Form Of Escrow Agreement

Exhibit 10.18
ESCROW AGREEMENT


THIS ESCROW AGREEMENT (this "Agreement"), dated as of ___________ __, 2001, is made and entered into by and among Cardiac Science, Inc., a Delaware corporation ("Parent"), a committee consisting of a representative of U.S. Trust, a representative of Fidelity Investments and Mark Wagner ("Shareholders' Representative") and [Bank] (the "Escrow Agent").


WHEREAS, pursuant to a First Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 5, 2001, by and among Parent, Cardiac Science Acquisition Corp., a Minnesota corporation ("Merger Sub"), and Survivalink Corporation, a Minnesota corporation (the "Company"), the Company shall be merged with and into Merger Sub. Capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed to them in the Merger Agreement.


WHEREAS, pursuant to the Merger Agreement, the Company Outstanding Shares will be cancelled and coverted into the right to receive from Parent the Total Merger Consideration, payable in cash, Parent Common Stock and Parent Notes, as described in the Merger Agreement.


WHEREAS, pursuant to section 2.4 of the Merger Agreement, at the Effective Time of the Merger, Parent shall deposit an amount equal to 5% of Total Merger Consideration payable to the holders of the Company Outstanding Shares (the "Shareholders") in an escrow account with the Escrow Agent.


WHEREAS, the obligations of Parent, Merger Sub and the Company to consummate the Merger are contingent, among other things, upon the execution and delivery of this Agreement.


WHEREAS, the Escrow Agent is willing to act as escrow agent on the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained in this Agreement and in the Merger Agreement, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Parent, Shareholders' Representative and the Escrow Agent agree as follows:


1. Designation of Escrow Agent and Amount of Escrow Fund. The Escrow Agent
----------------------------------------------------- is hereby appointed escrow agent to hold and dispose of the escrow amount provided for in Section 2.4 of the Merger Agreement in accordance with the terms and conditions set forth in this Agreement, and the Escrow Agent accepts such designation and agrees to hold and dispose of such escrow amount in accordance with the provisions of this Agreement. Concurrently with the execution of this Agreement, Parent will deposit with the Escrow Agent $_______ face value of Parent Notes (the "Escrow Notes") and ________ shares of Common Stock (the "Escrow Shares" and, together with the Escrow Notes, the "Escrow Fund") The Escrow Notes and Escrow Shares shall be in the form of duly authorized stock certificates and notes dated the Effective Date issued in the names of each of the Shareholders (as set forth in Annex A), such amount being a portion of the Total Merger Consideration payable to the Shareholders by Parent pursuant to the Merger Agreement. The Escrow Agent hereby acknowledges receipt of the Escrow Fund.


2. Escrow Share and Escrow Note Matters.
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(a) Dividends, Voting and Rights of Ownership. Except for tax-free
----------------------------------------- dividends paid in stock declared with respect to the Escrow Shares pursuant to Section 305(a) of the Code ("Additional Escrow Shares"), any cash dividends, dividends payable in securities or other distributions of any kind made in respect of the Escrow Shares will be distributed currently by Parent to the Shareholders. The Shareholders will have the right to vote the Escrow Shares deposited in its Escrow Account so long as such Escrow Shares are held in escrow, and Parent will take all reasonable steps necessary to allow the exercise of such rights. While the Escrow Shares remain in the Escrow Agent's possession pursuant to this Agreement, the Shareholders will retain and will be able to exercise all other incidents of ownership of said Escrow Shares that are not inconsistent with the terms and conditions hereof.


(b) No Encumbrance. No Escrow Shares or Escrow Notes or any beneficial
-------------- interest therein may be pledged, sold, assigned or transferred, including by operation of law, by the Shareholders or be taken or reached by any legal or equitable process in satisfaction of any debt or other liability of the Shareholders, prior to the delivery to the Shareholders of the Escrow Shares or Escrow Notes by the Escrow Agent.


(c) Power to Transfer Escrow Shares and Escrow Notes. The Escrow Agent is
------------------------------------------------- hereby granted the power to effect any transfer or cancellation of Escrow Shares or Escrow Notes contemplated by this Agreement. Parent and its transfer agent will cooperate with the Escrow Agent in promptly issuing stock certificates to effect such transfers of Escrow Shares.


3. Escrow Fund Claim and Disbursement Procedures.
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(a) Initiation of Claim Procedure for Indemnification or Reimbursement. In
------------------------------------------------------------------ the event Parent or any of its affiliates, officers, directors, employees, agents, successors or assigns (a "Claimant") proposes to make any claim under the Merger Agreement for which the Escrow Fund is available to indemnify such Claimant, it shall assert such claim in the form of a certificate signed by the Claimant ("Officer's Certificate") delivered to the Escrow Agent (with a duplicate copy thereof being delivered concurrently to Shareholders' Representative). The Escrow Agent shall promptly send a copy of the Officer's Certificate to Shareholders' Representative after receipt of the same from the Claimant. The Officer's Certificate shall specify in reasonable detail the nature, the basis, and the amount or estimated amount of the Claimant's claim.


(b) Shareholders' Representative Objection. Shareholders' Representative
-------------------------------------- shall have thirty (30) days after receipt of any Officer's Certificate in which to object in writing to the claim or claims made by the Claimant in the Officer's Certificate, which written objection (the "Objection Notice") shall state, in reasonable detail, the basis for the Shareholders' Representative's objection. In the event the Escrow Agent does not receive an Objection Notice within such thirty (30) day period, the Escrow Agent shall make distributions to the Claimant in accordance with Section 3(d) of this Agreement. However, no such distribution shall be made with respect to those matters specified in the Objection Notice delivered within such thirty (30) day period. A duplicate copy of the Objection Notice shall be delivered to the Claimant at the same time it is delivered to the Escrow Agent.


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(c) Negotiated Settlement of Claims. In the event that Shareholders'
------------------------------- Representative timely delivers an Objection Notice with respect to any claim or claims made in an Officer's Certificate, Shareholders' Representative and the Claimant's duly authorized representatives shall, within the sixty (60) day period beginning as of the date of the receipt by the Claimant of the Objection Notice or such extended period as Claimant and Shareholders' Representative shall mutually agree upon in writing, attempt in good faith to agree upon the proper resolution of each of such claims. If the parties should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum to make distributions from the Escrow Fund in accordance with the terms of such memorandum and Section 3(d) of this Agreement. Escrow Agen ...