-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BJiTi5FrP+hPSGHzoEHe11KmRDtIYY6YLG1ImUgqD6ddsMxRpJp/GmXTXSAk38Gp DfODDvaxu5eZM5p5HwPExw== 0000950142-04-002593.txt : 20040723 0000950142-04-002593.hdr.sgml : 20040723 20040722163936 ACCESSION NUMBER: 0000950142-04-002593 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20040722 GROUP MEMBERS: CARDIAC SCIENCE CO-INVESTMENT, LP GROUP MEMBERS: FRANK H. PEARL GROUP MEMBERS: PERSEUS ACQUISITION/RECAPITALIZATION FUND, LLC GROUP MEMBERS: PERSEUS ACQUISITION/RECAPITALIZATION MANAGEMENT, LLC GROUP MEMBERS: PERSEUS EC, LLC GROUP MEMBERS: PERSEUS MARKET OPPORTUNITY FUND, LP GROUP MEMBERS: PERSEUS MARKET OPPORTUNITY PARTNERS GP, LLC GROUP MEMBERS: PERSEUS MARKET OPPORTUNITY PARTNERS, LP GROUP MEMBERS: PERSEUS MF, LLC GROUP MEMBERS: PERSEUS, LLC GROUP MEMBERS: PERSEUSPUR, LLC GROUP MEMBERS: RAPPAHANNOCK INVESTMENT COMPANY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CARDIAC SCIENCE INC CENTRAL INDEX KEY: 0000876188 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 330465681 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-41851 FILM NUMBER: 04926860 BUSINESS ADDRESS: STREET 1: 16931 MILLIKAN AVENUE CITY: IRVINE STATE: CA ZIP: 92606 BUSINESS PHONE: 9495870357 MAIL ADDRESS: STREET 1: 16931 MILLIKAN AVENUE CITY: IRVINE STATE: CA ZIP: 92606 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PEARL FRANK H CENTRAL INDEX KEY: 0000927752 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2099 PENNSYLVANIA AVENUE NW STREET 2: SUITE 900 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2024520101 MAIL ADDRESS: STREET 1: 2099 PENNSYLVANIA AVENUE NW STREET 2: SUITE 900 CITY: WASHINGTON STATE: DC ZIP: 20003 SC 13D/A 1 sc13da1-cardiac.txt AMENDMENT NO. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1) CARDIAC SCIENCE, INC. (Name of Issuer) Common Stock, par value $.001 per share (Title of Class of Securities) 141410209 (CUSIP Number) Rodd Macklin Perseus Acquisition/Recapitalization Fund, L.L.C. Perseus Market Opportunity Fund, L.P. Cardiac Science Co-Investment, L.P. 888 Seventh Avenue, 29th Floor New York, NY 10106 Tel. No.: (212) 651-6400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) with a copy to Bruce A. Gutenplan, Esq. Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 July 20, 2004 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject to this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes.) - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 2 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus Acquisition/Recapitalization Fund, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 6,124,655 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 6,124,655 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,124,655 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------ (1) Assuming complete exercise of the warrants held by Perseus A/R Fund to purchase an aggregate of 6,124,655 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 3 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus Market Opportunity Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,654,046 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 4 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Cardiac Science Co-Investment, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 2,229,808 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 2,229,808 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,229,808 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.5% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------- (1) Assuming complete exercise of the warrants held by CS Co-Investment to purchase an aggregate of 2,229,808 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 5 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus Acquisition/Recapitalization Management, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,354,463 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,354,463 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,354,463 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.8% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ----------------- (1) Assuming complete exercise of each of (i) the warrants held by Perseus A/R Fund and (ii) the warrants held by CS Co-Investment, to purchase an aggregate of 8,354,463 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 6 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus Market Opportunity Partners, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,654,046 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------ (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 7 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus Market Opportunity Partners GP, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,654,046 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------ (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 8 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) ---------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES 0 BENEFICIALLY ---------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH 8,654,046 (1) REPORTING ---------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------ (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 9 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus MF, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) ---------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES 0 BENEFICIALLY ---------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH 8,654,046 (1) REPORTING ---------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 10 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Rappahannock Investment Company - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,654,046 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,654,046 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,654,046 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of the warrants held by Perseus Market Opportunity to purchase an aggregate of 6,544,341 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 11 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus EC, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,354,463 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,354,463 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,354,463 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.8% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of each of (i) the warrants held by Perseus A/R Fund and (ii) the warrants held by CS Co-Investment, to purchase an aggregate of 8,354,463 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 12 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseuspur, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 8,354,463 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 8,354,463 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,354,463 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.8% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of each of (i) the warrants held by Perseus A/R Fund and (ii) the warrants held by CS Co-Investment, to purchase an aggregate of 8,354,463 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 13 of 30 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Frank H. Pearl (in the capacity described herein) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 17,008,509 (1) NUMBER OF ---------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ---------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 17,008,509 (1) PERSON ---------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 17,008,509 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.8% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ---------------- (1) Assuming complete exercise of each of (i) the warrants held by Perseus A/R Fund, (ii) the warrants held by Perseus Market Opportunity and (iii) the Warrants held by CS Co-Investment, to purchase an aggregate of 14,898,804 shares of Common Stock. See Item 5 herein. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 14 of 30 - -------------------------------------------------------------------------------- Pursuant to Rule 13d-2(a) of Regulation D-G of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Act"), the undersigned hereby amend their Schedule 13D Statement dated June 10, 2002 ITEM 1. SECURITY AND ISSUER. No material change. ITEM 2. IDENTITY AND BACKGROUND. No material change. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 3 is amended and restated in its entirety to read as follows: Pursuant to a Senior Note and Warrant Purchase Agreement, dated as of May 29, 2002 (the "2002 Purchase Agreement"), among the Purchasers and the Company, the Company issued and the Purchasers acquired senior notes of the Company (the "Senior Notes") in the aggregate principal amount of $50,000,000 and warrants to purchase 3,000,000 shares of Common Stock (consisting of 1,307,297 shares issuable to Perseus A/R Fund, 1,216,754 shares issuable to Perseus Market Opportunity and 475,949 shares issuable to CS Co-Investment) at an exercise price of $4.00 per share (the "Four Dollar Warrants") and warrants to purchase 10,000,000 shares of Common Stock (consisting of 4,357,657 shares issuable to Perseus A/R Fund, 4,055,847 shares issuable to Perseus Market Opportunity and 1,586,496 shares issuable to CS Co-Investment) at an exercise price of $3.00 per share (the "Three Dollar Warrants," and together with the Four Dollar Warrants, the "2002 Warrants") for an aggregate purchase price of $50,000,000 (the "2002 Purchase Price"). The source of the 2002 Purchase Price was capital contributions from the partners and members of the Purchasers. In connection with the service of Ray E. Newton, III, a managing director of Perseus, as a director of the Company, the Company issued to the Purchasers warrants to purchase 25,000 shares of Common Stock at an exercise price of $1.75 per share on October 24, 2002 (the "2002 Director Warrants") and warrants to purchase 100,000 shares of Common Stock at an exercise price of $4.61 per share on September 17, 2003 (the "2003 Director Warrants" and, together with the 2002 Director Warrants, the "Director Warrants"). The 2002 Director Warrants were issued as - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 15 of 30 - -------------------------------------------------------------------------------- follows: (i) warrants to purchase 10,894 shares to Perseus A/R Fund, (ii) warrants to purchase 10,140 shares to Perseus Market Opportunity and (iii) warrants to purchase 3,966 shares to CS Co-Investment. The 2003 Director Warrants were issued as follows: (i) warrants to purchase 43,577 shares to Perseus A/R Fund, (ii) warrants to purchase 40,558 shares to Perseus Market Opportunity and (iii) warrants to purchase 15,865 shares to CS Co-Investment. No funds were provided in connection with the issuance of the Director Warrants. In connection with a waiver to the Company's credit agreement, the Company granted warrants to purchase 500,000 shares of Common Stock at an exercise price of $3.95 per share (the "Credit Agreement Warrants") on March 16,2004 as follows: (i) warrants to purchase 217,885 shares to Perseus A/R Fund, (ii) warrants to purchase 202,790 shares to Perseus Market Opportunity and (iii) warrants to purchase 79,325 shares to CS Co-Investment. No funds were provided in connection with the issuance of the Credit Agreement Warrants. Pursuant to a Purchase Agreement, dated as of July 20, 2004 (the "2004 Purchase Agreement"), among the Company, Perseus Market Opportunity and the other purchasers named therein, the Company sold to Perseus Market Opportunity 2,109,705 shares of Common Stock and a warrant to purchase 843,882 shares of Common Stock at an exercise price of $2.84 per share (the "2004 Warrant" and, together with the 2002 Warrants, the Director Warrants and the Credit Agreement Warrants, the "Warrants") for an aggregate purchase price of $5,000,000.85 (the "2004 Purchase Price"). The source of the 2004 Purchase Price was capital contributions from the partners of Perseus Market Opportunity. ITEM 4. PURPOSE OF TRANSACTION. Item 4 is amended and restated in its entirety to read as follows: Except as disclosed herein, the Reporting Persons have acquired the Common Stock and the Warrants for investment purposes. A copy of the Purchase Agreement is attached to the initial Schedule 13D as Exhibit 2 and incorporated herein by reference, a copy of the form of 2002 Warrants is attached to the initial Schedule 13D as Exhibit 3 and incorporated herein by reference, a copy of the Registration Rights Agreement (the "Registration Rights Agreement") is attached to the initial Schedule 13D as Exhibit 4 and incorporated herein by reference and a copy of the form of the Senior Notes is attached to the initial Schedule 13D as Exhibit 5 and incorporated herein by reference. A copy of the 2002 Director Warrant issued to Perseus Market Opportunity is attached hereto as Exhibit 2 and incorporated herein by reference (similar warrants were granted to Persues A/R Fund and CS Co-Investment). A copy of the 2004 Director Warrant issued to Persues A/R Fund is attached hereto as Exhibit 3 and - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 16 of 30 - -------------------------------------------------------------------------------- incorporated herein by reference (similar warrants were granted to Perseus Market Opportunity and CS Co-Investment). A copy of the Credit Agreement Warrant issued to Persues A/R Fund is attached hereto as Exhibit 4 and incorporated herein by reference (similar warrants were granted to Perseus Market Opportunity and CS Co-Investment). A copy of the 2004 Purchase Agreement is attached hereto as Exhibit 5 and incorporated herein by reference. A copy of the form of 2004 Warrants is attached hereto as Exhibit 6 and incorporated herein by reference. A copy of the Amended and Restated Registration Rights Agreement (as defined below) is attached hereto as Exhibit 7 and incorporated herein by reference. Set forth below is a description of certain material terms of the Purchase Agreement, the 2002 Warrant, the Registration Rights Agreement, the Director Warrants, the Credit Agreement Warrants, the 2004 Purchase Agreement, the 2004 Warrant and the Amended and Restated Registration Rights Agreement. The following description of certain material terms is qualified in its entirety by reference to the Purchase Agreement, the 2002 Warrants, the Registration Rights Agreement, the Director Warrants, the Credit Agreement Warrants, the 2004 Purchase Agreement, the 2004 Warrant and the Amended and Restated Registration Rights Agreement. TERMS OF THE PURCHASE 2002 AGREEMENT BOARD REPRESENTATION. Pursuant to the 2002 Purchase Agreement, so long as Purchasers and their transferees of the Senior Notes (the "Transferees") continue to own at least 50% of the shares of Common Stock issued or issuable upon the exercise of the 2002 Warrants (the "2002 Registrable Securities"), Purchasers and such Transferees have the right, at the direction of Purchasers and such Transferees holding 51% or more of the 2002 Registrable Securities then owned by Purchasers and such Transferees, to designate two directors to the Board of Directors of the Company (the "Board"). In addition, pursuant to the 2002 Purchase Agreement, so long as Purchasers and the Transferees continue to own at least 25% of the 2002 Registrable Securities, Purchasers and such Transferees have the right, at the direction of Purchasers and such Transferees holding 51% or more of the 2002 Registrable Securities then owned by Purchasers and such Transferees, to designate one director to the Board. Additionally, pursuant to the 2002 Purchase Agreement, up to two directors designated by Purchasers and the Transferees have the right, upon request, to serve on (i) each committee of the Board and (ii) the Board of Directors of each material subsidiary of the Company. Upon the closing of the transactions contemplated by the 2002 Purchase Agreement, the Board elected one representative of the Purchasers, Ray E. Newton, III, to the Board. In - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 17 of 30 - -------------------------------------------------------------------------------- addition, pursuant to the 2002 Purchase Agreement, at any time that the Purchasers and the Transferees are no longer entitled to designate representatives to the Board and hold at least: (i) 25% of the Senior Notes issued to Purchasers and such Transferees, the Purchasers and such Transferees shall have certain observation rights, including but not limited to (a) appointing a non-voting representative to attend meetings of the Board and (b) to make proposals, recommendations and suggestions to the Company's officers and directors relating to the business and affairs of the Company at such reasonable times as may be requested by the Purchasers or such Transferees (it being understood that the Company will not be required to accept such proposals, recommendations or suggestions). TERMS OF THE 2002 WARRANTS EXERCISE RIGHTS. The Common Stock underlying the Four Dollar Warrants may be purchased at a price per share equal to $4.00 (the "Four Dollar Exercise Price") and the Common Stock underlying the Three Dollar Warrants may be purchased at a price per share equal to $3.00 (the "Three Dollar Exercise Price" and, together with the Four Dollar Exercise Price, the "2002 Exercise Prices"). As a result of an anti-delution adjustment, the Company issued replacement Four Dollar warrants to the Purchasers on September 17, 2003. Four Dollar Warrants to purchase 1,318,911 shares, 1,227.564 shares and 480,177 shares of Common Stock were issued to Perseus A/R Fund, Perseus Market Opportunity and CS Co-Investment, respectively, at an exercise price of $3.96 per share. The 2002 Exercise Prices may be paid (i) in cash, (ii) through the cancellation of indebtedness owed by the Company to the Purchasers or the Transferees under the Senior Notes or (iii) in certain circumstances, by reducing the number of shares of Common Stock issuable upon the exercise of the 2002 Warrants having a fair market value equal to such Exercise Prices, all in accordance with the terms contained in the 2002 Warrants. The 2002 Exercise Prices and the number of shares issuable upon exercise of the 2002 Warrants will be subject to adjustment upon the occurrence of certain events as set forth in the 2002 Warrants. As a result of anti-dilution adjustments, the Three Dollar Exercise Price was reduced to $2.92 per share and the number of shares of Common Stock issuable upon the exercise of the Three Dollar Warrants was increased to 10,273,973 shares (consisting of 4,477,045 shares issuable to Perseus A/R Fund, 4,166,966 shares issuable to Perseus Market Opportunity and 1,629,962 shares issuable to CS Co-Investment), and the Four Dollar Exercise Price was reduced to $3.82 and the number of shares of Common Stock issuable upon the exercise of the Four Dollar Warrants - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 18 of 30 - -------------------------------------------------------------------------------- was increased to 3,137,576 shares (consisting of 1,367,248 shares issuable to Perseus A/R Fund, 1,272,553 shares issuable to Perseus Market Opportunity and 497,775 shares issuable to CS Co-Investment). EXERCISE AT THE COMPANY'S OPTION. If, at any time following May 30, 2005, the daily closing price per share of Common Stock for 45 consecutive trading days (occurring at least 45 consecutive trading days following May 30, 2005) is at least $6.00 per share (with appropriate adjustments to be made for any stock dividend, split-up, subdivision or any other combination or reclassification), then the Company may, at its option, require the holders of the 2002 Warrants to exercise such 2002 Warrants, all in accordance with the terms and conditions contained in the 2002 Warrants. EXERCISE PERIOD. The 2002 Warrants are exercisable at any time, or from time to time, from the date of issuance, May 30, 2002, until May 30, 2009 (the "2002 Warrant Expiration Date"). In the event that a filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR") is required to be made before certain shares of Common Stock may be issued upon the exercise of the 2002 Warrants, then the 2002 Warrant Expiration Date with respect to the right to exercise the 2002 Warrants into such shares shall be the third business day following the expiration or termination of the statutory waiting period under HSR (and any extension thereof). TERMS OF THE DIRECTOR WARRANTS EXERCISE RIGHTS. The Common Stock underlying the 2002 Director Warrants may be purchased at a price per share equal to $1.75 (the "2002 Director Exercise Price) and the Common Stock underlying the 2003 Director Warrants may be purchased at a price per share equal to $4.61 (the "2003 Director Exercise Price" and, together with the 2002 Director Exercise Price, the "Director Exercise Prices"). The Director Exercise Prices may be paid (i) in cash or (ii) in certain circumstances, by reducing the number of shares of Common Stock issuable upon the exercise of the Director Warrants having a fair market value equal to such Director Exercise Prices, all in accordance with the terms contained in the Director Warrants. The Director Exercise Prices and the number of shares issuable upon exercise of the Director Warrants will be subject to adjustment upon the occurrence of certain events as set forth in the Director Warrants. EXERCISE PERIOD. One fourth of the 2002 Director Warrants were exercisable on October 24, 2003. The remaining 2002 Director Warrants vest proportionately over the next 36 months, with all of such warrants becoming fully vested on October 24, 2006. One fourth of the 2003 Director Warrants are exercisable - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 19 of 30 - -------------------------------------------------------------------------------- on September 17, 2004. The remaining 2003 Director Warrants vest proportionately over the next 36 months, with all of such warrants becoming fully vested on September 17, 2007. The 2002 Director Warrants expire on October 24, 2012. The 2003 Director Warrants expire on September 17, 2013. TERMS OF THE CREDIT AGREEMENT WARRANTS EXERCISE RIGHTS. The Common Stock underlying the Credit Agreement Warrants may be purchased at a price per share equal to $3.95 (the "Credit Agreement Exercise Price"). The Credit Agreement Exercise Price may be paid (i) in cash, (ii) through the cancellation of indebtedness owed by the Company to the warrant holder under the Senior Notes or (iii) in certain circumstances, by reducing the number of shares of Common Stock issuable upon the exercise of the Credit Agreement Warrants having a fair market value equal to such Credit Agreement Exercise Price, all in accordance with the terms contained in the Credit Agreement Warrants. The Credit Agreement Exercise Price and the number of shares issuable upon exercise of the Credit Agreement Warrants will be subject to adjustment upon the occurrence of certain events as set forth in the Credit Agreement Warrants. As a result of anti-dilution adjustments, the Credit Agreement Exercise Price was reduced to $3.81 per share and the number of shares of Common Stock issuable upon the exercise of the Credit Agreement Warrants was increased to 518,373 (consisting of 225,891 shares issuable to Perseus A/R Fund, 210,242 shares issuable to Perseus Market Opportunity and 82,240 shares issuable to CS Co-Investment). EXERCISE AT THE COMPANY'S OPTION. If, at any time following March 16, 2007, the daily closing price per share of Common Stock for 45 consecutive trading days (occurring at least 45 consecutive trading days following March 16, 2007) is at least $6.00 per share (with appropriate adjustments to be made for any stock dividend, split-up, subdivision or any other combination or reclassification), then the Company may, at its option, require the holders of the Credit Agreement Warrants to exercise such Credit Agreement Warrants, all in accordance with the terms and conditions contained in the Credit Agreement Warrants. EXERCISE PERIOD. The Credit Agreement Warrants are exercisable at any time, or from time to time, from the date of issuance, March 16, 2004, until March 16, 2011 (the "Credit Agreement Warrant Expiration Date"). In the event that a filing under HSR is required to be made before certain shares of Common Stock may be issued upon the exercise of such Credit Agreement Warrants, the Credit Agreement Warrant Expiration Date with respect to the right to exercise the Credit Agreement Warrants into such shares shall be the third business day following the expiration or termination of the statutory waiting period under HSR (and any extension thereof). - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 20 of 30 - -------------------------------------------------------------------------------- TERMS OF THE 2004 WARRANT EXERCISE RIGHTS. The Common Stock underlying the 2004 Warrant may be purchased at a price per share equal to $2.84 (the "2004 Exercise Price). The 2004 Exercise Price may be paid (i) in cash, (ii) through the cancellation of indebtedness owed by the Company to Perseus Market Opportunity under the Senior Notes, or (iii) in certain circumstances, by reducing the number of shares of Common Stock issuable upon the exercise of the 2004 Warrant having a fair market value equal to such 2004 Exercise Price, all in accordance with the terms contained in the 2004 Warrant. The 2004 Exercise Price and the number of shares issuable upon exercise of the 2004 Warrants will be subject to adjustment upon the occurrence of certain events as set forth in the 2004 Warrant. EXERCISE PERIOD. The 2004 Warrant is exercisable at any time, or from time to time, from the date of issuance, July 20, 2004, until May 30, 2009 (the "2004 Warrant Expiration Date"). In the event that a filing under HSR is required to be made before certain shares of Common Stock may be issued upon the exercise of the 2004 Warrant, then the 2004 Warrant Expiration Date with respect to the right to exercise the 2004 Warrant into such shares shall be the third business day following the expiration or termination of the statutory waiting period under HSR (and any extension thereof). TERMS OF THE REGISTRATION RIGHTS AGREEMENT In connection with the 2002 Purchase Agreement, the Company granted the Purchasers certain Form S-1 demand registration rights, "piggy-back" registration rights and Form S-3 registration rights as described more fully in the Registration Rights Agreement in connection with the 2002 Registrable Securities. The Company had an obligation under the Registration Rights Agreement to prepare and file with the Securities and Exchange Commission (the "Commission"), within 45 days following May 30, 2002, a shelf registration statement pursuant to Rule 415 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), on Form S-3 registering the 2002 Registrable Securities. The purpose of such registration rights was to facilitate the Purchasers' ability to dispose of their 2002 Registrable Securities in a public sale. TERMS OF THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT In connection with the 2004 Purchase Agreement, the Company entered into an Amended and Restated Registration Rights Agreement with Perseus Market Opportunity and the other parties to the 2004 Purchase Agreement (the "Amended and Restated Registration Rights Agreement"). - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 21 of 30 - -------------------------------------------------------------------------------- Pursuant to the Amended and Restated Registration Rights Agreement, the Company granted Perseus Market Opportunity and the other parties to such agreement certain demand registration rights, "piggy-back" registration rights and Form S-3 registration rights in connection with the shares of Common Stock purchased by Perseus Market Opportunity pursuant to the 2004 Purchase Agreement and the shares of Common Stock underlying the 2004 Warrants purchased by Perseus Market Opportunity pursuant to the 2004 Purchase Agreement (collectively, the "2004 Registrable Securities"). The Company has an obligation under the Amended and Restated Registration Rights Agreement to prepare and file with the Commission, within 60 days following July 20, 2004, a shelf registration statement pursuant to Rule 415 promulgated under the Securities Act on Form S-3 registering the 2004 Registrable Securities. The purpose of such registration rights is to facilitate Perseus Market Opportunity's ability to dispose of its 2004 Registrable Securities in a public sale. ADDITIONAL DISCLOSURE The Reporting Persons may from time to time acquire additional shares of Common Stock in the open market or in privately negotiated transactions, subject to availability of Common Stock at prices deemed favorable, the Company's business or financial condition and other factors and conditions the Reporting Persons deem appropriate. Alternatively, the Reporting Persons may sell all or a portion of their Common Stock, the Warrants or Common Stock issued upon exercise of the Warrants in privately negotiated transactions, in the open market pursuant to the exercise of certain registration rights granted pursuant to the Registration Rights Agreement and the Amended and Restated Registration Rights Agreement as described above or through an exemption from registration in compliance with applicable law, in each case, subject to the factors and conditions referred to above and to the terms of the 2002 Purchase Agreement, the 2004 Purchase Agreement, the Warrants, the Registration Rights Agreement and the Amended and Restated Registration Rights Agreement, as the case may be. In addition, the Reporting Persons may formulate other purposes, plans or proposals regarding the Company or any of its securities to the extent deemed advisable in light of general investment and trading policies, market conditions or other factors. Except as described in the 2002 Purchase Agreement, the 2004 Purchase Agreement, the Warrants, the Registration Rights Agreement or the Amended and Restated Registration Rights Agreement, and as otherwise set forth in this Schedule 13D, no Reporting Person or any individual otherwise identified - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 22 of 30 - -------------------------------------------------------------------------------- in Item 2 has any present plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer or a material amount of assets of the Company or of any of its subsidiaries; (d) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As of the date hereof, Perseus A/R Fund may be deemed to beneficially own 6,124,655 shares of Common Stock, based on calculations made in accordance with Rule 13d-3(d) representing approximately 6.6% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). As of the date hereof, the Perseus Market Opportunity may be deemed to beneficially own 8,654,046 shares of Common Stock, based on calculations made in accordance with Rule 13d-3(d), representing 9.3% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). As of the date hereof, CS Co-Investment may be deemed to beneficially own 2,229,808 shares of Common Stock, based on calculations made in accordance with Rule 13d-3(d), representing approximately 2.5% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). The above percentages are based upon there being 86,146,549 Shares of Common Stock outstanding as of July 20, 2004. By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, as of the date hereof, each of (i) Perseus Partners, (ii) Perseus Partners GP, (iii) Perseus, (iv) Perseus MF and (v) Rappahannock may be deemed to beneficially own 8,654,046 shares of Common Stock, based on calculations made in accordance with Rule - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 23 of 30 - -------------------------------------------------------------------------------- 13d-3(d), representing approximately 9.3% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, as of the date hereof, each of (i) Perseus Management, (ii) Perseus EC and (iii) Perseuspur may be deemed to beneficially own 8,354,463 shares of Common Stock, based on calculations made in accordance with Rule 13d-3(d), representing approximately 8.8% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, as of the date hereof, Mr. Pearl may be deemed to beneficially own 17,008,509 shares of Common Stock, based on calculations made in accordance with Rule 13d-3(d), representing approximately16.8% of the outstanding shares of Common Stock in accordance with Rule 13d-3(d). For the purpose of the above amounts and percentages (and the amounts set forth below in subsection (b)), the Reporting Persons have included all shares of Common Stock underlying the Director Warrants as if all of such warrants have vested on the date hereof. The Reporting Persons herby disclaim beneficial ownership of any warrants that they do not beneficially own as set forth on Rule 13d-3(d). (b) By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, Perseus A/R Fund may be deemed to have the sole power to direct the voting and disposition of the 6,124,655 shares of Common Stock beneficially owned by Perseus A/R Fund. By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, CS Co-Investment may be deemed to have the sole power to direct the voting and disposition of the 2,229,808 shares of Common Stock beneficially owned by CS Co-Investment. By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, each of (i) Perseus Management, (ii) Perseus EC and (iii) Perseuspur may be deemed to have the sole power to direct the voting and disposition of the 6,124,655 shares of Common Stock beneficially owned by Perseus A/R Fund and the 2,229,808 shares of Common Stock owned by CS Co-Investment. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 24 of 30 - -------------------------------------------------------------------------------- By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, each of (i) Perseus Market Opportunity, (ii) Perseus Partners, (iii) Perseus Partners GP, (iv) Perseus, Perseus MF and (v) Rappahannock may be deemed to have the sole power to direct the voting and disposition of the 8,654,046 shares of Common Stock beneficially owned by Perseus Market Opportunity. By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, Mr. Pearl may be deemed to have the sole power to direct the voting and disposition of the 6,124,655 shares of Common Stock beneficially owned by Perseus A/R Fund, the 8,654,046 shares of Common Stock owned by Perseus Market Opportunity and the 2,229,808 shares of Common Stock owned by CS Co-Investment. (c) Except as set forth above, no Reporting Person nor, to the best knowledge of each Reporting Person, any person identified in Item 2 hereof, beneficially owns any shares of Common Stock or has effected any transaction in shares of Common Stock during the preceding 60 days. (d) Each of the Reporting Persons affirms that no person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock owned by the Reporting Persons. The partners and members of the Purchasers have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Warrants or the Common Stock held for the account of the Purchasers in accordance with their ownership interests in the Purchasers. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 is amended and restated in its entirety to read as follows: As described in Items 3 and 4 above, on May 29, 2002, the Purchasers and the Company entered into to the 2002 Purchase Agreement pursuant to which the Purchasers agreed to purchase Senior Notes issued by the Company in the aggregate principal amount of $50,000,000 and 2002 Warrants exercisable for an aggregate of 13,000,000 shares of Common Stock, subject to adjustment upon the occurrence of certain events as set forth in the 2002 Warrants. The Purchasers and the Company also - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 25 of 30 - -------------------------------------------------------------------------------- entered into the Registration Rights Agreement pursuant to which the Purchasers have certain Form S-1 demand registration rights, "piggy-back" registration rights and Form S-3 registration rights as described more fully in the Registration Rights Agreement. The Company had an obligation under the Registration Rights Agreement to prepare and file with the Commission within 45 days following May 30, 2002 a shelf registration statement on Form S-3 or successor form registering the 2002 Registrable Securities. Additionally, Survivalink Corporation, a subsidiary of the Company, entered into a Guaranty, dated May 30, 2002 and Cadent Medical Corporation, a subsidiary of the Company, entered into a Guaranty, dated May 30, 2002, both of which guaranty certain obligations of the Company under the Senior Notes and the Purchase Agreement and are in the form of Guaranty, a copy of which is attached to the initial Schedule 13D as Exhibit 6 and incorporated herein by reference. Certain obligations of the Company under the Senior Notes and the 2002 Purchase Agreement are secured by a Security Agreement, dated May 30, 2002 (the "Security Agreement"), entered into by the Purchasers, the Company, HSBC Bank USA, as agent for the Purchasers and Cadent Medical Corporation, Survivalink Corporation, Cardiac Science Sweden AB, Artema Medical AB, Artema Technologies AB and Cardiac Science International, each a subsidiary of the Company, a copy of which is attached to the initial Schedule 13D as Exhibit 7 and incorporated herein by reference. As described in Items 3 and 4, Perseus Market Opportunity and the Company entered into the 2004 Purchase Agreement pursuant to which Perseus Market Opportunity purchased 2,109,705 shares of Common Sock and the 2004 Warrants exercisable for 843,882 shares of Common Stock, subject to adjustment upon the occurrence of certain events set forth in the 2004 Warrants. Perseus Market Opportunity and the Company entered into the Amended and Restated Registration Rights Agreement pursuant to which Perseus Market Opportunity has certain demand registration rights, "piggy-back" registration rights and Form S-3 registration rights as described more fully in the Amended and Restated Registration Rights Agreement. The Company has an obligation under the Amended and Restated Registration Rights Agreement to prepare and file with the Commission, within 60 days following July 20,2004, a shelf registration statement on Form S-3 or successor form registering the 2004 Registrable Securities. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 26 of 30 - -------------------------------------------------------------------------------- The Company also issued the 2002 Director Warrants and the 2004 Director Warrants to Mr. Newton and the Credit Agreement Warrants to Perseus A/R Fund, Perseus Market Opportunity and CS Co-Investment. The foregoing summaries of the 2002 Purchase Agreement, the 2002 Warrants, the Registration Rights Agreement, the form of Guaranty and the Security Agreement are qualified in their entirety by reference to Exhibits 2, 3, 4, 6 and 7, respectively, to the initial Schedule 13D. The foregoing summaries of the 2002 Director Warrants, the 2004 Director Warrants, the Credit Agreement Warrants, the 2004 Purchase Agreement, the 2004 Warrants and the Amended and Restated Registration Rights Agreement are qualified in their entirety to Exhibits 2, 3, 4, 5, 6 and 7, respectively. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1: Joint Filing Agreement, dated July 22, 2004, among (i) Perseus Acquisition/Recapitalization Fund, L.L.C., (ii) Perseus Market Opportunity Fund, L.P., (iii) Cardiac Science Co-Investment, L.P., (iv) Perseus Acquisition/Recapitalization Management, L.L.C., (v) Perseus Market Opportunity Partners, L.P., (vi) Perseus Market Opportunity Partners GP, L.L.C., (vii) Perseus, L.L.C., (viii) Perseus MF, L.L.C., (ix) Rappahannock Investment Company, (x) Perseus EC, L.L.C., (xi) Perseuspur, L.L.C., and (xii) Frank H. Pearl. Exhibit 2: Warrant, dated October 24, 2002, issued to Perseus Acquisition/Recapitalization Fund, L.L.C. Exhibit 3: Warrant, dated September 17, 2003, issued to Perseus Market Opportunity Fund, L.P. Exhibit 4: Warrant, dated March 16, 2004, issued to Perseus Acquisition/Recapitalization Fund, L.L.C. Exhibit 5: Purchase Agreement, dated as of July 20, 2004, by and among Cardiac Science, Inc., Perseus Market Opportunity and the other investors named therein (filed as Exhibit 4.1 to the Company's Report on Form 8-K filed on July 22, 2004 and incorporated herein by reference). - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 27 of 30 - -------------------------------------------------------------------------------- Exhibit 6: Form of Warrant, dated July 20, 2004 (filed as Exhibit 4.3 to the Company's Report on Form 8-K filed on July 22, 2004 and incorporated herein by reference). Exhibit 7: Amended and Restated Registration Rights Agreement, dated as of July 20, 2004, by and among Cardiac Science, Inc., Perseus Market Opportunity Fund, L.P. and the other parties thereto (filed as Exhibit 4.2 to the Company's Report on Form 8-K filed on July 22, 2004 and incorporated herein by reference). Exhibit 8: Power of Attorney, dated April 9, 2003, by Frank Pearl in favor of Rodd Macklin. - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 28 of 30 - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: July 22, 2004 PERSEUS ACQUISITION/RECAPITALIZATION FUND, L.L.C. By: Perseus Acquisition/Recapitalization Management, L.L.C., its Managing Member By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY FUND, L.P. By: Perseus Market Opportunity Partners, L.P., its General Partner By: Perseus Market Opportunity Partners GP, L.L.C., its General Partner By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 29 of 30 - -------------------------------------------------------------------------------- CARDIAC SCIENCE CO-INVESTMENT, L.P. By: Perseus Acquisition/Recapitalization Management, L.L.C., its General Partner By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS ACQUISITION/RECAPITALIZATION MANAGEMENT, L.L.C. By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY PARTNERS, L.P. By: Perseus Market Opportunity Partners GP, L.L.C., its General Partner By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY PARTNERS GP, L.L.C. By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer - -------------------------------------------------------------------------------- CUSIP No. 141410209 SCHEDULE 13D Page 30 of 30 - -------------------------------------------------------------------------------- PERSEUS, L.L.C. By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MF, L.L.C. By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer RAPPAHANNOCK INVESTMENT COMPANY By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS EC, L.L.C. By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUSPUR, L.L.C. By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer FRANK H. PEARL /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Attorney-in-Fact EX-1 2 ex1sc13da1-cardiac.txt EXHIBIT 1 EXHIBIT 1 --------- JOINT FILING AGREEMENT Each of the undersigned hereby acknowledges and agrees, in compliance with the provisions of Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended, that the Schedule 13D to which this Agreement is attached as an Exhibit (the "Schedule 13D"), and any amendments thereto, will be filed with the Securities and Exchange Commission jointly on behalf of the undersigned. This Agreement may be executed in one or more counterparts. Dated: July 22, 2004 PERSEUS ACQUISITION/RECAPITALIZATION FUND, L.L.C. By: Perseus Acquisition/Recapitalization Management, L.L.C., its Managing Member By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY FUND, L.P. By: Perseus Market Opportunity Partners, L.P., its General Partner By: Perseus Market Opportunity Partners GP, L.L.C., its General Partner By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer CARDIAC SCIENCE CO-INVESTMENT, L.P. By: Perseus Acquisition/Recapitalization Management, L.L.C., its General Partner By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS ACQUISITION/RECAPITALIZATION MANAGEMENT, L.L.C. By: Perseus EC, L.L.C., its Managing Member By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY PARTNERS, L.P. By: Perseus Market Opportunity Partners GP, L.L.C., its General Partner By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MARKET OPPORTUNITY PARTNERS GP, L.L.C. By: Perseus, L.L.C., its Managing Member By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS, L.L.C. By: Perseus MF, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS MF, L.L.C. By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer RAPPAHANNOCK INVESTMENT COMPANY By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS EC, L.L.C. By: Perseuspur, L.L.C., its Managing Member By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUSPUR, L.L.C. By: /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer FRANK H. PEARL /s/ Rodd Macklin -------------------------------------- Name: Rodd Macklin Title: Attorney-in-Fact EX-99 3 ex2sc13da1-cardiac.txt EXHIBIT 2 THE OFFER AND SALE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND COMPLIANCE ARE NOT REQUIRED. Warrant to Purchase 10,140 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF CARDIAC SCIENCE, INC. This is to certify that, for value received, PERSEUS MARKET OPPORTUNITY FUND, L.P. (the "Holder"), is entitled to purchase from CARDIAC SCIENCE, INC., a Delaware corporation (the "Company"), having its principal place of business at 16931 Millikan Avenue, Irvine, California 92606, at any time during the period from the date hereof (the "Commencement Date") to 5:00 p.m., California time, on October 24, 2012 (the "Expiration Date"), at which time this Warrant shall expire and become void, and subject to vesting and other provisions of this Warrant, Ten Thousand One Hundred Forty (10,140) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at $1.75 per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise Price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. VESTING: EXERCISE AND PAYMENT; EXCHANGE. (a) The right to exercise this Warrant shall vest and be exercisable from time to time in whole or in part as to any vested installment as follows: - -------------------------------------------------------------------------------- ON OR AFTER: EXERCISABLE AS TO: ----------- ----------------- - -------------------------------------------------------------------------------- October 24, 2003 2,508 shares - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Monthly Thereafter 212 shares per month (7,632 shares, vesting 1/36 per month with full vesting as of October 24, 2006) - -------------------------------------------------------------------------------- (b) This Warrant may be exercised in whole or in part at any time from and after the dale hereof and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day which shall not be such a day. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) either (A) a certified or official bank check for the Exercise Price for the number of Warrant Shares specified in the exercise form; or (B) other securities of the Company owned by the Holder and having a fair market value determined asset forth in SECTION 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form or (C) any combination of the consideration specified in the foregoing clauses (A) and (B). If this Warrant is, exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered by the Holder. (c) EXCHANGE OF WARRANT FOR COMMON STOCK. In addition to and without limiting the rights of the Holder under the terms of this Warrant, the Holder shall have the right, upon its written request delivered or transmitted to the Company together with this Warrant, to exchange this Warrant, in whole or in part at any time or from time to time on or prior to the Expiration date, for the number of shares of Common Stock having an aggregate fair market value (determined as set forth in SECTION 3 hereof) on the date of such exchange equal to the difference between (i) the aggregate fair market value on the date of such exchange (determined as set forth in SECTION 3 hereof) of a number of Warrant Shares designated by the Holder and (ii) the aggregate Exercise Price the Holder would have paid to the company to purchase such designated number of Warrant Shares, and, if a balance of purchasable Warrant Shares remains after such exchange, the Company shall execute and deliver to the Holder a new Warrant evidencing the right of the Holder to purchase such balance of Warrant Shares. No payment of any cash or other consideration shall be required. Such exchange shall be effective upon the date of receipt by the Company of the original Warrant surrendered for cancellation and a written request from the Holder that the exchange pursuant to this Subsection be made, or at such later date as may be specified in such request. (d) CONDITIONS TO EXERCISE OR EXCHANGE. The restrictions in SECTION 7 shall apply, to the extent applicable by their terms, to any exercise or exchange of this Warrant permitted by this SECTION 1. 2. RESERVATION OF SHARES. The Company shall, at all times until the expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. 3. FRACTIONAL INTERESTS. The Company shall not issue any fractional shares or script representing fractional shares upon the exercise or exchange of this Warrant. With respect to any fraction of a share resulting from the exercise or exchange hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the number of shares of Common Stock into which each share of Common Stock is then convertible, multiplied by the current fair market value per share of Common Stock. The current fair market value shall be the last reported sale price of the Common Stock on The Nasdaq National Market or the last business day prior to 2 the date of exercise of this Warrant or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on The Nasdaq National Market. 4. NO RIGHTS AS STOCKHOLDERS. This Warrant shall not entitle the Holder to any rights as a stockholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 5. ADJUSTMENTS IN NUMBER AND EXERCISE PRICES OF WARRANT SHARES. 5.1 The number of shares of Common Stock for which this Warrant may be exercised and the Exercise Prices therefor shall be subject to adjustment as follows: (a) If the Company is recapitalized through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of shares of Common Stock for which this Warrant may be exercised shall be increased or reduced, as of the record date for such recapitalization in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the exercise price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. (b) If the Company declares a dividend or distribution on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of shares of Common Stock for which this Warrant may be exercised shall be increased as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares (and shares of Common Stock issuable upon conversion of all such securities convertible into Common Stock) of Common Stock as a result of such dividend, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all the Warrant Shares issuable hereunder immediately after the record date for such dividend shall equal the aggregate amount so payable immediately before such record date. (c) If the Company distributes to holders of its Common Stock, other than as part of its dissolution or liquidation or the winding up of its affairs, any evidence of indebtedness or any of its assets (other than cash, Common Stock or securities convertible into Common Stock), the Company shall give written notice to the Holder of any such distribution at least fifteen days prior to the proposed record date in order to permit the Holder to exercise this Warrant on or before the record date. There shall be no adjustment in the number of shares of Common Stock for which this Warrant may be exercised, or in the Exercise Price, by virtue of any such distribution. (d) If the Company offers rights or warrants to the holders of Common Stock which entitle them to subscribe to or purchase additional Common Stock or securities convertible into Common Stock, the Company shall give written notice of any such proposed offering to the Holder at least fifteen days prior to the proposed record date in order to permit the Holder to exercise this Warrant on or before such record date. There shall be no adjustment in the number of shares of Common Stock for which this Warrant may be exercised, or in the Exercise Price, by virtue of any such distribution. 3 (e) If the event, as a result of which an adjustment is made under paragraph (a) or (b) above, does not occur, then any adjustments in the Exercise Price or number of shares issuable that were made in accordance with such paragraph (a) or (b) shall be adjusted to the Exercise Price and number of shares as were in effect immediately prior to the record date for such event. 5.2 In the event of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or in the event of any consolidation or merger of the Company with another entity after which the Company is not the surviving entity, at any time prior to the expiration of this Warrant, upon subsequent exercise of this Warrant the Holder shall have the right to receive the same kind and number of shares of Common Stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger, appropriately adjusted for any subsequent event described in this SECTION 5. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the then applicable Exercise Price, the holder may, at the Holder's option exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. In the event of any such reorganization, merger or consolidation, the corporation formed by such consolidation or merger or the corporation which shall have acquired the assets of the Company shall execute and deliver a supplement hereto to the foregoing effect, which supplement shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Warrant. 5.3 If the Company shall, at any time before the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right to receive upon exercise of this Warrant, in lieu of the shares of Common Stock of the Company that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full and, in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 5.4 The Company may retain a firm of independent public accountants of recognized standing (who may be any such firm employed by the Company) to make any computation required under this SECTION 5, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this SECTION 5. 5.5 Whenever the number of Warrant Shares or Exercise Price shall be adjusted as required by the provisions of this SECTION 5, the Company forthwith shall file in the custody of its secretary or an assistant secretary, at its principal office, an officer's certificate showing the adjusted number of Warrant Shares and Exercise Price and setting forth in 4 reasonable detail the circumstances requiring the adjustment. Each such officer's certificate shall be made available at all reasonable times during reasonable hours for inspection by the Holder. 6. NOTICES TO HOLDER. So long as this Warrant shall be outstanding (a) if the Company shall pay any dividends or make any distribution upon the Common Stock otherwise than in cash or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least thirty days prior to the relevant date described below (or such shorter period as is reasonably possible if thirty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's stockholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. 7. TRANSFER, EXERCISE, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT, WARRANT SHARES OR OTHER SECURITIES. 7.1 This Warrant may be transferred, exercised, exchanged or assigned ("transferred"), in whole or in part, subject to the following restrictions. This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant or the conversion of the Warrant Shares shall be subject to restrictions on transferability unless registered under the Securities Act of 1933, as amended (the "Securities Act"), or unless an exemption from registration is available. Until this Warrant and the Warrant Shares or Other Securities are so registered, this Warrant and any certificate for Warrant Shares or Other Securities issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant, the Warrant Shares or Other Securities may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant, the Warrant Shares or Other Securities may be transferred without such registration. This Warrant and the Warrant Shares or Other Securities may also be subject to restrictions on transferability under applicable state securities or blue sky laws. Until the Warrant and the Warrant Shares or Other Securities are registered under the Securities Act, the Holder shall reimburse the Company for its expenses, including attorneys' fees, incurred in connection with any transfer or assignment, in whole or in part, of this Warrant or any Warrant Shares or Other Securities. 7.2 Until this Warrant, the Warrant Shares or other Securities are registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant, the Warrant Shares, or other Securities that the transferee (who may be the Holder in the case of an exercise or exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that transferee provide written information adequate to establish that the transferee is an "accredited investor" 5 within the meaning of Regulation D issued under the Securities Act, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act and any applicable securities or blue sky laws, all as determined by counsel to the Company. 7.3 Any transfer permitted hereunder shall be made by surrender of this Warrant to the Company at its principal office or to its transfer agent at its offices with a duly executed request to transfer the Warrant, which shall provide adequate information to effect such transfer and shall be accompanied by funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all transfer conditions, the Company or its transfer agent shall, without charge, execute and deliver a new Warrant in the name of the transferee named in such transfer request, and this Warrant promptly shall be cancelled. 7.4 Upon receipt by the Company of evidence satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct its transfer agent to execute and deliver, a new Warrant of like tenor and date, any such lost, stolen or destroyed Warrant thereupon shall become void. 7.5 Each Holder of this Warrant, the Warrant Shares and any Other Securities shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Securities Act, any applicable state securities or blue sky laws or any statute or common law, insofar as such losses, claims, damages or liabilities or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrant, the Warrant Shares or Other Securities in violation of this Warrant. 8. NO IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times, in good faith, take all such Action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 9. NOTICES. Notices and other communications to be given to the Holder shall be deemed sufficiently given if delivered by hand, or two business days after mailing if mailed by registered or certified mail, postage prepaid, addressed in the name and at the address of such Holder appearing on the records of the Company. Notices or other communications to the Company shall be deemed to have been sufficiently given if delivered by hand or two business days after mailing if mailed by registered or certified mail, postage prepaid, to the Company at: 16931 Millikan Avenue Irvine, California 92606 Attention: Chief Financial Officer Either party may change the address to which notices shall be given by notice pursuant to this SECTION 9. 10. GOVERNING LAW. This Warrant shall be governed by and construed in accordance with the laws of the State of California. 6 IN WITNESS WHEREOF, the Company has executed this Warrant as of October 24, 2002. CARDIAC SCIENCE, INC. By: /S/RODERICK DE GREEF -------------------------------- Name: RODERICK DE GREEF ------------------------------ Its: CHIEF FINANCIAL OFFICER ------------------------------- 7 EX-99 4 ex3sc13da1-cardiac.txt EXHIBIT 3 EXHIBIT 3 --------- THE OFFER AND SALE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND COMPLIANCE ARE NOT REQUIRED. Warrant to Purchase 43,577 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF CARDIAC SCIENCE, INC. This is to certify that, for value received, ACQUISITION/ RECAPITALIZATION FUND, L.L.C. (the "Holder"), is entitled to purchase from CARDIAC SCIENCE, INC., a Delaware corporation (the "Company"), having its principal place of business at 1900 Main Street, Suite 700, Irvine, California 92614, at any time during the period from the date hereof (the "Commencement Date") to 5:00 p.m., California time, on September 17, 2013 (the "Expiration Date"), at which time this Warrant shall expire and become void, and subject to vesting and other provisions of this Warrant, Forty-three Thousand Five Hundred Seventy-seven (43,577) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at $4.61 per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise Price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. Vesting: Exercise and Payment; Exchange. (a) The right to exercise this Warrant shall vest and be exercisable from time to time in whole or in part as to any vested installment as follows:
- ------------------------------------------------------------------------------------------------------- ON OR AFTER: EXERCISABLE AS TO: - ------------------------------------------------------------------------------------------------------- September 17, 2004 10,889 shares - ------------------------------------------------------------------------------------------------------- Monthly Thereafter 908 shares per month (32,688 shares, vesting 1/36 per month with full vesting as of September 17, 2007) - -------------------------------------------------------------------------------------------------------
(b) This Warrant may be exercised in whole or in part at any time from and after the dale hereof and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day which shall not be such a day. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) either (A) a certified or official bank check for the Exercise Price for the number of Warrant Shares specified in the exercise form; or (B) other securities of the Company owned by the Holder and having a fair market value determined asset forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form or (C) any combination of the consideration specified in the foregoing clauses (A) and (B). If this Warrant is, exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered by the Holder. (c) Exchange of Warrant for Common Stock. In addition to and without limiting the rights of the Holder under the terms of this Warrant, the Holder shall have the right, upon its written request delivered or transmitted to the Company together with this Warrant, to exchange this Warrant, in whole or in part at any time or from time to time on or prior to the Expiration date, for the number of shares of Common Stock having an aggregate fair market value (determined as set forth in Section 3 hereof) on the date of such exchange equal to the difference between (i) the aggregate fair market value on the date of such exchange (determined as set forth in Section 3 hereof) of a number of Warrant Shares designated by the Holder and (ii) the aggregate Exercise Price the Holder would have paid to the company to purchase such designated number of Warrant Shares, and, if a balance of purchasable Warrant Shares remains after such exchange, the Company shall execute and deliver to the Holder a new Warrant evidencing the right of the Holder to purchase such balance of Warrant Shares. No payment of any cash or other consideration shall be required. Such exchange shall be effective upon the date of receipt by the Company of the original Warrant surrendered for cancellation and a written request from the Holder that the exchange pursuant to this Subsection be made, or at such later date as may be specified in such request. (d) Conditions to Exercise or Exchange. The restrictions in Section 7 shall apply, to the extent applicable by their terms, to any exercise or exchange of this Warrant permitted by this Section 1. 2. Reservation of Shares. The Company shall, at all times until the expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. 3. Fractional Interests. The Company shall not issue any fractional shares or script representing fractional shares upon the exercise or exchange of this Warrant. With respect to any fraction of a share resulting from the exercise or exchange hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the number of shares of Common Stock into which each share of Common Stock is then convertible, multiplied by the current fair 2 market value per share of Common Stock. The current fair market value shall be the last reported sale price of the Common Stock on The Nasdaq National Market or the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on The Nasdaq National Market. 4. No Rights as Stockholders. This Warrant shall not entitle the Holder to any rights as a stockholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 5. Adjustments in Number and Exercise Prices of Warrant Shares. 5.1 The number of shares of Common Stock for which this Warrant may be exercised and the Exercise Prices therefor shall be subject to adjustment as follows: (a) If the Company is recapitalized through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of shares of Common Stock for which this Warrant may be exercised shall be increased or reduced, as of the record date for such recapitalization in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the exercise price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. (b) If the Company declares a dividend or distribution on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of shares of Common Stock for which this Warrant may be exercised shall be increased as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares (and shares of Common Stock issuable upon conversion of all such securities convertible into Common Stock) of Common Stock as a result of such dividend, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all the Warrant Shares issuable hereunder immediately after the record date for such dividend shall equal the aggregate amount so payable immediately before such record date. (c) If the Company distributes to holders of its Common Stock, other than as part of its dissolution or liquidation or the winding up of its affairs, any evidence of indebtedness or any of its assets (other than cash, Common Stock or securities convertible into Common Stock), the Company shall give written notice to the Holder of any such distribution at least fifteen days prior to the proposed record date in order to permit the Holder to exercise this Warrant on or before the record date. There shall be no adjustment in the number of shares of Common Stock for which this Warrant may be exercised, or in the Exercise Price, by virtue of any such distribution. (d) If the Company offers rights or warrants to the holders of Common Stock which entitle them to subscribe to or purchase additional Common Stock or securities convertible into Common Stock, the Company shall give written notice of any such proposed offering to the Holder at least fifteen days prior to the proposed record date in order to permit the Holder to exercise this Warrant on or before such record date. There shall be no adjustment in the number of shares of Common Stock for which this Warrant may be exercised, or in the Exercise Price, by virtue of any such distribution. 3 (e) If the event, as a result of which an adjustment is made under paragraph (a) or (b) above, does not occur, then any adjustments in the Exercise Price or number of shares issuable that were made in accordance with such paragraph (a) or (b) shall be adjusted to the Exercise Price and number of shares as were in effect immediately prior to the record date for such event. 5.2 In the event of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or in the event of any consolidation or merger of the Company with another entity after which the Company is not the surviving entity, at any time prior to the expiration of this Warrant, upon subsequent exercise of this Warrant the Holder shall have the right to receive the same kind and number of shares of Common Stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger, appropriately adjusted for any subsequent event described in this Section 5. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the then applicable Exercise Price, the holder may, at the Holder's option exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. In the event of any such reorganization, merger or consolidation, the corporation formed by such consolidation or merger or the corporation which shall have acquired the assets of the Company shall execute and deliver a supplement hereto to the foregoing effect, which supplement shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Warrant. 5.3 If the Company shall, at any time before the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right to receive upon exercise of this Warrant, in lieu of the shares of Common Stock of the Company that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full and, in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 5.4 The Company may retain a firm of independent public accountants of recognized standing (who may be any such firm employed by the Company) to make any computation required under this Section 5, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section 5. 5.5 Whenever the number of Warrant Shares or Exercise Price shall be adjusted as required by the provisions of this Section 5, the Company forthwith shall file in the custody of its secretary or an assistant secretary, at its principal office, an officer's certificate showing the adjusted number of Warrant Shares and Exercise Price and setting forth in reasonable detail the circumstances requiring the adjustment. Each such officer's certificate shall be made available at all reasonable times during reasonable hours for inspection by the Holder. 6. Notices to holder. So long as this Warrant shall be outstanding (a) if the Company shall pay any dividends or make any distribution upon the Common Stock otherwise than in cash or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least thirty days prior to the relevant date described below (or such shorter period as is reasonably possible if thirty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's stockholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. 7. Transfer, Exercise, Exchange, Assignment or Loss of Warrant, Warrant Shares or Other Securities. 7.1 This Warrant may be transferred, exercised, exchanged or assigned ("transferred"), in whole or in part, subject to the following restrictions. This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant or the conversion of the Warrant Shares shall be subject to restrictions on transferability unless registered under the Securities Act of 1933, as amended (the "Securities Act"), or unless an exemption from registration is available. Until this Warrant and the Warrant Shares or Other Securities are so registered, this Warrant and any certificate for Warrant Shares or Other Securities issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant, the Warrant Shares or Other Securities may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant, the Warrant Shares or Other Securities may be transferred without such registration. This Warrant and the Warrant Shares or Other Securities may also be subject to restrictions on transferability under applicable state securities or blue sky laws. Until the Warrant and the Warrant Shares or Other Securities are registered under the Securities Act, the Holder shall reimburse the Company for its expenses, including attorneys' fees, incurred in connection with any transfer or assignment, in whole or in part, of this Warrant or any Warrant Shares or Other Securities. 7.2 Until this Warrant, the Warrant Shares or other Securities are registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant, the Warrant Shares, or other Securities that the transferee (who may be the Holder in the case of an exercise or exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that transferee provide written information adequate to establish that the transferee is an "accredited investor" within the meaning of Regulation D issued under the Securities Act, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act and any applicable securities or blue sky laws, all as determined by counsel to the Company. 7.3 Any transfer permitted hereunder shall be made by surrender of this Warrant to the Company at its principal office or to its transfer agent at its offices with a duly executed request to transfer the Warrant, which shall provide adequate information to effect such transfer and shall be accompanied by funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all transfer conditions, the Company or its transfer agent shall, without charge, execute and deliver a new Warrant in the name of the transferee named in such transfer request, and this Warrant promptly shall be cancelled. 7.4 Upon receipt by the Company of evidence satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct its transfer agent to execute and deliver, a new Warrant of like tenor and date, any such lost, stolen or destroyed Warrant thereupon shall become void. 7.5 Each Holder of this Warrant, the Warrant Shares and any Other Securities shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Securities Act, any applicable state securities or blue sky laws or any statute or common law, insofar as such losses, claims, damages or liabilities or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrant, the Warrant Shares or Other Securities in violation of this Warrant. 8. No Impairment. The Company will not, by amendment of its Certificate of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times, in good faith, take all such Action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 9. Notices. Notices and other communications to be given to the Holder shall be deemed sufficiently given if delivered by hand, or two business days after mailing if mailed by registered or certified mail, postage prepaid, addressed in the name and at the address of such Holder appearing on the records of the Company. Notices or other communications to the Company shall be deemed to have been sufficiently given if delivered by hand or two business days after mailing if mailed by registered or certified mail, postage prepaid, to the Company at: 1900 Main Street, Suite 700 Irvine, California 92614 Attention: Chief Financial Officer Either party may change the address to which notices shall be given by notice pursuant to this Section 9. 10. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California. 6 IN WITNESS WHEREOF, the Company has executed this Warrant as of September 17, 2003. CARDIAC SCIENCE, INC. By: /s/Roderick de Greef ---------------------------- Name: Roderick de Greef ---------------------------- Its: Chief Financial Officer ---------------------------- 7 EX-4 5 ex4sc13da1-cardiac.txt EXHIBIT 4 EXHIBIT 4 --------- THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR WITH ANY SECURITIES COMMISSION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THIS WARRANT OR THE ISSUER RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT. No. W-7 Warrant to Purchase 217,885 Shares of Common Stock (subject to adjustment) CARDIAC SCIENCE, INC. WARRANT TO PURCHASE 217,885 SHARES OF COMMON STOCK Cardiac Science, Inc., a Delaware corporation (the "Company"), hereby certifies that, for good and valuable consideration, Perseus Acquisition/Recapitalization Fund, L.L.C. or its registered transferees, successors or assigns (each, a "holder"), is the registered holder of warrants (the "Warrants") to subscribe for and purchase from the Company, TWO HUNDRED SEVENTEEN THOUSAND EIGHT HUNDRED EIGHTY-FIVE (217,885) shares of validly issued, fully paid and nonassessable Common Stock (as adjusted pursuant to Section 4 hereof, the "Warrant Shares") of the Company, at a purchase price per share equal to three dollars ninety-five cents ($3.95) (such price, as adjusted pursuant to Section 4 hereof, the "Warrant Price"), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, (a) the term "Common Stock" shall mean the Company's presently authorized Common Stock, par value $.001 per share, and any stock into or for which such Common Stock may hereafter be converted or exchanged, and (b) the term "Date of Grant" shall mean May 30, 2002. The term "Warrant" shall include any warrant issued upon transfer or partial exercise of this Warrant, unless the context clearly requires otherwise. This Warrant is being issued pursuant to that certain Senior Note and Warrant Purchase Agreement (the "Purchase Agreement") dated May 29, 2002 by and among the Company and the Purchasers named therein. Capitalized terms used in this letter and not defined herein shall have the meanings ascribed to them in the Purchase Agreement. 1. Term. The purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the Date of Grant through and including the close 2 of business on the seventh anniversary of the Date of Grant (the "Expiration Date"); provided, however, that if the holder has timely surrendered this Warrant for exercise in compliance with Section 2(a), but the statutory waiting period required under HSR (as defined in Section 10(c)(ii)), and any extension thereof, shall not have expired or been terminated BEFORE CERTAIN SHARES OF COMMON STOCK may be issued upon the exercise of this Warrant prior to the Expiration Date, then the Expiration Date with respect to the purchase right represented by this Warrant with respect to such shares shall be automatically extended until the third Business Day following the date of such expiration or termination. 2. Exercise. (a) Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 hereof, the expiration or termination of the statutory waiting period required under HSR (and any extension thereof) in respect of the issuance of certain Warrant Shares as provided in Section 10(c)(ii) hereof, and the expiration of the exercise delay periods, if applicable, set forth in Section 2(d) hereof, the purchase right represented by this Warrant may be exercised by the holder hereof, in whole or in part, at any time or from time to time, from and after the Date of Grant by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and, except as otherwise provided for herein, by the payment to the Company an amount in cash or by check equal to the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased. In addition and not in limitation of the foregoing, if such holder owns Senior Notes of the Company, in lieu of paying such Warrant Price in cash or by check, such holder shall have the right (but not the obligation) to pay such Warrant Price by agreeing to cancel and forgive the debt owed by the Company to such holder pursuant to the Senior Notes in the amount equal to such Warrant Price. (Such debt cancellation and forgiveness shall be applied first, toward accrued and unpaid interest on the Senior Notes (if any), second, to any premium due and owing on the Senior Notes (if any), and third, to the outstanding principal amount of the Senior Notes.) The person or persons in whose name(s) any certificate(s) representing shares of Common Stock shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised if exercised prior to the close of business on such date; otherwise, the date of record shall be the next Business Day. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to the holder hereof as soon as possible and in any event within five (5) Business Days after such exercise and, unless this Warrant has been fully exercised (including without limitation, exercise pursuant to Section 2(b) below), a new Warrant representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the holder hereof as soon as possible and in any event within such five (5) Business Day period. (b) Exercise at the Company's Option. If, at any time following the third anniversary of the Date of Grant, (i) the daily Closing Price (as defined below) per share of Common Stock for forty-five (45) consecutive Trading Days (as defined below) (the close of business on such day being referred to herein as the "Requisite Trading Date") occurring at least forty-five (45) consecutive Trading Days following the third anniversary of the Date of Grant, is 3 at least $6.00 (with appropriate adjustment made for any stock dividend, split-up or subdivision or any combination or reclassification made or effected subsequent to the date hereof), and (ii) the Shelf Registration (as defined in the Registration Rights Agreement of even date herewith between the Company and the Purchaser) with respect to the Warrant Shares is effective, then the Company, at its option, may require the holder of this Warrant to exercise this Warrant by providing written notification (the "Notice") to the holder. Such Notice shall (i) state that the Requisite Trading Date has occurred, and that the Company's desire to require the holder to exercise the Warrant. and (ii) be given to the holder not later than 30 days following the Requisite Trading Date. If the holder fails to exercise this Warrant by the first Business Day that occurs 30 days after such holder received the Notice (which shall have been given properly in accordance with this paragraph), this Warrant shall be deemed to have been exercised automatically immediately prior to the close of business on such day (the "Automatic Exercise Date"), and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such Automatic Exercise Date. As soon as practicable after the Automatic Exercise Date, not to exceed five Business Days, the Company shall provide written notification to the holder of the Automatic Exercise Date. This Warrant shall be deemed to be surrendered to the Company on the Automatic Exercise Date by virtue of this Section 2(b) and without any action by the holder of this Warrant or any other person, and payment to the Company of the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased shall be deemed to have been elected to be made by the holder pursuant to the terms of Section 2(c) below (without payment by the holder of any exercise price or any cash, cancellation of indebtedness under the Senior Notes or other consideration) (such election, a "Deemed Election"), unless the holder notifies the Company in writing as soon as practicable after receipt of the Notice, not to exceed five (5) Business Days, that, in its sole and absolute discretion, it chooses to pay the exercise price in cash, by check or by cancelling indebtedness under the Senior Notes pursuant to Section 2(a) above). As promptly as practicable on or after the Automatic Exercise Date (but subject to the expiration of the exercise delay periods, if applicable, set forth in Section 2(d) hereof) and in any event, within five (5) Business Days after the Automatic Exercise Date (or, if applicable, the expiration of the exercise delay periods set forth in Section 2(d) hereof), the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of Warrant Shares issuable upon such exercise. For purposes of the foregoing, "Closing Price" means, with respect to a share of Common Stock, as of the date of determination, (a) the closing price per share of Common Stock on such date published in The Wall Street Journal or, if no such closing price on such date is published in The Wall Street Journal, the average of the closing bid and asked prices on such date, as officially reported on the principal national securities exchange (including, without limitation, The Nasdaq Stock Market, Inc. (or its successor) ("NASDAQ")) on which the Common Stock is then listed or admitted to trading; or (b) if the Common Stock are not then listed or admitted to trading on any national securities exchange but are designated as national market system securities by the NASD, the last trading price per share of Common Stock on such date; or (c) if there shall have been no trading on such date or if the Common Stock is not so designated, the average of the reported closing bid and asked prices of the Common Stock on such date as shown by NASDAQ and reported by any member firm of The New York Stock Exchange, Inc. selected by the Company. If trading is conducted on a continuous basis on any exchange, then the closing price shall be at 4:00 p.m. New York City time. For purposes of the 4 foregoing, "Trading Day" means, so long as the Common Stock is listed or admitted to trading on a national securities exchange, a day on which the principal national securities exchange on which the Common Stock is listed is open for the transaction of business, or, if the Common Stock is not so listed or admitted for trading on any national securities exchange, a day on which NASDAQ is open for the transaction of business. (c) Net Issue Exercise. In lieu of the payment of the aggregate Warrant Price, the holder shall have the right (but not the obligation), to require the Company to convert this Warrant, in whole or in part, into shares of Common Stock as provided for in this Section 2(c). In connection with the foregoing and without limiting the rights of the holder under the terms of this Warrant, the holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company (with the notice of exercise form and notice of such election attached hereto as Exhibit A duly executed) in which event the Company shall issue to the holder a number of Warrant Shares computed using the following formula: X = Y (A - B) ---------- A Where: X = the number of shares of Common Stock to be issued to the holder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the number of shares of Common Stock to be issued upon such partial exercise(at the date of such calculation) A = the Fair Market Value (as defined in Section 4(j) below) of one (1) share of Common Stock B = the Warrant Price (d) Certain Limitations on Net Issue Exercise. Notwithstanding anything to the contrary set forth herein (but giving full effect to the provisions relating to a Deemed Election as set forth in this Section 2(d)), and provided that a Shelf Registration (as defined in the Registration Agreement) with respect to the offer and sale of all of the Warrant Shares is and remains effective, the right of the holder of this Warrant to elect to pay the Warrant Price pursuant to the terms of Section 2(c) hereof shall be restricted as follows: (i) the right of the holder of this Warrant to elect to pay the Warrant Price pursuant to the terms of Section 2(c) hereof shall not be available during the period commencing on the Date of Grant and ending on (and excluding) the date of the first anniversary of the Date of Grant; (ii) if during the period commencing on (and including) the first anniversary of the Date of Grant and ending on (and excluding) the date of the third anniversary of the Date of Grant, the holder elects (or, in the case of a Deemed Election, is deemed to have 5 elected pursuant to Section 2(b)) to pay the Warrant Price for all or any portion of the Warrant Shares pursuant to the terms of Section 2(c) hereof, the Company shall have the right to delay the exercise of such portion of the Warrant (the potion of the Warrant that is exercisable into such Warrant Shares, including the portion of the Warrant that would have been cancelled to pay the Warrant Price pursuant to the terms of Section 2(c) hereof, the "Warrant Portion") for a period of up to 10 Business Days from the receipt of notice of exercise with respect to the Warrant Portion (or, in the case of a Deemed Election, from the Automatic Exercise Date ), but not longer (which period shall be deemed to include the expired portion of the exercise delay period referenced in Section 2(d)(iii) hereof); provided that, during such 10-Business Day period, the Company uses its reasonable best efforts (at its own cost and expense) to locate a prospective third-party purchaser for the Warrant Portion. If, prior to the expiration of such 10-Business Day period, (1) the Company is able to locate such third-party purchaser for the Warrant Portion, (2) such third-party purchaser makes a legally binding offer to purchase the Warrant Portion on terms (including price) satisfactory to the holder, and (3) such third-party purchaser agrees to exercise the Warrant Portion immediately after purchasing it and to pay the exercise price thereon to the Company in cash, then the holder, at the request of the Company, shall sell the Warrant Portion to such third-party purchaser on such terms; (iii) if during the period commencing on (and including) the first anniversary of the Date of Grant and ending on (and excluding) the date of the third anniversary of the Date of Grant, the holder owns any Senior Notes and elects (or, in the case of a Deemed Election, is deemed to have elected pursuant to Section 2(b)) to pay the Warrant Price for all or any portion of the Warrant Shares pursuant to the terms of Section 2(c) hereof , the Company shall have the right to delay the exercise of the portion of this Warrant covering such Warrant Shares for which the holder is able to pay the Warrant Price by canceling and forgiving the debt owed by the Company to such holder pursuant to the Senior Notes in the amount equal to such Warrant Price as set forth in Section 2(a) (such portion of this Warrant, the "Tax Opinion Portion") for a period of up to 10 Business Days from the receipt of notice of exercise with respect to such Tax Opinion Portion from the holder (or, in the case of a Deemed Election, from the Automatic Exercise Date), but not longer (which period shall be deemed to include the expired portion of the exercise delay period referenced in Section 2(d)(ii) hereof); provided that, during such 10-Business Day period, the Company shall use its reasonable best efforts to obtain, in good faith, an unqualified opinion (reasonably satisfactory to the holder) addressed to the holder from a nationally recognized tax counsel acceptable to the holder that the holding period (calculated with reference to the original investment date) of the Warrant Shares received upon the payment of the Warrant Price by canceling and forgiving the debt owed by the Company to such holder pursuant to the Senior Notes in the amount equal to such Warrant Price as set forth in Section 2(a) will include the period for which such holder held the Senior Notes to be cancelled and the Warrants to be exercised (such opinion, the "Tax Opinion"). If, prior to the expiration of such 10-day period, the Company is able to obtain a Tax Opinion, the holder shall not have the right to pay the Warrant Price pursuant to the terms of Section 2(c) hereof in respect of such Tax Opinion Portion until the date of the third anniversary of the Date of Grant; and (iv) during the period commencing on (and including) the first anniversary of the Date of Grant and ending on (and excluding) the date of the third anniversary of the Date of Grant, if the Company is unable obtain the Tax Opinion pursuant to Section 2(d)(iii) above with 6 respect to a Tax Opinion Portion elected (or, in the case of a Deemed Election, deemed to have been elected pursuant to Section 2(b)) to be exercised by the holder (or the Company reasonably believes that it would be unable to obtain such Tax Opinion), then by written notice to the holder given not more than 3 Business Days following the later of: (x) receipt of notice of exercise from such holder by the Company in respect of such Tax Opinion Portion (or, in the case of a Deemed Election, from the Automatic Exercise Date ) or (y) if applicable, the expiration of the exercise delay period in respect of such Tax Opinion Portion pursuant to Section 2(d)(iii) above, the Company shall have the right to require the holder to exercise all or any portion of such Tax Opinion Portion by electing to pay the Warrant Price pursuant to the methods of exercise set forth in Section 2(a) hereof (and not pursuant to the terms of Section 2(c) hereof ) if, upon the exercise of such portion of the Warrants, the Company will pay such holder an additional amount (the "Grossed Up Taxes") in cash which, after reduction for all Taxes payable by such holder thereon, is equal to the difference between the Taxes that would be due from such holders on the exercise of the Warrants and the immediate sale of the resulting Warrant Shares at their fair market value if taxed as ordinary income and the Taxes that would be due on such exercise and sale if taxed at the applicable capital gains rate. (For purposes of computing the Grossed Up Taxes, it shall be assumed that the holder is an individual resident of New York City, taxed at the maximum marginal rate of Federal, state, and local income taxation). 3. Stock Fully Paid; Reservation of Shares. All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be validly issued, fully paid and nonassessable, and free from all taxes, liens, charges, pre-emptive rights and other encumbrances with respect to the issue thereof. The Company shall pay all transfer taxes, if any, attributable to the issuance of the Warrant Shares upon the exercise of this Warrant. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved, and free from preemptive rights, for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 4. Adjustment of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: (a) Adjustments for Dividends in Stock. If the Company at any time or from time to time while this Warrant, or any portion thereof, remains outstanding and unexpired declares any dividend, or authorizes any other distribution, upon any stock of the Company of any class, payable in Additional Shares of Common Stock (as defined in this Section 4(a)) (except for any distribution specifically provided for in Section 4(b), Section 4(c), or as set forth in Section 4(f)), then, and in each such case, (A) the aggregate number of Warrant Shares for which this Warrant is exercisable (the "Warrant Share Number") immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Company) so that the holder shall be entitled to receive upon exercise of this Warrant the number of shares of Common Stock of the Company that it would have owned or would have been entitled to receive upon or by reason of any of the events described above, had this Warrant been exercised immediately prior to the occurrence of such event and (B) the Warrant Price payable upon the exercise of this Warrant shall be adjusted pursuant to the following formula: 7 X = Y(A) ---- B Where: X = the Warrant Price, as adjusted pursuant to this formula Y = the Warrant Price in effect immediately prior to such adjustment A = the number of Warrant Shares issuable upon the exercise of this Warrant immediately prior to such adjustment B = the number of Warrant Shares issuable upon the exercise of this Warrant immediately after such adjustment An adjustment made pursuant to this Section 4(a) shall become effective retroactively to a date immediately following the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution. The term "Additional Shares of Common Stock" as used in this Warrant shall mean all shares of Capital Stock issued or issuable by the Company after the date of this Warrant, except for the Warrant Shares. For purposes of the foregoing, "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of such Person's capital stock and any and all rights, warrants or options exchangeable for or convertible into such capital stock. (b) Subdivision or Combination of Shares. If the Company at any time or from time to time while this Warrant, or any portion thereof, remains outstanding and unexpired shall (x) subdivide the outstanding shares of Common Stock into a larger number of shares, (y) combine the outstanding shares of Common Stock into a smaller number of shares or (z) issue any shares of its Capital Stock in a reclassification of the Common Stock (other than any such event for which an adjustment is made pursuant to another clause of this Section 4), then, and in each such case, (A) the Warrant Share Number immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Company) so that the holder shall be entitled to receive upon exercise of this Warrant the number of shares of Common Stock of the Company that it would have owned or would have been entitled to receive upon or by reason of any of the events described above, had this Warrant been exercised immediately prior to the occurrence of such event and (B) the Warrant Price payable upon the exercise of this Warrant shall be adjusted by multiplying such Warrant Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Warrant Shares issuable upon the exercise of this Warrant immediately prior to such adjustment, and the denominator of which shall be the number of Warrant Shares issuable immediately thereafter. An adjustment made pursuant to this Section 4(b) shall become effective retroactively to the close of business on the day upon which such corporate action becomes effective. (c) Certain Distributions. If the Company at any time while this Warrant, or any portion thereof, remains outstanding and unexpired shall declare a dividend or otherwise make a distribution to the holders of its Common Stock (other than dividends, distributions or issuances referred to in Section 4(a), Section 4(b), Section 4(d), Section 4(e), or Section 4(k)) in 8 the form of: (1) cash or other property; (2) any evidence of indebtedness, any shares of its capital stock or any other securities or property of any nature whatsoever (including securities of a subsidiary), or (3) any warrants or other rights to subscribe for or purchase any evidences of indebtedness, any shares of its capital stock, or any other securities or property of any nature whatsoever (including securities of a subsidiary), then the Warrant Price shall be reduced by multiplying the Warrant Price in effect immediately prior to the record date for such event by a fraction (a) the numerator of which shall be the Fair Market Value per share of Common Stock on such record date less the amount allocated to one share of Common Stock of any such cash so distributed and the Fair Market Value of any evidences of indebtedness, shares of capital stock, other securities or property, or warrants or other subscriptions or purchase rights so distributed, and (b) the denominator of which shall be such Fair Market Value per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Warrant Price shall again be adjusted to be the Warrant Price which would then be in effect if such record date had not been fixed, but such subsequent adjustment shall not affect the number of Warrant Shares issued upon any exercise of this Warrant prior to the date such subsequent adjustment was made. (d) Merger; Sale of Assets; Reclassification. If at any time while this Warrant, or any portion thereof, remains outstanding and unexpired there shall be (1) a reorganization or reclassification (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (2) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (3) a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, reclassification, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Warrant Price then in effect, the number of shares of stock or other securities or property of the successor corporation (or the Company, as applicable) resulting from such reorganization, reclassification, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, reclassification, merger, consolidation, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 4. The foregoing provisions of this Section 4(d) shall similarly apply to successive reorganizations, reclassification, mergers, consolidations, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in the manner set forth under Section 4(j). At the time of such event, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by the Board of Directors of the Company, with the consent of the holder in such instances where the rights of the holder are adversely affected in the reasonable opinion of the holder) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable. These adjustments shall be as nearly equivalent as practicable to the adjustments provided in this Section 4. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors, with the consent of the holder in such instances where the rights of 9 the holder are adversely affected in the reasonable opinion of the holder) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. In case any Additional Shares of Common Stock or evidence of indebtedness, shares of stock or other securities which are at any time, directly or indirectly, convertible into or exchangeable for Additional Shares of Common Stock or any rights or options to purchase any Additional Shares of Common Stock or convertible securities shall be issued in connection with any merger of another corporation into the Company (with the Company surviving such merger), the amount of consideration therefor shall be deemed to be the fair market value of such portion of the assets of such merged corporation as the Board of Directors of the Company shall in good faith determine to be attributable to such Additional Shares of Common Stock, convertible securities or rights or options, as the case may be, and the Warrant Price shall be adjusted in accordance with this Section 4. (e) Dissolution, Liquidation and Wind-Up. In case the Company shall, at any time prior to the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the holder of this Warrant shall be entitled, upon the exercise of this Warrant, to receive in lieu of the shares of Common Stock of the Company which such holder would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to such holder upon any such dissolution, liquidation or winding up with respect to such shares of Common Stock of the Company, had such holder been the holder of record of the Warrant Shares receivable upon the exercise of this Warrant on the record date for the determination of those persons entitled to receive any such liquidating distribution. After such dissolution, liquidation or winding up which shall result in any cash distribution in excess of the Warrant Price provided for by this Warrant, the holder of this Warrant may, at such holder's option, exercise the same without making payment of the Warrant Price, and in such case the Company shall, upon the distribution to the holder, consider that said Warrant Price has been paid in full to it and in making settlement to the holder, shall deduct from the amount payable to the holder of this Warrant an amount equal to such Warrant Price. (f) Issuances of Additional Securities. (i) Issuances of Common Stock. If and whenever after the Date of Grant, the Company issues or sells, or in accordance with Sections 4(f)(ii) and (iii) below, is deemed to have issued or sold, any share of Common Stock for a consideration per share less than (x) the Adjusted Fair Market Value (as defined in Section 4(j) below) of the Common Stock at such time or (y) the Warrant Price in effect immediately prior to such time (the greater of such amounts being referred to herein as the "Adjustment Multiplier"), then immediately upon such 10 issue or sale or deemed issue or sale, the Warrant Price shall be reduced to the amount computed using the following formula: X = Y * [(A*B)+C] --------- A*D Where: X = the Warrant Price, as adjusted pursuant to this formula Y = the Warrant Price in effect immediately prior to such issue or sale A = the Adjustment Multiplier B = the number of shares of Common Stock outstanding on a fully diluted basis immediately prior to such issue or sale C = the consideration, if any, received by the Company upon such issue or sale D = the number of shares of Common Stock outstanding on a fully diluted basis immediately after such issue or sale Subject to Section 4(l) hereof, upon each such adjustment of the Warrant Price hereunder, the number of shares of Common Stock acquirable upon the exercise of this Warrant shall be adjusted to the number of shares determined computed using the following formula: X = Y(A) ---- B Where: X = adjusted number of shares of Common Stock acquirable upon the exercise of this Warrant Y = the Warrant Price in effect immediately prior to being adjusted in accordance with the formula set forth in the immediately preceding paragraph A = the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to adjustment in accordance with this formula B = the Warrant Price as adjusted in accordance with the formula set forth in the immediately preceding paragraph Notwithstanding the foregoing, there shall be no adjustment to the Warrant Price or the number of shares of Common Stock obtainable upon the exercise of this Warrant with respect to the issuance or granting of options to directors, officers or employees of the Company or the exercise thereof pursuant to the Company's stock option plan approved by the Board of Directors of the Company, but only to the extent that the aggregate shares of Common Stock covered by 11 such option plan (excluding shares of Common Stock issuable upon the exercise of options outstanding on the date hereof and listed on Schedule 4.2(b) to the Purchase Agreement) do not exceed 1,200,000 shares (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect). (ii) Issuance of Rights or Options. For purposes of determining the adjusted Warrant Price under Section 4(f)(i) hereof, if the Company in any manner grants or sells any rights, warrants or options to subscribe for or purchase Convertible Securities (as defined below) or Common Stock (the "Options"), and the price per share for which Common Stock is issuable upon the exercise of such Options (or upon conversion or exchange of any stock or securities (directly or indirectly) convertible or exercisable into or exchangeable for Common Stock (the "Convertible Securities") issuable upon exercise of such Options) is less than the greater of (x) the Adjusted Fair Market Value of the Common Stock determined as of the time of the granting or sale of such Options or (y) the Warrant Price in effect immediately prior to such time, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options (or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options) shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total minimum amount, if any, received or receivable by the Company as consideration for the granting or sale of such Options, plus the aggregate minimum amount of additional consideration payable to the Company upon exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the aggregate minimum amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable at any time upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable at any time upon the exercise of such Options. No further adjustment of the Warrant Price or the number of shares of Common Stock issuable hereunder shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (iii) Issuance of Convertible Securities. For purposes of determining the adjusted Warrant Price under Section 4(f)(i), if the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the greater of (x) the Adjusted Fair Market Value of the Common Stock determined as of the time of such issue or sale or (y) the Warrant Price in effect immediately prior to such time, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) 12 the total maximum number of shares of Common Stock issuable at any time upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Warrant Price or the number of shares of Common Stock issuable hereunder shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Warrant Price or the number of shares of Common Stock issuable hereunder had been or are to be made pursuant to other provisions of this Section 4(f), no further adjustment of the Warrant Price or the number of shares of Common Stock issuable hereunder shall be made by reason of such issue or sale. (iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, any decrease in the Warrant Price or any increase in the number of shares of Common Stock for which this Warrant may be exercised, to the extent in any way affected by or computed using such expired or terminated Options or Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock actually issued (or deemed issued in accordance with Sections 4(f)(ii) and (iii) above, which have not expired or terminated) upon the exercise, conversion or exchange of such Options or Convertible Securities. Notwithstanding anything to the contrary set forth in the preceding sentence, no such adjustment to the Warrant Price or the number of shares of Common Stock for which this Warrant may be exercised shall be made to the extent that such adjustment would put the holder in a worse economic position than he or it would have been in, had such Option or Convertible Security never been issued. (v) Other Matters. If any Common Stock, Option or Convertible Security is issued or sold, or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor (net of discounts, commissions and related expenses). In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the consideration for the Option shall be the Fair Market Value thereof. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock. (g) Consideration Other than Cash. In case the Company at any time prior to the expiration of this Warrant shall issue or sell any shares of Common Stock or convertible securities or other common stock equivalents for a consideration other than cash, the amount of the consideration other than cash payable to the Company shall be deemed to be the fair value (as determined in accordance with Section 4(j) below) of such consideration. Whether or not the consideration so received is cash, the amount thereof shall be determined after deducting therefrom any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Company in connection therewith. (h) Record Date. In case at any time the Company shall fix a record date of the holders of its Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock or convertible securities or other common stock 13 equivalents or rights or options to purchase either thereof, or (2) to subscribe for or purchase Common Stock or convertible securities or other common stock equivalents or rights or options to purchase either thereof, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (i) [Intentionally Deleted.] (j) Maximum Warrant Price; Fair Market Value. The Warrant Price in effect at any time shall not be increased as a result of any event described in this Section 4, unless specifically indicated. Fair Market Value as of a particular date shall mean the average of the daily closing prices for the preceding thirty (30) trading days before the day in question. The closing price for each day shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System. If such quotations are unavailable, or with respect to other appropriate security, property, assets, business or entity, Fair Market Value shall be determined mutually by the Board of Directors and the holder or, if the Board of Directors and the holder shall fail to agree, at the Company's expense, by a firm of independent certified public accountants of recognized national standing (who have not been employed by the Company within the last five years) acceptable to the holder (an "Appraiser"). Any determination of the Fair Market Value by an Appraiser shall be based on a valuation of the Company as an entirety without regard to any discount for minority interests or disparate voting rights among classes of capital stock. The Adjusted Fair Market Value per share of a security shall be equal to the Fair Market Value of such security, less 10% of such Fair Market Value, and less the amount of reasonable and documented out-of-pocket fees and expenses, if any, incurred by the Company as a result of the issuance of the securities being evaluated, divided by the total number of securities so issued on a fully diluted basis, which amount of reasonable and documented fees and expenses so subtracted shall, for all purposes under this Warrant, be capped at 5% of such security's Fair Market Value. (k) Company to Prevent Dilution. The Company shall not, by amendment of its organizational documents, by entering into any contract, agreement or understanding with any third party or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the carrying out of all the provisions of this Section 4 with the tenor and purpose of such section. (l) Share Adjustment Limit. Notwithstanding anything to the contrary set forth in Section 4(f) hereof, the maximum number of additional shares of Common Stock acquirable upon the exercise of all warrants issued pursuant to the Purchase Agreement pursuant to the anti-dilution provisions set forth in Section 4(f) therein shall not exceed the Pre-Stockholder Approval Number (as defined in Section 4 (m)). Accordingly, the adjustment to the number of shares of Common Stock acquirable upon the exercise of all warrants issued pursuant 14 to the Purchase Agreement pursuant to the anti-dilution provisions set forth in Section 4(f) therein shall be made on a pro rata basis (based on the number of additional shares of Common Stock that would have been acquirable upon the exercise of each such warrant pursuant to the anti-dilution provisions set forth in Section 4(f) therein had the Adjustment Limit (as defined below) not been reached) among all such warrants entitled to such adjustment (at the time of such entitlement) until the Adjustment Limit is reached. Once a number of shares of Common Stock equal to the Pre-Stockholder Approval Number is issued pursuant to the anti-dilution provisions set forth in Section 4(f) of the warrants issued pursuant to the Purchase Agreement upon the exercise thereof, no additional shares of Common Stock may be issued upon the exercise of any such warrant issued pursuant to the Purchase Agreement pursuant to the anti-dilution provisions set forth in Section 4(f) therein (such limitation, the "Adjustment Limit"). Any share of Common Stock issued pursuant to any warrant issued pursuant to the Purchase Agreement in excess of the Adjustment Limit shall automatically be deemed cancelled. The Adjustment Limit shall act merely to limit the number of additional shares of Common Stock issuable upon the exercise of the Warrants after giving effect to the provisions set forth in Section 4(f) therein, and not to restrict any adjustments to the Warrant Price pursuant to this Warrant, and shall not affect any matter other than the exercise of the Warrants into shares of Common Stock. In addition, once the Adjustment Limit has been reached, upon (and in addition) to each adjustment of the Warrant Price pursuant to Section 4(f) hereof (the Warrant Price as so adjusted, the "Initially Adjusted Price"), the Warrant Price per share of Common Stock shall be further adjusted to the amount computed using the following formula (the Warrant Price as so further adjusted, the "Further Adjusted Price"): X = Y-( A ) ----- B Where: X = the Further Adjusted Price Y = the Initially Adjusted Price A = the Adjusted Fair Market Value (as of the date of issue or sale, or deemed issue or sale, of securities by the Company that triggered the anti-dilution adjustments pursuant to Section 4(f) hereof) of the additional number of shares of Common Stock that would have been issuable upon the exercise of this Warrant pursuant to Section 4(f), but became non-issuable pursuant to this Section 4(l) because the Adjustment Limit has been reached B = the total number of Shares of Common Stock acquirable upon the exercise of this Warrant on an "as fully exercised basis" at the time of such adjustment (giving effect to the Adjustment Limit) (m) Pre-Stockholder Approval Number. For purposes of this Warrant, "Pre-Stockholder Approval Number" shall equal to 438,599 shares of Common Stock (subject to adjustment to reflect stock splits, stock dividends, stock combinations, recapitalizations and like occurrences). 15 5. Notice of Adjustments. Whenever the Warrant Price or the number of Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and the number of Warrant Shares purchasable hereunder after giving effect to such adjustment, which shall be mailed, by first class mail, postage prepaid to the holder of this Warrant. 6. Fractional Shares. No fractional shares of Common Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor based on the Fair Market Value of a share of Common Stock on the date of exercise. 7. Transfer of Warrant. (a) Warrant Register. The Company will maintain a register (the "Warrant Register") containing the names and addresses of the holder or holders of the Warrants. Any holder of this Warrant, or any portion thereof may change his or her address as shown on the Warrant Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the holder may be delivered or given by mail to such holder as shown on the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary. (b) Warrant Agent. The Company may, by written notice to the holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or any or all of the foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent. (c) Transferability and Nonnegotiability of Warrant. This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee. Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the "Securities Act"), title to this Warrant may be transferred by endorsement (by the holder executing the Assignment Form attached hereto as Exhibit B) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery. (d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Securities Act and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the holder a new warrant or warrants of like tenor, in the name of the holder or as the holder may direct, for the number of shares issuable upon exercise hereof. 16 (e) Compliance with Securities Laws. (1) The holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Common Stock to be issued upon exercise hereof or conversion thereof are being acquired solely for the holder's own account and not as a nominee for any other party, and for investment, and that the holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof or conversion thereof except under circumstances that will not result in a violation of the Securities Act or any state securities laws. (2) The Warrant Shares and any other securities issued upon exercise hereof or conversion thereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws): "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR WITH ANY SECURITIES COMMISSION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT." 8. Replacement of Warrants or Stock Certificates. The Company covenants to the holder hereof that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any loss, theft or destruction, upon receipt of an executed lost securities bond or indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 17 9. Rights as Stockholders; Information. No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of the directors or upon any matter submitted to stockholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise, until this Warrant shall have been exercised and the Warrant Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. The foregoing notwithstanding, the Company will transmit to the holder of this Warrant such information, documents and reports as are generally distributed to the holders of any class or series of the securities of the Company concurrently with the distribution thereof to the stockholders. (a) Registration. Holders of the Warrant Shares shall have the registration rights set forth in the Registration Agreement, including, without limitation, the right to require the Company into maintain the effectiveness of the Shelf Registration Statement covering the Warrant Shares until such time as all the Warrant Shares have been sold. 10. Special Agreements of the Company. (a) Reservation of Shares. The Company covenants and agrees that all Warrant Shares will, upon issuance, be validly issued, fully paid and non-assessable and free from all preemptive rights of any shareholder, and from all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Company hereby covenants and agrees to take all such action as may be necessary to assure that the par value per share of the Common Stock is at all times equal to or less than the Warrant Price. (b) Avoidance of Certain Actions. The Company will not, by amendment of its articles of incorporation, certificate of incorporation or any other charter document through any reorganization, transfer of assets, consolidation, merger, issue or sale of securities or otherwise, avoid or take any action which would have the effect of avoiding the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in carrying out all of the provisions of this Warrant and in taking all of such action as may be necessary or appropriate in order to protect the rights of the holders against dilution or other impairment of their rights hereunder. (c) Securing Governmental Approvals. (i) If any shares of Common Stock required to be reserved for the purposes of exercise of this Warrant require registration with or approval of any governmental authority under any federal law (other than the Securities Act) or under any state law before such shares may be issued upon exercise of this Warrant, the Company will, at its expense, as expeditiously as possible, cause such shares to be duly registered or approved, as the case may be. 18 (ii) If APPROVALS OF, OR FILINGS OR REGISTRATIONS WITH, THE FEDERAL TRADE COMMISSION AND DEPARTMENT OF JUSTICE PURSUANT TO THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED ("HSR") ARE REQUIRED UNDER APPLICABLE LAW BEFORE CERTAIN SHARES OF COMMON STOCK may be issued upon exercise of this Warrant, AND THE HOLDER DESIRES TO EXERCISE THIS WARRANT FOR SUCH SHARES, THEN, THE COMPANY SHALL: (X) WITHIN 10 BUSINESS DAYS OF RECEIPT OF NOTICE OF EXERCISE FOR SUCH SHARES FROM SUCH HOLDER, PREPARE AND MAKE ALL FILINGS REQUIRED TO BE MADE BY THE COMPANY PURSUANT TO THE NOTIFICATION AND REPORTING OBLIGATIONS OF HSR AND (Y) USE ITS BEST EFFORTS TO AS PROMPTLY AS POSSIBLE TAKE, OR CAUSE TO BE TAKEN, AND COOPERATE WITH SUCH HOLDER TO TAKE, ALL OTHER ACTIONS AND DO, OR CAUSE TO BE DONE, ALL THINGS NECESSARY, PROPER OR APPROPRIATE UNDER APPLICABLE LAWS AND REGULATIONS TO CONSUMMATE AND MAKE EFFECTIVE THE EXERCISE OF THIS WARRANT FOR SUCH SHARES. THE COMPANY SHALL PAY THE FILING FEES ASSOCIATED WITH THE FILINGS UNDER HSR. (d) Listing on Securities Exchanges; Registration. If, and so long as, any class of the Company's Common Stock shall be listed on any national securities exchange (as defined in the Exchange Act) or NASDAQ, the Company will, at its expense, obtain and maintain the approval for listing upon official notice of issuance of all Warrant Shares and maintain the listing of Warrant Shares after their issuance; and the Company will so list on such national securities exchange or NASDAQ, will register under the Exchange Act (or any similar statute then in effect), and will maintain such listing of, any other securities that at any time are issuable upon exercise of this Warrant if and at the time any securities of the same class shall be listed on such national securities exchange or NASDAQ by the Company. (e) Compliance with Law. The Company shall comply with all applicable laws, rules and regulations of the United States and of all states, municipalities and agencies and of any other jurisdiction applicable to the Company and shall do all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and authority necessary to continue its business. (f) Notices of Stock Dividends, Subscriptions, Reclassifications, Consolidations, Mergers, etc. If at any time: (1) the Company shall declare a cash dividend (or an increase in the then existing dividend rate), or declare a dividend on Common Stock payable otherwise than in cash out of its net earnings after taxes for the prior fiscal year; or (2) the Company shall authorize the granting to the holders of Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (3) there shall be any capital reorganization, or reclassification, or redemption of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or firm; or (4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then the Company shall give to the holders at the addresses of such holders as shown on the books of the Company, at least twenty (20) days prior to the applicable record date hereinafter specified, a written notice summarizing such action or event and stating the record date for any such dividend or rights (or, if a record date is not to be selected, the date as of which the holders of Common Stock of record entitled to such dividend or rights are to be determined), the date on which any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected the holders of Common Stock of record shall be entitled to effect any exchange of their shares of Common Stock for cash (or cash 19 equivalent), securities or other property deliverable upon any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up. 11. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 12. Notices. Unless otherwise specifically provided herein, all communications under this Warrant shall be in writing and shall be deemed to have been duly given if given in accordance with Section 12.3 of the Purchase Agreement. 13. Governing Law. It is the intention of the parties that the internal substantive laws, and not the laws of conflicts, of Delaware should govern the enforceability and validity of this Warrant, the construction of its terms and the interpretation of the rights and duties of the parties. 14. Acceptance. Receipt of this Warrant by the holder hereof shalL constitute acceptance of and agreement to the foregoing terms and conditions. [Signature page follows.] 20 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized. CARDIAC SCIENCE, INC. By: Name: Title: Address: Dated: as of March 16, 2004 EX-99 6 ex8sc13da1-cardiac.txt EXHIBIT 8 EXHIBIT 8 --------- POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that I, FRANK H. PEARL, hereby make, constitute and appoint RODD MACKLIN as my agent and attorney-in-fact for the purpose of executing in my name, (a) in my personal capacity or (b) in my capacity as Chairman of, member of or in other capacities with Perseus LLC ("Perseus") and each of its affiliates or entities advised by me or Perseus, all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities, futures contracts, or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the Commodities Futures Trading Commission and National Futures Association, the United States Securities and Exchange Commission (the "SEC") pursuant to the Commodities Exchange Act and the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act and information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. All past acts of the attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. This power of attorney shall be valid from the date hereof until revoked by me. IN WITNESS WHEREOF, I have executed this instrument as of the 9th day of April, 2003. /s/ Frank H. Pearl --------------------------- FRANK H. PEARL -----END PRIVACY-ENHANCED MESSAGE-----