**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K/A**

**(AmendmentNo. 1)**

**ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2006**

**Commission file number 001-16379**

**DendriteInternational, Inc.**

(Exact Name of Registrant as Specified in Its Charter)

| **New Jersey**                   |   | **22-2786386**       |
|----------------------------------|--------|----------------------|
| (State or Other  Jurisdiction of |   | (I.R.S. Employer     |
| Incorporation or  Organization)  |   | Identification  No.) |

 

**1405/1425 Route 206 SouthBedminster, NJ 07921**(Address of PrincipalExecutive Offices)

**(908) 443-2000**(Registrant’stelephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
| **Title of Each Class**     |   | **Name of Exchange on Which Listed** |
|-----------------------------|--------|--------------------------------------|
| Common Stock, no par  value |   | The NASDAQ Stock Market  LLC         |

 

Securitiesregistered pursuant to Section 12(g) of the Act:

**None**

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reportspursuant to Section 13 or Section 15(d) of the Exchange Act.Yes o No x

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer o | Accelerated filer x | Non-accelerated filer o |
|--------------------------------|--------------------------|------------------------------|

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of shares of common stock held bynon-affiliates of the registrant as of June 30, 2006 was $326,241,000based upon the June 30, 2006 closing price of $9.22 per share.

The number ofshares of common stock outstanding as of March 22, 2007 was 44,559,874.

**EXPLANATORY NOTE**

**This Amendment No. 1 on Form10-K/A amends our Annual Report on Form 10-K filed April 2, 2007 (“OriginalAnnual Report”) solely to incorporate information required by Part III Items10, 11, 12, 13 and 14.  Other than as setforth herein, the registrant has not undertaken to update any informationprovided in the Original Annual Report.**

 

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**PART III**

**ITEM 10.Directors, Executive Officers and Corporate Governance**

The information concerning the Company’s executiveofficers set forth in Part I, Item 1 under the caption “ExecutiveOfficers,” is incorporated herein by reference.

**Directors**

The Board of Directors of Dendrite International, Inc.(“Dendrite”) is comprised of ten members. Set forth below is a brief description of the background of eachdirector.
| **Nominee**          | ** ** | ** ** | ** ** | ** ** | **Age** | ** **                                         | ** ** | **Position With The Company** |
|----------------------|------------|------------|------------|------------|---------|----------------------------------------------------|------------|-------------------------------|
| John E. Bailye       |       |       | 53         |       |    | Chairman of the Board  and Chief Executive Officer |
| John A. Fazio        |       |       | 63         |       |    | Director                                           |
| Bernard M. Goldsmith |       |       | 63         |       |    | Director                                           |
| Edward J. Kfoury     |       |       | 68         |       |    | Director                                           |
| Peter W. Ladell      |       |       | 63         |       |    | Director                                           |
| Clay B. Lifflander   |       |       | 44         |       |    | Director                                           |
| Peter G. Tombros     |       |       | 64         |       |    | Director                                           |
| Paul A. Margolis     |       |       | 54         |       |    | Director                                           |
| John H. Martinson    |       |       | 59         |       |    | Director                                           |
| Patrick J. Zenner    |       |       | 60         |       |    | Director                                           |
|                      |            |            |            |            |         |                                                    |            |                               |  |  |

 

**Business Experience**

**John E. Bailye**hasserved as Chief Executive Officer and a director since the Company’sincorporation in 1987 and since 1991 has had the additional position ofChairman of the Board. Prior to 1987, Mr. Bailye served as a ManagingDirector of Foresearch Pty., Limited, a consulting company to thepharmaceutical industry in Australia. Mr. Bailye served in that capacityfrom the time he acquired Foresearch in 1976 until he sold the company in 1986.Mr. Bailye holds a Bachelor of Commerce in Finance, Marketing and Businessfrom the University of New South Wales.

**John A. Fazio**hasserved as a director of the Company since 2003. Mr. Fazio served invarious accounting, auditing, consulting and administrative capacities withPricewaterhouseCoopers (“PwC”) from 1967 until his retirement in 2000,including Senior General Practice Partner and a National Business Leader in PwC’spharmaceutical practice, Vice Chairman, International and head of PwC’sStrategic Risk Services practice. Mr. Fazio is a member of the AmericanInstitute of Certified Public Accountants and the Institute of ManagementAccountants. Mr. Fazio became a director of ImClone Systems Inc. in 2003 andis a director of Heidrick & Struggles International, Inc.Mr. Fazio is a Certified Public Accountant and Certified ManagementAccountant and holds a Bachelor of Science in Accounting from Penn StateUniversity and Masters Degree in Accounting from Ohio State University.

**Bernard M. Goldsmith**has served as a director of the Company since 1996. In 1986, he founded UpdataCapital, Inc., an investment banking firm focused on mergers andacquisitions in the information technology industry. Mr. Goldsmith currentlyserves as an Advisory Partner of Updata. Mr. Goldsmith is also a GeneralPartner of Updata Partners, a private equity firm which he founded in 1997.Mr. Goldsmith also founded Updata Software Company where he served asChief Executive Officer from 1986 to 1988 and CGA Computer, Inc. where heserved as Chairman and Chief Executive Officer from 1968 to 1986. He is also adirector of various private companies. Mr. Goldsmith holds a Bachelor ofArts in Business Administration from Rutgers University.

**Edward J. Kfoury**has served as a director of the Company since 1997. He has also served as theCompany’s Lead Director since the Board created the position inApril 2003. Mr. Kfoury served as a division President and Vice 

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President of International Business MachinesCorporation (“IBM”) from 1988 through 1993 and in various other positions withIBM from 1963 to 1988. Mr. Kfoury is a director of various privately heldcompanies. Mr. Kfoury is also a trustee of the Maine Chapter of the NatureConservancy, an advisory trustee of the Maine Audubon Society and President ofRangeley Lakes Heritage Trust. Mr. Kfoury holds a Bachelor of BusinessAdministration in Marketing from the University of Notre Dame.

**Peter W. Ladell** hasserved as a director of the Company since October 2005. Mr. Ladellwas the Chief Operating Officer of Hoechst Marion Roussel from 1997 until thecompany’s December 1999 merger with Rohne-Poulenc Rorer to form AventisPharmaceuticals. Mr. Ladell subsequently served as a member of the AventisExecutive Committee until his retirement in 2001.  During his 35 yeartenure at Hoechst Marion Roussel and its predecessors, Mr. Ladell servedin several other senior leadership positions, including President and ChiefExecutive Officer, Hoechst Marion Roussel, North America and President, MarionMerrell Dow Europe. Mr. Ladell holds a Bachelor of Commerce in Marketingand Accounting and an honorary doctorate of Civil Laws from Acadia University.

**Clay B. Lifflander** has served asa director of the Company since October 2006. Mr. Lifflander has been Presidentof MCM Capital Management, LLC, the general partner of MMI Investments, L.P.,since its inception. Mr. Lifflander has also served as the Portfolio Manager ofMMI since its inception. Previously, Mr. Lifflander was a Managing Director inthe M&A Group at Smith Barney, where he served from 1984 to 1994.  From 1994 to 1995, he served as President ofthe NYC Economic Development Corp. Mr. Lifflander was CEO of Key Components,Inc. from 1995 to 2003 and Co-Chair in 2004. Mr. Lifflander is a trustee of theHudson River Museum and a former Chairman of the NYC Industrial DevelopmentAgency, Director of the United Nations Development Corporation and Trustee ofthe Village of Dobbs Ferry. Mr. Lifflander holds Bachelor of Arts and M.B.A.degrees from Cornell University.

**Paul A. Margolis**has served as a director of the Company since 1993. Mr. Margolis is aGeneral Partner of Longworth Venture Partners, a venture capital company whichinvests in software, Internet and content companies. Mr. Margolis foundedMarcam Corporation in 1980 and was its Chairman, President and Chief ExecutiveOfficer until 1996 and a director of Marcam until 1998. He is also a directorof various private companies. Mr. Margolis holds a Bachelor of Arts fromBrown University and an M.B.A. from Harvard Business School.

**John H. Martinson**has served as a director of the Company since 1991. In 1986, he founded theEdison Venture Funds and currently serves as its managing partner.Mr. Martinson is also a director of various privately held companies. Heis a former Chairman of the New Jersey Technology Council and former Chairmanof the National Venture Capital Association. Mr. Martinson holds aBachelor of Science in Aeronautics from the United States Air Force Academy, anM.S. in Astronautics from Purdue University and an M.B.A. from SouthernIllinois University.

**Peter G. Tombros**has served as a director of the Company since October 2005.Mr. Tombros is Professor and Distinguished Executive in Residence at theEberly College of Science at Pennsylvania State University, a position he hasheld since October 2005. Formerly, Mr. Tombros served as Chairman andChief Executive Officer of drug discovery company VivoQuest, Inc. from2002 to 2005.  From 1994 to 2001, Mr. Tombros was President and ChiefExecutive Officer of bio-pharmaceutical company Enzon, Inc.  Prior toEnzon, Mr. Tombros spent 25 years with Pfizer, Inc., serving invarious leadership roles, including Executive Vice President, Pfizer Pharmaceuticals;Senior Vice President, General Manager, Roerig Division; and Vice President,Marketing, Pfizer Laboratories Division. Mr. Tombros is a director ofAlpharma Inc., Cambrex Corporation, PharmaNet Development Group, Inc.,Protalex, Inc. and NPS Pharmaceuticals. He is also a former Chairman of the NewJersey Technology Council. Mr. Tombros holds a Bachelor of Science andMaster of Science from Pennsylvania State University and a Master of BusinessAdministration from the University of Pennsylvania Wharton Graduate School ofBusiness.

**Patrick J. Zenner**has served as a director of the Company since 2001. Mr. Zenner served asthe President and Chief Executive Officer of Hoffmann-La Roche, Inc., aleading research-intensive pharmaceutical company, from 1993 to 2001.Mr. Zenner served in various other capacities with Hoffmann-La Roche since1969, including Senior Vice President of its pharmaceutical division from 1992to 1993, Head of International Pharmaceutical Marketing from 1988 to 1992 andVice President and General Manager of Roche Laboratories from 1982 to 1988.Mr. Zenner is a director of ArQule, Inc., CuraGen Corporation, EXACTSciences Corporation, Geron Corporation, Praecis Pharmaceuticals Inc., ScielePharma Inc., West Pharmaceutical Services, Inc. and Xoma Corporation. Heis also a director of Creighton University and the Chairman of the Board ofTrustees of Fairleigh Dickinson University.

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Mr. Zenner holds a Bachelor of Science inBusiness Administration from Creighton University and an M.B.A. from FairleighDickinson University.

**Section 16(a)Beneficial Ownership Reporting Compliance**

Section 16(a) of the Securities Exchange Act of 1934requires the Company’s executive officers and directors to file reportsregarding ownership of the Company’s Common Stock with the SEC, and to furnishthe Company with copies of all such filings. Based on a review of thesefilings, the Company believes that all filings were timely made.

**Code of Ethics**

We have adopted a Code ofEthics and Standards of Business Conduct (“Code of Ethics”) within the meaningof Item 406(b) of SEC Regulation S-K that applies to our principalexecutive officer, principal financial officer and principal accounting officer, as well asto all other officers, employees and directors of the Company. Our Code ofEthics is publicly available on our website at www.dendrite.com. If we makesubstantive amendments to our Code of Ethics or grant any waiver in favor of adirector or executive officer, we will publicly disclose the nature of suchamendment or waiver on our website and to the extent required by Nasdaq and SECrules in a current report on Form 8-K.

**ShareholderCommunications Process**

Information regarding theCompany’s process for shareholders to communicate with the Board of Directorsand the manner in which such communications are forwarded is available at theInvestor Relations section of the Company’s website located atwww.dendrite.com.

**Audit Committee**

TheCompany has an Audit Committee established in accordance with Section 3(a)(58)(A)of the Exchange Act.  The Audit Committeeis comprised of Messrs. Fazio, Margolis and Zenner, each of whom the Board ofDirectors has determined satisfies the independence and audit committeequalification standards of Nasdaq and the SEC. The Board has also determined that Mr. Fazio is an audit committeefinancial expert within the meaning of the SEC regulations. This designation isan SEC disclosure requirement related to Mr. Fazio’s experience andunderstanding of accounting and auditing matters and is not intended to imposeany additional duty, obligation or liability on Mr. Fazio.

**ITEM 11. ExecutiveCompensation**

**CompensationDiscussion and Analysis**

*Overview*

We provide a broad array of solutions worldwide thatenable pharmaceutical and other life science companies to strategicallyoptimize their sales and marketing channels, clinical resources and complianceinitiatives.

Our products and services are grouped into threeoperating segments, Sales Solutions, Marketing Solutions and EmergingSolutions. Sales Solutions primarily includes products and sales supportservices which are used by the sales forces of our customers. MarketingSolutions primarily includes interactive marketing, data and analytics andcampaign management. Emerging solutions includes compliance solutions, clinicalsolutions, and contract sales force services.

Headquartered in Bedminster, New Jersey we haveoffices in twenty-three countries around the world.  Our products and services are deployed ineach of the world’s top 20 pharmaceutical companies and in large, mid-tier, andemerging life sciences companies in approximately 50 countries.

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2006 was a transition year for the Company duringwhich the Company concentrated on controlling costs and finding new revenuestreams. Our revenue for 2006 was $424 million.

The overall objective ofour executive compensation programs is to ensure that:

·                  we are able tohire and retain highly talented executives and leaders, and

·                  those executivesare appropriately rewarded for bringing value to our shareholders.

The Company believes thatit can achieve these objectives by providing our executive officers (our “Executives”)the opportunity to earn a highly competitive pay package tying annual incentivepay and long-term compensation directly to Company and individual performance.

The CompensationCommittee engages its own compensation consultant (Steven Hall & Partners,LLC) for particular projects.  On anongoing basis, the Compensation Committee obtains compensation information,surveys and other data from management and other third party sources.  The benchmarking information used by theCommittee for the 2006 compensation review was coordinated through TowersPerrin, which is retained by the Company through management.

Dendrite employs apremium pay philosophy for our Executives. We target each component of Total Direct Compensation (base salary,annual incentive pay, and equity awards) at a level that is approximately equalto that of the 75th percentile of a market survey group (we referto this as the “75th percentile”). We benchmark each of these pay elements independently of theothers.  For this purpose, the value ofour equity awards is considered based on the valuation methodologies used inthe compensation surveys, which differ from the accounting values used in thecompensation tables provided in this report.

The CompensationCommittee believes that targeting base pay at the 75th percentile enables us to attract the mosttalented Executives available.  Targetingour annual incentive opportunity to the 75th percentile allowsus to reward our Executives if they meet aggressive short-term businessobjectives.  Targeting equitycompensation to the 75th percentile helps motivate our Executives tomanage our business to achieve increased long-term shareholder return.

Our mix of Total DirectCompensation places roughly two-thirds to three-quarters of an Executive’spotential compensation “at risk” (annual incentive pay plus equitygrants).  This weighting of “at risk”compensation requires our Executives to deliver value to the Company andstrengthens the tie between our Executive’s performance and long-termshareholder return.

Actual pay earned by ourExecutives in prior years from annual cash incentive opportunities is not takeninto account by the Compensation Committee in making a current year’scompensation decisions for salary increases or target annual incentivecompensation.  Instead, the CompensationCommittee principally uses benchmarking data to assist it in positioning acurrent year’s salary and target incentive annual opportunities atapproximately the 75th percentile. In determining equity award levels, the Committee will at times, forretention purposes, consider compensation likely to be earned from prior years’equity grants in adjusting upward a current year’s equity award allocation fora particular individual.  This adjustmentis in addition to benchmarking at approximately the 75th percentile. This occurred for two Executives in 2006.

We believe that ourbenefits and perquisites are competitive in the marketplace. The difference inphilosophy between the competitive positioning we use for our benefits andperquisites and the 75th percentile we use in setting Total DirectCompensation is based on our belief that while basic benefits are important toemployees and their welfare, Total Direct Compensation is the key driver ofindividual performance and Company success.

*Total DirectCompensation*

In January 2006,Dendrite management retained Towers Perrin, an international management consultingfirm specializing in compensation and benefits practices, to provide anexecutive compensation review.  The 

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purpose of the review was to compare Total DirectCompensation of our Executives with comparable positions in themarketplace.  To complete this review,Dendrite’s management provided Towers Perrin with information on our 2005 basesalaries, actual annual incentive pay earned for 2004 performance, and 2005equity awards.  The roles andresponsibilities of our Executives were reviewed, and in consultation withTowers Perrin, comparable executive positions in the marketplace wereidentified.

The elements of TotalDirect Compensation were compared across three separate market samples.  These were:

·                  Technologycompanies participating in Towers Perrin’s 2005 Executive Compensation Databasewith annual revenues between $100 million and $2 billion. This data cut of 21companies enabled Dendrite to compare its compensation practices to a criticalmass of employers in the same general industry.

·                  General industrycompanies participating in Towers Perrin’s 2005 Executive Compensation Databasewith annual revenues between $100 million and $1 billion. This data cut of 90companies allowed Dendrite to compare its compensation practices with employersof approximately the same size.

·                  Companiesparticipating in the 2005 Radford Executive Compensation Survey with annualrevenues between $200 million and $500 million. This data cut of 117 companiesallowed Dendrite to compare its compensation practices with employers ofapproximately the same size in the Technology and Life Sciences industries.

The results of thisreview were used by Dendrite management and our Compensation Committee asgeneral guidance for our 2006 decisions on base salary, annual incentive targetsand equity grants.  The CompensationCommittee compared our Executives’ base salaries, target annual incentive payand equity awards with the 75th percentile of themarket survey for each element. Additionally, the Committee considered internal pay equity amongexisting Executives and internal pay equity of existing Executives withtargeted compensation of newly-hired Executives.

*Elements ofCompensation*

The total compensationpackage for our Executives consists of the following elements:

·                  Base salary

·                  Annual cashincentive

·                  Long-termincentives (equity-based awards and, in certain cases, long-term cash incentiveawards)

·                  Health andwelfare benefits

·                  Retirementsavings plans

·                  Perquisites

Each element isconsidered individually and adjusting any one element does not necessarilyaffect other elements.  This approach hasallowed the Company to adjust elements of compensation strategically byfocusing on the issues that most affect the individual Executive.

The combination of theseelements is designed to:

·                  provideExecutives the opportunity to realize a highly competitive pay package

·                  motivateindividual and Company performance by putting a high percentage of compensationat risk

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·                  account for thewelfare of our executives and their families

·                  provide limitedperquisites to Executives.

While Dendrite has noestablished policy for allocating the mix of pay elements, as a result offollowing the above pay practices, the actual mix of compensation elements forExecutives is between:

·                  approximately25% - 35% base salary

·                  approximately20% - 35% annual cash incentive

·                  approximately35% - 55% long-term incentives (equity-based grants and long-term cashincentive)

The 2006 pay mix at “target”levels for the named executive officers (NEOs) identified in our SummaryCompensation Table in this report were:  

| Executive        | ** ** | ** ** | ** ** | **Base Salary** | ** ** | **2006 Annual  Incentive at  Target** | ** ** | **2006  LTI Value at  Target** | ** ** | **Total Direct  Compensation at**

**Target** | ** ** |
|------------------|------------|------------|------------|----------------------|------------|-------------------------------------------------|------------|------------------------------------------|------------|---------------------------------------------------------|------------|
| John Bailye      |       |       | 24         | %                    |       |                                            | 24         | %                                        |       |                                                    | 53         | % |   |   | 100 | % |   |
| Joseph Ripp      |       |       | 26         | %                    |       |                                            | 20         | %                                        |       |                                                    | 54         | %* |   |   | 100 | % |   |
| Jeff Bairstow    |       |       | 32         | %                    |       |                                            | 17         | %                                        |       |                                                    | 50         | %* |   |   | 100 | % |   |
| Natasha Giordano |       |       | 27         | %                    |       |                                            | 27         | %                                        |       |                                                    | 45         | % |   |   | 100 | % |   |
| Jean Paul Modde  |       |       | 33         | %                    |       |                                            | 33         | %                                        |       |                                                    | 35         | % |   |   | 100 | % |   |

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*                    Includesspecial LTI cash incentive program for J. Ripp and J. Bairstow

The Committeebelieves that this mix of Total Direct Compensation, combined with Dendrite’spremium pay philosophy, offers our Executives the opportunity to earn a highlycompetitive pay package based on their efforts and Company success, whilesignificantly limiting annual incentive pay and long-term incentivecompensation unless the Company performs well.

*Base Salary*

The Committeetargets base salary for our Executives at approximately the 75th percentile of the market survey.  This philosophy reflects our belief that inorder to attract and retain top talent, it is necessary to offer an attractivebase pay package to our Executives.

Our President andChief Operating Officer (“President/COO”) reviews our Executives’ compensationwith the Compensation Committee to determine if any adjustments should beconsidered.  When assessing an Executive’sbase salary, the President/COO and the Compensation Committee take many factorsinto account.  Some of the factorsconsidered for any one Executive may be:

·                  overall Companyperformance

·                  the Executive’srelative contribution to the Company’s overall performance

·                  the scope andresponsibility of the Executive compared with market survey data

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·                  theindividual’s responsibilities and pay relative to other positions in theCompany

·                  currentbase salary relative to the 75th percentile of the market survey

After reviewing these factors early in 2006, the Compensation Committeedecided that no salary increases were warranted for the majority of ourExecutives.  One of the main drivers ofthis decision was the current positioning of the Executives’ base salaries tothe 75th percentile. However, there were some exceptions.

Midway through 2006, the Compensation Committee approved a $35,000promotional increase for Natasha Giordano. The Committee believed this increase was appropriate in light of anexpansion of Ms. Giordano’s responsibilities, which included new responsibilityfor an additional principal customer and increased responsibility in othermajor operating areas.

Also, in late 2005, after an extensive search process, the Board ofDirectors hired Joseph Ripp as the Company’s President/COO and Jeff Bairstow asthe Company’s Executive Vice President and Chief Financial Officer(EVP/CFO).  The Compensation Committeeapproved base salaries for each of these Executives above the 75th percentilefor their positions.  For each position,the Compensation Committee believed that it was necessary to provide basesalary above the 75th percentile in order to attract and secure these highlyexperienced and qualified candidates.

The 2006 base salary for John Bailye, our Chairman and CEO, was atapproximately the 50th percentile of the market survey.  The Committee considered this to beappropriate and consistent with our 2005 financial performance and our approachof tying a greater portion of our CEO’s compensation to Company performance andsuccess.

*Annual Incentive Pay*

The Compensation Committee sets target annual incentive pay using the75th percentile of the market survey as aguide.  Company management(President/COO) recommends to the Compensation Committee, and the Committeereviews and establishes, what they believe are aggressive corporate financialperformance goals which must be met for an Executive to achieve a 100% payoutof an annual incentive target.  In recentyears, the Company has not paid full target annual incentive pay to ourExecutives due to below target performance. In some instances, Executives did not receive any annual incentivepayout.

In March 2006, the Compensation Committee approved the DendriteManagement Incentive Plan (the “DMIP”) for 2006. The DMIP is our annual cashincentive plan for Executives and key U.S. employees.  Under the DMIP, annual cash incentive awardopportunities are provided to employees in certain positions including allExecutives.  Payment of awards is subjectto achieving pre-established Company financial objectives and individualstrategic objectives.

The 2006 annual incentive awards were based on a particular targetamount for each employee. The targets are set as cash amounts and not as apercentage of base salary.  One-half ofeach individual’s annual target incentive was based on Company financialobjectives and one-half was determined and payable semi-annually based onindividual strategic objectives.

The “target” incentive amount based on Company financial objectives isearned if the objectives are met.  Forperformance below the objectives, the Executive could earn a portion of thetarget incentive amount, so long as a threshold level for all objectives isachieved.  For performance exceeding theobjectives, payments in excess of the target incentive amount are earned, up to150% of the target incentive amount.

For 2006, our President/COO recommended, and the Compensation Committeeapproved, the following Company financial targets:

·                  revenue

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·                  profitability(using adjusted EBITDA)

·                  costsavings targets

These financial measures were considered to be the key factors for theCompany’s short and long term success. Cost savings targets were the cost savings identified through ourOperational Effectiveness (OE) initiative undertaken during 2006.

Adjusted EBITDA is calculated as GAAP operating income adjusted toremove the impact of: depreciation; amortization; restructuring charges; otherOE related expenses such as duplicate operations, moving costs, andstrategic/consulting costs related to execution of the OE program; and specialcosts related to the Company’s assessment of strategic alternatives.

All three financial targets must have been met at a minimum of 90% oftarget performance in order for the Company’s financial portion of the annualincentive award to be paid.

For 2006, Company management and the Compensation Committee continuedthe practice of setting what they believed to be aggressive corporateperformance goals.  The financialobjectives were consistent with our Board-approved financial plan.  The 2006 financial targets were:
| **Performance Goal** | ** ** | ** ** | ** ** | **Target** | ** ** | **Percent of  Corporate  Portion of  Annual  Incentive** | ** ** | **Payout  below  90%  of Target*** | ** ** | **Payout at  90%  of Target** | ** ** | **Payout at  100%  of Target** | ** ** | **Payout  Above  100%  of Target** | ** ** |
|---------------------------|------------|------------|------------|------------|------------|--------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|------------------------------------------|------------|-----------------------------------------|------------|
| Revenue                   |       | $          | 463M       |       | 33.3       | %                                                                  | 0          | %                                       | 50         | %                                       | 100        | %                                        | Up to 150% |                                    |
| Adjusted EBITDA           |       | $          | 59M        |       | 33.3       | %                                                                  | 0          | %                                       | 50         | %                                       | 100        | %                                        | Up to 150% |                                    |
| Cost Savings Target       |       | $          | 43M        |       | 33.3       | %                                                                  | 0          | %                                       | 50         | %                                       | 100        | %                                        | Up to 150% |                                    |

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*                    Ifactual achievement against any of these financial objectives falls below the90% threshold, no part of the corporate portion of the annual incentive wouldbe paid for 2006.

Our actual 2006 results against our Company financial performanceobjectives were:  (A) revenue: between90% and 100% of target; (B) adjusted EBITDA: less than 90% of target; and (C)costs savings: greater than 100% of target. Because the Company failed to achieve at least 90% of target on allthree Company financial objectives, no payout for the corporate portion of theannual incentive award was earned or payable. As a result, for 2006, the Executives were only eligible to earn anannual incentive payment based on their individual strategic objectives(one-half of their total annual incentive target opportunity).

The individual strategic objectives for the CEO were established by theCompensation Committee. All other individual strategic objectives for 2006 wereestablished by our President/COO and/or CEO. The targets were what the President/COO or CEO believed to be keyindicators of the success of the Executive’s business unit and areas ofbusiness responsibility.  Depending onthe individual Executive, factors could include unit revenue, unit operatingprofit or margin, cost savings, organizational realignment, and other similarindividual performance indicators. Achievement against individual strategic objectives was measured andpaid on a semi-annual basis.  For theExecutives, achievement against each individual strategic objective wasreviewed by the President/COO or CEO and approved by the CompensationCommittee.  Annual incentive awardsearned against achievement of strategic objective were calculated as follows.

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| Achievement Against Strategic Objectives | ** ** | ** ** | ** ** | **Percent of  Target Earned** | ** ** |
|---------------------------------------------------------|------------|------------|------------|-----------------------------------------|------------|
| Less than 90%                                           |       | 0          | %          |
| 90% up to 100%                                          |       | 50         | %          |
| 100%                                                    |       | 100        | %          |
| Greater than  100%                                      |       | 125        | %          |

 

For each individual strategic objective at least 90% achievement mustbe reached to be eligible for any payout; from 90% achievement up to 100%achievement, 50% is paid; at 100% achievement, 100% is paid; and above 100%achievement, 125% is paid.

The 2006 individual strategic objectives for our NEOs were:

·                  Mr.Bailye’s individual strategic objectives were total Company performance againsttarget revenue, adjusted EBITDA, cost savings targets and earnings per share.The Company met its revenue goals in the first half, but not for the secondhalf of the year; the adjusted EBITDA threshold was not achieved in either halfof the year; cost savings were achieved in each half; and EPS was not achievedin either half.  The result was that theCompensation Committee approved a payment of 19% of Mr. Bailye’s total 2006annual target incentive.  This actualpayout positioned his annual incentive below the 50th percentile of market.

·                  Individualstrategic objectives for Ms. Giordano and Mr. Modde were based primarily onbusiness unit performance.  Each also hadadditional strategic objectives related to cost savings and organizationalrestructuring.  The CompensationCommittee approved 53% of Ms. Giordano’s total 2006 incentive target based onher achievement against her individual strategic objectives; and the Committeeapproved 35% of Mr. Modde’s total 2006 annual incentive target based on hisachievement against his individual strategic objectives.

The 2006 annual incentives award opportunities (both Company financialobjectives and individual objectives) for Mr. Ripp and Mr. Bairstow were eachguaranteed as a part of their employment agreements entered into in 2005.  The Compensation Committee believed thatthese bonus guarantees were necessary to attract Messrs. Ripp and Bairstow tothe Company and to encourage them to implement operating changes andinvestments in our business necessary to best position Dendrite for long-termgrowth and success.

Under the DMIP, the Compensation Committee also has discretion toadjust any proposed annual incentive award upward or downward by 20%.  Ms Giordano’s DMIP payment included adiscretionary adjustment of 8% of her total 2006 payout to acknowledge herefforts towards the success of the Company. Additionally, at the time Ms. Giordano’s base salary increase wasapproved, the Committee approved a discretionary mid-year bonus of $15,000 toacknowledge her continued success with key customers.

*Equity-Based Awards*

The Compensation Committee seeks to tie Executive financial reward toincreases in shareholder value.  TheCommittee believes that allocating a significant portion of an Executive’scompensation opportunity to equity focuses the Executive on issues important toshareholder value.  Dendrite applies thesame premium pay philosophy to equity-based compensation for our Executives.

Equity-based awards for our Executives are generally madeannually.  In 2005, the Company soughtshareholder approval of additional shares for our primary equity-basedcompensation plan.  The proposedadditional

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plan shares were intended to fund the plan forapproximately one****additional year.  For 2005, equity-based awards were made inMay 2005 following shareholder approval of the additional plan shares.

In 2006, management, the Compensation Committee and the Boardconsidered how to best use the limited number of plan shares available for 2006equity-based grants.  The President/COOrecommended and the Compensation Committee and Board approved the use ofrestricted stock units (RSUs) and also limited the number of executives whowould receive equity-based grants in 2006. The decision to use RSUs with a limited group of executives was based onan evaluation of:

·                  conservingthe limited number of remaining plan shares

·                  thenew accounting costs for stock options due to the adoption of FAS 123(R)

·                  theretention value of RSU awards (which are not dependent solely upon appreciationin the value of our common stock following the date of grant) compared with thelower retention value and the lower actual realized values from our stockoptions granted in prior years

·                  reducingthe plan’s rate of share usage and slowing the growth in plan shares grantedrelative to total shares outstanding

Indetermining 2006 equity-based awards for individual Executives, the Committeeconsidered a number of different factors including:

·                  thevalue of individual equity-based grants relative to the 2006 market survey data

·                  theExecutives’ current expectations

·                  therelative value of the awards compared with the level and expected contributionof each of the Executives

·                  fortwo Executives, for retention purposes, the likely realizable values fromcurrently outstanding stock options

The Committee also considered the employment agreement commitment toMr. Ripp, which was to provide a higher annual equity-based award thanother Executives excluding the CEO.

After considering these factors, the Committee approved the following2006 equity-based awards: 

| Executive        | ** ** | ** ** | ** ** | **Number of  RSUs approved  by the Committee** | ** ** |
|------------------|------------|------------|------------|--------------------------------------------------------------------|------------|
| John Bailye      |       | 100,000    |       |
| Joseph Ripp      |       | 55,000     |       |
| Jeff Bairstow    |       | 45,000     |       |
| Natasha Giordano |       | 40,000     |       |
| John Paul Modde  |       | 25,000     |       |

 

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The 2006 equity-basedawards resulted in the following equity award values against our market surveydata:

·                  Mr.Bailye: between the 50th and 75th percentile

·                  Mr.Ripp:  approximately the 75th percentile

·                  Mr.Bairstow: approximately the 75th percentile

·                  MsGiordano:  above the 75th percentile,which also reflected a retention factor

·                  Mr.Modde: approximately the 75th percentile

*Long-Term Cash Compensation Arrangement*

In February 2006, the Compensation Committee approved a bonusarrangement for Mr. Ripp, our President/COO, and Mr. Bairstow, ourEVP/CFO.  The purpose of the arrangementwas to create an incentive to increase shareholder value.

The Committee believed that the implementation and success of ourrestructuring, cost containment and growth plans proposed by Mr. Ripp and Mr.Bairstow would be key to creating long-term shareholder value.  To provide an added incentive to Mr. Ripp andMr. Bairstow for achieving these objectives, the Board approved a long-termcash bonus arrangement for each individual.  Under this arrangement, incentive payments in specific amounts would bemade based on appreciation in the Company’s common stock value above threetargeted levels. The targeted levels could be met at any point during a fouryear period based on the average daily closing price of the Company’s commonstock over a 45 consecutive trading day period. Up to two-thirds of thepotential bonus could be earned at the end of two years and one-third could beearned at the end of three years.  Themaximum award for Mr. Ripp was $2.0 million and for Mr. Bairstow $350,000.To be eligible for payment of any portion of the incentive bonus the Executivemust be actively employed by the Company on the payment date.  Under theterms of the bonus plan, the full bonus award is payable upon a change incontrol.  The consummation of theproposed merger with Cegedim SA would constitute a change in control resultingin payment of the full bonus amount for each individual.

*Benefits*

We believe that a company of Dendrite’s size needs to offer itsemployees comprehensive health and welfare benefits in order to be competitivein the marketplace.  To that end, for2006 our Executives as well as all other full-time employees are entitled tocomprehensive medical, dental, vision, life insurance, long-term disability,short-term disability, accidental death, business travel accident, and anemployee stock purchase plan.

These benefit programs are designed to provide certain basic quality oflife benefits and financial protection to our employees and their families. Webelieve these benefits are both reasonable and generally comparable to benefitsoffered at other similar-sized companies in our industry.

*Retirement Savings*

Dendrite provides a 401(k) savings plan for our U.S. employees underwhich employees may contribute on a pre-tax basis up to 40% of their eligibletotal compensation (which generally consists of salary, commissions and annualincentive), up to the IRS maximum amounts. Dendrite matches 50% of the first 6% of contributed pay.

We also offer a voluntary deferred compensation plan (DCP) as acost-effective benefit to employees who meet a minimum annual salary threshold.The DCP provides participants with a way to delay receipt of income and thusincome taxation until a future date. While deferred, the amount of compensationis not reduced by income taxes, and the executive can choose to have this “pre-tax”amount deemed invested in one or more hypothetical investments. Similar to the401(k) savings plan, these investments offer a broad range of investmentchoices to allow

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participants the ability to structure theirinvestments in a way that suits their risk and return objectives.  However, because the plan is administered bya different provider than the 401(k) plan, the funds are distinct frominvestment funds offered under our 401(k) plan. Although the executive willeventually owe income taxes on any amounts distributed from the DCP, theability to invest on a “pre-tax” basis allows for a higher ultimate after-taxreturn. We do not provide any matching contributions to the DCP.

Participants in the Deferred Compensation Plan are also eligiblefor a death benefit payable to the participant’s designated beneficiary.

*Perquisites*

The Company has limited our Executive’s perquisites to those that webelieve are standard for executives in their position in the industry.Specifically, Executives have:

·                  financialplanning services in an annual amount up to $10,000 for a grandfathered groupof Executives.  NEOs included in thisgroup are Mr. Bailye, Ms. Giordano and Mr. Modde

·                  enhancedlife insurance and long-term disability benefits for Mr. Ripp andMr. Bailye

·                  Mr.Bairstow, who was hired in December 2005, is also reimbursed for his reasonabletransportation expenses from his principal residence at time of hire to theCompany’s headquarters and for his temporary housing and automobile expenses

The cost of perquisites for our NEOs is included in the “All OtherCompensation” column of the Summary Compensation Table.

*Incentive Stock Bonus Program*

In 1999, the Compensation Committee approved the adoption of anincentive stock bonus program whereby senior executives may elect to receiveall or a portion of their incentive bonus (including any amounts earned butdeferred) in shares of common stock (we call these “bonus shares”).  We believe that this encourages stockownership by our executive officers and aligns their interests with ourshareholders.

The number of bonus shares equals the amount of the executive officer’sbonus which he or she elects to receive in common stock, divided by the closingprice of the Company’s common stock immediately prior to the bonus paymentdate. To encourage executive officers to receive their bonus in bonus shares,the Company grants an incentive to each executive officer.  Each executive officer who elects to receivebonus shares receives a stock option for the same number of shares as the bonusshares, calculated without giving effect to any bonus shares withheld to paywithholding taxes (we call these “tandem options”). Tandem options vest on thefirst anniversary of the bonus payment date. The tandem options and the bonusshares are issued under our 1997 Stock Incentive Plan.  No Executives participated in this program in2006.

*Severance Protection*

We provide severance protection to senior executives whose employmentis terminated without cause. This helps us to compete with other companies inrecruiting and retaining qualified executives. When recruiting an executivefrom another company, the executive in most cases will seek contract terms thatprovide compensation if his or her employment is terminated in cases in whichthe executive has not engaged in misconduct. We provide separation pay andbenefits on the condition that the departed executive not compete with us,solicit our customers and employees, or take other actions that harm ourbusiness, for specified periods following termination.

In line with whatwe believe is competitive practice, we provide a higher level of severancepayments and benefits if the executive is terminated without cause or elects toterminate employment for good reason in connection with a change in control.These protections provide a number of important benefits. If a change incontrol event is developing, executives who lack these assurances seekemployment elsewhere. Change in control transactions take time to unfold, and astable management team helps to ensure that our business operations continuewithout undue disruption.

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Under our current equity plans, we provide for acceleration of vestingof equity awards for all plan participants upon the occurrence of a change incontrol, without regard to whether the individual will be terminated. In thisway, plan participants can realize value from their equity awards in the sameway as shareholders in a change in control transaction. We also believe thatthis vesting helps maintain the focus of plan participants if a potentialchange in control event develops.

Details concerning our employment agreements with our NEOs (includingseverance protection) are included under “Potential Payments Upon Terminationor CIC” in this report.

*Appointment of President/Chief Operating Officer and Executive VicePresident/Chief Financial Officer*

Joseph Ripp was appointed as President and Chief Operating Officer ofthe Company on November 1, 2005, and Jeff Bairstow was appointed asExecutive Vice President and Chief Financial Officer of the Company onDecember 20, 2005.

In approving the compensation arrangement and employment agreement foreach of these Executives (see “Potential Payments Upon Termination or CIC” inthis report), the Compensation Committee considered the extensive experienceand substantial contribution that each of these Executives was expected to maketo the Company and considered what would be a competitive compensation packageto attract and retain each of these Executives.

*2006 Revision of CEO Employment Agreement*

The employment agreement for Mr. Bailye, our Chairman and CEO, was revisedin May 2006.  His prior employmentagreement was entered into in 1997.  TheCommittee began its discussion and review of this agreement in 2005.  The primary purposes of the revision were toequalize severance protection for a non-change in control termination withseverance arrangements entered into with other senior executives of the Companyand to bring Mr. Bailye’s employment agreement up to date with the Company’scurrent practices. The 2006 agreement involved no increase in current basesalary or annual target bonus.

*Tax and Accounting Considerations*

The Compensation Committee considers the deductibility of executivecompensation under Internal Revenue Code (IRC) Section 162(m), whichprovides that the Company may not deduct compensation of more than $1,000,000that is paid to certain executives unless the compensation above that thresholdqualifies as “performance-based” within the meaning of Section 162(m).

Base salary is fixed each year and is not “performance-based” withinthe meaning of Section 162(m).  Awardsunder our annual incentive plan do not qualify as “performance-based” underSection 162(m) because the performance criteria used under the plan is notshareholder approved and, in any event, all or part of such award may not bebased entirely upon objective criteria.  Our RSUs do not qualify as “performance-based” under IRC Section 162(m)because the amount of the award is not based solely on the increase in thevalue of the stock after the grant date. Compensation realized from stock option grants under our shareholderapproved 1997 equity plan qualifies as “performance based” under IRC Section162(m).  However, compensation earnedfrom stock options granted under our new hire authorization equity plan inconnection with hiring new executives (including the initial awards made toMr. Ripp and Mr. Bairstow upon their hiring) is not eligible forexclusion under the Section 162(m) because this plan is notshareholder approved.

Beginning in fiscal 2006, the Company began accounting for stock-basedcompensation in accordance with Statement of Financial Accounting Standards No.123 (revised), Share-Based Payment (“FAS 123(R)”).  The Compensation Committee took this newaccounting expense into account in determining not to make annual stock optiongrants in 2006.

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*Adjustment or Recovery of Awards*

The Company does not have a general policy to recover incentivepayments if the relevant performance measures and financial targets on whichthey were based are restated or otherwise adjusted in a manner that wouldreduce the size of a payment already made. The Company would review this, if and when a situation arose.

However, the Company’s option grant agreements generally provide forforfeiture of awards and a right of the Company to repayment of gain realizedon option exercises in the event of (i) a serious breach of conduct by anoptionee or (ii) breach by an optionee of his or her employment agreement,including a breach of the optionee’s obligations of confidentiality or dutiesnot to compete with the Company or solicit Company employees.

Further, under Section 304 of the Sarbanes-Oxley Act, if the Company isrequired to restate its financial results due to material noncompliance withany financial reporting requirements as a result of misconduct, the CEO and CFOcould be required to reimburse the Company for (1) any bonus or otherincentive-based or equity-based compensation received during the twelve monthsfollowing the first public issuance of the non-complying document, and (2) anyprofits realized from the sale of securities of the Company during those twelvemonths.

*Stock Ownership Requirements*

In order to ensure that our Executives’ interests are closely alignedwith the interests of our shareholders, we believe that our Executives shouldown a significant amount of Company stock.

In 1999, the Board of Directors adopted a Share Ownership Program whichestablishes stock ownership requirements for our senior management and ourdirectors. The program was amended in 2005. Under the program, members of our senior management and our Board ofDirectors must achieve and maintain ownership of specified amounts of theCompany’s stock by certain time periods.

Each director must achieve 25% of the ownership level by the fourth anniversaryof the effective date of the program or the date of his or her appointment; 50%of the ownership level within five years of that date; and 100% of theownership level within six years.

Each member of senior management who is subject to the program mustachieve 50% of the required ownership level within five years of the effectivedate of the program or the date of hire or promotion to the position; 75% ofthe ownership level within six years of this date; and 100% of the ownershiplevel within seven years.

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**Executive Compensation**

Thefollowing table sets forth compensation information for the Company’s ChiefExecutive Officer, Chief Financial Officer and the other three most highlycompensated executive officers of the Company (the “Named Executive Officers”).

**Summary Compensation Table forFiscal 2006**
| (A)                                                   | ** ** | ** ** | ** ** | **(B)**  | ** ** | **(C)**         | ** ** | **(D)**        | ** ** | **(E)**                | ** ** | **(F)**                 | ** ** | **(G)**                                                 | ** ** | **(H)**                                                                                            | ** ** | **(I)**                              | ** ** | **(J)**        | ** ** |
|-------------------------------------------------------|------------|------------|------------|----------|------------|-----------------|------------|----------------|------------|------------------------|------------|-------------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|----------------|------------|
| **Name and Principal Position**        | ** ** | ** ** | ** ** | **Year** | ** ** | **Salary  ($)** | ** ** | **Bonus  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **Non-  Equity  Incentive  Plan  Compen-  sation  ($)** | ** ** | **Change in  Pension  Value  and  Non-  qualified  Deferred  Compen-  sation  Earnings  ($)** | ** ** | **All  Other  Compen-  sation  ($)** | ** ** | **Total  ($)** | ** ** |
| John E. Bailye,                                       |       | 2006       |       | 525,000  |       | 0               |       | 276,222        |       | 2,753,391              |       | 98,458                  |       | 0                                                       |       | 24,516                                                                                             |       | 3,677,587                            |       |
| Chairman of the Board and Chief  Executive Officer    |       |       |       |     |       |            |       |           |       |                   |       |                    |       |                                                    |       |                                                                                               |       |                                 |       |
| Joseph A. Ripp,                                       |       | 2006       |       | 800,000  |       | 600,000         |       | 1,614,422      |       | 0                      |       | 0                       |       | 0                                                       |       | 762                                                                                                |       | 3,015,946                            |       |
| President and Chief Operating Officer                 |       |       |       |     |       |            |       |           |       |                   |       |                    |       |                                                    |       |                                                                                               |       |                                 |       |
| Jeffrey J. Bairstow,                                  |       | 2006       |       | 475,000  |       | 240,000         |       | 124,300        |       | 0                      |       | 0                       |       | 0                                                       |       | 128,698                                                                                            |       | 1,081,553                            |       |
| Executive Vice President and Chief  Financial Officer |       |       |       |     |       |            |       |           |       |                   |       |                    |       |                                                    |       |                                                                                               |       |                                 |       |
| Natasha Giordano,                                     |       | 2006       |       | 273,333  |       | 26,106          |       | 136,883        |       | 139,885                |       | 138,193                 |       | 0                                                       |       | 6,600                                                                                              |       | 774,670                              |       |
| President, Global Business                            |       |       |       |     |       |            |       |           |       |                   |       |                    |       |                                                    |       |                                                                                               |       |                                 |       |
| Jean-Paul Modde,                                      |       | 2006       |       | 275,000  |       | 0               |       | 69,056         |       | 161,313                |       | 96,250                  |       | 0                                                       |       | 0                                                                                                  |       | 601,619                              |       |
| President, Asia-Pacific                               |       |       |       |     |       |            |       |           |       |                   |       |                    |       |                                                    |       |                                                                                               |       |                                 |       |

 

**Columns (C), (D) & (G) —Salary, Bonus and Non-Equity Incentive Plan Compensation**

The NEOs may defera portion of their salary (column (C)), bonus (column (D)) and annual cashincentive award (column (G)) on a pre-tax basis under the Dendrite 401(k)savings plan and the Deferred Compensation Plan.

During fiscal2006, Mr. Bailye, Mr. Bairstow and Ms. Giordano each deferred a portion of hisor her compensation under the 401(k) savings plan.  Mr. Bailye acquired 2,163****Dendriteshares under the 401(k) savings plan in fiscal 2006.  Mr. Bairstow also deferred a portion of hiscompensation under the Deferred Compensation

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Plan.  Forinformation regarding the Deferred Compensation Plan, see “Non-QualifiedDeferred Compensation” below.

For Mr. Ripp andMr. Bairstow, the amounts in column (D) represent the guaranteed annualincentive awards for fiscal 2006 to which they were entitled under theiremployment agreements entered into in 2005. For Ms. Giordano, the amount in column (D) reflects a $15,000discretionary bonus paid to her in 2006 as well as a discretionary adjustmentto her DMIP payment for fiscal 2006 in the amount of $11,106.  These bonus amounts are described above inthe “Annual Incentive Pay” section of the CD&A.

The amountsreported in column (G) reflect the amounts earned and paid to each NEO for fiscal2006 under Dendrite’s Management Incentive Plan (DMIP), which is the Company’sannual cash incentive plan.  For furtherinformation regarding the DMIP, see “Annual Incentive Pay” in the CompensationDiscussion and Analysis.

**Column (E) — Stock Awards**

Amounts shownreflect the compensation cost recognized in fiscal 2006 for financial statementreporting purposes for restricted stock units (RSUs) granted in 2006 and 2005,as determined in accordance with FAS 123R (excluding the impact of estimatedforfeitures related to service-based vesting conditions).  For RSUs, fair value is calculated using the closing price of the Company’s commonstock on the date immediately preceding the grant date.  Additional information concerning the Company’saccounting for RSUs granted in 2006 and 2005 is included in Note 10 (under theheading “Restricted Stock Units”) of the Notes to Consolidated FinancialStatements in our 2006 Annual Report on Form 10-K (“2006 Form 10-K”).  Holders of RSUs are not entitled todividends.  There were no forfeitures ofRSUs by the NEOs during fiscal 2006. Because these amounts reflect the Company’s accounting expense, they donot correspond to the actual value that will be recognized by the NEOs.

**Column (F) — Option Awards**

Amounts shownrepresent the compensation cost recognized in fiscal 2006 for financialstatement reporting purposes for the fair value of stock options granted in2006, 2005, 2004, 2003 and 2002, in accordance with FAS 123R. Pursuant to SECrules, the amounts shown exclude the impact of estimated forfeitures related toservice-based vesting conditions.  Forinformation on the valuation assumptions with respect to options granted infiscal 2006, 2005 and 2004, refer to Note 1 (under the heading “Stock BasedCompensation”) to our 2006 Form 10-K. For information on the valuation assumptions with respect to optionsgranted in fiscal 2003 and 2002, refer to Note 1 (under the heading “StockBased Compensation”) to our Consolidated Financial Statements in our Form 10-Kfor fiscal 2003.  There were noforfeitures of stock options by the NEOs during fiscal 2006.** **Because theseamounts reflect the Company’s accounting expense, they do not correspond to theactual value that will be recognized by the NEOs.

**Column (H) — Change in PensionValue and Nonqualified Deferred Compensation Earnings**

The Company doesnot maintain any defined pension benefit plans.**** No above-market rates (as defined in SECrules) were earned under our non-qualified deferred compensation plan in fiscal2006.

**Column (I) — All OtherCompensation**

The amountsreported in this column represent the aggregate dollar amount for fiscal 2006for each NEO for perquisites and other personal benefits, “gross-ups” or otheramounts reimbursed for the payment of taxes, Company contributions to the taxqualified 401(k) savings plan and life insurance premiums paid by the Company.The following table shows the specific amounts included in the All OtherCompensation column for fiscal 2006.

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**All OtherCompensation**
| **Name**     | ** ** | ** ** | ** ** | **Perquisites  and Other  Personal  Benefits  ($)** | ** ** | **Tax  Reimbursements  ($)** | ** ** | **Company  Contributions  to Defined  Contribution  Savings Plan  ($)** | ** ** | **Life  Insurance  Premiums  ($)** | ** ** |
|--------------|------------|------------|------------|----------------------------------------------------------|------------|------------------------------|------------|-----------------------------------------------------------------------------------|------------|------------------------------------|------------|
| Mr. Bailye   |       | 17,450     |       | 0                                                        |       | 6,600                        |       | 466                                                                               |       |
| Mr. Ripp     |       | —     |       | 0                                                        |       | 0                            |       | 762                                                                               |       |
| Mr. Bairstow |       | 71,483     |       | 50,615                                                   |       | 6,600                        |       | 0                                                                                 |       |
| Ms. Giordano |       | —     |       | 0                                                        |       | 6,600                        |       | 0                                                                                 |       |
| Mr. Modde    |       | —     |       | 0                                                        |       | 0                            |       | 0                                                                                 |       |

 

The aggregatevalue of perquisites and other personal benefits for Mr. Bailye in fiscal2006 was $17,450. This amount includes: reimbursement for cost of financialplanning services ($10,000) and home office and related expenses ($7,450).  The aggregate value of perquisites and otherpersonal benefits for Mr. Bairstow in fiscal 2006 was $71,483. This amountincludes: the cost of commuting between Mr. Bairstow’s out-of-state residenceand Dendrite’s principal offices in New Jersey including car and rentalresidence ($71,077) and the income imputed to Mr. Bairstow in connection withhis death benefit under the Deferred Compensation Plan ($406).  Mr. Bairstow received tax reimbursement forthe commuting costs.

**Grants of Plan-Based Awards During Fiscal 2006**

The following table provides information concerning the annual cashincentive plan awards and long-term equity awards made to each of our NEOs infiscal 2006 and the Company’s long-term cash compensation arrangement withcertain NEOs.

 
| (A)                 | ** ** | ** ** | ** ** | **(B)**         | ** ** | **(C)**                           | ** ** | **(D)**                                                                                            | ** ** | **(E)**                                                               | ** ** | **(F)**                                                      | ** ** | **(G)**                | ** ** | **(H)**         | ** ** |
|---------------------|------------|------------|------------|-----------------|------------|-----------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|--------------------------------------------------------------|------------|------------------------|------------|-----------------|------------|
| ** **          | ** ** | ** ** | ** ** | ** **      | ** ** | **Date of  Compen-  sation** | ** ** | **Estimated Future Payouts Under  Non-Equity Incentive Plan Awards** | ** ** | **All  Other  Stock  Awards:  Number  of Shares  of Stock** | ** ** | **Grant  Date Fair  Value  of Stock  and  Option** | ** ** |
| **Name**            | ** ** | ** ** | ** ** | **Grant  Date** | ** ** | **Committee  Approval**           | ** ** | **Threshold  ($)**                                                                                 | ** ** | **Target  ($)**                                                       | ** ** | **Maximum  ($)**                                             | ** ** | **or Units  (#)** | ** ** | **Awards  ($)** | ** ** |
| John E. Bailye      |       |       |       |            |       | 131,250                           | (1)        | 262,500                                                                                            | (1)        | 393,750                                                               | (1)        |                                                         |       |                   |       |
|                     |       |       |       |            |       | 16,406                            | (2)        | 262,500                                                                                            | (2)        | 328,123                                                               | (2)        |                                                         |       |                   |       |
|                     |       | 5/1/2006   |       | 4/24/2006       |       |                              |       |                                                                                               |       |                                                                  |       | 100,000                                                      |       | 1,243,000              |       |
| Joseph Ripp         |       |       |       |            |       | 666,667                           | (3)        | 1,333,334                                                                                          | (3)        | 2,000,000                                                             | (3)        |                                                         |       |                   |       |
|                |       | 5/1/2006   |       | 4/24/2006       |       |                              |       |                                                                                               |       |                                                                  |       | 55,000                                                       |       | 683,650                |       |
| Jeffrey J. Bairstow |       |       |       |            |       | 116,667                           | (3)        | 233,334                                                                                            | (3)        | 350,000                                                               | (3)        |                                                         |       |                   |       |
|                     |       | 5/1/2006   |       | 4/24/2006       |       |                              |       |                                                                                               |       |                                                                  |       | 45,000                                                       |       | 559,350                |       |
| Natasha Giordano    |       |       |       |            |       | 71,250                            | (1)        | 142,500                                                                                            | (1)        | 213,750                                                               | (1)        |                                                         |       |                   |       |
|                |       |       |       |            |       | 3,563                             | (2)        | 142,500                                                                                            | (2)        | 178,125                                                               | (2)        |                                                         |       |                   |       |
|                |       | 5/1/2006   |       | 4/24/2006       |       |                              |       |                                                                                               |       |                                                                  |       | 40,000                                                       |       | 497,200                |       |

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| Jean-Paul Modde |   |     |   |      |   | 68,750 | (1)    | 137,500 | (1)    | 206,250 | (1)    |   |   |    |   |
|-----------------|--------|----------|--------|-----------|--------|--------|--------|---------|--------|---------|--------|--------|--------|---------|--------|
|                 |   |     |   |      |   | 3,438  | (2)    | 137,500 | (2)    | 171,875 | (2)    |   |   |    |   |
|                 |   | 5/1/2006 |   | 4/24/2006 |   |   |   |    |   |    |   | 25,000 |   | 310,750 |   |

 

**Columns(D) through (F) — Estimated Future Payouts Under Non-Equity Incentive PlanAwards**

Theamounts reported in these columns show the potential threshold, target andmaximum performance incentive awards that could have been achieved by theparticipating NEOs under (i) the Company’s annual cash incentive plan (which wecall our “DMIP”) for the fiscal 2006 performance year and (ii) the Company’slong-term cash compensation arrangement for Mr. Ripp and Mr. Bairstow.

DMIP.  As indicated by footnotes (1) and (2), the “Total”DMIP annual award opportunity available to each participating NEO was comprisedof the following components:

(1)                               Theamounts reflected in this row represented one-half of the NEO’s potential DMIPaward that was based upon the Company achieving pre-established financialperformance objectives.  In fiscal 2006,the relevant criteria related to revenue, profitability (using adjusted EBITDA)and cost savings.  The potential payoutson this portion of the award opportunity ranged from:

·                  25% of the “Total”annual award opportunity if 90% of the Company financial objectives wereachieved

·                  50% of the “Total”annual award opportunity if 100% of the Company financial objectives wereachieved

·                  75% of the “Total”annual award opportunity if 120% of the Company financial objectives wereachieved

Actual amountsachieved under this component of the DMIP are paid on an annual basis.  Because “Threshold” performance was notachieved in fiscal 2006 in all three of the financial targets, no award wasmade under this component of the plan.

(2)                                Theamounts reflected in this row represented one-half of the NEO’s potential DMIPaward that was based upon the NEO achieving pre-established individualstrategic objectives. Actual amounts achieved under this component of the DMIPare determined and paid on a semi-annual basis. If the participating NEOachieved 90% of target against at least one of his or her strategic objectivesin either the first or second half of fiscal 2006, he or she would have beenentitled to receive the amount reflected in the “Threshold” column under thiscomponent of the DMIP. The potential payments on this portion of the annualaward opportunity ranged from:

·                  Approximately 1%to 3% of the “Total” annual award opportunity (depending upon the particularNEO) if 90% of at least one of the individual strategic objectives wereachieved in either the first or second half of fiscal 2006

·                  50% of the “Total”annual award opportunity if 100% of all of the individual strategic objectiveswere achieved in both the first and second half of fiscal 2006

·                  62.5% of the “Total”annual award opportunity if greater than 100% of the individual strategicobjectives were achieved in both the first and second half of fiscal 2006

18

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The 2006 DMIP award opportunities (both Companyfinancial objectives and individual objectives) for Mr. Ripp and Mr. Bairstowwere each guaranteed as a part of their employment agreements entered into in2005.  As a result, the amounts paid toMr. Ripp and Mr. Bairstow under the DMIP are not reflected in the above tableand are shown in the Summary Compensation Table under the “Bonus” column (C).

A discussion of the material terms of the DMIP andeach component of the plan, including a description of the formula and criteriato be applied in determining the amounts payable in fiscal 2006, is includedunder “Annual Incentive Pay” in the Compensation Discussion and Analysis.  The actual amounts earned by and paid to eachof Mr. Bailye, Ms. Giordano and Mr. Modde under the DMIP for fiscal 2006 areshown in the Summary Compensation Table under the “Non-Equity Incentive PlanCompensation” column (G).

Long-TermCash Compensation Arrangement.  As indicated by footnote (3), Mr. Ripp andMr. Bairstow participate in a long-term cash compensation arrangement adoptedin February 2006, which was developed by the Company to provide incentive forthe implementation of our restructuring and cost containment plans.

Underthe long-term cash compensation arrangement, Mr. Ripp and Mr. Bairstow wereprovided the opportunity to earn three levels of incentive payments based onappreciation in the Company’s common stock over the period of March 1, 2006through March 1, 2010.  To achieve eachlevel, the average daily closing price of the Company’s common stock on theNasdaq Global Select Market (“Nasdaq”) must exceed the pre-established pricefor the particular performance level for a period of 45 consecutive tradingdays.  Amounts earned within the firsttwo years of the program would be paid following the end of the two yearperiod.  Amounts earned after this periodwould be paid after March 1, 2010.  If onthe payment date, the closing price of the Company’s common stock on Nasdaq isnot at least equal to the corresponding price for the applicable level achieved(as described under (3) below), then the payment would be automatically delayedfor 12 months (but not beyond March 31, 2010). To be eligible for any earned incentive payment, the executive must beactively employed by the Company as of the particular payment date(s).  The full amount of each executive’s awardopportunity under the long-term cash compensation arrangement is payable upon achange in control.  The consummation ofthe proposed merger with Cegedim SA would constitute a change in controlresulting in payment of the full amount for each executive under the long-termcash compensation arrangement.

(3)                                  Theamounts reflected in this row represent the three levels of incentive paymentsachievable by Mr. Ripp and Mr. Bairstow under the long-term cash compensationarrangement.  Upon the achievement ofeach of the three separate levels under the program, Mr. Ripp would be entitledto receive $666,667 and Mr. Bairstow would be entitled to receive$116,667.  In order to achieve eachlevel, the conditions described above must be met and, except in the case of achange in control of the Company, the average daily closing price of theCompany’s common stock on Nasdaq must exceed:

·                  for the first “Threshold”level, $14 per share;

·                  for the second “Target”level, $16 per share; and

·                  for the third “Maximum”level, $18 per share.

Adiscussion of the long-term cash compensation arrangement is included under “Long-TermCash Compensation Arrangement” in the Compensation Discussion and Analysis.

**Column(G) — All Other Stock Awards**

Thiscolumn shows the number of restricted stock units granted to our NEOs in fiscal2006 under the Company’s 1997 Stock Incentive Plan as part of our equitycompensation program.  Restricted stockunits generally vest in one-third annual increments beginning one year from thedate of grant. Restricted stock units automatically vest on a change incontrol. Holders of restricted stock units have no rights as stockholders,including no voting rights or dividend rights.

19

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Additionaldetails regarding the 2006 restricted stock unit awards are included under “EquityAwards” in the Compensation Discussion and Analysis.

**Column(H) — Grant Date Fair Value of Stock and Option Awards**

This column shows the full grant date fair value ofrestricted stock units under FAS 123(R) granted to each of the NEOs in fiscal2006.  Generally, the full grant datefair value is the amount that the Company will expense in its financialstatements over the award’s full vesting period.

Forrestricted stock units, fair value was calculated using the closing price ofthe Company’s common stock on the date immediately preceding the grantdate.  The fair value shown forrestricted stock unit awards granted in fiscal 2006 is accounted for inaccordance with FAS 123(R).  Our 2006Form 10-K contains additional information on valuation and valuationassumptions of the restricted stock units under Note 10 (“Equity CompensationPlans”).  These amounts reflect theCompany’s accounting expense and do not correspond to the actual value thatwill be recognized by the NEOs.

**OutstandingEquity Awards At 2006 Fiscal Year-End**

Thefollowing table provides information concerning the current holdings ofunexercised and unvested stock options and unvested restricted stock units foreach of the NEOs as of the end of fiscal 2006. The market value of the restricted stock units is based on the closingmarket price of the Company’s common stock on the Nasdaq Global Select Marketas of December 29, 2006, which was $10.71 per share.
| (A)            | ** ** | ** ** | ** ** | **(B)**         | ** ** | **(C)**                                                                                  | ** ** | **(D)**                                                                                    | ** ** | **(E)**                          | ** ** | **(F)**                      | ** ** | **(G)**                                                                                | ** ** | **(H)**                                                                                       | ** ** |
|----------------|------------|------------|------------|-----------------|------------|------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------------------------|------------|----------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
| **Name**       | ** ** | ** ** | ** ** | **Grant  Date** | ** ** | **Number of  Securities  Underlying  Unexercised  Options   (#)  Exercisable** | ** ** | **Number of  Securities  Underlying  Unexercised   Options  (#)  Unexercisable** | ** ** | **Option  Exercise  Price  ($)** | ** ** | **Option  Expiration  Date** | ** ** | **Number  of Shares  or Units  of Stock  That  Have  Not  Vested  (#)** | ** ** | **Market  Value  of Shares  or Units  of Stock  That  Have  Not  Vested  ($)** | ** ** |
| John E. Bailye |       | 1/24/00    |       | 108,500 (C.1)   |       |                                                                                     |       | 33.19                                                                                      |       | 1/24/10                          |       |                         |       |                                                                                   |       |
|                |       | 2/5/01     |       | 108,000 (C.1)   |       |                                                                                     |       | 19.06                                                                                      |       | 2/5/11                           |       |                         |       |                                                                                   |       |
|                |       | 2/6/02     |       | 4,167 (C.1)     |       |                                                                                     |       | 12.01                                                                                      |       | 2/6/12                           |       |                         |       |                                                                                   |       |
|                |       | 2/6/03     |       | 375 (C.2)       |       | 200,064 (D.2)                                                                            |       | 7.75                                                                                       |       | 2/6/13                           |       |                         |       |                                                                                   |       |
|                |       | 1/27/04    |       | 185,102 (C.3)   |       |                                                                                     |       | 14.90                                                                                      |       | 1/27/14                          |       |                         |       |                                                                                   |       |
|                |       | 11/22/04   |       | 262,220 (C.4)   |       |                                                                                     |       | 17.05                                                                                      |       | 10/22/07                         |       |                         |       |                                                                                   |       |
|                |       | 11/22/04   |       | 53,399 (C.4)    |       |                                                                                     |       | 17.05                                                                                      |       | 2/6/12                           |       |                         |       |                                                                                   |       |
|                |       | 11/22/04   |       | 429 (C.4)       |       |                                                                                     |       | 17.05                                                                                      |       | 2/6/13                           |       |                         |       |                                                                                   |       |
|                |       | 5/18/05    |       | 170,000 (C.5)   |       |                                                                                     |       | 13.87                                                                                      |       | 5/18/15                          |       |                         |       |                                                                                   |       |
|                |       | 8/17/05    |       | 187,500 (C.4)   |       |                                                                                     |       | 18.00                                                                                      |       | 5/10/09                          |       |                         |       |                                                                                   |       |
|                |       | 8/17/05    |       | 3,071 (C.4)     |       |                                                                                     |       | 18.00                                                                                      |       | 2/12/14                          |       |                         |       |                                                                                   |       |
|                |       | 8/17/05    |       | 18,000 (C.4)    |       |                                                                                     |       | 18.00                                                                                      |       | 2/17/14                          |       |                         |       |                                                                                   |       |
|                |       | 8/17/05    |       | 14,898 (C.4)    |       |                                                                                     |       | 18.00                                                                                      |       | 1/27/14                          |       |                         |       |                                                                                   |       |
|                |       | 12/19/05   |       | 21,731 (C.4)    |       |                                                                                     |       | 14.63                                                                                      |       | 2/6/12                           |       |                         |       |                                                                                   |       |
|                |       | 12/19/05   |       | 74,648 (C.4)    |       |                                                                                     |       | 14.63                                                                                      |       | 2/6/13                           |       |                         |       |                                                                                   |       |
|                |       | 12/19/05   |       | 18,000 (C.6)    |       |                                                                                     |       | 14.63                                                                                      |       | 12/19/15                         |       |                         |       |                                                                                   |       |

20

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|                     |   | 5/1/06   |   |          |   |         |   |   |   |     |   | 100,000 |   | 1,243,000 |   |
|---------------------|--------|----------|--------|---------------|--------|--------------|--------|--------|--------|----------|--------|---------|--------|-----------|--------|
| Joseph Ripp         |   | 11/1/05  |   | 500,000 (C.5) |   |         |   | 17.55  |   | 11/1/15  |   |    |   |      |   |
|                |   | 11/1/05  |   |          |   |         |   |   |   |     |   | 166,666 |   | 2,924,988 |   |
|                |   | 5/1/06   |   |          |   |         |   |   |   |     |   | 55,000  |   | 683,650   |   |
| Jeffrey J. Bairstow |   | 12/20/05 |   | 275,000 (C.5) |   |         |   | 14.39  |   | 12/20/15 |   |    |   |      |   |
|                     |   | 5/1/06   |   |          |   |         |   |   |   |     |   | 45,000  |   | 559,350   |   |
| Natasha Giordano    |   | 10/24/00 |   | 30,000 (C.1)  |   |         |   | 22.88  |   | 10/24/10 |   |    |   |      |   |
|                |   | 10/1/01  |   | 1,334 (C.7)   |   |         |   | 7.94   |   | 10/1/11  |   |    |   |      |   |
|                |   | 6/10/02  |   | 1,910 (C.1)   |   |         |   | 12.14  |   | 6/10/12  |   |    |   |      |   |
|                |   | 1/30/03  |   | 833 (C.8)     |   |         |   | 6.81   |   | 1/30/13  |   |    |   |      |   |
|                |   | 2/6/03   |   | 16,665 (C.2)  |   | 33,335 (D.2) |   | 7.75   |   | 2/6/13   |   |    |   |      |   |
|                |   | 1/27/04  |   | 30,000 (C.3)  |   |         |   | 14.90  |   | 1/27/14  |   |    |   |      |   |
|                |   | 3/11/04  |   | 4,000 (C.9)   |   |         |   | 14.77  |   | 3/11/14  |   |    |   |      |   |
|                |   | 5/18/05  |   | 60,000 (C.5)  |   |         |   | 13.87  |   | 5/18/15  |   |    |   |      |   |
|                |   | 4/25/05  |   |          |   |         |   |   |   |     |   | 3,498   |   | 52,260    |   |
|                |   | 5/1/06   |   |          |   |         |   |   |   |     |   | 40,000  |   | 497,200   |   |
| Jean-Paul Modde     |   | 7/24/97  |   | 17,500 (C.10) |   |         |   | 6.29   |   | 7/24/07  |   |    |   |      |   |
|                     |   | 5/10/99  |   | 30,000 (C.10) |   |         |   | 16.75  |   | 5/10/09  |   |    |   |      |   |
|                     |   | 1/24/00  |   | 20,000 (C.1)  |   |         |   | 33.19  |   | 1/24/10  |   |    |   |      |   |
|                     |   | 2/25/00  |   | 1,695 (C.4)   |   |         |   | 23.41  |   | 1/16/07  |   |    |   |      |   |
|                     |   | 10/24/00 |   | 30,000 (C.1)  |   |         |   | 22.88  |   | 10/24/10 |   |    |   |      |   |
|                     |   | 2/5/01   |   | 20,000 (C.1)  |   |         |   | 19.06  |   | 2/5/11   |   |    |   |      |   |
|                     |   | 10/1/01  |   | 12,000 (C.7)  |   |         |   | 7.94   |   | 10/1/11  |   |    |   |      |   |
|                     |   | 2/6/02   |   | 27,500 (C.1)  |   |         |   | 12.01  |   | 2/6/12   |   |    |   |      |   |
|                     |   | 1/30/03  |   | 30,000 (C.1)  |   |         |   | 6.81   |   | 1/30/13  |   |    |   |      |   |
|                     |   | 1/30/03  |   | 15,000 (C.8)  |   |         |   | 6.81   |   | 1/30/13  |   |    |   |      |   |
|                     |   | 2/6/03   |   | 23,332 (C.2)  |   | 46,668 (D.2) |   | 7.75   |   | 2/6/13   |   |    |   |      |   |
|                     |   | 7/1/03   |   | 1,281 (C.1)   |   | 219 (D.1)    |   | 12.79  |   | 7/1/13   |   |    |   |      |   |
|                     |   | 1/27/04  |   | 60,000 (C.3)  |   |         |   | 14.90  |   | 1/27/14  |   |    |   |      |   |
|                     |   | 2/20/04  |   | 18,000 (C.9)  |   |         |   | 15.30  |   | 2/20/14  |   |    |   |      |   |
|                     |   | 5/18/05  |   | 60,000 (C.5)  |   |         |   | 13.87  |   | 5/18/15  |   |    |   |      |   |
|                     |   | 9/12/05  |   | 18,000 (C.11) |   |         |   | 18.68  |   | 9/12/15  |   |    |   |      |   |
|                     |   | 5/1/06   |   |          |   |         |   |   |   |     |   | 25,000  |   | 310,750   |   |

 

**Column (B) — Grant Date**

This columnreflects the grant date for each stock option and restricted stock unit awardoutstanding for each NEO as of the end of fiscal 2006.

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**Columns (C), (D), (E) and (F) —Option Awards**

All stock optionawards reflected in columns (C) and (D) vested or will vest as follows:
| (C.1) and (D.1) |   | Options become exercisable as follows: 25% on first  anniversary of the date of grant, and the remaining 75% pro-rata on a monthly  basis for the three years thereafter.                                                             |
|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                                                                                                  |
| (C.2) and (D.2) |   | All options became exercisable on January 1, 2007,  however, some options became exercisable on an accelerated basis pursuant to  a specified schedule when certain performance criteria were achieved.                               |
|            |   |                                                                                                                                                                                                                                  |
| (C.3)           |   | Options vested on December 31, 2004, however, the  right to sell the underlying shares accrues only in one-third annual  increments commencing on each of the first three anniversaries of the date of  grant.                        |
|            |   |                                                                                                                                                                                                                                  |
| (C.4)           |   | Options became 100% exercisable on the first  anniversary of the date of grant.                                                                                                                                                       |
|            |   |                                                                                                                                                                                                                                  |
| (C.5)           |   | Options fully vested on December 31, 2005, however,  the right to sell the underlying shares accrues only in one-third annual  increments commencing on each of the first three anniversaries of the date of  grant.                  |
|            |   |                                                                                                                                                                                                                                  |
| (C.6)           |   | Options fully vested on December 31, 2005, but the  underlying shares may not be sold until one year from the date of grant.                                                                                                          |
|            |   |                                                                                                                                                                                                                                  |
| (C.7)           |   | Subject to meeting certain Company financial  objectives, options vested on an accelerated basis in one-third increments on  January 31, 2002, July 31, 2002 and January 31, 2003. All unvested options  vested on December 31, 2004. |
|            |   |                                                                                                                                                                                                                                  |
| (C.8)           |   | 50% of the options vested on January 30, 2004, and  the remaining 50% vested on January 30, 2005.                                                                                                                                     |
|            |   |                                                                                                                                                                                                                                  |
| (C.9)           |   | Options fully vested on December 31, 2004.                                                                                                                                                                                            |
|            |   |                                                                                                                                                                                                                                  |
| (C.10)          |   | Options became exercisable in one-quarter increments  on each of the first four anniversaries of the date of grant.                                                                                                                   |
|            |   |                                                                                                                                                                                                                                  |
| (C.11)          |   | Options fully vested on December 31, 2005.                                                                                                                                                                                            |

 

In addition, all unvestedoptions also vest on an accelerated basis upon a change in control of theCompany.

**Columns (G) and (H) — Stock Awards**

All awards reflected inColumn (G) represent restricted stock unit awards, which vest in three equalincrements on each of the first three anniversaries of the date of grant.

Inaddition, all restricted stock units also vest on an accelerated basis upon achange in control of the Company.

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**OptionExercises and Stock Vested in Fiscal 2006**

The following table provides information concerning stock optionexercises and the vesting of restricted stock units for each of the NEOs duringfiscal 2006.  The value realized onexercise or vesting reflects the amounts received before payment of anyapplicable withholding tax or broker commissions.
| **(A)**             | ** ** | ** ** | ** ** | **(B)**                                                         | ** ** | **(C)**                                        | ** ** | **(D)**                                                        | ** ** | **(E)**                                       | ** ** |
|---------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **          | ** ** | ** ** | ** ** | **Option Awards**                                          | ** ** | **Stock Awards**                          | ** ** |
| **Name**            | ** ** | ** ** | ** ** | **Number of  Shares Acquired  on Exercise  (#)** | ** ** | **Value Realized  on Exercise  ($)** | ** ** | **Number of  Shares Acquired  on Vesting  (#)** | ** ** | **Value Realized  on Vesting  ($)** | ** ** |
| John E. Bailye      |       | —     |       | —                                                          |       | —                                         |       | —                                                         |       |
| Joseph Ripp         |       | —     |       | —                                                          |       | 83,334                                         |       | 871,257                                                        |       |
| Jeffrey J. Bairstow |       | —     |       | —                                                          |       | —                                         |       | —                                                         |       |
| Natasha Giordano    |       | —     |       | —                                                          |       | 1,802                                          |       | 22,246                                                         |       |
| Jean-Paul Modde     |       | 12,000     |       | 179,880                                                         |       | —                                         |       | —                                                         |       |

 

**Non-Qualified Deferred Compensation for Fiscal 2006**

Thefollowing table provides information with respect to the DendriteInternational, Inc. Deferred Compensation Plan (“Deferred Compensation Plan”),which is our non-qualified compensation deferral plan**,**for each of our NEOs:
| **(A)**             | ** ** | ** ** | ** ** | **(B)**                                                 | ** ** | **(C)**                                                  | ** ** | **(D)**                                            | ** ** | **(E)**                                         | ** ** | **(F)**                                            | ** ** |
|---------------------|------------|------------|------------|---------------------------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------------|------------|
| **Name**            | ** ** | ** ** | ** ** | **Executive  Contributions  in Last FY  ($)** | ** ** | **Registrant  Contributions  in Last FY  ($)** | ** ** | **Aggregate  Earnings in  Last FY  ($)** | ** ** | **Aggregate  Withdrawals/  Distributions  ($)** | ** ** | **Aggregate  Balance  at Last FYE  ($)** | ** ** |
| John E. Bailye      |       | 0          |       | 0                                                       |       | 0                                                        |       | 0                                                  |       | 0                                               |       |
| Joseph Ripp         |       | 0          |       | 0                                                       |       | 0                                                        |       | 0                                                  |       | 0                                               |       |
| Jeffrey J. Bairstow |       | 36,771     |       | 0                                                       |       | 2,624                                                    |       | 0                                                  |       | 39,395                                          |       |
| Natasha Giordano    |       | 0          |       | 0                                                       |       | 0                                                        |       | 0                                                  |       | 0                                               |       |
| Jean-Paul Modde     |       | 0          |       | 0                                                       |       | 0                                                        |       | 0                                                  |       | 0                                               |       |

 

**Column (B) — ExecutiveContributions in Last Fiscal Year**

The amountsreported in this column reflect amounts deferred by each NEO in fiscal 2006under the Company’s non-qualified deferred compensation plan.  Mr. Bairstow is the only NEO who participatesin the Deferred Compensation Plan. $21,771 of the amount deferred by Mr. Bairstow is also reported ascompensation to

23

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Mr. Bairstow in the “Salary” column of the SummaryCompensation Table and $15,000 of the deferred amount is reported ascompensation in the “Bonus”****column of theSummary Compensation Table.  Mr. Bailye,Mr. Bairstow and Ms. Giordano also made contributions to the tax-qualified401(k) savings plan, which are included as compensation in the SummaryCompensation Table.

**Column (C) — Registrant Contributions in LastFiscal Year**

The Company does not makecontributions under the Deferred Compensation Plan.  The Company makes contributions under thetax-qualified 401(k) savings plan which are not included above but are includedin the “All Other Compensation” column of the Summary Compensation Table andquantified in the “All Other Compensation” table that appears in the footnotesfollowing the Summary Compensation Table.

**Column (D) — Aggregate Earningsin Last Fiscal Year**

The amountsreported in this column reflect the deemed investment returns in fiscal 2006 onall amounts attributable to contributions made under the Deferred CompensationPlan for all years.

*Deferred Compensation Plan*

The Company maintains theDeferred Compensation Plan to provide certain highly compensated employees theopportunity to defer receipt of their compensation.

A participant may defer up to100%****of his or her base salary, bonus orcommission with a minimum of $5,000 for the year.  The Compensation Committee may impose limitson the amount of compensation that a participant may defer.  To date, no such limits have beenimposed.  A participant is fully vestedin his or her deferrals at the time of deferral.

Under the terms of theDeferred Compensation Plan, the Company may make hypothetical discretionarycontributions to the participants’ deferral accounts.  To date, the Company has not made anydiscretionary contributions under the Deferred Compensation Plan.

Amounts credited to a participant’s deferral accountwill be deemed to be invested in the available investment funds as selected bythe participant.  These investment fundsare held under a life insurance policy and include:

Gartmore GVIT Money Market -Class V; Gartmore GVIT Government Bond - Class I;  PIMCO VIT Low Duration - Admin Shares;  PIMCO VIT Total Return - Admin Shares; JanusAspen Series Balanced - Service Shares; JP Morgan GVIT Balanced - Class I; AIMV.I. Basic Value - Series I Shares; AllianceBernstein VPS Growth & Income -Class A; American Century VP Income & Growth - Class I; T. Rowe PriceEquity Income - Class II; Dreyfus VIF Appreciation - Initial Shares; DreyfusStock Index - Initial Shares; Fidelity VIP II Contrafund - Service Class;Fidelity VIP III Growth Opportunities - Service Class; American Century VPUltra - Class I Fidelity VIP Growth - Service Class Gartmore GVIT Growth -Class I; Janus Aspen Series Forty - Service Shares; Oppenheimer AggressiveGrowth VA - Initial Class; T. Rowe Price Mid Cap Growth - Class II; RoyceCapital Micro-Cap; Baron Capital Asset - Insurance Shares; Gartmore GVIT SmallCompany - Class I; Neuberger Berman AMT Fasciano - Class S; Templeton VIPForeign Securities - Class 2; Fidelity VIP Overseas - Service Class; AmericanCentury VP International - Class I.  Therate of return earned on the hypothetical account balance of each participantis based on the actual performance of the funds in which the participant isdeemed invested.  The participant maychange his or her choice of funds at any time.

Distribution of aparticipant’s deferral account will be made at the time (including upon theoccurrence of a specified event) and in the number of installments as electedby the participant in his or her distribution election. Distribution optionsinclude electing lump sum or quarterly installments either during employment orat termination. However, if upon termination from employment, the participant’sdeferral account is less than $25,000, his or her

24

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deferral account will be paid in a lump sum.  In addition, participants in the DeferredCompensation Plan are also eligible for a death benefit payable to his or herdesignated beneficiary.

If a participant has afinancial emergency, the participant can request distribution of his or herdeferral account.  With respect tograndfathered deferrals under Section 409A of the Internal Revenue Code, aparticipant at any time may request a distribution of all or a portion of hisor her deferral account (minimum distribution amount of $25,000).  However, 10% of the requested amount will beforfeited from the participant’s account.

Payments from the Deferred Compensation Plan may be delayed upon aparticipant’s termination of employment, in accordance with Section 409A of theInternal Revenue Code.

**Potential Payments Upon Termination or Change In Control**

## *Employment Agreement with Chairman and CEO*

## In May 2006, the Company entered into anemployment agreement with its Chairman of the Board of Directors and ChiefExecutive Officer, John E. Bailye. The Agreement replaced Mr. Bailye’sprior employment agreement dated March 25, 1997 and involved no increaseto his current base salary or annual bonus target.

## The Company provides the following compensation toMr. Bailye under the agreement:  (1) base salary of $525,000 perannum, which was his existing annual base salary, and (2) annualdiscretionary bonus potential with an initial target of not less than 100% ofbase salary, consistent with his existing bonus target, both to be reviewed onan annual basis by the Board. Bonus eligibility is to be determined and paid inaccordance with the Company’s applicable incentive compensation policy then ineffect for senior executives. The payment of any bonus is subject to:(i) the Company’s achievement of goals approved by the Board,(ii) such other objectives as may be determined by the Board from time totime and (iii) the terms and conditions of the incentive compensationplan.

## While actively employed by the Company, Mr. Bailyewill continue to be covered under the Company’s life insurance and long-termand short-term disability policies. To the extent that the life insurancebenefit and long-term disability benefit do not each equal one times his basesalary and target bonus, the Company will reimburse any additional cost ofobtaining such coverage. Mr. Bailye will also continue to be entitled tofinancial planning assistance in an amount not to exceed $10,000 per year.

## In the event Mr. Bailye’s employment isterminated by the Company other than for cause, death or disability, or heterminates his employment for good reason, other than in connection with achange in control, he is entitled to (i) base salary through the date of termination,(ii) severance payments equal to his annual base salary plus target bonus,payable over 12 months, (iii) a payment equal to his pro-rata bonus forthe year of termination and (iv) continuation of medical and dentalbenefit coverage for Mr. Bailye and his family for 12 months at the samecost paid as an employee.

## In the event Mr. Bailye’s employment isterminated by the Company other than for cause, death or disability, or heterminates his employment for good reason, in each case within three yearsfollowing a change in control, he is entitled to (i) base salary throughthe date of termination, (ii) severance payments equal to three times thesum of his annual base salary plus target bonus, payable in a lump sum within30 days of the date of termination, (iii) a payment equal to his pro-ratabonus for the year of termination, (iv) continuation of medical and dentalbenefit coverage for Mr. Bailye and his family for three years at the samecost paid as an employee, (v) maintenance by the Company, for six(6) years following termination, of the Company’s directors’ and officers’liability insurance substantially in accordance with the Company’s existingcoverage and (vi) immediate vesting of all outstanding stock options andthe elimination of all sales restrictions on such stock options.Mr. Bailye is also entitled to a tax gross-up payment in the event thatany payments made to him are subject to an excise tax under IRCSection 280G. Shareholder approval of the proposed merger with Cegedim SAwould constitute a change in control under Mr. Bailye’s agreement.

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##  

## Under the Agreement, Mr. Bailye is subject torestrictive covenants regarding confidentiality, non-competition,non-solicitation and non-disparagement.

## On March 1, 2007, Mr. Bailye and Cegedim SAentered into a letter agreement providing that, immediately following theeffective time of the proposed merger with Cegedim SA, his employment withDendrite will be terminated, with such termination to be deemed to have beenwithout cause and, in accordance with such, Mr. Bailye will be entitled to theseverance payments and other benefits set forth in his employment agreementwith Dendrite.

*OtherEmployment Agreements*

Mr. Ripp was appointed as President and Chief Operating Officer of theCompany on November 1, 2005. In connection with his appointment, theCompensation Committee approved an employment agreement with Mr. Rippunder which the Company is required to provide the following compensation:(1) base salary of not less than $800,000 per annum; (2) annualdiscretionary bonus potential of $600,000 which was guaranteed for the balanceof 2005, on a pro-rated basis, and was guaranteed for 2006; (3) options topurchase 500,000 shares of common stock with an exercise price equal to thefair market value on the date of grant, which options vested onDecember 31, 2005 and are subject to a three-year restriction on sellingthe underlying shares such that not more than one-third of such shares may besold before the first, second and third anniversaries of the option grant date;and (4) 250,000 restricted stock units, which vest in annual one-thirdincrements.

In the event Mr. Ripp is terminated by the Company other than forcause, death or disability or terminates his employment for good reason, otherthan in connection with a change in control, he will receive severance payequal to his monthly base salary for the twelve month period following histermination plus his annual target bonus as of the date of termination; healthbenefits coverage for up to twelve months at the same cost as he paid as anemployee; and his target bonus for the year in which employment is terminatedpro-rated to reflect the portion of the year he performed services for theCompany.

The Company also reimburses Mr. Ripp for life and disabilityinsurance premiums in excess of the coverage provided by the Company’s standardpolicies which will provide a benefit, when combined with the Company’sstandard policies, in an amount not to exceed his annual base salary plusannual target bonus. Mr. Ripp is subject to restrictive covenantsregarding confidentiality, non-competition, non-solicitation andnon-disparagement.

Mr. Bairstow was appointed as Executive Vice President and ChiefFinancial Officer of the Company on December 20, 2005. In connection withhis appointment, the Compensation Committee approved an employment agreementwith Mr. Bairstow under which the Company is required to provide thefollowing compensation: (1) base salary of not less than $475,000 perannum; (2) annual discretionary bonus potential with an initial target of$240,000, which is guaranteed for 2006; and (3) options to purchase275,000 shares of common stock with an exercise price equal to the fair marketvalue on the date of grant, which options vested on December 31, 2005 andare subject to a three-year restriction on selling the underlying shares suchthat not more than one-third of such shares may be sold before the first,second and third anniversaries of the option grant date.

Pursuant to an amendment to his employment agreement made in October2006, in the event Mr. Bairstow is terminated by the Company other thanfor cause, death or disability or terminates his employment for good reason,other than in connection with a change in control, he will receive severancepayments equal to his monthly base salary for 12 months and his target annualbonus.  The severance payments are paidin twelve monthly payments.  He wouldalso be entitled to continued COBRA coverage under the Company’s group healthplan at the same cost paid as an employee.

Mr. Bairstow is reimbursed for his reasonable commuting expensesfrom his current residence and for his temporary housing and auto expense forup to the first twenty months of employment as well as for any tax on suchreimbursement.  He is entitled to alsoreceive reimbursement of relocation expenses in accordance with the Company’srelocation policy, provided he relocates within two years from his employmentcommencement date, and the amount paid by the Company on account of his commutingexpenses will be applied to reduce the amount

26

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he would be entitled to under the relocation policy.Mr. Bairstow is subject to restrictive covenants regardingconfidentiality, non-competition, non-solicitation and non-disparagement.

Mr. Ripp and Mr. Bairstowalso participate in a long-term cash compensation arrangement adopted inFebruary 2006, which was developed by the Company to provide incentive for theimplementation of our restructuring and cost containment plans.  Under the long-term cash compensationarrangement, Mr. Ripp and Mr. Bairstow were provided the opportunity to earnthree levels of incentive payments based on appreciation in the Company’scommon stock over the period of March 1, 2006 through March 1, 2010.  Amounts earned within the first two years ofthe program would be paid following the end of the two year period.  Amounts earned after this period would bepaid after March 1, 2010.  However, thefull amount of each executive’s award opportunity under the long-term cashcompensation arrangement is payable upon a change in control.  For further information regarding thelong-term cash compensation arrangement, see footnotes (2) and (3) to columns(D) through (F) of the Grants of Plan-Based Awards Table above.

The Companyalso has employment agreements with certain of its other executive officers,including Ms. Giordano and Mr. Modde. Pursuant to amendments to these agreements approved by the CompensationCommittee in October 2006, if the executive’s employment is terminated by theCompany for any reason other than death, cause, or disability (and not inconnection with a change in control), the executive is entitled to receiveseverance payments equal to his or her monthly base salary for 12 months andthe executive’s target annual bonus.  The severance payments are paid tothe executive in twelve monthly payments.  The executive would also beentitled to continued COBRA coverage under the Company’s group health plan forthe same severance period at the same cost paid as an employee.  The October 2006 amendments were approved bythe Compensation Committee and were intended to standardize severanceprotection for these executives and for Mr. Bairstow in the event of employmenttermination not in connection with a change in control.

In February 2006, the Compensation Committee approved amendmentsto the employment agreements entered into with certain of its executiveofficers, including Mr. Ripp, Mr. Bairstow, Ms. Giordano and Mr. Modde.  The amendments extended, and made uniform,severance protection in the event of termination of employment without cause orfor good reason within one year following a change in control.  The Compensation Committee believed that itwas important to make uniform severance protection upon any employment terminationin connection with a change in control. If a change in control event is developing, executives who  lack sufficient assurances may seekemployment elsewhere.  Change in controltransactions take time to unfold and a stable management team helps to ensureour business operations continue without undue interruption.

The amendments provided that upon a termination of the executive’semployment by the Company without cause or the termination by the executiveofficer for good reason, each within one year following a change in control(which term includes consummation of the proposed merger with Cegedim SA), theexecutive will be entitled to (i) base salary through the date oftermination, (ii) severance payments in a lump sum amount equal to the sumof twenty-four months base salary plus two times the executive’s target bonus,(iii) payment of a pro-rated target bonus amount for the year in which thedate of termination occurs, (iv) continued COBRA coverage under theCompany’s group health plans, at the same cost paid as an employee, for up totwenty-four months and (v) immediate vesting of all stock options andrestricted stock or other outstanding equity awards granted to the executivesand the lifting of all contractual sale conditions on such equity awards.

The above amendments to the employment agreements of Mr. Ripp,Mr. Bairstow, Ms. Giordano and Mr. Modde also provided that if it isdetermined that any actual or potential payment or benefit from the Company,including a severance payment made upon a change in control, would subject theexecutive to the imposition of an excise tax under IRC Section 280G, thenthe Compensation Committee may either (i) reduce the change in controlseverance payment to avoid the excise tax or (ii) pay to the executive a “gross-up”payment which takes into account income, employment and excise tax liabilitiesresulting from the payment. Pursuant to amendments to the above employmentagreements authorized by a March 1, 2007 resolution of the CompensationCommittee, in the event the proposed merger with Cegedim SA is consummated, theCompany will be obligated to pay the applicable “gross-up” payment for thebenefit of each affected executive.

The employment agreements discussed above generally define “cause” asthe executive’s (i) gross misconduct in respect of his or her duties tothe Company, (ii) engaging in an indictable offense either related to his

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or her duties or likely to have a material adverseimpact on the Company, (iii) commission of a willful or intentional act whichmaterially injures (or could be expected to injure) the Company, or(iv) engaging in grossly negligent conduct which materially injures (orcould be expected to injure) the Company.

“Good reason” is generally defined as, without the written consent ofthe executive, (i) the assignment of duties or responsibilities materiallyand adversely inconsistent with his or her position or a material reduction inthose duties, (ii) the Company’s material breach of the employmentagreement, (iii) relocation of the executive outside of a thirty-five mileradius from his or her office, (iv) a failure to continue in effect, or amaterial and adverse reduction in benefits under, any welfare benefit plan inwhich the executive is a participant unless comparable benefits are otherwiseafforded or the action is required by applicable law, and (v) the failureof a successor entity to assume the obligations under the applicable employmentagreements upon a change in control.

“Change in control” is defined generally to include significant changesin the ownership of the Company, certain changes in the Board of Directors, andcertain business combinations (which would include consummation of the proposedmerger with Cegedim SA).

*EstimatedSeverance and Certain Other Post-Employment Payments and Benefits*

Thefollowing table shows the estimated payments and value of benefits that theCompany would provide to each of its NEOs in the event of employmenttermination, in each case assuming a hypothetical employment separation date ofDecember 31, 2006 (the last day of the Company’s 2006 fiscal year).  For this table, the market price of theCompany’s common stock is assumed to be $10.71, which was the closing price onDecember 31, 2006.  Certain otherassumptions made for purposes of presenting this information are explainedbelow. 
| Name           | ** ** | ** **                                   | ** ** | **Benefit** | ** ** | **Termination as  of 12/31/06  Without Cause  or for Good  Reason (no  Change in  Control)  ($)** | ** ** | **Change in  Control as  of 12/31/06  w/o Employment  Termination  ($)** | ** ** | **Termination as  of 12/31/06  Without Cause  or for Good  Reason (w/in  1 Year Following  Change in Control)  ($)** | ** ** |
|----------------|------------|----------------------------------------------|------------|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| John E. Bailye |       | Salary (1)                                   |       |        | 525,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 1,575,000 |   |   |
|                |       | Annual Incentive Plan  (1)                   |       |        | 525,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 1,575,000 |   |   |
|                |       | Prorata Bonus (2)                            |       |        | 525,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 525,000 |   |   |
|                |       | Equity Award  Acceleration (3)               |       |        | 0          |                                                                                                                                 |       |                                                                                         | 1,663,189  |                                                                                                                                                                   |       |   | 1,663,189 |   |   |
|                |       | Incremental Medical and  Dental Benefits (4) |       |        | 8,061      |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 24,184 |   |   |
|                |       | D&O Insurance                            |       |        | 0          |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 225,000 |   |   |
|                |       | Tax Gross-up                                 |       |        | 0          |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 0 |   |   |
|                |       | Total                                        |       |        | 1,583,061  |                                                                                                                                 |       |                                                                                         | 1,663,189  |                                                                                                                                                                   |       |   | 5,587,373 |   |   |
| Joseph A. Ripp |       | Salary (1)                                   |       |        | 800,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 1,600,000 |   |   |
|           |       | Annual Incentive Plan  (1)                   |       |        | 600,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 1,200,000 |   |   |
|           |       | Prorata Bonus (2)                            |       |        | 450,000    |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 450,000 |   |   |
|           |       | Cash Incentive Bonus  (5)                    |       |        | 0          |                                                                                                                                 |       |                                                                                         | 2,000,000  |                                                                                                                                                                   |       |   | 2,000,000 |   |   |
|           |       | Equity Award  Acceleration (3)               |       |        | 0          |                                                                                                                                 |       |                                                                                         | 2,374,043  |                                                                                                                                                                   |       |   | 2,374,043 |   |   |
|           |       | Incremental Medical and  Dental Benefits (4) |       |        | 4,960      |                                                                                                                                 |       |                                                                                         | 0          |                                                                                                                                                                   |       |   | 9,921 |   |   |
|           |       | Tax Gross-up                                 |       |        | 0          |                                                                                                                                 |       |                                                                                         | 868,944    |                                                                                                                                                                   |       |   | 2,599,660 |   |   |
|                |       | Total                                        |       |        | 1,854,960  |                                                                                                                                 |       |                                                                                         | 5,242,987  |                                                                                                                                                                   |       |   | 10,233,624 |   |   |

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| Jeffrey J. Bairstow |   | Salary (1)                                   |   |   | 475,000 |   |   |   | 0       |   |   |   | 950,000   |   |   |
|---------------------|--------|----------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|
|                |   | Annual Incentive Award  (1)                  |   |   | 240,000 |   |   |   | 0       |   |   |   | 480,000   |   |   |
|                |   | Prorata Bonus (2)                            |   |   | 180,000 |   |   |   | 0       |   |   |   | 180,000   |   |   |
|                |   | Cash Incentive Bonus  (5)                    |   |   | 0       |   |   |   | 350,000 |   |   |   | 350,000   |   |   |
|                |   | Equity Award  Acceleration (3)               |   |   | 0       |   |   |   | 481,950 |   |   |   | 481,950   |   |   |
|                |   | Incremental Medical and  Dental Benefits (4) |   |   | 9,134   |   |   |   | 0       |   |   |   | 18,269    |   |   |
|                |   | Tax Gross-up                                 |   |   | 0       |   |   |   | 0       |   |   |   | 910,540   |   |   |
|                |   | Total                                        |   |   | 904,134 |   |   |   | 831,950 |   |   |   | 3,370,759 |   |   |
| Natasha Giordano    |   | Salary (1)                                   |   |   | 285,000 |   |   |   | 0       |   |   |   | 570,000   |   |   |
|                |   | Annual Incentive Plan  (1)                   |   |   | 285,000 |   |   |   | 0       |   |   |   | 570,000   |   |   |
|                |   | Prorata Bonus (2)                            |   |   | 222,656 |   |   |   | 0       |   |   |   | 222,656   |   |   |
|                |   | Equity Award  Acceleration (3)               |   |   | 0       |   |   |   | 564,535 |   |   |   | 564,535   |   |   |
|                |   | Incremental Medical and  Dental Benefits (4) |   |   | 9,134   |   |   |   | 0       |   |   |   | 18,269    |   |   |
|                |   | Tax Gross-up                                 |   |   | 0       |   |   |   | 0       |   |   |   | 657,788   |   |   |
|                |   | Total                                        |   |   | 801,790 |   |   |   | 564,535 |   |   |   | 2,603,248 |   |   |
| Jean-Paul Modde     |   | Salary (1)                                   |   |   | 275,000 |   |   |   | 0       |   |   |   | 550,000   |   |   |
|                |   | Annual Incentive Plan  (1)                   |   |   | 275,000 |   |   |   | 0       |   |   |   | 550,000   |   |   |
|                |   | Prorata Bonus (2)                            |   |   | 206,250 |   |   |   | 0       |   |   |   | 206,250   |   |   |
|                |   | Equity Award  Acceleration (3)               |   |   | 0       |   |   |   | 405,887 |   |   |   | 405,887   |   |   |
|                |   | Incremental Medical and  Dental Benefits (4) |   |   | 8,061   |   |   |   | 0       |   |   |   | 16,123    |   |   |
|                |   | Tax Gross-up                                 |   |   | 0       |   |   |   | 0       |   |   |   | 0         |   |   |
|                |   | Total                                        |   |   | 764,311 |   |   |   | 405,887 |   |   |   | 1,728,260 |   |   |

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(1)             EachNEO’s annual salary earned for fiscal 2006 is reported in the SummaryCompensation Table and is not included in these amounts.  

(2)             Giventhe hypothetical termination date of December 31, 2006, each NEO’s pro ratabonus amount would be equal to the full year’s bonus amount specified in his orher employment agreement less any portion of this bonus amount that had alreadybeen paid to the NEO earlier in fiscal 2006. 

(3)             Theamount for “Equity Award Acceleration” represents the total in-the-money valueof stock options and the market value of unvested RSUs which would becomevested on an accelerated basis solely as a result of a CIC.  This value would vest upon a CIC even if theexecutive’s employment is not terminated.

(4)             Amountsreflect the cost to the Company of continued medical and dental benefitsreduced by the amount paid by the NEO for the continued coverage.

(5)             Theseamounts reflect the cash incentive bonuses to which Mr. Ripp and Mr. Bairstoware entitled upon a CIC under the long-term cash compensation arrangement.

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The timing of the payment of some compensation and benefits may berestricted under IRC Section 409A, which regulates deferred compensation.  Some amounts payable to any of the NEOs uponemployment termination may be delayed for six months after termination.

The amounts in this table do not include any amounts under the Company’s401(k) savings plan.  The amounts in thistable also do not include the amounts under our Deferred Compensation Plan,which are provided above in the “Non-Qualified Deferred Compensation” sectionof this Proxy Statement.

The above table only provides estimates of the amounts that would havebeen payable  and of the value ofbenefits under existing employment arrangements and plans to which the NEOswould be entitled based upon the hypothetical occurrence of the specifiedevents on the last day of the 2006 fiscal year.

As discussed in Part I, Item1 of our Form 10-K filed on April 2, 2007, we entered into a Merger Agreementwith Cegedim SA and its indirect subsidiary Dogwood Enterprises, Inc. on March1, 2007.  If the merger contemplated bythe Merger Agreement is completed, it would constitute a change in control ofDendrite.  The amounts shown in the tabledo not represent the actual payments and other benefits to which the NEOs may beentitled as a result of this potential merger.

**Director Compensation**

In October 2005, the Compensation Committee ofthe Board amended the Company’s director compensation program. Under the newcompensation program, which became effective on January 1, 2006, eachnon-employee director receives an annual grant of 4,000 stock options and 5,000RSUs, along with an annual cash retainer of $35,000.  Each non-employee director also receives aper meeting fee of $1,000 for in-person attendance at Board or Committeemeetings and $500 for telephonic meetings. In addition to the above, theChairperson of each of the Committees also receives the following annual cashretainer: Audit Committee, $35,000; Compensation Committee, $15,000; CorporateGovernance and Nominating Committee, $10,000. The Lead Director also receivesan annual grant of an additional 4,000 RSUs and an additional annual cashretainer of $50,000.

**Director Summary CompensationTable for Fiscal 2006**

The table below summarizes the compensation paid bythe Company to non-employee directors for fiscal 2006.

 
| **(A)**              | ** ** | ** ** | ** ** | **(B)**                                               | ** ** | **(C)**                | ** ** | **(D)**                 | ** ** | **(G)**                               | ** ** | **(H)**        | ** ** |
|----------------------|------------|------------|------------|-------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|---------------------------------------|------------|----------------|------------|
| **Name**             | ** ** | ** ** | ** ** | **Fees Earned  or Paid in  Cash  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
| John A. Fazio        |       | 90,000     |       | 22,244                                                |       | 0                      |       | 0                       |       | 112,244                               |       |
| Bernard M. Goldsmith |       | 73,000     |       | 22,244                                                |       | 48,461                 |       | 0                       |       | 143,705                               |       |
| Edward J. Kfoury     |       | 107,500    |       | 40,040                                                |       | 48,461                 |       | 0                       |       | 196,001                               |       |
| Peter Ladell         |       | 53,000     |       | 22,244                                                |       | 38,606                 |       | 0                       |       | 113,850                               |       |

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| Clay Lifflander    |   | 11,000 |   | 678    |   | 806    |   | 0 |   | 12,484  |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|---|--------|---------|--------|
| Paul A. Margolis   |   | 54,500 |   | 22,244 |   | 48,461 |   | 0 |   | 125,205 |   |
| John H. Martinson  |   | 51,500 |   | 22,244 |   | 48,461 |   | 0 |   | 122,205 |   |
| Terence H. Osborne |   | 16,000 |   | 0      |   | 0      |   | 0 |   | 16,000  |   |
| Peter Tombros      |   | 50,500 |   | 22,244 |   | 38,606 |   | 0 |   | 111,350 |   |
| Patrick J.  Zenner |   | 69,000 |   | 22,244 |   | 48,461 |   | 0 |   | 139,705 |   |

** **

**Column(A) — Name**

John E. Bailye,the Company’s Chairman of the Board and Chief Executive Officer, is notincluded in this table as he is an employee of the Company and thus receives noseparate compensation for his service as a director.  The compensation received by Mr. Bailye as anemployee of the Company is shown in the Summary Compensation Table above.

Mr. Osborneretired from the Board of Directors on February 6, 2006.  Upon his retirement, all of Mr. Osborne’soutstanding stock options became exercisable.

**Column (B) — Fees Earned or Paidin Cash**

The amounts inthis column reflect the cash compensation paid to the directors during fiscal2006.  Mr. Lifflander and Mr. Osborneearned a pro-rated amount, as each served on the Board for only a portion offiscal 2006.

**Column (C) — Stock Awards**

Amounts shown reflect the compensation cost recognizedin fiscal 2006 for financial statement reporting purposes for RSUs granted in2006, as determined in accordance with FAS 123R (excluding the impact of estimatedforfeitures related to service-based vesting conditions).  For RSUs, fair value was calculated using the closing price of the Company’s commonstock on the date immediately preceding the grant date.  The full grant date fair value of eachnon-management director’s grant of RSUs in fiscal 2006, with the exception ofMr. Kfoury and Mr. Lifflander, was $72,800. The full grant date fair value of Mr. Kfoury’s grant of RSUs was$131,040.  The full grant date fair valueof Mr. Lifflander’s grant of RSUs was $10,760. Additional information concerning the Company’s accounting for RSUsgranted in 2006 is included in Note 10 (under the heading “Restricted StockUnits”) of the Company’s 2006 Form 10-K. Holders of RSUs are not entitled to dividends.  There were no forfeitures of RSUs bynon-management directors during fiscal 2006.

As of December 31, 2006, each individual had thefollowing RSUs outstanding: Mr. Fazio, 5,000; Mr. Goldsmith, 5,000; Mr. Kfoury,9,000; Mr. Ladell, 5,000; Mr. Lifflander, 1,000; Mr. Margolis, 5,000; Mr.Martinson, 5,000; Mr. Osborne, 0; Mr. Tombros, 5,000; and Mr. Zenner, 1,000.

**Column (D) — Option Awards**

Amounts shownrepresent the compensation cost recognized in fiscal 2006 for financialstatement reporting purposes for the fair value of stock options granted infiscal 2006, 2005 and 2003, in accordance with FAS 123R. Pursuant to SEC rules,the amounts shown exclude the impact of estimated forfeitures related toservice-based vesting conditions.  Forinformation on the valuation assumptions with respect to option grants infiscal 2006, 2005 and 2003 refer to Note 1 (under the heading “Stock BasedCompensation”) in our Form 10-K for fiscal years 2006 and 2003.  There were no forfeitures of stock options bynon-management directors during fiscal 2006.

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As of December 31,2006, the following individuals had the following options outstanding: Mr.Fazio, 140,000; Mr. Goldsmith, 237,767; Mr. Kfoury, 204,767; Mr. Ladell,13,000; Mr. Lifflander, 800; Mr. Margolis, 227,767; Mr. Martinson,279,767; Mr. Osborne, 17,000; Mr. Tombros, 174,290; and Mr. Zenner, 194,766.

**Column (F) —  Change in Pension Value and NonqualifiedDeferred Compensation Earnings**

The Company doesnot maintain any defined pension benefit plans.****Noabove-market rates (as defined in SEC rules) were earned under ournon-qualified deferred compensation plan in fiscal 2006.

**Compensation Committee Interlocks and Insider Participation**

None of themembers of the Compensation Committee was at any time during 2006 an officer oremployee of the Company. No executive officer of the Company serves as a memberof the board of directors or compensation committee of any other entity thathas one or more executive officers serving as a member of our Board ofDirectors or Compensation Committee.

**ITEM12. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters**

**SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

The followingtables set forth information with respect to the number and percentage of theoutstanding shares of the Common Stock of the Company, as of April 5,2007, which, according to the information supplied to the Company, arebeneficially owned by (i) each person who, to the knowledge of the Companybased on Schedules 13G or 13D filed with the Securities and ExchangeCommission, is the beneficial owner of more than 5% of the Company’soutstanding Common Stock, (ii) each person who is currently a director ofthe Company or is a nominee for election as a director of the Company,(iii) each named executive officer, and (iv) all current directorsand executive officers of the Company as a group. Unless indicated otherwisebelow, the person or entity listed has sole voting and dispositive power withrespect to the shares that are deemed beneficially owned by such person orentity, subject to community property laws, where applicable.

***Persons known to Own More Than 5% of the Shares of CommonStock Outstanding***
| Name of Beneficial Owner               | ** ** | ** ** | ** ** | **Shares  Beneficially  Owned(1)** | ** ** | **Percentage of  Common Stock  Outstanding** | ** ** |
|-------------------------------------------------------|------------|------------|------------|------------------------------------|------------|--------------------------------------------------------|------------|
| MMI Investments, L.P.(2)                              |       | 5,992,312  |       | 13.4                               | %          |
| 1370 Avenue of the Americas  New York, New York 10019 |       |       |       |                               |       |
| Barclays Global Investors, NA(3)                      |       | 3,142,122  |       | 7.1                                | %          |
| 45 Fremont  Street  San Francisco, CA 94105           |       |       |       |                               |       |

 

***Director and Executive Officer Common Stock Ownership***
| Name of Beneficial Owner                                                      | ** ** | ** **                  | ** ** | **Position** | ** ** | **Shares of  Common  Stock  Beneficially  Owned** | ** ** | **Rights to  Acquire  Beneficial  Ownership  of Shares of  Common  Stock(5)** | ** ** | **Total Number  of Shares of  Common Stock  Beneficially  Owned** | ** ** | **Percentage of  Common  Stock  Outstanding** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-----------------------------|------------|--------------|------------|--------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| John E. Bailye(4)                                                                            |       | Chairman of the Board       |       |         | 2,524,089  |                                                   |       | 1,464,104                                                                                    |       |                                                                                  | 3,988,193  |                                               |       |   | 8.7 | % |   |
| c/o Dendrite  International, Inc.  1405 U.S. Highway  206 Bedminster,  New Jersey 07921 |       | and Chief Executive Officer |       |         |       |                                                   |       |                                                                                         |       |                                                                                  |       |                                               |       |   |   |   |   |
|                                                                                              |            |                             |            |              |            |                                                        |            |                                                                                              |            |                                                                                       |            |                                                    |            |  |  |  |  |  |  |  |

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| John A. Fazio                                   |   | Director                                                 |   |   | 8,700     |   |   | 140,000   |   |   | 148,700    |   |   |   | *    |   |   |
|-------------------------------------------------|--------|----------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|--------|------|--------|--------|
| Bernard M.  Goldsmith                           |   | Director                                                 |   |   | 17,700    |   |   | 237,767   |   |   | 255,467    |   |   |   | *    |   |   |
| Edward J. Kfoury(6)                             |   | Director                                                 |   |   | 29,060    |   |   | 204,767   |   |   | 233,827    |   |   |   | *    |   |   |
| Clay B.  Lifflander                             |   | Director                                                 |   |   | 5,992,312 | (7)    |   | —    |   |   | 5,992,312  |   |   |   | 13.4 | %      |   |
| Peter W. Ladell                                 |   | Director                                                 |   |   | 5,200     |   |   | 13,000    |   |   | 18,200     |   |   |   | *    |   |   |
| Paul A.  Margolis(8)                            |   | Director                                                 |   |   | 19,800    |   |   | 227,767   |   |   | 247,567    |   |   |   | *    |   |   |
| John H.  Martinson                              |   | Director                                                 |   |   | 61,904    |   |   | 279,767   |   |   | 341,671    |   |   |   | *    |   |   |
| Peter G. Tombros                                |   | Director                                                 |   |   | 3,700     |   |   | 17,000    |   |   | 20,700     |   |   |   | *    |   |   |
| Patrick J.  Zenner                              |   | Director                                                 |   |   | 10,700    |   |   | 174,290   |   |   | 184,990    |   |   |   | *    |   |   |
| Joseph A. Ripp                                  |   | President and Chief Operating Officer                    |   |   | 57,125    |   |   | 518,700   |   |   | 575,825    |   |   |   | 1.3  | %      |   |
| Jeffrey J.  Bairstow                            |   | Executive Vice President and Chief Financial Officer     |   |   | —    |   |   | 290,300   |   |   | 290,300    |   |   |   | *    |   |   |
| Christine A.  Pellizzari                        |   | Senior Vice President, General Counsel and Secretary     |   |   | 5,122     |   |   | 222,053   |   |   | 227,175    |   |   |   | *    |   |   |
| Carl L. Cohen                                   |   | President, Marketing Solutions                           |   |   | —    |   |   | —    |   |   | —     |   |   |   | *    |   |   |
| Natasha Giordano                                |   | President, Global Business                               |   |   | 2,711     |   |   | 193,426   |   |   | 196,137    |   |   |   | *    |   |   |
| Garry D. Johnson                                |   | Senior Vice President and Chief Technology Officer       |   |   | 3,429     |   |   | 210,655   |   |   | 214,084    |   |   |   | *    |   |   |
| Mario Mauri                                     |   | President, Europe                                        |   |   | —    |   |   | 27,891    |   |   | 27,891     |   |   |   | *    |   |   |
| Jean-Paul Modde                                 |   | President, Asia-Pacific                                  |   |   | 15,036    |   |   | 437,968   |   |   | 453,004    |   |   |   | 1.0  | %      |   |
| Mark Theilken                                   |   | President, Sales Solutions                               |   |   | 4,300     |   |   | 320,200   |   |   | 324,500    |   |   |   | *    |   |   |
| James Young                                     |   | Senior Vice President and Chief Human Resources  Officer |   |   | —    |   |   | —    |   |   | —     |   |   |   | *    |   |   |
| All executive officers and directors as a group |   |                                                     |   |   | 8,760,888 |   |   | 4,979,655 |   |   | 13,740,543 |   |   |   | 27.7 | %      |   |

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*                    Representsless than 1%.

(1)             Numbersare drawn from “beneficial ownership” disclosures within publicly filed Form 4,13G and 13D filings and include shares subject to stock options exercisable,and restricted stock units that will vest, on or within 60 days of April 5,2007.

(2)             Pursuantto an amended 13D filed on October 23, 2006 and Form 4 filed onAugust 16, 2006 by MMI Investments, L.P. (“MMI”), MMI has sole votingpower and sole dispositive power with respect to 5,992,312 shares.

(3)             Pursuantto an amended 13G filed January 23, 2007 by Barclays Global Investors,N.A., Barclays Global Fund Advisors, Barclays Global Investors, Ltd. andBarclays Global Investors Japan Trust and Banking Company Limited(collectively, “Barclays”), Barclays has sole voting power with respect to2,971,018 shares and sole dispositive power with respect to 3,142,122 shares.

(4)             Mr. Bailyehas sole voting power and sole dispositive power with respect to 3,665,040shares and sole voting power and shared dispositive power with respect to543,405 shares. Mr. Bailye has pledged as security 1,828,040 of hisshares.

(5)             Representsshares subject to (i) stock options exercisable and (ii) stockoptions and restricted stock units that will vest on or within 60 daysfollowing March 16, 2007.

(6)             Mr.Kfoury has pledged as security 20,000 of his shares.

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(7)             Thesesecurities are owned directly by MMI, the general partner of which, MCM CapitalManagement, LLC (“MCM”), owns, indirectly as such general partner, itsproportionate interest of these securities. Mr. Lifflander is a VotingMember and President of MCM. Mr. Lifflander and MCM disclaim beneficial ownershipof such shares except to the extent of their respective pecuniary intereststherein. The source of funds for the shares purchased by MMI was a combinationof MMI’s working capital and margin loans. All of these shares are held inmargin accounts maintained at two financial services companies under customaryterms and conditions and are pledged to secure outstanding margin loans. Exceptas expressly acknowledged herein, this disclosure shall not be deemed anadmission that any such person or entity is the beneficial owner of, or has anypecuniary interest in, any such securities for any purpose.

(8)             Mr.Margolis holds his shares in a margin account but has no outstanding marginobligations under such account.

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**Equity Compensation Plan Information**

Thefollowing table provides equity compensation plan information as of the end ofour 2006 fiscal year with respect to compensation plans under which the Company’sequity securities are authorized for issuance:

**Equity CompensationPlan Information**
| **Plan category**                                         | ** ** | ** ** | ** ** | **Number of securities  to be issued upon  exercise of outstanding  options, warrants  and rights  (a)** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights  (b)(1)** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation plans  (excluding securities  reflected in column (a))  (c)** | ** ** |
|----------------------------------------------------------------|------------|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation  plans approved by security holders(2)     |       | 7,388,191  | (3)        | $                                                                                                                                                     | 14.09      |                                                                                                                | 998,294    | (4)                                                                                                                                                                                                                   |
| Equity compensation  plans not approved by security holders(5) |       | 2,206,410  | (6)        | $                                                                                                                                                     | 13.52      |                                                                                                                | 493,920    |                                                                                                                                                                                                                  |
| Total                                                          |       | 9,594,601  |       | $                                                                                                                                                     | 13.96      |                                                                                                                | 1,492,214  |                                                                                                                                                                                                                  |

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(1)             Excludesrestricted stock units.

(2)             Representsthe Company’s 1992 Stock Plan, 1997 Employee Stock Purchase Plan and 1997 StockIncentive Plan.

(3)             Represents6,862,243 shares subject to outstanding options and 519,998 shares subject torestricted stock units under the 1997 Stock Incentive Plan and 5,950 sharessubject to outstanding options under the 1992 Stock Plan.

(4)             Includes18,292 shares available for purchase under the 1997 Employee Stock PurchaseProgram.  No shares are available forissuance under the 1992 Stock Plan.

(5)             Representsthe New Hire Authorization (“New Hire Plan”).

(6)             Represents2,039,744 shares subject to outstanding options and 166,666 shares subject torestricted stock units under the New Hire Plan.

Transactionsunder the New Hire Plan were registered with the Securities and ExchangeCommission on Form S-8. In accordance with the requirements of NasdaqRule 4350(i), new hires may be granted non-qualified stock options underthe new hire authorization. The exercise price for options is the fair marketvalue of the Company’s common stock on the date of the grant. Vesting ofoptions under the New Hire Plan is determined by the Compensation Committee.All options granted prior to 2004, and certain grants in 2004, generally vesttwenty-five percent (25%) on the first anniversary of date of grant and theremaining seventy-five percent (75%) become exercisable pro rata over thefollowing three year period, on a monthly basis, commencing on the firstanniversary of the date of grant and ending on the fourth anniversary of thedate of grant.  Other option grantsduring 2004 generally vested 100% on December 31, 2004, with the right tosell the underlying shares accruing in either three, or four, equalinstallments on each of the first three, or four, anniversaries of the date ofgrant.  Generally option grants during2005 vested on June 30, 2005 for grants made prior to June 30, 2005 andDecember 31, 2005 for grants made after June 30, 2005, with the right to sellthe underlying shares accruing in either three, or four, equal installments oneach of the first three, or four, anniversaries of the date of grant.  All options granted under the New Hire Planin 2006 and 2007 include a ten-year duration and an exercise price equal to theclosing price of Dendrite’s stock on the business day immediately preceding thedate of grant, and generally vest as follows: (i) twenty-five percent (25%) ofthe options shall first become exercisable on the first anniversary of date ofgrant and (ii) the remaining seventy-five percent (75%) shall becomeexercisable pro rata over the following three (3) year period, on a monthlybasis, commencing on the first anniversary of the date of grant and ending onthe fourth anniversary of the date of grant.  The restricted stock unitsgenerally vest in three or four equal installments on each of the first threeor four anniversaries of the date of grant. The other terms and conditions of such new hire options are generallythe same as for non-qualified stock options granted under the 1997 StockIncentive Plan. Such grants are not subject to the Employee Retirement IncomeSecurity Act of 1974, as amended.

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**ITEM 13. CertainRelationships and Related Transactions**

During2006, the Company chartered aircraft for Company business use from third partycharter companies, including Worldwide Jet Charter.  Worldwide Jet is not affiliated with theCompany or any executives of the Company and it charters aircraft on acommercial basis on behalf of numerous individual aircraft owners. In certaininstances, the aircraft provided by Worldwide Jet from Kookaburra Air LLCand, for 2006, up to $97,000 was paid by Worldwide Jet to Kookaburra inthe form of a credit for such aircraft leased on behalf of the Company. Kookaburra is an aircraft owner whose owners are Mr. Bailye and his spouse, andKookaburra actively charters its aircraft. The revenue from aircraft charteredby the Company through Worldwide Jet is not a material portion ofKookaburra’s overall business with Worldwide Jet.

Mr.Bailye is a party to a registration rights agreement with the Company underwhich he has certain rights with respect to the registration for resale to thepublic of certain shares of Common Stock owned by him.  The rights under the agreement expired inOctober 2006.

**Board Independence andComposition**

TheBoard has reviewed all relationships between each director and the Company and,based on this review, the Board has affirmatively determined that John A.Fazio, Bernard M. Goldsmith, Edward J. Kfoury, Peter W. Ladell, Clay B.Lifflander, Paul A. Margolis, John H. Martinson, Peter G. Tombros and PatrickJ. Zenner are each independent in accordance with all Nasdaq independencestandards.  In addition the Board hasreviewed all relationships between each director and the Company and, based onthis review, the Board has affirmatively determined that each director that isa member of the Compensation, Corporate Governance and Nominating and AuditCommittees is independent in accordance with all applicable independencestandards.

The Boarddetermines the independence of its members through a broad consideration of allrelevant facts and circumstances, including an assessment of the materiality ofany relationship between the Company and a director.  In making each of these independencedeterminations, the Board considered and broadly assessed, from the standpointof materiality and independence, all of the information provided by eachdirector in response to detailed inquiries concerning his independence and anydirect or indirect business, family, employment, transactional or otherrelationship or affiliation of such director with the Company.** ** The Board also considered the existing venturecapital and private equity investment relationships among Messrs. Goldsmith,Kfoury, Margolis, Martinson and the Company’s CEO.

**ITEM 14. PrincipalAccountant Fees and Services**

The fees billed for services rendered for 2006 and2005 by Deloitte & Touche LLP were as follows:

 

|                         | ** ** | **2006**                                                                                                 | ** ** | **2005**                                                                                                 | ** ** |
|-------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| Audit Fees (1)          |       | $                                                                                                        | 4,224,791  |                                                                                                     | $          | 2,441,000 |   |
| Audit-Related  Fees (2) |       |          11,622                                                  |       |          31,755                                                  |       |
| Tax Fees                |       |                   0 |       |                   0 |       |
| All Other Fees (3)      |       | 347,087                                                                                                  |       |        100,000                                                             |       |
| Total                   |       | $4,583,500                                                                                               |       | $                                                                                                        | 2,572,755  |   |
|                         |            |                                                                                                          |            |                                                                                                          |            |  |  |

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(1)                                 Representsfees for professional services provided by Deloitte & Touche LLP inconnection with the integrated audit of our consolidated financial statements,the effectiveness of our internal control over financial reporting, management’s

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assessment of the Company’sinternal control over financial reporting, review of our quarterly financialstatements and audit services provided in connection with other statutory orregulatory filings.

(2)                                 For2006 consists of transfer pricing studies in India and Mexico.  For 2005 consists primarily of servicesrelated to business acquisitions and registration statements.

(3)                                 Consistsof services related to employee benefit plan audits. For 2006 also includesservices rendered in connection with an SEC comment letter and a directoreducation program.

TheAudit Committee has adopted a formal policy concerning the pre-approval of allservices to be provided by the independent registered public accounting firm tothe Company. Specific services being provided by the independent registeredpublic accounting firm are regularly reviewed in accordance with thepre-approval policy.  The Audit Committeehas delegated pre-approval authority to the Audit Committee Chairman for allservices with a budgeted cost of less than $50,000.  The Committee receives periodic updates onservices being provided by the independent registered public accounting firm,including services approved by the Audit Committee Chairman, and management maypresent additional services for approval. All services provided by theindependent registered public accounting firm for 2006 were approved in advanceby the Audit Committee.

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**SIGNATURES**

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

|                      | DENDRITE INTERNATIONAL, INC. |
|----------------------|------------------------------|
|                 | By:                          | /s/ JOHN E. BAILYE |
| Date: April 30, 2007 |                         | John E. Bailye |
|                 |                         | Chairman and Chief Executive Officer |

 

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**EXHIBITINDEX**
|      |   |  Certifications:                                                                                                                                                       |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1 |   | Certification of  John E. Bailye, Chairman of the Board and Chief Executive Officer of the  Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002    |
| 31.2 |   | Certification of  Jeffrey J. Bairstow, Executive Vice President and Chief Financial Officer of  the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |

 

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