I TRAX INC - DEF 14A - 20010501 - EXECUTIVE_COMPENSATION
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The Company's executive officers and other key employees and their ages
as of April 10, 2001 are as follows:
Name Age Position
-------------------------------------------------------------------------------
Frank A. Martin 50 Chairman, Chief Executive Officer, President
and Director
Hans C. Kastensmith 41 Vice-Chairman, Founder and Director
Gary Reiss 50 Chief Operating Officer and Secretary
David C. McCormack 31 Vice President and Chief Technology Officer
Michael O'Connell, M.D. 42 Chief Medical Officer
Alan D. Sakal 42 Senior Vice President, Sales
Anthony Tomaro, CPA 36 Chief Financial Officer
Stuart Ditchek, M.D. 40 Medical Director
Shikha Sethi, M.D. 29 Managing Director
Yuri Rozenfeld 32 General Counsel and Assistant Secretary
Please see Proposal No. 1 above for biographical information of Messrs.
Martin and Kastensmith.
Gary Reiss has been the Chief Operating Officer of I-trax since
February 2001 and of I-trax Health Management Solutions since March 2000. In
this capacity, he oversees the daily operations of the Company. Mr. Reiss has
over eight years of experience as the chief operating officer of health and
medical information management companies. From November 1999 to March 2000, Mr.
Reiss served as the Chief Operating Officer of EduNeering, Inc., an electronic
knowledge management company, where his responsibilities included positioning
the company as a web provider and portal. From 1995 to 1999, Mr. Reiss served as
the Chief Operating Officer of Allscripts, Inc., where he was responsible for
all operations. From 1992 to 1995, Mr. Reiss was an Executive Vice President and
Chief Operating Officer of Physician Dispensing Systems, a company he founded
with Mr. Martin and which was later acquired by Allscripts, Inc.
David C. McCormack has been the Chief Technology Officer of I-trax
since February 2001 and of I-trax Health Management Solutions since January
2000. Mr. McCormack was the Vice President of Engineering, of Member-Link from
January 1999 until its merger with I-trax Health Management Solutions in
December 1999. Mr. McCormack oversees all of the Company'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: an inventory management system; an EDI transaction processing system;
and an electronic document management system. Additionally, 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. His architectural guidance was instrumental in successfully
fielding multi-terabyte distributed data warehouse that integrates millions of
transportation related transactions daily. Mr. McCormack has worked for several
large defense contractors. His 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.
Michael O'Connell, M.D., has been the Chief Medical Officer of I-trax
since February 2001 and of I-trax Health Management Solutions since November
1999. In this role, he oversees development of the numerous I-trax software
applications. He is responsible for intellectual content and successful
compliance with current Center for Disease Control and other national
immunization guidelines. Dr. O'Connell has served as the Assistant Chief of the
Allergy-Immunology Department at Walter Reed Army Medical Center and as a
Co-Consultant to the Army Surgeon General for Allergy & Immunizations since May
1997. He has been intimately involved in the development and deployment of the
Company's immunization system at Walter Reed, providing the current immunization
data, tables, and guideline/recommendations for AsthmaWatch(R). Dr. O'Connell
has served as a United States Army Medical Officer since 1985.
Alan D. Sakal has been the Senior Vice President, Sales of I-trax since
February 2001 and of I-trax Health Management Solutions since April 2000. In
this capacity he oversees all of the Company's sales initiatives. Mr. Sakal has
over 17 years of experience in sales and related areas. From November 1999 to
March 2000, Mr. Sakal
15
served as the Vice President, Sales, of EduNeering, Inc., an electronic
knowledge management company, where his responsibilities included overseeing all
of EduNeering's sales initiatives. From 1997 to 1999, Mr. Sakal served as a
Senior Sales Strategy Consultant of MDM Marketing. From 1992 to 1997, Mr. Sakal
held several sales positions with Allscripts, Inc., including Vice President,
Point of Care Sales.
Anthony Tomaro, CPA has been the Chief Financial Officer of I-trax and
I-trax Health Management Solutions since April 2001. 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. Prior to 1994, he
was a manager with a large regional accounting firm specializing in the real
estate industry.
Stuart H. Ditchek, M.D, FAAP, has been the Medical Director of I-trax
and I-trax Health Management Solutions since February 2001, when I-trax acquired
iSummit Partners, LLC (d/b/a MyFamilyMD(TM)). Dr. Ditcheck founded
MyFamilyMD(TM)in 1999 and was its President and Chairman. Dr. Ditchek has been
in private practice in New York since 1986 and is the senior founding partner of
Integrative Pediatric Associates of New York, a multi-physician group practice
with over 7,000 patients in the New York City area. Dr. Ditchek is also an
Associate Professor of Pediatrics at the New York University School of Medicine.
Dr. Ditchek is a board-certified pediatrician, a Diplomat of the American Board
of Pediatrics, an active Fellow of the American Academy of Pediatrics and a
member of the New York Pediatric Society. Dr. Ditchek is the Associate Director
of the Division of Familial Dysautonomia at New York University.
Shikha M. Sethi, M.D. has been the Managing Director of I-trax since
February 2001. Dr. Sethi was the Executive Vice President, acting Chief
Executive Officer and a co-founder of MyFamilyMD(TM) beginning in 1999. From
1993 to 1994, Dr. Sethi was a management consultant with American Practice
Management (currently CSC Healthcare), where Dr. Sethi worked with leading
academic and community hospitals on managed care strategy, mergers and
acquisitions and clinical practice management.
Yuri Rozenfeld has been the General Counsel and Assistant Secretary of
I-trax since October 2000 and of I-trax Health Management Solutions since July
2000. 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.
The following Summary Compensation Table sets forth the compensation
earned by the Company's Chief Executive Officer and the three other most highly
compensated executive officers who were serving as such as of December 31, 2000
(collectively, the "Named Officers"), each of whose aggregate compensation for
fiscal year 2000 exceeded $100,000 for services rendered in all capacities to
the Company and its subsidiaries for that fiscal year. Compensation for fiscal
year 2000 was received by the applicable Named Officer from I-trax Health
Management Solutions and for fiscal year 1999 from Member-Link.
16
Summary Compensation Table
Annual Compensation Long-Term Compensation
Restricted Number
Stock of LTIP All
Name and Position Year Salary Bonus Other Awards Options Payouts Other
------------------------------------------------------------------------------------------------------------------------
Frank A. Martin 2000 $146,063(1) $ -0- $ 4,500(2) -0- 350,000 $ -0- $ -0-
Chairman, Chief Executive 1999 25,000(3) -0- -0- -0- -0- -0- -0-
Officer and President
Hans C. Kastensmith 2000 149,910(1) -0- -0- -0- -0- -0- -0-
Vice-Chairman and Founder 1999 202,250(4) -0- -0- -0- -0- -0- -0-
David C. McCormack 2000 119,750(1) -0- -0- -0- -0- -0- -0-
Chief Technology Officer 1999 142,234(5) -0- -0- -0- -0- -0- -0-
Gary Reiss 2000 134,965(1) -0- 4,500(2) -0- 700,000 -0- -0-
Chief Operating Officer and 1999 -0- -0- -0- -0- -0- -0- -0-
Secretary
-----------------------------------------------
(1) Salary includes amounts deferred under the Company's 401(K) Plan. Salary
also includes amount deferred pursuant to the Company's Salary Deferment
Program instituted in November 2000 to conserve cash. The Named Officers
deferred the following amounts pursuant to the Salary Deferment Program:
Frank A. Martin, $29,166; Hans C. Kastensmith, $25,000; David C. McCormack,
$20,834; and Gary Reiss, $29,166.
(2) Represents an automobile and parking allowance.
(3) Salary includes receipt of 250,000 shares of Common Stock, valued at $0.10
per share, as payment for services.
(4) Salary includes receipt of 1,000,000 shares of Common Stock, valued at
$0.125 per share, as payment for services.
(5) Salary includes receipt of 330,000 shares of Common Stock, valued at $0.125
per share, as payment for services.
The following table contains information concerning the stock option
grants made to each of the Named Officers for the fiscal year ended December 31,
2000. No stock appreciation rights were granted during such year.
Option Grants in Last Fiscal Year
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Fiscal Exercise Price Expiration
Name Granted Year (1) (Dollars per Share) Date
----------------------------------------------------------------------------------------------------------------------
Frank A. Martin 350,000 9.9% $ 2.00 12/28/10
Hans C. Kastensmith -0- -0- N/A N/A
David C. McCormack -0- -0- N/A N/A
Gary Reiss 350,000 9.9% 1.00 3/14/10
350,000 9.9% 2.00 10/ 9/10
------------------------- ---------------------- -----------------------
(1) Based on an aggregate of 3,519,666 options granted in the fiscal year.
17
The following table sets forth information concerning option exercises
in fiscal year 2000 and option holdings as of December 31, 2000 with respect to
each of the Named Officers. No stock appreciation rights were outstanding at the
end of that year.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Shares Acquired on Unexercised Options at Year End (1)
Name Exercise Value Realized at Year End
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Frank A. Martin -0- -0- 350,000 $ -0-
Hans C. Kastensmith -0- -0- -0- -0-
David C. McCormack -0- -0- -0- -0-
Gary Reiss -0- -0- 700,000 350,000
-------------------------
(1) Based on the fair market value of the Company's Common Stock at December
29, 2000 ($2 per share) less the exercise price payable for such shares.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
I-trax Health Management Solutions has entered into employment
agreements with each of Frank A. Martin, Gary Reiss, Hans C. Kastensmith, David
C. McCormack and Dr. Michael O'Connell.
Employment Contracts
Frank A. Martin and Gary Reiss
On December 29, 2000, I-trax Health Management Solutions entered into
an employment agreement with each of Frank A. Martin, the Chief Executive
Officer of I-trax and of I-trax Health Management Solutions and Gary Reiss, the
Chief Operating Officer of I-trax and of I-trax Health Management Solutions.
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 and such bonuses and option grants as may be approved
by the Company's Board of Directors or its Compensation Committee from time to
time.
The Company may terminate either Mr. Martin's or Mr. Reiss's employment
with or without cause at any time. In addition, either Mr. Martin or Mr. Reiss
may terminate his employment upon 90 days notice or upon shorter notice for good
reason. Good reason includes the failure by the Company 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 the Company 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 so long as he is receiving severance payments. Finally, one
hundred percent (100%) of options granted to such executive officers shall
accelerate and vest immediately.
With the exception of the circumstances described above, each executive
officer agreed not to compete against the Company 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
18
disclose any confidential information of the Company 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, each
executive officer also agreed that any invention he develops during his
employment relating to the business of the Company will belong to the Company.
Hans C. Kastensmith
On June 1, 1999, Member-Link, the predecessor of I-trax Health
Management Solutions, entered into an employment agreement with Hans C.
Kastensmith, the Vice-Chairman, Founder and director of I-trax and Vice-Chairman
and Founder of I-trax Health Management Solutions. The term of the agreement is
three years ending on May 31, 2002. I-trax Health Management Solutions is bound
by the agreement as a successor-in-interest to Member-Link. The agreement
provides for an annual base salary of $175,000 and cash bonuses from time to
time as the Company's Board of Directors may deem appropriate.
The agreement prohibits Mr. Kastensmith from using or disclosing any of
the Company's confidential information at any time in the future and he has
agreed that any inventions he develops during his employment relating to the
Company's business will become the Company's property. He is also prohibited
from competing with the Company for a period of one year following the
termination of the agreement, unless the resulting termination is due to the
Company's breaching the agreement.
Mr. Kastensmith may terminate the agreement at any time upon at least
60 days written notice.
David C. McCormack
On September 28, 2000 and effective as of January 1, 2000, I-trax
Health Management Solutions entered into an employment agreement with David C.
McCormack, the Chief Technology Officer of I-trax and of I-trax Health
Management Solutions, for an initial term of three years ending on December 31,
2002. Thereafter, the employment agreement renews automatically for successive
periods of one year, unless either party elects not to renew. The agreement
provides for an annual base salary during the initial term of $125,000 and
bonuses and option grants that may be approved by the Company's Board of
Directors or its Compensation Committee from time to time.
In the event the Company terminates Mr. McCormack's employment without
cause at any time during his employment, the Company will pay Mr. McCormack
severance, equal to one year's salary, payable over one year. In the event the
employment agreement is terminated without cause, the executive officer will
remain subject to the non-competition restrictions described below only so long
as he is receiving severance payments.
With the exception of the circumstance described above, Mr. McCormack
agreed not to compete against the Company for a period of one year following the
expiration of the original term or any renewal term, even if the actual
employment is terminated prior to such expiration. Mr. McCormack also agreed not
to use or disclose any confidential information of the Company 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. Mr. McCormack also
agreed that any invention he develops during his employment relating to the
business of the Company will be its sole and absolute property.
Mr. McCormack may terminate the agreement at any time upon at least 60
days written notice.
Michael O'Connell, M.D.
On November 29, 1999, I-trax Health Management Solutions entered into
an employment agreement with Dr. Michael O'Connell, the Chief Medical Officer of
I-trax and I-trax Health Management Solutions, for a period of three years
ending on November 28, 2002. The agreement provides for an annual base salary of
$85,000 and cash bonuses from time to time, as the Company's Board of Directors
may deem appropriate.
Dr. O'Connell is also entitled to a sales bonus for sales of the
Company's enterprise application systems for which he is determined to be
primarily responsible. The bonus is equivalent to a commission of six percent
(6%) of the revenue realized from such sales net of sales costs and expenses,
gross receipts taxes, and capital cost recovery.
19
The agreement prohibits Dr. O'Connell from using or disclosing any of
the Company's confidential information at any time in the future and he has
agreed that any inventions he develops during his employment relating to the
business of the Company will become the Company's sole and absolute property. He
is also prohibited from competing with the Company for a period of two years
following the termination of the agreement, unless the resulting termination is
due to the Company's breach of the agreement.
Dr. O'Connell may terminate the agreement at any time upon at least 60
days written notice.
Change of Control Arrangements
The Compensation Committee, as administrator of the Plan and the
Company's 2000 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 the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than ten percent (10%) of the Company's
outstanding Common Stock are subject to the reporting requirements of Section
16(a) of the Exchange Act which require them to file reports with respect to
their ownership of Common Stock and their transactions in Common Stock. Based
upon (i) the copies of Section 16(a) reports that the Company received from such
persons for their 2000 fiscal year transactions in the Common Stock and their
Common Stock holdings and (ii) the written representations received from one or
more of such persons that no annual Form 5 reports were required to be filed by
them for the 2000 fiscal year, the Company believes that all reporting
requirements under Section 16(a) for such fiscal year were met in a timely
manner by its executive officers, Board members and greater than ten-percent
stockholders, except: (i) each member of the Board of Directors and executive
officers of the Company effective as of May 3, 2000 filed a delinquent Form 3
required to be filed in connection with I-trax Health Management Solutions'
Exchange Act registration statement on Form 10-SB; (ii) Frank A. Martin, an
executive officer and a ten percent (10%) beneficial owner filed two delinquent
Forms 4, the first reporting a purchase from I-trax Health Management Solutions
of a convertible promissory note in an aggregate amount of $250,000 and an
associated warrant and the second reporting the purchase from I-trax Health
Management Solutions of 250,000 shares of Common Stock, (iii) Gary Reiss, an
executive officer, filed two delinquent Forms 4, the first reporting a purchase
from I-trax Health Management Solutions of a convertible promissory note in an
aggregate amount of $250,000 and an associated warrant and the second reporting
the purchase from I-trax Health Management Solutions of 250,000 shares of Common
Stock, (iv) Yuri Rozenfeld, an executive officer, filed a delinquent Form 3; and
(v) William S. Wheeler, a director, filed a delinquent Form 4 reporting receipt
of options.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In July 1999, I-trax Health Management Solutions issued and sold
1,000,000 shares of its common stock to each of Frank A. Martin, and Joseph E.
Shamy and Greta Shamy, as tenants in common, at a per share price of $.10, for
an aggregate cash consideration of $300,000 to raise working capital. Mr. Martin
is the Chief Executive Officer of I-trax. Joseph E. Shamy and Greta Shamy are
beneficial owners of more than five percent (5%) of outstanding Common Stock.
In September 1999, I-trax Health Management Solutions issued to certain
executive officers of Member-Link an aggregate of 2,000,000 shares, of which
1,000,000 shares were issued to Hans C. Kastensmith, the Vice-Chairman and
Founder of I-trax and the Vice-Chairman and Founder of I-trax Health Management
Solutions, as consideration for services rendered by Mr. Kastensmith in
connection with a certain license agreement, a management services agreement and
a technical services agreement between Member-Link and I-trax Health Management
Solutions. The aggregate consideration deemed received by Mr. Kastensmith in
this transaction was $125,000.
Effective as of December 30, 1999, Member-Link merged with and into
I-trax Health Management Solutions pursuant to a Merger Agreement dated as of
December 14, 1999. In the merger, each of the 1,809,686 outstanding shares of
common stock of Member-Link was converted into a right to receive 4.4207 shares
of
20
common stock of I-trax Health Management Solutions. 8,000,082 shares of common
stock of I-trax Health Management Solutions were issued in the merger. At the
time of the merger, Nantucket Healthcare Ventures I, L.P., an affiliate of Mr.
Martin, the Chief Executive Officer of I-trax, and an affiliate of David R.
Bock, a director of I-trax, held in the aggregate 486,168 shares of common stock
of Member-Link, which shares were converted in the merger into 2,149,203 shares
of common stock of I-trax Health Management Solutions. In addition, at the time
of the merger, Hanks C. Kastensmith, the Vice-Chairman and Founder of I-trax,
held an aggregate of 796,148 shares of common stock of Member-Link, which shares
were converted in the merger into 3,519,534 shares of I-trax Health Management
Solutions common stock.
In February 2000, I-trax Health Management Solutions sold 1,800,000
shares of its common stock for an aggregate consideration of $1,800,000, in a
series of closings pursuant to a private placement. Mr. Martin together with his
wife and children purchased 125,000 of such shares for an aggregate purchase
price of $125,000.
Dr. Craig A. Jones, a director of I-trax, 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 is purchasing an
information system from the Company at an approximate cost of $100,000 to
support implementation of a clinical disease management program. Dr. Jones is
the director of that clinical program. In May 2000, the Company also entered
into a verbal consulting agreement with Dr. Jones. Pursuant to the agreement, in
addition to attending Board of Directors meeting, Dr. Jones assists I-trax with
its product development efforts, attends trade shows on its behalf and
originates business leads. Dr. Jones is compensated at a rate of $3,000 per
month. These payments were suspended in November 2000.
In May 2000, I-trax Health Management Solutions entered into a
Consulting Agreement with Health Industry Investments, LLC, an affiliate of
Philip D. Green, a director of I-trax. Pursuant to the Consulting Agreement,
Health Industry agreed to perform certain services for I-trax and I-trax Health
Management Solutions, which include arranging introductions with potential
customers. In turn, Health Industry received the right to purchase 20,000 shares
of common stock of I-trax Health Management Solutions at a purchase price of $2
per share. The beneficial owners of Health Industry exercised this right and
purchased these shares in September 2000 pursuant to a private placement
conducted by I-trax Health Management Solutions. In addition, Health Industry
received options to acquire up to 80,000 shares of common stock of I-trax Health
Management Solutions at an exercise price of $0.625 as compensation for
performing services under the Consulting Agreement. The options vest in equal
monthly installments over the one-year term of the Consulting Agreement. All
options were accelerated in October 2000.
From November 2000 through January 2001, I-trax and I-trax Health
Management Solutions issued several convertible promissory notes with an
aggregate face amount of $2,000,000. Of such total, $250,000 was loaned to the
Company by Frank A. Martin, its Chief Executive Officer, $250,000 was loaned to
the Company by Gary Reiss, its Chief Operating Officer, and $170,000 was loaned
to the Company by Joseph E. Shamy and Greta Shamy, each a beneficial owners of
more than five percent (5%) of outstanding Common Stock. The convertible
promissory notes mature one year from the date of issuance and bear interest at
8% per annum or 12% per annum in an event of default of payments. The stock
purchase warrants grant holders a right to purchase one share of Common Stock
for each $1 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 are $2 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 $2.
Effective as of December 29, 2000, I-trax Health Management Solutions
issued to each of Frank A. Martin, its Chief Executive Officer, and Gary Reiss,
its Chief Operating Officer, 250,000 shares of common stock of I-trax Health
Management Solutions at a per share purchase price of $2. The aggregate purchase
price is 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 a rate of 5.87% per annum. The principal and
interest on each Promissory Note and Pledge Agreement is 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 the Company's goals, the Company's Compensation Committee
may waive and forgive any of the annual payments of principal and interest in
lieu of granting such officers a cash bonus.
21
To allow the Company to meet its February and March 2001 working
capital requirements, Frank A. Martin, the Company's Chief Executive Officer,
and Gary Reiss, the Company's Chief Operating Officer, advanced an aggregate of
$475,000 to the Company. The Company and Messrs. Martin and Reiss have not yet
agreed on repayment terms.
On February 7, 2001, the Company completed its acquisition of iSummit
Partners, LLC (d/b/a MyFamilyMD(TM)). In connection with this closing, the
Company entered into a Registration Rights Agreement with the former owners of
MyFamilyMD, including Dr. Stuart Ditchek and A. David Fishman, each a beneficial
owner of more than five percent (5%) of outstanding Common Stock. The
Registration Rights Agreement grants the former owners of MyFamilyMD the right
to require the Company to register the shares of Common Stock issued to the
former owners of MyFamilyMD in the acquisition in the event the Company elects
to register any of its Common Stock for its own account.
The Certificate of Incorporation limits the liability of the Company'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 the
Company 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. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission.
The Company's bylaws provide that the Company shall 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.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors consists entirely
of non-employee directors, and its primary function is to make recommendations
to the Board of Directors concerning executive compensation, option grants
pursuant to the Plan and the Company's 2000 Equity Compensation Plan and other
benefit policies for the Company.
The Committee believes that the most effective compensation program is
one that provides executives competitive base salaries and incentives to achieve
both current and long-term strategic business goals of the Company.
The Company's executive compensation programs are designed to:
o Align the interests of executive officers with the long-term
interests of the Company's stockholders.
o Motivate and challenge executive officers to achieve both annual
and long-term strategic business goals.
o Support an environment that rewards executive officers based upon
corporate and individual performance and results.
o Attract and retain executive officers critical to the long-term
success of the Company.
In 2000, the basic components of executive officer compensation
consisted of base salary and long-term incentives in the form of stock options.
Although the Compensation Committee believes that cash bonuses are typically
appropriate to meet the goals discussed above, the Committee believed that the
Company's performance in 2000 did not merit such cash bonuses. The executive
officers also participate in employee benefit plans available generally to the
Company's employees.
Base Salary. Technology companies face intense competition for qualified
employees, and the Committee believes it is important that the Company's
executive officer compensation levels be competitive with other technology
companies. The Committee reviewed the compensation of its executives in
comparison with other publicly traded technology companies and targeted base
salary levels to be consistent with comparable positions at these companies.
22
Long-Term Incentives in Form of Stock Options. The Committee believes
that significant management ownership of the Company's stock effectively
motivates the building of stockholder wealth and aligns the interests of
management with those of the Company's stockholders. During calendar year 2000,
the Company's executive officers received option grants totaling 1,100,000
shares under the terms of the Company's 2000 Equity Compensation Plan and option
grants totaling 350,000 outside of the Company's 2000 Equity Compensation Plan.
All such options were granted at per share exercise prices equal to the fair
market value of the underlying Common Stock on the date of grant.
In addition, Messrs. Martin and Reiss, the Chief Executive Officer and
Chief Operating Officer of the Company, respectively, were each permitted to
purchase 250,000 shares of common stock of I-trax Health Management Solutions at
a per share purchase price of $2.00. The aggregate purchase price is 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 a rate of 5.87% per annum. The principal and interest on each
Promissory Note and Pledge Agreement is 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
the Company's goals, the Company's Compensation Committee may waive and forgive
any of the annual payments of principal and interest in lieu of granting to such
officers a cash bonus.
Chief Executive Officer Compensation. The compensation plan for Mr.
Martin for 2000 contained the same elements and operated in the same manner as
the compensation plan described above for the other executive officers. The
Committee believes that Mr. Martin's total 2000 compensation was appropriate in
light of his importance to the achievement of the Company's goals.
During 2000, Mr. Martin was granted options to acquire 350,000 shares of
Common Stock at $2 per share, the fair market value of such stock on the date of
grant. In addition, Mr. Martin purchased an aggregate of 250,000 shares from the
Company pursuant to a Promissory Note and Pledge Agreement. Mr. Martin is a
significant stockholder of the Company and has advanced to the Company a
significant sum for working capital requirements. The Committee believes that
Mr. Martin's interests align directly with the Company's stockholders. To the
extent his performance translates into an increased value of Common Stock, all
stockholders will benefit.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code disallows a tax deduction to publicly held companies
for compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1,000,000 per covered officer in any fiscal year. The
limitation applies only to compensation that is not considered to be
performance-based. Non-performance-based compensation paid to the Company's
executive officers for 2000 did not exceed the $1,000,000 limit per officer, and
the Committee does not anticipate that the non-performance-based compensation to
be paid to the Company's executive officers in the foreseeable future will
exceed that limit.
Members of the Compensation Committee
David R. Bock
Craig Jones, M.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed in February 2000, and the members
of the Compensation Committee are Dr. Jones and Mr. Bock. Neither of these
individuals was at any time during fiscal 2000, or at any other time, an officer
or employee of the Company. No executive officer of the Company serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors during 2000 developed an
updated charter for the Committee, which was approved by the full Board. The
complete text of the new charter is reproduced in Exhibit A to this Proxy
Statement.
23
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
PricewaterhouseCoopers, 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 PricewaterhouseCoopers, LLP required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees); and (d)
discussed with PricewaterhouseCoopers, 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
PricewaterhouseCoopers, LLP the overall scope and plans for its audit. The Audit
Committee met with management and PricewaterhouseCoopers, 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, 2000.
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 or I-trax Health Management Solutions 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
John R. Palumbo
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, 2000,
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: Investor Relations.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholders who intend to have a proposal considered for inclusion in
the Company's proxy materials for presentation at the Company's 2002 annual
meeting of stockholders pursuant to Rule 14a-8 under the Exchange Act must
submit the proposal to the Company at its offices at One Logan Square, Suite
2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103, Attn: Gary Reiss,
not later than January 22, 2002. Stockholders who intend to present a proposal
at such meeting without inclusion of such proposal in the Company's proxy
materials pursuant to Rule 14a-8 under the Exchange Act are required to provide
advance notice of such proposal to the Company at the aforementioned address not
later than January 22, 2002. The Company 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.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the 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.
24
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 ("MD&A") 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.
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
25
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.
26
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
I-TRAX, INC.
I-trax, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors adopted a resolution setting forth a
proposed amendment to the Certificate of Incorporation of said Corporation and
declaring said amendment advisable and directing that said amendment be
submitted to the stockholders of said Corporation entitled to vote in respect
thereof for their approval. The resolution setting forth said amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of the
Corporation be amended by replacing the first sentence of the FOURTH
Article thereof so that such sentence shall be and read as follows:
"The total number of shares of stock which the
Corporation shall have authority to issue is 102 million
shares, of which (i) 100,000,000 shares are designated as
Common Stock, $0.001 par value per share, and (ii) 2,000,000
shares are designated as Preferred Stock, $0.001 par value per
share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That thereafter said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law by obtaining a
vote of at least fifty percent (50%) of the Common Stock in favor of said
amendment in the manner set forth in Section 222 of the General Corporation Law.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to
be signed by the Chief Executive Officer and the Secretary of the Corporation
this ____ day of __________, 2001.
I-TRAX, INC.
By:______________________________
Frank A. Martin
Chief Executive Officer
Attest:
Gary Reiss, Secretary
27
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, 2001
The undersigned holder of Common Stock, par value $.001, of I-trax,
Inc. (the "Company") hereby appoints Frank A. Martin and Gary Reiss, 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
Monday, May 21, 2001 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 PROPOSALS 2, 3 AND 4,
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" PROPOSALS 2, 3 AND 4.
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.
I-TRAX, INC.
Please mark votes as in this example [X]
1. To elect the following directors Nominees: David R. Bock, Philip D. FOR AGAINST / / For all nominees, except
to serve for a term ending upon Green, Michael M.E. Johns, M.D., / / / / for nominees written below.
the 2002 Annual Meeting of Craig Jones, M.D., Hans C. Nominee exception(s).
Stockholders or until their Kastensmith, Frank A. Martin, John
successors are elected and R. Palumbo and William S. Wheeler
qualified:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
2. To approve the amendment to the Company's Certificate of Incorporation FOR AGAINST ABSTAIN
as set forth in the accompanying Proxy Statement. / / / / / /
3. To adopt the Company's 2001 Equity Compensation Plan as set forth in the FOR AGAINST ABSTAIN
accompanying Proxy Statement. / / / / / /
4. To ratify the appointment of PricewaterhouseCoopers, LLP as the FOR AGAINST ABSTAIN
Company's independent auditors for the fiscal year ending December 31, / / / / / /
2001.
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.
Signature:
Signature (if held jointly):
Date: ____________, 2001
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.
Next Section
Previous Section