NOTICE OF 2013 ANNUAL MEETING OF STOCKHOLDERS
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TIME AND DATE
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8:30 a.m., Eastern Time, July 25, 2013
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PLACE
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Philadelphia Marriott West
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111 Crawford Avenue
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West Conshohocken, Pennsylvania, 19428
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ITEMS OF BUSINESS
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1.
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To consider and vote upon a proposal, which we refer to as the "Holding Company Proposal," approving the Agreement and Plan of Reorganization, dated as of April 22, 2013, by and among CardioNet, BioTelemetry and
Merger Sub, which agreement is included in the accompanying proxy statement/prospectus as Annex I;
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2.
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To elect three (3) Class III directors to hold office until the 2016 Annual Meeting of Stockholders or until their successors are elected and qualified;
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3.
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To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2013; and
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4.
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To transact any other business that may be properly brought before our meeting or any adjournment or postponement thereof.
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RECORD DATE
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You can vote if you are a stockholder of record on May 28, 2013.
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ANNUAL REPORT
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Our 2012 Annual Report on Form 10-K is available at http://www.cardionet.com in the "Investors" section.
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PROXY VOTING
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You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy and are a record holder of your shares, you may still vote in person if you
attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
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By order of the Board of Directors,
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Peter Ferola
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Secretary
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Table of Contents
ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and financial information about CardioNet from our Annual Report on
Form 10-K for the year ended December 31, 2012 and from other documents that are not included in or being delivered with this proxy statement/prospectus. The incorporated
information that is not included in or being delivered with this proxy statement/prospectus is available to you without charge upon your written or oral request. You can obtain any document that is
incorporated by reference in this proxy statement/prospectus, excluding all exhibits that have not been specifically incorporated by reference, on the "Investors" page of our website at
http://investors.cardionet.com or by requesting it in writing or by telephone from us at the following address or telephone number:
CardioNet, Inc.
227 Washington Street #210
Conshohocken, PA 19428
Telephone: (800) 908-7103
Attn: Investor Relations
If you would like to request any documents, please do so by July 16, 2013 in order to receive them before the annual meeting. See
"
Where You Can Find More Information
" on page 66.
You
should rely only on the information contained or incorporated by reference in this proxy statement/prospectus and the registration statement of which this proxy statement/prospectus
is a part to vote on the proposals being presented at the annual meeting. No one has been authorized to provide you with information that is different from what is contained in this document or in the
incorporated documents.
This proxy statement/prospectus is dated June 7, 2013. You should not assume the information contained in this proxy statement/prospectus is accurate as of any date
other than this date, and neither the mailing of this proxy statement/prospectus to stockholders nor the issuance of the CardioNet common stock in the reorganization implies that information is
accurate as of any other date.
Table of Contents
TABLE OF CONTENTS
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CARDIONET, INC.
227 Washington Street, #210
Conshohocken, Pennsylvania 19428
PROXY STATEMENT
SOLICITATION OF PROXIES
FOR THE
2013 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 25, 2013
SUMMARY OF THIS PROXY STATEMENT/PROSPECTUS
In this proxy statement/prospectus, the terms "we," "us" and "our" refer to CardioNet, Inc., the current
Delaware corporation, and its consolidated subsidiaries, prior to the completion of the proposed reorganization, and to BioTelemetry, Inc., the new Delaware corporation, and its consolidated
subsidiaries, upon completion of the proposed reorganization, when the distinction between the two companies is not important to the discussion. When the distinction between the two companies is
important to the discussion, we use the term "BioTelemetry" to refer to BioTelemetry, Inc. and "CardioNet" to refer to CardioNet, Inc.
The
enclosed proxy is solicited by the board of directors (the "Board" or "Board of Directors") of CardioNet for use at our annual meeting of stockholders to be held on July 25,
2013, at 8:30 a.m., Eastern Time, at the Philadelphia Marriott West located at 111 Crawford Avenue, West Conshohocken, Pennsylvania, 19428 (the "annual meeting"), and any and all adjournments
or postponements thereof. This proxy statement/prospectus and form of proxy, along with our Annual Report on Form 10-K for the year ended December 31, 2012, are being mailed
to our stockholders on or about June 12, 2013. You are receiving a proxy statement/prospectus and proxy card from us because our records indicate that you owned shares of our common stock on
May 28, 2013, the record date for the meeting (the "Record Date").
Our
Board of Directors is soliciting your proxy to be used at the annual meeting. When you sign the proxy card, you appoint Joseph H. Capper and Peter Ferola as your representatives at
the annual meeting. One or both of these individuals, or a substitute if necessary, will vote your shares at the annual meeting as you have instructed them on the proxy card. If you sign and deliver
your proxy card, but you do not provide voting instructions, your proxy representative will vote FOR each of the three nominees for director (Proposal Two) and, subject to applicable rules and
regulations, FOR Proposals One and Three and with respect to any other matter that may be presented at the annual meeting, in the discretion of the proxy representative. This way, your shares will be
voted whether or not you attend the annual meeting. Even if you plan to attend the annual meeting, we recommend that you complete, sign and return your proxy card in advance of the annual meeting as
your plans may change.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2013 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 25, 2013
Copies of this proxy statement/prospectus, the form of the proxy card and our Annual Report on Form 10-K for the year ended December 31,
2012 are also available online at
http://www.cardionet.com
in the "Investors" section.
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QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING
Why am I receiving these materials?
We have sent you this proxy statement/prospectus and the enclosed proxy card because the Board of Directors of CardioNet is soliciting
your proxy to vote at the 2013 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. You are invited to attend the annual meeting to vote on the proposals
described in this proxy statement/prospectus. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card.
We
intend to mail this proxy statement/prospectus and accompanying proxy card on or about June 12, 2013 to all stockholders of record entitled to vote at the annual meeting.
What matters am I being asked to vote upon?
The following matters will be voted on at the Annual Meeting:
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To approve the "Holding Company Proposal," approving the Agreement and Plan of Reorganization, dated as of
April 22, 2013, by and among CardioNet, BioTelemetry and Merger Sub, a copy of which is included as Annex I to this proxy statement/prospectus;
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To elect three (3) Class III directors to hold office until the 2016 Annual Meeting of Stockholders or until
their successors are elected and qualified;
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To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the
year ending December 31, 2013; and
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Any other business that may be properly brought before our meeting or any adjournment or postponement thereof.
Why is the proxy statement so much longer than usual?
In addition to asking you to vote upon the annual election of directors and the annual ratification of the selection of our independent
public accountants, this year we are asking you to approve the Holding Company Proposal pursuant to which our present company will become a subsidiary of a new Delaware corporation named
BioTelemetry, Inc. and you will become a shareholder of this new Delaware holding company. Under the US federal securities rules, we can only
exchange your current shares of CardioNet common stock ("CardioNet Common Stock") for shares of BioTelemetry Common Stock ("BioTelemetry Common Stock") if we (i) register with the Securities
and Exchange Commission (the "SEC") the issuance of the BioTelemetry Common Stock and (ii) offer you the new shares to you by way of a prospectus that provides you a summary of the terms of the
Holding Company Proposal, the terms of the plan of reorganization pursuant to which we will affect the reorganization and a description of your rights as a shareholder of BioTelemetry Common Stock.
Consequently, this year our proxy statement is a referred to as a "proxy statement/prospectus" and forms a part of a Registration Statement on Form S-4 that we have filed
with the SEC.
Who can vote at the annual meeting?
Only stockholders of record at the close of business on May 28, 2013, our "Record Date," will be entitled to vote at the annual
meeting. On this record date, there were 25,455,135 shares of CardioNet Common Stock outstanding and entitled to vote.
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Stockholder of Record: Shares Registered in Your Name
If your shares were registered directly in your name with CardioNet's transfer agent, American Stock Transfer & Trust Company on
the Record Date, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to
fill out and return the enclosed proxy card to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization
on the Record Date, then you are the beneficial owner of shares held in "street name" and these proxy materials are being forwarded to you by that organization. The organization holding your account
is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the
shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you
request and obtain a valid proxy from your broker or other agent.
How do I vote?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the annual meeting or vote by proxy using the enclosed proxy card.
Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.
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To vote in person, come to the annual meeting and we will give you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the
envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy
card and voting instructions with these proxy materials from that organization rather than from CardioNet. Simply complete and mail the proxy card to ensure that your vote is submitted to your broker
or bank. Alternatively, you may vote as instructed by your broker or bank. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the
instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of CardioNet Common Stock you own as of May 28, 2013.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted "For" the Holding Company
Proposal (Proposal No. 1), "For" the election of the nominees listed in Proposal No. 2 for director (Proposal No. 2), and "For" the ratification of the selection of Ernst &
Young LLP, as the Company's independent public accounting firm for the year ending
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December 31,
2013 (Proposal No. 3). If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares
using his or her best judgment.
Who is paying for this proxy solicitation?
CardioNet will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees
may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse
brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts.
Please complete, sign and return
each
proxy card to ensure that all of your shares are voted.
Are proxy materials available on the internet?
This proxy statement/prospectus and our 2012 annual report to stockholders are available at
http://www.cardionet.com
in the "Investors"
section.
Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your
shares, you may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a later date.
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You may send a timely written notice that you are revoking your proxy to CardioNet's Secretary at 227 Washington Street
#210, Conshohocken, Pennsylvania 19428.
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You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.
If
your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
What is the quorum requirement and why is it necessary?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of
the outstanding shares are present at the meeting in person or represented by proxy. On the record date, there were 25,455,135 shares outstanding and entitled to vote. Thus, the holders of 12,727,567
shares must be present in person or represented by proxy at the meeting or by proxy to have a quorum.
Your
shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the
meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the meeting in person or
represented by proxy or the chairman of the meeting may adjourn the meeting to another date.
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What are "broker non-votes"?
Broker non-votes occur when a beneficial owner of shares held in "street name" does not give instructions to the broker or
nominee holding the shares as to how to vote on matters deemed "non-routine." Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting
instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are
considered to be "routine," but not with respect to "non-routine" matters. Under the NASDAQ Stock Market ("NASDAQ") rules and interpretations, "non-routine" matters include the
election of directors and generally those matters involving a contest or a matter that may substantially affect the rights or privileges of stockholders, such as mergers or stockholder proposals.
How many votes are needed to approve each proposal?
The table below sets forth the number of votes needed for each proposal on the ballot to pass. The table also sets forth whether a
nominee can exercise discretion and vote your shares absent your instructions and if not, the impact of such broker non-vote on the approval of the proposal; and the impact of abstentions.
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Proposal
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How Many Votes are Needed for Proposal to Pass?
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1. Holding Company Proposal
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Majority of the shares present, either in person or by proxy, and entitled to vote on the proposal.
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2. Election of Directors
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Plurality, meaning that the nominee receiving the most "For" votes of the shares present, either in person or by proxy, and entitled to vote on the proposal will be elected.
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3. Ratification of Ernst & Young LLP
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Majority of the shares present, either in person or by proxy, and entitled to vote on the proposal.
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How will broker non-votes and abstentions affect the proposals?
For each proposal that you will be asked to vote upon, the table below describes (i) whether brokers will vote your shares
absent instructions from you and (ii) the impact of broker non-votes and abstentions on such proposal.
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Proposal
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Can Brokers
Vote Absent
Instructions?
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Impact of
Broker
Non-Votes
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Impact of
Abstentions
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1. Holding Company Proposal
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No
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None
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Against
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2. Election of Directors
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No
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None
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None
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3. Ratification of Ernst & Young LLP
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Yes
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N/A
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Against
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How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting. Final voting results will be reported by the Company on
Form 8-K within four business days after the annual meeting.
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QUESTIONS AND ANSWERS
ABOUT THE HOLDING COMPANY REORGANIZATION
What is the Holding Company Proposal?
We are asking you to approve an agreement and plan of reorganization (the "Reorganization Agreement") that would result in our
reorganization merging with a wholly owned subsidiary of a Delaware holding company. Under the Reorganization Agreement, BioTelemetry Merger Sub, Inc., a Delaware corporation, will merge with
and into CardioNet, Inc., a Delaware corporation, with CardioNet surviving the merger as a wholly owned subsidiary of BioTelemetry, Inc., a Delaware corporation.
Upon
completion of the reorganization, BioTelemetry will, in effect, replace our present company as the publicly held corporation. BioTelemetry and its subsidiaries will conduct all of
the operations we currently conduct. As a result of the reorganization, the current stockholders of CardioNet will become stockholders of BioTelemetry with the same number and percentage of shares of
BioTelemetry as they hold of CardioNet prior to the reorganization. The Reorganization Agreement, which sets forth the plan of reorganization and is the primary legal document that governs the
reorganization, is attached as Annex I to this proxy statement/prospectus.
You are encouraged to read the Reorganization Agreement carefully.
Why are you forming a holding company?
We are forming a holding company to:
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align our operational activities with our legal structure to realize efficiencies;
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simplify internal management of our operations; and
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provide us with enhanced strategic and business flexibility, in particular for acquiring or forming other businesses, if
and when appropriate and feasible.
To
review the reasons for our reorganization in greater detail, see "
Proposal One: The Holding Company
Proposal
Reasons for the Reorganization; Recommendation of our Board
," beginning on page 14.
What will happen to my stock?
In the reorganization, your shares of CardioNet Common stock will automatically be converted into the same number of shares of
BioTelemetry Common Stock. As a result, you will become a stockholder of BioTelemetry and will own the same number and percentage of shares of BioTelemetry Common Stock that you now own of CardioNet
Common Stock. We expect that BioTelemetry Common Stock will continue to be listed on the NASDAQ Global Market under the symbol "BEAT."
How will being a stockholder of BioTelemetry be different from being a CardioNet stockholder?
After the reorganization, you will own the same number and percentage of shares of BioTelemetry Common Stock that you owned of
CardioNet Common Stock immediately prior to the reorganization. You will own shares of a Delaware holding company that owns our operating businesses. Your rights as a stockholder of BioTelemetry will
be substantially the same as your rights as a stockholder of CardioNet, including rights as to voting and dividends. For more information, see "
Proposal One: The Holding
Company ProposalComparative Rights of Holders of BioTelemetry Capital Stock and CardioNet Capital Stock; Provisions under the DGCL and Organizational Documents
,"
"
Description of BioTelemetry Capital Stock
"
and
"
Description of CardioNet Capital Stock
."
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Will the management or the business of the company change as a result of the reorganization?
No. The management and business of our company will remain the same after the reorganization.
What will be the name of the public company following the reorganization?
The name of the public company following the reorganization will be "BioTelemetry, Inc."
Will the company's CUSIP number change as a result of the reorganization?
Yes. Following the reorganization the company's CUSIP number will be 090672 106.
Will I have to turn in my stock certificates?
No. Do not turn in your stock certificates. We will not require you to exchange your stock certificates as a result of the
reorganization. After the reorganization, your CardioNet Common Stock certificates will represent the same number of shares of BioTelemetry Common Stock.
Will the reorganization affect my U.S. federal income taxes?
The proposed reorganization has been structured to be a tax-free transaction under U.S. federal income tax laws. We expect
that you will not recognize any gain or loss for U.S. federal income tax purposes upon your receipt of BioTelemetry Common Stock in exchange for your shares of CardioNet Common Stock in the
reorganization; however, the tax consequences to you will depend on your own situation. You are urged to consult your
own tax advisors concerning the specific tax consequences of the reorganization to you, including any state, local or foreign tax consequences of the reorganization. For further information, see
"
Proposal One: The Holding Company ProposalMaterial U.S. Federal Income Tax Consequences
."
How will the reorganization be treated for accounting purposes?
For accounting purposes, our reorganization into a holding company structure will be treated as a merger of entities under common
control. The accounting treatment for such events is similar to the former "pooling of interests method." Accordingly, the consolidated financial position and results of operations of CardioNet will
be included in the consolidated financial statements of BioTelemetry on the same basis as currently presented.
What vote is required to approve the Holding Company Proposal?
The required vote is the affirmative vote of a majority of the shares present, either in person or by proxy, and entitled to vote on
the proposal.
What percentage of the outstanding shares do directors and executive officers hold?
On May 28, 2013, directors, executive officers and their affiliates beneficially owned approximately 7.7% of our outstanding
shares of CardioNet Common Stock. To that extent, their interest in the reorganization is the same as the interest in the reorganization of our stockholders generally.
If the stockholders approve the reorganization, when will it occur?
If our stockholders approve the reorganization and all other conditions to completion of the reorganization are satisfied or waived,
the reorganization will become effective on the date we file a Certificate of Merger with the Secretary of State of the State of Delaware or a later date that we specify therein. We expect that
we will specify in the Certificate of Merger that the reorganization will be effective shortly after obtaining approval from our stockholders.
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Do I have appraisal (or dissenters') rights?
No. Holders of CardioNet Common Stock do not have appraisal rights under Delaware law as a result of the reorganization even if the
reorganization is approved by our stockholders, because CardioNet Common Stock is listed on the NASDAQ Global Market and BioTelemetry Common Stock will be listed on the NASDAQ Global Market following
the reorganization.
Whom do I contact if I have questions about the Holding Company Proposal?
You may contact us at:
CardioNet, Inc.
227 Washington Street #210
Conshohocken, PA 19428
Telephone: (800) 908-7103
Attn: Peter Ferola
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SUMMARY OF THE HOLDING COMPANY PROPOSAL
This section highlights key aspects of the Holding Company Proposal, including the Reorganization Agreement,
that are described in greater detail elsewhere in this proxy statement/prospectus. It does not contain all of the information that may be important to you. To better understand the Holding Company
Proposal, and for a more complete description of the legal terms of the Reorganization Agreement, you should read this entire document carefully, including the Annexes, and the additional documents to
which we refer you. You can find information with respect to these additional documents in "Where You Can Find More Information."
The Principal Parties
CardioNet, Inc.
227 Washington Street #210
Conshohocken, Pennsylvania 19428
Telephone: (610) 729-7000
CardioNet, Inc.,
a Delaware corporation (the "Company," "CardioNet," "we" or "us"), provides cardiac monitoring services, cardiac monitoring device manufacturing, and centralized
cardiac core laboratory services. Since the Company became focused on cardiac monitoring in 1999, the Company has developed a proprietary integrated patient management platform that incorporates a
wireless data transmission network, Food and Drug Administration ("FDA") cleared algorithms and medical devices, and 24-hour monitoring service centers.
The
Company operates under three segments: patient services, product and research services. Prior to 2012, the Company operated under two segments: patient services and product. The
patient services business segment's principal focus is on the diagnosis and monitoring of cardiac arrhythmias or heart rhythm disorders, through its Mobile Cardiac Outpatient Telemetry
("MCOT"), event and Holter services. The product business segment focuses on the development, manufacturing, testing and marketing of medical devices to healthcare companies, clinics and
hospitals. The Company's research services business segment focuses on providing cardiac safety monitoring services for drug and medical devices trials in a research environment.
In
connection with the reorganization, Merger Sub (as defined below) will merge with and into CardioNet, with CardioNet surviving the merger as a wholly owned subsidiary of BioTelemetry
(as defined below). After the reorganization, CardioNet will continue to engage in its current business, and all of CardioNet's contractual, employment and other business relationships will generally
continue unaffected by the reorganization, except that following the reorganization, CardioNet intends to distribute the equity interests of its subsidiaries Braemar Manufacturing, LLC, a
Delaware limited liability company ("Braemar"), and CardioCORE Lab, LLC, a Delaware limited liability company ("CardioCORE"), to BioTelemetry and its executive management team and certain
corporate-level employees will become employees of BioTelemetry.
The
Company's headquarters are located at 227 Washington Street #210, Conshohocken, Pennsylvania 19428, and the telephone number at this location is (610) 729-7000.
Information about us
is available on our website at www.cardionet.com. The contents of our website are not incorporated by reference herein and are not deemed to be part of this proxy statement/prospectus.
BioTelemetry, Inc.
227 Washington Street #210
Conshohocken, Pennsylvania 19428
Telephone: (610) 729-7000
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BioTelemetry, Inc.,
a Delaware corporation ("BioTelemetry"), was formed as a wholly owned subsidiary of CardioNet in order to effectuate the reorganization. Prior to the
reorganization, BioTelemetry will have no assets or operations other than those incident to its formation.
BioTelemetry Merger Sub, Inc.
227 Washington Street #210
Conshohocken, Pennsylvania 19428
Telephone: (610) 729-7000
BioTelemetry
Merger Sub, Inc., a Delaware corporation ("Merger Sub"), was formed as a wholly owned subsidiary of BioTelemetry in order to effectuate the reorganization. Prior to
the reorganization, Merger Sub will have no assets or operations other than those incident to its formation.
What You Will Receive in the Reorganization (Page 16)
In the reorganization, each outstanding share of CardioNet Common Stock will be converted automatically into one share of BioTelemetry
Common Stock. In addition, each outstanding option to purchase shares of CardioNet Common Stock, if not exercised before the completion of the reorganization, will become an option to acquire, at the
same exercise price, an identical number of shares of BioTelemetry Common Stock. Each outstanding restricted stock unit for shares of CardioNet Common Stock will become a restricted stock unit for an
identical number of shares of BioTelemetry Common Stock. Finally, participants in the CardioNet Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") will be entitled to receive shares of
BioTelemetry Common Stock in accordance with the terms of the Employee Stock Purchase Plan, and shares of CardioNet Common Stock currently held in the Employee Stock Purchase Plan will be converted
into shares of BioTelemetry Common Stock.
On
the Record Date, there were outstanding 25,455,135 shares of CardioNet Common Stock and 927,962 unvested restricted stock units, as well as options to acquire an aggregate of
3,291,817 shares of CardioNet Common Stock.
Conditions to Completion of the Reorganization (Page 17)
The completion of the reorganization depends on the satisfaction or waiver of a
number of conditions, including, but not limited to, the following:
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absence of any stop order suspending the effectiveness of the registration statement, of which this proxy
statement/prospectus forms a part, relating to the shares of BioTelemetry Common Stock to be issued in the reorganization;
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approval and adoption of the Reorganization Agreement by the affirmative vote of a majority of the shares present, either
in person or by proxy, and entitled to vote on the proposal;
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receipt of approval for listing on the NASDAQ Global Market of shares of BioTelemetry Common Stock to be issued in the
reorganization; and
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absence of any order or proceeding that would prohibit or make illegal completion of the reorganization.
Termination of the Reorganization Agreement
We may terminate the Reorganization Agreement, even after adoption by our shareholders, if our Board determines to do so for any
reason.
Board of Directors and Executive Officers of BioTelemetry Following the Reorganization (Page 20)
The board of directors of
BioTelemetry (the "BioTelemetry Board") presently consists of the same persons comprising the CardioNet Board and it is expected that the BioTelemetry Board will remain
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the
same following the reorganization. BioTelemetry expects that its executive officers following the reorganization will be the same as those of CardioNet immediately prior to the reorganization.
Material U.S. Federal Income Tax Consequences (Page 18)
The proposed reorganization has been structured to be a tax-free
transaction under U.S. federal income tax laws. We expect that you will not recognize any gain or loss for U.S. federal income tax purposes upon your receipt of BioTelemetry Common Stock in exchange
for your shares of CardioNet Common Stock in the reorganization; however, the tax consequences to you will depend on your own situation. You are urged to consult your own tax advisors concerning the
specific tax consequences of the reorganization to you, including any state, local or foreign tax consequences of the reorganization.
Markets and Market Prices
BioTelemetry Common Stock is not currently traded on any stock exchange. CardioNet Common Stock is traded under the ticker symbol
"BEAT" on the NASDAQ Global Market, and we expect BioTelemetry Common Stock to trade on the NASDAQ Global Market under the ticker symbol "BEAT" following the reorganization. On May 31, 2013 the
closing price per CardioNet share was $2.79.
Appraisal Rights (Page 19)
Under Delaware law, CardioNet's shareholders do not have appraisal rights with respect to the reorganization.
Certain Financial Information
We have not included pro forma financial comparative per share information concerning CardioNet that gives effect to the reorganization
because, immediately after the completion of the reorganization, the consolidated financial statements of BioTelemetry will be the same as CardioNet's consolidated financial statements immediately
prior to the reorganization, and the reorganization will result in the conversion of each share of CardioNet Common Stock into one share of BioTelemetry Common Stock. In addition, we have not provided
financial statements of BioTelemetry because, prior to the reorganization, it will have no assets, liabilities or operations other than incident to its formation. We have incorporated by reference our
Annual Report on Form 10-K for the year ended December 31, 2012.
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RISK FACTORS
In considering whether to vote in favor of the Holding Company Proposal, you should consider all of the
information we have included in this proxy statement/prospectus, including its Annexes, and all of the information included in the documents we have incorporated by reference, including our Annual
Report on Form 10-K for the year ended December 31, 2012 and the risk factors described in the other documents incorporated by reference. In addition, you should pay
particular attention to the risks described below.
Our Board may choose to defer or abandon the reorganization.
Completion of the reorganization may be deferred or abandoned, at any time, by action of our Board, whether before or after the annual
meeting. While we currently expect the reorganization to take place shortly after approval of the Holding Company Proposal by our stockholders, the Board may defer completion or may abandon the
reorganization because of any determination by our Board that the reorganization would not be in the best interests of CardioNet or
its shareholders or that the reorganization would have material adverse consequences to CardioNet or its shareholders.
We may not obtain the expected benefits of our reorganization into a holding company structure.
We believe our reorganization into a holding company structure will provide us with benefits in the future. These expected benefits may
not be obtained if market conditions or other circumstances prevent us from taking advantage of the strategic, business and financing flexibility that it affords us. As a result, we may incur the
costs of creating the holding company structure without realizing the possible benefits.
As a holding company, BioTelemetry will depend in large part on dividends from its operating subsidiaries to satisfy its obligations.
After the completion of the reorganization, BioTelemetry will be a holding company with no business operations of its own. Its only
significant assets will be the outstanding capital stock of its subsidiaries. As a result, it will rely on funds from its current subsidiaries and any subsidiaries that it may form in the future to
meet its obligations.
The market for BioTelemetry shares may differ from the market for CardioNet shares.
Although it is anticipated that the BioTelemetry common shares will be authorized for listing on the NASDAQ Global Market, the market
prices, trading volume and volatility of the BioTelemetry shares could be different from those of the CardioNet shares.
The proposed reorganization into a holding company structure may result in substantial direct and indirect costs whether or not completed.
The reorganization may result in substantial direct costs. These costs and expenses are expected to consist primarily of attorneys'
fees, accountants' fees, filing fees and financial printing expenses and will be substantially incurred prior to the vote of our shareholders. The reorganization may also result in certain indirect
costs by diverting the attention of our management
and employees from our business and by increasing our administrative costs and expenses. These administrative costs and expenses will include keeping separate records and in some cases making separate
regulatory filings for BioTelemetry and each of its subsidiaries. The reorganization may also result in certain state sales taxes and other transfer taxes, as well as state income taxes.
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SPECIAL NOTE ABOUT FORWARD-LOOKING INFORMATION
This proxy statement/prospectus and the documents incorporated by reference in this registration statement include "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, regarding future events and our future results that are subject to the safe harbors created under the
Securities Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which represent our management's beliefs and assumptions concerning
future events. When used in this proxy statement/prospectus and in documents incorporated herein by reference, forward-looking statements include, without limitation, statements regarding financial
forecasts or projections, and our expectations, beliefs, intentions or future strategies that are signified by the words "expects," "anticipates," "believes," "intends," "plans," "may," "estimates,"
"predicts," "potential," "should," "will," "would," "will be," "will continue," "will likely result" or the negative of these terms or other comparable terminology. These forward-looking statements
are subject to risks, uncertainties and assumptions that could cause our actual results and the timing of certain events to differ materially from those expressed in the forward-looking statements.
You
should understand that many important factors, in addition to those discussed or incorporated by reference in this proxy statement/prospectus, could cause our results to differ
materially from those expressed in the forward-looking statements. Potential factors that could affect our results include those described in this proxy statement/prospectus under "Risk Factors," and
those identified in our Annual Report on Form 10-K for the year ended December 31, 2012 and in the other documents incorporated herein by reference. In light of these risks
and uncertainties, the forward-looking results discussed or incorporated by reference in this proxy statement/prospectus might not occur.
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PROPOSAL ONE:
THE HOLDING COMPANY PROPOSAL
This section of the proxy statement/prospectus describes the Holding Company Proposal. Although we believe that
the description in this section covers the material terms of the Holding Company Proposal, this summary may not contain all of the information that is important to you. The summary of the material
provisions of the Reorganization Agreement provided below is qualified in its entirety by reference to the Reorganization Agreement, which we have attached as Annex I to this proxy
statement/prospectus and which we incorporate by reference into this proxy statement/prospectus. You should carefully read the entire proxy statement/prospectus and the Reorganization Agreement for a
more complete understanding of the Holding Company Proposal. Your approval of the Holding Company Proposal will constitute your approval and adoption of the Reorganization Agreement, the
reorganization, the certificate of incorporation of BioTelemetry and the bylaws of BioTelemetry.
Reasons for the Reorganization; Recommendation of our Board
At a meeting of the Board held on April 15, 2013, the Board concluded that the reorganization is advisable, determined that the
terms of the Reorganization Agreement are fair to and in the best interest of CardioNet and its shareholders and adopted and approved the Reorganization Agreement.
During
the course of its deliberations, our Board consulted with management, outside legal counsel and outside tax advisors and considered a number of positive factors, including the
following:
-
-
Ability to Align our Operational Activities with our Legal
Structure.
We believe the holding company structure would allow us to realign our existing lines of business into different
subsidiaries, which would provide efficiencies with internal management of our different lines of business. The reorganization will provide the framework necessary to allocate management, employees
and other costs more effectively to such lines of business. The structure will also allow our employees to focus on the lines of business within their areas of responsibility. Various employee
incentive plans are currently based on profitability and having a holding company structure with different subsidiaries would allow us to more effectively set performance metrics for incentive
compensation based on individual business lines in the future.
-
-
Ability to Legally Manage Certain Tax
Expenses.
We believe that the holding company structure will provide a platform to proactively manage the impact of certain taxes, such
as state taxes, by segregating operations within certain states, thus resulting in an overall lower effective tax rate for the consolidated company in the future.
-
-
Possible Future Strategic and Business Flexibility of the Holding
Company Structure.
We believe the holding company structure could facilitate future expansion of our business by providing a more
flexible structure for acquiring other businesses or entering into joint ventures while continuing to keep the operations and risks of our other businesses separate. In addition, if the cash generated
over time by our businesses was determined by our Board to be greater than the amount necessary for the operation or capital needs of those businesses, this cash could be transferred to a separate
corporate entity owned by the holding company and invested as our Board believes to be appropriate.
In
addition to the positive factors described above, our Board also considered the following potential negative factor associated with the Holding Company
Proposal:
-
-
Increased Costs and Expenses Associated with Implementing the Holding
Company Proposal and Administering a Holding Company Structure.
The reorganization may result in additional direct costs. These costs
and expenses are expected to consist primarily of professional fees, which will be substantially incurred prior to the vote of our shareholders and new marketing branding expenses. The reorganization
may also result in certain indirect costs by diverting the attention
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of
our management and employees from our business and increasing our administrative costs and expenses. These administrative costs and expenses will include keeping separate records and in some cases
making separate regulatory filings for each of BioTelemetry and its current and future subsidiaries. The reorganization may also result in certain state sales taxes and other transfer taxes, as well
as state income taxes.
After
careful consideration, our Board has determined that creation of a holding company structure offers a net benefit to our shareholders. The Board has (i) approved the Holding
Company Proposal, (ii) determined that the terms of the Reorganization Agreement and the reorganization are advisable and in the best interest of our shareholders, and (iii) adopted and
approved the Reorganization Agreement.
The Board recommends a vote "FOR" the adoption and approval of the Reorganization Agreement.
Reorganization Procedure
CardioNet currently owns all of the issued and outstanding common stock of BioTelemetry, BioTelemetry currently owns all of the issued
and outstanding common stock of Merger Sub, the subsidiary formed for purposes of completing the proposed reorganization, and CardioNet owns all of the issued and outstanding equity interests of ECG
Scanning, Braemar and CardioCORE. Following the approval of the Reorganization Agreement by the CardioNet shareholders and the satisfaction or waiver of the other conditions specified in the
Reorganization Agreement (which are described below), Merger Sub will merge with and into CardioNet, the subsidiary of BioTelemetry. Below is the current structure of CardioNet, as well as the
structure of BioTelemetry immediately following the reorganization, the contemplated distribution of the Braemar and CardioCORE equity interests to BioTelemetry from CardioNet and the conversion of
CardioNet to a Delaware limited liability company pursuant to Delaware law:
Current Structure
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Post Reorganization Structure
As
a result of the merger of CardioNet and Merger Sub:
-
-
CardioNet will be the surviving corporation, and the separate corporate existence of Merger Sub will cease.
-
-
Each outstanding share of CardioNet Common Stock will automatically convert into one share of BioTelemetry Common Stock,
as described below, and the current shareholders of CardioNet will become the shareholders of BioTelemetry.
-
-
BioTelemetry will own all of CardioNet's common stock and each share of BioTelemetry Common Stock now held by CardioNet
will be cancelled.
The
result of the reorganization will be that Merger Sub will be merged with and into CardioNet and CardioNet will become a wholly owned subsidiary of BioTelemetry. BioTelemetry's
certificate of incorporation and bylaws are included in this proxy statement/prospectus as Annex II and Annex III, respectively. For more information regarding your rights as a
shareholder before and after the reorganization, see "
Comparative Rights of Holders of BioTelemetry's Capital Stock and CardioNet's Capital Stock; Provisions under the DGCL and
Organizational Documents
," "
Description of BioTelemetry Capital Stock
" and "
Description of CardioNet
Capital Stock
."
Following
the merger, CardioNet intends to distribute the equity interests of its subsidiaries Braemar and CardioCORE to BioTelemetry, and BioTelemetry intends to effect the conversion
of CardioNet to a Delaware limited liability company pursuant to Delaware law. As a result, CardioNet, Braemar and CardioCORE would all be first-tier subsidiaries of BioTelemetry. ECG
Scanning will remain as a direct subsidiary of CardioNet.
In
all other respects, the company will remain the same. The current directors and executive officers of CardioNet will continue as directors and executive officers of BioTelemetry. In
addition, our current business and operations will remain the same.
What CardioNet Shareholders Will Receive in the Reorganization
Each share of CardioNet Common Stock will convert into one share of BioTelemetry Common Stock. After the completion of the
reorganization, you will own the same number and percentage of shares of BioTelemetry Common Stock as you currently own of CardioNet Common Stock.
CardioNet Stock Options and Other Rights to Receive CardioNet Stock
Each of the outstanding options to acquire shares of CardioNet Common Stock in the aggregate will become options to acquire, on the
same terms and conditions as before the reorganization, an
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identical
number of shares of BioTelemetry Common Stock. Each outstanding restricted stock unit for shares of CardioNet Common Stock will become a restricted stock unit for an identical number of
shares of BioTelemetry Common Stock. On the Record Date, there were outstanding options to acquire an aggregate of 3,291,817 shares of CardioNet Common Stock and 927,962 unvested restricted stock
units. CardioNet's existing stock-based compensation plans, which include the 2008 Equity Incentive Plan (the "2008 Option Plan") and the 2008 Non-employee Directors' Stock Option Plan
(the "Directors' Plan"), provide, or will provide, that plan participants will be entitled to receive shares of BioTelemetry Common Stock rather than shares of CardioNet Common Stock, on the same
terms otherwise provided for in the respective plans.
Corporate Name Following the Reorganization
The name of the public company following the reorganization will be "BioTelemetry, Inc."
No Exchange of Stock Certificates
In the reorganization, your shares of CardioNet Common Stock will be converted automatically into shares of BioTelemetry Common Stock.
Your certificates of CardioNet Common Stock, if any, will represent, before and after the reorganization, an equal number of shares of BioTelemetry Common Stock, and no action with regard to stock
certificates will be required on your part. We expect to send you a notice after the reorganization is completed specifying this and other relevant information.
Conditions to Reorganization
We will complete the reorganization only if each of the following conditions is satisfied or
waived:
-
-
absence of any stop order suspending the effectiveness of the registration statement, of which this proxy
statement/prospectus forms a part, relating to the shares of BioTelemetry Common Stock to be issued in the reorganization;
-
-
approval and adoption of the Reorganization Agreement by the affirmative vote of a majority of the shares present, either
in person or by proxy, and entitled to vote on the proposal;
-
-
receipt of approval for listing on the NASDAQ Global Market of shares of BioTelemetry Common Stock to be issued in the
reorganization; and
-
-
absence of any order or proceeding that would prohibit or make illegal completion of the reorganization.
Effectiveness of Reorganization
The reorganization will become effective on the date we file a certificate of merger with the Secretary of State of the State of
Delaware or a later date that we specify therein. We will file the certificate of merger when the conditions to the reorganization described above have been satisfied or waived. We expect that we will
specify in the certificate of merger that the reorganization will be effective shortly after obtaining approval from our stockholders.
Termination of Reorganization Agreement
The Reorganization Agreement may be terminated at any time prior to the completion of the reorganization (even after adoption by our
shareholders) by action of the Board if it determines that for any reason the completion of the transactions provided for therein would be inadvisable or not in the best interest of our company or our
shareholders.
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Amendment of Reorganization Agreement
The Reorganization Agreement may, to the extent permitted by the General Corporation Law of the State of Delaware (the
"DGCL"), be supplemented, amended or modified at any time prior to the completion of the reorganization (even after adoption by our shareholders), by the mutual consent of the parties
thereto.
Material U.S. Federal Income Tax Consequences
The following discussion summarizes the material U.S. federal income tax consequences of the reorganization to U.S. holders of
CardioNet Common Stock. This discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), current and proposed Treasury regulations and
judicial and administrative decisions
and rulings as of the date of this proxy statement/prospectus, all of which are subject to change (possibly with retroactive effect) and all of which are subject to differing interpretation. This
discussion does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances or to persons subject to special treatment under U.S.
federal income tax laws. In particular, this discussion deals only with shareholders that hold CardioNet Common Stock as capital assets within the meaning of the Internal Revenue Code. In addition,
this discussion does not address the tax treatment of special classes of shareholders, such as banks, insurance companies, tax-exempt organizations, financial institutions, broker-dealers,
persons holding CardioNet stock as part of a hedge, straddle or other risk reduction, constructive sale or conversion transaction, U.S. expatriates, persons subject to the alternative minimum tax and
persons who acquired CardioNet stock in compensatory transactions. If you are not a U.S. holder (as defined below), this discussion does not apply to you.
As
used in this summary, a "U.S. holder" is:
-
-
an individual U.S. citizen or resident alien;
-
-
a corporation, partnership or other entity created or organized under U.S. law (federal or state);
-
-
an estate whose worldwide income is subject to U.S. federal income tax; or
-
-
a trust if a court within the United States of America is able to exercise primary supervision over the administration of
the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or certain trusts formed prior to August 20, 1996, if such trust has a valid
election in effect to be treated as a domestic trust for U.S. federal income tax purposes.
If
a partnership (including, for this purpose, any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of CardioNet Common Stock, the U.S. federal
income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of CardioNet Common Stock that is a
partnership, and the partners in such partnership, are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the reorganization.
ALL HOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE REORGANIZATION TO THEIR PARTICULAR SITUATION, INCLUDING THE
EFFECTS OF U.S. FEDERAL, STATE AND LOCAL, FOREIGN AND OTHER TAX LAWS.
The
proposed reorganization will constitute an exchange of CardioNet Common Stock for BioTelemetry Common Stock governed by Section 368(a). Any gain recognized by that
distribution will be deferred for federal income tax purposes. Neither BioTelemetry nor CardioNet has requested nor will request a private letter ruling from the Internal Revenue Service as to the tax
consequences of the
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reorganization.
Assuming the transactions are treated as described in this paragraph, the material U.S. federal income tax consequences of the transactions will be as
follows:
-
-
No gain or loss will be recognized by BioTelemetry or CardioNet as a result of the merger;
-
-
No gain or loss will be recognized by you upon your receipt of BioTelemetry Common Stock solely in exchange for your
CardioNet Common Stock;
-
-
The aggregate tax basis of the shares of BioTelemetry Common Stock that you receive in exchange for your CardioNet Common
Stock in the merger will be the same as the aggregate tax basis of your CardioNet Common Stock exchanged; and
-
-
The holding period for shares of BioTelemetry Common Stock that you receive in the merger will include the holding period
of your CardioNet Common Stock exchanged.
The foregoing discussion is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences or any other consequences
of the reorganization. In addition, the discussion does not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not address
state, local, foreign or non-income tax consequences or tax return reporting requirements. Accordingly, you are strongly urged to consult with your own tax advisor to determine the
particular U.S. federal, state, local or foreign income or other tax consequences to you of the reorganization.
Anticipated Accounting Treatment
For accounting purposes, our reorganization into a holding company structure will be treated as a merger of entities under common
control. The accounting treatment for such events is similar to the former "pooling of interests method." Accordingly, the financial position and results of operations of CardioNet will be included in
the consolidated financial statements of BioTelemetry on the same basis as currently presented.
Authorized Capital Stock
CardioNet is authorized to issue two hundred million (200,000,000) shares of common stock, $0.001 par value per share, and ten million
(10,000,000) shares of preferred stock, $0.001 par value per share. BioTelemetry' certificate of incorporation, which would govern the rights of our shareholders after the reorganization, authorizes
the issuance of two hundred million (200,000,000) shares of common stock, $0.001 par value per share, and ten million (10,000,000) shares of preferred stock, $0.001 par value per share. Upon
completion of the reorganization, the number of shares of BioTelemetry Common Stock that will be outstanding will be equal to the number of shares of CardioNet Common Stock outstanding immediately
prior to the reorganization. The number of shares authorized for issuance under CardioNet's equity compensation plans as of December 31, 2012 is set forth on page 40 of this proxy
statement/prospectus. No other shares are presently reserved for any other purpose.
Appraisal Rights
Holders of CardioNet Common Stock will not have appraisal rights in connection with the reorganization because CardioNet Common Stock
is listed on the NASDAQ Global Market and BioTelemetry Common Stock will similarly be listed on the NASDAQ Global Market following the reorganization.
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Listing of BioTelemetry Common Stock on the NASDAQ Global Market; De-listing and De-registration of CardioNet Common Stock
The completion of the reorganization is conditioned on the approval for listing of the shares of BioTelemetry Common Stock issuable in
the reorganization (and any other shares to be reserved for issuance in connection with the reorganization) on the NASDAQ Global Market. We expect that BioTelemetry Common Stock will continue to trade
under the ticker symbol "BEAT." In addition, BioTelemetry will become a reporting company under the Exchange Act.
Following
the reorganization, CardioNet Common Stock will no longer be quoted on the NASDAQ Global Market and will no longer be registered under the Exchange Act. In addition, CardioNet
will cease to be a reporting company under the Exchange Act.
Board of Directors and Executive Officers of BioTelemetry Following the Reorganization
Presently, the BioTelemetry Board and the CardioNet Board are comprised of the same persons. We expect that immediately following the
reorganization the
BioTelemetry Board will be comprised of Kirk E. Gorman, Ronald A. Ahrens, Joseph H. Capper, Anthony J. Conti, Eric N. Prystowsky, M.D., Rebecca W. Rimel and Robert J. Rubin, M.D., should
Ms. Rimel and Drs. Rubin and Prystowsky be re-elected as directors of CardioNet at the 2013 annual meeting.
We
expect that the executive officers of BioTelemetry following the reorganization will be the same as those of CardioNet immediately prior to the reorganization.
For
information concerning persons expected to become directors of BioTelemetry, see "
Proposal Two: Election of Directors
."
Issuances of BioTelemetry Common Stock Under the CardioNet Stock Based Compensation Plans
The adoption of the Reorganization Agreement by the holders of CardioNet Common Stock will also constitute approval of the assumption
by BioTelemetry of the CardioNet Stock Based Compensation Plans (the "CardioNet Plans") and, where appropriate, the future issuance of shares of BioTelemetry Common Stock in lieu of shares of
CardioNet Common Stock under the CardioNet Plans, each as amended in connection with the reorganization without further shareholder action.
BioTelemetry Certificate of Incorporation
The adoption of the Reorganization Agreement by the holders of CardioNet Common Stock will also constitute approval of the terms of the
BioTelemetry certificate of incorporation in the form attached to this proxy statement/prospectus as Annex II.
Restrictions on the Sale of BioTelemetry Shares
The shares of BioTelemetry Common Stock to be issued in the reorganization will be registered under the Securities Act. These shares
will be freely transferable under the Securities Act, subject to existing restrictions on certain affiliates of BioTelemetry.
Comparative Rights of Holders of BioTelemetry Capital Stock and CardioNet Capital Stock; Provisions under the DGCL and Organizational Documents
At the effective time of the merger, CardioNet Common Stock will be converted on a one-for-one basis into
BioTelemetry Common Stock. As a result, BioTelemetry' certificate of incorporation and bylaws and the applicable provisions of the DGCL will govern the rights of the former holders of CardioNet Common
Stock who receive shares of BioTelemetry Common Stock pursuant to the merger. The rights of CardioNet shareholders are currently governed by the DGCL and common law,
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CardioNet's
amended and restated certificate of incorporation and CardioNet's amended and restated bylaws. The rights of BioTelemetry shareholders after the completion of the reorganization will
continue to be governed by the DGCL and common law, and will be governed by BioTelemetry' certificate of incorporation and BioTelemetry' bylaws, which, other than the name of the entity, updated
information regarding the registered agent, the incorporator and the initial number of directors, and certain dates, are identical to the amended and restate certificate of incorporation and amended
and restated bylaws of CardioNet. As a result, there is no comparative difference under the DGCL or the charter documents in the rights of holders of BioTelemetry Common Stock and CardioNet Common
Stock.
Authorized but Unissued Shares
Delaware law does not require shareholder approval for any issuance of authorized shares. Authorized but unissued shares may be used
for a variety of corporate purposes, including future public or private offerings to raise additional capital or to facilitate corporate acquisitions. One of the effects of the existence of authorized
but unissued shares may be to enable the CardioNet, or after the reorganization the BioTelemetry, Board of Directors to issue shares to persons friendly to the current management, which issuance could
render more difficult or discourage an attempt to obtain control of CardioNet, or after the reorganization BioTelemetry, by means of a merger, tender offer, proxy contest or otherwise, and thereby
protect the continuity of current management and possibly deprive the shareholders of opportunities to sell their shares of common stock at a premium over the market price of CardioNet, or after the
reorganization BioTelemetry, common stock.
Certain Provisions of CardioNet's and BioTelemetry' Organizational Documents and the DGCL
Certain provisions of CardioNet's amended and restated certificate of incorporation and amended and restated bylaws and BioTelemetry'
certificate of incorporation and bylaws may delay or make more difficult unsolicited acquisitions or changes of control of CardioNet or BioTelemetry, respectively. These provisions could have the
effect of discouraging third parties from making proposals involving an unsolicited acquisition or change in control of CardioNet or BioTelemetry, respectively, although these proposals, if made,
might be considered desirable by a majority of our shareholders. These provisions may also have the effect of making it more difficult for third parties to cause the replacement of the current
management without the concurrence of the Board of Directors. These provisions:
-
-
establish a classified Board of Directors such that not all members of our board are elected at one time;
-
-
authorize the issuance of undesignated preferred stock, the terms of which may be established and shares of which may be
issued without stockholder approval, and which may include rights superior to the rights of the holders of common stock;
-
-
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our
stockholders;
-
-
provide that the Board of Directors is expressly authorized to make, alter, or repeal our bylaws; and
-
-
establish advance notice requirements for nominations for elections to our board or for proposing matters that can be
acted upon by stockholders at stockholder meetings.
In
addition, because we are incorporated in Delaware, we are subject to Section 203 of the DGCL which, subject to certain exceptions, prohibits stockholders owning in excess of
15% of our outstanding voting stock from merging or combining with us. These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a
transaction involving a change of control of our Company, even if doing so would benefit our stockholders. These provisions could also discourage
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proxy
contests and make it more difficult for our stockholders to elect directors of their choosing and cause us to take other
Exculpation from Liability of Directors in Certain Circumstances
Indemnification Agreements
CardioNet's amended and restated bylaws and BioTelemetry' bylaws provide for indemnification of their respective directors and officers
to the fullest extent not prohibited by the DGCL or any other applicable law. CardioNet has entered, and intends to continue to enter, into indemnification agreements with its directors and executive
officers. These agreements, among other things, require the Company to indemnify our directors and executive officers for certain expenses, including attorneys' fees, judgments, fines and settlement
amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors or executive officers, or any of our subsidiaries or any other
company or enterprise to which the person provides services at our request.
Description of BioTelemetry Capital Stock
BioTelemetry is incorporated in the State of Delaware. The rights of shareholders of BioTelemetry will generally be governed by
Delaware law and BioTelemetry's certificate of incorporation and bylaws. The following is a summary of the material provisions of BioTelemetry's certificate of incorporation and bylaws. This summary
is not complete and is qualified by reference to Delaware statutory and common law and the full texts of BioTelemetry' certificate of incorporation and bylaws, which are attached as Annexes II
and III to this proxy statement/prospectus.
General
Upon the completion of the reorganization, the authorized capital of BioTelemetry will be two hundred million (200,000,000) shares of
common stock, $0.001 par value per share and ten million (10,000,000) shares of preferred stock, $0.001 par value per share. All of the shares issued and outstanding upon completion of the
reorganization will be fully paid and nonassessable.
Upon
completion of the reorganization, the number of shares of BioTelemetry Common Stock that will be outstanding will be equal to the number of shares of CardioNet Common Stock
outstanding immediately prior to the reorganization.
Common Stock
Dividends and Distributions.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all
available
funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future.
Any future determination related to dividend policy will be made at the discretion of our Board of Directors.
Liquidation Rights.
If BioTelemetry is liquidated, dissolved or wound up, voluntarily or involuntarily, holders of BioTelemetry Common
Stock will be
entitled to share ratably in all assets of BioTelemetry remaining after payments to creditors and after satisfaction of the liquidation preference, if any, of the holders of any preferred stock that
may at the time be outstanding.
Voting Rights.
Holders of BioTelemetry Common Stock are entitled to one vote per share on all matters to be voted upon by shareholders.
Shareholders
may cumulate votes in the election of directors and shareholders may vote by proxy.
Other.
There are no preemption, redemption, sinking fund or conversion rights applicable to the BioTelemetry Common Stock.
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Preferred Stock
The Company maintains an unregistered blank check preferred stock class. As of the date of this proxy statement/prospectus, there are
no shares of preferred stock authorized and outstanding.
Transfer Agent
We expect that the transfer agent for BioTelemetry Common Stock will be American Stock Transfer & Trust Company.
The NASDAQ Global Market Listing
We expect that BioTelemetry Common Stock will be listed on the NASDAQ Global Market under the trading symbol "BEAT."
Description of CardioNet Capital Stock
CardioNet is also incorporated in the State of Delaware. The rights of shareholders of CardioNet will generally be governed by Delaware
law and CardioNet's amended and restated certificate of incorporation and amended and restated bylaws. The following is a summary of the material provisions of CardioNet's amended and restated
certificate of incorporation and amended and restated bylaws. This summary is not complete and is qualified by reference to Delaware statutory and common law and the full texts of CardioNet's amended
and restated certificate of incorporation and amended and restated bylaws. A copy of CardioNet's amended and restated certificate of incorporation is attached as Exhibit 3.1 to CardioNet's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission ("SEC") on August 17, 2007
(the "CardioNet S-1"). A copy of CardioNet's amended and restated bylaws is attached as Exhibit 3.2 to the CardioNet S-1.
General
CardioNet is authorized to issue two hundred million (200,000,000) shares of common stock, $0.001 par value per share, and ten million
(10,000,000) shares of preferred stock, $0.001 par value per share. As of May 28, 2013, CardioNet had 25,455,135 shares of common stock outstanding and held of record by approximately 61
shareholders. The issued and outstanding shares of CardioNet Common Stock are fully paid and nonassessable.
Common Stock
Dividends and Distributions.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all
available
funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future.
Any future determination related to dividend policy will be made at the discretion of our Board of Directors.
Liquidation Rights.
If BioTelemetry is liquidated, dissolved or wound up, voluntarily or involuntarily, holders of BioTelemetry Common
Stock will be
entitled to share ratably in all assets of BioTelemetry remaining after payments to creditors and after satisfaction of the liquidation preference, if any, of the holders of any preferred stock that
may at the time be outstanding.
Voting Rights.
Holders of BioTelemetry Common Stock are entitled to one vote per share on all matters to be voted upon by shareholders.
Shareholders
may cumulate votes in the election of directors and shareholders may vote by proxy.
Other.
There are no preemption, redemption, sinking fund or conversion rights applicable to the BioTelemetry Common Stock.
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Preferred Stock
The Company maintains an unregistered blank check preferred stock class. As of the date of this proxy statement/prospectus, there are
no shares of preferred stock authorized and outstanding.
Transfer Agent
The transfer agent for CardioNet Common Stock is American Stock Transfer & Trust Company.
The NASDAQ Global Market Listing
CardioNet Common Stock is listed on the NASDAQ Global Market under the trading symbol "BEAT."
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PROPOSAL TWO:
ELECTION OF DIRECTORS
Our Board of Directors currently consists of seven members and is divided into three classes, each of which has a three year term.
Class I consists of two directors, Class II consists of two directors and Class III consists of three directors. Vacancies on the Board of Directors may be filled only by persons
elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a class, including vacancies created by an increase in the number of directors,
shall serve for the remainder of the full term of that class and until the director's successor is elected and qualified.
The
Board of Directors currently has seven members and there are three directors serving as Class III directors. The term of office of the Class III directors expires in
2013. We are nominating Eric N. Prystowsky, M.D., Rebecca W. Rimel and Robert J. Rubin, M.D. for re-election at the 2013 Annual Meeting. Drs. Prystowsky and Rubin and Ms. Rimel were
appointed by the Board of Directors in March 2001, July 2007 and May 2009 respectively. If elected at the annual meeting, each of these nominees would serve until the 2016 Annual Meeting and until his
or her successor is elected and has qualified, or, if sooner, until the director's death, resignation or removal. It is CardioNet's policy to invite directors and nominees for director to attend the
annual meeting.
On
May 4, 2012, following the recommendation of our Nominating and Governance Committee, the Board of Directors appointed Anthony J. Conti as a director of the Company.
Mr. Conti serves as a Class II director with a term continuing through the Company's 2015 Annual Meeting. Mr. Conti filled a vacancy on the Board of Directors.
There
is one vacancy in Class I and one vacancy in Class II directors. We are seeking to identify individuals to fill these vacancies. All of our directors attended our
2012 Annual Meeting of Stockholders.
Directors
are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The three nominees
receiving the most "For" votes (among votes properly cast in person or by proxy) will be elected. If no contrary indication is made, shares represented by executed proxies will be voted "For" the
election of the three nominees named above or, if any nominee becomes unavailable for election as a result of an unexpected occurrence, "For" the election of a substitute nominee designated by our
Board of Directors. Each nominee has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve.
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The Board of Directors Recommends
A Vote In Favor of Our Named Nominees.
The following is a brief biography for our nominees for Class III directors and each person whose term of office as a
Class I or Class II director will continue after the annual meeting.
|
|
|
|
|
|
Class and Name
|
|
Age
|
|
Position
|
Directors:
|
|
|
|
|
|
Class III Directors:
|
|
|
|
|
|
Eric N. Prystowsky, M.D.(2)(3)
|
|
|
66
|
|
Director
|
Rebecca W. Rimel(2)
|
|
|
61
|
|
Director
|
Robert J. Rubin, M.D.(1)(3)
|
|
|
67
|
|
Director
|
Class I Directors:
|
|
|
|
|
|
Ronald A. Ahrens(2)(3)
|
|
|
73
|
|
Director
|
Joseph H. Capper
|
|
|
50
|
|
Director, President and Chief Executive Officer
|
Class II Directors:
|
|
|
|
|
|
Kirk E. Gorman(1)
|
|
|
62
|
|
Director and Chairman
|
Anthony J. Conti(1)
|
|
|
64
|
|
Director
|
-
(1)
-
Member
of the Audit Committee.
-
(2)
-
Member
of the Compensation Committee.
-
(3)
-
Member
of the Nominating and Corporate Governance Committee.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2016 ANNUAL MEETING
Rebecca W. Rimel.
Ms. Rimel has been a member of our Board of Directors since May 2009. She joined The Pew Charitable
Trusts in 1983 as Health
Program Manager and has led the organization as Executive Director from 1988 through 1994 and in her current position as President and Chief Executive Officer since 1994. From 1981 through 1983,
Ms. Rimel served as Assistant Professor in the Department of Neurosurgery at the University of Virginia Hospital. Along with additional teaching and practitioner positions at the University of
Virginia Hospital, she also held the title of Head Nurse of the medical center's emergency department. Ms. Rimel serves as a member of the Board of The Pew Charitable Trusts, and on the Boards
of DWS Mutual Funds and Becton Dickenson & Company Ms. Rimel brings to the Company a superior reputation for leadership and experience in the clinical, academic and business sectors of
the healthcare industry. She has had, and continues to build, an exemplary career in public policy, non-profit administration, advocacy and innovation related to the healthcare field.
Ms. Rimel received her Bachelor of Science from the University of Virginia School of Nursing, and earned a Master of Business Administration degree from James
Madison University. Ms. Rimel's education and professional experience serves as a basis for her contributions, past and present, as a member of the board of directors for various public and
private companies.
Eric N. Prystowsky, M.D.
Dr. Prystowsky has been a member of our Board of Directors since March 2001. Since 1988,
Dr. Prystowsky has
served as the Director, Clinical Electrophysiology Laboratory at St. Vincent Hospital, Indianapolis, Indiana. Since 1988, Dr. Prystowsky has served as Consulting Professor of Medicine at
Duke University. Since 2004, he has served as the associate editor of Hurst Textbook of Cardiology and, since January 2004, he has served as editor-in-chief of the Journal of
Cardiovascular Electrophysiology. From 1992 to 1994, he served as the Chairman of the American Heart Association's Committee on Electrocardiography and Electrophysiology and, from May 2001 to May
2002, as President of the Heart Rhythm Society. Dr. Prystowsky also served as the
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Chairman
of the ABIM test writing committee for the Electrophysiology Boards until July 2008. Dr. Prystowsky currently serves on the Board of Directors of Stereotaxis, Inc., a
biotechnology company. Dr. Prystowsky received an undergraduate degree from the Pennsylvania State University and an M.D. from the Mount Sinai School of Medicine. Dr. Prystowsky brings
relevant real-time clinical and academic experience as a published and renowned electrophysiologist with St. Vincent Hospital and Consulting Professor at Duke University.
Dr. Prystowsky's knowledge of and experience with cardiac medicine is vast and includes leading positions within the American Heart Association as well as the Heart Rhythm Society.
Dr. Prystowsky also brings to the Board of Directors specific experience in serving as a board member of another company.
Robert J. Rubin, M.D.
Dr. Rubin has been a member of our Board of Directors since July 2007. He was a clinical professor of
medicine at
Georgetown University from 1995 until 2012 when he was appointed a Distinguished Professor of Medicine. From 1987 to 2001, he was president of the Lewin Group (purchased by Quintiles Transnational
Corp. in 1996), a national health policy and management consulting firm. From 1994 to 1996, Dr. Rubin served as Medical Director of ValueRx, a pharmaceutical benefits company. From 1992 to
1996, he served as President of Lewin-VHI, a healthcare consulting company. From 1987 to 1992, he served as President of Lewin-ICF, a healthcare consulting company. From 1984
to 1987, Dr. Rubin served as a principal of ICF, Inc., a healthcare consulting company. From 1981 to 1984, he served as the Assistant Secretary for Planning and Evaluation at the
Department of Health and Human Services and as an Assistant Surgeon General in the United States Public Health Service. Dr. Rubin serves as a member of the Board of Directors of
Soligenix, Inc. He is a board certified nephrologist and internist. He received an undergraduate degree in Political Science from Williams College and an M.D. from Cornell University.
Dr. Rubin brings over 30 years of specific experience as a professor, policy maker, clinician and business professional dedicated
to the medical profession. His specific experience with the United States Department of Health and Human Services and Assistant Surgeon General is a unique and invaluable qualification, which lends
insight into governmental practice, policy making and regulation. Dr. Rubin's extensive and diverse background in education, government and business allows him to serve as a resource on a broad
spectrum of matters.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NOMINEES NAMED ABOVE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2014 ANNUAL MEETING
Joseph H. Capper.
Mr. Capper has been our President and Chief Executive Officer and a member of our Board of Directors since
June 2010.
Mr. Capper has served as President, Chief Executive Officer and a member of the Board of Directors of Home Diagnostics, Inc., a leading developer, manufacturer and marketer of diabetes
management products. Mr. Capper joined Home Diagnostics in 2009. Home Diagnostics was listed on NASDAQ until its strategic merger. Prior to joining Home Diagnostics, from 2002 to 2009,
Mr. Capper was President and Chief Executive Officer of CCS Medical Inc., a private company that is a leading provider of medical supplies in diabetes, wound care, respiratory and other
therapeutic categories. Earlier in his career, Mr. Capper spent nine years with Bayer Corporation, ultimately becoming National Sales Director of the Diabetic Products Division.
Mr. Capper also served in the U.S. Navy as a combat aviator and subsequently as a Congressional Liaison. Mr. Capper received an undergraduate degree in Accounting from West Chester
University and a Master of Business Administration degree in International Finance from George Washington University. Mr. Capper brings an extensive amount leadership and diverse experience in
public and private companies.
Ronald A. Ahrens.
Mr. Ahrens has been a member of our Board of Directors since August 2008 and Chairman of our Compensation
Committee since
December 2009. From 2004 to the present, Mr. Ahrens has served as the Vice Chairman of the Board of Directors and as a member of the Compensation Committee of Temptime Corporation, a healthcare
technology company. Previously, he
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served
as a member of the Board of Directors and Chairman of the Compensation Committee of VIASYS Healthcare Inc., a global medical technology company, from November 2001 until its acquisition
in July 2007 for $1.5 billion by Cardinal Health. Mr. Ahrens' past experience includes serving as Chairman of the Board of Directors of Closure Medical Corporation, a medical devices
corporation, from 1999 through June 2004, St. Ives Laboratories, Inc., a hair and skin care company from 1995 to 1997 and from 1990 to 1993 as a member of the Board of Directors of
Alcide Corporation, an animal healthcare technology company. Earlier in his career, Mr. Ahrens held various positions with Merck & Co, Inc. a global pharmaceuticals products
company, including President of Merck Consumer Healthcare Group Worldwide and Executive Vice President of Merck Consumer Healthcare Group International. Mr. Ahrens received an undergraduate
degree in English from Concordia College and a Masters in Sacred Theology from Concordia Seminary. Mr. Ahrens is a veteran of the healthcare industry and brings to the Board over forty years of
senior executive and management experience with both public and private pharmaceutical and device companies. He has also established a strong track record of serving and consulting for significant
public and private company board of directors. Mr. Ahrens' breadth of knowledge and hands-on business experience provides him with the necessary skill to serve as the Chairman of
the Compensation Committee for our Board of Directors and to easily relate to and act as a liaison between other members of the Board and executives within the Company.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2015 ANNUAL MEETING
Anthony J. Conti.
Mr. Conti joined the CardioNet board of directors in May 2012, serving as the Chairman of its Audit
Committee. He joined
Coopers and Lybrand in 1973 and served a wide range of technology, utility and health services clients. He held a number of leadership roles with Coopers and Lybrand, and later with
PricewaterhouseCoopers, after its merger with Price Waterhouse in 1998. Mr. Conti serves as the Chairman of the Audit Committee for Ametek, Inc., an electronic instrument and
electromechanical device company. He previously served as Chairman of the Board of the World Affairs Council of Philadelphia until December of 2011, and now serves as Chairman Emeritus. He also served
as a Member of the Board and Executive Committee of the United Way of Southeastern Pennsylvania. Mr. Conti holds a Bachelors of Arts degree in Economics from St. Joseph's University and
a Master of Business Administration degree from Temple University. Mr. Conti's extensive background as independent accountant, together with his experience as an audit committee member makes
him uniquely suited to be our audit committee chairman.
Kirk E. Gorman.
Mr. Gorman has been a member of our Board of Directors since August 2008 and our Chairman since October
2011.
Mr. Gorman has served as the Executive Vice President, Chief Financial Officer of Jefferson Health System, a hospital system in Philadelphia, Pennsylvania since September 2003.
Mr. Gorman has also been a member of the Board of Directors and Audit Committee of IASIS Healthcare LLC since February 2004. From April 1987 to March 2003, Mr. Gorman served as
the Senior Vice President, Chief Financial Officer of Universal Health Services, Inc., a hospital management company and President, Chief Financial Officer and a member of the Board of Trustees
of Universal Health Realty Income Trust, a real estate investment trust specializing in healthcare and human service related facilities. From June 2007 to October 2009, he also served on the board of
Care Investment Trust, a real estate investment trust. From November 2001 to December 2003, and from February 2005 until its acquisition by Cardinal Health, Inc. in July 2007, Mr. Gorman
served as a member of the Board of Directors of VIASYS Healthcare, Inc. a healthcare technology company. Mr. Gorman received an undergraduate degree from Dartmouth College and a Master
of Business Administration degree from the Amos Tuck School of Business. Mr. Gorman brings extensive financial knowledge and experience as the Chief Financial Officer of numerous healthcare
related companies, including Jefferson Health System, the largest hospital system in Philadelphia. His specific and ongoing healthcare related financial experience with reimbursement, tax, accounting,
and financial and strategic
28
Table of Contents
planning
is especially valuable to the Company. Mr. Gorman also brings significant public company board of director and audit committee experience.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND
CORPORATE GOVERNANCE
INDEPENDENCE OF THE BOARD OF DIRECTORS
As required under the NASDAQ listing standards, a majority of the members of a listed company's Board of Directors must qualify as
"independent," as affirmatively determined by the Board of Directors. The Board of Directors consults with CardioNet's counsel to
ensure that the Board of Directors' determinations are consistent with relevant securities and other laws and regulations regarding the definition of "independent," including those set forth in
pertinent listing standards of the NASDAQ, as in effect from time to time.
Consistent
with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and the Company, its senior
management and its independent registered public accounting firm, the Board of Directors has affirmatively determined that the following directors are independent directors within the meaning of the
applicable NASDAQ listing standards: Messrs. Ahrens, Conti and Gorman, Ms. Rimel and Drs. Prystowsky and Rubin. In making this determination, the Board of Directors found that none of
these directors or nominees for director had a material or other disqualifying relationship with the Company. Mr. Capper, the Company's President and Chief Executive Officer, is not an
independent director by virtue of his employment with the Company.
BOARD LEADERSHIP STRUCTURE AND ROLE IN OVERSIGHT OF RISK
Our Board leadership structure is currently composed of an independent Chairman of the Board of Directors, an independent Audit
Committee Chairman, an independent Nominating and Corporate Governance Committee Chairman, and an independent Compensation Committee Chairman. Kirk E. Gorman has served as a member of our Board of
Directors since August of 2008 and the Chairman of our Board of Directors since October, 2011.
Our
Board of Directors recognizes the importance of effective risk oversight in running a successful business, and in fulfilling its fiduciary responsibilities to CardioNet and its
stockholders. While the Chief Executive Officer, the General Counsel and other members of our senior leadership team are responsible for the day-to-day management of risk, our
Board of Directors is responsible for ensuring that an appropriate culture of risk management exists within the Company and for setting the right "tone at the top," overseeing our aggregate risk
profile, and assisting management in addressing specific risks, such as strategic and competitive risks, financial risks, brand and reputation risks, legal risks, regulatory risks and operational
risks.
The
Board believes that its current leadership structure best facilitates its oversight of risk by combining independent leadership, through the independent chairman, independent board
committees, and majority independent board composition. The Chairman, independent committee chairs, and other directors also are experienced professionals or executives who can and do raise issues for
board consideration and review, and are not hesitant to challenge management. The Board believes there is a well-functioning and effective balance between the independent Chairman and
non-executive board members, which enhances risk oversight.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met twelve (12) times during the year ended December 31, 2012. All directors attended at least 75%
of the aggregate of the meetings of the Board of Directors, and of the committees on which they served, held during the period for which they were directors or committee members.
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Table of Contents
INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 2012, the Board of Directors of CardioNet maintained three committees; the Audit Committee,
the Compensation Committee and the Nominating and Corporate Governance Committee. The following table provides membership information for each of the committees of the Board of Directors as of
May 28, 2013:
|
|
|
|
|
|
|
Name
|
|
Audit
|
|
Compensation
|
|
Nominating and
Corporate
Governance
|
Ronald A. Ahrens
|
|
|
|
X*
|
|
X
|
Anthony J. Conti
|
|
X*
|
|
|
|
|
Kirk E. Gorman
|
|
X
|
|
|
|
|
Eric N. Prystowsky, M.D.
|
|
|
|
X
|
|
X
|
Rebecca W. Rimel
|
|
|
|
X
|
|
|
Robert J. Rubin, M.D.
|
|
X
|
|
|
|
X*
|
Below
is a description of each committee of the Board of Directors as such committees have been constituted during the year ended December 31, 2012, and are presently constituted.
The Board of Directors has determined that each current member of each committee meets the applicable SEC and NASDAQ rules and regulations regarding "independence" and that each member is free of any
relationship that would impair his or her individual exercise of independent judgment with regard to the Company.
Audit Committee
The Audit Committee of the Board of Directors was established by the Board of Directors in accordance with Section 3(a)(58)(A)
of the Exchange Act to oversee the Company's corporate accounting and financial reporting processes and audits of its financial statements. The Board of Directors has adopted an Audit Committee
Charter which is available on our website at
http://investors.cardionet.com.
The functions of this committee include, among other
things:
-
-
evaluating the performance of our independent registered public accounting firm and determining whether to retain their
services for the ensuing year;
-
-
reviewing and pre-approving the engagement of our independent registered public accounting firm to perform
audit services;
-
-
reviewing and proposing to the full Board of Directors for approval any permissible non-audit services;
-
-
reviewing our annual financial statements and reports and discussing the statements and reports with our independent
registered public accounting firm and management;
-
-
reviewing with our independent registered public accounting firm and management significant issues that arise regarding
accounting principles and financial statement presentation, and matters concerning the effectiveness of internal auditing and financial reporting controls; and
-
-
establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters.
Both
our independent registered public accounting firm and management periodically meet privately with our Audit Committee.
30
Table of Contents
Our
Audit Committee currently consists of Messrs. Conti, Gorman and Dr. Rubin, each of whom is a non-employee director of our Board of Directors.
Mr. Conti is currently the Chairman of our Audit Committee. Mr. Conti joined the Committee in May 2012. The Audit Committee met five (5) times in 2012. The Board of
Directors reviews the NASDAQ listing standards' definition of independence for Audit Committee members on an annual basis and has determined that all current members of the Company's Audit Committee
are independent (as independence is currently defined in Rule 5605(a)(2) and IM-5605 of the NASDAQ listing standards and Rule 10A-3 under the Exchange Act). The
Board of Directors has determined that Anthony J. Conti is a financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act.
Report of the Audit Committee of the Board of Directors
During 2012, the Audit Committee met five (5) times. In the exercise of the Audit Committee's duties and responsibilities, the
Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2012 with the Company's management. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA,
Professional
Standards
, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T. The Audit Committee has also received the
written disclosures and the letter from the independent registered public accounting firm required by the Independence Standards Board Standard No. 1
(Independence
Discussions with Audit Committees)
, as adopted by the PCAOB in Rule 3600T and has discussed with the independent registered public accounting firm the independent
registered public accounting firm's independence. Based on its review and discussions and subject to the limitations on the role and responsibilities of the Audit Committee in its charter, the Audit
Committee recommended to the Board that the audited financial statements for 2012 be included in the Company's Annual Report to stockholders on Form 10-K filed with the SEC.
Anthony
J. Conti, Chair
Kirk E. Gorman
Robert J. Rubin, M.D.
April 15,
2013
This Report of the Audit Committee is not "soliciting material" and shall not be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement/prospectus into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically
incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.
Compensation Committee
The Compensation Committee currently consists of three directors, Mr. Ahrens, the Chairman of the Compensation Committee,
Dr. Prystowsky and Ms. Rimel. All members of the Company's Compensation Committee are independent (as independence is currently defined in Rule 5605(a)(2), IM-5605 and
Rule 5605(d)(2) of the NASDAQ listing standards and Section 162(m) of the Internal Revenue Code. In 2012, the Compensation Committee met three (3) times.
The
Board of Directors has adopted a Compensation Committee Charter which was revised as of January 22, 2009 and is available on our website at
http://investors.cardionet.com
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Table of Contents
The
Compensation Committee of the Board of Directors acts on behalf of the Board of Directors to review, recommend for adoption, and oversee the Company's compensation strategy,
policies, plans and programs, including:
-
-
reviewing and recommending to the Board of Directors the compensation and other terms of employment of our Chief Executive
Officer;
-
-
reviewing and approving the compensation and other terms of employment of our executive officers (other than the Chief
Executive Officer);
-
-
reviewing and recommending to the Board of Directors performance goals and objectives relevant to the compensation of our
Chief Executive Officer and assessing his or her performance against these goals and objectives;
-
-
interpreting, administering, and granting, or with respect to the Chief Executive Officer recommending for approval by the
Board of Directors, awards under the equity incentive plans, compensation plans and similar programs advisable for us, as well as modification or termination of existing plans and programs;
-
-
reviewing and periodically accessing the adequacy of compensation to be paid or awarded to members of the Board of
Directors;
-
-
establishing policies with respect to equity compensation arrangements;
-
-
reviewing the competitiveness of our executive compensation programs and evaluating the effectiveness of our compensation
policy and strategy in achieving expected benefits to us;
-
-
reviewing and recommending to the Board of Directors the terms of any employment agreements, severance arrangements,
change in control protections and any other compensatory arrangements for our executive officers;
-
-
reviewing incentive compensation arrangements to ensure that such compensation arrangements do not encourage unnecessary
risk taking; and
-
-
reviewing with management our disclosures under the caption "Compensation Discussion and Analysis" and recommending to the
full Board of Directors its inclusion in our periodic reports to be filed with the SEC.
Typically,
the Compensation Committee meets quarterly and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation
Committee. The Compensation Committee meets regularly in executive session. However, from time to time, various
members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, provide financial or other background
information or advice or otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in or be present during any deliberations of the Compensation
Committee regarding his compensation. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company, as well as
authority to obtain, at the expense of the Company, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the
Compensation Committee considers necessary or appropriate in the performance of its duties.
Our
Compensation Committee retains the services of third party executive compensation specialists and consultants from time to time, as it sees fit, in connection with the establishment
of cash and equity compensation and related policies.
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The
specific recommendations of the Compensation Committee with respect to executive compensation for the year ended December 31, 2012 are described in greater detail in the
Compensation Discussion and Analysis section of this proxy statement/prospectus.
Use of Compensation Consultants
The Compensation Committee has authority to retain compensation consultants, independent counsel or other consultants necessary to
assist it in fulfilling its responsibilities and, during 2012, retained Pearl Meyer & Partners, LLC ("PM&P"), to serve as its independent compensation consultant. For further discussion
of the role that PM&P played in setting executive compensation during 2012, please see the discussion under "Role of the Independent Compensation Consultant" in our Compensation Discussion and
Analysis later in this proxy.
Compensation Committee Interlocks and Insider Participation
As indicated above, Mr. Ahrens, Ms. Rimel and Dr. Prystowsky currently serve, and previously served during 2012,
as members of the Compensation Committee. No member of the Compensation Committee has ever been an executive officer or employee of the Company. None of our officers currently serves, or has served
during the last completed year, on the Compensation Committee or the Board of Directors of any other entity that has one or more officers serving as a member of the Board of Directors or the
Compensation Committee.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently consists of three directors, Dr. Rubin, the Chairman of the
Nominating and Corporate Governance Committee, Mr. Ahrens and Dr. Prystowsky. During 2012, the Nominating and Corporate Governance Committee met one (1) time. The Board of
Directors has adopted a Nominating and Corporate Governance Committee Charter which is available on our website at
http://investors.cardionet.com.
All
members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) and IM-5605 of the NASDAQ listing standards).
The
functions of the Nominating and Corporate Governance Committee include, among other things:
-
-
identifying, reviewing and evaluating candidates to serve on our Board of Directors consistent with criteria approved by
our Board of Directors;
-
-
determining the minimum qualifications for service on our Board of Directors;
-
-
evaluating director performance on the Board of Directors and applicable committees of the Board of Directors and
determining whether continued service on our Board of Directors is appropriate;
-
-
reviewing, evaluating and recommending individuals for membership on our Board of Directors;
-
-
evaluating nominations by stockholders of candidates for election to our Board of Directors;
-
-
considering and assessing the independence of members of our Board of Directors;
-
-
developing, as appropriate, a set of corporate governance policies and principles, including a code of business conduct
and ethics and reviewing and recommending to our Board of Directors any changes to such policies and principles;
-
-
periodically reviewing with our Chief Executive Officer the succession plans for the office of Chief Executive Officer and
for other key executive officers, and making recommendations to our Board of Directors of appropriate individuals to succeed to these positions;
33
Table of Contents
-
-
considering questions of possible conflicts of interest of directors as such questions arise;
-
-
reviewing the adequacy of our Nominating and Corporate Governance Committee charter on a periodic basis; and
-
-
reviewing and evaluating, at least annually, the performance of the Nominating and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic
financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as
possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her
field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of the Company's stockholders. However, the
Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current
composition of the Board of Directors, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate
Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board of Directors and the Company, to maintain a balance of
knowledge, experience and capability.
The
Nominating and Corporate Governance Committee places a high priority on identifying individuals with diverse skill sets and types of experience including identification of
individuals from among the medical professional and medical device communities. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance
Committee reviews these directors' overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance, and any other
relationships and transactions that might impair the directors' independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the
nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The
Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The
Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs
of the Board of Directors. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates' qualifications and then selects a nominee by majority vote.
The
Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to
alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to
recommend individuals for consideration by the Nominating and Corporate Governance Committee to
become nominees for election to the Board of Directors for the 2014 Annual Meeting of Stockholders may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee
on or before February 21, 2014 at the following address: 227 Washington Street #210, Conshohocken, Pennsylvania 19428, Attn: Secretary. Submissions must include the full name of the proposed
nominee, a description of the proposed nominee's business experience for at least the previous five years, complete biographical information, a description of the proposed nominee's qualifications as
a director and the name of the nominating stockholder, a representation that the nominating stockholder is a beneficial or record holder of the Company's stock and has been a holder
34
Table of Contents
for
at least one year. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Company's Board of Directors has adopted a formal process by which stockholders may communicate with the Board of Directors or any
of its directors. This information is available on the Company's website at
http://investors.cardionet.com.
CODE OF ETHICS
The Company has adopted the CardioNet, Inc. Code of Business Conduct and Ethics that applies to all officers, directors and
employees, which was amended and updated to reflect current business practice and industry regulation on January 22, 2009. We intend to maintain the highest standards of ethical business
practices and compliance with all laws and regulations applicable to our business. The Code of Business Conduct and Ethics is available on our website at
http://investors.cardionet.com.
If the Company
makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a
provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website at
http://investors.cardionet.com.
EXECUTIVE OFFICERS
The following table sets forth information regarding our executive officers as of June 4, 2013:
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Executive Officers:
|
|
|
|
|
|
Joseph H. Capper
|
|
|
50
|
|
Director, President and Chief Executive Officer
|
Heather C. Getz, CPA
|
|
|
38
|
|
Senior Vice President and Chief Financial Officer
|
Michael Geldart
|
|
|
50
|
|
Senior Vice President, Strategy and Business Development
|
Peter Ferola
|
|
|
44
|
|
Senior Vice President, Corporate Development, General Counsel, Secretary
|
Anna McNamara, RN
|
|
|
65
|
|
Senior Vice President, Clinical Operations
|
Fred (Andy) Broadway III
|
|
|
43
|
|
Senior Vice President, Sales and Marketing
|
Daniel Wisniewski
|
|
|
49
|
|
Senior Vice President, Business Operations
|
George Hrenko
|
|
|
50
|
|
Senior Vice President, Human Resources and Organizational Excellence
|
Biographical Information for Executive Officers
Joseph H. Capper.
Mr. Capper was appointed President and Chief Executive Officer and a member of the Board of Directors of
CardioNet in June
2010. Prior to joining CardioNet, Mr. Capper served as President, Chief Executive Officer and a member of the Board of Directors of Home Diagnostics, Inc., a leading developer,
manufacturer and marketer of diabetes management products. Mr. Capper joined Home Diagnostics in 2009 and positioned the Company for a strategic merger in a transaction that created substantial
value to its stockholders. Home Diagnostics was listed on the NASDAQ until its strategic merger. Prior to joining Home Diagnostics, from 2002 to 2009, Mr. Capper was President and Chief
Executive Officer of CCS Medical Inc., a private company that is a leading provider of medical supplies in diabetes, wound care, respiratory and other therapeutic categories. Earlier in his
career, Mr. Capper spent nine years with Bayer Corporation, ultimately becoming National Sales Director of the Diabetic Products Division. Mr. Capper also has a distinguished service
record having served in the U.S. Navy as a combat aviator and subsequently as a Congressional Liaison. Mr. Capper received an undergraduate degree in Accounting from West Chester University and
a Master of Business Administration degree in International Finance from George Washington University.
35
Table of Contents
Heather C. Getz, CPA.
Ms. Getz was appointed Senior Vice President and Chief Financial Officer in January 2010.
Ms. Getz joined
CardioNet in May 2009 as Vice President of Finance. From April 2008 to May 2009, Ms. Getz was Vice President of Finance at Alita Pharmaceuticals, Inc., a privately held specialty
pharmaceutical company, where she was responsible for all areas of finance, accounting and information systems. Prior to joining Alita Pharmaceuticals, Inc., from March 2002 to April 2008,
Ms. Getz held various financial leadership positions at VIASYS Healthcare Inc., a healthcare technology company, including directing the company's global financial planning, budgeting
and analysis, and external reporting functions. From June 1997 to February 2002, Ms. Getz began her career at Sunoco, Inc., where she held various positions of increasing responsibility.
Ms. Getz is a certified public accountant, and received her undergraduate degree in Accountancy and a Master of Business Administration degree from Villanova University.
Peter Ferola.
Mr. Ferola joined CardioNet in February 2011 as its Senior Vice President, Corporate Development and General
Counsel, with over
20 years of progressive leadership experience in business management, legal affairs and corporate governance. From 2009 to 2011, Mr. Ferola served as Vice President, General Counsel and
Secretary of Nipro Diagnostics, Inc. (formerly Home Diagnostics, Inc., NASDAQ: HDIX). Prior to joining Home Diagnostics, Mr. Ferola worked as a corporate and securities attorney
with Greenberg Traurig, LLP and with Dilworth Paxson, LLP in Washington, D.C. focusing on mergers, acquisitions, public securities offerings and corporate governance matters. From 1989
to 2002, Mr. Ferola worked in executive management roles for an American Stock Exchange-listed company, most recently serving as Vice PresidentAdministration and Corporate
Secretary,
overseeing the Company's administrative functions, legal matters and investor relations. Mr. Ferola earned a Bachelor of Science and Juris Doctor degree from Nova Southeastern University and a
Master of Laws in Securities and Financial Regulation from Georgetown University Law Center. Mr. Ferola has authored numerous articles on corporate and securities laws, with a particular focus
on audit committees and regulations implemented in the wake of the Sarbanes-Oxley Act of 2002.
Michael Geldart.
Mr. Geldart joined CardioNet in June 2012 as its Senior Vice President, Corporate Strategy and Business
Development. Michael has
more than 20 years of experience in executive leadership, health law and corporate development. Most recently, from May 2011 until coming to CardioNet in June of 2012, Michael worked as a
consultant with numerous companies on strategic business planning and compliance matters through his sole proprietor consulting business, Geldart Consulting, LLC. From October 2009 to April
2011, Mr. Geldart was the Chief Operating Officer of MedExpress, a leading multi-state Urgent Care provider. Prior to joining MedExpress, from July 2002 to September 2009, Michael was the Chief
Operating Officer and Executive Vice President of Corporate Development of CCS Medical. Prior to joining CCS Medical, Michael was a partner at Holland & Knight, LLP, a global law firm,
where he most recently served as the Co-Chair of the firm's National Health Care Practice Group. Michael received a Bachelor of Arts in Chemistry from the University of South Florida and a
Juris Doctor degree from Stetson University College of Law. Michael is a member of the Florida Bar.
Anna McNamara, RN.
Ms. McNamara joined CardioNet in 2002 serving in various Clinical Operations roles. She currently serves
as our Senior Vice
President, Clinical Operations. From February 2001 to September 2002, Ms. McNamara served as Executive Vice President of Clinical Operations for LifeWatch Corp., a healthcare services company.
From July 1998 to February 2001, Ms. McNamara served as Vice President of Clinical Operations for Quality Diagnostic Services at Matria Healthcare, Inc., a healthcare company. From
January 1997 to July 1998, Ms. McNamara served as Vice President of Clinical Operations for WebMD Health Corp., a web-based health information provider. Ms. McNamara received
an undergraduate degree in Nursing from Marymount College and worked as a Registered Nurse at Mercy Hospital in Scranton, Pennsylvania.
36
Table of Contents
Fred (Andy) Broadway III.
Mr. Broadway joined CardioNet in June 2009 as its Vice President, Marketing, bringing 15 years of
progressive
leadership experience in sales and marketing, including extensive therapeutic knowledge in Cardiology and Neurology. In September 2012, Mr. Broadway was promoted to Senior Vice President,
Marketing, and in January 2013, Mr. Broadway became CardioNet's Senior Vice President, Sales and Marketing. Prior to joining CardioNet, from 2006 to June 2009, Andy
was Director of Marketing at Bristol-Myers Squibb, leading the commercialization launch efforts of a potential new therapy for the treatment of stroke prevention in atrial fibrillation. Earlier in his
career, Andy was on the marketing team at Pfizer, responsible for developing yearly and long term strategic plans, brand and portfolio positioning, asset/life/cycle development, and overseeing
commercialization tactics for several leading brands. Andy started his career with Sanofi Pharmaceuticals, where he held numerous positions of increasing responsibility including sales, marketing, and
eventually leadership positions in both sales and marketing. Andy received his undergraduate degree in Zoology from Auburn University.
Daniel Wisniewski.
Mr. Wisniewski joined CardioNet in December 2010 as its Senior Vice President, Operations, with over
20 years of
experience in executive leadership, information systems, and operations. Most recently, from 2000 to 2010, Mr. Wisniewski served as Chief Information Officer with CCS Medical, Inc. As
the Chief Information Officer, Mr. Wisniewski was responsible for developing a highly scalable patient centric operational infrastructure focused on compliance, growth and expense control
within the healthcare industry. Prior to joining CCS Medical, Inc., Mr. Wisniewski held various roles within the nuclear and banking industries with increasing responsibilities in
information systems and general management. Mr. Wisniewski began his career as an U.S. Navy Nuclear Trained Naval Officer. Mr. Wisniewski received his undergraduate degree in Electrical
Engineering from Virginia Military Institute.
George Hrenko.
Mr. Hrenko joined CardioNet in 2008 as its VP of Human Resources and was named Senior Vice President, Human
Resources and
Organizational Excellence in May 2010. Most recently, Mr. Hrenko served as a Director of Human Resources for Target Corporation from February 2002 to March 2007. From December 1998 to February
2002, Mr. Hrenko held several positions with Bank One Corporation, including First Vice President, Human Resources Generalist, Vice President, Compensation, and Vice President, Corporate
Staffing. From 1996 to 1998 he served as Managing Director, Human Resources for Continental Airlines. Prior to joining Continental Airlines, Mr. Hrenko served as Human Resources Manager at
Pepsi-Cola Co. and PepsiCo, Inc., from 1987 to 1996. Mr. Hrenko received an undergraduate degree in English and Psychology from Penn State University.
37
Table of Contents
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of the CardioNet Common Stock as of May 28, 2013 by:
(i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company
as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of CardioNet Common Stock.
|
|
|
|
|
|
|
|
Name
|
|
Amount and
Nature of
Beneficial
Ownership(1)
|
|
Percent
of Class*
|
|
Ronald A. Ahrens(2)
|
|
|
164,336
|
|
|
*
|
|
Robert J. Rubin, M.D.(3)
|
|
|
139,152
|
|
|
*
|
|
Kirk E. Gorman(4)
|
|
|
120,036
|
|
|
*
|
|
Eric N. Prystowsky, M.D.(5)
|
|
|
111,960
|
|
|
*
|
|
Rebecca W. Rimel(6)
|
|
|
72,992
|
|
|
*
|
|
Anthony J. Conti
|
|
|
54,796
|
|
|
*
|
|
Joseph H. Capper(7)
|
|
|
722,022
|
|
|
2.8
|
%
|
Anna McNamara(8)
|
|
|
101,223
|
|
|
*
|
|
Heather C. Getz, CPA(9)
|
|
|
103,418
|
|
|
*
|
|
Michael Geldart(10)
|
|
|
25,000
|
|
|
*
|
|
Daniel Wisniewski(11)
|
|
|
61,709
|
|
|
*
|
|
Sophrosyne Capital LLC(12)
|
|
|
2,473,878
|
|
|
9.7
|
%
|
Camber Capital Management LLC(13)
|
|
|
2,481,412
|
|
|
9.7
|
%
|
Trigran Investments Inc.(14)
|
|
|
2,488,913
|
|
|
9.8
|
%
|
Trigran Investments LP(15)
|
|
|
1,485,471
|
|
|
5.8
|
%
|
Directors and Executive Officers as a Group (14 persons)(16)
|
|
|
1,966,653
|
|
|
7.7
|
%
|
-
*
-
Less
than one percent
-
(1)
-
This
table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G if any filed with the SEC.
Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 25,455,135 shares outstanding on May 28, 2013, adjusted as required
by rules promulgated by the SEC.
-
(2)
-
Includes
options to purchase 34,786 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(3)
-
Includes
options to purchase 28,489 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(4)
-
Includes
options to purchase 27,286 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(5)
-
Includes
options to purchase 42,687 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(6)
-
Includes
options to purchase 9,388 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(7)
-
Includes
options to purchase 605,424 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
38
Table of Contents
-
(8)
-
Includes
options to purchase 40,304 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(9)
-
Includes
options to purchase 93,740 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(10)
-
Includes
options to purchase 25,000 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(11)
-
Includes
options to purchase 61,709 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
-
(12)
-
Based
on Amendment 2 to Schedule 13G/A filed by Sophrosyne Capital LLC on February 7, 2013. The address of the principal business and
office of Sophrosyne Capital LLC is 156 E 36
th
Street at 2 Sniffen Court, New York, New York 10016.
-
(13)
-
Based
on Amendment 2 to Schedule 13G/A filed by Camber Capital Management LLC on February 14, 2013. Camber Capital
Management LLC possesses shared voting and shared dispositive power over its 2,481,412 shares. The address of the principal business and office of Camber Capital Management LLC is 101
Huntington Avenue, 25
th
Floor, Boston, MA 02199.
-
(14)
-
Based
on Amendment 2 to Schedule 13G/A filed by Trigran Investments Inc. on February 14, 2013. Trigran Investments Inc.
possesses shared voting and shared dispositive power over its 2,488,913 shares. The address of the principal business and office of Trigran Investments, Inc. is 630 Dundee Road,
Suite 230, Northbrook, IL 60062.
-
(15)
-
Based
on Amendment 1 to Schedule 13G/A filed by Trigran Investments LP on February 14, 2013. Trigran Investments LP possesses
shared voting and shared dispositive power over its 1,485,471 shares. The address of the principal business and office of Trigran Investments LP is 630 Dundee Road, Suite 230,
Northbrook, IL 60062.
-
(16)
-
Includes
options to purchase 1,170,540 shares of CardioNet Common Stock, which were exercisable as of, or will be exercisable within sixty (60) days
after May 28, 2013.
39
Table of Contents
EQUITY COMPENSATION PLAN INFORMATION
The following table presents the equity compensation plan information as of December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information
|
|
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants,
and rights
|
|
Weighted-average
exercise price of
outstanding
options,
warrants
and rights
|
|
Number of
securities
remaining
available for future
issuance under
equity
compensation
plans (excluding
securities reflected
in column (a))
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
:
|
|
|
|
|
|
|
|
|
|
|
Employee and non-employee director stock option plans
|
|
|
3,669,103
|
|
$
|
5.83
|
|
|
1,853,786
|
|
Employee stock purchase plan
|
|
|
50,903
|
|
$
|
2.01
|
|
|
457,584
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,720,006
|
|
$
|
5.78
|
|
|
2,311,370
|
|
|
|
|
|
|
|
|
|
40
Table of Contents
DIRECTOR AND EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
In this Compensation Discussion and Analysis, we address the compensation provided to our named executive officers listed below under
"Our Named Executive Officers" and in the Summary Compensation Table that follows this discussion, the goals that we seek to achieve through our executive compensation program and other important
factors underlying our compensation practices and policies.
2012
has been another challenging year for us with mixed results. We experienced shortfalls to our revenue and gross profits. However, despite these challenges, we achieved, and in some
cases exceeded, certain pre-established incentive plan goals. This presented a challenge to the Compensation Committee, which was again tasked with balancing the need to provide
compensation sufficient to attract and retain key members of our senior management team through this challenging period, on one hand, with the goal of aligning compensation with stockholder value, on
the other hand. As in previous years, in an effort to strike an appropriate balance between these purposes, the Compensation Committee made certain adjustments to the compensation paid to certain
executive officers (as described in more detail below) as compared to what they would have received based on a strict application of the pre-established performance metrics, while at the
same time ensuring that overall incentive payments reflected the mixed results of 2012. This was accomplished mainly through an increase from 40% to 50% of target in cash incentive payouts to our
senior
executives. The net effect of these decisions was an aggregate payout of cash incentive for 2012 performance using a bonus pool of 50% of full target, with certain adjustments for individual
performance based on Mr. Capper's recommendation. The Compensation Committee also awarded equity grants at 50% of target, which was 50% less than 2011 equity awards. In addition, with exception
for market based adjustments for our Chief Financial Officer in 2013, base salaries remained unchanged for 2012 and 2013.
In
addition, the Compensation Committee periodically reviews the Company's executive pay practices, its appropriate peer group and the utilization of shares in its equity plans, with a
view toward ensuring that the Company's overall compensation practices are consistent with the market and effective in generating long-term shareholder value.
Our
compensation program is generally designed to provide performance-oriented incentives that fairly compensate our executive officers and enable us to attract, retain and motivate
executives with outstanding ability and potential. Our compensation program consists of both short-term and long-term components, including cash and equity-based compensation,
and is intended to reward consistent performance that meets or exceeds formally established performance goals and objectives. Our Compensation Committee and senior management is focused on providing
an appropriate mix of short-term and long-term incentives, and we are mindful not to rely on highly leveraged incentives that would result in risky short-term
behavior. Our compensation program provides long-term incentives to ensure that our executives continue in employment with us and directly tie executive compensation to generation of
shareholder value. For 2013, we have revised our Management Incentive Plan to include corporate goals and objectives relating to volume, revenue, and EBITDA growth, and we overlay management by
objective (MBO) goals that are intended to encourage our executives to build and maintain an infrastructure that supports our growth and increases revenues.
Our named executive officers for 2012 are Messrs. Capper, Geldart and Wisniewski, and Ms. Getz and Ms. McNamara.
41
Table of Contents
Our Compensation Committee is composed entirely of independent directors. Our Compensation Committee administers our executive
compensation program.
The
general duties of the Compensation Committee include:
-
-
Administration of the Company's annual incentive, equity compensation and long term incentive plans;
-
-
Review and recommendation of major compensation plans for approval by the Board;
-
-
Recommendation of compensation for the President and Chief Executive Officer for approval by the independent members of
our Board; and
-
-
Approval of compensation decisions relating to all executive officers.
Our
Compensation Committee believes that our executive compensation program should include both short-term and long-term components, including cash and
equity-based compensation, and should reward consistent performance that meets or exceeds expectations. In general, we tie compensation to the achievement of specific corporate and individual goals.
Determinations about corporate performance are based on achievement of specific, pre-determined objectives. Individual performance against goals are more subjective and are based on the
judgments made at the discretion of our Compensation Committee and our Board of Directors, with input from our Chief Executive Officer, except as it relates to his own compensation. For our executive
officers other than himself, our Chief Executive Officer evaluates the performance of the executive officers on an annual basis and makes recommendations to our Compensation Committee with respect to
annual salary adjustments, bonuses and annual equity awards. These recommendations
are reviewed by our Compensation Committee on an aggregated basis so that our Compensation Committee can evaluate the compensation paid to our executives on a total compensation basis. While our
Compensation Committee reviews the recommendations of our Chief Executive Officer with respect to executive officers other than himself, our Compensation Committee exercises its own discretion in
approving salary adjustments and discretionary cash and equity awards for all executives and communicates its final approval to our Board of Directors.
We
believe our approach to goal setting, setting of targets with payouts at multiple levels of performance, and evaluation of performance results assist in mitigating excessive
risk-taking that could harm our value or reward poor judgment by our executives. The features of these practices and programs also reflect sound risk management practices. We believe we
have allocated our compensation among base salary and short and long-term compensation target opportunities in such a way as to not encourage excessive risk-taking. This is
based on our belief that applying Company-wide metrics encourages decision making that is in the best long-term interests of the company and our stockholders. In addition, we
believe that the mix of equity award instruments used under our long-term incentive program, including both stock options and full value awards (i.e., restricted stock units), in
each case, that vest over a multi-year period also mitigates risk and properly account for the time horizon of risk.
Currently, our Compensation Committee is chartered to review and make recommendations to our Board of Directors regarding the
compensation to be paid to our Chief Executive Officer and approves compensation for all other executive officers. Historically, our Compensation Committee negotiated compensation with our Chief
Executive Officer, and our Chief Executive Officer consulted with our Board of Directors regarding the compensation of our other named executive officers.
42
Table of Contents
The Compensation Committee may retain, at the expense of the Company, independent counsel or other consultants necessary to assist in
fulfillment of its responsibilities and the exercise of its authority under this Charter, including, without limitation, with respect to the preparation of this Compensation Discussion and Analysis
for the Company's filings with the SEC. If a consulting firm is to be retained to assist in the evaluation of director, Chief Executive Officer or senior executive compensation, the Compensation
Committee shall have sole authority to retain and terminate the consulting firm, including sole authority to approve the firm's fees and other retention terms.
In
2009, our Compensation Committee retained PM&P as an independent compensation consultant to assist it in benchmarking our executive compensation decisions and practices against the
group of publicly-traded peer companies listed below. The market study was updated in the fall of 2010 for the purpose of assisting the Compensation Committee with establishing salaries, target bonus
and target long-term incentive opportunities for officers in 2011. In 2012, PM&P re-evaluated the group of peer companies, and determined the group listed below provides an
adequate basis to evaluate comparative positions. Generally, salaries and initial stock grants for our executive officers have been negotiated at the time of hire, taking into account the salaries and
equity awards made to similarly situated executives at the companies in our peer group, as well as the executive's experience in the position and in the industry generally. Thereafter, salaries are
subject to an annual review process and the adequacy of equity awards are reviewed annually.
At
the time the market analysis was last updated in the fall of 2012, the companies in our peer group included the following 15 publicly traded companies in the medical products and
services sector, with revenue between $70 million and $400 million (with most between $90 million and $240 million), classification by Standard and Poor's ("S&P") as Health
Care Equipment, Health Care Services or Life Sciences Tools & Services, equity market capitalization between $100 million and $1 billion (with most between $300 million and
$500 million), to the extent possible, company considered part of the "cardio" sector of the Med Tech industry:
-
-
Affymetrix, Inc.
-
-
Natus Medical, Inc.
-
-
Angiodynamics, Inc.
-
-
Exactech, Inc.
-
-
Abiomed, Inc.
-
-
Quidel Corp.
-
-
Spectranetics Corp.
-
-
Cryolife, Inc.
-
-
Solta Medical, Inc.
-
-
Epocrates, Inc.
-
-
Vascular Solutions, Inc.
-
-
Bioclinica, Inc.
-
-
Cardiovascular Systems, Inc.
-
-
Palomar Med Technologies, Inc.
-
-
Atricure, Inc.
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To achieve its objectives for our executive compensation program, the Compensation Committee evaluates our executive compensation program with the goal of setting
compensation at levels the Compensation Committee believes are competitive with those of other similarly situated companies that compete with us for executive talent and has periodically engaged PM&P
to provide additional assurance that the Company's executive compensation programs are reasonable and consistent with its objectives. PM&P reports directly to the Compensation Committee, periodically
participates in committee meetings, and advises the Compensation Committee with respect to compensation trends and best practices, plan design, and the reasonableness of individual compensation
awards. Although the Compensation Committee reviews the compensation practices of our peer companies as described above, the Compensation Committee does not adhere to strict formulas or survey data to
determine the mix of compensation elements. Instead, as described below, the Compensation Committee considers various factors in exercising its discretion to determine compensation, including the
experience, responsibilities and performance of each of our executive officers, as well as the company's overall financial performance. This flexibility is particularly important in designing
compensation arrangements to attract and retain executives in the period of uncertainty that the company is currently facing.
The compensation program for our executive officers has consisted principally of base salary, short-term cash incentives
and long-term incentives in the form of equity grants.
Generally, base salaries for our executives were established based on the scope of their responsibilities and individual experience,
taking into account our informal understanding of competitive market compensation paid by other companies for similar positions within our industry. Base salaries are typically reviewed annually
taking into account individual responsibilities, performance and achievement. Increases may be determined based upon specific performance related objectives or goals, as well as an overall evaluation
of performance. Guidelines for annual merit increases are determined based upon achievement of company objectives for the year, as well as economic, industry and market factors.
We
believe, based on our recruiting efforts and general experience in our industry, that the base salary levels of our named executive officers are commensurate with the general salary
levels for similar positions in medical device and services companies of similar size and stage of development and operations. In 2012, our Compensation Committee did not adjust the salaries for our
named executive officers. The salaries in effect for 2012 and 2013 are set forth below.
|
|
|
|
|
Name
|
|
2012 and 2013
Base Salary
|
|
Joseph H. Capper
|
|
$
|
535,000
|
|
Heather C. Getz, CPA
|
|
$
|
322,000
|
*
|
Anna McNamara, RN
|
|
$
|
321,360
|
|
Daniel Wisniewski
|
|
$
|
320,000
|
|
Michael Geldart
|
|
$
|
320,000
|
|
-
*
-
Ms. Getz's
salary was increased from $298,000 for 2013 to be within the 50
th
percentile of peer group Chief Financial Officers.
In
February 2013, our Compensation Committee met to review performance for 2012 and, at Mr. Capper's recommendation, decided not to award any salary increases for our named
executive officers for 2013, with the exception of Ms. Getz. Our Compensation Committee considered a number
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of
factors in reaching its decision not to approve base salary increases for 2013, including financial and overall corporate and individual performance during 2012.
We maintain our Management Incentive Plan ("MIP") to reward executives with annual cash bonuses for achievement of certain corporate
performance objectives and individual objectives. The MIP operates on a calendar year schedule.
While
all employees of the Company are eligible to participate in the MIP, our Compensation Committee has the authority to designate which employees will participate in the MIP in any
given year. Unless specifically excepted, an employee must be employed by us by October 1st of any given year to be eligible to participate in the MIP for the calendar year. In addition,
unless specifically excepted, an eligible employee must be actively employed by us on the date bonuses are paid under the MIP to receive a payment. In general, bonuses under the MIP are paid out
within the first two and one-half months following year-end.
On
an annual basis, our Compensation Committee selects the individual and corporate performance goals for the upcoming year and determines how the achievement of those goals will be
measured and the amount of the bonuses determined. Each participant in the MIP is assigned a specific target award, based on his or her role and competitive market practice. The target award reflects
the award to be paid for meeting predefined corporate and individual performance goals. Target awards are defined as a percentage of base salary. For 2012, the Compensation Committee determined that
actual awards under the MIP could range from 0% to 200% of target, depending on performance. Within the formula under the MIP, our Compensation Committee has the discretion to take into account
circumstances that may have affected performance as to any particular participant.
For
2012, our Compensation Committee determined that the corporate performance measures were volume, revenue, EBITDA, as well as team objectives and established minimum and maximum
goals. Our Compensation Committee determined that the above criteria was an appropriate corporate performance objective because it is linked to top line growth and the creation of stockholder value.
For
our named executive officers, the individual target bonuses approved by our Compensation Committee, expressed as a percentage of each person's base salary, were as follows:
|
|
|
|
|
Joseph H. Capper
|
|
|
100
|
%
|
Heather C. Getz, CPA
|
|
|
60
|
%
|
Other Named Executive Officers
|
|
|
50
|
%
|
In
February 2013, our Compensation Committee evaluated the level of achievement of the financial goal, cost reduction goal, and the individual performance objectives relating to
operational commitments relative to the executive officer's position (taking into account the weighting described above together with Mr. Capper's recommendations), and approved funding at 50%
of target, with actual Named Executive Officer bonuses varying from that level based on individual performance evaluation performed by the Company's Chief Executive Officer for each Named Executive
Officer. In making its decision to pay bonuses at these levels, our Compensation Committee balanced the management team's achievement of certain pre-established incentive plan goals with
the overall performance of the Company. With respect to individual objectives, our Compensation Committee considered management's successes in acquiring ECG Scanning and CardioCORE. The Committee also
considered the level of contribution made by each named executive officer with respect to the
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achievement
of these goals based on the scope of their responsibilities with the Company, taking into account recommendations from Mr. Capper.
|
|
|
|
|
Joseph H. Capper
|
|
$
|
267,500
|
|
Heather C. Getz, CPA
|
|
$
|
107,316
|
|
Daniel Wisniewski
|
|
$
|
72,000
|
|
Anna McNamara, RN
|
|
$
|
80,340
|
|
Michael Geldart
|
|
$
|
60,667
|
*
|
-
*
-
Reflects
prorated bonus.
For
2013, our Compensation Committee has determined that the goals under the MIP will be as follows and will be weighted as noted:
|
|
|
% of Payout
|
|
Goal
|
30%
|
|
Revenue
|
30%
|
|
EBITDA
|
40%
|
|
Team Objectives
|
Our
Compensation Committee determined that these goals are appropriate in order to continue to advance the Company's overall strategic objectives and to enhance stockholder value. The
target bonus opportunity set for the named executive officers for 2013 under the MIP are as follows, and remain unchanged from the 2012 target bonus opportunities:
|
|
|
|
|
Joseph H. Capper
|
|
|
100
|
%
|
Heather C. Getz, CPA
|
|
|
60
|
%
|
Other Named Executive Officers
|
|
|
50
|
%
|
Equity Compensation Plans
Prior to our initial public offering, we granted equity awards primarily through our 2003 Equity Incentive Plan (the "2003 Plan"),
which was adopted by our Board of Directors and stockholders to permit the grant of stock options, stock bonuses, and restricted stock to our officers, directors, employees and consultants. In the
absence of a public trading market for our common stock prior to the closing of our initial public offering, our Board of Directors and Compensation Committee determined the fair market value of our
common stock in good faith, based upon consideration of a number of relevant factors, including the status of our development efforts, financial status and market conditions. In addition, we secured
an outside valuation from an independent valuation firm in order to set fair market value of our common stock.
In
connection with our initial public offering in 2008, our Board of Directors adopted new equity compensation plans. Specifically, our Board of Directors adopted the 2008 Equity
Incentive Plan (the "2008 EIP"), the Director Plan (as described in more detail below under "Non-Employee Director Compensation") and the 2008 Employee Stock Purchase Plan (the "ESPP").
Each of the new plans became effective on March 18, 2008, upon the effectiveness of our initial public offering. The 2008 EIP replaced the 2003 Plan immediately following our initial public
offering and affords our Compensation Committee much greater flexibility in making a wide variety of equity awards. The ESPP is available to all executive officers on the same basis as our other
employees.
Our
2008 EIP authorizes us to grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock awards, performance cash awards and other stock
awards. To date, we have granted only stock options and restricted stock units under the 2008 EIP. All stock
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options
granted to our employees and directors were granted with an exercise price that was no less than the fair market value of a share of our common stock on the date such options were granted.
Prior to January 2009, all option grants typically vested over four years, with one quarter of the shares subject to the stock option vesting on the one year anniversary of the vesting commencement
date, and the remaining shares vesting in equal monthly installments thereafter over three years. Beginning in January 2009, the Compensation Committee determined to modify the vesting schedule for
new grants so that, as a general matter, grants would vest in 25% increments over a four year period beginning with the first anniversary of the date of grant. Our Compensation Committee determined
that this vesting schedule better achieved the goal of our Compensation Committee to encourage retention and dedication to the success of the Company over a longer time horizon (since they vest only
at the end of each anniversary year, and not monthly). All options have a ten year term (unless terminated earlier due to termination of service with the Company). Additional information regarding
accelerated vesting upon or following a change in control is discussed below under "Potential Payments Upon Termination Or Change In Control."
Long Term Incentive Plan
In October 2008, our Board of Directors adopted a Long Term Incentive Plan ("LTIP") to reward executives with stock option and
restricted stock equity grants under our 2008 EIP, based on achievement of pre-established company performance objectives. The LTIP is effective for the issuance of grants based
performance evaluations. The objectives of the LTIP are to drive growth in stockholder value, reward key employees for demonstrated value creation, provide a retention incentive for key employees,
build equity ownership among the executive team, and focus executives on multi-year operating performance. In May 2010, the Board of Directors modified the vesting schedule for grants
issued under the LTIP providing that all future grants will vest at the rate of 25% on December 31
st
following the grant date and on each of the first, second and third
anniversaries thereafter. We believe that by providing our executives the opportunity to increase their ownership of our stock, the best interests of stockholders and executives will be more aligned
and we will encourage long-term performance. Stock awards enable our executive officers to participate in any increase in stockholder value and personally participate in the risks of
business setbacks. It is our belief that long-term incentives motivate and reward successful long-term value creation and the achievement of financial goals for the Company and
our stockholders, as well as retain top executive talent.
At
the beginning of the next calendar year, awards will be granted following the determination of the corporate financial performance in each year. The target dollar values will be
adjusted by up to 40% above or below the target dollar value stated above in the event that corporate performance exceeds or does not meet the target earnings per share goal. One-half of
this adjusted dollar value will be converted into a stock option award (based on the Black-Scholes value of the option at the time of grant). The stock option will have a 10-year term and
vest 25% per year commencing on December 31
st
after the date of the grant, and the three anniversaries of the commencement date thereafter. One-half of the
adjusted dollar value will be converted into a restricted stock unit award (based on the closing stock price on the date of grant). The restricted stock unit award will vest in full on the third
anniversary of the date of grant.
In
2012, our Compensation Committee awarded a 100% of target equity payout to executives under the LTIP Plan based on 2011 results, and in 2013 our Compensation Committee awarded at 60%
of target equity payout to executives under the LTIP Plan based on 2012 results. In addition, the Board of Directors approved a discretionary grant of 50,000 shares of common stock to
Mr. Capper under the Company's EIP plan. The Board awarded this grant in recognition of his leadership effort during 2012. Such grant will be subject to the above term and vesting schedule.
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Table of Contents
For our named executive officers, the individual target dollar values approved by our Compensation Committee for 2013 (which remain in effect for each year,
unless modified by the Committee), expressed as a percentage of each person's base salary, were as follows:
|
|
|
Joseph H. Capper
|
|
200% of base salary
|
Heather C. Getz
|
|
75% of base salary
|
All Other Named Executive Officers
|
|
50% of base salary
|
All
executive officers and other employees selected by our Compensation Committee are eligible to receive awards under the LTIP. The LTIP provides for annual grants of restricted stock
units and stock options under the 2008 EIP based on the achievement of a corporate goal based on adjusted earnings per share, as determined annually by our Compensation Committee. If corporate
financial performance meets the specified earnings per share goal, the participants in the LTIP will receive awards based on each individual's target dollar value, which is determined by our
Compensation Committee. For our named executive officers, the individual target dollar values approved by our Compensation Committee for 2013, expressed as a percentage of each person's base salary,
are as follows:
|
|
|
Joseph H. Capper
|
|
200% of base salary
|
Heather C. Getz, CPA
|
|
75% of base salary
|
Other Named Executive Officers
|
|
50% of base salary
|
Employment Agreements
On June 15, 2010, we entered into an employment agreement with Joseph H. Capper, which provides that he will serve as the
President and Chief Executive Officer of the Company. The agreement was effective on June 15, 2010 and continues until terminated in accordance with its terms.
Pursuant
to the terms of the Employment Agreement, Mr. Capper is entitled to a minimum base salary of $515,000. Mr. Capper also received a bonus payment of $150,000 in
consideration of the incentive and equity compensation Mr. Capper forfeited from his prior employer. Beginning with the 2010 calendar year, Mr. Capper was eligible to participate in the
MIP and LTIP in accordance with the terms of those plans. Mr. Capper's target annual bonus opportunity under the MIP is 100% of his base salary and Mr. Capper's target dollar value for
purposes of the LTIP is 200% of base salary.
Contemporaneously
with his entry into the Employment Agreement, Mr. Capper received a restricted stock unit award with respect to 60,000 shares of CardioNet Common Stock and a
stock option to purchase 500,000 shares CardioNet Common Stock.
The
Employment Agreement provides that in the event the Company terminates Mr. Capper without "cause" or Mr. Capper resigns for "good reason" (each as defined in the
Employment Agreement), it
will pay to Mr. Capper severance benefits that consist of the following (i) base salary and accrued and unused vacation earned through the date of his termination, and (ii) an
amount equal to two times his base salary at the rate in effect at the time of termination plus two times his on-target annual performance incentive bonus in effect for the year of
termination, such amount to be paid in 24 monthly installments. Mr. Capper will also be eligible for continued participation in the Company's medical, dental and vision plans for a
period of up to 24 months. Mr. Capper's receipt of the amount described in clause (ii) above and the continued participation in the Company's medical, dental and vision plans are
contingent upon his execution and non-revocation of a release of claims in the form attached to the Employment Agreement.
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Table of Contents
Mr. Capper's
employment with the Company is at will and may be terminated by the Company at any time and for any reason, or for no reason. Upon any termination by the Company,
Mr. Capper agrees to resign all positions, including as an officer and, if applicable, as a director or member of the Board of Directors or any committee thereof. See the description under
"Severance and Change in Control Benefits" and "Potential Payments Upon Termination or Change in Control" below for further information regarding severance benefits under Mr. Capper's
employment agreement.
As
a condition of Mr. Capper's employment as our President and Chief Executive Officer, he executed and must abide by our Proprietary Information and Inventions Agreement. Under
the employment agreement, Mr. Capper will be subject to non-competition restrictions for the term of his employment and during any period thereafter in which he is receiving
severance benefits.
Getz, Wisniewski, McNamara and Geldart Agreements
The agreements provide severance and change in control benefits upon termination of the executives' termination of employment by us
without cause or by the executives for good reason. See the description under "Severance and Change in Control Benefits" and "Potential Payments Upon Termination or Change in Control" below for
further information regarding severance benefits under the employment agreements.
As
a condition of their employment with us, each executive must execute and abide by our Proprietary Information and Inventions Agreement. Under the employment agreements, each executive
will be subject to non-competition restrictions for the term of his employment and during any period thereafter in which he is receiving severance benefits.
Messrs. Wisniewski
and Geldart and Ms. Getz and Ms. McNamara's employment with us is at will and may be terminated by us at any time and for any reason, or for no
reason. Upon any termination by us, each executive agrees to resign all positions, including as an officer and, if applicable, as a director or member of the board or any committee thereof.
The employment agreements for each of our named executive officers provide for payments in the event that the executive is terminated
by us without cause or by the executive for good reason, in each case, without regard to whether the termination occurs in the context of a change in control. With the exception of Mr. Capper,
if the executive's employment is terminated by us without cause or by the executive for good reason in connection with a change in control, all of the executive's equity awards will immediately
accelerate and become fully vested. All of Mr. Capper's equity awards will immediately accelerate and become fully vested upon a change in control without regard to a termination of employment
(unless he is terminated for cause). Payments and benefits to Messrs. Capper, Wisniewski and Geldart and Ms. Getz and Ms. McNamara will be modified to avoid any excise tax under
Section 409A of the Internal Revenue Code to the extent the modification would result in a greater net after-tax benefit to the executive. We believe these severance and change in
control benefits are an essential element of our overall executive compensation package. The severance and change in control benefits were also determined through comparison to companies in our peer
group.
See
"Potential Payments Upon Termination Or Change In Control" below for further information regarding the payments and benefits under the employment agreements.
In addition, consistent with our compensation philosophy, we intend to continue to maintain broad based retirement and welfare employee
benefit programs for all of our employees, in which our named
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Table of Contents
executive
officers are also eligible to participate. However, our Compensation Committee, in its discretion, may in the future revise, amend or add to the benefits of any executive officer if it deems
it advisable. In October 2009, effective January 1, 2010, our Compensation Committee approved a matching contribution under our 401(k) retirement plan of 100% on the first 3% of compensation
deferred under the plan and 50% on the next 2% of compensation deferred under the plan (up to the applicable statutory limits under the Internal Revenue Code). In October of 2011, as part of the
company's previously announced cost cutting initiative, the compensation committee suspended the 401(k) match, effective January 1, 2012.
During
2012, we reimbursed Mr. Geldart and Ms. McNamara for the cost of certain living, commuting and relocation expenses. For Mr. Geldart, the Company made a tax
gross up payment for the taxes he paid on the reimbursement of relocation expenses. With respect to Ms. McNamara, the Company made a tax gross up payment for the taxes she paid on the
reimbursement of living expenses. We agreed to provide these benefits to these individuals because we view them as an integral part of our management team and essential in pursuing our strategic
plans. Mr. Geldart's relocation reimbursement was a condition to his employment with the company, as he was required to relocate to Pennsylvania. Mr. Geldart's expense reimbursement
relating to relocation is prescribed in his Employment Agreement with the Company. The Company is not contractually obligated to pay Mr. Geldart or Ms. McNamara for the cost of living
and commuting expenses. Our Compensation Committee continually evaluates the compensation arrangements in place for our named executive officers and may determine to continue or eliminate these
benefits, at its discretion. With respect to Mr. Geldart, benefits were provided on a temporary basis to provide him adequate time to relocate to a permanent residency near our headquarters
The Board has determined that, based on the changes to the Non-Employee Director Compensation program (as more fully
described below), no stock ownership requirement is necessary for its Board members and executive officers.
Our Compensation Committee has no formal policy on the timing of stock option or restricted stock unit grants. Historically, our
Compensation Committee makes such grants in the first quarter of each calendar year. The exercise price is the closing price of the underlying CardioNet Common Stock on the grant date. If an executive
officer of CardioNet is hired after the time the Company usually makes grants, management may recommend to our Compensation Committee that the officer receive equity compensation. Other than the
Director Plan described in more detail under "Non-Employee Director Compensation" below (which has been frozen for future grants), we do not have any program, plan or obligation that
requires us to grant equity compensation to executive officers on specified dates and we have not made equity grants in connection with the release or withholding of material non-public
information. Authority to make equity grants to executive officers rests with our Compensation Committee (except with respect to grants made to our Chief Executive Officer, which must be approved by
our Board of Directors), based on recommendations from our Compensation Committee, although our Compensation Committee does consider the recommendations of our Chief Executive Officer for executive
officers other than himself.
Section 162(m) of the Internal Revenue Code limits our deduction for federal income tax purposes to not more than
$1 million of compensation paid to certain executive officers in a calendar year. Compensation above $1 million may be deducted if it is "performance-based compensation." The
Compensation Committee has not yet established a policy for determining which forms of incentive
50
Table of Contents
compensation
awarded to our executive officers will be designed to qualify as "performance-based compensation." To maintain flexibility in compensating our executive officers in a manner designed to
promote our objectives, our Compensation Committee has not adopted a policy that requires all compensation to be deductible. However, our Compensation Committee intends to evaluate the effects of the
compensation limits of Section 162(m) on any compensation it proposes to grant, and our Compensation Committee intends to provide future compensation in a manner consistent with our best
interests and those of our stockholders. Shareholder approval of the Company's 2008 Equity Incentive
Plan would ensure continued ability to qualify equity-based compensation under 162(m), as deemed appropriate by our Compensation Committee.
Risk Assessment of the Compensation Programs
The Compensation Committee considers potential risks when reviewing and approving compensation programs. We have designed our
compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding employees for achieving long-term financial and
strategic objectives through prudent business judgment and appropriate risk taking. The following elements have been incorporated in our programs available for our executive
officers:
-
-
A Balanced Mix of Compensation ComponentsThe target compensation mix for our executive officers is composed
of salary, annual cash incentives and long-term equity incentives, representing a mix that is not overly weighted toward short-term cash incentives.
-
-
Multiple Performance FactorsOur incentive compensation plans use both company-wide metrics and
individual performance, which encourage focus on the achievement of objectives for the overall benefit of the company.
-
-
The annual cash incentive is dependent on multiple performance metrics including volume, revenue as well as individual
goals related to specific strategic or operational objectives.
-
-
The long-term incentives are equity-based and awarded if certain earnings per share goals are met. These
incentives have a minimum of 3 year vesting to complement our annual cash based incentives.
-
-
Capped Incentive AwardsAnnual incentive awards capped at 200% of target.
Additionally,
the Compensation Committee considered an assessment of compensation-related risks for all of our employees. Based on this assessment, the Committee concluded that our
compensation programs do not create risks that are reasonably likely to have a material adverse effect on CardioNet. In making this evaluation, the Committee reviewed the key design elements of our
compensation programs in relation to industry norms as well as the means by which any potential risks may be mitigated, such as through our internal controls and oversight by management and the Board
of Directors.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis ("CD&A") contained in
this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this proxy statement and in our
Form 10-K for the year ended December 31, 2012.
Ronald
A. Ahrens, Chair
Rebecca W. Rimel
Eric N. Prystowsky, M.D.
April 15,
2013
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Non-Employee Director Compensation
In July 2007, our Board of Directors adopted a compensation program for our non-employee directors, or the
"Non-Employee Director Compensation Policy." The Non-Employee Director Compensation Policy became effective in March 2008 and was amended in August 2008. In January 2012, in
light of the appointment of an independent Chairman of the Board, the Board of Directors revised the Non-Employee Director Compensation Policy to remove the lead director role and related
compensation, and added an annual cash retainer of $100,000 for the non-executive Chairman of the Board role.
Prior
to 2009, our non-employee directors received initial and annual, automatic, non-discretionary grants of nonqualified stock options to purchase 5,000 shares
of CardioNet Common Stock under the terms and provisions of our director compensation plan (the "Director Plan"), which became effective in March 2008. Each of these grants vested in 12 equal monthly
installments following the date of the grant. In connection with the adoption of the Compensation Program for Non-Employee Directors (as defined below), which became effective as of the
date of the 2009 Annual Meeting and supersedes and replaces all prior non-employee director compensation programs, the Director Plan was frozen and no further grants will be made under
that plan, unless our Board of Directors determines to unfreeze the Director Plan in the future.
In
addition to the foregoing, each non-employee director that joined our Board of Directors prior to the closing of our initial public offering was automatically granted a
non-statutory stock option to purchase 15,000 shares of CardioNet Common Stock under our 2003 Plan with an exercise price equal to the then fair market value of CardioNet Common Stock and
each non-employee director assuming the role of a chairperson of the Audit, Compensation or Nominating and Corporate Governance Committees during such period was automatically granted an
additional non-statutory option to purchase 7,500 shares of CardioNet Common Stock under our 2003 Plan with an exercise price equal to the then fair market value of CardioNet Common Stock
on the date of grant. Each of these grants vest over a three year period, 33
1
/
3
% of which will vest upon the first anniversary of the date of grant and the remainder will vest in a
series of 24 successive equal monthly installments thereafter. All stock options granted have a maximum term of ten years and will vest in full upon the closing of a change in control transaction.
In
May 2010, our Board of Directors adopted a revised compensation program for our non-employee directors, or the "Compensation Program for Non-Employee
Directors." Pursuant to the Compensation Program for Non-Employee Directors, each non-employee director receives:
Initial Restricted Stock Unit Award:
Upon his or her first election or appointment as a member of our Board of Directors, a
non-employee director will receive a restricted
stock unit award under the 2008 EIP representing the right to receive that number of shares of CardioNet Common Stock determined by dividing $80,000 by the fair market value of a share of CardioNet
Common Stock on the award date. The restricted stock units will vest in four successive quarters following the award date and will be distributed in the form of common stock on the earliest to occur
of the non-employee director's death, disability, separation from service or a change in the ownership or effective control of the Company within the meaning of such term under
Section 409A of the Internal Revenue Code.
Annual Retainer:
At the individual's election, each non-employee director will receive either a cash award of $50,000 (paid in
quarterly installments over
the calendar year) or a restricted stock unit award equal to 100% of the amount of the retainer that the director elects to have converted divided by the fair market value of the CardioNet Common
Stock on the award date. The restricted stock unit will be awarded under the 2008 EIP as of the date of the annual meeting of the Company's stockholders and will vest in four successive quarters
following the award date and will be distributed in the form of common stock on the earliest to occur of the non-employee
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director's
death, disability, separation from service or a change in the ownership or effective control of the Company within the meaning of such term under Section 409A of the Internal Revenue
Code.
Annual Restricted Stock Unit Award:
Each non-employee director will receive a restricted stock unit award under the 2008 EIP as of the
date of the annual meeting of the
Company's stockholders. The number of shares will be determined by dividing $80,000 by the fair market value of the stock on the award date. The restricted stock units will vest in four successive
quarters following the award date and will be distributed in the form of common stock on the earliest to occur of the non-employee director's death, disability, separation from service or
a change in the ownership or effective control of the Company within the meaning of such term under Section 409A of the Internal Revenue Code.
Independent Chairman Retainer:
A non-employee director serving in the role as Chairman of the Board may elect to receive either a cash
award of $100,000 (the "Chairman
Retainer") (paid in 4 quarterly installments over the calendar year as of the last day of each calendar quarter beginning with the first calendar quarter following the date of the 2013 annual meeting)
or a restricted stock unit award equal to 100% of the amount of the Chairman Retainer the Chairman elects to have converted into a restricted stock unit award divided by the fair market value of
common stock as of the date the restricted stock units are granted. Any fractional share will be rounded up to the next whole share of common stock. The restricted stock units will vest proportionally
over the four successive quarters following the award date. In the event of the occurrence of the non-employee director's death, "disability" (within the meaning of such term under Code
Section 409A(a)(2)(C)), "separation from service" (within the meaning of such term under Code Section 409A(a)(2)(A)(i)) or a 409A change in control event prior to the full vesting date,
all outstanding restricted stock units shall be fully vested. Notwithstanding any other provision to the contrary, the vested restricted stock units will not be distributed in the form of common stock
until the earliest to occur of the lead director's death, "disability (within the meaning of such term under Code Section 409A(a)(2)(C)), "separation from service" (within the meaning of such
term under Code Section 409A(a)(2)(A)(i)) or a 409A change in control.
Committee Chairperson Retainer:
In addition to the above, non-employee directors serving as chairpersons of the Audit, Compensation or
Nominating and Corporate
Governance Committees will receive additional annual cash compensation as follows:
Audit
Committee Chair: $15,000
Compensation Committee Chair: $10,000
Nominating and Corporate Governance Committee Chair: $10,000
Committee Member Retainer:
Non-employee directors serving as a committee member will receive additional cash compensation as follows:
Audit
Committee Member: $7,500
Compensation Committee Member: $5,000
Nominating and Corporate Governance Committee Member: $5,000
In
January 2012, in light of the appointment of an independent Chairman of the Board of Directors, the Board eliminated the lead director role and added an annual cash award of $100,000
for the Chairman of the Board.
As
Chairman of the Board, Mr. Gorman will receive the annual non-employee director restricted stock unit award described above, and a cash award of $100,000 (paid in 4
quarterly installments over the calendar year as of the last day of each calendar quarter beginning with the first calendar quarter following the inception of his service as Chairman in October 2011)
or a restricted stock unit award
53
Table of Contents
equal
to 100% of the amount of the cash award Mr. Gorman elects to have converted into a restricted stock unit award divided by the fair market value of common stock as of the date the
restricted stock units are granted.
In
addition to the foregoing, we have reimbursed and will continue to reimburse our non-employee directors for their travel, lodging and other reasonable expenses incurred in
attending meetings of our Board of Directors and committees of our Board of Directors.
The
following table sets forth information concerning the compensation that we paid or awarded during the year ended December 31, 2012 to each of our non-employee
directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid
in Cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
Kirk E. Gorman
|
|
|
56,875
|
|
|
133,756
|
|
|
|
|
|
|
|
|
190,631
|
|
Rebecca W. Rimel
|
|
|
55,000
|
|
|
80,002
|
|
|
|
|
|
|
|
|
135,002
|
|
Eric N. Prystowsky, M.D.
|
|
|
60,000
|
|
|
80,002
|
|
|
|
|
|
|
|
|
140,002
|
|
Ronald A. Ahrens
|
|
|
|
|
|
145,007
|
|
|
|
|
|
|
|
|
145,007
|
|
Robert J. Rubin, M.D.
|
|
|
25,625
|
|
|
113,757
|
|
|
|
|
|
|
|
|
139,382
|
|
Anthony J. Conti
|
|
|
32,500
|
|
|
160,004
|
|
|
|
|
|
|
|
|
192,504
|
|
54
Table of Contents
Summary Compensation Table
The following table provides information regarding the compensation earned during the years ended December 31, 2010, 2011 and
2012 by each person serving in 2012 as a principal executive officer, principal financial and accounting officer or other executive officer, who we collectively refer to herein our "named executive
officers."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and principal position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards(1)
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
All other
compensation
($)
|
|
Total
($)
|
|
Joseph H. Capper
|
|
|
2012
|
|
|
535,000
|
|
|
|
|
|
534,999
|
|
|
519,290
|
|
|
267,500
|
|
|
|
|
|
1,856,789
|
|
President and Chief
|
|
|
2011
|
|
|
531,154
|
|
|
|
|
|
154,502
|
|
|
155,889
|
|
|
267,500
|
|
|
112,811
|
|
|
1,221,856
|
|
Executive Officer
|
|
|
2010
|
|
|
265,423
|
|
|
|
|
|
393,600
|
|
|
2,014,635
|
|
|
137,500
|
|
|
245,891
|
|
|
3,057,049
|
|
Heather C. Getz
|
|
|
2012
|
|
|
298,100
|
|
|
|
|
|
111,787
|
|
|
108,504
|
|
|
107,316
|
|
|
|
|
|
625,707
|
|
Senior Vice President,
|
|
|
2011
|
|
|
292,888
|
|
|
|
|
|
60,976
|
|
|
104,639
|
|
|
89,430
|
|
|
|
|
|
547,934
|
|
Chief Financial Officer
|
|
|
2010
|
|
|
244,058
|
|
|
|
|
|
99,548
|
|
|
77,814
|
|
|
93,495
|
|
|
|
|
|
514,915
|
|
Anna McNamara(2)
|
|
|
2012
|
|
|
321,360
|
|
|
|
|
|
80,340
|
|
|
77,980
|
|
|
80,340
|
|
|
58,506
|
|
|
618,526
|
|
Senior Vice President,
|
|
|
2011
|
|
|
319,560
|
|
|
|
|
|
46,798
|
|
|
90,337
|
|
|
80,340
|
|
|
58,041
|
|
|
595,076
|
|
Clinical Operations
|
|
|
2010
|
|
|
307,846
|
|
|
|
|
|
44,996
|
|
|
38,537
|
|
|
89,700
|
|
|
61,213
|
|
|
542,292
|
|
Michael Geldart(3)
|
|
|
2012
|
|
|
166,154
|
|
|
|
|
|
43,200
|
|
|
124,030
|
|
|
60,667
|
|
|
184,200
|
|
|
578,251
|
|
Senior Vice President,
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Strategy and
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Wisniewski
|
|
|
2012
|
|
|
320,000
|
|
|
|
|
|
79,999
|
|
|
77,650
|
|
|
72,000
|
|
|
|
|
|
549,649
|
|
Senior Vice President,
|
|
|
2011
|
|
|
320,000
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
400,000
|
|
Operations
|
|
|
2010
|
|
|
12,308
|
|
|
|
|
|
84,800
|
|
|
257,624
|
|
|
|
|
|
156,063
|
|
|
510,795
|
|
-
(1)
-
Calculated
in accordance with FASB ASC Topic 718 using the grant date fair value as described in Note 13 of the Companys Consolidated Financial
Statements for the year ended December 31, 2012 included in the Annual Report on Form 10-K as filed with the Commission on February 22, 2013.
-
(2)
-
Ms. McNamara
joined CardioNet in 2002 and currently serves as our Senior Vice President, Clinical Operations. All other compensation for 2012
includes $42,165 for certain living and commuting expenses and a tax gross up payment of $16,341 for the taxes applicable to the reimbursement of these expenses.
-
(3)
-
Mr. Geldart
was appointed our Senior Vice President, Corporate Strategy and Business Development in 2012. All other compensation for 2012 includes
$84,200 in consulting fees prior to his appointment with CardioNet, $30,000 sign on bonus, $37,362 for relocation expenses and a tax gross up payment of $70,000 for the taxes applicable to the
reimbursement of these expense relocation expense.
55
Table of Contents
Grants of Plan-Based Awards
All stock options granted to our named executive officers are incentive stock options, to the extent permissible under the Internal
Revenue Code. The exercise price per share of each stock option granted to our named executive officers was equal to the fair market value of CardioNet Common Stock as determined in good faith by our
Board of Directors on the date of the grant. All stock options were granted under our 2008 plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
Stock
Awards
Number
of Shares
of Stock
or Units
(#)(1)
|
|
|
|
|
|
Grant
Date
Fair
Value
of Stock
and
Option
Awards
($)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Option
Awards
Number of
Securities
Underlying
Options
(#)(2)
|
|
|
|
|
|
|
|
Estimated Potential Payouts
Under Non-Equity Incentive
Plan Awards
|
|
Estimated Potential Payouts
Under Equity Incentive
Plan Awards
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(4)
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Joseph H. Capper
|
|
|
2/21/2012
|
|
|
|
|
|
535,000
|
|
|
1,070,000
|
|
|
642,000
|
|
|
1,070,000
|
|
|
1,498,000
|
|
|
|
|
|
35,714
|
|
|
2.8
|
|
|
59,208
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,071
|
|
|
|
|
|
|
|
|
534,999
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
277,518
|
|
|
2.8
|
|
|
460,082
|
|
Heather C. Getz
|
|
|
2/21/2012
|
|
|
|
|
|
322,000
|
|
|
241,500
|
|
|
144,900
|
|
|
241,500
|
|
|
338,100
|
|
|
39,924
|
|
|
|
|
|
|
|
|
111,787
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,463
|
|
|
2.8
|
|
|
22,320
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,986
|
|
|
2.8
|
|
|
86,185
|
|
Anna McNamara
|
|
|
2/21/2012
|
|
|
|
|
|
321,360
|
|
|
160,680
|
|
|
96,408
|
|
|
160,680
|
|
|
224,952
|
|
|
|
|
|
35,361
|
|
|
2.8
|
|
|
58,623
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,676
|
|
|
2.8
|
|
|
19,357
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,693
|
|
|
|
|
|
|
|
|
80,340
|
|
Daniel M. Wisniewski
|
|
|
2/21/2012
|
|
|
|
|
|
320,000
|
|
|
160,000
|
|
|
96,000
|
|
|
160,000
|
|
|
224,000
|
|
|
28,571
|
|
|
|
|
|
|
|
|
79,999
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,124
|
|
|
2.8
|
|
|
58,230
|
|
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,714
|
|
|
2.8
|
|
|
19,420
|
|
Michael Geldart
|
|
|
6/11/2012
|
|
|
|
|
|
320,000
|
|
|
160,000
|
|
|
96,000
|
|
|
160,000
|
|
|
224,000
|
|
|
|
|
|
100,000
|
(3)
|
|
2.16
|
|
|
124,030
|
|
|
|
|
6/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
43,200
|
|
-
(1)
-
Represents
restricted stock units (the "RSU's"). RSU's will vest in full on the third anniversary of the grant date, subject to accelerated vesting upon
certain terminations of employment following certain corporate transactions involving the Issuer. The shares of common stock underlying the RSU's will be issued when the RSU's vest.
-
(2)
-
The
options will vest at the rate of 25% on December 31st following the grant date and on each of the first, second and third anniversaries
thereafter.
-
(3)
-
The
options will vest in four equal annual installments commencing on the first anniversary of the date of grant and expire if not exercised within ten
years from the date of grant.
-
(4)
-
Represents
the fair market value of CardioNet Common Stock as determined in good faith by our Board of Directors on the date of the grant.
-
(5)
-
The
amounts reported represent the aggregate grant date fair value of the awards calculated in accordance with FASB ASC 718 as described in Note 13
of the Companys Consolidated Financial Statements for the year ended December 31, 2012 included in the Annual Report on Form 10-K as filed with the Commission on February 22,
2013.
56
Table of Contents
Outstanding Equity Awards at December 31, 2012
The following table sets forth certain information regarding outstanding equity awards granted to our named executive officers for 2012
that remain outstanding as of December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable (#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)(1)
|
|
Market Value
of Shares or
Units of
Stock That
Have Not
Vested ($)(2)
|
|
Joseph H. Capper
|
|
|
250,000
|
(3)
|
|
250,000
|
|
|
6.56
|
|
|
6/15/2020
|
|
|
|
|
|
|
|
|
|
|
27,166
|
(4)
|
|
27,119
|
|
|
4.67
|
|
|
3/4/2021
|
|
|
|
|
|
|
|
|
|
|
78,308
|
(4)
|
|
199,210
|
|
|
2.8
|
|
|
2/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
136,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,084
|
|
|
75,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,071
|
|
|
435,642
|
|
|
|
|
|
|
|
35,714
|
|
|
2.8
|
|
|
2/21/2022
|
|
|
|
|
|
|
|
Heather C. Getz
|
|
|
22,932
|
(5)
|
|
|
|
|
17.44
|
|
|
5/11/2019
|
|
|
|
|
|
|
|
|
|
|
17,068
|
(5)
|
|
|
|
|
17.44
|
|
|
5/11/2019
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(3)
|
|
2,500
|
|
|
6.95
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(3)
|
|
5,000
|
|
|
6.43
|
|
|
1/22/2020
|
|
|
|
|
|
|
|
|
|
|
4,176
|
(4)
|
|
1,394
|
|
|
8.79
|
|
|
5/10/2020
|
|
|
|
|
|
|
|
|
|
|
3,750
|
(3)
|
|
11,250
|
|
|
4.67
|
|
|
3/4/2021
|
|
|
|
|
|
|
|
|
|
|
10,702
|
(4)
|
|
10,703
|
|
|
4.67
|
|
|
3/4/2021
|
|
|
|
|
|
|
|
|
|
|
16,362
|
(4)
|
|
49,087
|
|
|
2.8
|
|
|
2/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
22,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,924
|
|
|
91,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,057
|
|
|
29,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,010
|
|
|
9,143
|
|
Anna McNamara
|
|
|
7,500
|
(3)
|
|
2,500
|
|
|
6.95
|
|
|
8/12/2019
|
|
|
|
|
|
|
|
|
|
|
5,331
|
(4)
|
|
1,779
|
|
|
8.79
|
|
|
5/10/2020
|
|
|
|
|
|
|
|
|
|
|
8,214
|
(4)
|
|
8,215
|
|
|
4.67
|
|
|
3/4/2021
|
|
|
|
|
|
|
|
|
|
|
3,750
|
(3)
|
|
11,250
|
|
|
4.67
|
|
|
3/4/2021
|
|
|
|
|
|
|
|
|
|
|
11,759
|
(4)
|
|
35,278
|
|
|
2.8
|
|
|
2/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,119
|
|
|
11,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,693
|
|
|
65,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,021
|
|
|
22,848
|
|
Daniel Wisniewski
|
|
|
50,000
|
(3)
|
|
50,000
|
|
|
4.24
|
|
|
12/6/2020
|
|
|
|
|
|
|
|
|
|
|
11,709
|
(4)
|
|
35,129
|
|
|
2.8
|
|
|
2/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
45,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,571
|
|
|
65,142
|
|
Michael Geldart
|
|
|
|
|
|
100,000
|
(3)
|
|
2.16
|
|
|
6/11/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
45,600
|
|
-
(1)
-
Unless
otherwise noted herein, the RSU's will vest in full on the third anniversary of the grant date, subject to accelerated vesting upon certain
terminations of employment following certain corporate transactions involving the Company. The shares of common stock underlying the RSU's will be issued when the RSU's vest.
-
(2)
-
Value
based on the closing stock price of a share of CardioNet Common Stock on December 31, 2012 ($2.28).
-
(3)
-
The
options will vest in four equal annual installments commencing on the first anniversary of the date of the grant and expire if not exercised within ten
years from the date of the grant.
-
(4)
-
The
shares will vest at the rate of 25% on December 31 and on each of the first, second and third anniversaries of the Vesting Commencement Date.
-
(5)
-
These
options were fully vested in December 2009.
57
Table of Contents
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(1)
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
Value
Realized on
Exercise ($)
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
Value
Realized on
Vesting ($)
|
|
Joseph H. Capper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heather C. Getz
|
|
|
|
|
|
|
|
|
10,000
|
|
|
24,200
|
|
Anna McNamara
|
|
|
|
|
|
|
|
|
27,788
|
|
|
72,543
|
|
Daniel Wisniewski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Geldart
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
value realized on exercise of stock option awards is the difference between the stock price on the date of exercise and the exercise price of the
options.
Option Re-pricings
We did not engage in any re-pricings of any of our named executive officers' outstanding equity awards during the year
ended December 31, 2012.
Pension Benefits
None of our named executive officers participate in or have account balances in qualified or non-qualified defined benefit
plans sponsored by us. Our Compensation Committee may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests.
Nonqualified Deferred Compensation
None of our named executive officers participate in or have account balances in nonqualified defined contribution plans or other
nonqualified deferred compensation plans maintained by us. Our Compensation Committee may elect to provide our officers and other employees with non-qualified defined contribution or other
nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interests.
Potential Payments Upon Termination Or Change In Control
In this section, we describe payments that may be made to our named executive officers upon several events of termination, including
termination in connection with a change in control. The payment amounts discussed and in the table below reflect the payments that would have been due to the named executive officers had the
termination or change in control event occurred on December 31, 2012. The information in this section does not include information relating to payments and benefits provided on a
nondiscriminatory basis to salaried employees generally upon termination of employment. On December 31, 2012, the last reported sale price of CardioNet Common Stock on the NASDAQ Global Market
was $2.28 per share. Actual amounts payable would vary based on the date of the named executive officer's termination of employment and can only be finally determined at that time.
Unless
specified otherwise, the information in this section is based upon the terms of the (i) Employment Agreement between us and Mr. Capper, dated June 15, 2010,
(ii) Employment Agreement between us and Ms. McNamara, dated October 19, 2009, (iii) Employment Agreement between us and Ms. Getz, dated January 15, 2010,
(iv) Employment Agreement between us and
58
Table of Contents
Michael
Geldart, dated June 11, 2012, and (v) Employment Agreement between us and Daniel Wisniewski, dated December 7, 2010 (collectively, the "Agreements").
The
Agreements provide each of our named executive officers severance payments and benefits upon termination of employment by us without cause or by the executives for good reason.
Mr. Capper is entitled to a cash severance payment equal to the sum of (i) 2x his respective annual base salaries as of the last day of active employment and (ii) 2x his
on-target annual performance incentive bonus in effect at the time of termination. With the exception of Mr. Capper, the other executives are entitled to a cash severance payment
equal to the sum of (i) 1x their annual base salaries as of the last day of active employment and (ii) 1x their on-target annual performance incentive bonus in effect at the
time of his termination.
In
addition, we will continue to provide to each of our named executive officers continued participation in our medical, dental and vision plans at the same premium rates and cost
sharing as may be charged from time to time for employees generally for a specified period of time. Specifically, Mr. Capper will receive continued coverage for twenty-four months
following the applicable date of termination and the other executives will have continued coverage for twelve months following the applicable date of termination.
The
foregoing severance payments and benefits payable upon termination of employment to each named executive officer are conditioned on the execution of a written waiver and release of
claims. In addition, for all of our named executive officers, such payments and benefits are consideration for the restrictive covenants set forth in the Agreements. Specifically, during the term of
each executive's employment with us and during any period thereafter in which severance payments or benefits are paid, the executive may not compete with us (as defined in the Agreement).
The
Agreements also provide each named executive officer (with the exception of Mr. Capper) with accelerated vesting of their equity awards in connection with termination of
employment following a change in control. Specifically, if the executive's employment is terminated by us without cause or by the executive for good reason within thirty days before or twelve months
after a change in control, all of equity awards will immediately accelerate and become fully vested. Mr. Capper's equity awards will immediately accelerate and become fully vested upon a change
in control without regard to termination of his employment (unless he is terminated for cause).
In
the event any payment or benefit to the other executive officers would constitute an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code
and be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the affected executive will be entitled to the greater of (on a net after-tax basis):
(i) the largest amount of the payment that would result in no portion of the payment or benefit being subject to the excise tax under Section 4999 of the Internal Revenue Code, or
(ii) the entire payment or benefit without any reduction to avoid the excise tax.
The
Agreements do not provide any severance payments or benefits upon a termination by us for cause, by the executive without good reason, or on account of the executive's disability or
death. The executive would be entitled only to base salary and unused vacation benefits earned through the date of the executive's termination of employment and the amount of any vested benefits under
our benefit
plans. We will have no further obligations to the executive under the Agreements, except as provided by law.
A
termination for cause under the Agreements would generally result from an executive's: (i) willful and repeated failure to satisfactorily perform his job duties,
(ii) willful commission of an act that materially injures our business, (iii) willful refusal or failure to follow lawful and reasonable directions of our Board of Directors,
(iv) conviction of, or plea of
nolo contendere
to, any felony involving moral turpitude, (v) engagement or in any manner participation in
any activity which is
59
Table of Contents
directly
competitive with or injurious to us or any of our affiliates or which violates any restrictive covenants applicable to the executive, (vi) commission of any fraud against us, and our
affiliates, employees, agents or customers or use or intentional appropriation for the executive's personal use or benefit of any company funds or property not authorized by our Board of Directors to
be so used or appropriated, or (vii) material breach of or willful failure to comply with our policies, including, but not limited to, equal employment opportunity or harassment policies,
insider trading policies, code of ethics or conflict of interest policies, non-disclosure and confidentiality policies, travel and expense policies, workplace violence policies,
Sarbanes-Oxley compliance policies, policies governing preparation and approval of financial statements, and/or policies governing the making of financial commitments on our behalf.
Good
reason under the Agreements generally exists if, without the executive's consent, there is: (i) a change in the executive's title that is accompanied by a material reduction
in the executive's duties, authority or responsibilities relative to the executive's duties, authority or responsibilities in effect immediately prior to such reduction, (ii) a relocation of
the executive's principal business location to a point that requires a one-way increase of the executive's commuting distance of more than fifty miles, (iii) a material reduction of
the executive's base salary, or (iv) a failure on our part to obtain the agreement from any successor to assume or agree to perform our obligations under the Agreements.
Under
the Agreements, a change in control would be deemed to have occurred if (i) we consolidate or merge with and into any other corporation or other entity or person, or any
other corporate reorganization occurs, in which our capital stock immediately prior to such consolidation, merger or reorganization, represents less than 50% of the voting power of the surviving
entity immediately after such consolidation, merger or reorganization, (ii) we are party to any transaction, or series of related transactions in which more than 50% of our voting power is
transferred (except any consolidation or merger effected exclusively to change our domicile or any transaction or series of transactions principally for bona fide equity financing purposes in which we
receive cash or our indebtedness is canceled), or (iii) we sell, lease, license or dispose of all or substantially all of our assets. The Agreements do not provide for any tax
gross-up compensation for excise taxes.
60
Table of Contents
The
following table summarizes the amounts payable to each of our named executive officers based on the items described above with respect to each of the events set forth in the table.
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Involuntary Termination
without Cause or For
Good Reason Unrelated
to Change of Control
|
|
Upon a Change
of Control
|
|
Involuntary Termination
without Cause or For
Good Reason Related to
a Change of Control
|
|
Capper, Joseph H.
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
2,140,000
|
|
$
|
0
|
|
$
|
2,140,000
|
|
Continued Welfare
|
|
$
|
20,396
|
|
$
|
0
|
|
$
|
20,396
|
|
Acceleration Value of Stock Options
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Acceleration Value of Restricted Stock
|
|
$
|
0
|
|
$
|
647,873
|
|
$
|
647,873
|
|
Total Value
|
|
$
|
2,160,396
|
|
$
|
647,873
|
|
$
|
2,808,269
|
|
Getz, Heather C.
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
515,200
|
|
$
|
0
|
|
$
|
515,200
|
|
Continue Welfare
|
|
$
|
10,925
|
|
$
|
0
|
|
$
|
10,925
|
|
Acceleration Value of Stock Options
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Acceleration Value of Restricted Stock
|
|
$
|
0
|
|
$
|
0
|
|
$
|
152,739
|
|
Total Value
|
|
$
|
526,125
|
|
$
|
0
|
|
$
|
678,864
|
|
Michael Geldart
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
480,000
|
|
$
|
0
|
|
$
|
480,000
|
|
Continue Welfare
|
|
$
|
14,911
|
|
$
|
0
|
|
$
|
14,911
|
|
Acceleration Value of Stock Options
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Acceleration Value of Restricted Stock
|
|
$
|
0
|
|
$
|
0
|
|
$
|
45,600
|
|
Total Value
|
|
$
|
494,911
|
|
$
|
0
|
|
$
|
540,511
|
|
McNamara, Anna
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
482,040
|
|
$
|
0
|
|
$
|
482,040
|
|
Continue Welfare
|
|
$
|
8,010
|
|
$
|
0
|
|
$
|
8,010
|
|
Acceleration Value of Stock Options
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Acceleration Value of Restricted Stock
|
|
$
|
0
|
|
$
|
0
|
|
$
|
99,939
|
|
Total Value
|
|
$
|
490,050
|
|
$
|
0
|
|
$
|
581,979
|
|
Daniel Wisniewski
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
480,000
|
|
$
|
0
|
|
$
|
480,000
|
|
Continue Welfare
|
|
$
|
10,976
|
|
$
|
0
|
|
$
|
10,976
|
|
Acceleration Value of Stock Options
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Acceleration Value of Restricted Stock
|
|
$
|
0
|
|
$
|
0
|
|
$
|
57,275
|
|
Total Value
|
|
$
|
490,976
|
|
$
|
0
|
|
$
|
548,251
|
|
61
Table of Contents
PROPOSAL THREE:
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected Ernst & Young LLP as the Company's independent registered
public accounting firm for the year ending December 31, 2013 and has further directed that management submit the selection of independent registered public accounting firm for ratification by
the stockholders at the Annual Meeting. Ernst & Young LLP has audited the Company's financial statements since 2004. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither
the Company's Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP as the Company's independent
registered public accounting firm. However, the Audit Committee of the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board of Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee of the Board of Directors in its discretion may direct the appointment of different independent auditors at any time
during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
The
affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the
selection of Ernst & Young LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
In 2012, the Company entered into an engagement agreement with Ernst & Young LLP which sets forth the terms by which
Ernst & Young LLP will perform audit services for the Company. That agreement is subject to alternative dispute resolution procedures and an exclusion of punitive damages.
The
following table represents aggregate fees billed to the Company for the years ended December 31, 2012 and 2011, respectively, by Ernst & Young LLP, the Company's
independent registered public accounting firm. All fees described below were approved by the Audit Committee.
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
2012
|
|
2011
|
|
Audit Fees(1)
|
|
$
|
606,400
|
|
$
|
475,000
|
|
Audit-related Fees(4)
|
|
$
|
0
|
|
$
|
465,000
|
|
Tax Fees(2)
|
|
$
|
30,000
|
|
$
|
151,000
|
|
All Other Fees(3)
|
|
$
|
13,000
|
|
$
|
0
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
649,400
|
|
$
|
1,091,000
|
|
-
(1)
-
Audit
fees were principally for services rendered for the audit and/or review of our consolidated financial statements.
-
(2)
-
Tax
Fees consist of fees billed in the indicated year for professional services performed by Ernst & Young LLP with respect to tax compliance,
tax advice and tax planning.
-
(3)
-
All
Other Fees consist of fees billed in the indicated year for other permissible work performed by Ernst & Young LLP relating to an audit of
the Company's Employee Benefit Plan.
62
Table of Contents
-
(4)
-
Audit-related
fees were for professional services related to merger and acquisition due diligence. No such fees were incurred in 2012.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit services
rendered by our independent registered public accounting firm, Ernst & Young LLP. The policies generally pre-approve specified services in the defined categories of audit
services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee's approval of the scope of the engagement of the
independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide
each service. The pre-approval of services may be delegated to one or more of the Audit Committee's members, but the decision must be reported to the full Audit Committee at its next
scheduled meeting. 100% of the independent registered public accounting firm's fees were pre-approved.
The
Audit Committee has determined that the rendering of the services other than audit services by Ernst & Young LLP is compatible with maintaining the principal
accountant's independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL THREE.
TRANSACTIONS WITH RELATED PERSONS
RELATED-PERSON TRANSACTIONS POLICY AND PROCEDURES
We have adopted a written Related-Person Transactions Policy that sets forth our policies and procedures regarding the identification,
review, consideration and oversight of "related-persons transactions." For purposes of our policy only, a "related-person transaction" is a transaction, arrangement or relationship (or any series of
similar transactions, arrangements or relationships) in which we and any "related person" are participants involving an amount that exceeds $120,000. Transactions involving compensation for services
provided to us as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director or a holder of more than
five percent of CardioNet Common Stock, including any of their immediate family members and any entity owned or controlled by such persons.
Under
the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to our
Audit Committee (or, where review by our Audit Committee would be inappropriate, to another independent body of our Board of Directors) for review. The presentation must include a description of,
among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available. To
identify related-person transactions in advance, we rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-person transactions,
our Audit Committee takes into account the relevant available facts and circumstances including, but not limited to:
-
-
the risks, costs and benefits to us;
-
-
the impact on a director's independence in the event the related person is a director, immediate family member of a
director or an entity with which a director is affiliated;
-
-
the terms of the transaction;
-
-
the availability of other sources for comparable services or products; and
63
Table of Contents
-
-
the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.
In
the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. Our policy requires that, in
reviewing a related-person transaction, our Audit Committee must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of us and our
stockholders, as our Audit Committee determines in the good faith exercise of its discretion. We did not previously have a formal policy concerning transactions with related persons.
We
are not aware of any transaction required to be reported as a related-person transaction since January 1, 2012 where such policies and procedures did not require review,
approval or ratification or where such policies and procedures were not followed.
Stock Options Granted to Executive Officers and Directors
We have granted stock options to our executive officers and directors, as more fully described in the section entitled "Director and
Executive Compensation" on page 41.
Indemnification Agreements
We have entered, and intend to continue to enter, into indemnification agreements with our directors and executive officers. These
agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys' fees, judgments, fines and settlement amounts incurred by a
director or executive officer in any action or proceeding arising out of their services as one of our directors or executive officers, or any of our subsidiaries or any other company or enterprise to
which the person provides services at our request.
ADDITIONAL INFORMATION
Stockholder Proposals Due For Next Year's Annual Meeting
Stockholders who wish to include proposals in the proxy statement for the 2014 Annual Meeting must submit such proposals in accordance
with regulations adopted by the SEC. To be considered for inclusion in the proxy statement for the 2014 Annual Meeting, such stockholder proposals must be submitted in writing by February 21,
2014. In addition, stockholders may wish to have a proposal presented at the 2014 Annual Meeting but not to have such proposal included in the proxy statement for the 2014 Annual Meeting. Pursuant to
our bylaws, notice of any such proposal must be received by us between March 27, 2014 and April 26, 2014. If it is not received during this period, such proposal shall be deemed
"untimely" for purposes of Rule 14a-4(c) under the Exchange Act and, therefore, the proxies will have the right to exercise discretionary voting authority with respect
to such proposal. Any stockholder proposals must be submitted to CardioNet's Secretary at 227 Washington Street #210, Conshohocken, Pennsylvania 19428. You should submit any proposal by a method that
permits you to prove the date of delivery to us.
Your
notice to the Secretary shall set forth: (A) your name and address, and the class and number of shares of CardioNet Common Stock, which you beneficially own;
(B) whether you intend to deliver a proxy statement and form of proxy to the holders of at least the number of shares of the Company necessary to carry the proposal, or in the case of a
nomination for director, a sufficient number of shares of the Company necessary to elect such nominee; (C) as to each person whom you propose to nominate for election or reelection as a
director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act and Rule 14a-4(d) thereunder (including such person's written consent to being named in the proxy statement as a
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nominee
and to serving as a director if elected); and (D) as to any other business that you propose to bring before the meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and any material interest you have in such business.
For
more information, please refer to the Company's Bylaws filed as Exhibit 3.2 to the Company's Registration Statement on Form S-1 (File
No. 33-145547) originally filed with the SEC on August 17, 2007.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based
solely on a review of the copies of such reports furnished to us and representatives of these persons, all reports required to be filed have been filed for the year ended
December 31, 2012.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for
proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is
commonly referred to as "householding," potentially means extra convenience for stockholders and cost savings for companies.
This
year, a number of brokers with account holders who are CardioNet stockholders will be "householding" our proxy materials. A single proxy statement will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be "householding"
communications to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in "householding" and
would prefer to receive a separate proxy statement and annual report, please notify your broker, or direct your written request to CardioNet, Inc., Peter Ferola, Secretary, 227 Washington
Street #210, Conshohocken, Pennsylvania 19428 or contact Peter Ferola at (610) 729-0212. Stockholders who currently receive multiple copies of the proxy statement at their
addresses and would like to request "householding" of their communications should contact their brokers.
Other Business At Our Annual Meeting
Our Board is not aware of any business which properly may be presented for action at our meeting other than the matters set forth in
the Notice of Annual Meeting. Should any other matter requiring a vote of the shareholders properly arise, the enclosed proxy gives discretionary authority to the persons named in the proxy to vote on
such matters in accordance with their best judgment.
VALIDITY OF SHARES
Greenberg Traurig, LLP, Fort Lauderdale, Florida, will pass upon the validity of the shares of BioTelemetry Common Stock offered
by this proxy statement/prospectus.
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EXPERTS
The consolidated financial statements of CardioNet, Inc. appearing in CardioNet, Inc.'s Annual Report
(Form 10-K) for the year ended December 31, 2012 (including the schedule appearing therein), and the effectiveness of CardioNet, Inc.'s internal control over financial
reporting as of December 31, 2012 have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firms as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Registration Statement
BioTelemetry filed a registration statement on Form S-4 to register with the SEC the shares of BioTelemetry Common
Stock offered by this proxy
statement/prospectus. This proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of BioTelemetry in addition to being a proxy statement of CardioNet for the
annual meeting. As permitted by SEC rules, this proxy statement/prospectus does not contain all the information you can find in the registration statement or in exhibits to the registration statement.
Other SEC Filings
CardioNet files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any
of the information on file with the SEC at the SEC's public reference room, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. CardioNet's SEC filings are also available on the SEC's web site located at www.sec.gov, and
certain filings are available on CardioNet's web site at www.cardionet.com.
Documents Incorporated by Reference
We are "incorporating by reference" into this prospectus specific documents that we file with the SEC, which means that we can disclose
important information to you by referring you to those documents that are considered part of this prospectus supplement. Information that we file subsequently with the SEC will automatically update
and supersede this information. We incorporate by reference the documents listed below, and any future documents that we file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act until the termination of the offering of all of the securities covered by this prospectus supplement has been completed.
We
incorporate by reference into this prospectus supplement the following documents filed by us with the SEC, other than information furnished pursuant to Item 2.02 or
Item 7.01 of Form 8-K, each of which should be considered an important part of this prospectus supplement:
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Commission Filing (File No. 0-10961)
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Period Covered or Date of Filing
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Annual Report on Form 10-K
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Year Ended December 31, 2012
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Quarterly Report on Form 10-Q
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Three Months Ended March 31, 2013
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Current Reports on Form 8-K
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February 22, 2013, April 22, 2013, May 23, 2013
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All subsequent documents filed by us under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
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After the date of this prospectus supplement
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We
will provide to each person, including any beneficial owner, to whom a prospectus supplement and the accompanying prospectus is delivered, a copy of any or all of the information that
has been
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incorporated
by reference in this prospectus supplement and the accompanying prospectus but not delivered with this prospectus supplement and accompanying prospectus.
You
may request a copy of each of our filings at no cost, by writing or telephoning us at the following address or telephone number:
If you would like to request documents from us, please do so by July 16, 2013 to receive them before the annual meeting. We will send requested documents
by first-class mail within one business day after receiving the request.
You
should rely only on the information contained or incorporated by reference in this proxy statement/prospectus and the registration statement of which this proxy statement/prospectus
is a part to vote on the annual meeting proposals. No one has been authorized to provide you with information that is different from what is contained in this proxy statement/prospectus or in the
incorporated documents.
This
proxy statement/prospectus is dated June 7, 2013. You should not assume the information contained in this proxy statement/prospectus is accurate as of any date other than
this date, and neither the mailing of this proxy statement/prospectus to shareholders nor the issuance of the BioTelemetry Common Stock in the reorganization shall imply information is accurate as of
any other date.
By
order of the Board of Directors,
CardioNet, Inc.
Peter Ferola
Secretary
Conshohocken,
Pennsylvania
June 7, 2013
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Annex I
AGREEMENT AND PLAN OF REORGANIZATION
OF
CARDIONET, INC.,
BIOTELEMETRY, INC.
AND
BIOTELEMETRY MERGER SUB, INC.
This Agreement and Plan of Reorganization (this "
Agreement
") dated as of
April 22, 2013 is made by and among CardioNet, Inc., a Delaware corporation (the "
Corporation
"), BioTelemetry, Inc., a Delaware
corporation ("
Holdings
") and BioTelemetry Merger Sub, Inc., a Delaware corporation (the "
Merger
Sub
").
RECITALS:
WHEREAS
, as of the date hereof, the authorized capital stock of the Corporation
consists of (i) 200,000,000 shares of common stock, par value $0.001 per share (the "
Corporation Common Stock
") of which approximately 25,380,656
shares are issued and outstanding, approximately 5,522,889 shares are reserved for issuance under the Corporation's Plans (as defined below) and upon exercise of outstanding Corporation Awards (as
defined below) and no shares are held in treasury, and (ii) 10,000,000 shares of preferred stock, no par value ("
Corporation Preferred Stock
"),
of which none is outstanding;
WHEREAS
, as of the date hereof, the authorized capital stock of Holdings consists of (i) 200,000,000 shares of common stock, par
value $0.001 per share (the "
Holdings Common Stock
") of which 100 shares are issued and outstanding and held by the Corporation, and no shares are held
in treasury, and
(ii) 10,000,000 shares of preferred stock, no par value ("
Holdings Preferred Stock
"), of which none is outstanding;
WHEREAS
, as of the date hereof, all of the issued and outstanding common stock of the Merger Sub ("
Merger Sub
Common Stock
") is held by Holdings;
WHEREAS
, Holdings and Merger Sub are newly formed entities organized for the purposes of participating in the transactions herein
contemplated;
WHEREAS
, the Board of Directors of each of the Corporation, Holdings and the Merger Sub have unanimously determined that it is advisable
and in the best interests of their respective stockholders to reorganize to create a new holding company structure by merging the Corporation with the Merger Sub with the Corporation being the
surviving entity (sometimes hereinafter referred to as the "
Surviving Corporation
"), and converting each outstanding share of Corporation Common Stock
into one share of Holdings Common Stock, all in accordance with the terms of this Agreement (the "
Proposed Reorganization
");
WHEREAS
, the Boards of Directors of each of the Corporation, Holdings and the Merger Sub have approved this Agreement and the merger of
the Corporation with the Merger Sub upon the terms and subject to the conditions set forth in this Agreement (the "
Merger
");
WHEREAS
, the Boards of Directors of each of the Corporation and Merger Sub have declared advisable this Agreement and the Merger upon the
terms and subject to the conditions set forth in this Agreement, and the Boards of Directors of each of the Corporation and Merger Sub have unanimously determined to recommend to their stockholders
and sole stockholder, respectively, the adoption of this
Annex I-1
Table of Contents
Agreement
and the approval of the Merger, subject to the terms and conditions hereof and in accordance with the provisions of the Delaware General Corporation Law (the
"
DGCL
"); and
WHEREAS
, the sole stockholder of the Merger Sub has approved this Agreement and the Merger.
AGREEMENT:
NOW, THEREFORE
, in consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the Corporation, Holdings and the Merger Sub, intending to be legally bound, hereby agree as follows:
1.
Merger.
Upon the terms and subject to the conditions set forth in this Agreement, the Merger Sub shall be
merged with and into the Corporation, pursuant to and in accordance with Section 251 of the DGCL, the separate corporate existence of the Merger Sub shall cease and the Corporation shall
continue its existence as the Surviving Corporation under the DGCL.
2.
Effects of the Merger.
After satisfaction or, to the extent permitted hereunder, waiver of all conditions to
the Merger, the Corporation, which shall be the Surviving Corporation, shall file a certificate of merger, substantially in the form attached hereto as
Exhibit A
(the "
Certificate of Merger
"), with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware law in connection with the Merger. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware (the "
Effective Time
"). The Merger shall have the effects set forth in the DGCL.
3.
Certificate of Incorporation; Bylaws; Directors and Officers.
Subject to the terms and conditions of this
Agreement, from and after the Effective Time: (a) the certificate of incorporation of the Corporation in effect immediately prior to the Effective Time shall remain the certificate of
incorporation of the Surviving Corporation unless and until amended in accordance with their terms and applicable law; (b) the bylaws of the Corporation in effect immediately prior to the
Effective Time shall remain the bylaws of the Surviving Corporation unless and until amended in accordance with their terms and applicable law; and (c) the directors and officers of the Merger
Sub shall be the directors and officers of the Surviving Corporation.
4.
Directors and Officers of Holdings.
Prior to the Effective Time, the Corporation in its capacity as the sole
stockholder of Holdings, agrees to take or cause to be taken all such actions as are necessary to cause those persons serving as the directors and executive officers of the Corporation immediately
prior to the Effective Time to be elected or appointed as the directors and executive officers of Holdings, each such person to have the same office(s) with Holdings (and the same committee
memberships in the case of directors) as he or she held with the Corporation, with the directors serving in the same class that they serve with the Corporation to serve until the earlier of the next
meeting of the Holdings stockholders at which an election of directors of such class is held and until their successors are elected or appointed (or their earlier death, disability or retirement)
5.
Additional Actions.
Subject to the terms of this Agreement, the parties hereto shall take all such reasonable
and lawful action as may be necessary or appropriate in order to effectuate the Merger and to comply with the requirements of the DGCL.
6.
Cancellation of the Shares of Holdings; Conversion of the Shares of the Merger Sub; Conversion of Shares of the
Corporation.
At the Effective Time by virtue of the Merger and without any action on the part of the Corporation, Holdings or the Merger Sub: (a) Each share
of Holdings Common Stock issued and outstanding immediately prior to the Effective Time shall be automatically canceled, retired and shall cease to exist; (b) The Merger Sub Common Stock owned
by Holdings will automatically be converted into, and thereafter represent, 100% of the common stock of the Surviving Corporation; and (c) each share of Corporation Capital Stock issued and
Annex I-2
Table of Contents
outstanding
immediately prior to the Effective Time (other than any shares held in treasury, which shall be automatically cancelled and retired without the payment of any consideration therefor) shall
be automatically converted into one, duly issued, fully paid and nonassessable share of Holdings Common Stock (the "
Merger Consideration
"). From and
after the Effective Time, holders of certificates formerly evidencing Corporation Common Stock shall cease to have any rights as stockholders of the Corporation, except as provided by law;
provided, however
, that such holders shall have the rights set forth in
Section 7
herein.
7.
No Surrender of Certificates; Direct Registration of Holdings Common Stock.
At the Effective Time, each
outstanding share of Corporation Common Stock (other than any shares of Corporation Common Stock to be cancelled in accordance with Section 6) shall automatically represent the same number of
shares of Holdings Common Stock without any further act or deed by the stockholders of the Corporation. Until thereafter surrendered for transfer or exchange in the ordinary course, each outstanding
certificate that, immediately prior to the Effective Time, evidenced Corporation Common Stock shall, from and after the Effective Time, be deemed and treated for all corporate purposes to evidence the
ownership of the same number of shares of Holdings Common Stock.
8.
Assumption of Corporation Awards.
At the Effective Time, all unexercised and unexpired options to purchase
Corporation Common Stock ("
Corporation Options
") or restricted stock units (collectively with Corporation Options, "
Corporation
Awards
") then outstanding under the Corporation's 2008 Equity Incentive Plan, the 2008 Non-employee Directors' Stock Option Plan, the 2003 Equity Incentive Plan and
the Employee Stock Purchase Plan (collectively, the "
Corporation Plans
"), whether or not then exercisable, will be assumed by Holdings. Each Corporation
Award so assumed by Holdings under this Agreement will continue to have, and be subject to, the same terms and conditions as set
forth in the applicable Corporation Plan and any agreements thereunder immediately prior to the Effective Time (including, without limitation, the vesting schedule (without acceleration thereof by
virtue of the Merger and the transactions contemplated hereby) and per share exercise price), except that each Corporation Award will be exercisable (or will become exercisable in accordance with its
terms) for, or shall be denominated with reference to, that number of shares of Holdings Common Stock equal to the number of shares of Corporation Common Stock that were subject to such Corporation
Award immediately prior to the Effective Time.
9.
Assignment and Assumption of Agreements.
Effective as of the Effective Time, the Corporation hereby assigns
to Holdings, and Holdings hereby assumes and agrees to perform, all obligations of the Corporation pursuant to the Corporation Plans, each stock option agreement and restricted stock unit agreement
entered into pursuant to the Corporation Plans, and each outstanding Corporation Award granted thereunder. The Corporation and Holdings will take or cause to be taken all actions necessary or
desirable in order to implement the assumption by Holdings of the Corporation Plans, each stock option agreement or restricted stock unit agreement entered into pursuant thereto, and each Corporation
Award granted thereunder, all to the extent deemed appropriate by the Corporation and Holdings and permitted under applicable law.
10.
Registration Statement; Proxy/Prospectus.
As promptly as practicable after the execution of this Agreement,
the Corporation shall prepare and file with the Securities and Exchange Commission (the "
SEC
") a proxy statement in preliminary form relating to the
Stockholders' Meeting (as hereinafter defined) (together with any amendments thereof or supplements thereto, the "
Proxy Statement
") and Holdings shall
prepare and file with the SEC a registration statement on Form S-4 (together with all amendments thereto, the "
Registration
Statement
" and the prospectus contained in the Registration Statement together with the Proxy Statement, the
"
Proxy/Prospectus
"), in which the Proxy Statement shall be included, in connection with the registration under the Securities Act of the shares of
Holdings Common Stock to be issued to the stockholders
Annex I-3
Table of Contents
of
the Corporation as the Merger Consideration. Each of Holdings and the Corporation shall use its reasonable best efforts to cause the Registration Statement to become effective and the Proxy
Statement to be cleared by the SEC as promptly as practicable, and, prior to the effective date of the Registration Statement, Holdings shall take all actions reasonably required under any applicable
federal securities laws or state blue sky laws in connection with the issuance of shares of Holdings Common Stock pursuant to the Merger. As promptly as reasonably practicable after the Registration
Statement shall have become effective and the Proxy Statement shall have been cleared by the SEC, the Corporation shall mail or cause to be mailed or otherwise make available in accordance with the
Securities Act and the Exchange Act, the Proxy/Prospectus to its stockholders;
provided
,
however
, that
the parties shall consult and cooperate with each other in determining the appropriate time for mailing
or otherwise making available to the Corporation's stockholders the Proxy/Prospectus in light of the date set for the Stockholders' Meeting.
11.
Meeting of Corporation Stockholders.
The Corporation shall take all action necessary in accordance with the
DGCL and the Corporation's Amended and Restated Certificate of Incorporation and Bylaws (together, the "
Corporation Charter Documents
") to call, hold
and convene a meeting of its stockholders to consider the adoption of this Agreement (the "
Stockholders' Meeting
") to be held no less than 10 nor more
than 60 days following the distribution of the definitive Proxy/Prospectus to its stockholders. The Corporation will use its reasonable best efforts to solicit from its stockholders proxies in
favor of the adoption of this Agreement and approval of the Merger.
12.
Conditions Precedent.
The obligations of the parties to this Agreement to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to fulfillment or waiver by the parties hereto at or prior to the Effective Time of each of the following conditions:
-
a.
-
The
Registration Statement shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceeding for that purpose shall have been initiated or, to the knowledge of Holdings or the Corporation, threatened by the SEC and not
concluded or withdrawn. No similar proceeding with respect to the Proxy Statement shall have been initiated or, to the knowledge of Holdings or the Corporation, threatened by the SEC and not concluded
or withdrawn;
-
b.
-
This
Agreement and the Merger shall have been approved by the requisite vote of the stockholders of the Corporation in accordance with the DGCL and the
Corporation Charter Documents;
-
c.
-
The
Holdings Common Stock to be issued pursuant to the Merger shall have been approved for listing by the NASDAQ Global Market
("
NASDAQ
");
-
d.
-
No
order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order that is in effect shall have been enacted,
entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality that prohibits or makes illegal the consummation of the Merger or the transactions contemplated
hereby.
13.
Amendment.
At any time prior to the Effective Time, this Agreement may be amended, to the fullest extent
permitted by applicable law, by an agreement in writing duly approved by the parties hereto.
14.
Termination.
At any time prior to the Effective Time, this Agreement may be terminated and the Merger
contemplated hereby may be abandoned by action of the Board of Directors of the Corporation if such Board of Directors should determine that for any reason the completion of the transactions provided
for herein would be inadvisable or not in the best interest
Annex I-4
Table of Contents
of
the Corporation or its stockholders. In the event of such termination and abandonment, this Agreement shall become void and neither the Corporation, Holdings nor Merger Sub nor their respective
stockholders, members, directors or officers shall have any liability with respect to such termination and abandonment.
15.
Entire Agreement.
This Agreement contains the entire agreement between the parties with respect to the
Merger and supersedes all prior agreements, written or oral, with respect thereto.
16.
Governing Law.
This Agreement shall be governed and construed in accordance with the laws of the State of
Delaware, without regard to conflicts of laws principles thereof.
17.
Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns
18.
Headings.
The headings in this Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
19.
Severability of Provisions.
The invalidity or unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or other provision of this Agreement shall in no way affect the validity or enforcement of any other provision or any part thereof.
20.
Counterparts.
This Agreement may be executed in any number of counterparts, each of which when so executed
shall constitute an original copy hereof, but all of which together shall be considered but one in the same document.
[SIGNATURE
PAGE FOLLOWS]
Annex I-5
Table of Contents
IN WITNESS WHEREOF
, the parties hereto have executed this Agreement effective as of the date first above written.
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CORPORATION:
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CARDIONET, INC., a Delaware corporation
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By:
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/s/ PETER FEROLA
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Name:
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Peter Ferola
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Title:
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Senior Vice President, General Counsel and Secretary
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HOLDINGS:
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BIOTELEMETRY, INC., a Delaware corporation
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By:
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/s/ PETER FEROLA
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Name:
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Peter Ferola
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Title:
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Senior Vice President, General Counsel and Secretary
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MERGER SUB:
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BIOTELEMETRY MERGER SUB, INC., a Delaware corporation
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By:
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/s/ PETER FEROLA
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Name:
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Peter Ferola
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Title:
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Senior Vice President, General Counsel and Secretary
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[Signature Page to Agreement and Plan of Reorganization]
Annex I-6
Table of Contents
EXHIBIT A
Certificate of Merger
Annex I-7
Table of Contents
CERTIFICATE OF MERGER
OF
BIOTELEMETRY MERGER SUB, INC.
WITH AND INTO
CARDIONET, INC.
(Pursuant to Section 251 of the General Corporation
Law
of the State of Delaware)
April , 2013
CardioNet, Inc., a Delaware corporation, hereby certifies that:
1. The
name and state of incorporation of each of the constituent corporations is as follows:
(a) CardioNet, Inc.,
a Delaware corporation (the "
Acquiring Corporation
");
(b) BioTelemetry, Inc.,
a Delaware corporation and wholly owned subsidiary of the Acquiring Corporation ("
Holdings
");
and
(c) BioTelemetry
Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Holdings (the "
Target
Corporation
").
2. The
Agreement and Plan of Reorganization (the "
Agreement
"), dated as of April 22, 2013, by and among the Acquiring
Corporation, Holdings and the Target Corporation, has been approved, adopted, executed and acknowledged by each of the constituent corporations in accordance with Section 251 of the General
Corporation Law of the State of Delaware.
3. The
name of the surviving corporation is CardioNet, Inc. (the "
Surviving Corporation
").
4. The
merger is to become effective upon the filing of this certificate of merger (this "
Certificate
") by the Acquiring
Corporation with the Secretary of State of the State of Delaware (the "
Effective Time
").
5. The
certificate of incorporation of the Acquiring Corporation in effect immediately prior to the Effective Time shall remain the certificate of incorporation of the
Surviving Corporation from and after the Effective Time.
6. The
executed Agreement is on file at the principal place of business of the Surviving Corporation located at: 227 Washington Street #210, Conshohocken, Pennsylvania
19428.
7. A
copy of the Agreement will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of any constituent corporation.
[SIGNATURE
PAGE FOLLOWS]
Annex I-8
Table of Contents
IN
WITNESS WHEREOF, the Acquiring Corporation has caused this Certificate to be executed and acknowledged as of the date first set out above.
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CARDIONET, INC., a Delaware corporation
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By:
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Name:
Title:
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[Signature Page to Certificate of MergerCardioNet, Inc. and BioTelemetry Merger Sub, Inc.]
Annex I-9
Table of Contents
Annex II
CERTIFICATE OF INCORPORATION
OF
BIOTELEMETRY, INC.
I.
The name of this corporation is BioTelemetry, Inc. (the "
Company
").
II.
The address of the registered office of the Company in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware, 19801 and the name of the registered agent of the Company in the State of Delaware at such address is The Corporation Trust Company.
III.
The purpose of the Company is to engage in any lawful act or activity for which a corporation may be organized under the Delaware
General Corporation Law ("
DGCL
").
IV.
A.
The Company is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares of all classes of capital stock which the Company shall have authority to issue is two hundred ten million (210,000,000), of which two hundred million (200,000,000)
shares shall be Common Stock, having a par value of $0.001 per share (the "
Common Stock
"), and ten million (10,000,000) shares shall be Preferred Stock,
having a par value of $0.001 (the "
Preferred Stock
").
B.
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Company (the
"
Board of Directors
") is hereby expressly authorized to provide for the issue of any or all of the unissued and undesignated shares of the Preferred
Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation,
preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions
adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the DGCL. The Board of Directors is also expressly authorized to increase or decrease the number
of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be
decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of
shares of such series. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any
certificate of designation filed with respect to any series of Preferred Stock.
C.
Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to
the stockholders of the Company for their vote;
provided
,
however
, that, except as otherwise required by
law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred
Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either
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separately
or together as a class with the holders of one or more other series of Preferred Stock, to vote thereon by law or pursuant to this Certificate of Incorporation (including any certificate of
designation filed with respect to any series of Preferred Stock).
V.
For the management of the business and for the conduct of the affairs of the Company, and in further definition, limitation and
regulation of the powers of the Company, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:
A.
The management of the business and the conduct of the affairs of the Company shall be vested in its Board of Directors.
The number of directors that shall constitute the Board of Directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of directors constituting the Board of
Directors.
B.
Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified
circumstances, the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall initially be assigned to each class
in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the filing date of this Certificate of Incorporation (the
"
Filing Date
"), the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three
years. At the second annual meeting of stockholders following such Filing Date, the term of office of the Class II directors shall expire and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following such Filing Date, the term of office of the Class III directors shall expire and Class III directors shall
be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose
terms expire at such annual meeting.
Notwithstanding
the foregoing provisions of this section, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or
removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
C.
Neither the Board of Directors nor any individual director may be removed without cause. Subject to any limitation imposed
by law, any individual director or directors may be removed with cause by the affirmative vote of the holders of at least 66
2
/
3
% of the voting power of all then-outstanding
shares of capital stock of the Company entitled to vote generally at an election of directors, voting together as a single class.
D.
Subject to the rights of the holders of any series of Preferred Stock that may be designated from time to time, any
vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of
directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, except as otherwise provided by
law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected
in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall
have been elected and qualified.
E.
Subject to the rights of the holders of any series of Preferred Stock that may be designated from time to time, the Board
of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Company. Any adoption, amendment or repeal of the Bylaws of the
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Company
by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Company, subject to any restrictions which may be set forth in this Certificate of Incorporation (including any certificate of designation that may be filed from time to time); provided, however,
that, in addition to any vote of the holders of any class or series of stock of the Company required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least
66
2
/
3
% of the voting power of the then-outstanding shares of the capital stock of the Company entitled to vote generally at an election of directors, voting together as a
single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the Company.
F.
The directors of the Company need not be elected by written ballot unless the Bylaws of the Company so provide.
G.
No action shall be taken by the stockholders of the Company except at an annual or special meeting of stockholders called
in accordance with the Bylaws of the Company. No action shall be taken by the stockholders of the Company by written consent or electronic transmission.
H.
Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders
before any meeting of the stockholders of the Company shall be given in the manner provided in the Bylaws of the Company.
VI.
A.
The liability of a director of the Company for monetary damages shall be eliminated to the fullest extent under applicable
law. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated to
the fullest extent permitted by the DGCL, as so amended.
B.
Any repeal or modification of this
Article VI
shall be prospective
and shall not affect the rights under this
Article VI
in effect at the time of the alleged occurrence of any act or omission to act giving rise
to liability or indemnification.
VII.
A.
The Company reserves the right to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, except as provided in
Section B
of this
Article VII
, and all rights
conferred upon the stockholders herein are granted subject to this reservation.
B.
Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Company required by law or by this Certificate of Incorporation or any
certificate of designation filed with respect to a series of Preferred Stock that may be designated from time to time, the affirmative vote of the holders of at least 66
2
/
3
% of the
voting power of all of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors, voting together as a single class, shall be
required to alter, amend or repeal
Articles V
,
VI
or
VII
of this Certificate of Incorporation.
VIII.
The name and mailing address of the incorporator are: CardioNet, Inc., 227 Washington Street, #300, Conshohocken, PA
19428.
*
* * *
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IN WITNESS WHEREOF
, the undersigned incorporator, for the purpose of forming a corporation pursuant to the DGCL, does make this
certificate, hereby declaring and certifying that this is the act and deed of the undersigned and that the facts stated herein are true, and accordingly set my hand hereto this
11
th
day of April, 2013.
|
|
|
|
|
|
|
INCORPORATOR
:
|
|
|
CARDIONET, INC.
|
|
|
/s/ PETER FEROLA
|
|
|
Name:
|
|
Peter Ferola
|
|
|
Title:
|
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Secretary
|
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Table of Contents
Annex III
BYLAWS
OF
BIOTELEMETRY, INC.
ARTICLE I
OFFICES
Section 1. Registered Office.
The registered office of the corporation in the State of Delaware shall be
in the City of Wilmington, County of New Castle.
Section 2. Other Offices.
The corporation shall also have and maintain an office or principal place of
business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal.
The Board of Directors may adopt a corporate seal. The corporate seal shall
consist of a die bearing the name of the corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place Of Meetings.
Meetings of the stockholders of the corporation may be held at such place,
either within or without the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall
not
be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law (the
"
DGCL
").
Section 5. Annual Meetings.
(a)
The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board
of Directors of the corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation's notice of
meeting of stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving the
stockholder's notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this
Section 5
.
(b)
At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought
before the meeting. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of
Section 5(a)
of these Bylaws, (i) the
stockholder must have given timely notice thereof in writing to the Secretary of the corporation,
(ii) such other business must be a proper matter for stockholder action under DGCL, (iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is
made, has provided the corporation with a Solicitation Notice (as defined in clause (iii) of the last sentence of this
Section 5(b)
), such
stockholder or beneficial owner must, in the case of a proposal,
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have
delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation's voting shares required under applicable law to carry any such proposal, or, in the case of
a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation's voting shares reasonably believed by such stockholder or beneficial
owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice, and
(iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have
solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this
Section 5
. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 90
th
day nor earlier
than the close of business on the 120
th
day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the
preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120
th
day prior to such annual meeting
and not later than the close of business on the later of the 90
th
day prior to such annual meeting or the 10
th
day following the day on which public
announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth: (A) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "
1934 Act
") and Rule 14a-4(d) thereunder (including
such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of
such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (X) the name and address of such stockholder, as they appear on the corporation's books, and of such beneficial owner, (Y) the class and number of shares
of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner, and (Z) whether either such stockholder or beneficial owner intends to deliver a
proxy statement and form of proxy to holders of, in the case of the proposal, at least the percentage of the corporation's voting shares required under applicable law to carry the proposal or, in the
case of a nomination or nominations, a sufficient number of holders of the corporation's voting shares to elect such nominee or nominees (an affirmative statement of such intent, a
"
Solicitation Notice
").
(c)
Notwithstanding anything in the third sentence of
Section 5(b)
of
these Bylaws to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 100 days prior to the first anniversary of the preceding year's annual meeting,
a stockholder's notice required by this
Section 5
shall also be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10
th
day
following the day on which such public announcement is first made by the corporation.
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(d)
Only such persons who are nominated in accordance with the procedures set forth in this
Section 5
shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 5
. Except as otherwise provided by law, the Chairman of
the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the
procedures set forth in
these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall not be presented for stockholder action at
the meeting and shall be disregarded.
(e)
Notwithstanding the foregoing provisions of this
Section 5
, in
order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders' meeting, a stockholder must also comply with all applicable
requirements of the 1934 Act and the rules and regulations thereunder with respect to matters set forth in this
Section 5
. Nothing in these
Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the 1934 Act.
(f)
For purposes of this
Section 5
, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.
Section 6. Special Meetings.
(a)
Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the
Chairman of the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption).
(b)
If a special meeting is properly called by any person or persons other than the Board of Directors, the request shall be
in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by certified or registered mail, return receipt requested, to the
Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such special meeting, which shall be held not less than 35 nor more than 120 days after the date of the receipt of the request. Upon
determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of
Section 7
of these Bylaws. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a
meeting of stockholders called by action of the Board of Directors may be held.
(c)
Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who is a
stockholder of record at the time of giving notice provided for in these Bylaws who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this
Section 6(c)
. In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation's notice of meeting,
if the stockholder's notice required by
Section 5(b)
of these Bylaws shall be delivered to the Secretary at the principal executive offices of
the corporation not earlier than the close of business on the 120
th
day prior to such special meeting
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and
not later than the close of business on the later of the 90
th
day prior to such meeting or the 10
th
day following the day on which public announcement is
first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a
special meeting commence a new time period for the giving of a stockholder's notice as described above.
(d)
Notwithstanding the foregoing provisions of this
Section 6
, a
stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder with respect to matters set forth in this
Section 6
. Nothing in these Bylaws
shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation's
proxy statement pursuant to Rule 14a-8 under the 1934 Act.
Section 7. Notice Of Meetings.
Except as otherwise provided by law, notice, given in writing or by
electronic transmission, of each meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such
meeting, such notice to specify the place, if any, date and hour, in the case of special meetings, the purpose or purposes of the meeting, and the means of remote communications, if any, by which
stockholders and proxy holders may be deemed to be present in person and vote at any such meeting. If mailed, notice is deemed given when deposited in the United States mail, postage prepaid, directed
to the stockholder at such stockholder's address as it appears on the records of the corporation. If sent via electronic transmission, notice is deemed given as of the sending time recorded at the
time of transmission. Notice of the time, place, if any, and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, or by electronic
transmission by such person, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person, by remote communication, if applicable, or by proxy, except
when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.
Section 8. Quorum.
At all meetings of stockholders, except where otherwise provided by statute or by the
Certificate of Incorporation, or by these Bylaws, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares
of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman
of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law or by applicable stock exchange or Nasdaq Stock Market rules, or by the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the
affirmative vote of a majority of shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the subject matter shall be
the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in
person, by remote communication, if applicable, or represented by proxy duly authorized at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or
series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series,
present in person, by remote communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except
where otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the
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majority
(plurality, in the case of the election of directors) of the outstanding shares of such class or classes or series present in person, by remote communication, if applicable, or represented by
proxy duly authorized at the meeting shall be the act of such class or classes or series.
Section 9. Adjournment And Notice Of Adjourned Meetings.
Any meeting of stockholders, whether annual or
special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares present in person, by remote communication, if applicable, or represented
by proxy at the meeting. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more
than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at
the meeting.
Section 10. Voting Rights.
For the purpose of determining those stockholders entitled to vote at any
meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in
Section 12
of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall
have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not
be a stockholder. No proxy shall be voted after three years from its date of creation unless the proxy provides for a longer period.
Section 11. Joint Owners Of Stock.
If shares or other securities having voting power stand of record in
the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one votes, his act binds all; (b) if more than one votes, and the
vote is not evenly split on a particular matter, the act of the majority so voting binds all; (c) if more than one votes, but the vote is evenly split on any particular matter, each faction may
vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section 217(b). If the instrument filed with the Secretary
shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of
subsection (b)
or
(c)
shall be a majority
or even-split in interest.
Section 12. List Of Stockholders.
The Secretary shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, (a) on a reasonably accessible electronic
network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business
of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is
available only to stockholders of the corporation. The list shall be open to examination of any stockholder during the time of the meeting as provided by law.
Section 13. Action Without Meeting.
No action shall be taken by the stockholders except at an annual or
special meeting of stockholders called in accordance with these Bylaws, and no action shall be taken by the stockholders by written consent or by electronic transmission.
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Section 14. Organization.
(a)
At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy duly authorized,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.
(b)
The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings
of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present,
limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and
closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the
meeting shall be announced at the meeting. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in
accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number And Term Of Office.
The authorized number of directors of the corporation shall be
fixed in accordance with the Certificate of Incorporation. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any reason, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws.
Section 16. Powers.
The powers of the corporation shall be exercised, its business conducted and its
property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation.
Section 17. Classes of Directors.
Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively.
Initially, directors shall be assigned to each class
in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the initial classification of the Board of Directors, the term
of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following such initial
classification, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of
stockholders following such initial classification, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At
each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting.
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Notwithstanding
the foregoing provisions of this section, each director shall serve until his successor is duly elected and qualified or until his earlier death, resignation or removal.
No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 18. Vacancies.
Unless otherwise provided in the Certificate of Incorporation and subject to the
rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be
filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have
been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this
Section 18
in the case of the death, removal
or resignation of any director.
Section 19. Resignation.
Any director may resign at any time by delivering his or her notice in writing
or by electronic transmission to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of
Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall
have been duly elected and qualified.
Section 20. Removal.
(a)
Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances,
neither the Board of Directors nor any individual director may be removed without cause.
(b)
Subject to any limitation imposed by law, any individual director or directors may be removed with cause by the
affirmative vote of the holders of at least 66
2
/
3
% of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally at an election of
directors, voting together as a single class.
Section 21. Meetings.
(a)
Regular Meetings.
Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board
of Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile,
telegraph or telex, or by electronic mail or other electronic means. No further notice shall be required for regular meetings of the Board of Directors.
(b)
Special Meetings.
Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board, the
Chief Executive Officer or a majority of the directors then in office.
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(c)
Meetings by Electronic Communications Equipment.
Any member
of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.
(d)
Notice of Special Meetings.
Notice of the time and place of
all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate
messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least 24 hours before the date and time of the meeting. If notice is
sent by U.S. mail, it shall be sent by first class mail, charges
prepaid, at least three days before the date of the meeting. Notice of any meeting may be waived in writing, or by electronic transmission, at any time before or after the meeting and will be waived
by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
(e)
Waiver of Notice.
The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a
quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice shall sign a written waiver of notice or shall waive notice by electronic
transmission. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting.
Section 22. Quorum And Voting.
(a)
Unless the Certificate of Incorporation requires a greater number, and except with respect to questions related to
indemnification arising under
Section 43
for which a quorum shall be one-third of the exact number of directors fixed from time to
time, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of
Incorporation;
provided
,
however
, at any meeting whether a quorum be present or otherwise, a majority of
the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting.
(b)
At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by
the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws.
Section 23. Action Without Meeting.
Unless otherwise restricted by the Certificate of Incorporation or
these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors
or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or transmission or transmissions are filed with the minutes of proceedings of
the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 24. Fees And Compensation.
Directors shall be entitled to such compensation for their services as
may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the
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corporation
in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a)
Executive Committee.
The Board of Directors may appoint an
Executive Committee to consist of one or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall
have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or
matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any bylaw of the corporation.
(b)
Other Committees.
The Board of Directors may, from time to
time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one or more members of the Board of Directors and shall have
such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive
Committee in these Bylaws.
(c)
Term.
The Board of Directors, subject to any requirements of
any outstanding series of Preferred Stock and the provisions of
subsections (a)
or
(b)
of
this
Section 25
, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The
membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any
reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee.
The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition,
in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
(d)
Meetings.
Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this
Section 25
shall be held at such times
and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings
need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a
member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of notice to members of the Board of
Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will
be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Unless otherwise provided by the Board of Directors in the resolutions authorizing the creation of the committee, a majority of the
authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present
shall be the act of such committee.
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Section 26. Organization.
At every meeting of the directors, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is absent, the Chief Executive Officer (if a director), or if the Chief Executive Officer is absent, the President (if a director), or,
in the absence of any such person, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, any Assistant Secretary
directed to do so by the Chairman, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated.
The officers of the corporation shall include, if and when designated by
the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer and the Treasurer.
The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of
Directors may assign such additional titles to one or more of the officers as it shall deem appropriate.
Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation
shall be fixed by or in the manner designated by the Board of Directors.
Section 28. Tenure And Duties Of Officers.
(a)
General.
All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any
time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.
(b)
Duties of Chairman of the Board of Directors.
The Chairman
of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly
incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. If there is no President or Chief Executive
Officer, unless otherwise determined by the Board of Directors, then the Chairman of the Board of Directors shall also serve as the President of the corporation and shall have the powers and duties
prescribed in paragraph (c) of this
Section 28
.
(c)
Duties of Chief Executive Officer.
The Chief Executive
Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. Unless some
other officer has been elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the business and officers of the corporation. To the extent that a Chief Executive Officer has been appointed, all references in these
Bylaws to the President shall be deemed references to the Chief Executive Officer. The Chief Executive Officer shall perform other duties commonly incident to the office and shall also perform such
other duties and have such other powers, as the Board of Directors shall designate from time to time.
(d)
Duties of President.
The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors or the Chief Executive Officer has been appointed and is present. Unless
another officer has been appointed Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the business and officers of the corporation. The President
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shall
perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.
(e)
Duties of Vice Presidents.
The Vice Presidents may assume
and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time.
(f)
Duties of Secretary.
The Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these
Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties provided for in these
Bylaws and other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The President
may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly
incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
(g)
Duties of Chief Financial Officer.
The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and
as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the
corporation. The Chief Financial Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the
President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the
Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties
commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
Section 29. Delegation Of Authority.
The Board of Directors may from time to time delegate the powers or
duties of any officer to any other officer or agent, notwithstanding any provision hereof.
Section 30. Resignations.
Any officer may resign at any time by giving notice in writing or by electronic
transmission to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a
later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not
be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.
Section 31. Removal.
Any officer may be removed from office at any time, either with or without cause, by
the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or by the Chief Executive
Officer or by other superior officers upon whom such power of removal may have been conferred by the Board of Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION
Section 32. Execution Of Corporate Instruments.
The Board of Directors may, in its discretion, determine
the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the
corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these Bylaws, and such execution or signature
shall be binding upon the corporation.
All
checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person or persons
as the Board of Directors shall authorize so to do.
Unless
authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation
by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
Section 33. Voting Of Securities Owned By The Corporation.
All stock and other securities of other
corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to
do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. Form And Execution Of Certificates.
The shares of the corporation shall be represented by
certificates, or shall be uncertificated. Certificates for the shares of stock of the corporation, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable
law. Every holder of stock represented by certificate in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors,
the Chief Executive Officer, the President or any Vice President and by the Chief Financial Officer, Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of
shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue. Each certificate, if any, shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences,
and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will
furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect to
this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
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Section 35. Lost Certificates.
A new certificate or certificates shall be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed
certificate or certificates, or the owner's legal representative, to agree to indemnify the corporation in such manner as it shall require or to give the corporation a surety bond in such form and
amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. Transfers.
(a)
Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in
person or by attorney duly authorized, and, in the case of stock represented by certificate, upon the surrender of a properly endorsed certificate or certificates for a like number of shares.
(b)
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or
more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
Section 37. Fixing Record Dates.
(a)
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided
,
however
, that the Board of Directors may fix a
new record date for the adjourned meeting.
(b)
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not
more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 38. Registered Stockholders.
The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution Of Other Securities.
All bonds, debentures and other corporate securities of the
corporation, other than stock certificates (covered in
Section 34
), may be signed by the Chairman of the Board of Directors, the Chief Executive
Officer, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted
thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer;
provided
,
however
, that where any such bond, debenture or other corporate security shall be
authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest
coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or
such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other
corporate security so signed or attested shall have been
delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile
signature shall have been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 40. Declaration Of Dividends.
Dividends upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.
Section 41. Dividend Reserve.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the corporation, or for such
ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year.
The fiscal year of the corporation shall be fixed by resolution of the Board of
Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification Of Directors, Officers, Employees And Other Agents.
(a)
Directors and Officers.
The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the DGCL or any other applicable law;
provided
,
however
, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and officers; and,
provided
,
further
, that the corporation shall not be required
to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such person
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unless
(i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the DGCL or any other applicable law or (iv) such indemnification
is required to be made under
subsection (d)
.
(b)
Employees and Other Agents.
The corporation shall have power
to indemnify its employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification
shall be given to any such employee or other persons as the Board of Directors shall determine.
(c)
Expenses.
The corporation shall advance to any person who
was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the
fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or officer in connection with such proceeding
provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal
(hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this
Section 43
or otherwise.
Notwithstanding
the foregoing, unless otherwise determined pursuant to paragraph (e) of this Section 43, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director of the corporation, in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote of directors who were not parties to the
proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such
directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.
(d)
Enforcement.
Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and officers under this
Section 43
shall be deemed to be contractual
rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or officer. Any right to indemnification or advances granted by this
Section 43
to a director or officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction
if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within 90 days of request therefor. The claimant in
such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the corporation
shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the
corporation to indemnify the claimant for the amount claimed. In connection with any claim by an officer of the corporation (except in any action, suit or
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proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact that such officer is or was a director of the corporation) for advances, the corporation shall be entitled
to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests
of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper
in the circumstances because the officer or director has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or officer to enforce a right to indemnification or to an advancement of expenses hereunder,
the burden
of proving that the director or officer is not entitled to be indemnified, or to such advancement of expenses, under this
Section 43
or otherwise
shall be on the corporation.
(e)
Non-Exclusivity of Rights.
The rights conferred
on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation,
Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding office. The
corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent
not prohibited by the DGCL, or by any other applicable law.
(f)
Survival of Rights.
The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
(g)
Insurance.
To the fullest extent permitted by the DGCL or
any other applicable law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this
Section 43
.
(h)
Amendments.
Any repeal or modification of this
Section 43
shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any
action or omission to act that is the cause of any proceeding against any agent of the corporation.
(i)
Saving Clause.
If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and officer to the full extent not prohibited by any applicable
portion of this
Section 43
that shall not have been invalidated, or by any other applicable law. If this
Section 43
shall be invalid due to the
application of the indemnification provisions of another jurisdiction, then the corporation shall
indemnify each director and officer to the full extent under any other applicable law.
(j)
Certain Definitions.
For the purposes of this Bylaw, the
following definitions shall apply:
(1)
The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative.
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(2)
The term "expenses" shall be broadly construed and shall include, without limitation, court costs, attorneys' fees,
witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.
(3)
The term the "corporation" shall include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this
Section 43
with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate
existence had continued.
(4)
References to a "director," "officer," "employee," or "agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as, respectively, a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
(5)
References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent
of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the corporation" as referred to in this
Section 43
.
ARTICLE XII
NOTICES
Section 44. Notices.
(a)
Notice To Stockholders.
Written notice to stockholders of
stockholder meetings shall be given as provided in
Section 7
herein. Without limiting the manner by which notice may otherwise be given
effectively to stockholders under any agreement or contract with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder meetings
may be sent by U.S. mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or other electronic means.
(b)
Notice To Directors.
Any notice required to be given to any
director may be given by the method stated in
subsection (a)
, as otherwise provided in these Bylaws, or by overnight delivery service, facsimile,
telex or telegram, except that such notice other than one which is delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the
absence of such filing, to the last known post office address of such director.
(c)
Affidavit Of Mailing.
An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, or other agent, specifying the name and address or the names and
addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or
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Table of Contents
were
given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.
(d)
Methods of Notice.
It shall not be necessary that the same
method of giving notice be employed in respect of all recipients of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be
employed in respect of any other or others.
(e)
Notice To Person With Whom Communication Is
Unlawful.
Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person
with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or
permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate shall
state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
(f)
Notice to Stockholders Sharing an Address.
Except as
otherwise prohibited under the DGCL, any notice given under the provisions of the DGCL, the Certificate of Incorporation or the Bylaws shall be effective if given by a single written notice to
stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall have been deemed to have been given if such stockholder fails to
object in writing to the corporation within 60 days of having been given notice by the corporation of its intention to send the single notice. Any consent shall be revocable by the stockholder
by written notice to the corporation.
ARTICLE XIII
AMENDMENTS
Section 45. Bylaw Amendments.
Subject to these Bylaws or the provisions of the Certificate of
Incorporation, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the corporation. Any adoption, amendment or repeal of the Bylaws of the corporation by the Board of
Directors shall require the approval of a majority of the authorized number of Directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the corporation; provided,
however, that, in addition to any vote of the holders of any class or series of stock of the corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of
at least 66
2
/
3
% of the voting power of all of the then-outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the corporation.
ARTICLE XIV
LOANS TO OFFICERS OR EMPLOYEES
Section 46. Loans To Officers Or Employees.
Except as otherwise prohibited by applicable law, the
corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors,
such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in
such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict
the powers of guaranty or warranty of the corporation at common law or under any statute.
Annex III-18
Table of Contents
CERTIFICATE OF SECRETARY
OF BIOTELEMETRY, INC.
I HEREBY CERTIFY THAT
:
I
am the duly elected and acting Secretary of BioTelemetry, Inc., a Delaware corporation (the "
Company
"); and
Attached
hereto is a complete and accurate copy of the Bylaws of the Company as duly adopted by the Board of Directors on April 11, 2013 and said Bylaws are presently in effect.
IN WITNESS WHEREOF
, I have hereunto subscribed my name and affixed the seal of the Company this 11th day of April, 2013.
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/s/ PETER FEROLA
SECRETARY
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Annex III-19
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ANNUAL MEETING
OF STOCKHOLDERS OF CARDIONET, INC. Thursday, July 25, 2013 Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be Held on July 25, 2013 The Proxy Statement and our Annual
Report on Form 10-K are available at http://www.cardionet.com in the
"Investor Relations" section. Please sign, date and mail your proxy
card in the envelope provided as soon as possible. Signature of Stockholder
Date: Signature of Stockholder Date: Note: Please sign exactly as your name
or names appear on this Proxy. When shares are held jointly, each holder
should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title
as such. If signer is a partnership, please sign in partnership name by
authorized person. To change the address on your account, please check the
box at right and indicate your new address in the address space above. Please
note that changes to the registered name(s) on the account may not be
submitted via this method. 2. Election of the following Class III Directors
to hold office until the 2016 Annual Meeting O Eric N. Prystowsky, M.D. O Rebecca
W. Rimel O Robert J. Rubin, M.D. O Ronald A. Ahrens 1. To approve the Holding
Company Proposal and related Reorganization Agreement, pursuant to which our
present company will reorganize into a holding company and become a
subsidiary of a new Delaware corporation named BioTelemetry, Inc. 3. To
ratify the selection of Ernst & Young LLP as the Company's independent
registered public accounting firm for 2013. The shares represented by this
proxy when properly executed will be voted in the manner directed herein by
the undersigned Stockholder(s). If no direction is made, this proxy will be
voted FOR the three nominees for director in Proposal Two, FOR Proposals One
and Three, and, in the discretion of the proxy holders named herein, on any
other matters that may properly come before the Meeting and any
adjournment(s) or postponement(s) thereof. Please vote, date and promptly
return this proxy in the enclosed return envelope which is postage prepaid if
mailed in the United States. FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD
AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to each nominee you wish to
withhold, as shown here: NOMINEES: THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE
"FOR" THE NOMINEES LISTED IN PROPOSAL TWO AND "FOR"
PROPOSALS ONE AND THREE. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
Please detach along perforated line and mail in the envelope provided.
--------------- ---------------- 20330030000000001000 5 072513 FOR AGAINST
ABSTAIN GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you
can quickly access your proxy material, statements and other eligible
documents online, while reducing costs, clutter and paper waste. Enroll today
via www.amstock.com to enjoy online access. MARK X HERE IF YOU PLAN TO
ATTEND THE MEETING.
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0
--------------- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475
CARDIONET, INC. 227 Washington Street #210 Conshohocken, Pennsylvania 19428
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JULY 25, 2013 Our Board of Directors is soliciting
your proxy to be used at the Annual Meeting of Stockholders of CardioNet,
Inc., to be held at the Philadelphia Marriott West located at 111 Crawford
Avenue, West Conshohocken, Pennsylvania 19428 on July 25, 2013, at 8:30 a.m.,
Eastern Time, and at any and all postponements, continuations and
adjournments thereof (the "Annual Meeting"). The undersigned hereby
appoints Joseph H. Capper and Peter Ferola, and each of them, as attorneys
and proxies of the undersigned, with full power of substitution, to vote all
of the shares of stock of CardioNet, Inc., which the undersigned may be
entitled to vote at the Annual Meeting, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, and with
discretionary authority as to any and all other matters that may properly
come before the meeting. If you sign and deliver your proxy card, but you do
not provide voting instructions, your proxy will vote FOR each of the three
nominees for director (Proposal Two) and, subject to applicable rules and
regulations, FOR Proposals One and Three and with respect to any other matter
that may be presented at the Annual Meeting, in the discretion of the proxy
representative. This way, your shares will be voted whether or not you attend
the Annual Meeting. Even if you plan to attend the Annual Meeting, we
recommend that you complete, sign and return your proxy card in advance of
the Annual Meeting as your plans may change. (Continued and to be signed on
the reverse side) ADMISSION TICKET CARDIONET, INC. ANNUAL MEETING OF
STOCKHOLDERS JULY 25, 2013 AT 8:30 A.M. CARDIONET, INC. 227 WASHINGTON
STREET, #210 CONSHOHOCKEN, PA 19428 ADMITS ONE STOCKHOLDER
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