Exhibit 10.2


 


CARDIONET, INC.

LONG TERM INCENTIVE PLAN


 


SECTION 1                               PLAN ESTABLISHMENT AND OBJECTIVES


 


1.1                               Objectives of the Plan


 


The
objectives of this CardioNet, Inc. (the “Company”) Long Term Incentive
Plan (the “Plan”) are:


a.               To drive growth in shareholder value for the
Company;


b.              To reward key employees for demonstrated
value creation;


c.               To provide a retention incentive for key
employees;


d.              To build equity ownership among the executive
team;


e.               To focus executives on multi-year operating
performance.


 


Awards
granted under the Plan (the “Awards”) are intended to share the success of the
Company with key employees to the extent warranted by performance.


 


1.2                               Awards Under 2008 Equity
Incentive Plan


 


Awards will be granted pursuant to the Company’s
2008 Equity Incentive Plan (“EIP”) and will be administered by the Compensation
Committee of the Company’s Board of Directors (the “Committee”) pursuant to the
terms of the EIP.


 


SECTION 2                               ELIGIBILITY


 


2.1                               Eligibility


 


All
executive officers and other employees selected by the Committee (the “Key
Employees”) are eligible to receive Awards.


 


SECTION 3                               INCENTIVE AWARDS


 


3.1                               Award Grant Process


 


Under
the Plan, each Key Employee shall receive a set of annual Awards consisting of
a stock option Award and restricted stock Award.  The process for granting Awards shall be as
follows:


 

















 


A.                                    During the first three months of each fiscal
year (or, with respect to 2008, at the time of the adoption of the Plan), the
Committee will determine a target dollar value (the “Dollar Value”) for each
Key Employee.  Unless otherwise
determined by the Compensation Committee, the Dollar Value will be equal to a
percentage (the “Applicable Percentage”) of each Key Employee’s Base Salary (as
that term is defined in the Company’s Management Incentive Plan).  The Applicable Percentage may differ from Key
Employee to Key Employee and may be equal to, greater than or less than 100% of
the Key Employee’s Base Salary.


 


B.                                    During the first three months of each fiscal
year (or, with respect to 2008, at the time of the adoption of the Plan), the
Committee will also determine an annual corporate earnings per share goal (the “Financial
Target”).


 


C.                                    At the beginning of the next fiscal year
following the determinations made in paragraphs (A) and (C) above,
within 30 days following the approval of the Company’s year end audited
financial statements by the Audit Committee of the Company’s Board of Directors
(the “Audit Committee”) for the fiscal year just ended, the Committee will
adjust (up or down) the Dollar Value for the purpose of making prospective
awards as set forth in paragraph (D) below (which adjustment shall not
effect any prior awards granted under this Plan).  The adjusted value shall be referred to as
the “Adjusted Dollar Value” and shall be determined as follows:


 


1.                                      The Committee shall adjust the Company’s GAAP
earnings per share as necessary, in the Committee’s sole discretion, to account
for the effect of non-operational items such as taxes and interest income (such
adjusted earnings per share, the “Adjusted EPS”).


 


2.                                      The Committee shall calculate the percentage
(the “Goal Achievement Percentage”) by which the Adjusted EPS differs from the
Financial Target.  The Goal Achievement
Percentage shall be positive in the event that the Adjusted EPS exceeds the
Financial Target and negative in the event that the Adjusted EPS is less than
the Financial Target.  In no case shall
the Goal Achievement Percentage be higher than 20% or lower than -20%.


 


3.                                      The  Committee
shall determine a performance modifier (the “Performance Modifier”) equal to
two (2) times the Goal Achievement Percentage.  In no case shall the Performance Modifier be
higher than 40% or lower than -40%.


 


4.                                      The Adjusted Dollar Value will equal (A) the
Dollar Value plus (B) the product of (i) the Dollar Value times (ii) the
Performance Modifier.


 


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E.                                      After the Committee determines the Adjusted
Dollar Value, the Committee will grant a stock option Award and a restricted
stock Award to each Key Employee as follows:


 


1.                                      One half of the value of the Adjusted Dollar
Value will be converted into a stock option Award.  The number of shares underlying the stock
option Award will be determined by dividing (a) one-half of the Adjusted
Dollar Value by (b) the Black-Scholes value of an option covering one
share of stock to determine the number of options.  Each such stock option Award will vest
one-fourth at the end of each year, will have a 10-year exercise period, will
be granted pursuant to a form of stock option agreement under the EIP and will
have an exercise price equal to the fair market value of the Company’s common
stock on the date of grant as determined under the EIP. If the Key Employee
terminates employment prior to a vesting date, then all unvested options will
be forfeited.


 


2.                                      One half of the value of the Adjusted Dollar
Value will be converted into a restricted stock Award.  The number of shares underlying the
restricted stock Award will be determined by dividing (a) one-half of the
Adjusted Dollar Value by (b) fair market value of the Company’s common
stock on the date of grant, as determined in the EIP.  Shares of the Company’s common stock shall be
issued upon grant of the restricted stock Award, subject to a reacquisiton
right in favor of the Company that lapses in full on the third year anniversary
of the date of grant.  If the Key
Employee terminates employment prior to the third anniversary of the date of
grant, all restricted stock and related dividends associated with such grant
will be forfeited and automatically reacquired by the Company for no
consideration.  Restricted stock will be
granted pursuant to a form of restricted stock agreement under the EIP.


 


3.2                               Tax Withholding


 


The
Company may withhold, or require the withholding from any payment which it is
required to make, any federal, state, or local taxes required by law to be
withheld with respect to such payment and such sum as the Company may
reasonably estimate as necessary to cover any taxes for which the Company may be
liable and which may be assessed with regard to such payment.


 


SECTION 4                               ADMINISTRATION


 


4.1                               General Provisions


 


The
Committee will have oversight of the Plan. 
The Committee shall have authority to delegate responsibility for
performance of administrative functions necessary for the Plan and the Awards
to the Human Resources, Finance and Accounting Departments of the Company.


 


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4.2                               Modifications of the
Plan;  At-Will Employment


 


The
Company reserves the right to change, modify or terminate this Plan without
notice.  Nothing in this document is
intended to, nor does, alter the existing at-will employment relationship.  Key Employees are free to resign at any time,
for any reason.  Similarly, the Company
is free to end the employment relationship of any Key Employee at any time with
or without cause.


 


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