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biotel105592_10-2.htm - Generated by SEC Publisher for SEC Filing

 

 

Exhibit 10.2

 

SETTLEMENT AGREEMENT AND RELEASE

 

 

THIS SETTLEMENT AGREEMENT AND
RELEASE (“Agreement”), is made by and between
CardioNet, Inc. (“CardioNet”) and Biotel, Inc. (“Biotel”), with both parties
being referred to collectively as the “Settling Parties.”

 

WHEREAS,
the Settling Parties previously entered into a merger agreement, dated as of
April 1, 2009 (“Prior Agreement”); and 

 

WHEREAS,
the merger contemplated by the Prior Agreement has not been consummated, and as
a result, Biotel filed a Complaint and Jury Demand in the United States
District Court for the District of Minnesota, Case No. 09-cv-02013-DSD-JJK (the
“Lawsuit”); and

 

WHEREAS,
the Settling Parties desire to resolve all claims, disputes, and differences
between and among them regarding the subject matter of the Lawsuit by entering
into this Agreement, pursuant to which the Settling Parties agree, among other
things: (i) to terminate the Prior Agreement; (ii) to settle the Lawsuit with
respect thereto; and, (iii) to enter into a Merger Agreement by and among
Parent (CardioNet) and Target (Biotel) (hereinafter “Merger Agreement”) dated
as of the date of this Agreement.  Unless otherwise noted, all capitalized
terms carry the meaning or definition as stated in the Merger Agreement.

 

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Settling Parties hereby agree as follows:

 

1.             Release and
Waiver of Claims.  The Settling Parties agree to release, discharge and
forever acquit to the greatest extent allowed by law the other Party from any
and all actions, claims, demands and causes of action or suits at law or in
equity, past, present or future, of any kind, character and description, and
for any form of relief, including claims for damages, injunctive relief,
attorneys’ fees, costs, and expenses, that many now exist or hereafter accrue,
whether known or unknown, vested or contingent, direct or indirect, arising out
of, relating to, or in connection with the Prior Agreement dated April 1, 2009,
any and all amendments thereto, and related agreements, including, but not
limited to, all claims which were or could have been asserted in the Lawsuit. 
This mutual release and waiver of claims shall inure to the benefit of and be
binding upon the Settling Parties and their subsidiaries and affiliates,
shareholders, directors, managers, officers, employees, agents, insurers,
predecessors, successors and assigns.  This mutual release and waiver of claims
shall become effective as of the earlier of:

 

(a)  the Closing Date,

 

(b)  the termination of the
Merger Agreement pursuant to section 7.1(a) or 7.1(f)  thereof,

 

(c)  the termination of the
Merger Agreement pursuant to section 7.1(g) thereof, but only if the basis for
such termination is Biotel’s breach or failure to perform in a material respect
the covenants or other agreements contained in Article 5 of the Merger
Agreement, or

 

(d)  the Company, within 12
months after termination of the Merger Agreement, entering into a definitive
agreement to consummate, or consummating, a transaction contemplated by any
Alternative Proposal,

 

(the date of the earliest of the foregoing, the
“Effective Release Date”). 

 

2.             Dismissal of
Lawsuit.  The Settling Parties, by their respective counsel, shall, on the
Effective Release Date, execute, deliver and cause to be filed in the Court in
which the Lawsuit is pending a stipulation of dismissal with prejudice and
without costs in the form attached as Exhibit 1 to this Agreement.  Each of the
Settling Parties shall bear its own costs and expenses relating to the
dismissal of the Lawsuit, and the negotiation, preparation and execution of
this Agreement.  The Settling Parties shall each bear its own attorney’s fees.

 

	

   

  

1

 

 

 

3.             Joint Defense
of LifeWatch Patent Suit.  In view of the common interests of the Settling
Parties, the Settling Parties agree that, from the date of this Agreement until
the Effective Release Date, they shall enter into a joint defense agreement and
jointly defend against the lawsuit filed in the United States District Court
for the Northern District of Illinois by LifeWatch Services, Inc. and Card
Guard Scientific Survival Limited against Braemar, Inc., a Biotel subsidiary,
Case No. 1:09-cv-06001 (the “LifeWatch Patent Suit”).  As part of the joint defense,
Biotel agrees that it will require, to the extent practical given
confidentiality and other obligations, Braemar to consult with CardioNet on
significant case decisions, including pleadings, motions, stipulations, or
other filings and before serving any papers on opposing counsel or third
parties, including discovery requests and responses, subpoenas, expert reports,
motions, claim construction papers, contentions, or other papers.  Prior to the
Effective Release Date Braemar shall not, however, be required to obtain the
approval of CardioNet on such decisions (except as required by section
5.1(b)(xviii) of the Merger Agreement); however, Braemar shall take all
reasonable steps to protect and preserve CardioNet’s prospective interests and
rights in the lawsuit.  To the extent possible given confidentiality
obligations, Biotel agrees that it will require Braemar to provide to CardioNet
copies of all such court filings and papers served by LifeWatch or Card Guard. 
Each of the Settling Parties shall bear its own fees and expenses in connection
with the joint defense.  The Settling Parties further agree that this agreement
does not create any attorney-client relationship between counsel for one
Settling Party and the other Settling Party or its subsidiary.  This joint
defense will expire upon the earlier of the date of expiration of the Merger
Agreement, March 31, 2011, or the Effective Release Date.  

 

4.             Stay of Lawsuit. 
In light of the transactions contemplated by the Merger Agreement, the Settling
Parties hereby agree that, as soon as practicable following the date of this
Agreement, each of CardioNet and Biotel will file with the United States
District Court for the District of Minnesota a request to stay the Lawsuit
until the earlier to occur of (i) the termination of the Merger Agreement or
(ii) March 31, 2011.

 

5.             Effective Date. 
This Agreement shall become effective upon its execution by both Settling
Parties and upon execution of the Merger Agreement, to which this Agreement is
an exhibit.  

 

6.             No Reliance on
Third Party Statements.  Each of the Settling Parties hereby acknowledges
that it has not relied on any statement, representation, inducement, or promise
of any other party (or any officer, agent, employee, representative, or
attorney for any other party) in executing this Agreement, or making the
settlement provided for herein, except as expressly stated in this Agreement.

 

7.             Representations
of the Settling Parties.  Each of the Settling Parties represents and
warrants that it has read this Agreement, knows and understands the full
content of this Agreement, is voluntarily entering into this Agreement upon the
advice of its attorneys, and the individual executing this Agreement on such
Settling Party’s behalf has the authority to execute this Agreement and bind
the Settling Party on behalf of which such individual executes this Agreement.

 

8.             Confidentiality. 
The terms and conditions of, and negotiations leading to, (but not the fact of)
this Agreement shall be treated as confidential, and shall not be disclosed to
any third party, provided however, that the Settling Parties shall be permitted
to disclose this Agreement and its provisions: (1) pursuant to court order; (2)
to their attorneys, or accountants; (3) as may be necessary to comply with
reporting or disclosure requirements of any governmental or regulatory body or
agency; or (4) to obtain legal, tax or accounting advice, or pursuant to the
terms of an applicable insurance policy.  Further disclosure of any such
information which is not already publicly available shall be made only upon
written consent of the parties or upon order or process of a court of competent
jurisdiction. In addition, the Settling Parties shall not disclose to any other
person any information or discussions exchanged between the parties regarding
the terms and conditions of this Agreement and further shall maintain as
confidential all communications, discussions, and information regarding the
Disputes and the Lawsuit (except that which is already publicly available). 
Should either Party violate this provision, it agrees to indemnify and hold the
other Party harmless from all resulting expenses, legal fees, and damages
incurred to enforce this Agreement or this provision.

 

9.             Severability. 
If any provision of this Agreement is deemed by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective, provided that such remaining provisions
do not increase the obligations or liabilities of the Settling Parties.

 

	

   

  

2

 

 

 

10.          Counterparts;
Headings.   This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute and be one and the same instrument.
Paragraph headings used in this Agreement are provided for convenience only and
shall not be deemed to constitute a part hereof.

 

11.          Entire Agreement;
Amendment; Waiver.  This Agreement, together with the recitals, Exhibit 1
referenced herein, and the Merger Agreement, is the entire agreement between
the Settling Parties, supersedes and replaces any prior oral or written
communications, representations, or understandings concerning the terms of this
Agreement.  It may be modified only by an instrument in writing executed by the
parties hereto.  No omission or delay of any party in exercising any right
under this Agreement shall constitute or operate as a waiver of that or any
other right.  The recitals set forth on page 1 are incorporated into the terms
and conditions of this Agreement.

 

12.          Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the Settling Parties.

 

13.          Governing Law. 
This Agreement shall be governed by Minnesota law.  The rule of construction
that any ambiguities herein are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.  

 

                14.          District Court
Jurisdiction.  The United States District Court for the District of Minnesota
shall retain jurisdiction to hear and resolve any and all disputes which arise
from or relate to this Agreement.

 

 

	

   

  

3

 

 

WHEREFORE,
each of the Settling Parties has caused this Agreement to be duly executed on
the dates set forth below.

 

 

	
  CARDIONET, INC.

  	
   

  	
  BIOTEL, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Heather Getz

  	
        

  	
  By:

  	
  /s/ B. Steven Springrose

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Heather Getz

  	
   

  	
   

  	
  Name:

  	
  B. Steven Springrose

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP & CFO

  	
   

  	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  11/5/10

  	
   

  	
  Date:

  	
  11/5/10

  

 

 

 

4

EXHIBIT 1

STIPULATION OF DISMISSAL WITH PREJUDICE

 

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

 

	
Biotel, Inc.,

	
Civil File No. 09-cv-02013 (DSD-JJK)

	
 

	
Plaintiff,

	
 

	
 

	
v.

	
STIPULATION OF DISMISSAL

WITH PREJUDICE

	
CardioNet, Inc.,

	
 

	
Defendant.

	
 

 

The parties above-named, by and through their undersigned counsel, hereby stipulate to dismissal of the above-captioned matter with prejudice.  Each party shall bear its own costs and attorneys fees.

 

	
Dated:  October __, 2010

	
GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A.

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
Michael R. Cunningham (#20424)

Dean C. Eyler (#267491)

Sitso W. Bedaiko (#0389073)

	
 

	
500 IDS Center

80 S. Eighth Street

Minneapolis, MN 55402-3796

Telephone:  (612) 632-3000

	
 

	
 

	
 

	
 

	
Attorneys for Plaintiff Biotel, Inc.

	
Dated:  October __, 2010

	
DORSEY & WHITNEY LLP

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
Steven J. Wells #0163508

wells.steve@dorsey.com

Heather M. McCann #0386881

mccann.heather@dorsey.com

Britta Schnoor Loftus #0388020

loftus.britta@dorsey.com

	
 

	
50 South Sixth Street, Suite 1500

Minneapolis, MN 55402-1498

Telephone:  (612) 340-2600

	
 

	
 

	
 

	
Attorneys for Defendant CardioNet, Inc.

 

5Exhibit 10.1

December 18, 2008

Dear Curt,

We have agreed
that it is desirable to document in writing the terms of your consulting
services to Communications Systems Inc. which were originally established on
October 23, 2007 by action of the Board of Directors at that time.

1.
          Because of your
unique position as a founder of the Company and its CEO for more than 37 years,
because of your familiarity with the Company’s business practices, clients,
contacts, processes and products, and because your knowledge, skill and ability
can continue to provide benefit to the Company, the Company desires to retain
you to provide consulting services to the Company on a year to year basis.

2.          We
agree your services as a consultant began on May 21, 2008 in accordance with
decisions adopted by Compensation Committee and Board of Director beginning in
October 2007, and that this Letter Agreement memorializes both the services you
have provided since May 21, 2008 and will continue to provide until such time
as this Letter Agreement is modified or terminated. 

3.          Your
compensation for consulting services has been and shall continue to be at the
annual rate of $130,000.00 per year. While in 2008 this compensation was paid
to you as an employee, effective January 1, 2009 you will be compensated as an
independent contractor.

4.          Your
compensation as consultant to the Company is independent of compensation as a
director that you have received (beginning at the May 2008 shareholders
meeting) and will continue to receive so long as you are a director of the
Company.

5.          Your
duties as a consultant are to faithfully, diligently and to the best of your
ability be responsible for the development and support of all projects assigned
to you by the Company’s CEO or Board of Directors. Within this overall
framework, you will serve as a spokesperson and ambassador for the Company with
shareholders, customers, suppliers, employees, and other stakeholders. Further,
you agree to assist the CEO and provide advice in such areas as corporate
planning and strategies, corporate finance, marketing, business development and
executive compensation. Upon request, you will provide introductions and
liaison with individuals, companies or groups that could assist the Company in
its continue development and growth. You agreed that in providing these
services, you will at all times be subject to Company policies and procedures,
as well as directions and restrictions the Company Board of Directors or CEO
may reasonably adopt from time to time.

6.          You
will formally be treated as an independent contractor rather than an employee
effective January 1, 2009. As an independent contractor, the manner you fulfill
your responsibilities and render your services shall be in your sole discretion.
On the other hand, you understand and agree you shall not have authority to act
as an agent or employee of the Company. Also, as an independent contractor you
shall be solely responsible
for withholding of taxes and FICA, and shall not be eligible to participate in
any employee health plan or any other fringe benefit of the Company.

7.          The
Company will provide reasonable and appropriate support to you in your role as
a consultant, as well as to enable you to fulfill your duties as the Chairman
of the Company’s Board of Directors, including suitable office space in Hector,
Minnesota and Minnetonka, Minnesota, a Company provided car and cell phone, and
administrative support in Hector, Minnesota.

8.          You
will provide consulting services to the Company under this agreement on a year
to year basis, with the initial term ending May 30, 2009. Within 30 days prior
to that date, and each subsequent May 30, we have the right to give you written
notice that we wish to terminate this agreement or modify its terms, but if we
do not do so, this agreement will automatically renew for an additional one
year term. You, however, may terminate this agreement at any time on thirty
days notice. 

If you agree
that this letter correctly documents our understandings and agreements, please
sign where indicated below.

Very Truly
Yours,

Communication
Systems Inc.

/s/ Jeffrey K. Berg

Jeffrey K.
Berg

President

Accepted and
Agreed

/s/ Curtis A. Sampson

Curtis A. Sampson.

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