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) Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)
(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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[GRAPHIC OMITTED]
I-trax, Inc.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
April 22, 2004
Dear Stockholder:
We cordially invite you to attend I-trax's annual stockholders' meeting. The
meeting will be held on Wednesday, May 19, 2004, at 10:00 A.M. at Ballard Spahr
Andrews & Ingersoll, LLP, 1735 Market Street, 51st Floor, Philadelphia,
Pennsylvania.
At the meeting, stockholders will vote to elect directors. Please carefully read
the proposal and the related information 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]
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 19, 2004,
at 10:00 A.M., at Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street,
51st Floor in Philadelphia, Pennsylvania.
At the meeting, stockholders will be asked to:
o elect directors, and
o consider any other business properly brought before the meeting.
The close of business on April 12, 2004 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.
/s/ Yuri Rozenfeld
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YURI ROZENFELD
General Counsel and Secretary
April 22, 2004
I-TRAX, INC.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
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PROXY STATEMENT
FOR 2004 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 2004 annual meeting of stockholders and any
adjournments or postponements of the meeting. The 2004 annual meeting will be
held at 10:00 A.M. on May 19, 2004, at Ballard Spahr Andrews & Ingersoll, LLP,
1735 Market Street, 51st Floor, Philadelphia, Pennsylvania 19103. These proxy
materials were first mailed to stockholders on or about April 22, 2004. The
address of I-trax's principal executive office is One Logan Square, Suite 2615,
130 N. 18th Street, Philadelphia, Pennsylvania 19103. 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 on April 12, 2004 was the record date for
stockholders entitled to notice of and to vote at the 2004 annual meeting.
As of the record date, there were 28,374,852 outstanding shares of
I-trax common stock and 1,200,000 outstanding shares of I-trax Series A
Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock
converts into 10 shares of I-trax common stock and the holders of shares of
Series A Convertible Preferred Stock are entitled to vote them at the 2004
annual meeting on an "as converted" basis.
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
2004 annual meeting. Abstentions and broker non-votes will be counted as present
for the purpose of determining the presence of a quorum.
Vote Required
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 2004 annual meeting. The eight 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.
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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, 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 I-trax Series A Convertible Preferred 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.
ELECTION OF DIRECTORS
I-trax's board of directors currently consists of ten directors. Eight
of I-trax's current directors, whose terms expire at the 2004 annual meeting,
have been nominated for reelection at the 2004 annual meeting to serve until the
2005 annual meeting. The board's nominees for election as directors are David R.
Bock, Haywood D. Cochrane, Jr., Philip D. Green, Michael M.E. Johns, M.D.,
Arthur N. Leibowitz, M.D., Frank A. Martin, David Nash, M.D. and R. Dixon
Thayer, each of whom is currently serving on the board. John R. Palumbo and
William S. Wheeler, whose terms expire at the 2004 annual meeting, have agreed
not to stand for reelection because of their ongoing relations with I-trax.
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 2004
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 16, 2004, of
each nominee to the board of directors.
Name Age Position
---------------------------- ------------------ ----------------------------------------------------
Frank A. Martin 53 Chairman, Chief Executive Officer and Director
David R. Bock 60 Director
Haywood D. Cochrane, Jr. 55 Vice Chairman and Director
Philip D. Green 53 Director
Michael M.E. Johns, M.D. 62 Director
Arthur N. Leibowitz, M.D. 57 Director
David Nash, M.D. 48 Director
R. Dixon Thayer 52 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 investing in early stage
healthcare service and technology companies since December 1998. 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.
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Martin sold 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.
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.
Haywood D. Cochrane, Jr., has been a director and Vice Chairman of
I-trax since March 2004. Mr. Cochrane joined I-trax as a director and Vice
Chairman when I-trax acquired Meridian Occupational Healthcare Associates, Inc.,
which does business as CHD Meridian Healthcare ("CHD Meridian Healthcare"), on
March 19, 2004. Mr. Cochrane was the Chief Executive Officer and a director of
CHD Meridian Healthcare from February 1997 until the I-trax acquisition. From
June 1989 until joining CHD Meridian Healthcare, Mr. Cochrane served in various
executive capacities at Laboratory Corporation of America, National Health
Laboratories Inc. and Allied Clinical Laboratories, Inc. Mr. Cochrane is a
director of Tripath Imaging, Inc.
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. law firm of Green, Stewart, Farber & Anderson, P.C. Mr.
Green practices healthcare law and assists entities in corporate planning and
transactions. Mr. Green also represents a significant number of major teaching
hospitals and integrated healthcare delivery systems and a number of public and
private for-profit healthcare companies. Mr. Green is a director of Allscripts.
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. Dr. Johns is also a director of
Genuine Parts Company.
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.
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
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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.
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. He also currently serves as
President, Chief Executive Officer and director of GreenLeaf Auto Recyclers,
LLC, a company ab3 Resources, Inc. recently acquired from Ford Motor 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 restructured
the company. 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, Mr. Thayer was Vice President AFH Europe,
Scott Paper Company where he also served as Chief Operating Officer of the
European division.
There are no family relationships among directors, executive officers
and persons nominated to become directors.
Board of Directors Meetings
The board of directors of I-trax held 11 meetings during 2003. Each
director while serving in 2003, other than Philip D. Green, Michael M.E. Johns
and David Nash, 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. Currently, the board does not have a nominating committee. All
members of the board, however, participate in the consideration of director
nominees.
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, recommending stock options to the board at large with regard
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 two
members, Messrs. Bock and Thayer. The committee held 4 separate meetings in
2003. In addition, members of the committee participated in other board meetings
concerning compensation issues and had recommended a course of action with
respect to compensation matters to the board at those meetings. All of the
members of the compensation committee are independent, as defined in Section
121(A), as in effect on April 19, 2004, of the American Stock Exchange listing
standards.
Audit Committee
The audit committee is primarily responsible for appointing and
pre-approving the services performed by I-trax's independent auditors as well as
reviewing and evaluating I-trax's accounting principles and reporting
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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. Currently, the audit committee consists of Mr. Thayer, as Chairman,
and Mr. Bock. Further, the board has determined that each of Messrs. Bock and
Thayer meets the SEC criteria of financial expert and is financially
sophisticated for the purposes of American Stock Exchange listing standards. The
committee held 6 separate meetings in 2003. All of the members of the audit
committee are independent, as defined in Section 121(A), as in effect on April
19, 2004, of the American Stock Exchange listing standards and Rule 10A-3
promulgated under the Securities Exchange Act of 1934.
Director Nominations
Currently, the board does not have a nominating committee and all
members of the board consider director nominees. Because of the significance of
I-trax's acquisition of CHD Meridian Healthcare and the resulting changes in
management, the board determined that establishing a nominating committee was
not appropriate until the acquisition was completed. The board intends to
establish a nominating committee in the second or third quarter of 2004.
Currently, the board conducts functions of a nominating committee, which include
identifying and recommending nominees for election to the board. The board
considers candidates for board membership suggested by its members and
management. The board has authority to retain a search firm to assist in the
identification of director candidates. In selecting nominees for director, the
board considers a number of factors, including but not limited to:
o whether a candidate has business and industry experience that is
relevant to I-trax, including recent experience at the senior
management level of a company at least as large or larger than I-trax;
o the candidate's ability to work constructively with I-trax's
management and other directors;
o the candidate's ability to represent interests of the stockholders;
o the candidate's independence from management and freedom from
potential conflicts of interest with I-trax;
o the candidate's reputation, integrity, judgment, skill, leadership
ability, interpersonal skills, honesty and moral values;
o the candidate's financial literacy;
o the candidate's availability, including the number of other boards on
which the candidate serves, and his or her ability to dedicate
sufficient time and energy to his or her board duties;
o legal and regulatory concerns; and
o whether the candidate contributes to the range of talent, skills and
expertise appropriate for enhancing the board's diversity, overall
composition and effectiveness.
Members of the board may also request additional information about, or
an interview with, the potential nominee.
The board will also consider recommendations of nominees for director
received from stockholders at least 120 days prior to the anniversary date of
I-trax's annual meeting of stockholders for the previous year. In evaluating
nominations received from stockholders, the board will apply the criteria and
follow the process described above. Stockholders wishing to recommend a nominee
for director should submit such nomination in writing, along with any other
supporting materials the stockholder deems appropriate, to I-trax's Secretary.
5
Compensation of Directors
During 2003, directors did not receive any cash payments. In May 2003,
Messrs. Thayer and Bock each received options to acquire 40,000 shares of common
stock in consideration for their service on the board and its audit and
compensation committees. Dr. Johns received options to acquire 20,000 shares of
common stock in consideration for his service on the board. All of these options
are exercisable at $1.51 and vest over two years. Directors are reimbursed for
out-of-pocket expenses incurred in connection with attending board and committee
meetings.
Stockholder Access to Directors
Stockholders who wish to communicate with directors should do so by
writing to the Secretary, I-trax, Inc., One Logan Square, Suite 2615, 130 N.
18th Street, Philadelphia, PA 19103. Under that process, the Secretary of I-trax
reviews all such correspondence and regularly forwards to the board a summary of
all such correspondence and copies of all correspondence that, in the opinion of
the Secretary, deals with the functions of the board or committees thereof or
that he otherwise determines requires their attention. Directors may at any time
review a log of all correspondence received by I-trax that is addressed to
members of the board and request copies of any such correspondence. Concerns
relating to accounting, internal controls or auditing matters will be brought to
the attention of I-trax's audit committee.
Director Attendance at Annual Stockholders Meeting
I-trax encourages all of its directors to attend I-trax's annual
meeting of stockholders. All of the individuals then serving as directors
attended I-trax's 2003 annual meeting of stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
LISTED IN THIS PROXY STATEMENT.
CODE OF CONDUCT DISCLOSURE
I-trax has a Code of Conduct that is applicable to all employees of
I-trax, including I-trax's principal executive officer, the principal financial
officer and the principal accounting officer. The Code of Conduct is designed to
deter wrongdoing and promote ethical conduct, full and accurate reporting in
I-trax's SEC filings, compliance with applicable law, as well as other matters.
A copy of the Code of Conduct is available on I-trax's website at
www.i-trax.com.
PRINCIPAL ACCOUNTING FEES AND SERVICES
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 ended December 31, 2002 and 2003.
I-trax also engaged Goldstein Golub Kessler LLP, pursuant to the authorization
of the audit committee of the board, to audit I-trax's financial statements for
the year ending December 31, 2004. PricewaterhouseCoopers LLP 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.
6
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.
A summary of the audit and non-audit fees paid to Goldstein Golub
Kessler LLP and PricewaterhouseCoopers LLP in 2002 and 2003 is as follows:
Fiscal 2003 Fiscal 2002
----------- -----------
Audit Fees $128,000 $94,000
Audit-Related Fees -- --
Tax Fees 4,500 --
All Other Fees -- --
------------ -----------
Total Fees $132,500 $94,000
-------------------------
The audit committee's policy provides for the pre-approval of audit and
non-audit services performed by I-trax's independent auditor. Under the policy,
the audit committee may pre-approve specific services, including fee levels, by
the independent auditor in a designated category (audit, audit-related, tax
services and all other services).
Representatives of Goldstein Golub Kessler LLP are expected to be
present at the 2004 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.
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.
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EQUITY COMPENSATION PLAN INFORMATION
The following table represents information about all equity
compensation plans under which equity securities of I-trax are authorized for
issuance as of December 31, 2003. All share and exercise price information
presented below reflects a 1-for-5 reverse stock split effected as of close of
the business on January 3, 2003.
Number of shares of
common stock available
Number of shares of for issuance under
common stock issuable Weighted average equity compensation
upon the exercise of exercise price of plans (excluding shares
outstanding options, outstanding options, of common stock
Plan Category warrants and rights (a) warrants and rights (b) reflected in column (a))
-------------------------------------- ------------------------- -------------------------- --------------------------
Equity compensation plans approved 1,448,914 $ 3.36 551,086
by security holders (1)
Equity compensation plans not
approved by security holders (2) 4,020,372 $ 2.58 0
--------- -------- -------
Totals: 5,469,286 $ 2.79 551,086
========= ======== =======
--------------------------------------
(1) Represents shares issuable upon exercise of options under our 2000 and 2001
Equity Compensation Plans. The number of shares authorized for issuance
under 2001 Equity Compensation Plan increases automatically on the first
day of each year beginning with the year 2002 by 200,000 shares.
Accordingly, as of January 1, 2004, 1,600,000 shares were authorized for
issuance under the 2001 Plan. Generally, options granted under the 2000 and
2001 Plans vest over a period of three years with respect to grants made to
employees and consultants and over a period of two years with respect to
options grated to directors. Exercise prices are established with reference
to our common stock's market price.
(2) Includes options to acquire an aggregate of 669,000 shares granted outside
of our 2000 and 2001 Equity Compensation Plans and warrants to acquire an
additional 3,351,372 shares. Options granted outside of our 2000 and 2001
Equity Compensation Plans have terms similar to options granted pursuant to
such plans including, exercise prices established with reference to our
common stock's market price, vesting terms and exercise terms. Warrants are
granted as necessary to secure financings and have terms of five or seven
years. All outstanding options vested over three years.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of April 16, 2004, the number of shares
and percentage of common stock beneficially owned by:
o our Chief Executive Officer and four other most highly compensated
executive officers based on compensation earned during 2003;
o two highly compensated executive officers that joined I-trax following
the CHD Meridian Healthcare merger closed on March 19, 2004;
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 Securities 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, a person is deemed to beneficially own certain shares if the person
has the right to acquire the shares, such as upon exercise of options or
warrants, within 60 days of April 16, 2004, 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.
Convertible
Securities
Common Stock Exercisable
Beneficially Within 60
Executive Officers and Directors* Owned Days*** Total Percent of Class
---------------------------------------------- ----------------- ----------------- -------------- -----------------
Frank A. Martin (1) 1,323,134 585,235 1,908,369 6.6
Gary Reiss (2) 354,472 606,404 960,876 3.3
David R. Bock (1) 570,165 20,000 590,165 2.1
Charles D. (Chip) Phillips (3) 376,389 16,837 393,226 1.4
John R. Palumbo 37,080 238,831 275,911 1.0
Haywood D. Cochrane, Jr. (4) 154,109 6,893 161,002 **
Yuri Rozenfeld (5) 22,156 102,861 125,017 **
Anthony Tomaro 6,136 117,025 123,161 **
Philip D. Green (6) 1,200 89,280 90,480 **
William S. Wheeler 10,000 43,333 53,333 **
Michael M.E. Johns, M.D. -- 30,000 30,000 **
Arthur N. Leibowitz, M.D. -- 20,000 20,000 **
R. Dixon Thayer -- 20,000 20,000 **
David Nash, M.D. -- 12,500 12,500 **
Shannon W. Farrington -- -- -- **
All current executive officers and directors
as a group (14 persons) (7) 2,030,204 1,302,795 3,332,999 11.2
9
Convertible
Securities
Common Stock Exercisable
Beneficially Within 60
5% Stockholders Owned Days**** Total Percent of Class
---------------------------------------------- ----------------- ----------------- -------------- -----------------
Warburg, Pincus Ventures, L.P. (8) 4,148,461 623,595 4,772,056 16.5
Centre Reinsurance Limited (9) 2,329,174 336,119 2,665,293 9.3
CHD Investors, LLC (10) 1,544,646 232,190 1,776,836 6.2
Michael J. Hardies, M.D. (11) 1,472,369 221,326 1,693,695 5.9
Susan M. Mathews, Ph.D. (12) 1,243,207 213,591 1,456,798 5.1
----------------------------------------------
* Executive officers and directors of I-trax 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.
*** Includes shares of common stock issuable upon exercise of options and
warrants and, with respect Messrs. Phillips and Cochrane, shares of
common stock issuable upon conversion of Series A Convertible
Preferred Stock.
**** Includes shares of common stock issuable upon conversion of Series A
Convertible Preferred Stock.
(1) Messrs. Martin and Bock are members and managing directors of The
Nantucket Group, LLC, or Nantucket. Nantucket is the general partner
of Nantucket Healthcare Ventures I, L.P. or Nantucket Ventures, an
owner of 470,165 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 owns directly 100,000 shares. Mr. Martin owns
directly and with his wife 852,969 shares. 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) Includes 95,688 shares held in escrow for the benefit of Mr. Phillips.
(4) Includes 39,179 shares held in escrow for the benefit of Mr. Cochrane.
(5) Mr. Rozenfeld is a partner of The Spartan Group Limited Partnership,
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.
(6) Mr. Green is an affiliate of Health Industry Investments, LLC and Akin
Gump Health Strategies, LLC, holders of options to purchase 40,000 and
6,400 shares, respectively.
(7) Excludes Gary Reiss, who resigned from his position of Executive Vice
President on April 12, 2004.
(8) Includes 1,161,239 shares held in escrow for the benefit of Warburg,
Pincus Ventures, L.P. The address for Warburg, Pincus Ventures is 466
Lexington Avenue, New York, New York 10017.
(9) Includes 648,576 shares held in escrow for the benefit of Centre
Reinsurance Limited. The address for Centre Reinsurance Limited is
Wellesley House, 90 Pitts Bay Road, Pembroke HM08, Bermuda.
10
(10) Includes 432,378 shares held in escrow for the benefit of CHD
Investors, LLC. The address for CHD Investors is c/o Insurance
Partners, L.P., 65 East 55th Street, New Your, New York 10022.
(11) Includes 412,146 shares held in escrow for the benefit of Dr. Hardies.
Dr. Hardies is a Senior Vice President and the Chief Medial Officer -
Emeritus of I-trax and his address is c/o I-trax, Inc., One Logan
Square, Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania
19103.
(12) Includes 412,146 shares held in escrow for the benefit of Dr. Mathews.
The address for Dr. Mathews is 2398 Rosendale Road, Niskayuna, NY
12309.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
I-trax's executive officers and their ages as of April 16, 2004 are as
follows:
Name Age Position
-------------------------------------- ----------------- ------------------------------------------------------
Frank A. Martin 53 Chairman, Chief Executive Officer and Director
John R. Palumbo 53 President
Charles D. (Chip) Phillips 49 Executive Vice President and Chief Operating Officer
Shannon W. Farrington 38 Senior Vice President and Chief Financial Officer
Yuri Rozenfeld 35 Vice President, General Counsel and Secretary
Please see information under Election of Directors proposal above for
biographical information of Mr. Martin.
John R. Palumbo has been a director of I-trax and its predecessor,
Health Management, since March 2000 and President since February 2003. 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.
Charles D. (Chip) Phillips has been an Executive Vice President and the
Chief Operating Officer of I-trax since March 2004. Mr. Phillips joined I-trax
when I-trax acquired CHD Meridian Healthcare. Mr. Phillips was President and
Chief Operating Officer of CHD Meridian Healthcare from 1999 until its merger
with I-trax. From 1995 to March 1999, Mr. Phillips was Executive Vice President
and Chief Operating Officer of Health Partners, Inc., Hartford, Connecticut, a
rapidly growing $300 million, multi-state managed care business with 700
associates and 200,000 capitated lives. From 1991 to 1995, Mr. Phillips was
Senior Vice President and General Manager of Community Mutual Insurance Co., and
from 1989 to 1990 Executive Vice President, Chief Financial Officer and Chief
Operating Officer of Credit Life Companies Inc. A certified public accountant,
Mr. Phillips also worked as a veteran senior manager for Ernst & Young, where he
specialized in strategic and financial planning and general financial
management.
Shannon W. Farrington has been Senior Vice President and the Chief
Financial Officer of I-trax since March 2004. Ms. Farrington joined I-trax when
I-trax acquired CHD Meridian Healthcare. Ms. Farrington served as Senior Vice
President and the Chief Financial Officer of CHD Meridian Healthcare from
December 1999 until its merger with I-trax. From March 1995 to December 1995,
Ms. Farrington was the Director of Finance at Coventry Corporation, where she
developed medical cost containment directives and managed corporate financial
functions. Prior to this, from August 1990 to March 1995, Ms. Farrington held
the positions of Regional Chief Financial Officer for National Health
Laboratories and Assistant Vice President, Corporate Controller for Allied
Clinical
11
Laboratories. Both companies are now part of Laboratory Corporation of America.
A certified public accountant, Ms. Farrington also worked with Ernst & Young.
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.
Executive Compensation
The following Summary Compensation Table sets forth the compensation
earned by the following individuals: I-trax's Chief Executive Officer, President
and three other most highly compensated executive officers who were serving as
such as of December 31, 2003.
Summary Compensation Table
Annual Compensation Long-Term
Compensation
Name and Position Year Salary (1) Other Number of Options
---------------------------------- ------------- --------------- ------ ----------------- --- ----------------------
Frank A. Martin 2003 $171,000 $6,000 (4) 100,000
Chairman and Chief Executive 2002 173,543 (2) 6,000 (4) 1,750
Officer 2001 175,000 (3) 6,000 (4) 70,000
John R. Palumbo 2003 $195,396 $6,000 (4) 300,000
President 2002 40,000 (2) 1,000 (4) 162,000
2001 -- -- 20,000 (5)
Gary Reiss (6) 2003 $171,000 $6,000 (4) --
Former Executive Vice 2002 173,543 (2) 6,000 (4) 1,750
President 2001 175,000 (3) 6,000 (4) 140,000
Anthony Tomaro 2003 $145,863 -- 50,000
Vice President-Finance 2002 150,000 (2) 11,500
2001 150,000 (3) -- 40,000
Yuri Rozenfeld 2003 $136,599 -- 50,000
Vice President, General 2002 128,917 (2) -- 11,300
Counsel and Secretary 2001 124,375 (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; Mr. Tomaro,
$11,250; and Mr. Rozenfeld, $9,750. Amounts have been converted into
common stock at a conversion price of $1.75 per share effective June
30, 2003 or repaid.
(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 $135,357 in 2001; Mr. Reiss deferred
$135,357 in 2001; Mr. Tomaro deferred $70,665 in 2001; and Mr.
Rozenfeld deferred $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. Each of these
officers received warrants 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
12
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, 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 placements 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) Mr. Reiss resigned from his position of Executive Vice President on
April 12, 2004.
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, 2003. No stock appreciation rights were granted in 2003.
Option Grants in 2003 Fiscal Year
Percent of Total
Number of Securities Options Granted to Exercise Price
Underlying Options Employees in (Dollars per Share)
Name Granted (1) Fiscal Year (2) Expiration Date
---------------------------- ------------------------ -------------------- -------------------- -----------------
Frank A. Martin 100,000 10.8 $1.51 5/8/2013
John R. Palumbo 300,000 32.3 1.51 5/8/2013
Anthony Tomaro 50,000 5.4 1.51 5/8/2013
Yuri Rozenfeld 50,000 5.4 1.51 5/8/2013
----------------------------
(1) Options vest over three years.
(2) Based on options to acquire an aggregate of 928,000 shares granted in
the fiscal year.
13
The following table contains information about each of the identified
executive officers' option exercises in fiscal year 2003 and option holdings as
of December 31, 2003. No stock appreciation rights were outstanding at the end
of 2003.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Year End Year End
Acquired on Exercisable / Exercisable /
Name Exercise Value Realized Unexercisable Unexercisable (1)
--------------------------- --------------- ----------------- ---------------------------- --------------------------
Frank A. Martin -- -- 70,583 / 101,167 $122,669 / $299,738
John R. Palumbo -- -- 117,999 / 384,001 $170,352 / $1,039,828
Gary Reiss -- -- 210,583 / 1,167 $244,469 / $1,738
Anthony Tomaro -- -- 46,332 / 51,000 $70,345 / $150,490
Yuri Rozenfeld -- -- 46,266 / 50,867 $70,246 / $150,291
---------------------------
(1) Based on $4.49, the closing price of the common stock on December 31,
2003, less the exercise price payable upon exercise of unexercised
in-the-money options.
Employment Contracts
I-trax and its affiliated entities are parties to the following
employment agreement with executive officers:
Frank A. Martin
Health Management entered into an employment agreement with Mr. Martin
on December 29, 2000. The agreement was for an initial term of three years. The
employment agreement extends automatically for successive periods of one year,
unless Mr. Martin elects not to renew the agreement. The agreement provides for
an annual base salary during the initial term of $175,000.
Health Management may terminate Mr. Martin's employment with or without
cause at any time. In addition, Mr. Martin 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. Martin in his executive position,
material diminution of Mr. Martin's responsibilities, duties or authority,
assignment to Mr. Martin of duties inconsistent with his position or requiring
Mr. Martin to be permanently based anywhere other than within 25 miles of
Philadelphia, Pennsylvania.
In the event the employment agreement is terminated without cause or
for good reason, Health Management will pay Mr. Martin 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. Martin will remain
subject to the non-competition restrictions described below only as long as he
is receiving severance payments. Finally, all options granted to Mr. Martin will
accelerate and vest immediately.
With the exception of the circumstances described in the immediately
preceding paragraph, Mr. Martin 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. Mr. Martin 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, Mr. Martin agreed that any
invention he develops during his employment relating to the business of Health
Management will belong to Health Management.
14
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 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.
Haywood D. Cochrane, Jr. and Shannon W. Farrington
CHD Meridian Healthcare is a party to an employment agreement, each
dated January 1, 2000, with each of Mr. Cochrane and Ms. Farrington. Each
agreement was for an initial term of two years. Each employment agreement
extends automatically for successive periods of one year. Mr. Cochrane and Ms.
Farrington's current annual salary under his and her employment agreement is
$150,000 and $170,000, respectively.
CHD Meridian Healthcare may terminate Mr. Cochrane and Ms. Farrington's
employment with or without cause at any time. In addition, Mr. Cochrane and Ms.
Farrington may terminate his or her employment for good reason. Good reason
includes material diminution of the executive officer's salary, title or
responsibilities or requiring the executive officer to relocate to a place of
work more than 30 miles from executive's current place of work.
In the event either employment agreement is terminated without cause or
for good reason, CHD Meridian Healthcare will pay the applicable executive
officer severance equal to one year's salary, payable over one year.
In the event of termination for any reason, the executive officer will
remain subject to the non-competition restrictions described below for 6 months.
Each executive officer agreed not to compete against CHD Meridian
Healthcare for a period of 6 months after expiration or termination of the term
for any reason. Each executive officer also agreed not to use or disclose any
confidential information of CHD Meridian Healthcare.
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 the control of I-trax.
15
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 Securities 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 2003
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 2003 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, except Messrs. Palumbo and
Reiss each filed a Form 4 delinquent by 3 days reporting a conversion of loans
and accrued salary into common stock.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
I-trax is a party to a consulting agreement with Akin Gump Health
Strategies, LLC, an affiliate of Philip Green, a director. Under the 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 upon closing of transactions with such potential customers.
I-trax has not made any payment under this consulting agreement. Health
Strategies is a holder of options to acquire 6,400 shares of I-trax common stock
at $3.125 per share. Health Industry Investments, LLC, likewise an affiliate of
Mr. Green, is a holder of options to acquire 40,000 shares of I-trax common
stock at $2.75 per share.
Akin, Gump, Strauss, Hauer & Feld, L.L.P., an affiliate of Mr. Green,
provides legal services to I-trax. In 2003, I-trax paid Akin Gump $961 on
account of accrued expenses. During the first quarter of 2004, I-trax paid Akin
Gump $25,234 for rendered legal services and related expenses and $35,000 as a
"finders fee" in connection with the CHD Meridian Healthcare merger.
I-trax is a party to a distribution arrangement with Health Advocate,
Inc., a health services company. Arthur N. Leibowitz, a director, is an
Executive Vice President for Business Development and Chief Medical Officer of
Health Advocate. In 2003, I-trax paid Health Advocate $7,104 under the terms of
the distribution arrangement. During the first quarter of 2004, I-trax paid
Health Advocate $4,918 under the terms of the distribution arrangement.
Pursuant to a consulting agreement, I-trax engaged William S. Wheeler,
a director advised I-trax on accounting and financial matters from July 2002
until May 2003. I-trax paid Mr. Wheeler consultant compensation of $20,100 in
2002 and $34,200 in 2003 under the terms of this agreement. Mr. Wheeler also
served as I-trax's interim Chief Financial Officer from June 2003 until December
2003. I-trax paid Mr. Wheeler $78,750 in connection with these services.
I-trax is a party to a license and services agreement and a consulting
agreement with Virtual Interactions, Inc. Virtual Interactions is an affiliate
of Mr. Wheeler, a director. In 2003, I-trax paid Virtual Interactions $31,385
under the terms of these agreements. During the first quarter of 2004, I-trax
paid Virtual Interactions $4,167 under the terms of these agreements.
I-trax is a party to a consulting arrangement with Catherine Martin, a
former healthcare investment banker with Alex. Brown and Sons, Inc., and H.C.
Wainwright & Co., and the wife of Frank A. Martin, Chairman and Chief Executive
Officer. Under the terms of the consulting arrangement, among other things, Ms.
Martin provided services in connection with the CHD Meridian Healthcare
acquisition and related financing. Ms. Martin earned compensation of $37,500 in
2003 and $37,500 during the first quarter of 2004 under the terms of the
consulting arrangement.
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
16
to which the Psilos Group agreed, among other things, to loan I-trax up to
$1,000,000. The Psilos Group included Nantucket Healthcare Ventures I, L.P., a
venture fund managed by Mr. Martin. As consideration, I-trax granted the Psilos
Group warrants to acquire 0.05264 shares of common stock at $.50 per share for
each $1 of the face amount of the loan. The loan accrued interest at an annual
rate of 8%. 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. In June 2003, Nantucket assigned
its $75,000 loan plus accrued interest of $6,669 on such loan to a third party
investor relations consultant, which converted such sum into 46,668 shares of
common stock at the rate of $1.75 per share in a private placement I-trax
completed in June 2003. Nantucket converted the balance of accrued interest of
$6,098 into 3,484 shares of common stock in the same private placement.
In March and April 2003, Mr. Martin loaned I-trax an aggregate of
$200,000 to fund I-trax's working capital deficiency. These loans accrued
interest at an annual rate of 8%. Of this amount, I-trax repaid $20,000 in
September 2003, $25,000 in October 2003 and $10,000 in November 2003. I-trax
repaid $145,000, the balance of the loan, plus accrued interest of $6,346 on
March 19, 2004, contemporaneously with the closing of the CHD Meridian
Healthcare merger. In consideration for these advances and continued commitment
to support I-trax, in May 2003 Mr. Martin received warrants to acquire an
aggregate of 300,000 shares of common stock at $1.80 per share.
In addition to the loan described above, at June 30, 2003, I-trax owed
Mr. Martin an aggregate of $369,741, which represented 2001 loans and accrued
interest on such loans. Mr. Martin converted this amount into 211,280 shares of
common stock at the rate of $1.75 per share in a private placement I-trax
completed in June 2003.
In February 2003, Gary Reiss, a former Executive Vice President, loaned
I-trax an aggregate of $50,000 to fund I-trax's working capital deficiency. The
loan accrued interest at an annual rate of 8%. I-trax repaid the loan, plus
accrued interest of $2,878, on March 19, 2004, contemporaneously with the
closing of the CHD Meridian Healthcare merger. In consideration for these
advances and continued commitment to support I-trax, in May 2003 Mr. Reiss
received warrants to acquire an aggregate of 150,000 shares of common stock at
$1.80 per share.
In addition to the loan described above, at June 30, 2003, I-trax owed
Mr. Reiss an aggregate of $423,582, which represented 2001 loans and accrued
interest on such loans. Mr. Reiss converted this amount into 242,046 shares of
common stock at the rate of $1.75 per share in a private placement I-trax
completed in June 2003.
In March 2003, Jean F. Martin, a relative of Mr. Martin, loaned I-trax
an aggregate of $40,000 to fund I-trax's working capital deficiency. The loan
accrued interest at an annual rate of 8%. Of this amount, I-trax repaid $5,000
plus accrued interest of $933 in July 2003. Ms. Martin converted the remaining
$35,000 of the loan into 20,000 shares common stock at the rate of $1.75 per
share in a private placement I-trax completed in June 2003.
A relative of Mr. Reiss loaned I-trax $350,000 in September 2002. The
loan accrued interest at an annual rate of 8%. I-trax repaid $125,000 of the
loan in October 2002, $140,000 in February 2003, and $85,000, the balance, on
March 19, 2004, contemporaneously with the closing of the CHD Meridian
Healthcare merger. I-trax paid accrued interest monthly.
In July and August 2002, John Blazek, a former director, loaned I-trax
an aggregate of $234,500. Further, in February 2003, Mr. Blazek loaned I-trax an
additional $149,200. These loans accrued interest at an annual rate of 8%.
I-trax repaid these loans, plus accrued interest of $30,251, in October 2003.
I-trax used the proceeds of $500,000 from a key person life insurance policy on
the life of Carol Rehtmeyer to repay these loans. Dr. Rehtmeyer passed away in
September 2003, and the proceeds from the policy were pledged as security for
these loans.
In July and August 2002, Carol Rehtmeyer, a former director and
Executive Vice President, loaned I-trax $92,750. Further, in February 2003, Dr.
Rehtmeyer loaned I-trax $50,800. These loans accrued interest at an annual rate
of 8%. Dr. Rehtmeyer converted $75,000 of these loans into 42,857 shares common
stock at the rate $1.75 per share in a private placement I-trax completed in
June 2003. I-trax repaid $68,550, the balance, plus accrued interest
17
of $9,884, in October 2003. I-trax used the proceeds of $500,000 from a key
person life insurance policy on the life of Dr. Rehtmeyer to repay these loans.
The proceeds from the policy were pledged as security for these loans.
In July 2002, Jane Ludwig, a former Vice President, loaned I-trax
$22,750. This loans accrued interest at an annual rate of 8%. I-trax repaid this
loan, plus accrued interest of $2,128, in December 2003 and January 2004. I-trax
used the proceeds of $500,000 from a key person life insurance policy on the
life of Dr. Rehtmeyer to repay a portion of this loan. The proceeds from the
policy were pledged as security for this loan.
In February and May 2003, Mr. Blazek, acting in his capacity as limited
agent of certain I-trax stockholders that acquired I-trax common stock as a
result of I-trax's acquisition of WellComm Group, Inc., loaned I-trax $250,000,
which represented proceeds from the sale of 200,000 shares of I-trax common
stock previously held in escrow under the terms of the acquisition. Mr. Blazek
and Dr. Rehtmeyer's pro rata interest in the loan were $165,493 and $56,338,
respectively. The loan accrued interest at an annual rate of 4%. In June 2003,
Mr. Blazek and Dr. Rehtmeyer assigned $132,370 and $45,070, respectively, of
their pro rata interest in the loan, together with accrued interest of $552 and
$188, respectively, to a third party investor relations consultant, which
converted such sums into an aggregate of 101,817 shares of common stock at the
rate of $1.75 per share in a private placement I-trax completed in June 2003.
In April 2003, Acorn II, an investment fund affiliated with Woodglen
Group, L.P., a former 5% stockholder, loaned I-trax $150,000. This loans accrued
interest at an annual rate of 12%. I-trax repaid the loan in installments of
$25,000 of principal and interest, with the last such payment made in October
2003.
Messrs. Martin and Reiss, John Palumbo, President, and Yuri Rozenfeld,
Vice President and Secretary, deferred salaries in amounts of $16,044, $16,044,
$18,333 and $9,750, respectively, from October 2002 through April 2003 at the
request of I-trax to conserve cash. These officers converted the accrued
amounts, less withheld taxes, into 5,562, 5,562, 6,580 and 3,536 shares of
common stock, respectively, at the rate of $1.75 per share in a private
placement I-trax completed in June 2003.
Lauren Reiss-Pollard, a daughter of Mr. Reiss, is a Vice President of
Health Management. Ms. Reiss-Pollard received cash compensation of $80,717 in
2002 and $62,803 in 2003.
Sean Martin, the son of Mr. Martin, is an employee of Health
Management. Mr. Sean Martin received cash compensation of $62,500 in 2002 and
$61,486 in 2003.
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 2003, 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 appoints 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, 2003.
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
R. Dixon Thayer, 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, 2003,
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: Secretary.
STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Stockholders who intend to have a proposal considered for inclusion in
I-trax's proxy materials for presentation at I-trax's 2005 annual meeting of
stockholders pursuant to Rule 14a-8 under the Securities 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 23, 2004. 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 Securities 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 23, 2004. 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.
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OTHER MATTERS
I-trax's board of directors knows of no other matters to be presented
for stockholder action at the 2004 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
AUDIT COMMITTEE CHARTER
I. Purposes of the Committee
The primary purpose of the Audit Committee (the "Committee") is
oversight. The Committee will assist the Board of Directors (the "Board") in
fulfilling its responsibility to oversee:
o Management's conduct of the Corporation's financial reporting process;
o The financial reports and other financial information provided by the
Corporation to the Securities and Exchange Commission (the "SEC") and
the public;
o The Corporation's system of internal accounting and financial
controls;
o The performance of the Corporation's internal audit function;
o The independent auditors' qualifications, performance, and
independence; and
o The annual independent audit of the Corporation's financial
statements.
The Committee has the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditors.
The Committee will also prepare the report that the SEC rules require
be included in the Corporation's annual proxy statement.
The Corporation's management is responsible for preparing the
Corporation's financial statements. The independent auditors are responsible for
auditing those financial statements. Management, including the internal audit
function, and the independent auditors, have more time, knowledge, and detailed
information about the Corporation than do Committee members. Consequently, in
carrying out its oversight responsibilities, the Committee is not providing any
expert or special assurance as to the Corporation's financial statements, or any
professional certification as to the independent auditors' work, including with
respect to auditor independence. Each member of the Committee is entitled to
rely on the integrity of people and organizations from whom the Committee
receives information and the accuracy of such information, including
representations by management and the independent auditors regarding non-audit
services provided by the independent auditors.
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II. Committee Membership
The Committee will consist of not less than two, nor more than four,
members who will be appointed by the Board from among its members. Each member
of the Committee must satisfy such criteria of independence as the Board may
establish and such additional regulatory or listing requirements as the Board
may determine to be applicable or appropriate.
Accordingly, each member of the Committee must be financially literate
within a reasonable period of time after appointment to the Committee, and at
least one member of the Committee shall be an "audit committee financial expert"
as defined by the SEC.
The actual number of members will be determined from time to time by
resolution of the Board. Two members of the Committee will constitute a quorum.
III. Committee Structure and Operations
The Board will designate the Chair of the Committee. The Committee will
fix its own rules of procedure and will meet where and as provided by such rules
or by resolution of the Committee. In addition to the regular meeting schedule
established by the Committee, the Chair of the Committee may call a special
meeting at any time.
The Secretary of the Corporation will be the Secretary of the Audit
Committee, unless the Committee designates otherwise.
In the absence of the Chair during any Committee meeting, the Committee
may designate a Chair pro tempore.
The Committee will act only on the affirmative vote of a majority of
the members at a meeting or by unanimous written consent.
The Committee may establish sub-committees to carry out such duties as
the Committee may assign.
IV. Committee Activities
The following will be the common recurring activities of the Committee
in carrying out its purposes. These activities are set forth as a guide with the
understanding that the Committee may diverge from this guide as appropriate
given the circumstances.
1. Appoint the independent auditors to audit the consolidated financial
statements of the Corporation and its subsidiaries for the coming
year, and recommend to the Board ratification of that appointment by
the shareholders.
2. Pre-approve all audit and non-audit services to be provided by the
independent auditors to the Corporation, and regularly review (a) the
adequacy of the Committee's policies and procedures for pre-approving
the use of the independent
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auditors for audit and non-audit services with a view to auditor
independence; (b) the audit and non-audit services pre-approved; and
(c) fees paid to the independent auditors for pre-approved audit and
non-audit services.
3. Regularly review with the independent auditors (a) the arrangements
for and the scope of the independent auditors' audit of the
Corporation's consolidated financial statements; (b) the results of
the audit by the Corporation's independent auditors of the
Corporation's consolidated financial statements; (c) any audit
problems or difficulties encountered by the independent auditors and
management's response; (d) any significant deficiency in the design or
the operation of the Corporation's internal accounting controls
identified by the independent auditors and any resulting
recommendations; (e) all critical accounting policies and practices
used by the Corporation; (f) all alternative accounting treatments of
financial information within generally accepted accounting principles
that have been discussed with management, including the ramifications
of the use of such alternative treatments and disclosures, and the
treatment preferred by the independent auditors; and (g) other
material written communications between the independent auditors and
management. The Committee will report the foregoing to the Board with
such recommendations as it may deem appropriate.
4. Review major changes to the Corporation's auditing and accounting
principles and practices based on advice of the independent auditors
or management.
5. The Committee will (a) request annually from the independent auditors
a formal written statement delineating all relationships between the
independent auditors and the Corporation consistent with Independence
Standards Board Standard Number 1; and (b) discuss with the
independent auditors any such disclosed relationships and their impact
on the independent auditors' independence.
6. Evaluate, along with the other members of the Board and management the
performance of the independent auditors.
7. The Committee, along with the other members of the Board, will discuss
with management and the independent auditors the audited financial
statements to be included in the Corporation's annual report on Form
10-KSB, including the Corporation's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." The Committee will review and consider with the
independent auditors the matters required to be discussed by Statement
of Auditing Standards No. 61 ("SAS No. 61"), including deficiencies in
internal controls, fraud, illegal acts, management judgments and
estimates, audit adjustments, audit difficulties, and the independent
auditors' judgments about the quality of the Corporation's accounting
practices.
8. Discuss with the independent auditors and management the Corporation's
interim financial results to be included in each quarterly report on
Form 10-QSB,
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including the Corporation's disclosures under "Management's Discussion
and Analysis of Financial Condition and Results of Operations." Each
such review will include any matters required to be discussed by SAS
No. 61, and will occur prior to the Corporation's filing of the
related Form 10-QSB with the SEC.
9. Periodically review the Corporation's procedures for the receipt,
retention, and treatment of complaints regarding accounting, internal
accounting controls or auditing matters, including procedures for the
confidential, anonymous submission by employees of the Corporation, of
concerns regarding questionable accounting or auditing matters.
10. Confer with management and the independent auditors as requested by
any of them or by the Committee, at least annually, and review their
reports with respect to the functioning, quality, and adequacy of
programs for compliance with the Corporation's policies and procedures
regarding business ethics, financial controls, and internal auditing,
including information regarding violations or probable violations of
such policies. The Committee will report the foregoing to the Board
with such recommendations as it may deem appropriate.
11. Review the expenses of officers of the Corporation who are also
members of the Board and such other officers as it may deem
appropriate.
12. Review with the Controller and the Chief Financial Officer, at least
annually, the activities, budget, staffing, and structure of the
internal auditing function of the Corporation and its subsidiaries,
including their evaluations of the performance of that function and
any recommendations with respect to improving the performance of or
strengthening of that function. As appropriate, the Committee shall
review the reports of any internal auditor on a financial safeguard
problem that has not resulted in corrective action or has not
otherwise been resolved to the auditor's satisfaction at any
intermediate level of audit management.
13. From time to time, meet separately with management, internal auditors,
and independent auditors to discuss issues warranting attention by the
Committee.
14. Prepare any report or other disclosure by the Committee required to be
included in any proxy statement for the election of the Corporation's
directors under the rules of the SEC.
15. Review the adequacy of this charter on an annual basis.
16. Take other such actions and do other such things as may be referred to
it from time to time by the Board.
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V. Committee Evaluation
The Committee will annually complete a self-evaluation of the
Committee's own effectiveness and provide a report of that assessment to the
Board, including any recommended changes to the Committee's charter.
VI. Committee Reports
The Chair of the Committee will report to the full Board on the
Committee's activities, including the results of the Committee's self-evaluation
and any recommended changes to the Committee's charter.
VII. Resources and Authority of the Committee
The Committee has exclusive authority with respect to the retention of
the independent auditors described in Section IV of this charter. In discharging
its oversight role, the Committee is empowered to investigate any matter brought
to its attention with full access to all books, records, facilities, and
personnel of the Corporation. The Committee has the authority to retain outside
advisors, including legal counsel, auditors, or other experts, as it deems
appropriate, and to approve the fees and expenses of such advisors.
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