SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.____)
Filed by the Registrant /X/. Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
I-TRAX, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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fee was paid previously. Identify the previous filing by registration
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[GRAPHIC OMITTED]
Health Management Solutions
I-trax, Inc.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
April 25, 2003
Dear Stockholder:
We cordially invite you to attend I-trax's annual stockholders' meeting. The
meeting will be held on Wednesday, May 21, 2003, at 10:00 A.M. at 1735 Market
Street, 51st Floor, Philadelphia, Pennsylvania.
At the meeting stockholders will vote on several important matters. Please take
the time to carefully read each of the proposals described in the attached proxy
statement.
Your vote is important. Whether or not you plan to attend the meeting, you are
urged to complete, date, sign and return your proxy. If you attend the meeting
and would prefer to vote in person, you may still do so.
Thank you for your support of I-trax.
Very truly yours,
/s/ FRANK A. MARTIN
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FRANK A. MARTIN
Chairman and Chief Executive Officer
[GRAPHIC OMITTED]
Health Management Solutions
I-trax, Inc.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
Notice of Annual Meeting of Stockholders
Dear Stockholder:
I-trax's annual stockholders' meeting will be held on Wednesday, May 21, 2003,
at 10:00 A.M., at 1735 Market Street, 51st Floor in Philadelphia, Pennsylvania.
At the meeting, stockholders will be asked to
o elect directors,
o ratify the selection of I-trax's independent auditors for 2003,
and
o consider any other business properly brought before the meeting.
The close of business on April 14, 2003, is the record date for determining
stockholders entitled to vote at the annual meeting. A list of these
stockholders will be available at I-trax's headquarters, One Logan Square, Suite
2615, 130 N. 18th Street, Philadelphia, Pennsylvania, before the annual meeting.
Please sign, date and promptly return the enclosed proxy card in the enclosed
envelope so that your shares will be represented whether or not you plan to
attend the annual meeting.
By Order of the Board of Directors,
/s/ Yuri Rozenfeld
Yuri Rozenfeld
General Counsel and Secretary
April 25, 2003
1
I-TRAX, INC.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
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PROXY STATEMENT
FOR 2003 ANNUAL MEETING OF STOCKHOLDERS
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I-trax, Inc., a Delaware corporation, is delivering these proxy
materials in connection with the solicitation of proxies by the board of
directors of I-trax for its 2003 annual meeting of stockholders and any
adjournments or postponements of the meeting. The 2003 annual meeting will be
held at 10:00 A.M. on May 21, 2003, at 1735 Market Street, 51st Floor,
Philadelphia, Pennsylvania 19103. These proxy materials were first mailed to
stockholders on or about April 28, 2003. The address of I-trax's principal
executive office is One Logan Square, Suite 2615, 130 N. 18th Street,
Philadelphia, Pennsylvania. Sending a signed proxy will not affect the
stockholder's right to attend the annual meeting and vote in person. Every
stockholder has the power to revoke his or her proxy at any time before it is
voted. The proxy, before it is exercised at the meeting, may be revoked by
filing with I-trax's Secretary a notice in writing revoking it, by delivering a
duly executed proxy bearing a later date, or by attending the meeting and voting
in person.
Explanatory Note About I-trax Common Stock
Effective January 3, 2003, I-trax completed a 1-for-5 reverse stock
split. The board of directors and stockholders of I-trax authorized the reverse
stock split in connection with the then pending application to list I-trax
common stock on the American Stock Exchange. I-trax common stock began trading
on the American Stock Exchange on January 15, 2003 under the symbol "DMX." The
information presented in this proxy statement about the number of outstanding
shares of I-trax common stock, historic information about the number of shares
of common stock issued in connection with completed transactions and related
prices, and option and warrant information has been adjusted to reflect the
completed reverse stock split.
Stockholders Entitled to Vote
The close of business of April 14, 2003 was the record date for
stockholders entitled to notice of and to vote at the 2003 annual meeting. As of
the record date, there were 9,372,727 outstanding shares of I-trax common stock.
Quorum Required
The presence, in person or by proxy, of stockholders entitled to cast
at least a majority of the votes that all stockholders are entitled to cast on a
particular issue constitutes a quorum for the transaction of business at the
2003 annual meeting. Abstentions and broker non-votes will be counted as present
for the purpose of determining the presence of a quorum.
Votes Required
Proposal 1. Directors are elected by a plurality of the affirmative
votes cast by those shares present in person, or represented by proxy, and
entitled to vote at the 2003 annual meeting. The eleven nominees for director
receiving the highest number of affirmative votes will be elected. Abstentions
and broker non-votes will not be counted toward a nominee's total. Stockholders
may not cumulate votes in the election of directors.
Proposals 2. Ratification of Goldstein Golub Kessler LLP as I-trax's
independent auditors for the fiscal year ending December 31, 2003 requires the
affirmative vote of a majority of those shares present in person, or
1
represented by proxy, and cast either affirmatively or negatively at the 2003
annual meeting. Abstentions and broker non-votes will not be counted as having
been voted on the proposal.
Proxies
A form of proxy is enclosed. All properly executed proxies received by
I-trax's board of directors, and not revoked, will be voted as indicated in
accordance with the instructions written on the proxies. In the absence of
contrary instructions, shares represented by returned proxies will be voted for
the election of the directors as described in this proxy statement, in favor of
the ratification of Goldstein Golub Kessler LLP as I-trax's independent auditors
and, in the discretion of the proxy holders, on any other matter properly
brought before the meeting.
Solicitation of Proxies
I-trax will bear all of the costs of soliciting proxies. I-trax will
arrange with brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy materials to the beneficial owners of I-trax common
stock, and may reimburse these persons or institutions for expenses incurred in
connection with this distribution. Directors, officers or employees of I-trax,
none of whom will receive additional compensation, may solicit proxies in person
or by telephone, facsimile, e-mail or other means.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
I-trax's board of directors currently consists of eleven directors. All
eleven directors are to be elected at the 2003 annual meeting to serve until the
2004 annual meeting. The board's nominees for election as directors are John
Blazek, David R. Bock, Philip D. Green, Michael M.E. Johns, M.D., Arthur N.
Leibowitz, M.D., Frank A. Martin, David Nash, M.D., John R. Palumbo, Carol M.
Rehtmeyer, Ph.D., R. Dixon Thayer and William S. Wheeler, each of whom is
currently serving on the board.
The proxy holders intend to vote all proxies received by them in the
accompanying form for these nominees unless otherwise directed. In the event any
nominee is unable or declines to serve as a director at the time of the 2003
annual meeting, the proxies will be voted for any nominee who may be designated
by the present board of directors to fill the vacancy, or, in the alternative,
the board may reduce the number of directors. As of the date of this proxy
statement, I-trax is not aware of any nominee who is unable or unwilling to
serve as a director.
The following table lists the name and age, as of April 2, 2003, of
each nominee to the board of directors.
Name Age Position
--------------------------------------- ------------------ ---------------------------------------------------
Frank A. Martin 52 Chairman, Chief Executive Officer, Treasurer and
Director
John Blazek 48 Director
David R. Bock 59 Director
Philip D. Green 52 Director
Michael M.E. Johns, M.D. 61 Director
Arthur N. Leibowitz, M.D. 56 Director
David Nash, M.D. 47 Director
John R. Palumbo 52 Vice Chairman, President and Director
Carol M. Rehtmeyer, Ph.D. 53 Executive Vice President and Director
R. Dixon Thayer 51 Director
William S. Wheeler 46 Director
Frank A. Martin has been a director, Chairman and Chief Executive
Officer of I-trax since September 2000. Mr. Martin has been a director of I-trax
Health Management Solutions, Inc. ("Health Management"), a predecessor of I-trax
and currently its operating subsidiary, since 1996. Mr. Martin founded, and has
been a managing director of, The Nantucket Group, LLC ("Nantucket"), a
healthcare venture capital firm specializing in
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investing in early stage healthcare service and technology companies since
December 1998. He currently serves on the board of directors of Saddletude,
Inc., an Internet-based equestrian sports network. Mr. Martin served as the
Chief Executive Officer and director of EduNeering, Inc., an electronic
knowledge management company, from April 1999 to April 2000. In November 1992,
Mr. Martin founded Physician Dispensing Systems, Inc. ("PDS"), a healthcare
information technology company that developed pharmaceutical software for
physicians' offices. Mr. Martin assisted in the sale of PDS to Allscripts
Healthcare Solutions, Inc. ("Allscripts"), a provider of point-of-care solutions
to physicians, in December 1996 and then joined its board of directors on which
he served until 1998.
John Blazek, M.B.A., R.Ph., has been a director of I-trax since
February 2002. Mr. Blazek joined I-trax's board of directors when I-trax
acquired WellComm Group, Inc. ("WellComm") in February 2002. From May 2000 to
February 2002, Mr. Blazek served as the Chief Executive Officer of WellComm.
From 1998 to 1999, Mr. Blazek served as an Assistant to Mayor Hal Daub, City of
Omaha, in which capacity he oversaw economic development for the City of Omaha.
From 1996 to 1999, Mr. Blazek served as President of Blazek & Associates, Inc.,
a consulting firm. Mr. Blazek was co-owner of a company that was twice named
among Omaha's "25 fastest growing companies" before it was sold to Coram
Healthcare in 1992.
David R. Bock has been a director of I-trax since February 2001. Mr.
Bock was a director of Health Management from February 2000 to February 2001.
Mr. Bock has been a managing partner of Federal City Capital Advisors, LLC, an
investment banking firm located in Washington, D.C., since August 1997 and is
also a managing director of Nantucket. Mr. Bock served as Executive Vice
President and Chief Financial Officer of Pedestal, Inc., an Internet-based
company providing information on the secondary mortgage marketplace, from
January 2000 to April 2002. From 1992 to 1995, Mr. Bock was a managing director
in the London corporate finance group of Lehman Brothers where he was
responsible for developing Lehman Brothers' investment banking business in
emerging markets, including India, Russia, Turkey and Central Europe. Mr. Bock
also served in a variety of positions at the World Bank, including as Chief of
Staff for the Bank's worldwide lending operations.
Philip D. Green has been a director of I-trax since February 2001. Mr.
Green was a director of Health Management from March 2000 to February 2001.
Since July 2000, Mr. Green has been a partner of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., a leading international law firm. From its formation in 1989 until
it merged with Akin Gump in July 2000, Mr. Green was the founding principal of
the Washington, D.C. based law firm of Green, Stewart, Farber & Anderson, P.C.
Mr. Green practices healthcare law and assists entities in corporate planning
and transactions. Mr. Green represents a significant number of major teaching
hospitals and integrated healthcare delivery systems. Mr. Green also represents
a number of public and private for-profit healthcare companies. Mr. Green is
currently a member of the boards of directors of Allscripts and Imagyn Medical
Technologies, Inc., a medical device manufacturer.
Michael M.E. Johns, M.D., has been a director of I-trax since February
2001. Dr. Johns was a director of Health Management from October 2000 to
February 2001. Since 1996, Dr. Johns has served as an Executive Vice President
for Health Affairs of Emory University, overseeing Emory University's widespread
academic and clinical programs in health sciences. In this position, Dr. Johns
leads strategic planning initiatives for both patient care and research. In
addition, since 1996, Dr. Johns has served as the Chairman of the Board of Emory
Healthcare, a comprehensive healthcare system in metropolitan Atlanta. Dr. Johns
also is Chairman of the Board of EHCA, LLC, a company overseen jointly by Emory
Healthcare and HCA Corporation. Through EHCA, Emory is responsible for clinical
performance improvement and quality assurance in six local hospitals and five
surgery centers owned by HCA Corporation. From 1990 to 1996, Dr. Johns served as
the Dean of the Johns Hopkins School of Medicine and Vice President of the
Medical Faculty at Johns Hopkins University.
Arthur (Abbie) N. Leibowitz, M.D., FAAP, has been a director of I-trax
since March 2002. Since 2001, Dr. Leibowitz has been the Executive Vice
President for Business Development and Chief Medical Officer of Health Advocate,
Inc., a health services company, which he helped form. Health Advocate helps
consumers navigate the healthcare system. In 2000, Dr. Leibowitz served as
Executive Vice President for Digital Health Strategy and Business Development
and director of Medscape, Inc., a clinical information company. Dr. Leibowitz's
experience includes his tenure at Aetna U.S. Healthcare from 1987 to 2000 where
he served in several positions, including as Aetna's Chief Medical Officer for
over four years. Dr. Leibowitz is a nationally recognized leader in the
healthcare industry and an authority on managed care, clinical management and
medical information systems.
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David Nash, M.D., M.B.A., FACP, has been a director of I-trax since
February 2003. Since 2000, Dr. Nash has been The Dr. Raymond C. and Doris N.
Grandon Professor of Health Policy and Medicine at Thomas Jefferson University
Hospital. In 1995 he was named Associate Dean for Health Policy and Professor of
Medicine, Division of Internal Medicine at Jefferson Medical College. In 1990,
Dr. Nash was named Director of Health Policy and Clinical Outcomes at Thomas
Jefferson University Hospital. Dr. Nash has also served as a member of the
Disease Management Association of America, The Washington Business Group on
Health, and the National Committee for Quality Assurance (NCQA) Disease
Management Advisory Council. As of 2000, Dr. Nash has served as Editor-In-Chief
of Disease Management and is on the editorial board of eight other peer-reviewed
journals.
John R. Palumbo has been a director of I-trax since February 2001, Vice
Chairman since October 2002 and President since February 2003. Mr. Palumbo was a
director of Health Management from March 2000 to February 2001. From July 2001
to October 2002, Mr. Palumbo was a Vice President of Siemens Medical Solutions
Health Services, a provider of solutions and services for integrated healthcare.
From 1996 until it was acquired by Siemens, Mr. Palumbo served as Area Vice
President of Shared Medical Systems Corporation, a worldwide leader of health
information solutions. At Shared Medical Systems, Mr. Palumbo oversaw the
start-up of the national health services division, which marketed to and
serviced the for-profit and not-for profit national health systems. From 1995 to
1996, Mr. Palumbo served as an Executive Vice President and Chief Operating
Officer of Allscripts.
Carol M. Rehtmeyer, Ph.D., MSN, RN, has been a director since February
2002 and Executive Vice President since February 2003. Dr. Rehtmeyer joined
I-trax as director and a member of I-trax's Office of the President when I-trax
acquired WellComm in February 2002. Dr. Rehtmeyer formed WellComm in 1997 after
determining there was a need in healthcare for clinically based, customer
oriented telehealth information services. Dr. Rehtmeyer served as the President
of WellComm from its formation until February 2002. Dr. Rehtmeyer has more than
twenty-five years of healthcare experience in areas of practice teaching,
administration and leadership in clinical and managed care settings.
R. Dixon Thayer has been a director of I-trax since April 2003. Mr.
Thayer is the founder and senior partner of ab3 Resources, Inc., a strategic
consulting and private equity investment company. From 1999 to 2002, Mr. Thayer
served as Officer of Global New Business Operations for Ford Motor Company. In
this capacity, Mr. Thayer led corporate initiatives to develop, acquire and grow
"next generation" aftermarket service businesses to help transform Ford into a
global relationship-based consumer products and services company. From 1998 to
1999, Mr. Thayer served as President and Chief Executive Officer of Provant
Consulting Companies, where he helped lead the merger and integration of several
independent consultancies and training companies into the largest publicly
traded company of its type. From 1996 to 1998, Mr. Thayer served as President of
Sunbeam International Division and was an original member of the turnaround team
that successfully rescued the company from impending bankruptcy. From 1995 to
1996, Mr. Thayer was the Senior Vice President of Research, Development,
Engineering & Global Growth for Kimberly Clark Corporation and was a key
architect of the merger between Scott Paper and Kimberly Clark. From 1992 to
1995, he was Vice President AFH Europe, Scott Paper Company where he also served
as Chief Operating Officer of the European division.
William S. Wheeler has been a director of I-trax since February 2001.
Mr. Wheeler was a director of Health Management from September 1999 to February
2001. Mr. Wheeler is the Chief Executive Officer of the Tracer Group, Inc. a
company providing logistics support to the manufacturing industry. From March
2001 to March 2002, Mr. Wheeler was the Chief Operating Officer and Chief
Financial Officer of Net2Voice, a telecommunications company. Mr. Wheeler was a
Vice President at Cable & Wireless USA from June 1989 until February 1999.
During this period, Mr. Wheeler held the positions of Vice President and
Controller, Senior Vice President, Finance and acting President of the Dial
Internet Services division.
There are no family relationships among directors, executive officers
and persons nominated to become directors.
4
Board of Directors Meetings
The board of directors of I-trax held a total of six meetings during
2002. Each director who served in 2002, other than and Dr. Craig Jones, who
resigned from the board effective December 22, 2002, and Dr. Johns, attended
more than 75% of the meetings of the board and its committees of which he or she
is a member.
Board of Directors' Committees
The board of directors has a compensation committee and an audit
committee.
Compensation Committee
The compensation committee is primarily responsible for determining the
compensation payable to the officers and key employees of I-trax and
recommending to the board additions, deletions and alterations with respect to
the various employee benefit plans and other fringe benefits provided by I-trax.
No member of the committee, however, may participate in decisions pertaining to
his or her compensation or benefits in his or her capacity as a director of
I-trax. The committee also is primarily responsible for administering I-trax's
stock option plans, awarding stock options to I-trax's key employees and
non-employee directors and determining the terms and conditions on which the
options are granted. The committee currently has one member, Mr. Bock. Dr. Jones
served on the committee through the date of his resignation from the Board on
December 22, 2002. The committee did not hold separate meetings during 2002.
Rather, members of the committee participated in all board meetings concerning
compensation issues and had recommended a course of action with respect to
compensation matters to the board at those meetings. The board of directors
expects to elect a new member to the compensation committee at the 2003 annual
meeting of directors, which will follow I-trax's 2003 annual meeting of
stockholders.
Audit Committee
The audit committee is primarily responsible for approving the services
performed by I-trax's independent auditors and reviewing and evaluating I-trax's
accounting principles and reporting practices. The audit committee is also
responsible for monitoring I-trax's system of internal accounting controls and
has the responsibility and authority described in its charter, which is attached
as Exhibit A to this proxy statement. The audit committee and the board of
directors expect to review and, if necessary, amend the committee's charter as
may be required by the Sarbanes-Oxley Act of 2002 and related rules and
regulations at the 2003 annual meeting of directors, which will follow the 2003
annual meeting of stockholders. Currently, the audit committee consists of Mr.
Wheeler, as Chairman, and Mr. Bock. Mr. Palumbo served on the committee until
his resignation effective as of October 15, 2002 when he joined I-trax as an
employee. Mr. Wheeler currently serves as a consultant to I-trax, and the board
of directors expects to assess his continued service on the committee at the
2003 annual meeting of directors in light of the Sarbanes-Oxley Act of 2002 and
related rules and regulations. The committee held two separate meeting in 2002
and one separate meeting in 2003 to review I-trax's 2002 financial statements.
All of the members of the audit committee are independent, as defined in Section
121(A), as in effect on April 25, 2003, of the American Stock Exchange listing
standards.
Compensation of Directors
During 2002, directors did not receive any cash payments. When Dr.
Leibowitz joined the board in March 2002, he received an option grant that would
allow him to purchase up to 20,000 shares of I-trax common stock at $5.83 per
share. This option grant vests over a period of two years. Directors are
reimbursed for out-of-pocket expenses incurred in connection with attending
board meetings.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN
THIS PROXY STATEMENT.
5
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
I-trax is asking the stockholders to ratify the appointment of
Goldstein Golub Kessler LLP as I-trax's independent auditors for the fiscal year
ending December 31, 2003. The affirmative vote of the holders of a majority of
shares present or represented by proxy and voting at the 2003 annual meeting
will be required to ratify the appointment of Goldstein Golub Kessler LLP.
In the event the stockholders fail to ratify the appointment, the audit
committee of the board of directors will reconsider its selection. Even if the
appointment is ratified, the audit committee of the board, in its discretion,
may direct the appointment of a different independent accounting firm at any
time during the year if the board feels that such a change would be in I-trax's
and its stockholders' best interests.
Representatives of Goldstein Golub Kessler LLP are expected to be
present at the 2003 annual meeting, will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
I-trax engaged Goldstein Golub Kessler LLP on February 19, 2003,
pursuant to the authorization of the audit committee of the board to audit
I-trax's financial statements for the years ending December 31, 2002 and 2003.
PricewaterhouseCoopers LLP had audited I-trax's financial statements for the
years ending December 31, 2000 and 2001.
I-trax filed with the Securities and Exchange Commission on February
12, 2003 a Current Report on Form 8-K to report the dismissal of
PricewaterhouseCoopers LLP effective February 6, 2003 and on February 19, 2003 a
Current Report on Form 8-K to report the engagement of Goldstein Golub Kessler
LLP effective February 18, 2003. The board of directors and the audit committee
dismissed PricewaterhouseCoopers LLP and engaged Goldstein Golub Kessler LLP
after reviewing PricewaterhouseCoopers LLP's proposed fees to audit I-trax's
2002 financial statements and comparing those fees with those quoted by
comparable audit firms.
During the two years ending December 31, 2002 and through February
12, 2003 there were no disagreements between I-trax and PricewaterhouseCoopers
LLP on any matters of accounting principles or practices, financial statement
disclosure, or audit scope or procedures, which disagreements, if not resolved
to the satisfaction of PricewaterhouseCoopers LLP, would have caused it to make
reference to such disagreements in its reports. PricewaterhouseCoopers LLP
furnished to I-trax a letter addressed to the Securities and Exchange Commission
agreeing with this statement. This letter, dated February 12, 2003, was filed as
an exhibit to Form 8-K announcing the dismissal of PricewaterhouseCoopers LLP.
In addition, neither I-trax nor anyone on its behalf consulted
Goldstein Golub Kessler LLP regarding the application of accounting principals
to a specific completed or contemplated transaction or regarding the type of
audit opinion that Goldstein Golub Kessler LLP would render on I-trax's
financial statements prior to Goldstein Golub Kessler LLP's engagement.
During 2002, I-trax's former independent auditors,
PricewaterhouseCoopers LLP, provided services in the following categories and
amounts:
1. Audit Fees $48,125
2. Financial Information Systems Design and Implementation --
3. All Other Fees 11,800
The audit committee has considered the above non-audit services and has
determined that these services did not compromise the independence of
PricewaterhouseCoopers LLP.
6
In addition, subsequent to 2002, Goldstein Golub Kessler LLP provided
services in the following categories and amounts:
1. Audit Fees $50,000
2. Financial Information Systems Design and Implementation --
3. All Other Fees 5,000
Goldstein Golub Kessler LLP has a continuing relationship with American
Express Tax and Business Services Inc. from which it leases auditing staff who
are full time, permanent employees of American Express Tax and Business Services
and through which its partners provide non-audit services. As a result of this
arrangement, Goldstein Golub Kessler LLP has no full time employees and
therefore, none of the audit services performed were provided by permanent
full-time employees of Goldstein Golub Kessler LLP. Goldstein Golub Kessler LLP
manages and supervises the audit and audit staff, and is exclusively responsible
for the opinion rendered in connection with its examination.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
GOLDSTEIN GOLUB KESSLER LLP AS I-TRAX'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2003.
7
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of April 20, 2003, the number of shares
and percentage of I-trax common stock beneficially owned by:
o our Chief Executive Officer, four other most highly compensated
executive officers based on compensation earned during 2002, and
one executive officer elected in 2002;
o each director;
o all directors and executive officers as a group; and
o each person who is known by I-trax to own beneficially five
percent or more of I-trax's outstanding common stock.
Beneficial ownership was determined in accordance with Rule 13d-3 under
the Exchange Act of 1934, as amended. Under this rule, certain shares may be
deemed to be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the person
has the right to acquire the shares, such as upon exercise of options or
warrants, within 60 days of April 20, 2003, the date as of which the information
is provided. In computing the percentage ownership of any person, the amount of
shares includes the amount of shares beneficially owned by such person (and only
such person) by reason of any acquisition rights. As a result, the percentage of
outstanding shares of any person as shown in the following table does not
necessarily reflect the person's actual voting power at any particular date.
To I-trax's knowledge, except as indicated in the footnotes to this
table and under applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares shown as
beneficially owned by them.
Shares of Options and
Common Stock Warrants
Beneficially Exercisable
Named Executive Officers and Directors* Owned Within 60 Days Total Percent of Class
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Frank A. Martin (1) 1,140,308 295,894 1,436,202 14.9
John Blazek 945,296 3,333 948,629 10.1
Gary Reiss (2) 161,261 479,005 640,266 6.5
David R. Bock (1) 566,681 -- 566,681 6.1
Carol M. Rehtmeyer, Ph.D. 321,803 68,500 390,303 4.1
David C. McCormack 156,536 94,378 250,914 2.7
Yuri Rozenfeld (3) 18,580 108,151 126,731 1.3
Anthony Tomaro 6,136 114,732 120,868 1.3
John R. Palumbo 30,500 76,000 106,500 1.1
Philip D. Green (4) 1,200 69,280 70,480 **
Michael M.E. Johns, M.D. -- 40,000 40,000 **
William S. Wheeler 10,000 20,000 30,000 **
Arthur N. Leibowitz, M.D. -- 10,000 10,000 **
David Nash, M.D. -- -- -- --
R. Dixon Thayer -- -- -- --
All executive officers and directors as a
group (15 persons) 2,891,620 1,379,273 4,270,893 39.7
8
Warrants and
Shares of Convertible
Common Stock Securities
Beneficially Exercisable
5% Stockholders Owned Within 60 Days Total Percent of Class
--------------------------------------------------------------------------------------------------------------------
Palladin Opportunity Fund, LLC (5) -- 968,631 968,631 10.0
Woodglen Group, L.P. (6) 631,108 225,000 856,108 8.9
Hans Kastensmith 544,234 46,322 590,556 6.3
Raymond Markman 516,758 -- 516,758 5.5
----------------------------------------------
* Named executive officers and directors can be reached at I-trax, Inc., One
Logan Square, Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103.
** Less than 1% of the outstanding shares of common stock.
(1) Messrs. Martin and Bock are members and managing directors of The Nantucket
Group, LLC ("Nantucket"). Nantucket is the general partner of Nantucket
Healthcare Ventures I, L.P. ("Nantucket Ventures"), an owner of 466,681 shares.
Nantucket has sole voting and sole dispositive power with respect to these
shares. Therefore, Messrs. Martin and Bock may be deemed to have beneficial
ownership of the shares held by Nantucket Ventures. Messrs. Martin and Bock
disclaim beneficial ownership of the shares held by Nantucket Ventures, except
to the extent of their respective pecuniary interest in Nantucket Ventures. Mr.
Bock own directly 100,000 shares. Mr. Martin own directly and with his wife
651,127 shares and exercises investment control over 22,500 shares owned by his
mother. The address for Nantucket Ventures is c/o The Nantucket Group, LLC, One
Logan Square, Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103.
(2) Includes 3,800 shares held in the name of Mr. Reiss' wife.
(3) Mr. Rozenfeld is a partner of The Spartan Group Limited Partnership
("Spartan"), an owner of 6,000 shares. Mr. Rozenfeld has shared voting and
shared dispositive power with respect to the shares held by Spartan. Mr.
Rozenfeld may be deemed to have beneficial ownership of the shares held by
Spartan. Mr. Rozenfeld disclaims beneficial ownership of the shares held by
Spartan, except to the extent of his pecuniary interest in Spartan. Mr.
Rozenfeld owns 12,580 shares directly.
(4) Mr. Green is an affiliate of Health Industry Investments, LLC and Akin Gump
Health Strategies, LLC, holders of options to purchase 20,000 and 6,400 shares,
respectively, exercisable as of June 20, 2003.
(5) Palladin Asset Management, L.L.C. ("PAM") is the managing member of
Palladin. Palladin Capital Management, LLC ("PCM"), is the sole general partner
of The Palladin Group, L.P. ("Palladin Group"). Palladin Group is the investment
advisor of Palladin. PAM and PCM have shared voting and shared dispositive power
with respect to the shares held by Palladin. Because its beneficial ownership
arises solely from its status as the investment advisor of Palladin, Palladin
Group expressly disclaims equitable ownership of and pecuniary interest in any
shares. Palladin may not convert its debentures or exercise its warrants for
shares of common stock in excess of that number of shares of common stock that,
upon giving effect to such conversion or exercise, would cause the aggregate
number of shares of common stock beneficially owned by Palladin and its
affiliates to exceed 9.99% of the outstanding shares of the common stock
following such conversion or exercise; therefore, POF disclaims beneficial
ownership of any shares of common stock in excess of such amount. The business
address of Palladin is c/o The Palladin Group, 195 Maplewood Avenue, Maplewood,
New Jersey 07040.
(6) Woodglen Associates, LLC is the general partner of Woodglen Group, L.P.,
and, as such, has sole voting and sole dispositive power with respect to the
shares it holds. Its address is 101 East Street Road, Kennett Square,
Pennsylvania 19348.
9
EXECUTIVE COMPENSATION AND RELATED INFORMATION
I-trax's executive officers and their ages as of April 2, 2003 are as
follows:
Name Age Position
-------------------------------------- ----------------- ------------------------------------------------------
Frank A. Martin 52 Chairman, Chief Executive Officer, Treasurer and
Director
John R. Palumbo 52 Vice-Chairman and President
Gary Reiss 53 Executive Vice President and Chief Operating Officer
Carol M. Rehtmeyer, Ph.D. 53 Executive Vice President
Anthony Tomaro, CPA 38 Vice President and Chief Financial Officer
David C. McCormack 33 Vice President and Chief Technology Officer
Yuri Rozenfeld 34 Vice President, General Counsel and Secretary
Please see information under Proposal No. 1 above for biographical
information of Dr. Rehtmeyer and Messrs. Martin and Palumbo.
Gary Reiss has been an Executive Vice President of I-trax since
February 2003 and the Chief Operating Officer of I-trax since February 2003 and,
previously, from February 2001 to March 2002. Mr. Reiss served as a Member of
the Office of the President of I-trax from March 2002 to February 2003. Mr.
Reiss was the Chief Operating Officer of Health Management from March 2000 to
February 2001. From November 1999 to March 2000, Mr. Reiss served as the Chief
Operating Officer of EduNeering, Inc., an electronic knowledge management
company, where he was responsible for positioning the company as a web provider
and portal. From 1996 to 1999, Mr. Reiss served as the Chief Operating Officer
of Allscripts. From 1992 to 1995, Mr. Reiss was an Executive Vice President and
Chief Operating Officer of PDS, a company he founded with Mr. Martin and which
was later acquired by Allscripts.
Anthony Tomaro, CPA has been the Chief Financial Officer of I-trax and
Health Management since January 2001 and Vice President of I-trax since February
2003. Prior to joining I-trax, Mr. Tomaro was a partner in the New York
certified public accounting firm of Massella, Tomaro & Co., LLP. He is a member
of the American Institute of Certified Public Accountants and New York State
Society of Certified Public Accountants. Since 1994, Mr. Tomaro has served as a
partner in accounting firms specializing in Securities and Exchange Commission
accounting and auditing services along with domestic taxes and consulting
services.
David C. McCormack has been the Chief Technology Officer of I-trax
since February 2001 and Vice President of I-trax since February 2003. Mr.
McCormack was the Vice President of Engineering of Member-Link Systems, Inc.
from January 1999 until it was acquired by Health Management in December 1999.
Mr. McCormack oversees all of I-trax's software development efforts. He has
developed and deployed systems in most major programming languages. From April
1997 until January 1999, Mr. McCormack served as a partner in a Virginia based
consulting firm, where he oversaw all software developed by the firm, including:
an inventory management system; an EDI transaction processing system; and an
electronic document management system. From January 1995 until April 1997, Mr.
McCormack acted as a consultant to Lockheed Martin Mission Systems during its
development of the Global Transportation Network (GTN) for the Air Force. Mr.
McCormack's prior responsibilities have included the design, development and
integration of mission critical systems for the Army, Navy and Air Force. Mr.
McCormack has a U.S. Government Top Secret clearance.
Yuri Rozenfeld has been the General Counsel of I-trax since July 2000,
Secretary of I-trax since March 2002 and Vice President since February 2003.
From July 2000 to March 2002, Mr. Rozenfeld served as the General Counsel and
Assistant Secretary of I-trax and of Health Management. From April 1997 to July
2000, Mr. Rozenfeld was an associate in the Business and Finance Group at
Ballard Spahr Andrews & Ingersoll, LLP, where he represented small- and mid-cap
public companies and venture capital funds in a broad range of corporate
matters, including stock and asset acquisitions, mergers, venture capital
investments, venture fund formations, partnership and limited liability company
matters and securities law matters. From 1995 to April 1997, Mr. Rozenfeld was
an associate specializing in product liability litigation with Riker, Danzig,
Scherer, Hyland & Perretti LLP.
10
Executive Compensation
The following Summary Compensation Table sets forth the compensation
earned by the following individuals: I-trax's Chief Executive Officer; its
President, appointed on October 15, 2002; and four other most highly compensated
executive officers who were serving as such as of December 31, 2002.
Summary Compensation Table
Annual Compensation Long-Term
Compensation
Name and Position Year Salary (1) Other Number of Options
--------------------------------------------------------------------------------------------------------------------
Frank A. Martin 2002 $ 173,543 (2) $ 6,000 (4) 1,750
Chairman, Chief Executive 2001 175,000 (3) 6,000 (4) 70,000
Officer and Treasurer 2000 146,063 (3) 4,500 (4) 70,000
John R. Palumbo 2002 $ 40,000 (2) $ 1,000 (4) 162,000
Vice-Chairman and President 2001 -- -- 20,000 (5)
2000 -- -- 20,000 (5)
Gary Reiss 2002 $ 173,543 (2) $ 6,000 (4) 1,750
Executive Vice President and 2001 175,000 (3) 6,000 (4) 140,000
Chief Operating Officer 2000 134,965 (3) 4,500 (4) 140,000
Carol M. Rehtmeyer, Ph.D. 2002 $ 131,168 (2) -- 31,250
Executive Vice President 2001 -- -- --
2000 -- -- --
Anthony Tomaro 2002 $ 150,000 (2) 11,500
Vice President and Chief 2001 150,000 (3) -- 40,000
Financial Officer 2000 -- -- 40,000 (6)
Yuri Rozenfeld 2002 $ 128,917 (2) 11,300
Vice President, General 2001 124,375 (3) -- 40,000
Counsel and Secretary 2000 49,271 (3) -- 40,000
----------------------------------
(1) Salary includes amounts deferred under I-trax's 401(k) Plan.
(2) Salary includes the following amounts deferred by the named executive
officers at the request of I-trax to conserve cash: Mr. Martin, $20,418; Mr.
Palumbo, $23,333; Mr. Reiss, $20,418; Dr. Rehtmeyer, $14,582; Mr. Tomaro,
$11,250; and Mr. Rozenfeld, $9,750. Repayment terms have not been set.
(3) Salary includes amounts deferred under I-trax's salary deferment program in
effect from November 2000 to December 31, 2001. Pursuant to the program, Mr.
Martin deferred $29,166 in 2000 and $135,357 in 2001; Mr. Reiss deferred $29,166
in 2000 and $135,357 in 2001; Mr. Tomaro deferred $70,665 in 2001; and Mr.
Rozenfeld deferred $8,958 in 2000 and $65,132 in 2001. Further, effective as of
December 31, 2001, these executive officers, surrendered the deferred salary in
exchange for warrants to acquire I-trax common stock. These officers received a
warrant to acquire one share of common stock exercisable at $.75 per share for
each $1.75 of deferred salary. Accordingly, if an officer exercises these
warrants in the future, the effective per share price for each share of common
stock that such officer would receive upon exercise would be $2.50. The price of
$2.50 per share was intended to equal the price per share paid by third-party
investors purchasing common stock from I-trax in 2001 private placements.
Accordingly, Messrs. Martin and Reiss each received warrants to purchase 94,013
shares, Mr. Tomaro received warrants to purchase 40,380 shares and Mr. Rozenfeld
received warrants to purchase 42,337 shares. Effective as of December 31, 2001
and pursuant to the salary deferment program described above, the named
executive officers were granted warrants to purchase 52,269 shares of common
stock at an exercise price of $2.50 per share and warrants to purchase 14,062
shares of common stock at an exercise price of $5.00 per share. The warrants
exercisable at $2.50 were allocated as follows: Mr. Martin, 19,687; Mr. Reiss,
19,687; Mr. Tomaro,
11
6,250; and Mr. Rozenfeld, 6,645. The warrants exercisable at $5.00 were
allocated as follows: Mr. Martin, 4,375; Mr. Reiss, 4,375; Mr. Tomaro, 2,604;
and Mr. Rozenfeld, 2,708. These extra warrants were issued to all employees that
participated in the salary deferment program because similar warrants were
issued by I-trax to third-party investors in connection with the several private
placement completed by I-trax in 2001. As a condition to deferring pay in the
salary deferment program, I-trax promised the participating employees that they
would be treated in the same manner as third-party investors in I-trax.
(4) Automobile and parking allowance.
(5) These options were granted to Mr. Palumbo in connection with his service on
the board of directors of I-trax before he joined I-trax as an executive
officer.
(6) Grant approved by the board of directors on December 29, 2000, effective as
of January 1, 2001.
The following table contains information concerning the stock option
grants made to each of the named executive officers during the fiscal year ended
December 31, 2002. No stock appreciation rights were granted in 2002.
Option Grants in Last Fiscal Year 2002
Number of Percent of Total
Securities Options Granted to
Underlying Employees in Exercise Price
Name Options Granted Fiscal Year (1) (Dollars per Share) Expiration Date
--------------------------------------------------------------------------------------------------------------------
Frank A. Martin 1,750 0.3 $ 3.00 12/22/2012
John R. Palumbo 160,000 23.9 2.75 10/13/2012
2,000 0.3 3.00 12/22/2012
Gary Reiss 1,750 0.3 3.00 12/22/2012
Carol M. Rehtmeyer, Ph.D. 30,000 4.5 6.05 2/11/2012
1,250 0.2 3.00 12/22/2012
Anthony Tomaro 10,000 1.5 6.25 1/3/2012
1,500 0.2 3.00 12/22/2012
Yuri Rozenfeld 10,000 1.5 6.25 1/3/2012
1,300 0.2 3.00 12/22/2012
------------------------------------
(1) Based on options to acquire an aggregate of 668,578 shares granted in the
fiscal year.
12
The following table contains information about each of the identified
executive officers option exercises in fiscal year 2002 and option holdings as
of December 31, 2002. No stock appreciation rights were outstanding at the end
of that year.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at Year End In-the-Money Options
Name Exercise Realized Exercisable/Unexercisable at Year End (1)
--------------------------------------------------------------------------------------------------------------------
Frank A. Martin -- -- 76,665 / 65,085 --
John R. Palumbo -- -- 76,000 / 126,000 --
Gary Reiss -- -- 184,162 / 97,588 --
Carol M. Rehtmeyer, Ph.D. -- -- 0 / 31,250 --
Anthony Tomaro -- -- 46,665 / 44,835 --
Yuri Rozenfeld -- -- 56,665 / 34,635 --
-------------------------------
(1) The closing price of I-trax common stock on December 31, 2002 was $2.75 per
share. All options held by the named executive officers are exercisable at $2.75
or more.
Employment Contracts
Health Management, I-trax's operating subsidiary, is party to an
employment agreement with Messrs. Martin, Reiss and Palumbo and Dr. Rehtmeyer.
Frank A. Martin and Gary Reiss
On December 29, 2000, Health Management entered into an employment
agreement with each of Messrs. Martin and Reiss. Each agreement is for an
initial term of three years ending on December 28, 2003. Thereafter, each
employment agreement extends automatically for successive periods of one year,
unless the applicable executive officer elects not to renew the agreement. Each
agreement provides for an annual base salary during the initial term of
$175,000.
Health Management may terminate Mr. Martin or Mr. Reiss' employment
with or without cause at any time. In addition, Mr. Martin or Mr. Reiss may
terminate their employments upon 90 days' notice or upon shorter notice for good
reason. Good reason includes the failure by Health Management to continue the
executive officer in his executive position, material diminution of the
executive officer's responsibilities, duties or authority, assignment to the
executive officer of duties inconsistent with his position or requiring the
executive officer to be permanently based anywhere other than within 25 miles of
Philadelphia, Pennsylvania.
In the event either employment agreement is terminated without cause or
for good reason, Health Management will pay the applicable executive officer
severance equal to one year's salary, payable over one year. In addition, in the
event either employment agreement is terminated without cause or for good
reason, the executive officer will remain subject to the non-competition
restrictions described below only as long as he is receiving severance payments.
Finally, all options granted to such executive officers will accelerate and vest
immediately.
With the exception of the circumstances described in the immediately
preceding paragraph, each executive officer agreed not to compete against Health
Management for a period of one year following the expiration of the initial term
or any renewal term, even if the actual employment is terminated prior to such
expiration. Each executive officer also agreed not to use or disclose any
confidential information of Health Management for at least five years after the
expiration of the original term or any renewal term, even if the actual
employment is terminated
13
prior to such expiration. Finally, each executive officer agreed that any
invention he develops during his employment relating to the business of Health
Management will belong to Health Management.
Dr. Carol M. Rehtmeyer
On February 5, 2002, Health Management entered into an employment
agreement with Dr. Rehtmeyer. The agreement is for an initial term of three
years ending on February 5, 2005. Thereafter, the agreement extends
automatically for successive periods of one year, unless Dr. Rehtmeyer or Health
Management elects not to renew the agreement. The agreement provides for an
annual base salary during the initial term of $125,000.
Health Management may terminate Dr. Rehtmeyer's employment with or
without cause at any time. In addition, Dr. Rehtmeyer may terminate her
employment upon 90 days' notice or upon shorter notice for good reason. Good
reason includes the failure by Health Management to continue Dr. Rehtmeyer in
her executive position, material diminution of her responsibilities, duties or
authority, assignment to her of duties inconsistent with her position or
requiring her to be permanently based anywhere other than within 25 miles of
Omaha, Nebraska.
If the employment agreement is terminated without cause or for good
reason during the first year of the initial term, Health Management will pay Dr.
Rehtmeyer severance equal to one year's salary, payable over one year. If the
employment agreement is terminated without cause or for good reason after the
first year of the initial term, Health Management will pay Dr. Rehtmeyer
severance equal to six months' salary, payable over six months. In addition, if
the employment agreement is terminated without cause or for good reason, Dr.
Rehtmeyer will remain subject to the non-competition restrictions described
below only as long as she is receiving severance payments. If the employment
agreement is terminated without cause or for good reason following a change of
control of I-trax that results in a payment to Dr. Rehtmeyer on account of her
I-trax common stock, Health Management will not pay Dr. Rehtmeyer severance.
Finally, all options granted to Dr. Rehtmeyer will accelerate and vest
immediately in any circumstances described in this paragraph.
With the exception of the circumstances described in the immediately
preceding paragraph, Dr. Rehtmeyer agreed not to compete against Health
Management for a period of one year following the expiration of the initial term
or any renewal term, even if the actual employment is terminated prior to such
expiration. She also agreed not to use or disclose any confidential information
of Health Management for at least five years after the expiration of the
original term or any renewal term, even if the actual employment is terminated
prior to such expiration. Finally, Dr. Rehtmeyer also agreed that any invention
she develops during her employment relating to the business of Health Management
will belong to Health Management.
John R. Palumbo
On October 15, 2002, Health Management entered into an employment
agreement with Mr. Palumbo. The agreement is for an initial term of three years
ending on October 25, 2005. Thereafter, the agreement extends automatically for
successive periods of one year, unless Mr. Palumbo elects not to renew the
agreement. The agreement provides for an annual base salary during the initial
term of $200,000.
Health Management may terminate Mr. Palumbo's employment with or
without cause at any time. In addition, Mr. Palumbo may terminate his employment
upon 90 days' notice or upon shorter notice for good reason. Good reason
includes the failure by Health Management to continue Mr. Palumbo in his
executive position, material diminution of his responsibilities, duties or
authority, assignment to him of duties inconsistent with his position or
requiring him to be permanently based anywhere other than within 25 miles of
Philadelphia, Pennsylvania.
If the employment agreement is terminated without cause or for good
reason, Health Management will pay Mr. Palumbo severance equal to one year's
salary, payable over one year. In addition, in the event the employment
agreement is terminated without cause or for good reason, Mr. Palumbo will
remain subject to the non-competition restrictions described below only as long
as he is receiving severance payments. All options granted to Mr. Palumbo will
accelerate and vest immediately in any circumstances described in this
paragraph.
With the exception of the circumstances described in the immediately
preceding paragraph, Mr. Palumbo agreed not to compete against Health Management
for a period of one year following the expiration of the initial
14
term or any renewal term, even if the actual employment is terminated prior to
such expiration. He also agreed not to use or disclose any confidential
information of Health Management for at least five years after the expiration of
the original term or any additional term, even if the actual employment is
terminated prior to such expiration. Finally, Mr. Palumbo also agreed that any
invention he develops during his employment relating to the business of Health
Management will belong to Health Management.
Change of Control Arrangements
The compensation committee, as administrator of I-trax's 2000 Equity
Compensation Plan and 2001 Equity Compensation Plan, can provide for accelerated
vesting of the shares of common stock subject to outstanding options in
connection with certain changes in control of I-trax.
SECTION 16(a) OF THE EXCHANGE ACT BENEFICIAL OWNERSHIP COMPLIANCE
I-trax's board members, executive officers and persons who hold more
than 10% of I-trax's outstanding common stock are subject to the reporting
requirements of Section 16(a) of the Exchange Act of 1934, as amended, which
require them to file reports with respect to their common stock ownership and
their transactions in common stock. Based upon the copies of Section 16(a)
reports that I-trax received from such persons for their 2002 fiscal year
transactions in I-trax common stock and their common stock holdings and the
written representations received from one or more of these persons that no
annual Form 5 reports were required to be filed by them for the 2002 fiscal
year, I-trax believes that all reporting requirements under Section 16(a) for
such fiscal year were met in a timely manner by I-trax's executive officers,
board members and greater than 10% stockholders.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Dr. Jones, a director of I-trax through December 22, 2002, is the
Director of the Division of Allergy & Immunology at the Los Angeles County and
University of Southern California Medical Center, which is operated by the Los
Angeles County Department of Health Services (DHS). The Los Angeles County DHS
purchased an information system from I-trax to support implementation of a
clinical disease management program for which it paid I-trax approximately
$61,000 in 2001.
In May 2000, Health Management entered into a consulting agreement with
Health Industry Investments, LLC, an affiliate of Mr. Green, a director of
I-trax. This consulting agreement was superseded by a new consulting agreement
between Health Management and Akin Gump Health Strategies, LLC, likewise an
affiliate of Mr. Green. Under the new consulting agreement, Health Strategies
agreed to introduce Health Management to potential customers for I-trax's
services and Health Management agreed to compensate Health Strategies if Health
Management closes transactions with such potential customers. I-trax has not
made any payment under the original or new consulting agreement. In addition,
under the original consulting agreement, I-trax granted Health Management in
April 2001, options to acquire 40,000 shares of I-trax common stock at an
exercise price of $2.75 as compensation for continuing to perform services under
the consulting agreement. These options vest over two years.
Effective as of December 29, 2000, Health Management issued to each of
Messrs. Martin and Reiss, the Chief Executive Officer and Chief Operating
Officer, respectively, 50,000 shares of Health Management common stock at a per
share purchase price of $10. The aggregate purchase price was payable pursuant
to a Promissory Note and Pledge Agreement in the principal amount of $499,750.
The principal amount of each Promissory Note and Pledge Agreement accrues
interest at an annual rate of 5.87%. The principal and interest on each
Promissory Note and Pledge Agreement was payable in five annual installments of
principal and interest beginning on December 29, 2001. Furthermore, in the event
these officers were performing their duties adequately and were accomplishing
I-trax's goals, the compensation committee of I-trax's board of directors had
the option of waiving and forgiving any of the annual payments of principal and
interest in lieu of granting such officers a cash bonus. These transaction were
rescinded in 2001.
From November 2000 through May 2001, I-trax completed an offering of
convertible promissory notes and stock purchase warrants. I-trax raised
$2,000,000 in this offering. Of this total, $700,000 was loaned to I-trax by
Woodglen Group, L.P., a 5% stockholder, $250,000 was loaned to
15
I-trax by Mr. Martin and $250,000 was loaned to I-trax by Mr. Reiss. The
convertible promissory notes had a maturity date of one year from the date of
issue and accrue interest at an annual rate of 8% with a default annual rate of
12%. The principal amount of, and accrued and unpaid interest under, the
convertible promissory notes were convertible into common stock. The stock
purchase warrants granted the holders a right to purchase one shares of common
stock for each $10 in original principal amount of convertible promissory notes.
The initial conversion price of the convertible promissory notes and the
exercise price of the stock purchase warrants were $10 per share, subject, in
each case, to full-ratchet anti-dilution adjustment in the event of a subsequent
offering with an effective per share price of less than $10.
On June 25, 2001 and pursuant to an Exchange Agreement dated May 14,
2001, the holders of the convertible promissory notes, including Woodglen Group,
L.P., a 5% stockholder, Mr. Martin and Mr. Reiss exchanged the principal of, and
accrued interest through May 15, 2001 under, the promissory notes in the
aggregate amount of $2,280,157 for I-trax common stock at the exchange price of
$2.50 per share. As consideration for the exchange, I-trax reset the exercise
price of the warrants to acquire 440,000 shares of common stock, originally
issued together with the convertible promissory notes, to $2.50 per share.
Accordingly, in the transaction, Woodglen Group, L.P. received 291,108 shares
and warrants to acquire 140,000 shares, Mr. Martin received 104,690 shares and
warrants to acquire 50,000 shares and Mr. Reiss received 104,361 shares and
warrants to acquire 50,000 shares.
Effective as of June 25, 2001, I-trax completed a private placement of
440,000 shares of common stock at $2.50 per share, yielding to I-trax
$1,100,000. Woodglen Group, L.P., a 5% stockholder, invested $850,000 in this
private placement. As consideration for completing the private placement, I-trax
issued to the participating investors stock purchase warrants to purchase one
share of common stock for each $10 invested in this private placement at an
exercise price of $5.00 per share. I-trax, therefore, issued warrants to acquire
a total of 110,000 shares of common stock, of which a warrant to acquire 85,000
shares of common stock was issued to Woodglen Group, L.P.
During the first and second quarters of 2001, Mr. Martin loaned I-trax
$515,000 to fund I-trax's working capital deficiency. Of this amount, I-trax
repaid $240,000 in June 2001. On June 25, 2001, Mr. Martin exchanged the
remaining $275,000 of the loan, and accrued interest of $9,163, into common
stock at the exchange price of $2.50 per share. I-trax issued 113,664 shares in
this exchange. In addition, I-trax issued Mr. Martin a stock purchase warrants
to acquire 103,000 shares at an exercise price of $2.50 per share as
consideration for this bridge financing. The terms of this exchange transaction
and warrant issuance, including the exchange price and the calculation of the
number of warrants granted, were intended to be identical to those applicable to
the debt exchange transaction closed by I-trax on June 25, 2001 and described
above.
During the first and second quarters of 2001, Mr. Reiss loaned I-trax
$240,000 to fund I-trax's working capital deficiency. I-trax repaid this amount
in June 2001. On June 25, 2001, as consideration for the loan, I-trax issued Mr.
Reiss stock purchase warrants to acquire 48,000 shares of common stock at an
exercise price of $2.50 per share. The terms of the warrant issuance, including
the calculation of the number of warrants granted, were intended to be identical
to those applicable to the debt exchange transaction closed by I-trax on June
25, 2001 and described above.
On March 2, 2001, I-trax entered into an Amended and Restated
Promissory Note and Warrant Purchase Agreement with a group of investors led by
Psilos Group Partners, L.P. (collectively, the "Psilos Group") pursuant to which
the Psilos Group agreed, among other things, to loan I-trax up to $1,000,000.
The Psilos Group included Nantucket, a venture fund managed by Mr. Martin. As
consideration, I-trax granted the Psilos Group warrants to acquire .05264 shares
of common stock at $.50 per share for each $1 of the face amount of the loan.
The loan accrues interest at an annual rate of 8%, with an annual default rate
of 12%, and is due five years from original date of issuance. The Psilos Group
funded $692,809 of the $1,000,000 and received warrants to purchase 364,694
shares of common stock. Of such total amounts, Nantucket funded $75,000 and
received warrants to purchase 39,480 shares of common stock. Effective as of
January 4, 2002, all Psilos Group investors exercised their warrants using a
cashless exercise feature and received an aggregate of 340,316 shares of common
stock.
Beginning in November 2000, in an effort to conserve cash, I-trax
established a salary deferment program whereby certain executive officers,
including Messrs. Martin, Reiss, Tomaro, McCormack and Rozenfeld, and other
employees agreed to defer all or a portion of their salaries. To induce
employees to participate in the salary deferment program, I-trax agreed to pay
interest at an annual rate of 8% on the deferred salary. In addition, I-trax
16
promised participating employees that they would receive (1) an option to
convert deferred salary into equity on the same basis as third-party investors
in I-trax and (2) "coverage warrants" to the extent they were also granted to
third-party investors while participating employees were deferring pay. I-trax
ended the salary deferment program on December 31, 2001. As of December 31,
2001, I-trax accrued $1,038,876 on account of deferred salaries and interest
thereon. Certain participating employees, including Messrs. Martin, Reiss,
Tomaro, McCormack and Rozenfeld, agreed to exchange a total of $814,595 of
accrued salary, together with interest thereon, for warrants to acquire 465,480
shares of common stock with an exercise price of $0.75 per share. The number of
warrants issued to each employee electing to surrender accrued salary was
calculated by dividing the employee's total accrued salary and interest thereon
by $1.75. Accordingly, if an employee elected to exchange accrued salary for
warrants and later exercised these warrants, the effective per share price for
the shares of common stock that the employee would receive would be $2.50. The
price of $2.50 per share was intended to equal the price per share paid by
third-party investors purchasing common stock in several private placements
completed by I-trax in 2001. I-trax also granted the participating employees
warrants to acquire 142,193 shares of common stock at an exercise price of $2.50
per share and warrants to acquire 20,538 shares of common stock at $5.00 per
share. These extra warrants were issued to all employees that participated in
the salary deferment program because similar warrants were issued by I-trax to
third-party investors in connection with the several private placement completed
by I-trax in 2001.
During the third and fourth quarters of 2001, Mr. Reiss loaned I-trax
$296,000, Mr. Martin loaned I-trax $280,000 and Alan Sakal, I-trax's Senior Vice
President, loaned I-trax $100,000, in each case, to fund I-trax's working
capital deficiency. I-trax repaid Mr. Sakal's loan in January 2002. The
outstanding loans accrue interest at an annual rate of 8%. On December 20, 2001,
as consideration for the loans, I-trax issued Messrs. Reiss, Martin and Sakal
stock purchase warrants to acquire 29,600 shares, 28,000 shares and 10,000
shares of common stock, respectively, at an exercise price of $5.00 per share.
The terms of these warrants, including the calculation of the number of warrants
granted, were intended to be identical to the warrants issued by I-trax in a
private placement of $1,100,000 of common stock and warrants closed on June 25,
2001 and described above.
Effective as of December 31, 2001, Mr. Martin exercised warrants to
purchase 94,013 shares of common stock by agreeing to cancel a portion of a loan
in the amount of $70,510 payable by I-trax to Mr. Martin. The exercised warrants
were originally issued to Mr. Martin under the salary deferment program
described above.
Lauren Reiss-Pollard, a daughter of Mr. Reiss, is an employee of Health
Management. Mrs. Reiss-Pollard received cash compensation of $78,000 in 2001 and
$80,717 in 2002.
Sean Martin, the son of Mr. Martin, is an employee of Health
Management. Mr. Sean Martin received cash compensation of $62,500 in 2002.
In addition to advances to I-trax made by Messrs. Martin and Reiss
described elsewhere in this section, in 2001 Messrs. Martin and Reiss advanced
to I-trax an aggregate of $380,000 and subsequent to year ended 2002, Messrs.
Martin and Reiss advanced to I-trax an aggregate of $140,000. These advances
accrue interest at an annual rate of 8%. I-trax and Messrs. Martin and Reiss
have not yet agreed on repayment terms.
Effective February 6, 2002, I-trax acquired WellComm in a two-step
reorganization pursuant to a Merger Agreement dated January 28, 2002 by and
among I-trax, WC Acquisition, Inc., an Illinois corporation and a wholly-owned
subsidiary of I-trax, WellComm and Mr. Blazek and Dr. Rehtmeyer. In the merger,
I-trax issued WellComm stockholders approximately $2,200,000 in cash and
1,488,000 shares of I-trax common stock. Dr. Rehtmeyer also received options to
acquire 56,000 shares of I-trax common stock at a nominal exercise price. After
the merger, Mr. Blazek and Dr. Rehtmeyer were elected to I-trax's board of
directors.
I-trax funded the acquisition of WellComm by selling a 6% convertible
senior debenture in the aggregate principal amount of $2,000,000 to Palladin
Opportunity Fund LLC pursuant to a Purchase Agreement dated as of February 4,
2002 between Palladin and I-trax. Pursuant to the purchase agreement, I-trax
also issued Palladin a warrant to purchase an aggregate of up to 307,692 shares
of common stock at an exercise price of $5.50 per share. The outstanding
principal and any interest under the debenture are payable in full on or before
February 3, 2004. Further, outstanding principal and any interest may be
converted at any time at the election of Palladin into I-trax common stock. As a
result of this transaction, Palladin became a 5% stockholder.
17
In 2002, Mr. Blazek loaned I-trax $234,500, Dr. Rehtmeyer loaned I-trax
$92,750 and Jane Ludwig, a Vice President of I-trax, loaned I-trax $22,750.
Subsequent to year ended 2002, Mr. Blazek loaned I-trax $149,200 and Dr.
Rehtmeyer loaned I-trax $50,800. These loans are due on February 27, 2004 and
are accruing interest at an annual rate of 8%.
A relative of Mr. Reiss advanced to I-trax $350,000 in 2002. I-trax
repaid $125,000 of this sum in 2002 and $140,000 subsequent to year ended 2002.
The balance is due on demand and is accruing interest at an annual rate of 8%.
Subsequent to year ended 2002, Mr. Blazek, acting in his capacity as
limited agent of certain I-trax stockholders that that acquired I-trax common
stock as a result of the acquisition of WellComm by I-trax, loaned I-trax
$139,500. I-trax and Mr. Blazek have not yet agreed on repayment terms.
Subsequent to year ended 2002, Acorn II, an investment fund affiliated
with Woodglen Group, L.P., a 5% stockholder, loaned I-trax $150,000. The loan is
due on December 31, 2003 and is accruing interest at an annual rate of 12%.
Pursuant to a consulting agreement dated July 1, 2002, I-trax engaged
Mr. Wheeler to analyze and, if necessary, improve the company's accounting
practices and financial reporting. Under this consulting agreement, in 2002 Mr.
Wheeler received compensation from I-trax of $23,334.
The Certificate of Incorporation of I-trax limits the liability of
I-trax's directors for monetary damages arising from a breach of their fiduciary
duty as directors, except for any breach of the director's duty of loyalty to
I-trax or its stockholders, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for any
transaction from which the director derived an improper personal benefit and as
otherwise required by Delaware General Corporation Law. This limitation of
liability does not limit equitable remedies such as injunctive relief or
rescission.
I-trax's bylaws require I-trax to indemnify its directors and officers
to the fullest extent permitted by Delaware law, including in circumstances in
which indemnification is otherwise discretionary under Delaware law.
18
AUDIT COMMITTEE REPORT
The audit committee of the board of directors developed an updated
charter for the committee in 2000, which was approved by the full board. The
complete text of the charter is reproduced in Exhibit A to this proxy statement.
The audit committee of the board of directors recommends to the board
the accounting firm to be retained to audit the company's financial statements
and, once retained, consults with and reviews recommendations made by the
accounting firm with respect to financial statements, financial records, and
financial controls of the company.
Accordingly, the audit committee has (a) reviewed and discussed the
audited financial statements with management; (b) discussed with Goldstein Golub
Kessler LLP, the company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees); (c) received the written disclosures and the letter from Goldstein
Golub Kessler LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees); and (d) discussed with
Goldstein Golub Kessler LLP its independence from management and the company,
including the matters in the written disclosures required by the Independence
Standards Board. The audit committee also discussed with Goldstein Golub Kessler
LLP the overall scope and plans for its audit. The audit committee met with
management and Goldstein Golub Kessler LLP to discuss the results of the
auditors' examinations, their evaluations of the company's internal controls,
and the overall quality of the company's financial reporting.
In reliance on the review and discussions referred to above, the audit
committee recommended to the board of directors that the audited financial
statements be included in the company's Annual Report on Form 10-KSB for the
year ended December 31, 2002.
This report of the audit committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other I-trax filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that I-trax
specifically incorporates this report by reference therein.
Members of the Audit Committee
William S. Wheeler, Chairman
David R. Bock
FORM 10-KSB
The Company will mail without charge, upon written request, a copy of
the Company's Form 10-KSB Report for fiscal year ended December 31, 2002,
including its financial statements. Requests should be sent to I-trax, Inc., One
Logan Square, Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103,
Attn: Corporate Secretary.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Stockholders who intend to have a proposal considered for inclusion in
I-trax's proxy materials for presentation at I-trax's 2004 annual meeting of
stockholders pursuant to Rule 14a-8 under the Exchange Act of 1934, as amended,
must submit the proposal to the company at its offices at One Logan Square,
Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103, Attn: Yuri
Rozenfeld, not later than December 27, 2003. Stockholders who intend to present
a proposal at such meeting without inclusion of such proposal in I-trax's proxy
materials pursuant to Rule 14a-8 under the Exchange Act of 1934, as amended, are
required to provide advance notice of such proposal to I-trax at the
aforementioned address not later than December 27, 2003. I-trax reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements, including conditions established by the Securities and Exchange
Commission.
19
OTHER MATTERS
I-trax's board of directors knows of no other matters to be presented
for stockholder action at the 2003 annual meeting. However, if other matters do
properly come before the annual meeting or any adjournments or postponements
thereof, the board of directors intends that the persons named in the proxies
will vote upon such matters in accordance with their best judgment.
20
EXHIBIT A
I-TRAX, INC.
Audit Committee Charter
Role
The Audit Committee of the Board of Directors shall be responsible to
the Board of Directors for oversight of the quality and integrity of the
accounting, auditing, and reporting practices of the Company and shall perform
such other duties as may be directed by the Board. The Committee shall maintain
free and open communication with the Company's independent auditors and
management of the Company and shall meet in executive session at least annually.
In discharging this oversight role, the Committee is empowered to investigate
any matter brought to its attention, with full power to retain outside counsel
or other experts for this purpose.
Membership and Independence
The membership of the Committee shall consist of at least three
directors who are generally knowledgeable in financial and auditing matters,
including at least one member with accounting or related financial management
expertise. Each member shall be free of any relationship that, in the opinion of
the Board, would interfere with his or her individual exercise of independent
judgment, and shall meet the director independence requirements for serving on
audit committees as set forth in the American Stock Exchange's listing standards
applicable to companies with securities traded on The American Stock Exchange.
The Chairperson of the Audit Committee, who shall be appointed by the Board of
Directors, shall be responsible for leadership of the Committee, including
preparing agendas for and presiding over meetings, making Committee assignments
and reporting to the Board of Directors. The chairperson will also maintain
regular liaison with the Chief Executive Officer and Chief Financial Officer of
the Company and the lead independent audit partner.
Responsibilities
Internal Control
o Discuss with management and the independent auditors the quality
and adequacy of the Company's computer systems (and their
security), internal accounting controls and personnel.
o Review with the independent auditors and management any
management letter issued by the independent auditors and
management's responses thereto.
Financial Reporting
o Keep informed of important new pronouncements from the accounting
profession and other regulatory bodies, as well as other
significant accounting and reporting issues, that may have an
impact on the Company's accounting policies and/or financial
statements.
o Review the audited financial statements and management's
discussion and analysis of financial condition and results of
operations and discuss them with management and the independent
auditors. These discussions shall include consideration of the
quality of the Company's accounting policies and principles as
applied in its financial reporting, including review of
estimates, reserves and accruals, review of judgment areas,
review of audit adjustments, whether or not recorded, and such
other inquiries as may be appropriate. Based on the review, the
Committee shall make a recommendation to the Board as to the
inclusion of the Company's audited financial statements in the
Company's annual report on Form 10-KSB.
A-1
External Audit
o Review the performance of the independent auditors and recommend
to the Board the independent auditors to be engaged to audit the
financial statements of the Company and, if appropriate, the
termination of that relationship. In doing so, the Committee will
request from the auditors a written affirmation that the auditors
are independent, discuss with the auditors any relationships that
may impact the auditors' independence (including non-audit
services), and recommend to the Board any actions necessary to
oversee the auditors' independence.
o Oversee the independent auditors relationship by discussing with
the independent auditors the nature, scope and rigor of the audit
process, receiving and reviewing audit reports, and providing the
auditors full access to the Committee (and the Board) to report
on appropriate matters.
Reporting to Board of Directors
o Report Audit Committee activities to the full Board and issue
annually a report (including appropriate oversight conclusions)
to be included in the Company's proxy statement for its annual
meeting of shareholders.
o Review the Audit Committee Charter with the Board of Directors
annually.
A-2
PROXY I-TRAX, INC. PROXY
One Logan Square, Suite 2615, 130 N. 18th Street, Philadelphia, PA 19103
This Proxy is Solicited on Behalf of the Board of Directors of I-trax, Inc.
for the Annual Meeting of Stockholders to be held May 21, 2003
The undersigned holder of Common Stock, par value $.001, of I-trax,
Inc. (the "Company") hereby appoints Frank A. Martin and Yuri Rozenfeld, or
either of them, proxies for the undersigned, each with full power of
substitution, to represent and to vote as specified in this Proxy all Common
Stock of the Company that the undersigned stockholder would be entitled to vote
if personally present at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Wednesday, May 21, 2003 at 10:00 a.m. local time, at
1735 Market Street, 51st Floor, Philadelphia, Pennsylvania, and at any
adjournments or postponements of the Annual Meeting. The undersigned stockholder
hereby revokes any proxy or proxies heretofore executed for such matters.
This proxy, when properly executed, will be voted in the manner as
directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS, FOR THE APPOINTMENT OF
GOLDSTEIN GOLUB KESSLER LLP, AS INDEPENDENT AUDITORS AND, IN THE DISCRETION OF
THE DESIGNATED PROXIES, AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING. The undersigned stockholder may revoke this proxy at any time
before it is voted by delivering to the Secretary of the Company either a
written revocation of the proxy or a duly executed proxy bearing a later date,
or by appearing at the Annual Meeting and voting in person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
DIRECTORS AND FOR THE APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP, AS INDEPENDENT
AUDITORS.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE
ENCLOSED RETURN ENVELOPE. If you receive more than one proxy card, please sign
and return ALL cards in the enclosed envelope.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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================================================================================
(Reverse)
I-TRAX, INC.
/x/ Please mark votes as in this example.
1. To elect the following directors Nominees: FOR AGAINST For all nominees, except
to serve for a term ending upon John Blazek / / / / for nominees written below.
the 2003 Annual Meeting of David R. Bock
Stockholders or until their Philip D. Green / /
successors are elected and Michael M.E. Johns, M.D. ___________________________
qualified: Arthur N. Leibowitz, M.D. ___________________________
Frank A. Martin ___________________________
David Nash, M.D. Nominee exception(s).
John R. Palumbo
Carol Rehtmeyer, Ph.D.
R. Dixon Thayer
William S. Wheeler
2. To ratify the appointment of Goldstein Golub Kessler LLP as the Company's FOR AGAINST ABSTAIN
independent auditors for the fiscal year ending December 31, 2003 / / / / / /
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
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Signature
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Signature (if held jointly):
Date: , 2003
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When shares are held by joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee, guardian, custodian, corporate official or in any other fiduciary or
representative capacity, please give your full title as such.
Please sign your name exactly as it appears on this proxy, and mark, date and return this proxy as soon as
possible in the enclosed envelope.