UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________________________
FORM
10-K/A
(Amendment
No. 1)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
fiscal year ended December 31, 2008, or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the
transition period from __________to__________
Commission
file number 000-50531
_________________________
ETRIALS
WORLDWIDE, INC.
(Exact
name of Registrant as specified in its charter)
Delaware
|
20-0308891
|
(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
4000
Aerial Center Parkway
Morrisville,
North Carolina 27560
(Address
of principal executive offices, including zip code)
(919) 653-3400
(Registrant’s
telephone number, including area code)
__________________________
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, par value $.0001 per share
Securities
registered pursuant to Section 12(g) of the Act:
None.
Indicate
by check mark if the Registrant is a well-known seasoned issuer (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 reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes
o
No
x
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
o
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “accelerated filer”, “large accelerated filer” and “smaller
reporting company” (as defined in Rule 12b-2 of the Act) (Check
one):
Large accelerated filer
|
|
o
|
|
Accelerated filer
|
|
o
|
Non-accelerated
filer
|
|
o
(Do
not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
x
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes
o
No
x
The
aggregate market value of the voting stock held by non-affiliates of the
registrant, as of June 30, 2008, was approximately $12,290,536 (based on
the closing sale price of $1.85 per share). The number of outstanding
shares of the registrant’s Common Stock, $.0001 par value per share, as of April
24, 2009 was 10,804,585.
ANNUAL
REPORT ON FORM 10-K/A
Table
of Contents
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|
Page
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PART
III
|
|
1
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Item 10.
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Directors
and Executive Officers of the Registrant
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1
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Item 11.
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Executive
Compensation
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6
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Item 12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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16
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Item 13.
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Certain
Relationships and Related Transactions, and Director
Independence
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17
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Item 14.
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Principal
Accountant Fees and Services
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18
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PART
IV
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19
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Item 15.
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Exhibits
and Financial Statements
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19
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SIGNATURES
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20
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EXPLANATORY
NOTE
Certain
information required by Part III of Form 10-K was omitted from our report on
Form 10-K filed on March 11, 2009, because at that time we intended to file a
definitive proxy statement for our 2009 Annual Meeting of Stockholders within
120 days after the end of our fiscal year pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended. Because we no
longer intend to file the definitive proxy statement within the 120-day period,
the omitted information is filed herewith and provided below as
required.
PART
III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board
of Directors
Our
Certificate of Incorporation provides that our Board of Directors is divided
into three classes of directors with the numbers of directors in each class to
be as nearly equal as possible. Each class of directors generally
serves a three-year term. The terms of each class of directors ends
at different consecutive annual meetings of stockholders. Directors
within the same class have terms that end at the same annual meeting as other
directors in the same class. However, to ensure compliance with
NASDAQ rules regarding independence, as well as to ensure the number of
directors in each class is as equal as possible as is required by our
Certificate of Incorporation, it is sometimes necessary to elect a director for
a term of less than three years. This system of electing directors is often
called a staggered Board of Directors. A staggered Board system
facilitates continuity of Board membership. Having a staggered Board
also makes it more difficult for stockholders, including a buyer seeking to
purchase control of the Company, to quickly replace all or a majority of the
Board. For this reason, a staggered Board is considered an
anti-takeover measure that discourages potential buyers from seeking to purchase
the Company, unless the current Board of Directors approves the
acquisition.
Our
Bylaws authorize the Board of Directors to fix the number of directors that
constitute the whole Board at any number that is not less than one and not more
than nine. The Board of Directors currently consists of six directors
who are divided into three classes, with each of the directors having terms that
end with the election of their successors at the annual meetings of stockholders
for the years indicated below.
The
following directors’ terms end when their successors are elected at the 2009
annual meeting of shareholders.
Name,
Age, and Service On Board
|
|
Information
about Nominee
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Hans
Lindroth
50
Years Old
Director
Since February 2006
|
|
Hans Lindroth
has been
a Board member since February 2006. He served as a member the
Board of Directors of our subsidiary, etrials, Inc., from January 2003
until February 2006. Mr. Lindroth was the Chairman of the Board
of Directors from February 2006 through May 2008. Since April
1998, Mr. Lindroth has served as chief executive officer of Lingfield AB,
an organization that manages a group of investment vehicles whose
beneficial owner is the Peder Sager Wallenberg Charitable
Trust. Mr. Lindroth is a non-executive director of several
companies, including two companies that are publicly listed in Sweden –
MiniDoc AB and Smarteq AB. Mr. Lindroth received his undergraduate degree
in management, finance and computer science and received a Master of Arts
in political science from the University of Stockholm.
|
|
Name,
Age, and Service On Board
|
|
Information
about Nominee
|
Peter
Collins
40 Years
Old
Director
Since January 2005
|
|
Peter Collins
has been
a Board member since January 2005. He is Managing Principal of
Forge Capital Partner LLC, a diversified merchant banking, private equity
and real estate investment business headquartered in Tampa,
FL. Additionally, Mr. Collins is the co-founder and President
of Community Reinvestment Partners, LP, a group of private real estate
investment partnerships focused on acquiring and developing
income-producing commercial real estate in low to moderate-income
communities. From December 1997 to May 2002, Mr. Collins was a
Partner at Rock Creek Capital, a private equity firm. From June
1994 to December 1997, Mr. Collins served as a Manager with the Florida
State Board of Administration (Florida’s Public Pension Fund) and was also
the chief of staff for four years for State Senator Charles
Williams. Mr. Collins also currently serves as a non-executive
director of Digital Lightwave, a public company and as a director/advisor
to several private companies and venture capital firms. Mr.
Collins received both an undergraduate degree in Finance and a Master of
Business Administration in Finance from Florida State
University.
|
The
following directors’ terms end when their successors are elected at the 2010
annual meeting of stockholders.
Name,
Age, and Service on Board
|
|
Information
about Director
|
Donald
Russell
56 Years
Old
Director
Since November 2003
|
|
Donald Russell
has been
a Board member since November 2003. He served as our Vice
Chairman from October 2003 until he resigned from that position in
February 2006. Mr. Russell is also a Board member of Aerosonic
Corporation (AIM), an American Stock Exchange company. Mr.
Russell has been the Chairman of the Investment Committee for CEA Capital
Partners USA, L.P., a $150 million private equity fund, since its
inception in February 1997. He also has been a member of the
Investment Committee of Seaport Capital Partners II, L.P., a $262 million
private equity fund, since its inception in February 2000. Both
of these funds are focused on the entertainment, media, telecommunications
and information services industries. From July 1987 to June
1994, Mr. Russell was President of Communications Equity Associates’ New
York affiliate, CEA, Inc., and was responsible for overseeing CEA’s
mergers, acquisitions and corporate financing business in the cable
television and broadcasting segments. Mr. Russell received a
Bachelor of Arts in economics from Colgate
University. He was elected to the Society of International
Business Fellows in 2000.
|
|
|
|
Name,
Age, and Service on Board
|
|
Information
about Director
|
M.
Denis Connaghan
58
Years Old
Director
Since November 2008
|
|
M. Denis Connaghan
has
been a Board member and Chief Executive Officer of the Company since
November 2008. Mr. Connaghan was a Managing Director, Global
Operations and Global IT Program Management Offices with Marsh USA, Inc.,
a subsidiary of Marsh McLennan Company, from March 2007 through March
2008. Prior to that, he was a consultant to Marsh USA, Inc.
from October 2006 through March 2007. Before joining Marsh, Mr.
Connaghan was Chief Executive Officer of P2Plink, a medical bill
processing and review company related to workman’s compensation insurance
owned by The Hartford and Marsh USA from February 2005 through September
2006. Prior to that, he was a self-employed independent
executive consultant providing advice to numerous companies in health care
technology related businesses from April 2003 through December
2004. From May 2002 through March 2003, he was Chief Executive
Officer, Transaction Services for a division of Medic Computer
Systems/MISYS Healthcare Systems, which provides hardware and software
solutions for healthcare providers. He joined MISYS Healthcare
in September 1999. From early 1996 until August 2004, he was a
member of the Board of Directors of Transolutions, Inc., a medical
transcription company. Mr. Connaghan received a Master in
Business Administration in 1990 from the University of Chicago Graduate
School of Business.
|
The
following directors’ terms end when their successors are elected at the 2011
annual meeting of stockholders.
Name,
Age, and Service on Board
|
|
Information
about Director
|
Robert
Brill
62
Years Old
Director
Since February 2006
Chairman
of the Board
|
|
Robert Brill
has been a
Board member since February 2006. He served as a member of the
Board of Directors of our subsidiary, etrials, Inc., from December 2003
until February 2006. Dr. Brill has been founding managing
partner of Newlight Associates since June 1997, and was a general partner
of PolyVentures, whose principal investment focus was on early stage
investments in technology companies, from August 1988 until December
2002. Dr. Brill was also a founding member of the Technical
Advisory Board of the Semiconductor Research Corporation. Dr.
Brill received a Doctor in Philosophy in physics from Brown University and
a Bachelor of Arts and Bachelor of Science in engineering physics from
Lehigh University, both with honors. Dr. Brill also holds
multiple patents and invention disclosures.
|
|
|
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Kenneth
Jennings, Ph.D.
54 Years
Old
Director
Since November 2007
|
|
Kenneth Jennings
has
been a Board member since November 2007. He is the owner and
Managing Director of Third River Partners, LLC (formerly called Venture
Works Partners), a consulting company, where he focuses on growth
strategies and developing client companies’ human resources. He
has held these positions since January 2000. Mr. Jennings
received a Bachelor of Science in behavioral science from the Air Force
Academy in 1977, a Master of Science in management from the Air Force
Institute of Technology in 1981 and a Doctor of Philosophy in
organizational development from Purdue University in
1986.
|
Selection
of Nominees for the Board of Directors
The
Nominating and Corporate Governance Committee reviews and reports to the Board
on a periodic basis with regard to the size of the Board of Directors, criteria
and qualifications for membership on the Board and reviews the qualifications of
both current members and new candidates.
The
Nominating Committee will consider candidates for our Board proposed by
stockholders in accordance with our established procedures, which did not change
in fiscal year 2008.
Audit
Committee
The Audit
Committee assists the Board in its general oversight of our financial reporting,
internal controls and audit functions, and is directly responsible for the
appointment, retention, compensation and oversight of the work of our
independent registered public accounting firm. The members of the
Audit Committee are Robert Brill, Peter Collins and Kenneth
Jennings.
In
accordance with law, the Audit Committee has ultimate authority and
responsibility to select, compensate, evaluate and, when appropriate, replace
our registered public accounting firm. The Audit Committee has the
authority, as it determines appropriate, to engage its own outside advisors,
including experts in particular areas of accounting, apart from counsel or
advisors hired by management.
The Audit Committee also includes at
least one independent member who the Board has determined meets the
qualifications of an audit committee financial expert in accordance with SEC
rules. The Board has determined that Robert Brill is an audit
committee financial expert. Stockholders should understand that this
designation is a disclosure requirement of the SEC related to Mr. Brill’s
experience and understanding with respect to accounting and auditing
matters. The designation does not impose upon Mr. Brill any duties,
obligations or liabilities that are greater than are generally imposed on him as
a member of the Audit Committee and the Board, and his designation as an audit
committee financial expert pursuant to this SEC requirement does not affect the
duties, obligations or liabilities of any other member of the Audit Committee or
the Board.
Code
of Ethics
During
the fiscal year ended December 31, 2006, we adopted a Code of Ethics, which was
amended on April 6, 2008, for our employees, officers and directors that
complies with SEC regulations. The Code of Ethics is available free
of charge on our website at
www.etrials.com
, by
clicking on the Investors link, then the Corporate Governance
link. We intend to timely disclose any amendments to, or waivers
from, our code of ethics that are required to be publicly disclosed pursuant to
rules of the SEC by filing such amendment or waiver with the SEC.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act requires our directors, officers and persons who
own more than 10% of our outstanding common stock to file with the SEC and
NASDAQ an initial report of ownership of our stock on Form 3 and reports of
changes in ownership on Form 4 or Form 5. Persons subject
to Section 16 are required by SEC regulations to furnish us with copies of
all Section 16(a) forms that they file. Under SEC rules, certain
forms of indirect ownership and ownership of company stock by certain family
members are covered by these reporting requirements. As a matter of
practice, our administrative staff assists our executive officers and directors
in preparing initial ownership reports and reporting ownership changes, and
typically files these reports on their behalf.
Based
solely on a review of the copies of such forms in our possession, and on written
representations from certain reporting persons, we believe that during 2008 all
of our executive officers and directors filed the required reports on a timely
basis under Section 16(a) other than as follows:
|
▪
|
Peter
S. Benton’s Form 4 reporting a grant of 24,938 shares of our Common Stock
on March 7, 2008 was due on March 11, 2008, and filed on March 21, 2008;
and his Form 5 reporting cancellation of 24,938 shares of our Common Stock
on
May
1, 2008 was due on February 16, 2009 and has not been
filed.
|
|
▪
|
Dr.
Robert M. Brill’s
Form 4 reporting
the expiration without consideration of Warrants representing a total of
526,005 shares of our Common Stock on February 11, 2008, was due on
February 13, 2008 and filed on June 13, 2008; and his Form 4 reporting the
cancellation without consideration of 160,229 shares of our Common Stock
on February 19, 2008, was due on February 21, 2008, and filed on June 13,
2008.
|
|
▪
|
Arthur
David Campbell’s Form 4 reporting a grant of 15,517 shares of our Common
Stock on March 4, 2008 based on the closing price for our Common Stock on
March 7, 2008, was due on March 11, 2008 and filed on March 21, 2008; and
his Form 5 reporting cancellation of 15,517 shares of our Common Stock on
April 18, 2008 was due on or before February 16, 2009 and has not been
filed.
|
|
▪
|
James
W. Clark Jr.’s Form 4 reporting the expiration without consideration of
Warrants representing a total of 57,248 shares of our Common Stock on
February 11, 2008 was due on February 13, 2008 and filed on March 21,
2008;
his
Form 4 reporting
cancellation of 19,188 shares of our Common Stock on February 19, 2008 was
due on February 21, 2008 and filed on March 21, 2008; and his Form 4
reporting a grant of 49,261 shares of our Common Stock on March 4, 2008
based on the closing price for our Common Stock on March 7, 2008, was due
on March 11, 2008 and filed on March 21,
2008.
|
|
▪
|
M.
Denis Connaghan’s Form 4 reporting a grant of 100,000 shares of our Common
Stock and grant of options to purchase 350,000 shares of our Common Stock
on November 12, 2008, was due on November 14, 2008 and filed on his
initial report on Form 3 on November 21,
2008.
|
|
▪
|
Eugene
Jennings’s Form 4 reporting a grant of 100,000 shares of our Common Stock
on March 4, 2008, was due on March 6, 2008, and filed on March 21, 2008;
his Form 4 reporting a grant of 80,049 shares of our Common Stock on March
4, 2008 based on the closing price for our Common Stock on March 7, 2008
was due on March 11, 2008 and filed on March 21, 2008; and his Form 5
reporting cancellation of 80,049 shares of our Common Stock on July
10, 2008 was due on February 16, 2009 and has not been
filed.
|
|
▪
|
Kenneth
Jennings’s initial report on Form 3 was due on November 26, 2007 and filed
on March 18, 2008; and his Form 4 reporting a grant of options to purchase
50,000 shares of our Common Stock on March 4, 2008, was due on March 6,
2008, and filed on March 18, 2008.
|
|
▪
|
Marc
K. Leighton’s initial report on Form 3 was due on November 26, 2007 and
was filed on January 29, 2008; his Form 4 reporting a grant of options to
purchase 50,000 shares of our Common Stock on November 15, 2007 was due on
November 19, 2007 and filed on his initial report on Form 3 on January 29,
2008; his Form 4 reporting a grant of 14,482 shares of our Common Stock on
March 7, 2008 was due on March 11, 2008, and filed on March 21, 2008; and
his Form 5 reporting cancellation of 14,482 shares of our Common Stock on
July 11, 2008 was due on or before February 16, 2009 and has not been
filed.
|
|
▪
|
Michael
Mickens’s initial report on Form 3 was due on December 6, 2007 and filed
on March 21, 2008; his Form 4 reporting a grant of 8,867 shares of our
Common Stock on March 7, 2008 was due on March 11, 2008, and filed on
March 21, 2008; his Form 4 reporting a grant of options to purchase 50,000
shares of our Common Stock on February 20, 2008, was due on February 22,
2008, and filed on March 21, 2008; and his Form 4 reporting a grant of
options to purchase 50,000 shares of our Common Stock on July 30, 2008,
with an option price effective as of August 15, 2008, was due on August
19, 2008, and filed on December 18,
2008.
|
|
▪
|
Charles
J. Piccirillo’s initial report on Form 3 was due on November 26, 2007 and
was filed on January 29, 2008; his Form 4 reporting a stock option award
of 25,000 shares of our Common Stock on November 15, 2007 was due on
November 19, 2007 and filed on his initial report on Form 3 on January 29,
2008; his Form 4 reporting a grant of 12,931 shares of our Common Stock on
March 4, 2008 based on the closing price for our Common Stock on March 7,
2008 was due on March 11, 2008 and filed on March 21, 2008; his Form 4
reporting a grant of 25,000 shares of our Common Stock on May 9, 2008 was
due on May 13, 2008 and filed on November 12, 2008; his Form 4 reporting
purchases of 2,500 shares of our Common Stock on June 6, 2008 was due on
June 10, 2008 and filed on June 11, 2008; and his Form 4 reporting a grant
of options to purchase 50,000 shares of our Common Stock on July 30, 2008,
with an effective option price as of August 15, 2008, was due on August
19, 2008 and filed on November 12,
2008.
|
|
▪
|
Stuart
Thiede’s initial report on Form 3 was due on June 2, 2008 and was filed on
November 12, 2008; his Form 4 reporting a grant of 29,221 shares of our
Common Stock on July 30, 2008 based on the closing price for our Common
Stock on August 15, 2008 and reporting a grant of options to purchase
50,000 shares of our Common Stock on July 30, 2008, with an effective
option price as of August 15, 2008 was due on August 19, 2008, and filed
on November 12, 2008.
|
|
▪
|
Joseph
Trepanier’s initial report on Form 3 was due on March 27, 2008 and was
filed on April 17, 2008; his Form 4 reporting a grant of options to
purchase 20,000 shares of our Common Stock on May 9, 2008, was due on May
13, 2008 and filed on November 12, 2008; his Form 4 reporting a grant of
26,786 shares of our Common Stock on July 30, 2008 based on the closing
price for our Common Stock on August 15, 2008, was due on August 19, 2008
and filed on November 12, 2008; and his Form 4 reporting a grant of
options to purchase 80,000 shares of our Common Stock on July 30, 2008,
with an effective option price as of August 15, 2008, was due on August
19, 2008, and filed on November 12,
2008.
|
Executive
Officers
Our
executive officers who are not members of our Board of Directors as of April 20,
2009, is set forth below. There are no family relationships among our
directors or executive officers
Joseph
Trepanier
. (40 years old) Mr. Trepanier has served
as Chief Financial Officer since October 2008. From March 2008 to
October 2008, Mr. Trepanier served as Vice President of Finance and Corporate
Controller. From July 2007 until March 2008, Mr. Trepanier served as
Chief Operating Officer of Smart Online, from February 2004 until June 2007 he
was the Chief Financial Officer of DataFlux Corporation, and from January 2003
until February 2004 he was director of Finance of Hill-Rom
Corporation. Mr. Trepanier is a North Carolina-licensed Certified
Public Accountant and received a Bachelor in Science in accounting from West
Virginia University, a Bachelor in Science in business from the University of
New Hampshire, and a Master in Business Administration from Southern New
Hampshire University.
Michael
Mickens
. (41 years old) Mr. Mickens has served as Vice
President - Sales and Client Services since December 2007. Mr.
Mickens joined etrials from Cerner Corp., where he was Vice President -
Worldwide Sales and Business Development from June 2004 until November
2007. From January 2002 until July 2003, he was Vice President of
Worldwide Sales and Business Development at QED Solutions, Inc. Mr.
Mickens received a Bachelor of Science in business administration from Colorado
State University.
E. James Emerson,
Ph.D.
(66 years old) Dr. Emerson has served as Vice President
– Technology and Development since March 2009. From 1976 until 1984,
Dr. Emerson served as director of computer resources at KPMG in their New York
executive office. He served as Vice President of Technology at Pansophic
Systems (now part of Computer Associates) from 1984 until 1990 and as President
of RTI Software from 1990 until 2007. From 2007 until 2008, Dr. Emerson
was the Senior Vice President at Marsh USA. He holds a doctorate in
computer science from the New York University Polytechnic Institute, a Master in
Business Administration from Seton Hall University and a Bachelor of Science in
Physics from the University of Florida. Dr. Emerson has also served
as a professor of data base management systems and SQL at North Central College
in Naperville, IL.
ITEM 11. EXECUTIVE
COMPENSATION
Our
compensation system for senior management relies on the following
components:
|
§
|
performance-based
bonuses that might be less than, equal to, or more than, base
salary;
|
|
§
|
sales
commissions for certain personnel;
|
|
§
|
equity
compensation in the form of stock options and/or restricted stock;
and
|
|
§
|
health
insurance, 401k and other benefits.
|
The
following table sets forth summary information concerning the compensation paid
for the last two fiscal years to (1) the individuals who served as our principal
executive officer in 2008, (2) our two most highly compensated executive
officers other than the principal executive officer who were serving as
executive officers at the end of the last completed fiscal year
,
and (3) up to two additional
individuals for whom disclosure would have been provided but for the fact that
the individual was not serving as an executive officer of etrials at the end of
the last completed fiscal year.
SUMMARY
COMPENSATION TABLE
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards
($)
(2)
|
All
Other
Compensation
($)
|
Total
($)
|
M.
Denis Connaghan
President
& CEO
|
2008
2007
|
$45,832
-
|
$11,986
(1)
-
|
$15,152
(1)
-
|
$9,012
-
|
$1,082
(3)
-
|
$82,315
-
|
Joseph
(Jay) Trepanier III
Chief
Financial Officer & Secretary from May 2008
|
2008
2007
|
$117,084
-
|
$20,625
(4)
-
|
$20,625
(4)
-
|
$9,908
-
|
$5,305
(19)
-
|
$169,071
-
|
Michael
Mickens
Vice
President – Sales & Client Services
|
2008
2007
|
$180,000
$18,462
|
$84,726
(4)
-
|
$23,469
(4)
-
|
$11,250
-
|
$7,858
(5)
$794
(6)
|
$307,339
$18,462
|
Eugene
Jennings
President
& CEO until July 2008
|
2008
2007
|
$305,631
$199,740
|
$7,813
$95,000
(7)
|
$51,043
$36,537
|
$582,433
(8)
$190,962
|
$122,213
(9)(10)
$29,713
(9)(11)
|
$1,068,863
$515,415
|
Charles
Piccirillo
Interim
CEO, July 2008- November 2008;
Vice
President -Product Development until January 2009
|
2008
2007
|
$174,583
$49,424
|
$18,750
(4)
-
|
$20,581
(4)
-
|
$18,750
$1,651
|
$9,629
(12)
$2,448
(13)
|
$242,290
$53,523
|
James
W. Clark, Jr.
Treasurer
& Chief Financial Officer until May 2008
|
2008
2007
|
$132,837
$200,000
|
-
-
|
-
-
|
$366,452
(8)
$310,360
|
$134,089
(9)(14)
$24,481
(9)(15)
|
$633,378
$534,841
|
Michael
Harte
Senior
VP of Sales until December 2008
|
2008
2007
|
$187,775
$171,250
|
$38,472
$114,688
(17)
|
-
-
|
$29,179
(8)
$19,568
|
$22,653
(9)(16)
$22,008
(9)(18)
|
$
278,079
$327,514
|
(1)
|
Bonus
for M. Denis Connaghan for 2008 was guaranteed as a condition of his
employment contract with the Company. The Company paid 50%, or
$11,986, in cash and 50% in stock based on a per share price of
$0.73. The Company paid the bonus in 2009.
|
|
|
(2)
|
Amounts
shown in this column are based on the accounting expense recognized by the
Company in fiscal years 2008 and 2007 related to stock option awards made
in relevant fiscal years. There can be no assurance that the
options will ever be exercised (in which case no value will be realized by
the executive) or that the value on exercise will equal the FAS 123R
value. The assumptions and methodology used to calculate the
accounting expense recognized in fiscal years 2008 and 2007 for these
stock option awards are as
follows:
|
Valuation and amortization
method
- The Company determines the fair value of stock options using the
Black-Scholes option-pricing formula. This fair value is then
amortized on a straight-line basis over the requisite service periods of the
awards, which is generally the vesting period.
Expected Term
-
The expected term
represents the period that the Company determined based upon the simplified
method as allowed under the provisions of the Securities and Exchange
Commission’s Staff Accounting Bulletin No. 107 and represents the period of time
that options granted are expected to be outstanding.
Expected Volatility
- The
fair value of stock-based awards reflects a volatility factor the Company has
determined based on an analysis of reported data for a peer group of companies
that have issued stock options with substantially similar terms.
Expected Dividend Yield
- The
expected dividend yield is assumed to be zero because the Company has not paid
and does not anticipate paying cash dividends on its shares of common
stock.
Risk-Free Interest Rate
- The
Company bases the risk-free interest rate used in the Black-Scholes valuation
method on the yield to maturity at the time of the stock option grant on
zero-coupon U.S. government bonds having a remaining life equal to the option’s
expected life.
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|
|
|
|
|
|
|
Expected
dividend yield
|
0%
|
0%
|
0%
|
0%
|
0%
|
0%
|
Expected
volatility
|
0%
|
0%
|
0%
|
100%
|
100%
|
100%
|
Risk-free
interest rate
|
3.61%
|
4.46%
|
3.74%
|
5.08%
|
4.36%
|
2.68%
|
Expected
life (in years)
|
7.0
|
7.0
|
7.0
|
3.7
|
4.0
|
4.0
|
(4)
|
Includes performance-based awards
earned for fiscal year 2008 but paid in 2009 of $20,625 in cash and
$20,625 in stock for Mr. Trepanier, $11,250 in cash and $11,250 in stock
for Mr. Mickens, and $18,750 in cash and $18,750 in stock for Mr.
Piccirillo.
|
|
|
(5)
|
Consists for Mr. Mickens of
imputed value of group term life insurance of $231 and Company-paid
premiums for health, dental, and disability insurance employee programs of
$7,626.
|
|
|
(6)
|
Consists for Mr. Mickens of
Company-paid premiums for health and dental insurance employee programs of
$794.
|
|
|
(7)
|
Bonus for Eugene Jennings for
2007 was guaranteed as a condition of his employment contract with the
Company.
|
|
|
(8)
|
Includes an additional expense to
the Company in connection with the forfeiture of options without
consideration under FAS 123R, of $464,358 for Mr. Jennings, $279,227 for
Mr. Clark, and $16,039 for Mr. Harte.
|
|
|
(9)
|
Includes automobile allowances
for Eugene Jennings of $3,000 for 2008 and $3,688 for 2007, for James
Clark of $2,500 for 2008 and $6,000 for 2007, and for Michael Harte $8,625
for 2008 and $9,000 for 2007.
|
|
|
(10)
|
Includes for Mr. Jennings a
severance payment of $103,125, a Company contribution to 401(k) plan of
$4,024, imputed value of group term life insurance of $253 and
Company-paid premiums for health, dental, and disability insurance
employee programs of $11,811.
|
|
|
(11)
|
Includes for Mr. Jennings of
value of vested restricted stock award of $18,844 for 2007, imputed value
of group term life insurance of $259 for 2007 and Company-paid premiums
for health, dental, and disability insurance employee programs of $6,922
for 2007.
|
(12)
|
Consists for Mr. Piccirillo of a
Company contribution to 401(k) plan of $2,083, imputed value of group term
life insurance of $370 and Company-paid premiums for health, dental, and
disability insurance employee programs of $7,176
|
|
|
(13)
|
Consists for Mr. Piccirillo of
imputed value of group term life insurance of $116 and Company-paid
premiums for health, dental, and disability insurance employee programs of
$2,332.
|
|
|
(14)
|
Includes for Mr. Clark of a
severance payment of $116,667, a Company contribution to 401(k) plan of
$6,642, imputed value of group term life insurance of $240 and
Company-paid premiums for health, dental, and disability insurance
employee programs of $8,041.
|
|
|
(15)
|
Includes for Mr. Clark of a
Company contribution to 401(k) plan of $9,442 for 2007, imputed value of
group term life insurance of $774 for 2007 and company paid premiums for
health, dental, and disability insurance employee programs of $8,265 for
2007.
|
|
|
(16)
|
Includes for Mr. Harte of a
Company contribution to 401(k) plan of $6,429, imputed value of group term
life insurance of $224 and Company-paid premiums for health, dental, and
disability insurance employee programs of
$7,375.
|
|
|
(17)
|
Consists of commissions earned in
2007 for Michael Harte.
|
|
|
(18)
|
Includes for Mr. Harte of a
Company contribution to 401(k) plan of $5,331for 2007, imputed value of
group term life insurance of $265 for 2007 and Company-paid premiums for
health, dental, and disability insurance employee programs of $7,412 for
2007.
|
|
|
(19)
|
Consists for Mr. Trepanier of
Company contribution to 401(k) plan of $688, imputed value of group term
life insurance of $106 and Company-paid premiums for health, dental, and
disability insurance employee programs of
$4,512.
|
UNEXERCISED
STOCK OPTIONS AND UNVESTED EQUITY AT YEAR END
The
following table provides information for each named executive officer concerning
unexercised options, stock that has not vested and equity incentive plan awards
outstanding at December 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
OPTION
AWARDS
|
STOCK
AWARDS
|
Name
& Title
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares of Common Stock That Have Not Vested (#)
|
Market
Value of Shares of Common Stock That Have Not Vested ($)
(6)
|
Equity
Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have
Not Been Vested (#)
|
Equity
Incentive Plan Awards: Market or Payment Value of Unearned Shares Units or
Other Rights That Have Not Vested ($)
(6)
|
M.
Denis Connaghan
President
& CEO since November 2008
|
21,875
|
328,125
(1)
|
$1.10
|
11/10/2018
|
|
|
|
|
|
|
|
|
|
93,750
|
$82,500
|
|
|
Joseph
(Jay) Trepanier III
Chief
Financial Officer from May 2008
|
|
20,000
(2)
|
$1.51
|
5/9/2018
|
|
|
|
|
|
|
80,000
(3)
|
$1.54
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
26,786
|
$23,572
|
|
|
|
|
|
|
|
|
|
Michael
Mickens
Vice
President – Sales & Client Services
|
12,500
|
37,500
(4)
|
$2.47
|
2/20/18
|
|
|
|
|
|
6,250
|
43,750
(5)
|
$1.54
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
8,867
|
$7,803
|
|
|
|
|
|
|
|
|
|
Eugene
Jennings
President
& CEO until July 2008
|
92,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Piccirillo
Interim
CEO, July 2008- November 2008;
Vice
President Product Development until January 2009
|
9,375
|
|
|
|
|
|
12,931
|
$11,379
|
|
|
|
|
|
|
|
|
|
James
W. Clark, Jr.
Treasurer
& CFO until May 2008
|
251,355
|
5,167
|
|
|
|
|
49,261
|
$43,350
|
|
|
|
|
|
|
|
|
|
Michael
Harte
Senior
VP of Sales until December 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Subject
to accelerated vesting as described in Mr. Connaghan’s Incentive Stock
Option Agreement, the options vest in sixteen equal quarterly installments
of 21,875 shares on the 12th day of February, May, August and November of
each year beginning February 12,
2009.
|
(2)
|
Options
to purchase 5,000 shares vest annually, commencing on May 9,
2009.
|
(3)
|
Options
to purchase 3,125 shares vest quarterly in sixteen equal installments over
four years on the 15th day of November, February, May and August,
commencing on November 15, 2009.
|
(4)
|
Options
to purchase 12,500 shares vest annually commencing on February 20,
2009.
|
(5)
|
Options
to purchase 3,125 shares vest quarterly in sixteen equal installments over
four years, on the 15th day of November, February, May and August,
commencing on November 15, 2008
|
(6)
|
Based
on a closing price of $.88 per share on December 31,
2008.
|
Employment
Agreements
M.
Denis Connaghan
In
November 2008 we entered into an employment agreement with Mr.
Connaghan. The agreement continues until terminated by the Company or
by Mr. Connaghan and provides for a base salary of $325,000 per
year. Mr. Connaghan is eligible to earn a bonus of up to $175,000 per
year on terms and conditions determined by the Compensation Committee of our
Board of Directors. For 2008, the agreement provides for a guaranteed
bonus of $23,973, which is $175,000 prorated by the number of days in the year
that we employed Mr. Connaghan. The Company may choose to pay up to
50% of any bonus in shares of common stock of the Company. If the
shares are issued before the bonus is earned, the shares will be restricted
shares subject to forfeiture.
The
agreement provides that the Company may terminate the agreement and employment
for any reason at any time on reasonable notice and that Mr. Connaghan may
terminate for any reason at any time on 30 days’ notice. If the
Company terminates without "cause" (as defined in the agreement), or if Mr.
Connaghan terminates for "good reason" (as defined in the agreement), then (i)
the Company will pay 12 months’ base salary as severance, (ii) the Company will
provide 12 months of paid benefits and (iii) if bonus criteria are achieved and
a bonus would have been earned had Mr. Connaghan remained employed for the
entire year or other bonus measurement period, then the Company will pay a
prorated portion of the earned bonus based on the number of days during the year
or other bonus measurement period that we employed Mr. Connaghan prior to the
termination of employment. The agreement includes certain restrictive
covenants that limit Mr. Connaghan’s ability to compete with etrials and our
subsidiary or to divulge certain confidential information concerning etrials and
our subsidiary.
The
Company has also agreed to recommend that Mr. Connaghan be reelected to the
Board when his term expires, if the Board determines such recommendation is
consistent with the fiduciary duties of Board members and would not otherwise
harm the Company. The agreement also provides that upon termination
of employment, Mr. Connaghan will be deemed to have resigned from the Board, and
his receipt of severance payments is conditioned upon delivery of a letter of
resignation.
In
November 2008 our Board of Directors granted to Mr. Connaghan 100,000 restricted
shares of our Common Stock for a purchase price of $0.0001 per
share. Until such shares vest and upon a Termination of Employment
(as defined in the agreement), the Company may repurchase the restricted shares
at the purchase price for which the shares were issued. Subject to
accelerated vesting as described below, these restricted shares vest in sixteen
equal quarterly installments of 6,250 shares beginning in February 2009 and
ending in November 2012. If termination occurs without "cause" within
six months after a "change of control" (as defined in the agreement), then 50%
of the outstanding restricted shares that remain unvested at the termination
date will become vested. If no “change of control” has occurred, but
the Company terminates without "cause", or if the executive terminates for "good
reason" or upon death, disability or "normal retirement" (as defined in the
Plan), all the unvested shares will become vested. These shares of
restricted stock are subject to the terms of the Company's 2005 Performance
Equity Plan, as amended, or the Plan. Mr. Connaghan's restricted
stock agreement is in a form utilized for grants to other employees and, except
for the accelerated vesting provisions described above, does not grant him more
favorable terms than restricted stock agreements of other
employees.
In
November 2008 our Board of Directors granted incentive stock options to Mr.
Connaghan to purchase 350,000 shares of our Common Stock. The
exercise price for these options is $1.10 per share, which was the closing sale
price of our Common Stock on November 11, 2008. Subject to
accelerated vesting as described below, the options vest in sixteen equal
quarterly installments of 21,875 shares beginning in February 2009 and ending in
November 2012. If termination occurs without "cause" within six
months after a "change of control", then 50% of the outstanding stock options
that remain unvested at the termination date will automatically
vest. If no “change of control” has occurred, but the Company
terminates without "cause", or if the executive terminates for "good reason" or
upon death, disability or "normal retirement", all the unvested shares will vest
and be available for exercise for 90 days. These options are subject
to the terms of the Plan. The option agreement is in a form
utilized for option grants to employees generally and, except for the
accelerated vesting provisions described above, does not grant Mr. Connaghan
more favorable terms than option agreements of other employees.
Michael
Mickens and Joseph (Jay) Trepanier III
In August
and October 2008 we entered into employment agreements with Michael Mickens and
Joseph (Jay) Trepanier III, respectively. Mr. Mickens’ base salary is
$180,000 per year and Mr. Trepanier's base salary was initially $165,000 per
year. In March 2009, we increased Mr. Trepanier’s base salary to
$180,000. Mr. Mickens and Mr. Trepanier are eligible to receive
bonuses on terms and conditions determined by the Compensation Committee of our
Board of Directors. Both employment agreements terminate in February
2010 and do not contain automatic renewal provisions.
Except
for compensation, Mr. Mickens’s and Mr. Trepanier’s employment agreements
contain similar terms. Each agreement provides that the Company may
terminate the officer’s employment at any time with at least two weeks’ notice,
but that if the Company terminates employment before February 2010 and without
cause as defined in the agreement, then the officer is entitled to six months’
base salary and paid benefits as severance. Each agreement includes
restrictive covenants that limit the officer’s ability to compete with etrials
and our subsidiary or to divulge certain confidential information.
In July
2008 our Board of Directors granted to Mr. Mickens and Mr. Trepanier incentive
stock options to purchase 50,000
and 80,000 shares of
Common Stock, respectively. The exercise price for the options is
$1.54 per share, which was the closing sale price of our Common Stock on August
15, 2008. Subject to accelerated vesting as described below, the
options vest in 16 equal quarterly installments beginning in November 2008 and
ending in August 2011. If termination occurs without cause within six
months after a change of control as defined in the agreement, then 50% of the
outstanding stock options and restricted stock that vest over a time schedule
and remain unvested at the termination date will become
vested. Restricted shares that are subject to vesting via achievement
of performance targets (such as the bonus plan grants described below) are not
included in this acceleration provision. The option agreement is in a
form utilized for option grants to employees generally and, except for the
accelerated vesting provisions described above, do not grant Mr. Mickens or Mr.
Trepanier more favorable terms than option agreements of other
employees.
Mr.
Connaghan’s and Mr. Trepanier’s employment agreements are exhibits to our
filings with the Securities and Exchange Commission, and investors who desire to
understand all the provisions of these agreements (including the definitions of
defined terms) should read these agreements in their entirety. The
exhibit index to our annual report on From 10-K filed on March 11, 2009, refers
to the reports in which these employment agreements are furnished as
exhibits.
2008
Severance Payments
Beginning
in 2008 and continuing into 2009, the Company agreed to pay Messrs. Jennings,
Piccirillo, Clark and Harte certain severance payments in connection with their
terminations of employment. The Company agreed to partially
accelerate Mr. Jennings’s severance payment, paying him $100,000 of his
severance up front and the remaining $225,000 over the course of 12
months. Under their respective employment agreements, the Company
agreed to pay Messrs. Clark and Harte one year’s base salary. Under
his employment agreement, the Company agreed to pay Mr. Piccirillo six months’
base salary. In addition, the Company agreed to provide health
benefits to Messrs. Jennings, Clark and Harte for one year and to Mr. Piccirillo
for six months. Finally, for Mr. Jennings, 20,000 shares of
restricted stock accelerated and vested upon the termination of his
employment.
2008
Incentive Bonus Plan Awards
In March
2008 our Board of Directors created and approved the 2008 Executive Incentive
Bonus Plan, a more formal framework for making decisions about annual bonuses to
be paid to our executive officers and other employees. The Executive
Incentive Bonus Plan authorizes the Compensation Committee of the Board to make
grants of cash, restricted stock, stock options or other securities to officers
and employees in connection with annual bonus awards. Stock and
options granted pursuant to the Executive Incentive Bonus Plan will generally be
under the terms of the Company's 2005 Performance Equity Plan, which was
approved by the stockholders of the Company. Restricted shares are
subject to forfeiture until the Compensation Committee determines whether
performance criteria have been met after reviewing our audited year-end
financial statements.
The Board
approved awards providing that 50% of the bonus for performance during 2008 is
payable in shares of restricted common stock. The purchase price of
the shares is $0.0001 per share.
The remainder of the
bonus, if earned, is to be paid in cash after determination by the Compensation
Committee of the amount of the bonus earned based on the Committee's review of
2008 performance criteria. The number of shares of restricted stock
issued to each executive officer was determined by dividing the part of the
dollar amount of bonus (based on the assumption that 100% of all performance
target goals will be achieved) that is to be allocated to restricted stock by
the closing sale price of a share of Common Stock on March 7, 2008, which
was $2.03 per share. In February 2009, the Board recalculated the
number of restricted stock based on the closing sale price of a share of Common
Stock on February 27, 2009, which was $0.73 per share, and accordingly granted
additional shares.
The
provisions of the awards for all executive officers to whom awards were made are
uniform except for the amounts of the awards. A bonus is to be paid
only if the Company's deficit in EBITDA, or earnings before interest, taxes,
depreciation, amortization and non-cash stock-based compensation expense, is at
least 90% of the target performance level criteria established by the
Compensation Committee. If that EBITDA deficit performance is
achieved, then the executive officers become eligible to earn bonuses based on
four categories of performance during 2008 as follows:
(1) Total
orders;
(2) EBITDA;
(3) Net
service revenues; and
(4) A
discretionary component that is determined by the Compensation
Committee.
If the
minimum EBITDA target performance level is achieved, then the actual 2008
performance in each of the four categories is separately measured to determine
whether any bonus is earned for performance in that category. Each
category carries equal weight and accounts for 25% of the potential bonuses than
can be earned. A 90% is the minimum level of actual performance must
be met to earn any bonus in any category. A 90% actual performance
compared to target performance earns a bonus equal to 75% of the target bonus
cash and restricted stock for such performance category. If 2008
actual performance exceeds 100% of the target performance level for a category,
the bonus earned can be increased to up to 150% of the target bonus level for
that category, which is the amount that would be earned if 2008 actual
performance exceeds target performance levels by 125% or more.
Director
Compensation
The
following table provides information concerning the compensation during the
fiscal year ended December 31, 2008 for persons who served on our Board of
Directors during 2008, other than M. Denis Connaghan, our principal
executive officer and Eugene Jennings, our former principal executive officer
who served on our Board of Directors until July 8, 2008, each of whose
compensation is discussed under Executive Compensation.
DIRECTOR
COMPENSATION
|
Name
|
Fees
Earned
or
Paid in Cash ($)
|
Option
Awards
($)
(1)(2)
|
Total
($)
|
|
|
|
|
Robert
Brill
|
$29,833
|
$35,084
(4)
|
$64,917
|
Peter
Collins
|
$29,000
|
$35,084
(4)
|
$64,084
|
Peter
Coker
(3)
|
$12,500
|
-
(4)
|
$12,500
|
Kenneth
Jennings
|
$22,083
|
$37,774
(4)(5)
|
$59,857
|
Hans
Lindroth
|
$27,917
|
$35,084
(4)
|
$63,001
|
Donald
Russell
|
$23,792
|
$35,084
(4)
|
$58,876
|
(1)
|
See
footnote (4) of the Summary Compensation Table for an explanation of how
we value options.
|
|
|
(2)
|
As
of December 31, 2008, the number of shares underlying vested and unvested
options held by our non-employee directors was as
follows: 101,675 shares for Mr. Brill, 50,000 shares for Mr.
Collins, 50,000 shares for Mr. Jennings, 101,675 shares for Mr. Lindroth,
and 50,000 shares for Mr. Russell. Mr. Coker forfeited his
options in connection with his resignation from the
Board.
|
|
|
(3)
|
Mr.
Coker served as a director until May 2008. The Company
recognized $8,677 in accounting expense related to stock option awards in
the first quarter, but recouped that expense upon the forfeiture of all
his options in connection with his resignation from the
Board.
|
|
|
(4)
|
Represents
the accounting expense recognized by the Company in fiscal year 2008
related to stock option awards made in prior years.
|
|
|
(5)
|
Represents
options to purchase 50,000 shares as of December 31,
2008.
|
The Board
believes that compensation for independent directors should be a mix of cash and
equity-based compensation. We do not pay employee directors for Board
service in addition to their regular employee compensation. The
meeting fees that we paid non-employee directors in 2008 are set forth in the
table below. We reimbursed the directors for their travel and related
expenses in connection with attending Board meetings and Board-related
activities, such as site visits and sponsored events.
The
Compensation Committee, which consists solely of independent directors, has the
primary responsibility to review and consider any revisions to directors’
compensation. In accordance with the Compensation Committee’s
recommendations, the Board determined the non-employee directors’ compensation
effective April 1, 2006 as follows:
Cash
compensation:
|
etrials
Worldwide, Inc.
|
Annual
retainer
|
$10,000
|
Additional
annual retainer for Board chairman
|
$5,000
|
Annual
retainer for committee member
|
$1,500
|
Additional
annual retainer for committee chairman
|
$1,000
|
Board
meeting attendance
|
$1,000
(in person)
$500
(telephonically)
|
Committee
meeting attendance
|
$500
(whether in person or telephonically)
|
Stock
Options:
|
|
Upon
joining Board
|
50,000
shares
|
Option
vesting schedule
|
25%
on grant date and 25% annually on the anniversary of the
grant
|
In
October 2007 in order to facilitate making changes to the composition of the
Board of Directors, our Board approved a plan to reward directors for resigning
if the Board determines that changing the composition of the Board is in the
best interests of our stockholders. Because our Certificate of
Incorporation provides for a staggered Board with directors generally elected
for three-year terms, the Board determined that a plan to facilitate
resignations would be in the interests of our stockholders by giving the Board a
tool to shape Board composition to adapt to changing circumstances.
The plan
provides that its sole purpose is to give the Board greater flexibility in
changing the composition of the Board of Directors to adapt to changing
circumstances. Any director who is an executive officer or employee
of the Company at the time he is asked to resign from the Board is not eligible
to receive benefits under the plan. Directors whose conduct or
performance of duties or failure to perform duties is the reason for being asked
to resign are also not eligible to receive benefits under the plan.
The plan
was adopted to comply with Rule 16b-3 under the Securities Exchange Act of 1934
to cause cashless exercises to be exempt from the provisions of Section 16 to
the fullest extent possible.
The plan
provides that each director who resigns prior to the end of his term of office
after being asked by the Board of Directors to resign will have his option
agreement automatically changed upon such resignation so that: (1) all options
that have not vested will immediately become vested effective as of the date of
resignation; (2) the expiration date of all his options will be extended until
the earlier of the original termination date in effect when the option was
granted or a date that is 90 days after the next annual meeting of stockholders
of the Company, unless the Board selects an earlier expiration date; and (3) any
options that have vested as of the resignation date will become exercisable on a
cashless basis until the option expires.
Cashless
exercise is a benefit if options are “in the money,” that is, if the market
value of our Common Stock exceeds the exercise price of the options being
exercised. If a director elects to exercise options on a cashless
basis, the director would receive fewer shares than the director would have
received had the director paid the exercise price in cash. The number
of shares that are issued upon cashless exercise is calculated by determining
the amount by which the market price of the Common Stock (determined in
accordance with the plan or agreement under which the options were granted),
exceeds the exercise price of the options being exercised on a cashless basis,
and then dividing that excess market value by the exercise price per share of
the options being exercised on a cashless basis.
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
To our
knowledge, the following table sets forth information regarding ownership of our
common stock on April 24, 2009, by each (1) director and named executive
officer, (2) holder of more than 5% of our common stock who is not an officer or
director, and (3) all of our directors and executive officers as a
group. Except as otherwise indicated and subject to applicable
community property laws, each owner has sole voting and investment powers with
respect to the securities listed. There were 10,804,585 shares of our
common stock outstanding on April 24, 2009.
Stockholder(1)
|
|
Number
of Shares of Common Stock Beneficially Owned at April 24,
2009
|
|
|
|
|
Percent
of Class
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
|
Robert
Brill
|
|
|
1,092,828
|
|
(2
)
|
|
10.1
%
|
Peter
Collins
|
|
|
50,000
|
|
(3
)
|
|
Less
than 1%
|
M.
Denis Connaghan
|
|
|
281,182
|
|
(4
)
|
|
2.6
%
|
Kenneth
Jennings
|
|
|
25,000
|
|
(5
)
|
|
Less
than 1%
|
Hans
Lindroth
|
|
|
101,675
|
|
(6
)
|
|
Less
than 1%
|
Donald
Russell
|
|
|
326,750
|
|
(7
)
|
|
3.0
%
|
|
|
|
|
|
|
|
|
Non-Director Executive
Officers
|
|
|
|
|
|
|
|
|
|
Michael
Mickens
|
|
|
59,035
|
|
(8
)
|
|
Less
than 1%
|
Joseph
Trepanier III
|
|
|
97,946
|
|
(9
)
|
|
Less
than 1%
|
|
|
|
|
|
|
|
|
Other 5% Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
InfoLogix
|
|
|
607,236
|
|
(10
)
|
|
5.6
%
|
MiniDoc
AB
|
|
|
1,319,747
|
|
(11
)
|
|
12.2
%
|
Newlight
Associates Funds
|
|
|
991,153
|
|
(12
)
|
|
9.2
%
|
All
Current Officers and Directors as a Group (9) individuals
|
|
|
2,108,291
|
|
(13
)
|
|
19.5
%
|
(1)
|
Unless
otherwise indicated, the business address of each of the following is 4000
Aerial Center Parkway, Morrisville, North Carolina
27560.
|
(2)
|
Robert
Brill’s and Newlight Associates Funds’ business addresses are both c/o
Newlight Management, LLC, 500 North Broadway, Suite 144, Jericho, New York
11753. These shares consist of (i) 665,191 shares of
common stock held by Newlight Associates II, LP; (ii) 229,950 shares of
common stock held by Newlight Associates II (BVI), LP; (iii) 96,012
shares of common stock held by Newlight Associates II-E, LLC; and (iv)
101,675 shares of common stock issuable upon exercise of stock options
that are currently exercisable or which will become exercisable within 60
days after April 24, 2009 held by Dr. Brill. Dr. Brill is
a general partner of each of the three Newlight Associates II entities and
exercises voting control over the shares of our common stock held by the
three Newlight Associates II
entities.
|
(3)
|
Peter
Collins’s business address is 350 Camino Gardens Boulevard, Suite 102,
Boca Raton, FL 33432. These shares consist of 50,000 shares of
common stock issuable upon exercise of stock options that are currently
exercisable or which will become exercisable within 60 days after April
24, 2009.
|
(4)
|
Mr.
Connaghan’s shares include 43,750 shares of common stock issuable upon
exercise of options that are currently exercisable or which will become
exercisable within 60 days after April 24,
2009.
|
(5)
|
Mr.
Jennings’s shares include 25,000 shares of common stock issuable upon
exercise of options that are currently exercisable or which will become
exercisable within 60 days after April 24, 2009 and 10,000 shares of
common stock owned by his wife.
|
(6)
|
Hans
Lindroth’s business address is c/o Lingfield AB, Klevgránd 2, 11646
Stockholm, Sweden. His shares consist of 101,675 shares of
common stock issuable upon the exercise of options that are currently
exercisable or which will become exercisable within 60 days after April
24, 2009. These shares do not include (i) 1,319,747 shares
of common stock held by MiniDoc AB, of which Mr. Lindroth is a member
of the Board of Directors; and (ii) 607,236 shares of common stock held by
Infologix (BVI) Limited, of which Mr. Lindroth is a member of the Board of
Directors.
|
(7)
|
Donald
Russell’s business address is 101 E. Kennedy Blvd., Suite 3300, Tampa,
Florida 33602. His shares include of 50,000 shares of common
stock issuable upon exercise of stock options that are currently
exercisable or which will become exercisable within 60 days after April
24, 2009.
|
(8)
|
Mr.
Mickens’ shares include 21,875 shares of common stock issuable upon
exercise of options that are currently exercisable or which will become
exercisable within 60 days after April 24,
2009.
|
(9)
|
Mr.
Trepanier’s shares include 20,000 shares of common stock issuable upon
exercise of options that are currently exercisable or which will become
exercisable within 60 days after April 24,
2009.
|
(10)
|
Infologix
(BVI) Limited, or Infologix, is a company organized in the British Virgin
Islands whose registered office address is Palm Grove House, Road Town,
Tortola, British Virgin Islands, and whose business address is 14
Boulevard de Philosophes, 1205 Geneve, Switzerland. Infologix is wholly
owned by Hammerwood (BVI) Limited, or Hammerwood, a company organized
under the laws of the British Virgin Islands. Hammerwood is controlled by
Elmwood Investment Holdings Ltd., a holding company organized in the
British Virgin Islands. The Peder Sager Wallenberg Charitable Trust has
the right to receive 25% of 99.9% of all dividends declared by Hammerwood
and 25% of all of the assets of Hammerwood distributed upon any
liquidation thereof. These shares do not include 1,319,747 shares of
common stock held by MiniDoc AB, a company organized in Sweden, of which
Infologix owns approximately 39.4%. The Board of Directors of Infologix
consists of Martyn David Crespel, Hans Lindroth and Ellipsis Limited, a
company organized under the laws of Malaysia. The Board of Directors of
Infologix has the power to vote the shares of common stock held by
Infologix.
|
(11)
|
MiniDoc
AB’s business address is Norrmalmstorg 14, 111 46 Stockholm,
Sweden. MiniDoc AB is a publicly-traded holding company the
stock of which is traded on the small cap over-the-counter market in
Sweden. These shares do not include shares of common stock
issuable upon the exercise of options that are held by Mr. Lindroth,
nor do they include shares of stock held by Infologix (BVI) Limited (see
note 10, above), which owns approximately 39.4% of the outstanding shares
of MiniDoc AB. The Board of Directors of MiniDoc consists of
Mr. Lindroth, Lars Lindgren and Per Egeberg. The Board of
Directors of MiniDoc exercises voting control over the shares of our
common stock held by MiniDoc, other than those matters (if any) which must
be presented to a vote of MiniDoc’s stockholders under applicable
law
|
(12)
|
Robert
Brill’s and Newlight Associates Funds’ business addresses are both c/o
Newlight Management, LLC, 500 North Broadway, Suite 144, Jericho, New York
11753. These shares consist of (i) 665,191 shares of
common stock held by Newlight Associates II, LP; (ii) 229,950 shares of
common stock held by Newlight Associates II (BVI), LP; and
(iii) 96,012 shares of common stock held by Newlight Associates II-E,
LLC. Dr. Brill is a general partner of each of the three
Newlight Associates II entities and exercises voting control over the
shares of our common stock held by the three Newlight Associates II
entities.
|
(13)
|
Includes
413,975 shares of common stock issuable upon the exercise of options that
are currently exercisable or which will become exercisable within 60 days
of April 24, 2009.
|
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Director
Independence
Each of
our current directors other than M. Denis Connaghan and Donald Russell qualifies
as “independent” in accordance with the published listing requirements of
NASDAQ. The NASDAQ independence definition includes a series of
objective tests, such as that the director is not an employee of the company and
has not engaged in various types of business dealings with the
company. In addition, as further required by NASDAQ rules, the Board
has made a subjective determination as to each independent director that no
relationships exist that, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. In making these determinations, the directors reviewed and
discussed information provided by the directors and the Company with regard to
each director’s business and personal activities as they relate to the Company
and our management.
Certain
Relationships and Related Transactions
Our Policies
. It
is our policy that all employees must avoid any activity that is or has the
appearance of being hostile, adverse or competitive with the Company, or that
interferes with the proper performance of their duties, responsibilities or
loyalty to etrials. These policies are included in our Conflict of
Interest Policy, which covers our directors, executive officers and other
employees. Each director and executive officer must inform our Board
when confronted with any situation that might be perceived as a conflict of
interest, even if the person does not believe that the situation would violate
our Conflict of Interest Policy. If in a particular circumstance the
Board concludes that there is or might be a perceived conflict of interest, the
Board will instruct our attorneys to work with our management to determine if
there is a conflict of interest. Any waiver to these conflict rules
with regard to a director or executive officer requires the prior approval of
the Board or the Audit Committee.
NASDAQ
Rules
. NASDAQ rules defining independent director status also
govern conflict of interest situations. As discussed above, each of
our directors other than M. Denis Connaghan and Donald Russell, qualifies as
independent in accordance with the NASDAQ rules.
SEC Rules
. In
addition to our policies and NASDAQ policies and rules described above, the SEC
has specific disclosure requirements covering certain types of transactions
involving the Company and a director or executive officer or persons and
entities affiliated with them. In addition, as required by NASDAQ rules,
the members of the Audit Committee each qualify as independent under special
standards established by the SEC for members of audit committees.
Related
Party Transactions
Except
for normal compensation arrangements for services in their capacities as
officers, directors and employees, we did not enter into any transactions with
any of our executive officers, directors or beneficial owners of 5% or more of
our outstanding capital stock during the period beginning January 1, 2008
and ending December 31, 2008 or through the date of this document.
Except
for compensatory stock options and restricted shares of common stock issued to
officers and directors for services in their capacities as officers and
directors, which have been described in Item 11, we have not issued any stock,
options, warrants or other securities to any of our named executive officers,
directors and beneficial holders of 5% or more of our outstanding capital stock
during the period beginning January 1, 2008 and ending December 31, 2008 or
through the date of this amendment to our annual report on Form
10-K.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The Audit
Committee reviews and approves all services to be provided by Ernst & Young
for both audit and permitted non-audit services. The decision of the
Audit Committee with respect to non-audit services is based upon the
determination that those services will not impact the audit services provided by
Ernst & Young.
Fees
Paid to Independent Registered Public Accounting Firm
The
following table shows the fees that were paid or incurred for audit and other
services provided by Ernst & Young LLP for fiscal years 2008 and
2007. All of the services described in the following fee table were
approved in conformity with the Audit Committee’s pre-approval
process.
|
|
2008
|
|
|
2007
|
|
Audit
fees
|
|
$
|
387,339
|
|
|
$
|
472,000
|
|
Audit-related
fees
|
|
|
44,222
|
|
|
|
---
|
|
Tax
fees
|
|
|
2,800
|
|
|
|
13,800
|
|
All
other fees
|
|
|
|
|
|
|
---
|
|
Total
|
|
$
|
434,361
|
|
|
$
|
485,800
|
|
Audit Fees
. This
category includes the audit of our annual consolidated financial
statements, consents and review of documents filed with the SEC, and
services that are normally provided by the independent registered public
accounting firm in connection with statutory and regulatory
filings. This category also includes advice on accounting matters
that arose during, or as a result of, the audit or the review of interim
financial statements and statutory audits required by
non-U.S. jurisdictions.
Audit-Related
Fees
. This category consists of assurance and related services
provided by Ernst & Young that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under “Audit Fees.” We incurred $44,222 in 2008
audit-related fees, primarily in connection with our goodwill impairment
analysis. There were no such services provided during the years ended
December 31, 2007.
Tax Fees
. This
category consists of services rendered for tax compliance, advice and planning
tax services generally for tax compliance. We incurred fees of $2,800
related to our 2001 and 2002 California state income tax
returns. There were no such services provided during the years ended
December 31, 2007.
All Other
Fees
. None.
PART
IV
ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
(b) Exhibits.
Exhibit
Number
|
|
Description
of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification
of the Principal Executive Officer and Principal Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended,
the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
ETRIALS
WORLDWIDE, INC.
|
|
|
|
Date:
April 30, 2009
|
By:
|
|
/s/
M. Denis Connaghan
|
|
|
|
M.
Denis Connaghan
President
and Chief Executive Officer
|
20
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