**“Eligible Compensation”**means all W-2 earnings (e.g. wages, tips, overtime pay, bonuses andcommissions, as included on IRS Form W-2) and such amounts of gross earnings as are deferred by anEligible Employee (a) under a qualified cash or deferred arrangement described in Section 401(k) ofthe Code or (b) to a plan qualified under Section 125 of the Code. Eligible Compensation does notinclude taxable fringe benefits, reimbursement or other expense allowances, moving expenses,welfare benefits, deferred compensation (other than deferred amounts noted above), gain from stockoption exercises or any other special payments.     **“Eligible Employee”**means any employee of the Company or a Designated Subsidiary who is in theemploy of the Company or any Designated Subsidiary on one or more Offering Dates and who meets thefollowing criteria:     (a) the employee does not, immediately after the Option is granted, own stock (as defined bythe Code) possessing 5% or more of the total combined voting power or value of all classes of stockof the Company or of a Parent or Subsidiary Corporation;     (b) the employee’s customary employment is for 20 hours or more per week or any lesser numberof hours established by the Plan Administrator for a future Offering Period;     (c) if specified by the Plan Administrator for a future Offering Period, the employeecustomarily works a minimum of five months per year or any lesser number of months established bythe Plan Administrator; and     (d) if specified by the Plan Administrator for a future Offering Period, the employee has beenemployed for a minimum of one year as of an Offering Period or any lesser or greater minimumemployment period not to exceed two years that is established by the Plan Administrator for afuture Offering Period.If the Company permits any employee of a Designated Subsidiary to participate in the Plan, then allemployees of that Designated Subsidiary who meet the requirements of this paragraph shall also beconsidered Eligible Employees.  **“Enrollment Period”**has the meaning set forth in Section 7.1.     **“ESPP Broker”**has the meaning set forth in Section 10.1.     **“Fair Market Value”**shall be as established in good faith by the Plan Administrator or (a) ifthe Common Stock is listed on the Nasdaq National Market, the closing sales price for the CommonStock as reported by that market for regular session trading on the Offering Date or the PurchaseDate, as applicable, unless the Plan Administrator determines otherwise for a future OfferingPeriod or (b) if the Common Stock is listed on the New York Stock Exchange or the American StockExchange, the closing sales price for the Common Stock as such price is officially quoted in thecomposite tape of transactions on such exchange for regular session trading on the Offering Date orthe Purchase Date, as applicable, unless thePlan Administrator determines otherwise for a future Offering Period. If there is no such
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reported price for the Common Stock for the date in question, then such price on the last precedingdate for which such price exists shall be determinative of Fair Market Value.     **“Offering Period”**has the meaning set forth in Section 5.1.     **“Offering Date”**means the first day of an Offering Period.     **“Option”**means an option granted under the Plan to an Eligible Employee to purchase shares ofCommon Stock.     **“Parent Corporation”**means any corporation, other than the Company, in an unbroken chain ofcorporations ending with the Company, if, at the time of the granting of the Option, each of thecorporations, other than the Company, owns stock possessing 50% or more of the total combinedvoting power of all classes of stock in one of the other corporations in such chain.     **“Participant”**means any Eligible Employee who has elected to participate in an Offering Periodin accordance with the procedures set forth in Section 7 and who has not withdrawn from the Plan orwhose participation in the Plan is not otherwise terminated.     **“Plan”**means the Cardiac Science Corporation 2002 Employee Stock Purchase Plan, as it may beamended from time to time.     **“Plan Administrator”**has the meaning set forth in Section 3.1.     **“Purchase Date”**means the last day of each Purchase Period.     **“Purchase Period”**has the meaning set forth in Section 5.2.     **“Purchase Price”**has the meaning set forth in Section 6.     **“Related Party Transaction”**means (a) a merger or consolidation of the Company in which theholders of the outstanding voting securities of the Company immediately prior to the merger orconsolidation hold at least a majority of the outstanding voting securities of a successor company(as defined in Section 20.3) immediately after the merger or consolidation; (b) a sale, lease,exchange or other transfer of the Company’s assets to a majority-owned subsidiary company; (c) atransaction undertaken for the principal purpose of restructuring the capital of the Company,including but not limited to, reincorporating the Company in a different jurisdiction or creating aholding company; or (d) a corporate dissolution or liquidation.     **“Securities Act”**means the Securities Act of 1933, as amended.     **“Subscription”**has the meaning set forth in Section 7.1.     **“Subsidiary Corporation”**means any corporation, other than the Company, in an unbroken chainof corporations beginning with the Company, if, at the time of the granting of
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the Option, each ofthe corporations, other than the last corporation in the unbroken chain, owns stock possessing 50%or more of the total combined voting power of all classes of stock in one of the other corporationsin such chain.**SECTION 3. ADMINISTRATION****3.1 Plan Administrator**     The Plan shall be administered by the Board or the Committee or, if and to the extent theBoard or the Committee designates an executive officer of the Company to administer the Plan, bysuch executive officer (each, the “Plan Administrator”). Any decisions made by the PlanAdministrator shall be applicable equally to all Eligible Employees.**3.2 Administration and Interpretation by the Plan Administrator**     Subject to the provisions of the Plan, the Plan Administrator shall have the authority, in itssole discretion, to determine all matters relating to Options granted under the Plan, including allterms, conditions, restrictions and limitations of Options; provided, however, that allParticipants granted Options pursuant to the Plan shall have the same rights and privileges withinthe meaning of Code Section 423. The Plan Administrator shall also have exclusive authority tointerpret the Plan and may from time to time adopt, and change, rules and regulations of generalapplication for the Plan’s administration. The Plan Administrator’s interpretation of the Plan andits rules and regulations, and all actions taken and determinations made by the Plan Administratorpursuant to the Plan, unless reserved to the Board or the Committee, shall be conclusive andbinding on all parties involved or affected. The Plan Administrator may delegate administrativeduties to such of the Company’s other officers or employees as the Plan Administrator sodetermines.**SECTION 4. STOCK SUBJECT TO PLAN**     Subject to adjustment from time to time as provided in Section 20.1, the maximum number ofshares of Common Stock that shall be available for issuance under the Plan shall be:     (a) 175,419 shares, plus     (b) an annual increase to be added as of the first day of the Company’s fiscal year equal tothe least of (i) 175,419 shares and (ii) 2% of the outstanding shares of Common Stock of theCompany as of the end of the Company’s immediately preceding fiscal year on a fully diluted basis(assuming exercise of all outstanding options and warrants and conversion of all outstandingconvertible securities) and (iii) a lesser amount determined by the Board; provided, however, thatany shares from any increases in previous years that are not actually issued shall continue to beadded to the aggregate number of shares available for issuance under the Plan.     Shares issued under the Plan shall be drawn from authorized and unissued shares or sharessubsequently acquired by the Company as treasury shares.
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**SECTION 5. OFFERING AND PURCHASE PERIODS****5.1 Offering Periods**     (a) Except as otherwise set forth below, the Plan shall be implemented pursuant to twelvemonth offering periods (an “Offering Period”). Each Offering Period shall commence on December 1of each year and shall end on the following November 30.     (b) Notwithstanding the foregoing, the Plan Administrator may establish (i) a different termfor one or more future Offering Periods and (ii) different commencing and ending dates for suchfuture Offering Periods; provided, however, that an Offering Period may not exceed five years; andprovided, further, that if the Purchase Price may be less than 85% of the Fair Market Value of theCommon Stock on the Purchase Date, the Offering Period may not exceed 27 months.     (c) In the event the first or the last day of an Offering Period is not a regular businessday, then the first day of the Offering Period shall be deemed to be the next regular business dayand the last day of the Offering Period shall be deemed to be the last preceding regular businessday.**5.2 Purchase Periods**     (a) Each Offering Period shall consist of four consecutive purchase periods of three months’duration (each, a “Purchase Period”). The last day of each Purchase Period shall be the PurchaseDate for such Purchase Period. Except as otherwise set forth below, a Purchase Period shallcommence on December 1, March 1, June 1 and September 1 of each year and shall end three monthslater on the next February 28, May 31, August 31, and November 30 respectively, occurringthereafter.     (b) Notwithstanding the foregoing, the Plan Administrator may establish for a future OfferingPeriod (i) a different term for the initial Purchase Period or for one or more future PurchasePeriods and (ii) different commencing and ending dates for any such Purchase Period.     (c) In the event the first or last day of a Purchase Period is not a regular business day,then the first day of the Purchase Period shall be deemed to be the next regular business day andthe last day of the Purchase Period shall be deemed to be the last preceding regular business day.**5.3 Governmental Approval; Shareholder Approval**     Notwithstanding any other provision of the Plan to the contrary, an Option granted pursuant tothe Plan shall be subject to (a) obtaining all necessary governmental approvals and qualificationsfor the Plan and (b) obtaining shareholder approval of the Plan.
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**SECTION 6. PURCHASE PRICE**     (a) The purchase price (the “Purchase Price”) at which Common Stock may be acquired in anOffering Period pursuant to the exercise of all or any portion of an Option shall be 85% of thelesser of (i) the Fair Market Value of the Common Stock on the Offering Date of such OfferingPeriod and (ii) the Fair Market Value of the Common Stock on the Purchase Date.     (b) Notwithstanding the foregoing, if an increase in the number of shares authorized forissuance under the Plan (other than an annual increase pursuant to Section 4) is approved and allor a portion of such additional shares are to be issued during one or more Offering Periods thatare underway at the time of shareholder approval of such increase (the “Additional Shares”), then,if as of the date of such shareholder approval, the Fair Market Value of a share of Common Stock ishigher than the Fair Market Value on the Offering Date for any such Offering Period, the PurchasePrice for the Additional Shares shall be 85% of the lesser of (i) the Common Stock’s Fair MarketValue on the date of such shareholder approval and (ii) the Fair Market Value of the Common Stockon the Purchase Date.**SECTION 7. PARTICIPATION IN THE PLAN****7.1 Initial Participation**     An Eligible Employee shall become a Participant on the first Offering Date after satisfyingthe eligibility requirements and delivering to the Plan Administrator during the enrollment periodestablished by the Plan Administrator (the “Enrollment Period”) a subscription (the“Subscription”):     (a) indicating the Eligible Employee’s election to participate in the Plan;     (b) authorizing payroll deductions and stating the amount to be deducted regularly from theParticipant’s Eligible Compensation; and     (c) authorizing the purchase of Common Stock for the Participant in each Purchase Period.     An Eligible Employee who does not deliver a Subscription as provided above during theEnrollment Period shall not participate in the Plan for that Offering Period or for any subsequentOffering Period unless such Eligible Employee subsequently enrolls in the Plan by filing aSubscription with the Company during the Enrollment Period for such subsequent Offering Period.The Company may, from time to time, change the Enrollment Period for afuture Offering Period as deemed advisable by the Plan Administrator, in its sole discretion,for the proper administration of the Plan.     An employee who becomes eligible to participate in the Plan after an Offering Period hascommenced shall not be eligible to participate in such Offering Period but may participate in anysubsequent Offering Period, provided that such employee is still an
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Eligible Employee as of thecommencement of any such subsequent Offering Period. Eligible Employees may not participate inmore than one Offering Period at a time.**7.2 Continued Participation**     A Participant shall automatically participate in the next Offering Period until such time assuch Participant withdraws from the Plan pursuant to Section 11.3 or terminates employment asprovided in Section 13.**SECTION 8. LIMITATIONS ON RIGHT TO PURCHASE SHARES****8.1 Number of Shares Purchased**     (a) No Participant shall be entitled to purchase Common Stock under the Plan (or any otheremployee stock purchase plan that is intended to meet the requirements of Code Section 423sponsored by the Company, a Parent Corporation or a Subsidiary Corporation) with a Fair MarketValue exceeding $25,000 (such value determined as of the Offering Date for each Offering Period orsuch other limit as may be imposed by the Code) in any calendar year in which a Participantparticipates in the Plan (or any other employee stock purchase plan described in this Section 8.1).     (b) No Participant shall be entitled to purchase more than 525 shares of stock (or such othernumber as the Plan Administrator shall specify for a future Offering Period) under the Plan in anyPurchase Period.     (c) For a future Offering Period, the Board or the Committee may specify a different maximumnumber of shares that may be purchased by any Participant, as well as a maximum aggregate number ofshares that may be purchased by all Participants, pursuant to such Offering Period.**8.2 Pro Rata Allocation**     In the event the number of shares of Common Stock that might be purchased by all Participantsexceeds the number of shares of Common Stock available in the Plan, in a Purchase Period or in anOffering Period, the Plan Administrator shall make a pro rata allocation of the remaining shares ofCommon Stock in as uniform a manner as shall be practicable and as the Plan Administrator shalldetermine to be equitable. Fractional shares may not be issued under the Plan unless the PlanAdministrator determines otherwise for a future Offering Period.**SECTION 9. PAYMENT OF PURCHASE PRICE****9.1 General Rules**     Subject to Section 7.2 and Section 9.11, Common Stock that is acquired pursuant to theexercise of all or any portion of an Option may be paid for only by means of payroll deductionsfrom the Participant’s Eligible Compensation. Except as set forth in this
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Section 9, the amount ofcompensation to be withheld from a Participant’s Eligible Compensation during each pay period shallbe determined by the Participant’s Subscription.**9.2 Percent Withheld**     The amount of payroll withholding for each Participant for purchases pursuant to the Planduring any pay period shall be at least 1% but shall not exceed 15% of the Participant’s EligibleCompensation for such pay period (or such other higher percentage as the Plan Administrator mayestablish from time to time for a future Offering Period). Amounts shall be withheld in wholepercentages only.**9.3 Payroll Deductions**     Payroll deductions shall commence on the first payday following the Offering Date and shallcontinue through the last payday of the Offering Period unless sooner altered or terminated asprovided in the Plan.**9.4 Memorandum Accounts**     Individual accounts shall be maintained for each Participant for memorandum purposes only.All payroll deductions from a Participant’s compensation shall be credited to such account butshall be deposited with the general funds of the Company. All payroll deductions received or heldby the Company may be used by the Company for any corporate purpose.**9.5 No Interest**     No interest shall be paid on payroll deductions received or held by the Company.**9.6 Acquisition of Common Stock**     On each Purchase Date of an Offering Period, each Participant shall automatically acquire,pursuant to the exercise of the Participant’s Option, the number of shares of Common Stock arrivedat by dividing the total amount of the Participant’s accumulated payroll deductions for thePurchase Period by the Purchase Price; provided, however, that the number of shares of Common Stockpurchased by the Participant shall not exceed the number of whole shares of Common Stock sodetermined, unless the Plan Administrator has determined for a future Offering Period thatfractional shares may be issued under the Plan; and provided, further, that the number of shares ofCommon Stock purchased by theParticipant shall not exceed the number of shares for which Options have been granted to theParticipant pursuant to Section 8.1.**9.7 Refund of Excess Amounts**     Any cash balance remaining in the Participant’s account at the termination of a PurchasePeriod that is not sufficient to purchase a whole share of Common Stock shall be applied to thepurchase of Common Stock in the next Purchase Period, provided the
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Participant participates in thenext Purchase Period and the purchase complies with Section 8.1. All other amounts remaining in aParticipant’s account after a Purchase Date shall be refunded to the Participant as soon aspractical after the Purchase Date without the payment of any interest.**9.8 Withholding Obligations**     At the time the Option is exercised, in whole or in part, or at the time some or all theCommon Stock is disposed of, the Participant shall make adequate provision for local, state,federal and foreign withholding obligations of the Company, if any, that arise upon exercise of theOption or upon disposition of the Common Stock. The Company may withhold from the Participant’scompensation the amount necessary to meet such withholding obligations.**9.9 Termination of Participation**     No Common Stock shall be purchased on behalf of a Participant on a Purchase Date if his or herparticipation in a current Offering Period or the Plan has terminated on or before such PurchaseDate or if the Participant has otherwise terminated employment prior to a Purchase Date.**9.10 Procedural Matters**     The Company may, from time to time, establish (a) limitations on the frequency and/or numberof any permitted changes in the amount withheld during an Offering Period, as set forth in Section11.1, (b) an exchange ratio applicable to amounts withheld in a currency other than U.S. dollars,(c) payroll withholding in excess of the amount designated by a Participant in order to adjust fordelays or mistakes in the Company’s processing of properly completed withholding elections, and (d)such other limitations or procedures as deemed advisable by the Company in the Company’s solediscretion that are consistent with the Plan and in accordance with the requirements of CodeSection 423.**9.11 Leaves of Absence**     During unpaid leaves of absence approved by the Company and meeting the requirements of theapplicable treasury regulations promulgated under the Code, a Participant may elect to continueparticipation in the Plan by delivering cash payments to the Company on the Participant’s normalpaydays equal to the amount of his or her payroll deduction under the Plan had the Participant nottaken a leave of absence. Such cash payments will be basedupon the Participant’s base salary immediately before the leave of absence. Currently, thetreasury regulations provide that a Participant may continue participation in the Plan only duringthe first 90 days of a leave of absence unless the Participant’s reemployment rights are guaranteedby statute or contract.
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**SECTION 10. COMMON STOCK PURCHASED UNDER THE PLAN****10.1 ESPP Broker**     If the Plan Administrator designates or approves a stock brokerage or other financial servicesfirm (the “ESPP Broker”) to hold shares purchased under the Plan for the accounts of Participants,the following procedures shall apply. Promptly following each Purchase Date, the number of sharesof Common Stock purchased by each Participant shall be deposited into an account established in theParticipant’s name with the ESPP Broker. Each Participant shall be the beneficial owner of theCommon Stock purchased under the Plan and shall have all rights of beneficial ownership in suchCommon Stock. A Participant shall be free to undertake a disposition of the shares of Common Stockin his or her account at any time, but, in the absence of such a disposition, the shares of CommonStock must remain in the Participant’s account at the ESPP Broker until the holding period setforth in Code Section 423 has been satisfied. With respect to shares of Common Stock for which theholding period set forth above has been satisfied, the Participant may move those shares of CommonStock to another brokerage account of the Participant’s choosing or request that a stockcertificate be issued and delivered to him or her. Dividends paid in the form of shares of CommonStock with respect to Common Stock in a Participant’s account shall be credited to such account. AParticipant who is not subject to payment of U.S. income taxes may move his or her shares of CommonStock to another brokerage account of his or her choosing or request that a stock certificate bedelivered to him or her at any time, without regard to the Code Section 423 holding period.**10.2 Notice of Disposition**     By entering the Plan, each Participant agrees to promptly give the Company notice of anyCommon Stock disposed of within the later of one year from the Purchase Date and two years from theOffering Date for such Common Stock, showing the number of such shares disposed of and the PurchaseDate and Offering Date for such Common Stock. This notice shall not be required if and so long asthe Company has a designated ESPP Broker.**SECTION 11. CHANGES IN WITHHOLDING AMOUNTS AND**