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.____)
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I-TRAX, INC.
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(Name of Registrant as Specified in Its Charter)
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I-TRAX, INC.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
April 30, 2001
Dear I-trax, Inc. Stockholders:
You are cordially invited to the Annual Meeting of Stockholders to be
held at 10:00 A.M. on May 21, 2001 at 1735 Market Street, 51st Floor,
Philadelphia, Pennsylvania 19103.
Details with respect to the meeting are set forth in the attached
Notice of Annual Meeting and 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.
Very truly yours,
/s/ FRANK A. MARTIN
FRANK A. MARTIN
Chairman and Chief Executive Officer
I-TRAX, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 21, 2001
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To the Stockholders:
The Annual Meeting of Stockholders of I-trax, Inc. will be held at 1735
Market Street, 51st Floor, Philadelphia, Pennsylvania 19103, at 10:00 A.M. on
May 21, 2001 for the following purposes:
(1) To elect eight directors to serve one-year terms.
(2) To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock from 50,000,000 to 100,000,000.
(3) To adopt the Company's 2001 Equity Compensation Plan.
(4) To ratify the selection by the Board of Directors of the firm of
PricewaterhouseCoopers, LLP as independent auditors for 2001.
(5) To transact any other business that may properly come before the
meeting or any adjournment or postponement thereof.
Stockholders of record as of the close of business on April 26, 2001
are entitled to notice of and to vote at the meeting.
Whether or not you plan to attend the meeting, please complete, date
and sign the enclosed proxy card and return it in the enclosed envelope. Your
proxy may be revoked at any time prior to the time it is voted.
By Order of the Board of Directors,
/s/ GARY REISS
GARY REISS
Chief Operating Officer and Secretary
Philadelphia, PA
April 30, 2001
I-TRAX, INC.
One Logan Square, Suite 2615
130 N. 18th Street
Philadelphia, PA 19103
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
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These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of I-trax, Inc., a Delaware corporation
("I-trax" or the "Company"), for the Annual Meeting of Stockholders of I-trax to
be held at 10:00 A.M. on May 21, 2001, at 1735 Market Street, 51st Floor,
Philadelphia, Pennsylvania 19103, and any adjournments or postponements of such
meeting. These proxy materials were first mailed to stockholders on or about
April 30, 2001. The address of the principal executive office of I-trax 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 the Secretary of the Company 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
On February 5, 2001, I-trax and I-trax Health Management Solutions, Inc.
(formerly known as I-Trax.com, Inc.) completed a holding company reorganization.
The holding company reorganization was accomplished through a merger under
Delaware law. At the effective time of the reorganization, all of the
stockholders of I-trax Health Management Solutions became the stockholders of
I-trax and I-trax Health Management Solutions became a subsidiary of I-trax. The
holding company reorganization was described in greater detail in I-trax's
registration statement on Form S-4 (Registration Number 333-48862). Effective
February 5, 2001, all outstanding shares of I-trax Health Management Solutions
were converted into shares of I-trax, in a non-taxable transaction. I-trax
Health Management Solutions no longer files reports with the Securities and
Exchange Commission, and the price for its common stock is no longer quoted on
the Over-the-Counter Bulletin Board; however, I-trax does file reports with the
Securities and Exchange Commission, and the price for its common stock is quoted
on the Over-the-Counter Bulletin Board under the symbol "IMTX". The shares of
I-trax are represented by the same stock certificates that previously
represented shares of I-trax Health Management Solutions prior to the holding
company reorganization.
Stockholders Entitled to Vote
The close of business of April 26, 2001 was the record date for
stockholders entitled to notice of and to vote at the Annual Meeting. As of the
record date, there were 23,705,584 outstanding shares of the common stock, $.001
par value (the "Common Stock"), of I-trax.
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
Annual Meeting. Abstentions and broker non-votes will be counted as present for
the purpose of determining the presence of a quorum.
Votes Required
Proposal 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person, or represented by proxy, and entitled to
vote at the Annual Meeting. The eight (8) nominees for director
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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.
Proposal 2. Approval of the proposal to amend the Company's Certificate of
Incorporation requires the affirmative vote of holders of a majority of the
shares of Common Stock issued and outstanding and entitled to vote at the Annual
Meeting. Abstentions and broker non-votes are not affirmative votes and,
therefore, will have the same effect as votes against the proposal.
Proposal 3. Adoption of Company's 2001 Equity Compensation Plan requires
the affirmative vote of a majority of those shares present in person, or
represented by proxy, and cast either affirmatively or negatively at the Annual
Meeting. Abstentions are not affirmative votes and, therefore, will have the
same effect as votes against the proposal. Broker non-votes will not be treated
as entitled to vote on the matter and thus will not affect the outcome of voting
on the proposal.
Proposal 4. Ratification of the appointment of PricewaterhouseCoopers, LLP
as the Company's independent auditors for the fiscal year ending December 31,
2001 requires the affirmative vote of a majority of those shares present in
person, or represented by proxy, and cast either affirmatively or negatively at
the Annual Meeting. Abstentions and broker non-votes will not be counted as
having been voted on the proposal.
Proxies
A form of proxy is enclosed. All properly executed proxies received by the
Board of Directors, and not revoked, will be voted as indicated in accordance
with the instructions thereon. In the absence of contrary instructions, shares
represented by such proxies will be voted for the election of the directors as
described herein; in favor of the proposal to amend the Company's Certificate of
Incorporation; in favor of the adoption of the 2001 Equity Compensation Plan; in
favor of the ratification of the selection of the independent auditors; and in
the discretion of the proxy holders, on such other matters as may properly come
before the meeting.
Solicitation of Proxies
The entire cost of soliciting proxies will be borne by I-trax. Arrangements
may be made with brokerage houses and other custodians, nominees and fiduciaries
to send proxies and proxy materials to the beneficial owners of Common Stock,
and the Company may reimburse such persons or institutions for expenses incurred
in connection with any such distribution. Proxies may be solicited in person or
by telephone, facsimile, e-mail, telegraph or other means by directors, officers
or employees of I-trax, none of whom will receive additional compensation
therefor.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of eight directors. All eight
directors are to be elected at the Annual Meeting to serve until the 2002 Annual
Meeting. The Company's nominees for election as directors are David R. Bock,
Philip D. Green, Michael M.E. Johns, M.D., Craig Jones, M.D., Hans C.
Kastensmith, Frank A. Martin, John R. Palumbo and William S. Wheeler, each of
whom currently serves on the Board.
The proxy holders intend to vote all proxies received by them in the
accompanying form for such nominees unless otherwise directed. In the event any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy, or, in lieu thereof, the
Board of Directors may reduce the number of directors. As of the date of this
Proxy Statement, the Company is not aware of any nominee who is unable or
unwilling to serve as a director.
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The following table lists the name and age, as of April 10, 2001, of
each of the eight nominees to serve as directors of the Company.
Name Age Position
Frank A. Martin 50 Chairman, Chief Executive Officer,
President, Treasurer and Director
Hans C. Kastensmith 41 Vice-Chairman, Founder and
Director
Craig Jones, M.D. 43 Director
David R. Bock 58 Director
William S. Wheeler 45 Director
Philip D. Green 51 Director
John R. Palumbo 51 Director
Michael M.E. Johns, M.D. 59 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 since 1996. Mr. Martin founded, and has been a Managing
Director of, the Nantucket Group, LLC, a health care venture capital firm
specializing in investing in early stage health care service and technology
companies since December 1998. He is currently also on the Board of Directors of
ReCall Services, Inc. Mr. Martin served as the Chief Executive Officer and
Director of EduNeering, Inc. from April 1999 to April 2000. In November 1992,
Mr. Martin founded Physician Dispensing Systems, Inc. ("PDS"), a health care
information technology company that developed pharmaceutical software for
physicians' offices. Mr. Martin assisted in the sale of PDS to Allscripts, Inc.
in December 1996 and joined its Board of Directors on which he served until
1998.
Hans C. Kastensmith has been a director of I-trax since February 2001 and
Vice-Chairman of I-trax since March 2001. Mr. Kastensmith was a director of
I-trax Health Management Solutions from September 1999 to February 2001. Mr.
Kastensmith founded Member-Link Systems, Inc., I-trax's predecessor, in 1992 and
served as its Chief Executive Officer until it merged with I-trax Health
Management Solutions in 1999. Mr. Kastensmith is responsible for developing the
Company's Medicive(TM) Medical Enterprise Data System, playing an active role in
the design of the Medical Enterprise Data System and its various graphic user
interfaces and application modules. He has personally built the Company's
present customer base.
Craig A. Jones, M.D., has been a director of I-trax since February 2001.
Dr. Jones was a director of I-trax Health Management Solutions from January 2000
to February 2001. Dr. Jones is currently Director of the Division of Allergy &
Immunology and the Allergy & Immunology Residency Training Program at the Los
Angeles County and University of Southern California Medical Center and an
Assistant Professor of Pediatrics at the University of Southern California
School of Medicine. Since November 1996, Dr. Jones has served as Director of the
Breathmobile Mobile Asthma Clinic Program, a program that he developed. The
Company's AsthmaWatch(R) system is currently installed and in use in the
Breathmobile. Based on the clinical impact, the program is serving as a model
for community based preventive healthcare and disease management. From January
1997 to December 1997, Dr. Jones served as President of the Los Angeles Society
of Asthma, Allergy & Immunology. Because of this position, Dr. Jones is widely
respected for his clinical, educational, and managerial commitment to this
public health problem. Currently, he is designing and implementing a program for
the Los Angeles County Department of Health Services, which integrates clinical
operations and patient flow in three Breathmobiles serving more than sixty
school sites, County Comprehensive Health Centers, and Pediatric Services at the
LAC+USC Medical Center.
David R. Bock has been a director of I-trax since February 2001. Mr. Bock
was a director of I-trax Health Management Solutions from February 2000 to
February 2001. Mr. Bock has been the Executive Vice President and Chief
Financial Officer of Pedestal, Inc., an Internet-based company providing
information on the secondary mortgage marketplace, since January 2000. Prior to
that, Mr. Bock was a managing partner in Federal City Capital Advisors, LLC
("FCCA"), an investment-banking firm located in Washington, D.C. Mr. Bock is
also a Managing Director of the Nantucket Group, LLC. From 1992 to 1995, Mr.
Bock was a Managing Director in the London corporate finance group of Lehman
Brothers and was responsible for developing Lehman Brothers' investment banking
business in a wide range of emerging markets, including India, Russia, Turkey
and Central Europe. Mr. Bock also served in a variety of management positions at
the World Bank, including as Chief of Staff for the Bank's
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worldwide lending operations. From 1995 to 1997, he was President of
Maitland-Ruick & Company, a predecessor firm to FCCA. He was also a partner in a
corporate finance boutique focused on the Mid-Atlantic region of the United
States from 1979 to 1982, and an Associate with McKinsey & Company in London,
Paris and Washington, D.C. from 1970 to 1974. Mr. Bock has extensive experience
in economic policy, capital markets and corporate strategy across a wide range
of sectors, including financial services, health care, real estate, energy and
natural resources.
William S. Wheeler has been a director of I-trax since February 2001. Mr.
Wheeler was a director of I-trax Health Management Solutions from September 1999
to February 2001. Mr. Wheeler is also the Chairman of the Board of Director's
Audit Committee. Mr. Wheeler has been the Chief Operating Officer and Chief
Financial Officer of Net2Voice, a telecommunications company, since March 2001.
Mr. Wheeler was a Vice President at Cable & Wireless USA from June 1989 until
February 1999. During this period, Mr. Wheeler held the positions of Vice
President and Controller, Senior Vice President, Finance and acting President of
the Dial Internet Services division. While leading the Dial Internet Services
division, Mr. Wheeler successfully transitioned 300,000 consumer and business
dial Internet customers to Cable & Wireless USA from MCI as a result of Cable &
Wireless' acquisition of MCI's Internet business. In this capacity, Mr. Wheeler
had full responsibility for Marketing, Finance, a 500-seat Customer Service
Center, and all Operational Support Systems (billing, registration,
authentication, etc.). He developed a Marketing and Financial Plan to increase
the customer base and improve profitability in a very short time frame and
directed the launch of Cable & Wireless USA's first Consumer Internet Service
(www.cwix.com). The business was sold to Prodigy Internet in 1999. In May 1999,
Mr. Wheeler co-founded an Internet communications business that was launched in
April 2000.
Philip D. Green has been a director of I-trax since February 2001. Mr.
Green was a director of I-trax Health Management Solutions 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 its merger with Akin Gump in July 2000, Mr. Green was
the founding principal of the Washington, D.C. based law firm of Green, Stewart,
Farber & Anderson, P.C. From 1978 through 1989, Mr. Green was a partner in the
Washington, D.C. based law firm of Schwalb, Donnenfeld, Bray and Silbert, P.C.
Mr. Green practices health care law and assists entities in corporate planning
and transactions. Mr. Green represents a significant number of major teaching
hospitals and integrated health care delivery systems. Mr. Green also represents
a number of public and private for-profit health care companies. Mr. Green is
currently a member of the Board of Directors of Allscripts Healthcare Solutions,
Inc. and Imagyn Medical Technologies, Inc.
John R. Palumbo has been a director of I-trax since February 2001. Mr.
Palumbo was a director of I-trax Health Management Solutions from March 2000 to
February 2001. Mr. Palumbo has been a Vice President of Siemens Medical
Solutions Health Services, a provider of solutions and services for integrated
health care, since July 2001. 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 serving over 5,000 providers in
the United States, Europe and the Pacific Rim. At Shared Medical Systems, Mr.
Palumbo oversaw the start-up of the National Health Services division, which
markets to and services the for-profit and not-for profit national health
systems, such as Tenant, UHS, and Ascension, and in 1999 assumed additional
responsibilities for the Western Operations division. From 1995 to 1996, Mr.
Palumbo served as an Executive Vice President and Chief Operating Officer of
Allscripts, Inc. From 1990 to 1995, Mr. Palumbo was the Executive Vice President
of Healthworks Alliance, Inc., a company he founded specializing in
point-of-care technology and reengineering services allowing physicians to
process patients through the healthcare delivery system.
Michael M. E. Johns, M.D., has been a director of I-trax since February
2001. Dr. Johns was a director of I-trax Health Management Solutions, Inc. 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 and Chief Executive Officer of Emory Healthcare, a comprehensive
healthcare system in metropolitan Atlanta. Emory Healthcare includes two
physician practices, three wholly owned hospitals and a jointly owned fourth
hospital, as well as numerous affiliated hospitals in Atlanta and throughout
Georgia. 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
4
of Medicine and Vice President for Medical Affairs at Johns Hopkins University.
Under Dr. Johns' leadership, the medical school moved into first place among all
medical schools in sponsored research, completely revamped its medical education
curriculum and developed a technology transfer program considered a model of its
kind.
There are no family relationships among the directors and the executive
officers.
Board of Directors Meetings and Committees
The Board of Directors of I-trax Health Management Solutions held a total
of eight meetings during 2000. Each director attended more than 75% of the
meetings of the Board of Directors and any committee of which he is a member.
The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee is primarily responsible for determining the
compensation payable to the officers and key employees of the Company and to
recommend to the Board additions, deletions and alterations with respect to the
various employee benefit plans and other fringe benefits provided by the
Company, except that no member of the Committee shall take part in any decision
pertaining to his compensation or benefits in his capacity as a director of the
Company. The Committee also is primarily responsible for administering the
Company's stock option plans, awarding stock options to key employees and
non-employee directors of the Company and determining the terms and conditions
on which the options are granted. The Committee, which currently consists of Dr.
Jones and Mr. Bock, held no independent meetings during 2000. Rather, the
members of the Committee participated in all Board meetings concerning
compensation issues and had recommended a course of action to the Board of
Directors.
The Audit Committee is primarily responsible for approving the services
performed by the Company's independent auditors and reviewing and evaluating the
Company's accounting principles and reporting practices. The Audit Committee is
also responsible for monitoring the Company's system of internal accounting
controls and has the responsibility and authority described in its charter,
attached as Exhibit A hereto. This Committee, which currently consists of
Messrs. Wheeler, as Chairman, Palumbo and Bock, held no meetings during 2000.
The Committee held one meeting in 2001 to review the Company's 2000 financial
statements. The members of the Audit Committee are independent, as defined by
the National Association of Securities Dealers listing standards.
Compensation of Directors
During 2000, directors of the Company did not receive any cash payments.
Each director who was neither an employee nor stockholder of the Company
received an option grant of 100,000 shares. Each director is also reimbursed for
out-of-pocket expenses incurred in connection with attending meetings and other
services as a director.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES
The Board of Directors has determined that it is in the best interests of
the Company and its stockholders to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
50,000,000 to 100,000,000 shares. Accordingly, the Board of Directors has
unanimously approved the proposed Certificate of Amendment to the Certificate of
Incorporation of the Company, in the form attached hereto as Exhibit B (the
"Certificate of Amendment"), and hereby solicits the approval of the Company's
stockholders of the Certificate of Amendment. If the stockholders approve the
Certificate of Amendment, the Board of Directors currently intends to file the
Certificate of Amendment with the Secretary of State of the State of Delaware as
soon as
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practicable following such stockholder approval. If the stockholders do not
approve the Certificate of Amendment, the existing Certificate of Incorporation
will continue in effect.
The Company currently has 50,000,000 authorized shares of Common Stock, of
which 23,705,584 were outstanding as of April 26, 2001. In addition, the Company
has reserved up to approximately 4,500,000 shares of Common Stock for issuance
upon the exercise of outstanding warrants and convertible promissory notes based
on conversion and exercise prices currently in effect, 3,000,000 shares of
Common Stock for issuance pursuant to the Company's 2000 Equity Compensation
Plan and 5,000,000 shares of Common Stock for issuance pursuant to the Company's
2001 Equity Compensation Plan, provided that the 2001 Equity Compensation Plan
is approved at the Annual Meeting.
The objective of the increase in the authorized number of shares of Common
Stock is to ensure that the Company has sufficient shares available for future
issuances. The Board of Directors believes that it is prudent to increase the
authorized number of shares of Common Stock to the proposed level in order to
provide a reserve of shares available for issuance to meet business needs as
they arise. Such future activities may include, without limitation, financings,
establishing strategic relationships with corporate partners, providing equity
incentives to employees, officers or directors, or effecting stock splits or
dividends. The additional shares of Common Stock authorized may also be used to
acquire or invest in complementary businesses or products or to obtain the right
to use complementary technologies.
While the Company will continue to evaluate potential acquisitions of or
investments with third parties, the Company has no current legally binding
agreements to issue any portion of the additional authorized shares that would
result from the proposed amendment to the Company's Certificate of
Incorporation.
Possible Effects of the Proposed Amendment to the Certificate of Incorporation
If the stockholders approve the proposed Certificate of Amendment, the
Board of Directors may cause the issuance of additional shares of Common Stock
without further vote of the stockholders of the Company, except as provided
under Delaware corporate law or under the rules of any securities exchange on
which shares of Common Stock are then listed. Current holders of Common Stock
have no preemptive or similar rights, which means that current stockholders do
not have a prior right to purchase any new issue of Common Stock in order to
maintain their proportionate ownership thereof. The issuance of additional
shares of Common Stock would decrease the proportionate equity interest of the
Company's current stockholders and, depending upon the price paid for such
additional shares, could result in dilution to the Company's current
stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 3
ADOPT THE COMPANY'S 2001 EQUITY COMPENSATION PLAN
The Company is asking stockholders to adopt the Company's 2001 Equity
Compensation Plan (the "Plan") as a successor to its 2000 Equity Compensation
Plan. The Plan will provide a means whereby eligible individuals may be given an
opportunity to acquire shares of Common Stock and to benefit from increases in
value of the Common Stock. On March 20, 2001, the Board of Directors adopted the
Plan and authorized submission of the Plan to the Company's stockholders for
approval. The Board of Directors amended the plan on April 10, 2001.
The Board of Directors believes that equity awards under the Plan will play
an important role in the Company's efforts to attract, employ and retain
employees, directors and consultants of outstanding ability.
The principal terms and provisions of the Plan are summarized below. The
summary, however, is not intended to be a complete description of all the terms
of the Plan. The Company will furnish a copy of the Plan to any stockholder upon
written request to the Secretary of the Company at its executive offices in
Philadelphia, Pennsylvania.
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Structure. Four separate types of equity compensation may be issued under
the Plan. First, stock options may be granted to eligible individuals under the
Plan. Stock options give optionees the right to purchase shares of Common Stock
at an exercise price determined at the time the option is granted. Second, a
salary investment option grant program may be implemented under the Plan. The
salary investment option grant program permits eligible employees to reduce
their salary voluntarily as payment of two-thirds of the fair market value of
the underlying stock subject to the option, with the remaining one-third of the
fair market value payable as the exercise price for the option. Third, direct
issuances of stock may be made to eligible persons under the Plan. Persons
receiving direct issuances of restricted stock may purchase shares of Common
Stock at a price less than, equal to or greater than the fair market value of
the Common Stock or may receive such shares of Common Stock for past services
rendered or as a bonus for the performance of services. In addition, if
specifically implemented, the Plan permits non-employee members of the Board of
Directors to automatically receive options to purchase shares of Common Stock at
periodic intervals.
Administration. The Compensation Committee, which is comprised of two (2)
outside members of the Board of Directors, administers the Plan. Committee
members serve for such period of time as the Board of Directors may determine.
The Plan may also be administered, with respect to optionees who are not
executive officers subject to the short-swing profit rules of the federal
securities laws, by the Board of Directors or a secondary committee comprised of
one or more members of the Board of Directors. The Compensation Committee (or
Board of Directors or secondary committee to the extent acting as plan
administrator) has full authority (subject to the express provisions of the
Plan) to determine the eligible individuals who are to receive awards under the
Plan, the number of shares to be covered by each granted option or other award,
the date or dates on which the option is to become exercisable or the award is
to vest, the maximum term for which the option or award is to remain
outstanding, whether the granted option will be an incentive stock option that
satisfies the requirements of Section 422 of the Internal Revenue Code (the
"Code") or a non-statutory option not intended to meet such requirements and the
remaining provisions of the option grant or award.
Eligibility. Employees (including officers), outside directors and
consultants who render services to the Company or its subsidiary corporations
(whether now existing or subsequently established) are eligible to receive
awards under the Plan. However, only employees are eligible to receive incentive
stock options.
As of April 10, 2001, approximately 51 employees and other persons were
eligible to participate in the Plan.
Securities Subject to the Plan. The number of shares of Common Stock that
may be currently issued under the Plan shall not exceed 5,000,000. The number of
available shares subject to the Plan is increased automatically on the first day
of each calendar year beginning with the year 2002 by an amount equal to the
lesser of (i) three percent (3%) of the shares of Common Stock then outstanding
and (ii) 1,000,000 shares.
No one person participating in the Plan may receive options for more than
400,000 shares of Common Stock per calendar year.
Should an option or award under the Plan expire or terminate for any reason
prior to exercise in full or should restricted shares acquired upon exercise of
an option or award be repurchased by the Company for any reason, the shares
subject to the termination or repurchase will be available for subsequent
options or awards under the Plan.
Option Grants
Price and Exercisability. The option exercise price per share in the case
of an incentive stock option may not be less than one hundred percent (100%) of
the fair market value of the Common Stock on the grant date and, in the case of
a non-statutory option, may be less than, equal to or greater than the fair
market value of the Common Stock on the grant date. Options become exercisable
at such time or times and during such period as the Committee may determine and
set forth in the instrument evidencing the option grant.
The exercise price may be paid in cash or in shares of Common Stock.
Options may also be exercised through a same-day sale program, pursuant to which
a designated brokerage firm is to effect the immediate sale of
7
the shares purchased under the option and pay over to the Company, out of the
sale proceeds on the settlement date, sufficient funds to cover the exercise
price for the purchased shares plus all applicable withholding taxes. The
Compensation Committee may also assist any optionee (including an officer or
director) in the exercise of his or her outstanding options by (a) authorizing a
Company loan to the optionee or (b) permitting the optionee to pay the exercise
price in installments over a period of years. The Compensation Committee in its
sole discretion will establish the terms and conditions of any such loan or
installment payment. The Compensation Committee has the discretionary authority
to cancel outstanding options and to substitute options with an exercise price
based on the fair market value of the option shares on the regrant date.
No optionee is to have any stockholder rights with respect to the option
shares until the optionee has exercised the option, paid the exercise price and
become a holder of record of the shares. An incentive stock option is not
assignable or transferable other than by will or the laws of descent and
distribution, and during the optionee's lifetime only the optionee may exercise
the option. A non-statutory stock option may be assigned in circumstances
approved in advance by the Compensation Committee.
Termination of Service. Any option held by the optionee at the time of
cessation of service will not remain exercisable beyond the designated
post-service exercise period, which generally is three months from termination
date. Under no circumstances, however, may any option be exercised after the
specified expiration date of the option term. Each such option will normally,
during such limited period, be exercisable only to the extent of the number of
shares of Common Stock in which the optionee is vested at the time of cessation
of service. The Compensation Committee has complete discretion to extend the
period following the optionee's cessation of service during which his or her
outstanding options may be exercised and/or to accelerate the exercisability of
such options in whole or in part. Such discretion may be exercised at any time
while the options remain outstanding, whether before or after the optionee's
actual cessation of service.
The Compensation Committee may grant options that are exercisable for
unvested shares. The shares of Common Stock acquired upon the exercise of such
options may be subject to repurchase by the Company at the original exercise
price paid per share upon the optionee's cessation of service prior to vesting
in such shares. The Committee has complete discretion in establishing the
vesting schedule to be in effect for any unvested shares.
Incentive Stock Options. Incentive stock options may only be granted to
individuals who are employees of the Company or its parent or subsidiary
corporation. During any calendar year, the aggregate fair market value
(determined as of the grant date(s)) of the Common Stock for which one or more
options granted to any employee under the Plan (or any other equity plan of the
Company or its parent or subsidiary corporations) may for the first time become
exercisable as incentive stock options under Section 422 of the Code shall not
exceed $100,000.
Salary Investment Option Grant Program
The Compensation Committee may permit certain employees to participate in
the salary investment option grant program for one or more calendar years. Each
selected individual who elects to participate in the salary investment option
grant program must, prior to the start of each calendar year of participation,
file with the Compensation Committee an irrevocable authorization directing the
Corporation to reduce his or her base salary for that calendar year by an amount
not less than $5,000 nor more than $50,000. Each individual who makes this
election shall be granted an option under the salary investment grant program on
the first trading day in January for the calendar year for which the salary
reduction is to be in effect.
The exercise price per share shall be thirty-three and one-third percent
(33-1/3%) of the fair market value of the Common Stock on the grant date. The
exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the alternative forms authorized under the
stock option grant program. The number of shares of Common Stock subject to the
option shall be determined by dividing (a) the dollar amount of the approved
reduction in the optionee's base salary for the calendar year by (b) the product
of the fair market value per share of Common Stock on the option grant date and
sixty-six and two-thirds percent (66-2/3%). An option becomes exercisable in a
series of twelve (12) successive equal monthly installments upon the optionee's
completion of each calendar month of service in the calendar year for which the
salary reduction is in effect.
8
Stock Issuance Program
Stock may be sold at a price per share less than, equal to or greater than
the fair market value of the Common Stock on the date of issuance, payable in
cash or through a promissory note payable to the Company. Shares may also be
issued as consideration for past services or as a performance bonus.
The issued shares may either be immediately vested upon issuance or subject
to a vesting schedule tied to the performance of service or the attainment of
performance goals. The Compensation Committee will, however, have the
discretionary authority at any time to accelerate the vesting of any or all
unvested shares outstanding under the Plan.
General Provisions
Acceleration of Options. The Compensation Committee (or Board of Directors
to the extent acting as plan administrator), shall have full authority to
determine which, if any, outstanding option or award under the Plan will become
fully exercisable upon a "Change in Control" (as defined below). The Board of
Directors may also provide that such option or award is to be assumed by the
successor corporation (or parent) or to be replaced with a comparable option or
award to purchase shares of the capital stock of the successor corporation (or
parent).
A "Change in Control" shall mean a change in ownership or control of the
Company effected through any of the following transactions:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than persons who are stockholders on the effective date of the Plan)
becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 50%
of the voting power of the then outstanding securities of the Company; provided
that a Change in Control shall not be deemed to occur as a result of a change of
ownership resulting from the death of a stockholder and a Change in Control
shall not be deemed to occur as a result of a transaction in which the Company
becomes a subsidiary of another corporation and in which the stockholders of the
Company, immediately prior to the transaction, will beneficially own,
immediately after the transaction, shares entitling such stockholders to more
than 50% of all votes to which all stockholders of the parent corporation would
be entitled in the election of directors (without consideration of the rights of
any class of stock to elect directors by a separate class vote); or
(b) The stockholders of the Company approve (or, if
stockholder approval is not required, the Board of Directors approves) an
agreement providing for (i) the merger or consolidation of the Company with
another corporation where the stockholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such stockholders to more than 50% of
all votes to which all stockholders of the surviving corporation would be
entitled in the election of directors (without consideration of the rights of
any class of stock to elect directors by a separate class vote), (ii) the sale
or other disposition of all or substantially all of the assets of the
Corporation, or (iii) a liquidation or dissolution of the Company.
Valuation. For purposes of establishing the option price and for all other
valuation purposes under the Plan, the fair market value of a share of Common
Stock, if the Common Stock is publicly traded, shall be determined as follows:
(x) if the principal trading market for the Common Stock is the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market, the last reported sale price thereof on the relevant date or
(if there were no trades on that date) the latest preceding date upon which a
sale was reported; or (y) if the Common Stock is not principally traded on such
exchange or market, the highest "bid" price of Common Stock on the relevant
date, as reported by the Over-the-Counter Bulletin Board, the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Compensation Committee (or Board of Directors
to the extent acting as plan administrator) determines. If the Common Stock is
not publicly traded or, if publicly traded, the Compensation Committee (or Board
of Directors to the extent acting as plan administrator) determines that the
number of shares of the Common Stock traded on a given day, the last reported
sale price thereof, or, if applicable, the highest "bid" quotation as set forth
above are not indicative of the fair market value of the Common Stock, the fair
market value per share shall be as determined by the Compensation Committee (or
Board of Directors to the extent acting as plan administrator).
9
Changes in Capitalization. If any change is made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Company's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities by which the
share reserve is to increase each calendar year pursuant to the automatic share
increase provisions of the Plan, (iii) the number and/or class of securities for
which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances under the Plan per calendar year,
(iv) the number and/or class of securities for which grants are subsequently to
be made under the automatic option grant program to new and continuing
non-employee Board members, and (v) the number and/or class of securities and
the exercise price per share in effect under each outstanding option under the
Plan.
Each outstanding option or award that is assumed in connection with a
Change in Control will be appropriately adjusted to apply and pertain to the
number and class of securities that would otherwise have been issued, in
consummation of such Change in Control, to the optionee or participant had the
option or award been exercised immediately prior to the Change in Control.
Appropriate adjustments will also be made to the exercise price payable per
share and to the class and number of securities available for future issuance
under the Plan on both an aggregate and a per-participant basis.
Plan Amendments and Termination. The Board of Directors may amend or modify
the Plan in any and all respects whatsoever. However, without the consent of the
affected optionee or award holder, no such amendment or modification shall
adversely affect the rights and obligations under then outstanding options or
awards. The approval of the Company's stockholders will be obtained to the
extent required by applicable law. The Board may, at any time and for any
reason, terminate the Plan. Any options or awards outstanding at the time of
such termination will remain in force in accordance with the provisions of the
instruments evidencing such grants.
Because the Plan is discretionary, benefits to be received by individual
optionees are not determinable. The table below shows, as to each of the
executive officers named in the Summary Compensation Table below and the various
indicated groups, (i) the number of shares of Common Stock for which options
have been granted under the Plan as of April 10, 2001 and (ii) the exercise
price per share.
2001 Equity Compensation Plan
Number of Option
Name and Position Shares Exercise Price
---------------------------------------------------------------------------------------------------------------------
Frank A. Martin, Chairman, Chief Executive Officer and President 350,000 $ 0.55
Hans C. Kastensmith, Vice Chairman and Founder -0- n/a
David C. McCormack, Chief Technology Officer -0- n/a
Gary Reiss, Chief Operating Officer and Secretary 350,000 0.55
All current executive officers as a group 1,300,000 0.55
All current directors who are not executive officers as a group 350,000 0.55
All employees, including current officers who are not executive
officers, as a group 814,500 0.55
Federal Income Tax Consequences of Options Granted Under the Plan
Options granted under the Plan may be either incentive stock options that
satisfy the requirements of Section 422 of the Code or non-statutory options
that are not intended to meet such requirements. The federal income tax
treatment for the two types of options differs, as follows:
Incentive Stock Options. The optionee recognizes no taxable income at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. However, the excess of the fair market value of
the purchased shares on the exercise date over the exercise price paid for the
shares generally is includable in alternative minimum taxable income. The
optionee will recognize taxable income in the year in which the purchased shares
are sold or otherwise made the subject of disposition.
For federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other disposition of such
10
shares is made after the optionee has held the shares for more than two (2)
years after the grant date of the option and more than one (1) year after the
exercise date. If the optionee fails to satisfy either of these two holding
periods prior to the sale or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for such shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the fair market value of those shares on
the date the option was exercised over (ii) the exercise price paid for the
shares will be taxable as ordinary income. Any additional gain recognized upon
the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction for the taxable
year in which such disposition occurs equal to the excess of (i) the fair market
value of such shares on the date the option was exercised over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
The Company anticipates that any compensation deemed paid by the Company upon
one or more disqualifying dispositions of incentive stock option shares by the
Company's executive officers will remain deductible by the Company and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company.
Non-Statutory Options. An optionee recognizes no taxable income upon the
grant of a non-statutory option. The optionee will in general recognize ordinary
income in the year in which the option is exercised equal to the excess of the
fair market value of the purchased shares on the exercise date over the exercise
price paid for the shares, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
Special provisions of the Code apply to the acquisition of Common Stock
under a non-statutory option if the purchased shares are subject to repurchase
by the Company. These special provisions may be summarized as follows:
(i) If the shares acquired upon exercise of the non-statutory option
are subject to repurchase by the Company at the original exercise price in the
event of the optionee's termination of service prior to vesting in such shares,
the optionee will not recognize any taxable income at the time of exercise but
will have to report as ordinary income, as and when the Company's repurchase
right lapses, an amount equal to the excess of (A) the fair market value of the
shares on the date such repurchase right lapses with respect to such shares over
(B) the exercise price paid for the shares.
(ii) The optionee may, however, elect under Section 83(b) of the Code
to include as ordinary income in the year of exercise of the non-statutory
option an amount equal to the excess of (A) the fair market value of the
purchased shares on the exercise date (determined as if the shares were not
subject to the Company's repurchase right) over (B) the exercise price paid for
such shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right lapses.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed paid by the
Company upon the exercise of non-statutory options with exercise prices equal to
the fair market value of the option shares on the grant date will remain
deductible by the Company and will not have to be taken into account for
purposes of the $1 million limitation per covered individual on the
deductibility of the compensation paid to certain executive officers of the
Company.
Stock Issuances. The tax principles applicable to direct stock issuances
under the Plan will be substantially the same as those summarized above for the
receipt of stock upon the exercise of non-statutory option grants.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2001
EQUITY COMPENSATION PLAN
11
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the appointment of
PricewaterhouseCoopers, LLP as the Company's independent auditors for the fiscal
year ending December 31, 2001. The affirmative vote of the holders of a majority
of shares present or represented by proxy and voting at the Annual Meeting will
be required to ratify the appointment of PricewaterhouseCoopers, LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the appointment is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors feels that such a change would be in the Company's and its
stockholders' best interests.
Representatives of PricewaterhouseCoopers, LLP are expected to be present
at the 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.
The Company engaged PricewaterhouseCoopers, LLP on November 2, 2000,
pursuant to the authorization of the Board of Directors, to audit the Company's
financial statements for the year ending December 31, 2000. Massella, Tomaro &
Co., LLP, had audited the Company's prior year financial statements. The
Company's decision to change auditors was due to the expansion of its business
operations and the determination by the Board of Directors that the Company
required an auditing firm with national operations.
The change in auditors was not due to any discrepancies or disagreements
between the Company and Massella, Tomaro & Co., LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on November 3, 2000 to report the resignation of Massella,
Tomaro & Co., LLP., and the appointment of PricewaterhouseCoopers, LLP.
During 2000, the Company retained PricewaterhouseCoopers, LLP to provide
services in the following categories and amounts:
1. Audit Fees $37,000
2. Fnancial Information Systems Design and Implementation -0-
3. All Other Fees 33,0000
The Audit Committee has considered the above non-audit services and has
determined that the provision thereof is compatible with maintaining auditor
independence.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS, LLP TO SERVE AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of April 10, 2001, the number of shares and
percentage of the Company's Common Stock beneficially owned by (i) each person
who is known by the Company to own beneficially five percent (5%) or more of the
Company's outstanding Common Stock, (ii) each of the Company's directors and the
executive officers named in the Summary Compensation Table below, and (iii) all
executive officers and directors of the Company as a group.
12
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within sixty
(60) days of the date as of which the information is provided. In computing the
percentage ownership of any person, the amount of shares is deemed to include
the amount of shares beneficially owned by such person (and only such person) by
reason of such 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 the Company's knowledge, except as indicated in the footnotes to
this table and pursuant to applicable community property laws, the persons named
in the table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
Shares Beneficially Owned
as of April 10, 2001(1)
Beneficial Owner* Number of Shares Percent of Class
---------------------------------------------------------------------------------------
Hans C. Kastensmith 3,399,534 14.3%
Frank A. Martin (2)(3) 4,496,703 18.6%
Gary Reiss (4) 955,500 3.9%
David C. McCormack 782,680 3.3%
Nantucket Healthcare Ventures I, L.P. (2) 2,149,203 9.1%
Stuart Ditchek, M.D. 1,995,131 8.4%
David A. Fishman 2,079,581 8.8%
Greta Shamy (5) 1,633,349 6.8%
Joseph E. Shamy (6) 1,365,349 5.7%
Donald Anthony Walker Young (7) 1,500,000 5.9%
Albert S. Waxman, Ph.D. (8) 1,500,254 5.9%
David R. Bock (2)(9) 2,649,203 11.2%
Philip D. Green (10) 130,000 **
Michael M.E. Johns, M.D. -- --
Craig Jones, M.D. 130,000 **
John R. Palumbo (11) 75,000 **
William S. Wheeler 50,000 **
All executive officers and directors as a 11,094,585 44.0%
group (14 persons) (12)
* These beneficial owners can be reached at I-trax, Inc., One Logan Square,
Suite 2615, 130 N. 18th Street, Philadelphia, Pennsylvania 19103.
** Less than 1% of the outstanding shares of Common Stock.
(1) With respect to each beneficial owner, the number of shares of Common Stock
deemed outstanding includes shares issuable to such beneficial owner
pursuant to stock options, warrants or other convertible securities that
may be exercised or converted by such beneficial owner within sixty (60)
days after April 10, 2001.
(2) Frank A. Martin and David R. Bock are members and Managing Directors of the
Nantucket Group, LLC, the general partner of Nantucket Healthcare Ventures
I, L.P.
(3) Includes 2,149,203 shares held by Nantucket Healthcare Ventures I, L.P., an
affiliate of Mr. Martin. Also includes options exercisable for 50,000
shares of Common Stock, a promissory note convertible into 125,000 shares
of Common Stock and a warrant exercisable for 250,000 shares of Common
Stock, in each case within sixty (60) days of April 10, 2001. Excludes
68,800 shares of Common Stock held of record by immediate family members of
Mr. Martin, as to which shares Mr. Martin disclaims beneficial ownership.
13
(4) Includes options exercisable for 150,000 shares of Common Stock, a
promissory note convertible into 125,000 shares of Common Stock and a
warrant exercisable for 250,000 shares of Common Stock, in each case within
sixty (60) days of April 10, 2001. Excludes 16,500 shares of Common Stock
held of record by immediate family members of Mr. Reiss, as to which shares
Mr. Reiss disclaims beneficial ownership.
(5) Includes 1,070,349 shares of Common Stock owned as a tenant in common with
spouse. Includes promissory notes convertible into 85,000 shares of Common
Stock and warrants exercisable for 170,000 shares of Common Stock, in each
case within sixty (60) days of April 10, 2001 and in each case held as a
tenant in common with spouse. Excludes 40,000 shares of Common Stock held
of record by spouse, as to which shares Mrs. Shamy disclaims beneficial
ownership.
(6) Includes 1,070,349 shares of Common Stock owned as a tenant in common with
spouse. Includes promissory notes convertible into 85,000 shares of Common
Stock and warrants exercisable for 170,000 shares of Common Stock, in each
case within sixty (60) days of April 10, 2001 and in each case held as a
tenant in common with spouse. Excludes 308,000 shares of Common Stock held
of record by spouse, as to which shares Mr. Shamy disclaims beneficial
ownership.
(7) Includes a promissory note convertible into 150,000 shares of Common Stock
and a warrant exercisable for 300,000 shares of Common Stock, in each case
within sixty (60) days of April 10, 2001, held by Mr. Young. Also includes
a promissory note convertible into 350,000 shares of Common Stock and a
warrant exercisable for 700,000 shares of Common Stock, in each case within
sixty (60) days of April 10, 2001, held by Woodglen Group, L.P., an
affiliate of Mr. Young.
(8) Includes a warrant exercisable for 901,113 shares of Common Stock within
sixty (60) days of April 10, 2001, held by Psilos Group Partners, L.P. Also
includes a warrant exercisable for 599,141 shares of Common Stock within
sixty (60) days of April 10, 2001, held by JPMP/Psilos I-Trax, LLC. Dr.
Waxman is a Senior Managing Member of Psilos Group Investors, LLC, which is
the General Partner of Psilos Group Partners, L.P. and the Managing Member
of JPMP/Psilos I-Trax, LLC.
(9) Includes 2,149,203 shares held by Nantucket Healthcare Ventures I, L.P., an
affiliate of Mr. Bock.
(10) Includes options exercisable for 80,000 shares of Common Stock within sixty
(60) days of April 10, 2001 held by Health Industry Investments, LLC, an
affiliate of Mr. Green. Also includes options exercisable for 50,000 shares
of Common Stock within sixty (60) days of April 10, 2001.
(11) Includes options exercisable for 50,000 shares of Common Stock within sixty
(60) days of April 10, 2001.
(12) Includes 2,149,203 shares held by Nantucket Healthcare Ventures I, L.P., an
affiliate of each of Messrs. Martin and Bock. Also includes options
exercisable for 584,168 shares of Common Stock, promissory notes
convertible into 300,000 shares of Common Stock and warrants exercisable
for 600,000 shares of Common Stock, in each case within sixty (60) days of
April 10, 2001.
14
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 by the Company in November 2000 to conserve cash.
Amounts deferred pursuant to the Salary Deferment Program are as follows:
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. McCormanck 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 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
I-TRAX, INC.
2001 EQUITY COMPENSATION PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 2001 Equity Compensation Plan is intended to promote the interests
of I-trax, Inc., a Delaware corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into the separate equity incentive
programs described in items 1, 2 and 3 below, and, upon the direction of the
Board, into the separate equity incentive program described in item 4 below:
1. the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock,
2. the Salary Investment Option Grant Program under which eligible
employees may elect to have a portion of their base salary invested each year in
special options,
3. the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary), and
4. when implemented by the Board, the Automatic Option Grant
Program under which eligible non-employee Board members shall automatically
receive options at periodic intervals to purchase shares of Common Stock.
B. The provisions of Articles One and Six shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.
C. This Plan shall be unfunded. The Corporation shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any awards under this Plan.
III. ADMINISTRATION OF THE PLAN
A. The following provisions shall govern the administration of the
Plan:
1. The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and Covered Employees, but may delegate such authority in whole or
in part to the Primary Committee.
2. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
3. The Board (or Primary Committee) shall select the Section 16
Insiders and Covered Employees and other highly compensated Employees eligible
to participate in the Salary Investment Option Grant Program. However, all
option grants under the Salary Investment Option Grant Program shall be made in
accordance with the terms of that program and the Primary Committee shall not
exercise any administrative discretion with respect to option grants made under
the program.
4. If and when activated by the Board, administration of the
Automatic Option Grant Program shall be self-executing in accordance with the
terms of that program.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
1. to establish such rules as it may deem appropriate for proper
administration of the Plan, to make all factual determinations, to construe and
interpret the provisions of the Plan and the awards thereunder and to resolve
any and all ambiguities thereunder;
2. to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which eligible persons
are to receive such awards, the time or times when such awards are to be made,
the number of shares to be covered by each such award, the vesting schedule (if
any) applicable to the award, the status of a granted option as either an
Incentive Option or a Non-Statutory Option and the maximum term for which the
option is to remain outstanding;
3. to amend, modify or cancel any outstanding award with the
consent of the holder or accelerate the vesting of such award; and
4. to take such other discretionary actions as permitted pursuant
to the terms of the applicable program.
C. All decisions of each Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties.
D. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
E. Notwithstanding any of the foregoing provisions of this Section III
to the contrary, each Plan Administrator that has the authority to administer
any equity program under the Plan with respect to Section 16 Insiders and
Covered Employees shall consist solely of two or more individuals who are both
"outside directors" as defined under Section 162(m) of the Code and related
Treasury regulations and "non-employee directors" as defined under Rule 16b-3
under the 1934 Act.
F. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee
(whether or not an actual Board member) shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Primary Committee or the Secondary Committee shall
be liable for any act or omission made in good faith with respect to the Plan or
any options or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
1. Employees,
2
2. non-employee members of the Board or of the board of directors
of any Parent or Subsidiary, and
3. consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders and Covered Employees or
other highly compensated individuals shall be eligible to participate in the
Salary Investment Option Grant Program.
C. Only non-employee Board members shall be eligible to participate in
the Automatic Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed Five
Million (5,000,000) shares.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January of
each calendar year during the term of the Plan, beginning with the 2002 calendar
year, by an amount equal to three percent (3%) of the total number of shares of
Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall such annual increase exceed One
Million (1,000,000) shares.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than Four Hundred Thousand (400,000) shares of Common Stock in the
aggregate per calendar year.
D. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant to
the Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under the Plan. However, should the exercise price of
an option under the Plan be paid for with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an option or the vesting of a stock issuance under the Plan,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is exercised
or which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance. Shares of
Common Stock underlying one or more stock appreciation rights exercised under
the Plan shall not be available for subsequent issuance.
E. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities by which the share reserve is
to increase each calendar year pursuant to the automatic share increase
provisions of the Plan, (iii) the number and/or class of securities for which
any one person may be granted options, separately exercisable stock appreciation
rights and direct stock issuances under the Plan per calendar year, (iv) the
number and/or class of securities for which grants are subsequently to be made
under the Automatic Option Grant Program to new and continuing non-employee
Board members, and (v) the number and/or class of securities and the exercise
price per share in effect under each outstanding option under the Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
3
VI. LIMITATIONS ON ISSUANCE OR TRANSFER OF SHARES.
A. No Common Stock shall be issued or transferred in connection with
any award hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Common Stock have been complied with to the
satisfaction of the Plan Administrator. The Plan Administrator shall have the
right to condition any award made to any Optionee or Participant hereunder on
such Optionee's or Participant's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Common Stock
as the Plan Administrator shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Common Stock issued or transferred under the
Plan will be subject to such stop-transfer orders and other restrictions as may
be required by applicable laws, regulations and interpretations, including any
requirement that a legend be placed thereon.
B. If based upon the opinion of counsel to the Corporation, the Plan
Administrator determines that the exercise of any options would violate any
applicable provision of (a) state or federal securities law or (b) the listing
requirements of any securities exchange registered under the 1934 Act on which
are listed any of the Corporation's equity securities, then the Plan
Administrator may postpone any such exercise; provided, however, that the
Corporation shall use its best efforts to cause such exercise to comply with all
such provisions at the earliest practicable date.
C. With respect to Section 16 Insiders and Covered Employees of the
Corporation, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Board or the Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board and the Plan
Administrator.
D. If so requested by the Corporation or any representative of the
underwriters (the "Managing Underwriter") in connection with any registration of
the offering of any securities of the Corporation under the Securities Act of
1933, as amended (the "Securities Act"), an Optionee or Participant (including
any successor or assigns) shall not sell or otherwise transfer any shares or
other securities of the Corporation during the 180-day period following the
effective date of a registration statement of the Corporation filed under the
Securities Act (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Corporation) (the "Market
Standoff Period"). Such restriction shall apply to any registration statement of
the Corporation to become effective under the Securities Act that includes
securities to be sold on behalf of the Corporation to the public in an
underwritten public offering under the Securities Act. The Corporation may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.
4
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
The exercise price per share shall be fixed by the Plan Administrator
at the time of the option grant and may be less than, equal to or greater than
the Fair Market Value per share of Common Stock on the option grant date.
The exercise price shall become immediately due upon exercise of the
option and shall, subject to the provisions of Section II of Article Six and the
documents evidencing the option, be payable in one or more of the following
forms:
1. in cash or check made payable to the Corporation;
2. shares of Common Stock held for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date, or
3. to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.
Except to the extent the sale and remittance procedure described in
item 3, above, is utilized, payment of the exercise price for the purchased
shares must be made on the Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
C. Loans and Guarantees. The Plan Administrator may, in its discretion,
1. allow an Optionee in the Discretionary Option Grant Program to
defer (at no less than reasonable commercial rates) payment to the Corporation
of all or any portion of (a) the exercise price of an option, or (b) any taxes
associated with a benefit hereunder which is not a cash benefit at the time such
benefit is so taxable, or
2. cause the Corporation to guarantee a loan from a third party to
the Optionee in the Discretionary Option Grant Program, in an amount equal to
all or any portion of such exercise price or any related taxes.
5
Any such payment deferral or guarantee by the Corporation pursuant to
this Section I.C. shall be, on a secured or unsecured basis, for such periods,
at commercial interest rates, and on such other terms and conditions as the Plan
Administrator may determine. Notwithstanding the foregoing, a Optionee shall not
be entitled to defer the payment of such exercise price or any related taxes
unless the Optionee (a) enters into a binding obligation to pay the portion of
the exercise price or any related taxes which are deferred and (b) pays upon
exercise of an option a minimum amount, with respect to all shares of Common
Stock to be then issued, equal to the amount determined by the Plan
Administrator to be capital within the meaning of Section 154 of the Delaware
General Corporation Law. If the Plan Administrator has permitted a payment
deferral or caused the Corporation to guarantee a loan pursuant to this Section
I.C., then the Plan Administrator may, in its discretion, require the immediate
payment of such deferred amount or the immediate release of such guarantee in
the event the Optionee sells or otherwise transfers the Optionee's shares of
Common Stock purchased pursuant to such deferral or guarantee.
D. Cessation of Service.
The following provisions shall govern the exercise of any options
outstanding at the time of the Optionee's cessation of Service or death:
1. Any option outstanding at the time of the Optionee's cessation
of Service for any reason shall remain exercisable for such period of time
thereafter as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option, but no such option shall be exercisable after
the expiration of the option term.
2. Any option exercisable in whole or in part by the Optionee at
the time of death may be subsequently exercised by his or her Beneficiary.
3. During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's cessation
of Service, terminate and cease to be outstanding to the extent the option is
not otherwise at that time exercisable for vested shares.
4. Should the Optionee's Service be terminated for Misconduct or
should the Optionee engage in Misconduct while his or her options are
outstanding, then all such options shall terminate immediately and cease to be
outstanding.
The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding:
1. to extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service to such period of time
as the Plan Administrator shall deem appropriate, but in no event beyond the
expiration of the option term, and/or
2. to permit the option to be exercised, during the applicable
post-Service exercise period, for one or more additional installments in which
the Optionee would have vested had the Optionee continued in Service.
E. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
F. Repurchase Rights. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such
6
unvested shares, the Corporation shall have the right to repurchase, at the
exercise price paid per share, any or all of those unvested shares. The terms
upon which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.
G. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of
inheritance following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non-Statutory Option may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
without consideration during the Optionee's lifetime to one or more members of
the Optionee's immediate family, or to others, including but not limited to, a
trust in which Optionee and/or one or more such family members hold more than
fifty percent (50%) of the beneficial interest, an entity in which more than
fifty percent (50%) of the voting interests are owned by one or more such family
members, or an entity, acceptable to the Plan Administrator, with which the
Optionee has a business relationship. Non-Statutory Options may also be
transferred, to the extent permitted by the Plan Administrator, pursuant to a
domestic relations order (as defined under section 414(p) of the Code). Each
such transfer must also be consistent with applicable securities laws. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment which shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate
and each assignee shall agree to be legally bound by such terms.
Notwithstanding the foregoing, the Optionee may also designate one or
more persons as the Beneficiary or Beneficiaries of his or her outstanding
options, and those options shall, in accordance with such designation,
automatically be transferred to such Beneficiary or Beneficiaries upon the
Optionee's death while holding those options and upon furnishing proof
satisfactory to the Corporation of the Beneficiary's or Beneficiaries' right to
receive the options. Such Beneficiary or Beneficiaries shall take the
transferred options subject to all the terms and conditions of the applicable
agreement evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be exercised
following the Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One and Two shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Exercise Price. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
7
III. CONSEQUENCES OF A CHANGE IN CONTROL
A. Upon a Change in Control the Plan Administrator, subject to Section
III.B., below, shall have the full discretion to do any or all of the following
with respect to the outstanding options granted under the Discretionary Option
Grant Program:
1. to provide that the outstanding options shall accelerate and
become fully exercisable, whether or not those options are assumed or otherwise
continued in full force and effect pursuant to the terms of the Change in
Control. Any such option shall accordingly become exercisable, immediately prior
to the effective date of such Change in Control, for all of the shares of Common
Stock at the time subject to that option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock;
2. to provide that one or more of the Corporation's repurchase
rights provided in accordance with Section I.F., above, shall not be assignable
in connection with such Change in Control and shall terminate upon the
consummation of such Change in Control, except to the extent: (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
or are otherwise continued in full force and effect pursuant to the terms of the
Change in Control or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right
is issued;
3. where the Corporation is not the surviving corporation (or
survives only as a subsidiary of another corporation) to provide that all
outstanding options that are not exercised shall be assumed by, or replaced with
comparable options granted by, the surviving corporation;
4. subject to Section III.B. below, to require that Optionees
surrender their outstanding options in exchange for a payment by the
Corporation, in cash or Common Stock as determined by the Plan Administrator, in
an amount equal to the amount by which the then Fair Market Value of the shares
of Common Stock subject to the Optionee's unexercised options exceeds the
exercise price of the options;
5. after giving Optionees an opportunity to exercise their
outstanding options, to terminate any or all unexercised options at such time as
the Plan Administrator deems appropriate. Such surrender or termination shall
take place as of the date specified by the Plan Administrator; or
6. to take any other action that the Plan Administrator shall
determine to pursue.
B. Notwithstanding anything in the Plan to the contrary, in the event
of a Change in Control, the Plan Administrator shall not have the right to take
any actions described in the Plan that would make the Change in Control
ineligible for pooling of interest accounting treatment or that would make the
Change in Control ineligible for desired tax treatment if, in the absence of
such right, the Change in Control would qualify for such treatment and the
Corporation intends to use such treatment with respect to the Change in Control.
C. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Change in Control had the option been
exercised immediately prior to such Change in Control. Appropriate adjustments
to reflect such Change in Control shall also be made to (i) the exercise price
payable per share under each outstanding option, provided the aggregate exercise
price payable for such securities shall remain the same, (ii) the maximum number
and/or class of securities available for issuance over the remaining term of the
Plan and (iii) the maximum number and/or class of securities for which any one
person may be granted options, separately exercisable stock appreciation rights
and direct stock issuances under the Plan per calendar year. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options, substitute one or more shares of its own common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control.
8
D. The Plan Administrator may at any time provide that one or more
options will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
options do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.
E. The portion of any Incentive Option accelerated in connection with a
Change in Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may
determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
V. SUBSTITUTED OPTIONS
If the Plan Administrator cancels, with the consent of an Optionee, any
option granted under the Plan, and a new option is substituted therefor, then
the Plan Administrator may, in its discretion, provide that the grant date of
the canceled option shall be the date used to determine the earliest date or
dates for exercising or disposing of the new substituted option under Section
I.B., above, so that the Optionee may exercise or dispose of the substituted
option at the same time as if the Optionee had held the substituted option since
the grant date of the canceled option; provided, however, that no Optionee who
for purposes of Section 16 of the 1934 Act is treated as an officer, director or
10% Stockholder of the Corporation may dispose of a substituted exchange option
within less than six months after the grant date (calculated without reference
to this Section V).
9
ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
I. OPTION GRANTS
The Primary Committee may implement the Salary Investment Option Grant
Program for one or more calendar years beginning after the Plan Effective Date
and select the Section 16 Insiders and Covered Employees and other highly
compensated Employees who shall be eligible to participate in the Salary
Investment Option Grant Program for each such calendar year. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Five Thousand Dollars ($5,000) (or such lesser
amount as the Plan Administrator may determine) nor more than Fifty Thousand
Dollars ($50,000) (or such lesser amount as the Plan Administrator may
determine). Each individual who files such a timely election shall be granted an
option under the Salary Investment Grant Program on the first trading day in
January for the calendar year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in
the Optionee's base salary for the
calendar year, and
B is the Fair Market Value per share of Common Stock
on the option grant date.
C. Exercise and Term of Options. The option shall become exercisable in
a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar year for
which the salary reduction is in effect. Each option shall have a maximum term
of ten (10) years measured from the option grant date.
D. Cessation of Service. Each option outstanding at the time of the
Optionee's cessation of Service shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the option term or (ii) the
expiration of the three (3)-year period following the Optionee's cessation of
Service. To the extent the option is held by the Optionee at the time of
10
his or her death, the option may be exercised by his or her Beneficiary.
However, the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to remain outstanding with respect to any and all shares of
Common Stock for which the option is not otherwise at that time exercisable.
III. CHANGE IN CONTROL
A. In the event of any Change in Control while an Optionee remains in
Service holding an outstanding option granted under the Salary Investment Option
Grant Program, the Plan Administrator shall have the full discretion to do any
or all of the following:
1. to provide that each such outstanding option shall, immediately
prior to the effective date of the Change in Control, accelerate and become
fully exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock;
2. to provide that one or more of the Corporation's repurchase
rights provided in accordance with Section I.F., above, shall not be assignable
in connection with such Change in Control and shall terminate upon the
consummation of such Change in Control, except to the extent: (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
or are otherwise continued in full force and effect pursuant to the terms of the
Change in Control or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right
is issued;
3. where the Corporation is not the surviving corporation (or
survives only as a subsidiary of another corporation) to provide that all
outstanding options that are not exercised shall be assumed by, or replaced with
comparable options granted by, the surviving corporation;
4. subject to Section III.B. of Article Two, above, to require
that Optionees surrender their outstanding options in exchange for a payment by
the Corporation, in cash or Common Stock as determined by the Plan
Administrator, in an amount equal to the amount by which the then Fair Market
Value of the shares of Common Stock subject to the Optionee's unexercised
options exceeds the exercise price of the options;
5. after giving Optionees an opportunity to exercise their
outstanding options, to terminate any or all unexercised options at such time as
the Plan Administrator deems appropriate. Such surrender or termination shall
take place as of the date specified by the Plan Administrator; or
6. to take any other action that the Plan Administrator shall
determine to pursue.
B. Each option accelerated in connection with a Change in Control shall
terminate upon the Change in Control, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control.
C. Each option described in Section III.A., above, which is assumed in
connection with a Change in Control shall be appropriately adjusted to apply to
the number and class of securities which would have been issuable to the
Optionee in consummation of such Change in Control had the option been exercised
immediately prior to such Change in Control. Appropriate adjustments shall also
be made to the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same. To the extent the actual holders of the Corporation's outstanding
Common Stock receive cash consideration for their Common Stock in consummation
of the Change in Control, the successor corporation may, in connection with the
assumption of the outstanding options, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control.
11
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for options
granted under the Discretionary Option Grant Program.
12
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options. Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals or Service requirements. Each such
award shall be evidenced by one or more documents which comply with the terms
specified below.
A. Purchase Price.
1. The purchase price per share of Common Stock subject to direct
issuance shall be fixed by the Plan Administrator and may be less than, equal to
or greater than the Fair Market Value per share of Common Stock on the issue
date.
2. Subject to the provisions of Section II of Article Six, shares
of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent
or Subsidiary).
B. Vesting/Issuance Provisions.
1. The Plan Administrator may issue shares of Common Stock which
are fully and immediately vested upon issuance or which are to vest in one or
more installments over the Participant's period of Service or upon attainment of
specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards which shall entitle the recipient to receive a
specified number of vested shares of Common Stock upon the attainment of one or
more performance goals or Service requirements established by the Plan
Administrator.
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested
shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with respect
to the issued shares of Common Stock, whether or not the Participant's interest
in those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
13
5. The Plan Administrator may waive the surrender and cancellation
of one or more unvested shares of Common Stock (or other assets attributable
thereto) which would otherwise occur upon the cessation of the Participant's
Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant's
interest in the shares of Common Stock as to which the waiver applies. Such
waiver may be effected at any time, whether before or after the Participant's
cessation of Service or the attainment or non-attainment of the applicable
performance objectives.
6. Outstanding share right awards shall automatically terminate,
and no shares of Common Stock shall actually be issued in satisfaction of those
awards, if the performance goals or Service requirements established for such
awards are not attained. The Plan Administrator, however, shall have the
authority to issue shares of Common Stock in satisfaction of one or more
outstanding share right awards as to which the designated performance goals or
Service requirements are not attained.
II. CHANGE IN CONTROL
A. In the event of any Change in Control, the Plan Administrator shall
have the full discretion to do any or all of the following with respect to the
Corporation's outstanding repurchase rights applicable to shares of Common Stock
issued under the Stock Issuance Program:
1. to provide that all such outstanding repurchase rights shall
terminate and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full except to the extent that such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator at
the time the repurchase right is issued;
2. to assign the repurchase rights to the successor corporation
(or parent thereof) or otherwise to continue such rights in full force and
effect pursuant to the terms of the Change in Control; or
3. to take any other action that the Plan Administrator shall
determine to pursue.
B. The Plan Administrator may at any time provide for the automatic
termination of one or more of the Corporation's outstanding repurchase rights
applicable to the shares described in Section II.A., above, and the immediate
vesting of the shares of Common Stock subject to those terminated rights upon an
Involuntary Termination of the Participant's Service within a designated period
(not to exceed eighteen (18) months) following the effective date of any Change
in Control in which those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
IV. SECTION 83(b) ELECTION
Provided that the Plan Administrator shall not have prohibited the
Participant from making the following election, if a Participant shall, in
connection with any grant of share right awards make the election permitted
under section 83(b) of the Code (i.e., an election to include in such
Participant's gross income in the year of transfer the amounts specified in
section 83(b) of the Code), such Participant shall notify the Plan Administrator
of such election within ten (10) days of filing notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of section 83(b) of the Code.
14
V. FINANCING
The Plan Administrator in its sole discretion, may permit any
Participant to pay the purchase price of shares issued under the Stock Issuance
Program by delivering a full-recourse, interest bearing promissory note payable
in one or more installments. The terms of any such promissory note (including
the interest rate and the terms of repayment) shall be established by the Plan
Administrator, in its sole discretion. In no event may the maximum credit
available to the Participant exceed the sum of (i) the aggregate purchase price
payable for the purchased shares (less the amount determined by the Plan
Administrator with respect to the purchased shares to be capital within the
meaning of Section 154 of the Delaware General Corporation Law) plus (ii) any
Federal, state and local income and employment tax liability incurred by the
Participant in connection with the or share purchase.
15
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. The Board may implement the Automatic Option Grant
Program as of the first day of any month beginning after the Plan Effective
Date. Upon such implementation of the Program (the "Program Effective Date"),
options shall be granted on the dates specified below:
1. Each individual who is serving as a non-employee Board member
on the Program Effective Date and each individual who is first elected or
appointed as a non-employee Board member at any time after the Program Effective
Date shall automatically be granted, on the Program Effective Date or on the
date of such initial election or appointment, as appropriate, a Non-Statutory
Option to purchase Twenty Five Thousand (25,000) shares of Common Stock, (or any
lesser amount determined by the Board), provided that individual has not
previously been in the employ of the Corporation (or any Parent or Subsidiary).
2. On the date of each Annual Stockholders Meeting beginning with
the 2002 Annual Stockholder Meeting, each individual who is to continue to serve
as a non-employee Board member shall automatically be granted a Non-Statutory
Option to purchase Five Thousand (5,000) shares of Common Stock, (or any lesser
amount determined by the Board), provided that individual has served as a
non-employee Board member for at least six (6) months.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial 25,000-share option shall
vest, and the Corporation's repurchase right shall lapse, in a series of three
(3) successive equal annual installments over the Optionee's period of continued
service as a Board member, with the first such installment to vest upon the
Optionee's completion of one (1) year of Board service measured from the option
grant date. Each annual 5,000-share option shall vest, and the Corporation's
repurchase right shall lapse, upon the Optionee's completion of three (3) years
of Board service measured from the option grant date.
E. Cessation of Board Service. The following provisions shall govern
the exercise of any options outstanding at the time of the Optionee's cessation
of Board service:
1. Any option outstanding at the time of the Optionee's cessation
of Board service for any reason shall remain exercisable for a twelve (12)-month
period following the date of such cessation of Board service, but in no event
shall such option be exercisable after the expiration of the option term.
16
2. Any option exercisable in whole or in part by the Optionee at
the time of death may be subsequently exercised by his or her Beneficiary.
3. Following the Optionee's cessation of Board service, the option
may not be exercised in the aggregate for more than the number of shares for
which the option was exercisable on the date of such cessation of Board service.
Upon the expiration of the applicable exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee's cessation of Board
service, terminate and cease to be outstanding for any and all shares for which
the option is not otherwise at that time exercisable.
4. However, should the Optionee cease to serve as a Board member
by reason of death or Permanent Disability, then all shares at the time subject
to the option shall immediately vest so that such option may, during the twelve
(12)-month exercise period following such cessation of Board service, be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock.
II. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for options
granted under the Discretionary Option Grant Program.
17
ARTICLE SIX
MISCELLANEOUS
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or the issuance or vesting of such shares under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
1. Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
2. Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately upon the Plan Effective
Date. However, the Salary Investment Option Grant and Automatic Option Grant
Programs shall not be implemented until such time as the Plan Administrator and
the Board, respectively, may deem appropriate. Options may be granted under the
Discretionary Option Grant Program at any time on or after the Plan Effective
Date. However, no options granted under the Plan may be exercised, and no shares
shall be issued under the Plan, until the Plan is approved by the Corporation's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the Plan Effective Date, then all options previously granted under
this Plan shall terminate and cease to be outstanding, and no further options
shall be granted and no shares shall be issued under the Plan.
B. The Plan shall terminate upon the earliest of (i) the tenth
anniversary of the Plan Effective Date, (ii) the date on which all shares
available for issuance under the Plan shall have been issued as fully-vested
shares or (iii) the termination of all outstanding options in connection with a
Change in Control. Upon such plan termination, all outstanding options and
unvested stock issuances shall thereafter continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.
C. The Plan shall be the controlling document. No other statements,
representations, explanatory materials or examples, oral or written, may amend
the Plan in any manner. The Plan shall be binding upon and enforceable against
the Corporation and its successors and assigns.
18
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS/LEGAL COMPLIANCE
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any Stock Exchange (or the Nasdaq National Market or the Nasdaq Small Cap
Market, if applicable) on which Common Stock is then listed for trading.
C. With respect to persons subject to section 16 of the 1934 Act, it is
the intent of the Corporation that the Plan and all transactions under the Plan
comply with all applicable provisions of Rule 16b-3 or its successors under the
1934 Act. In addition, it is the intent of the Corporation that the Plan and the
options and stock issuances awarded under the Plan comply with the applicable
provisions of section 162(m) of the Code and section 422 of the Code. To the
extent that any legal requirement of section 16 of the 1934 Act or section
162(m) or 422 of the Code as set forth in the Plan ceases to be required under
section 16 of the 1934 Act or section 162(m) or 422 of the Code, that Plan
provision shall cease to apply. The Plan Administrator may revoke any option or
stock issuance if it is contrary to law or modify an award to bring it into
compliance with any valid and mandatory government regulation.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon an Optionee or a Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are
19
hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
VIII. CORPORATE TRANSACTIONS
Nothing contained in this Plan shall be construed to (i) limit the
right of the Plan Administrator to make awards under this Plan in connection
with the acquisition, by purchase, lease, merger, consolidation or otherwise, of
the business or assets of any corporation, firm or association, including awards
to employees thereof who become Employees or for other proper corporate
purposes, or (ii) limit the right of the Corporation to grant stock options or
make other awards outside of this Plan. Without limiting the foregoing, the Plan
Administrator may make an award to an employee of another corporation who
becomes an Employee by reason of a corporate merger, consolidation, acquisition
of stock or property, reorganization or liquidation involving the Corporation
(or any Parent or Subsidiary) in substitution for a stock option or restricted
stock grant made by such corporation. The terms and conditions of the substitute
grants may vary from the terms and conditions required by the Plan and from
those of the substituted stock incentives. The Corporation shall prescribe the
provisions of the substitute grants.
IX. GOVERNING LAW
The validity, construction, interpretation and effect of the Plan and
of the documents and other instruments issued under the Plan shall be governed
and construed by and determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof.
X. NATURE OF PAYMENTS
Any and all grants of options, payments of cash, or deliveries of
shares of Common Stock hereunder shall constitute special incentive payments to
the Optionees and Participants and shall not be taken into account in computing
the amount of salary or compensation of the Optionees and Participants for the
purposes of determining any pension, retirement, death or other benefits under
any pension, retirement, profit-sharing, bonus, life insurance or other employee
benefit plan of the Corporation (or any Parent or Subsidiary) or any agreement
between the Corporation (or any Parent or Subsidiary), on the one hand, and the
Optionee or Participant, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
XI. NON-UNIFORM DETERMINATIONS
The Plan Administrator's determinations under the Plan need not be
uniform and may be made by the Plan Administrator's selectively among persons
who receive, or are eligible to receive, awards under the Plan (whether or not
such persons are similarly situated).
XII. NO FRACTIONAL SHARES
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Award. The Plan Administrator shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
XIII. HEADINGS
Article and Section headings are for reference only. In the event of a
conflict between a heading and the content of an Article or a Section, the
content of the respective Article or Section shall control.
20
APPENDIX
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
program, if any, in effect under the Plan.
B. Beneficiary shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by an
Optionee or Participant, pursuant to such procedure, to succeed to such person's
rights under any outstanding awards held by him or her at the time of death. In
the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the
person or persons to whom the award is transferred by will or the laws of
inheritance.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
1. Any "person" (as such term is used in Sections 13(d) and 14(d)
of the 1934 Act) (other than persons who are stockholders on the effective date
of the Plan) becomes a "beneficial owner" (as defined in Rule 13d-3 under the
1934 Act), directly or indirectly, of securities of the Corporation representing
more than 50% of the voting power of the then outstanding securities of the
Corporation; provided that a Change in Control shall not be deemed to occur as a
result of a change of ownership resulting from the death of a stockholder and a
Change in Control shall not be deemed to occur as a result of a transaction in
which the Corporation becomes a subsidiary of another corporation and in which
the stockholders of the Corporation, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the
parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); or
2. The stockholders of the Corporation approve (or, if stockholder
approval is not required, the Board approves) an agreement providing for (i) the
merger or consolidation of the Corporation with another corporation where the
stockholders of the Corporation, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the merger or
consolidation, shares entitling such stockholders to more than 50% of all votes
to which all stockholders of the surviving corporation would be entitled in the
election of directors (without consideration of the rights of any class of stock
to elect directors by a separate class vote), (ii) the sale or other disposition
of all or substantially all of the assets of the Corporation, or (iii) a
liquidation or dissolution of the Corporation.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporation shall mean I-trax, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
I-trax, Inc. which shall by appropriate action adopt the Plan.
H. Discretionary Option Grant Program shall mean the discretionary
option grant program in effect under the Plan.
I. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance, including without limitation officers and members of the
Board.
J. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.
21
K. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
1. If the Common Stock is publicly traded, then the Fair Market
Value per share shall be determined as follows: (x) if the principal trading
market for the Common Stock is a Stock Exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market, the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported, or (y) if the Common Stock is not principally traded
on such exchange or market, the last reported highest "bid" price of Common
Stock on the relevant date, as reported by the OTC Bulletin Board, the National
Daily Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Plan Administrator determines.
2. If the Common Stock is not publicly traded or, if publicly
traded, the Plan Administrator determines that the number of shares of the
Common Stock traded on a given day, the last reported sale price thereof, or, if
applicable, the highest "bid" quotation as set forth above are not indicative of
the fair market value of the Common Stock, the Fair Market Value per share shall
be as determined by the Plan Administrator.
L. Incentive Option shall mean an option, which satisfies the
requirements of Code Section 422.
M. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
1. such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
2. such individual's voluntary resignation following (A) a change
in his or her position with the Corporation or Parent or Subsidiary employing
the individual which materially reduces his or her duties and responsibilities
or the level of management to which he or she reports, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and target
bonus under any corporate-performance based bonus or incentive programs) by more
than fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without the individual's
consent.
N. Misconduct shall mean, except to the extent specified otherwise by
the Plan Administrator, a finding by the Plan Administrator that the Optionee
(i) has breached his or her employment or service contract with the Corporation,
(ii) has engaged in disloyalty to the Corporation, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, (iii) has
disclosed trade secrets or confidential information of the Corporation to
persons not entitled to receive such information or (iv) has engaged in such
other behavior detrimental to the interests of the Corporation as the Plan
Administrator determines.
O. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
P. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
Q. Option Surrender Value shall mean the Fair Market Value per share of
Common Stock on the date an option is surrendered to the Corporation.
R. Optionee shall mean any person to whom an option is granted under
the Discretionary Option Grant, Salary Investment Option Grant or Automatic
Option Grant Program.
S. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the
22
Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
T. Participant shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.
U. Permanent Disability or Permanently Disabled shall mean an
Optionee's or a Participant's becoming disabled within the meaning of Code
section 22 (e)(3). However, solely for purposes of the Automatic Option Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.
V. Plan shall mean the Corporation's 2001 Equity Compensation Plan, as
set forth in this document.
W. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction. However, the
Primary Committee shall have the plenary authority to make all factual
determinations and to construe and interpret any and all ambiguities under the
Plan to the extent such authority is not otherwise expressly delegated to any
other Plan Administrator.
X. Plan Effective Date shall mean March 20, 2001, the date on which the
Plan was adopted by the Board.
Y. Primary Committee shall mean the committee of two (2) or more
non-employee Board members, as defined under Rule 16b-3 under the 1934 Act, who
are also "outside directors", as defined under section 162(m) of the Code and
who are appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to Section 16 Insiders and Covered
Employees and to administer the Salary Investment Option Grant Program with
respect to all eligible individuals.
Z. Salary Investment Option Grant Program shall mean the salary
investment grant program, if any, in effect under the Plan.
AA. Secondary Committee shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders and Covered Employees.
BB. Section 16 Insider and Covered Employee shall mean an officer or
director of the Corporation subject to the short-swing profit liabilities of
Section 16 of the 1934 Act and to the extent not covered by such statutory
provision, an officer who is subject to the cap on deductible remuneration under
section 162(m)(3) of the Code.
CC. Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
DD. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
EE. Stock Issuance Program shall mean the stock issuance program, if
any, in effect under the Plan.
23
FF. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
GG. 10% Stockholder shall mean the owner of stock (as determined under
Code section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
HH. Withholding Taxes shall mean the minimum applicable Federal, state
and local income and employment withholding tax liabilities to which the holder
of Non-Statutory Options or unvested shares of Common Stock may become subject
in connection with the exercise of those options or the vesting of those shares.
24
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.