the date in question on the Stock
Exchange determined by the Plan
Administrator to be the primary market for
the Common Stock, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no closing selling price for the Common
Stock on the date in question, then the Fair
Market Value shall be the closing selling
price on the last preceding date for which
such quotation exists.
(iii) If the Common Stock is at the
time neither listed on any Stock Exchange
nor traded on the Nasdaq National Market,
then the Fair Market Value shall be
determined by the Plan Administrator after
taking into account such factors as the Plan
Administrator shall deem appropriate.
M. Grant Date shall mean the date of grant of
the option as specified in the Grant Notice.
N. Grant Notice shall mean the Notice of Grant
of Stock Option accompanying the Agreement, pursuant to
which Optionee has been informed of the basic terms of the
option evidenced hereby.
O. Incentive Option shall mean an option which
satisfies the requirements of Code Section 422.
P. Misconduct shall mean the commission of
any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional
misconduct by Optionee adversely affecting the business or
affairs of the Corporation (or any Parent or Subsidiary) in
a material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which
the Corporation (or any Parent or Subsidiary) may consider
as grounds for the dismissal or discharge of Optionee or
any other individual in the Service of the Corporation (or
any Parent or Subsidiary).
Q. 1934 Act shall mean the Securities Exchange
Act of 1934, as amended.
R. Non-Statutory Option shall mean an option
not intended to satisfy the requirements of Code
Section 422.
S. Option Shares shall mean the number of
shares of Common Stock subject to the option.
T. Optionee shall mean the person to whom the
option is granted as specified in the Grant Notice.
U. Parent shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
V. Plan shall mean the Corporation's 1997 Stock
Option/Stock Issuance Plan.
W. Plan Administrator shall mean either the
Board or a committee of the Board acting in its capacity as
administrator of the Plan.
X. Purchase Agreement shall mean the stock
purchase agreement in substantially the form of Exhibit B
to the Grant Notice.
Y. Service shall mean the Optionee's
performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or an
independent consultant.
Z. Stock Exchange shall mean the American
Stock Exchange or the New York Stock Exchange.
AA. Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
AB. Vesting Schedule shall mean the vesting
schedule specified in the Grant Notice pursuant to which
the Optionee is to vest in the Option Shares in a series of
installments over his or her period of Service.
<PAGE>
Exhibit 4(c)
CARDIAC SCIENCE INC
STOCK ISSUANCE AGREEMENT
AGREEMENT made as of this ___ day of
____________ 199__, by and between Cardiac Science Inc,
a Delaware corporation, and
_________________________, Participant in the
Corporation's 1997 Stock Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall
have the meaning assigned to them in this Agreement or in
the attached Appendix.
A. PURCHASE OF SHARES
1. Purchase. Participant hereby
purchases ___________ shares of Common Stock (the
"Purchased Shares") pursuant to the provisions of the Stock
Issuance Program at the purchase price of
$___________________ per share (the "Purchase Price").
2. Payment. Concurrently with the
delivery of this Agreement to the Corporation, Participant
shall pay the Purchase Price for the Purchased Shares in
cash or cash equivalent and shall deliver a duly-executed
blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit I) with respect to the Purchased
Shares.
3. Stockholder Rights. Until such time
as the Corporation exercises the Repurchase Right,
Participant (or any successor in interest) shall have all
stockholder rights (including voting, dividend and
liquidation rights) with respect to the Purchased Shares,
subject, however, to the transfer restrictions of Articles B
and C.
B. SECURITIES LAW COMPLIANCE.
1. Restricted Securities. The
Purchased Shares have not been registered under the 1933
Act and are being issued to Participant in reliance upon the
exemption from such registration provided by SEC Rule
701 for stock issuances under compensatory benefit plans
such as the Plan. Participant hereby confirms that
Participant has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be
resold or transferred unless the Purchased Shares are first
registered under the Federal securities laws or unless an
exemption from such registration is available.
Accordingly, Participant hereby acknowledges that
Participant is prepared to hold the Purchased Shares for an
indefinite period and that Participant is aware that SEC
Rule 144 issued under the 1933 Act which exempts certain
resales of unrestricted securities is not presently available
to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act.
2. Disposition of Purchased Shares.
Participant shall make no disposition of the Purchased
Shares (other than a Permitted Transfer) unless and until
there is compliance with all of the following requirements:
(i) Participant shall have
provided the Corporation with a written summary of the
terms and conditions of the proposed disposition.
(ii) Participant shall have
complied with all requirements of this Agreement
applicable to the disposition of the Purchased Shares.
(iii) Participant shall have
provided the Corporation with written assurances, in form
and substance satisfactory to the Corporation, that (a) the
proposed disposition does not require registration of the
Purchased Shares under the 1933 Act or (b) all appropriate
action necessary for compliance with the registration
requirements of the 1933 Act or any exemption from
registration available under the 1933 Act (including Rule
144) has been taken.
The Corporation shall not be required (i) to
transfer on its books any Purchased Shares which have
been sold or transferred in violation of the provisions of
this Agreement or (ii) to treat as the owner of the
Purchased Shares, or otherwise to accord voting, dividend
or liquidation rights to, any transferee to whom the
Purchased Shares have been transferred in contravention of
this Agreement.
3. Restrictive Legends. The stock
certificates for the Purchased Shares shall be endorsed with
one or more of the following restrictive legends:
"The shares represented by this
certificate have not been registered under the Securities Act
of 1933. The shares may not be sold or offered for sale in
the absence of (a) an effective registration statement for the
shares under such Act, (b) a "no action" letter of the
Securities and Exchange Commission with respect to such
sale or offer or (c) satisfactory assurances to the
Corporation that registration under such Act is not required
with respect to such sale or offer."
"The shares represented by this
certificate are subject to certain repurchase rights granted
to the Corporation and accordingly may not be sold,
assigned, transferred, encumbered, or in any manner
disposed of except in conformity with the terms of a
written agreement dated ______________, 199__ between
the Corporation and the registered holder of the shares (or
the predecessor in interest to the shares). A copy of such
agreement is maintained at the Corporation's principal
corporate offices.
C. TRANSFER RESTRICTIONS
1. Restriction on Transfer. Except for
any Permitted Transfer, Participant shall not transfer,
assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase
Right. In addition, Purchased Shares which are released
from the Repurchase Right shall not be transferred,
assigned, encumbered or otherwise disposed of in
contravention of the Market Stand-Off.
2. Transferee Obligations. Each
person (other than the Corporation) to whom the Purchased
Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that
such person is bound by the provisions of this Agreement
and that the transferred shares are subject to (i) the
Repurchase Right, and (ii) the Market Stand-Off, to the
same extent such shares would be so subject if retained by
Participant.
3. Market Stand-Off.
(a) In connection with any
underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration
statement filed under the 1933 Act, Owner shall not sell,
make any short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise dispose or
transfer for value or otherwise agree to engage in any of
the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Corporation
or its underwriters. Such restriction (the "Market Stand-
Off") shall be in effect for such period of time from and
after the effective date of the final prospectus for the
offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period
exceed one hundred eighty (180) days and the Market
Stand-Off shall in all events terminate two (2) years after
the effective date of the Corporation's public offering.
(b) Owner shall be subject to the
Market Stand-Off provided and only if the officers and
directors of the Corporation are also subject to similar
restrictions.
(c) Any new, substituted or
additional securities which are by reason of any
Recapitalization or Reorganization distributed with respect
to the Purchased Shares shall be immediately subject to the
Market Stand-Off, to the same extent the Purchased Shares
are at such time covered by such provisions.
(d) In order to enforce the Market
Stand-Off, the Corporation may impose stop-transfer
instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. REPURCHASE RIGHT
1. Grant. The Corporation is hereby
granted the right (the "Repurchase Right"), exercisable at
any time during the sixty (60)-day period following the date
Participant ceases for any reason to remain in Service, to
repurchase at the Purchase Price any or all of the
Purchased Shares in which Participant is not, at the time of
his or her cessation of Service, vested in accordance with
the provisions of this Article D Vesting Schedule (such
shares to be hereinafter referred to as the "Unvested
Shares").
2. Exercise of the Repurchase Right.
The Repurchase Right shall be exercisable by written notice
delivered to each Owner of the Unvested Shares prior to
the expiration of the sixty (60)-day exercise period. The
notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be
effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing
the Unvested Shares to be repurchased shall be delivered to
the Corporation on or before the close of business on the
date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay
to Owner, in cash or cash equivalents (including the
cancellation of any purchase-money indebtedness), an
amount equal to the Purchase Price previously paid for the
Unvested Shares which are to be repurchased from Owner.
3. Termination of the Repurchase
Right. The Repurchase Right shall terminate with respect
to any Unvested Shares for which it is not timely exercised
under Paragraph D.2. In addition, the Repurchase Right
shall terminate and cease to be exercisable with respect to
any and all Purchased Shares in which Participant vests in
accordance with the following Vesting Schedule:
Participant shall vest in
twenty-five percent (25%) of the Purchased
Shares, and the Repurchase Right shall
concurrently lapse with respect to those
Purchased Shares, upon Participant's
completion of one (1) year of Service
measured from _________________, 199_.
Participant shall vest in the
remaining seventy-five percent (75%) of the
Purchased Shares, and the Repurchase Right
shall concurrently lapse with respect to those
Purchased Shares, in a series of thirty-six
(36) successive equal monthly installments
upon Participant's completion of each
additional month of Service over the thirty-
six (36)-month period measured from the
date on which the first twenty-five percent
(25 %) of the Purchased Shares vests
hereunder.
All Purchased Shares as to which the
Repurchase Right lapses shall, however, remain subject to
the Market Stand-Off.
4. Recapitalization. Any new,
substituted or additional securities or other property
(including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately
subject to the Repurchase Right and any escrow
requirements hereunder, but only to the extent the
Purchased Shares are at the time covered by such right or
escrow requirements. Appropriate adjustments to reflect
such distribution shall be made to the number and/or class
of Purchased Shares subject to this Agreement and to the
price per share to be paid upon the exercise of the
Repurchase Right in order to reflect the effect of any such
Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall
remain the same.
5. Corporate Transaction.
(a) The Repurchase Right shall
automatically terminate in its entirety, and all the
Purchased Shares shall vest in full, immediately prior to the
consummation of any Corporate Transaction.
(b) The Repurchase Right may
also terminate on an accelerated basis, and the Purchased
Shares shall immediately vest in full, in accordance with
the terms and conditions of any special addendum attached
to this Agreement.
E. SPECIAL TAX ELECTION
1. Section 83(b) Election. Under Code
Section 83, the excess of the Fair Market Value of the
Purchased Shares on the date any forfeiture restrictions
applicable to such shares lapse over the Purchase Price paid
for such shares will be reportable as ordinary income on
the lapse date. For this purpose, the term "forfeiture
restrictions" includes the right of the Corporation to
repurchase the Purchased Shares pursuant to the
Repurchase Right. Participant may elect under Code
Section 83(b) to be taxed at the time the Purchased Shares
are acquired, rather than when and as such Purchased
Shares cease to be subject to such forfeiture restrictions.
Such election must be filed with the Internal Revenue
Service within thirty (30) days after the date of this
Agreement. Even if the Fair Market Value of the
Purchased Shares on the date of this Agreement equals the
Purchase Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences
in the future. THE FORM FOR MAKING THIS
ELECTION IS ATTACHED AS EXHIBIT II HERETO.
PARTICIPANT UNDERSTANDS THAT FAILURE TO
MAKE THIS FILING WITHIN THE APPLICABLE
THIRTY (30)-DAY PERIOD WILL RESULT IN THE
RECOGNITION OF ORDINARY INCOME AS THE
FORFEITURE RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY.
PARTICIPANT ACKNOWLEDGES THAT IT IS
PARTICIPANT'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(b), EVEN IF
PARTICIPANT REQUESTS THE CORPORATION OR
ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.
F. GENERAL PROVISIONS
1. Assignment. The Corporation may
assign the Repurchase Right to any person or entity
selected by the Board, including (without limitation) one or
more stockholders of the Corporation. If the assignee of
the Repurchase Right is other than (i) a wholly owned
subsidiary of the Corporation or (ii) the parent corporation
owning one hundred percent (100%) of the Corporation's
outstanding capital stock, then such assignee must make a
cash payment to the Corporation, upon the assignment of
the Repurchase Right, in an amount equal to the excess (if
any) of (i) the Fair Market Value of the Purchased Shares
at the time subject to the assigned Repurchase Right over
(ii) the aggregate repurchase price payable for the
Purchased Shares.
2. No Employment or Service
Contract. Nothing in this Agreement or in the Plan shall
confer upon Participant any right to continue in Service for
any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining
Participant) or of Participant, which rights are hereby
expressly reserved by each, to terminate Participant's
Service at any time for any reason, with or without cause.
3. Notices. Any notice required to be
given under this Agreement shall be in writing and shall be
deemed effective upon personal delivery or upon deposit in
the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this
Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this
paragraph to all other parties to this Agreement.
4. No Waiver. The failure of the
Corporation in any instance to exercise the Repurchase
Right shall not constitute a waiver of any other repurchase
rights that may subsequently arise under the provisions of
this Agreement or any other agreement between the
Corporation and Participant. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver
of any other or subsequent breach or condition, whether of
like or different nature.
5. Cancellation of Shares. If the
Corporation shall make available, at the time and place and
in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased
in accordance with the provisions of this Agreement, then
from and after such time, the person from whom such
shares are to be repurchased shall no longer have any rights
as a holder of such shares (other than the right to receive
payment of such consideration in accordance with this
Agreement). Such shares shall be deemed purchased in
accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such
shares, whether or not the certificates therefore have been
delivered as required by this Agreement.
G. MISCELLANEOUS PROVISIONS
1. Governing Law. This Agreement
shall be governed by, and construed in accordance with,
the laws of the State of California without resort to that
State's conflict-of-laws rules.
2. Participant Undertaking.
Participant hereby agrees to take whatever additional action
and execute whatever additional documents the Corporation
may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions
imposed on either Participant or the Purchased Shares
pursuant to the provisions of this Agreement.
3. Agreement is Entire Contract. This
Agreement constitutes the entire contract between the
parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity
with the terms of the Plan.
4. Counterparts. This Agreement may
be executed in counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute
one and the same instrument.
5. Successors and Assigns. The
provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and
the legal representatives, heirs and legatees of Participant's
estate, whether or not any such person shall have become
a party to this Agreement and have agreed in writing to
join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have
executed this Agreement on the day and year first indicated
above.
CARDIAC SCIENCE INC.
By:
Title:
Address:
PARTICIPANT
Address:
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Participant has
read and hereby approves the foregoing Stock Issuance
Agreement. In consideration of the Corporation's granting
Participant the right to acquire the Purchased Shares in
accordance with the terms of such Agreement, the
undersigned hereby agrees to be irrevocably bound by all
the terms of such Agreement, including (without limitation)
the right of the Corporation (or its assigns) to purchase any
Purchased Shares in which Participant is not vested at the
time of his or her cessation of Service.
PARTICIPANT'S SPOUSE
Address:
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I hereby sell(s),
assign(s) and transfer(s) unto Cardiac Science Inc (the
"Corporation"), _____________ (____) shares of the
Common Stock of the Corporation standing in his or her
name on the books of the Corporation represented by
Certificate No. ____________ herewith and do(es) hereby
irrevocably constitute and appoint ___________________
Attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated: ____________
Signature
Instruction: Please do not fill in any blanks other than the
signature line. Please sign exactly as you would like your
name to appear on the issued stock certificate. The
purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional
signatures on the part of Participant.
<PAGE>
EXHIBIT II
SECTION 83(b) TAX ELECTION
<PAGE>
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the
Internal Revenue Code, pursuant to Treas. Reg. Section
1.83-2.
The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
The property with respect to which the election is being
made is________________ shares of the common
stock of Cardiac Science Inc.
The property was issued on _____________, 19__.
The taxable year in which the election is being made is the
calendar year 1997.
The property is subject to a repurchase right pursuant to
which the issuer has the right to acquire the property
at the original purchase price if for any reason
taxpayer's employment with the issuer is terminated.
The issuer's repurchase right lapses in a series of
annual and monthly installments over a four (4)-year
period ending on ________________, 200__.
The fair market value at the time of transfer (determined
without regard to any restriction other than a
restriction which by its terms will never lapse) is
$____ per share.
The amount paid for such property is $ ______ per share.
A copy of this statement was furnished to Cardiac Science
Inc for whom taxpayer rendered the services
underlying the transfer of property.
This statement is executed on ______________, 19__.
_________________________________
Spouse (if any)
Taxpayer
This election must be filed with the Internal Revenue
Service Center with which taxpayer files his or her Federal
income tax returns and must be made within thirty (30)
days after the execution date of the Stock Issuance
Agreement. This filing should be made by registered or
certified mail, return receipt requested. Participant must
retain two (2) copies of the completed form for filing with
his or her Federal and state tax returns for the current tax
year and an additional copy for his or her records.
<PAGE>
APPENDIX
The following definitions shall be in effect under
the Agreement:
Agreement shall mean this Stock Issuance
Agreement.
Board shall mean the Corporation's Board of
Directors.
Code shall mean the Internal Revenue Code of
1986, as amended.
Common Stock shall mean the Corporation's
common stock.
Corporate Transaction shall mean either of the
following stockholder-approved transactions:
a merger or consolidation in which
securities possessing more than fifty percent
(50%) of the total combined voting power of
the Corporation's outstanding securities are
transferred to a person or persons different
from the persons holding those securities
immediately prior to such transaction, or
the sale, transfer or other disposition
of all or substantially all of the
Corporation's assets in complete liquidation
or dissolution of the Corporation.
Corporation shall mean Cardiac Science Inc, a
Delaware corporation.
Fair Market Value of a share of Common Stock on
any relevant date, prior to the initial public offering of the
Common Stock-, shall be determined by the Plan
Administrator after taking into account such factors as it
shall deem appropriate.
Market Stand-Off shall mean the market stand-off
restriction specified in Paragraph C.3.
1933 Act shall mean the Securities Act of 1933, as
amended.
Owner shall mean Participant and all subsequent
holders of the Purchased Shares who derive their chain of
ownership through a Permitted Transfer from Participant.
Parent shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending
with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
Participant shall mean the person to whom shares
are issued under the Stock Issuance Program.
Permitted Transfer shall mean (i) a gratuitous
transfer of the Purchased Shares, provided and only if
Participant obtains the Corporation's prior written consent
to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a
transfer to the Corporation in pledge as security for any
purchase-money indebtedness incurred by Participant in
connection with the acquisition of the Purchased Shares.
Plan shall mean the Corporation's 1997 Stock
Option/Stock Issuance Plan attached hereto as Exhibit III.
Plan Administrator shall mean either the Board or
a committee of the Board acting in its capacity as
administrator of the Plan.
Purchase Price shall have the meaning assigned to
such term in Paragraph A.l.
Purchased Shares shall have the meaning assigned
to such term in Paragraph A.l.
Recapitalization shall mean any stock split, stock
dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the Corporation's
outstanding Common Stock as a class without the
Corporation's receipt of consideration.
Reorganization shall mean any of the following
transactions:
a merger or consolidation in which
the Corporation is not the surviving entity,
a sale, transfer or other disposition of
all or substantially all of the Corporation's
assets,
a reverse merger in which the
Corporation is the surviving entity but in
which the Corporation's outstanding voting
securities are transferred in whole or in part
to a person or persons different from the
persons holding those securities immediately
prior to the merger, or
any transaction effected primarily to
change the state in which the Corporation is
incorporated or to create a holding company
structure.
Repurchase Right shall mean the right granted to the
Corporation in accordance with Article D.
SEC shall mean the Securities and Exchange
Commission.
1.Service shall mean the Participant's performance
of services for the Corporation (or any Parent or
Subsidiary) in the capacity of an employee, subject to the
control and direction of the employer entity as to both the
work to be performed and the manner and method of
performance, a nonemployee member of the board of
directors or an independent consultant.
2.Stock Issuance Program shall mean the Stock
Issuance Program under the Plan.
AA. Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
AC. Vesting Schedule shall mean the vesting
schedule specified in Paragraph D.3 pursuant to which
Participant is to vest in the Purchased Shares in a series of
installments over the Participant's period of Service.
AD. Unvested Shares shall have the meaning
assigned to such term in Paragraph D.1.
<PAGE>
Exhibit 4(d)
CARDIAC SCIENCE INC
STOCK PURCHASE AGREEMENT
FOR SHARES NOT FULLY VESTED
AGREEMENT made this ____ day of
________________ 199_ by and between Cardiac Science
Inc, a Delaware corporation, and ,
Optionee under the Corporation's 1997 Stock Option/Stock
Issuance Plan.
All capitalized terms in this Agreement shall
have the meaning assigned to them in this Agreement or in
the attached Appendix.
A. EXERCISE OF OPTION
1. Exercise. Optionee hereby purchases
_______ shares of Common Stock (the "Purchased Shares")
pursuant to that certain option (the "Option") granted
Optionee on _____________________, 199__ (the "Grant
Date") to purchase up to _______________ shares of
Common Stock (the "Option Shares") under the Plan at the
exercise price of $_____________ per share (the "Exercise
Price").
2. Payment. Concurrently with the
delivery of this Agreement to the Corporation, Optionee
shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement
and shall deliver whatever additional documents may be
required by the Option Agreement as a condition for
exercise, together with a duly-executed blank Assignment
Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. Stockholder Rights. Until such time
as the Corporation exercises the Repurchase Right,
Optionee (or any successor in interest) shall have all the
rights of a stockholder (including voting, dividend and
liquidation rights) with respect to the Purchased Shares,
subject, however, to the transfer restrictions of Articles B
and C.
B. SECURITIES LAW COMPLIANCE
1. Restricted Securities. The
Purchased Shares have not been registered under the 1933
Act and are being issued to Optionee in reliance upon the
exemption from such registration provided by SEC Rule
701 for stock issuances under compensatory benefit plans
such as the Plan. Optionee hereby confirms that Optionee
has been informed that the Purchased Shares are restricted
securities under the 1933 Act and may not be resold or
transferred unless the Purchased Shares are first registered
under the Federal securities laws or unless an exemption
from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the
Purchased Shares for an indefinite period and that Optionee
is aware that SEC Rule 144 issued under the 1933 Act
which exempts certain resales of unrestricted securities is
not presently available to exempt the resale of the
Purchased Shares from the registration requirements of the
1933 Act.
2. Restrictions on Disposition of
Purchased Shares. Optionee shall make no disposition of
the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the
following requirements:
i) Optionee shall have provided
the Corporation with a written summary of the
terms and conditions of the proposed disposition.
ii) Optionee shall have complied
with all requirements of this Agreement applicable
to the disposition of the Purchased Shares.
iii) Optionee shall have provided
the Corporation with written assurances, in form
and substance satisfactory to the Corporation, that
(a) the proposed disposition does not require
registration of the Purchased Shares under the 1933
Act or (b) all appropriate action necessary for
compliance with the registration requirements of the
1933 Act or any exemption from registration
available under the 1933 Act (including Rule 144)
has been taken.
The Corporation shall not be required (i) to
transfer on its books any Purchased Shares which have
been sold or transferred in violation of the provisions of
this Agreement or (ii) to treat as the owner of the
Purchased Shares, or otherwise to accord voting, dividend
or liquidation rights to, any transferee to whom the
Purchased Shares have been transferred in contravention of
this Agreement.
3. Restrictive Legends. The stock
certificates for the Purchased Shares shall be endorsed with
one or more of the following restrictive legends:
"The shares
represented by this certificate
have not been registered
under the Securities Act of
1933. The shares may not be
sold or offered for sale in the
absence of (a) an effective
registration statement for the
shares under such Act, (b) a
"no action" letter of the
Securities and Exchange
Commission with respect to
such sale or offer or (c)
satisfactory assurances to the
Corporation that registration
under such Act is not
required with respect to such
sale or offer."
The shares
represented by this certificate
are subject to certain
repurchase rights granted to
the Corporation and
accordingly may not be sold,
assigned, transferred,
encumbered, or in any
manner disposed of except in
conformity with the terms of
a written agreement dated
______________ 199_
between the Corporation and
the registered holder of the
shares (or the predecessor in
interest to the shares). A
copy of such agreement is
maintained at the
Corporation's principal
corporate offices."
C. TRANSFER RESTRICTIONS
1. Restriction on Transfer. Except for
any Permitted Transfer, Optionee shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased
Shares which are subject to the Repurchase Right. In
addition, Purchased Shares which are released from the
Repurchase Right shall not be transferred, assigned,
encumbered or otherwise disposed of in contravention of
the Market Stand-Off.
2. Transferee Obligations. Each
person (other than the Corporation) to whom the Purchased
Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that
such person is bound by the provisions of this Agreement
and that the transferred shares are subject to (i) the
Repurchase Right, and (ii) the Market Stand-Off, to the
same extent such shares would be so subject if retained by
Optionee.
3. Market Stand-Off.
(a) In connection with any
underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration
statement filed under the 1933 Act, Owner shall not sell,
make any short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise dispose or
transfer for value or otherwise agree to engage in any of
the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Corporation
or its underwriters. Such restriction (the "Market Stand-
Off') shall be in effect for such period of time from and
after the effective date of the final prospectus for the
offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period
exceed one hundred eighty (180) days and the Market
Stand-Off shall in all events terminate two (2) years after
the effective date of the Corporation's public offering.
(b) Owner shall be subject to the
Market Stand-Off provided and only if the officers and
directors of the Corporation are also subject to similar
restrictions.
(c) Any new, substituted or
additional securities which are by reason of any
Recapitalization or Reorganization distributed with respect
to the Purchased Shares shall be immediately subject to the
Market Stand-Off, to the same extent the Purchased Shares
are at such time covered by such provisions.
(d) In order to enforce the Market
Stand-Off, the Corporation may impose stop-transfer
instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. REPURCHASE RIGHT
1. Grant. The Corporation is hereby
granted the right (the "Repurchase Right"), exercisable at
any time during the sixty (60)-day period following the date
Optionee
ceases for any reason to remain in Service or (if later)
during the sixty (60)-day period following the execution
date of this Agreement, to repurchase at the Exercise Price
any or all of the Purchased Shares in which Optionee is
not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those
shares or the special acceleration provisions of Paragraph
D.6 of this Agreement (such shares to be hereinafter
referred to as the "Unvested Shares").
2. Exercise of the Repurchase Right.
The Repurchase Right shall be exercisable by written notice
delivered to each Owner of the Unvested Shares prior to
the expiration of the sixty (60)-day exercise period. he
notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be
effected, representing the Unvested Shares to be
repurchased shall be delivered to the Corporation on or
before the close of business on the date specified for the
repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash or
cash equivalents (including the cancellation of any
purchase-money indebtedness), an amount equal to the
Exercise Price previously paid for the Unvested Shares
which are to be repurchased from Owner.
3. Termination of the Repurchase
Right. The Repurchase Right shall terminate with respect
to any Unvested Shares for which it is not timely exercised
under Paragraph D.2. In addition, the Repurchase Right
shall terminate and cease to be exercisable with respect to
any and all Purchased Shares in which Optionee vests in
accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall,
however, remain subject to the Market Stand-Off.
4. Aggregate Vesting Limitation. If
the Option is exercised in more than one increment so that
Optionee is a party to one or more other Stock Purchase
Agreements (the "Prior Purchase Agreements") which are
executed prior to the date of this Agreement, then the total
number of Purchased Shares as to which Optionee shall be
deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not
exceed in the aggregate the number of Purchased Shares in
which Optionee would otherwise at the time be vested, in
accordance with the Vesting Schedule, had all the
Purchased Shares (including those acquired under the Prior
Purchase Agreements) been acquired exclusively under this
Agreement.
5. Recapitalization. Any new,
substituted or additional securities or other property
(including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately
subject to the Repurchase Right and any escrow
requirements hereunder, but only to the extent the
Purchased Shares are at the time covered by such right or
escrow requirements. Appropriate adjustments to reflect
such distribution shall be made to the number and/or class
of Purchased Shares subject to this Agreement and to the
price per share to be paid upon the exercise of the
Repurchase Right in order to reflect the effect of any such
Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall
remain the same.
6. Corporate Transaction.
(a) The Repurchase Right shall
automatically terminate in its entirety, and all the
Purchased Shares shall vest in full, immediately prior to the
consummation of any Corporate Transaction.
(b) The Repurchase Right may
also terminate on an accelerated basis, and the Purchased
Shares shall immediately vest in full, in accordance with
the terms and conditions of any special addendum attached
to this Agreement.
E. SPECIAL TAX ELECTION
The acquisition of the Purchased Shares may
result in adverse tax consequences which may be avoided
or mitigated by filing an election under Code Section 83(b).
Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax
consequences applicable to the acquisition of the Purchased
Shares and the form for making the Code Section 83(b)
election are set forth in Exhibit II. OPTIONEE SHOULD
CONSULT WITH HIS OR HER TAX ADVISOR TO
DETERMINE THE TAX CONSEQUENCES OF
ACQUIRING THE PURCHASED SHARES AND THE
ADVANTAGES AND DISADVANTAGES OF FILING
THE CODE SECTION 83(b) ELECTION. OPTIONEE
ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY, AND NOT THE
CORPORATION'S, TO FILE A TIMELY ELECTION
UNDER CODE SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON
HIS OR HER BEHALF.
F. GENERAL PROVISIONS
1. Assignment. The Corporation may
assign the Repurchase Right to any person or entity
selected by the Board, including (without limitation) one or
more stockholders of the Corporation. If the assignee of the
Repurchase Right is other than (i) a wholly owned
subsidiary of the Corporation or (ii) the parent corporation
owning one hundred percent (100%) of the Corporation's
outstanding capital stock, then such assignee must make a
cash payment to the Corporation, upon the assignment of
the Repurchase Right, in an amount equal to the excess (if
any) of (i) the Fair Market Value of the Purchased Shares
at the time subject to the assigned Repurchase Right over
(ii) the aggregate repurchase price payable for the
Purchased Shares.
2. No Employment or Service
Contract. Nothing in this Agreement or in the Plan shall
confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service
at any time for any reason, with or without cause.
3. Notices. Any notice required to be
given under this Agreement shall be in writing and shall be
deemed effective upon personal delivery or upon deposit in
the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this
Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this
paragraph to all other parties to this Agreement.
4. No Waiver. The failure of the
Corporation in any instance to exercise the Repurchase
Right shall not constitute a waiver of any other repurchase
rights that may subsequently arise under the provisions of
this Agreement or any other agreement between the
Corporation and Optionee. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver
of any other or subsequent breach or condition, whether of
like or different nature.
5. Cancellation of Shares. If the
Corporation shall make available, at the time and place and
in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased
in accordance with the provisions of this Agreement, then
from and after such time, the person from whom such
shares are to be repurchased shall no longer have any rights
as a holder of such shares (other than the right to receive
payment of such consideration in accordance with this
Agreement). Such shares shall be deemed purchased in
accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been
delivered as required by this Agreement.
G. MISCELLANEOUS PROVISIONS
1. Optionee Undertaking. Optionee
hereby agrees to take whatever additional action and
execute whatever additional documents the Corporation
may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions
imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.
2. Agreement is Entire Contract. This
Agreement constitutes the entire contract between the
parties here to with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity
with the terms of the Plan.
3. Governing Law. This Agreement
shall be governed by, and construed in accordance with,
the laws of the State of California without resort to that
State's conflict-of-laws rules.
4. Counterparts. This Agreement may
be executed in counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute
one and the same instrument.
5. Successors and Assigns. The
provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted
assigns and the legal representatives, heirs and legatees of
Optionee's estate, whether or not any such person shall
have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have
executed this Agreement on the day and year first indicated
above.
CARDIAC SCIENCE INC
By:
Title:
Address:
OPTIONEE
Address:
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has
read and hereby approves the foregoing Stock Purchase
Agreement. In consideration of the Corporation's granting
Optionee the right to acquire the Purchased Shares in
accordance with the terms of such Agreement, the
undersigned hereby agrees to be irrevocably bound by all
the terms of such Agreement, including (without
Limitation) the right of the Corporation (or its assigns) to
purchase any Purchased Shares in which Optionee is not
vested at time of his or her cessation of Service.
OPTIONEE'S SPOUSE
Address:
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED
________________ hereby sell(s), assign(s) and transfer(s)
unto Cardiac Science Inc (the "Corporation"), (_______ )
shares of the Common Stock of the Corporation standing
in his or her name on the books of the Corporation
represented by Certificate No. ______________ herewith
and do(es) hereby irrevocably constitute and appoint
Attorney to transfer
the said stock on the books of the Corporation with full
power of substitution in the premises.
Dated: _____________________
Signature
Instruction: Please do not fill in any blanks other than the
signature line. Please sign exactly as you would like your
name to appear on the issued stock certificate. The
purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional
signatures on the part of Optionee.
<PAGE>
EXHIBIT II
FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(b) TAX ELECTION
I. Federal Income Tax Consequences and
Section 83(b) Election For Exercise of Non-Statutory
Option. If the Purchased Shares are acquired pursuant to
the exercise of a Non-Statutory Option, as specified in the
Grant Notice, then under Code Section 83, the excess of
the Fair Market Value of the Purchased Shares on the date
any forfeiture restrictions applicable to such shares lapse
over the Exercise Price paid for such shares will be
reportable as ordinary income on the lapse date. For this
purpose, the term "forfeiture restrictions" includes the right
of the Corporation to repurchase the Purchased Shares
pursuant to the Repurchase Right. However, Optionee may
elect under Code Section 83(b) to be taxed at the time the
Purchased Shares are acquired, rather than when and as
such Purchased Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal
Revenue Service within thirty (30) days after the date of
the Agreement. Even if the Fair Market Value of the
Purchased Shares on the date of the Agreement equals the
Exercise Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences
in the future. The form for making this election is attached
as part of this exhibit. FAILURE TO MAKE THIS
FILING WITHIN THE APPLICABLE THIRTY (30)-
DAY PERIOD WILL RESULT IN THE
RECOGNITION OF ORDINARY INCOME BY
OPTIONEE AS THE FORFEITURE RESTRICTIONS
LAPSE.
II. Federal Income Tax Consequences and
Conditional Section 83(b) Election For Exercise of
Incentive Option. If the Purchased Shares are acquired
pursuant to the exercise of an Incentive Option, as specified
in the Grant Notice, then the following tax principles shall
be applicable to the Purchased Shares:
i) For regular tax purposes, no
taxable income will be recognized at the
time the Option is exercised.
ii) The excess of (a) the Fair
Market Value of the Purchased Shares on
the date the Option is exercised or (if later)
on the date any forfeiture restrictions
applicable to the Purchased Shares lapse
over (b) the Exercise Price paid for the
Purchased Shares will be includible in
optionee's taxable income for alternative
minimum tax purposes.
iii) If Optionee makes a
disqualifying disposition of the Purchased
Shares, then Optionee will recognize
ordinary income in the year of such
disposition equal in amount to the excess of
(a) the Fair Market Value of the Purchased
Shares on the date the Option is exercised or
(if later) on the date any forfeiture
restrictions applicable to the Purchased
Shares lapse over (b) the Exercise Price paid
for the Purchased Shares. Any additional
gain recognized upon the disqualifying
disposition will be either short-term or long-
term capital gain depending upon the period
for which the Purchased Shares are held
prior to the disposition.
(iv) For purposes of the
foregoing, the term "forfeiture restrictions"
will include the right of the Corporation to
repurchase the Purchased Shares pursuant to
the Repurchase Right The term
"disqualifying disposition" means any sale
or other disposition of the Purchased
Shares within two (2) years after the Grant
Date or within one (1) year after the
exercise date of the Option.
(v) In the absence of final
Treasury Regulations relating to Incentive
Options, it is not certain whether Optionee
may, in connection with the exercise of the
Option for any Purchased Shares at the time
subject to forfeiture restrictions, file a
protective election under Code Section 83(b)
which would limit (a) Optionee's alternative
minimum taxable income upon exercise and
(b) Optionee's ordinary income upon a
disqualifying disposition to the excess of the
Fair Market Value of the Purchased Shares
on the date the Option is exercised over the
Exercise Price paid for the Purchased
Shares. Accordingly, such election if
properly filed will only be allowed to the
extent the final Treasury Regulations permit
such a protective election. Page 2 of the
attached form for making the election should
be filed with any election made in
connection with the exercise of an Incentive
Option.
<PAGE>
SECTION 83(b) ELECTION
This statement is being made under Section
83(b) of the Internal Revenue Code, pursuant to Treas.
Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is
being made is ________ shares of the common
stock of Cardiac Science, Inc.
(3) The property was issued on
____________________, 199__.
(4) The taxable year in which the election is being made
is the calendar year 199__.
(5) The property is subject to a repurchase right
pursuant to which the issuer has the right to acquire
the property at the original purchase price if for any
reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in
a series of installments over a four (4)-year period
ending on ______________ 200_.
(6) The fair market value at the time of transfer
(determined without regard to any restriction other
than a restriction which by its terms will never
lapse) is $________ per share.
(7) The amount paid for such property is $________
per share.
(8) A copy of this statement was furnished to Cardiac
Science, Inc. for whom taxpayer rendered the
services underlying the transfer of property.
(9) This statement is executed on
___________________, 199_.
Spouse (if any) Taxpayer
This election must be flied with the Internal Revenue
Service Center with which taxpayer files his or her Federal
income tax returns and must be made within thirty (30)
days after the execution date of the Stock Purchase
Agreement. This filing should be made by registered or
certified mail, return receipt requested. Optionee must
retain two (2) copies of the completed form for filing with
his or her Federal and state tax returns for the current tax
year and an additional copy for his or her records.
The property described in the above Section
83(b) election is comprised of shares of common stock
acquired pursuant to the exercise of an incentive stock
option under Section
422 of the Internal Revenue Code (the "Code").
Accordingly, it is the intent of the Taxpayer to utilize this
election to achieve the following tax results:
1. The purpose of this election is to have
the alternative minimum taxable income attributable to the
purchased shares measured by the amount by which the fair
market value of such shares at the time of their transfer to
the Taxpayer exceeds the purchase price paid for the
shares. In the absence of this election, such alternative
minimum taxable income would be measured by the spread
between the fair market value of the purchased shares and
the purchase price which exists on the various lapse dates
in effect for the forfeiture restrictions applicable to such
shares. The election is to be effective to the full extent
permitted under the Code.
2. Section 421(a)(1) of the Code
expressly excludes from income any excess of the fair
market value of the purchased shares over the amount paid
for such shares. Accordingly, this election is also intended
to be effective in the event there is a disqualifying
disposition" of the shares, within the meaning of Section
421(b) of the Code, which would otherwise render the
provisions of Section 83(a) of the Code applicable at that
time. Consequently, the Taxpayer hereby elects to have
the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares
on the date of transfer to the Taxpayer over the amount
paid for such shares. Since Section 421(a) presently
applies to the shares which are the subject of this Section
83(b) election, no taxable income is actually recognized for
regular tax purposes at this time, and no income taxes are
payable, by the Taxpayer as a result of this election.
THIS PAGE 2 IS TO BE ATTACHED TO ANY
SECTION 83(b) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK
OPTION UNDER THE FEDERAL TAX LAWS.
<PAGE>
APPENDIX
The following definitions shall be in effect
under the Agreement:
A. Agreement shall mean this Stock Purchase
Agreement.
B. Board shall mean the Corporation's Board of
Directors.
C. Code shall mean the Internal Revenue Code
of 1986, as amended.
D. Common Stock shall mean the Corporation's
common stock.
E. Corporate Transaction shall mean either of
the following stockholder-approved transactions:
i) a merger or consolidation in
which securities possessing more than fifty
percent (50%) of the total combined voting
power of the Corporation's outstanding
securities are transferred to a person or
persons different from the persons holding
those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other
disposition of all or substantially all of the
Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. Corporation shall mean Cardiac Science,
Inc., a Delaware corporation.
G. Exercise Price shall have the meaning
assigned to such term in Paragraph A.I.
H. Fair Market Value of a share of Common
Stock on any relevant date, prior to the initial public
offering of the Common Stock, shall be determined by the
Plan Administrator after taking into account such factors as
it shall deem appropriate.
I. Grant Date shall have the meaning assigned
to such term in Paragraph AL.l.
J. Grant Notice shall mean the Notice of Grant
of Stock Option pursuant to which Optionee has been
informed of the basic terms of the Option.
K. Incentive Option shall mean an option which
satisfies the requirements of Code Section 422.
L. Market Stand-Off shall mean the market
stand-off restriction specified in Paragraph C.3.
M. 1933 Act shall mean the Securities Act of
1933, as amended.
N. 1934 Act shall mean the Securities Exchange
Act of 1934, as amended.
O. Non-Statutory Option shall mean an option
not intended to satisfy the requirements of Code Section
422.
P. Option shall have the meaning assigned to
such term in Paragraph A.1.
Q. Option Agreement shall mean all agreements
and other documents evidencing the Option.
R. Optionee shall mean the person to whom the
Option is granted under the Plan.
S. Owner shall mean Optionee and all
subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from
Optionee.
T. Parent shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
U. Permitted Transfer shall mean (i) a
gratuitous transfer of the Purchased Shares, provided and
only if Optionee obtains the Corporation's prior written
consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Optionee's will or
the laws of intestate succession following Optionee's death
or (iii) a transfer to the Corporation in pledge as security
for any purchase-money indebtedness incurred by Optionee
in connection with the acquisition of the Purchased Shares.
V. Plan shall mean the Corporation's 1997
Stock Option/Stock Issuance Plan
W. Plan Administrator shall mean either the
Board or a committee of the Board acting in its capacity as
administrator of the Plan.
X. Prior Purchase Agreement shall have the
meaning assigned to such term in Paragraph D.4.
AB. Purchased Shares shall have the meaning
assigned to such term in Paragraph A.1.
AC. Recapitalization shall mean any stock split,
stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the
Corporation's outstanding Common Stock as a class
without the Corporation's receipt of consideration.
AD. Reorganization shall mean any of the
following transactions:
i) a merger or consolidation in
which the Corporation is not the surviving
entity,
ii) a sale, transfer or other disposition of
all or substantially all of the Corporation's assets,
iii) a reverse merger in which the
Corporation is the surviving entity but in which the
Corporation's outstanding voting securities are
transferred in whole or in part to a person or
persons different from the persons holding those
securities immediately prior to the merger, or
iv) any transaction effected primarily to
change the state in which the Corporation is
incorporated or to create a holding company
structure.
AF. SEC shall mean the Securities and Exchange
Commission.
AG. Service shall mean the Optionee's
performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an employee, subject to
the control and direction of the employer entity as to both
the work to be performed and the manner and method of
performance, a non-employee member of the board of
directors or an independent consultant.
AM. Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
AI. Target Shares shall have the meaning
assigned to such term in Paragraph D.2.
AJ. Vesting Schedule shall mean the vesting
schedule specified in the Grant Notice pursuant to which
the Optionee is to vest in the Option Shares in a series of
installments over his or her period of Service.
AK. Unvested Shares shall have the meaning
assigned to such term in Paragraph D.1.<PAGE>
Exhibit 4(e)
CARDIAC SCIENCE INC
STOCK PURCHASE AGREEMENT
FOR FULLY VESTED SHARES
AGREEMENT made this ____ day of
________________ 199_ by and between Cardiac Science
Inc, a Delaware corporation, and ,
Optionee under the Corporation's 1997 Stock Option/Stock
Issuance Plan.
All capitalized terms in this Agreement shall
have the meaning assigned to them in this Agreement or in
the attached Appendix.
A. EXERCISE OF OPTION
1. Exercise. Optionee hereby purchases
_______ shares of Common Stock (the "Purchased Shares")
pursuant to that certain option (the "Option") granted
Optionee on _____________________, 199__ (the "Grant
Date") to purchase up to _______________ shares of
Common Stock (the "Option Shares") under the Plan at the
exercise price of $_____________ per share (the "Exercise
Price"). The Option Shares are fully vested as of the date
of this Agreement under the terms of the Option.
2. Payment. Concurrently with the
delivery of this Agreement to the Corporation, Optionee
shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement
and shall deliver whatever additional documents may be
required by the Option Agreement as a condition for
exercise, together with a duly-executed blank Assignment
Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
B. SECURITIES LAW COMPLIANCE
1. Restricted Securities. The
Purchased Shares have not been registered under the 1933
Act and are being issued to Optionee in reliance upon the
exemption from such registration provided by SEC Rule
701 for stock issuances under compensatory benefit plans
such as the Plan. Optionee hereby confirms that Optionee
has been informed that the Purchased Shares are restricted
securities under the 1933 Act and may not be resold or
transferred unless the Purchased Shares are first registered
under the Federal securities laws or unless an exemption
from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the
Purchased Shares for an indefinite period and that Optionee
is aware that SEC Rule 144 issued under the 1933 Act
which exempts certain resales of unrestricted securities is
not presently available to exempt the resale of the
Purchased Shares from the registration requirements of the
1933 Act.
2. Restrictions on Disposition of
Purchased Shares. Optionee shall make no disposition of
the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the
following requirements:
i) Optionee shall have provided
the Corporation with a written summary of the
terms and conditions of the proposed disposition.
ii) Optionee shall have complied
with all requirements of this Agreement applicable
to the disposition of the Purchased Shares.
iii) Optionee shall have provided
the Corporation with written assurances, in form
and substance satisfactory to the Corporation, that
(a) the proposed disposition does not require
registration of the Purchased Shares under the 1933
Act or (b) all appropriate action necessary for
compliance with the registration requirements of the
1933 Act or any exemption from registration
available under the 1933 Act (including Rule 144)
has been taken.
The Corporation shall not be required (i) to
transfer on its books any Purchased Shares which have
been sold or transferred in violation of the provisions of
this Agreement or (ii) to treat as the owner of the
Purchased Shares, or otherwise to accord voting, dividend
or liquidation rights to, any transferee to whom the
Purchased Shares have been transferred in contravention of
this Agreement.
3. Restrictive Legends. The stock
certificates for the Purchased Shares shall be endorsed with
the following restrictive legend:
"The shares
represented by this certificate
have not been registered
under the Securities Act of
1933. The shares may not be
sold or offered for sale in the
absence of (a) an effective
registration statement for the
shares under such Act, (b) a
"no action" letter of the
Securities and Exchange
Commission with respect to
such sale or offer or (c)
satisfactory assurances to the
Corporation that registration
under such Act is not
required with respect to such
sale or offer."
C. TRANSFER RESTRICTIONS
1. Restriction on Transfer. Except for
any Permitted Transfer, Optionee shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased
Shares in contravention of the Market Stand-Off.
2. Transferee Obligations. Each
person (other than the Corporation) to whom the Purchased
Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that
such person is bound by the provisions of this Agreement
and that the transferred shares are subject to the Market
Stand-Off, to the same extent such shares would be so
subject if retained by Optionee.
3. Market Stand-Off.
(a) In connection with any
underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration
statement filed under the 1933 Act, Owner shall not sell,
make any short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise dispose or
transfer for value or otherwise agree to engage in any of
the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Corporation
or its underwriters. Such restriction (the "Market Stand-
Off') shall be in effect for such period of time from and
after the effective date of the final prospectus for the
offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period
exceed one hundred eighty (180) days and the Market
Stand-Off shall in all events terminate two (2) years after
the effective date of the Corporation's public offering.
(b) Owner shall be subject to the
Market Stand-Off provided and only if the officers and
directors of the Corporation are also subject to similar
restrictions.
(c) Any new, substituted or
additional securities which are by reason of any
Recapitalization or Reorganization distributed with respect
to the Purchased Shares shall be immediately subject to the
Market Stand-Off, to the same extent the Purchased Shares
are at such time covered by such provisions.
(d) In order to enforce the Market
Stand-Off, the Corporation may impose stop-transfer
instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. GENERAL PROVISIONS
1. No Employment or Service
Contract. Nothing in this Agreement or in the Plan shall
confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service
at any time for any reason, with or without cause.
2. Notices. Any notice required to be
given under this Agreement shall be in writing and shall be
deemed effective upon personal delivery or upon deposit in
the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this
Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this
paragraph to all other parties to this Agreement.
3. No Waiver. No waiver of any
breach or condition of this Agreement shall be deemed to
be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
4. Optionee Undertaking. Optionee
hereby agrees to take whatever additional action and
execute whatever additional documents the Corporation
may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions
imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.
5. Agreement is Entire Contract. This
Agreement constitutes the entire contract between the
parties here to with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity
with the terms of the Plan.
6. Governing Law. This Agreement
shall be governed by, and construed in accordance with,
the laws of the State of California without resort to that
State's conflict-of-laws rules.
7. Counterparts. This Agreement may
be executed in counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute
one and the same instrument.
8. Successors and Assigns. The
provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted
assigns and the legal representatives, heirs and legatees of
Optionee's estate, whether or not any such person shall
have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have
executed this Agreement on the day and year first indicated
above.
CARDIAC SCIENCE INC
By:
Title:
Address:
OPTIONEE
Address:
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has
read and hereby approves the foregoing Stock Purchase
Agreement. In consideration of the Corporation's granting
Optionee the right to acquire the Purchased Shares in
accordance with the terms of such Agreement, the
undersigned hereby agrees to be irrevocably bound by all
the terms of such Agreement.
OPTIONEE'S SPOUSE
Address:
<PAGE>
APPENDIX
The following definitions shall be in effect
under the Agreement:
A. Agreement shall mean this Stock Purchase
Agreement.
B. Board shall mean the Corporation's Board of
Directors.
C. Code shall mean the Internal Revenue Code
of 1986, as amended.
D. Common Stock shall mean the Corporation's
common stock.
E. Corporate Transaction shall mean either of
the following stockholder-approved transactions:
i) a merger or consolidation in
which securities possessing more than fifty
percent (50%) of the total combined voting
power of the Corporation's outstanding
securities are transferred to a person or
persons different from the persons holding
those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other
disposition of all or substantially all of the
Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. Corporation shall mean Cardiac Science,
Inc., a Delaware corporation.
G. Exercise Price shall have the meaning
assigned to such term in Paragraph A.I.
H. Fair Market Value of a share of Common
Stock on any relevant date, prior to the initial public
offering of the Common Stock, shall be determined by the
Plan Administrator after taking into account such factors as
it shall deem appropriate.
I. Grant Date shall have the meaning assigned
to such term in Paragraph AL.l.
J. Grant Notice shall mean the Notice of Grant
of Stock Option pursuant to which Optionee has been
informed of the basic terms of the Option.
K. Incentive Option shall mean an option which
satisfies the requirements of Code Section 422.
L. Market Stand-Off shall mean the market
stand-off restriction specified in Paragraph C.3.
M. 1933 Act shall mean the Securities Act of
1933, as amended.
N. 1934 Act shall mean the Securities Exchange
Act of 1934, as amended.
O. Non-Statutory Option shall mean an option
not intended to satisfy the requirements of Code Section
422.
P. Option shall have the meaning assigned to
such term in Paragraph A.1.
Q. Option Agreement shall mean all agreements
and other documents evidencing the Option.
R. Optionee shall mean the person to whom the
Option is granted under the Plan.
S. Owner shall mean Optionee and all
subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from
Optionee.
T. Parent shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
U. Permitted Transfer shall mean (i) a
gratuitous transfer of the Purchased Shares, provided and
only if Optionee obtains the Corporation's prior written
consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Optionee's will or
the laws of intestate succession following Optionee's death
or (iii) a transfer to the Corporation in pledge as security
for any purchase-money indebtedness incurred by Optionee
in connection with the acquisition of the Purchased Shares.
V. Plan shall mean the Corporation's 1997
Stock Option/Stock Issuance Plan
W. Plan Administrator shall mean either the
Board or a committee of the Board acting in its capacity as
administrator of the Plan.
X. Purchased Shares shall have the meaning
assigned to such term in Paragraph A.1.
Y. Recapitalization shall mean any stock split,
stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the
Corporation's outstanding Common Stock as a class
without the Corporation's receipt of consideration.
Z. Reorganization shall mean any of the
following transactions:
i) a merger or consolidation in
which the Corporation is not the surviving
entity,
ii) a sale, transfer or other disposition of
all or substantially all of the Corporation's assets,
iii) a reverse merger in which the
Corporation is the surviving entity but in which the
Corporation's outstanding voting securities are
transferred in whole or in part to a person or
persons different from the persons holding those
securities immediately prior to the merger, or
iv) any transaction effected primarily to
change the state in which the Corporation is
incorporated or to create a holding company
structure.
AA. SEC shall mean the Securities and Exchange
Commission.
AB. Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
<PAGE>
Exhibit 5
December 31, 1998
Board of Directors
Cardiac Science, Inc.
1176 Main Street
Suite C
Irvine, California 92614
Ladies and Gentlemen:
It is our opinion that the securities being registered
with the Securities and Exchange Commission, pursuant to
the Registration Statement of Cardiac Science, Inc. (the
"Company") on Form S-8, which are to be offered to
employees, including officers, directors and consultants and
advisors pursuant to the Company's 1997 Stock
Option/Stock Issuance Plan, will, when sold, be legally
issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit
to the aforesaid Registration Statement and further consent
to the reference made to us under the caption "Legal
Opinion" in the Company's prospectus.
Sincerely,
/s/ Breslow & Walker, LLP
Breslow & Walker, LLP
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of Cardiac Science, Inc. on Form S-8
(File No. 333-______) pertaining to the Cardiac Science,
Inc. 1997 Stock Option/Stock Issuance Plan of our report
dated March 11, 1998, which contains a paragraph
regarding the Company's ability to continue as a going
concern, on our audit of the consolidated financial
statements of Cardiac Science, Inc. as of December 31,
1997 and for the year ended December 31, 1997 which
report is included in the Company's 1997 Annual Report
on Form 10-KSB.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
December 31, 1998
<PAGE>