Ex-10.38 Form of Executive Officer Indemnification



 






Exhibit 10.38




INDEMNIFICATION AGREEMENT




     This
Indemnification Agreement (the “Agreement”) entered into as
of this ___ day of ___,
20 ___ by and between PharmaNet Development Group, Inc., a Delaware corporation (the “Company”), and
___ (the “Indemnitee”):



     WHEREAS, competent and experienced persons are becoming increasingly reluctant to serve
publicly-held corporations as directors, officers, or in other capacities unless they are provided
with adequate protection through liability insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their service to the corporation;



     WHEREAS, the board of directors of the Company (the “Board”) has determined that the inability
to attract and retain such persons is detrimental to the best interests of the Company’s
stockholders and that the Company should act to assure such persons that there will be increased
certainty of such protection in the future;



     WHEREAS, Section 145 of the Delaware General Corporation Law (the “DGCL”) empowers the Company
to indemnify its officers, directors, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as directors, officers, employees or agents of other
corporations or enterprises;



     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they will not be so
indemnified;



     WHEREAS, Indemnitee is willing to serve as an executive officer of the Company on the
condition that he be so indemnified.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:



     1. Definitions. For purposes of this Agreement:



          (a) “Act” means the Securities Exchange Act of 1934.



          (b) “Beneficial Owner” means (as defined in Rule 13d-3 under the Act), any Person who directly
or indirectly, owns securities of the Company representing 10% or more of the combined voting power
of the Company’s then outstanding securities.



          (c) “Change of Control” means a change in control of the Company occurring after the Effective
Date of a nature that would be required to be reported in response to Item 5.01 on Form 8-K (or in
response to any similar item on any Securities and Exchange Commission schedule or form)
promulgated under the Act, whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change of Control
shall be deemed to have occurred after the Effective Date if a Person (as defined below) becomes
the Beneficial Owner without the prior approval of at least two-thirds of the directors in



 









 




office immediately prior to such person attaining such percentage; (ii) the Company is a party
to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter; or (iii) during any period of two
consecutive years, individuals who, at the beginning of such period, constituted the Board
(including for this purpose, any new director whose election or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board.




          (d) “Corporate Status” describes the status of a person who is or was a director, officer,
employee, agent or fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which such person is or was serving at
the request of the Company.



          (e) “Disinterested Director” means a director of the Company who is not and was not a party to
the Proceeding in respect of which indemnification is sought by Indemnitee.



          (f) “Effective Date” means the date first above written.



          (g) “Expenses” shall include all reasonable attorney’s fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.



          (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years has been, retained
to represent (i) the Company or Indemnitee in any matter material to either such party, or (ii) any
other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under
this Agreement.



          (i) “Person” means (as such term is used in Sections 13(d) and 14(d) of the Act) an
individual, a partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).



          (j) “Proceeding” includes any actual or threatened action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative, whether or not initiated prior to the Effective
Date, except a proceeding initiated by an Indemnitee pursuant to Section 11 of this Agreement to
enforce his rights under this Agreement.



2









 





          (k) “Standard” shall mean the applicable standard of conduct set forth in Sections 145(a) and
(b) of the DGCL.



     2. Agreement to Serve. Indemnitee agrees to serve as an executive officer of the
Company. Indemnitee may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation of law). Similarly, the Company
shall have no obligation under this Agreement to continue Indemnitee in any position with the
Company.



     3. Indemnification — General. The Company shall indemnify and advance Expenses to
Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may thereafter from time to
time permit. However, no indemnification shall be made by the Company (except as ordered by a
court) unless a determination has been made in the manner provided for in Section 145(d) of the
DGCL and Section 9(b) herein that Indemnitee has met the applicable Standard. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the
rights set forth in the other sections of this Agreement.



     4. Third Party Actions. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any Proceeding, other than a Proceeding by or in the right of the Company.
Pursuant to this Section 4, Indemnitee shall be indemnified against Expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such Proceeding or any claim, issue or matter therein, if (i) he acted in good
faith, and in a manner he reasonably believed to be in or not opposed to the Company’s best
interests; and (ii) with respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful. Indemnitee shall not be entitled to indemnification in connection with any
Proceeding charging improper personal benefit to the Indemnitee, whether or not involving action in
his official capacity, in which he was judged liable on the basis that personal benefit was
improperly received by him. Notwithstanding the foregoing, Indemnitee shall not be entitled
to indemnification of Expenses paid by him to the extent that: (i) they relate to civil monetary
penalties and/or disgorgement of profits imposed in an action brought by, or in an administrative
proceeding before, the Securities and Exchange Commission; and (ii) such reimbursement would
violate public policy or otherwise would be prohibited by the Securities Exchange Commission or
applicable law.



     5. Direct and Derivative Actions. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 5, by reason of his Corporate Status, if he is, or is
threatened to be made, a party to any Proceeding brought by or in the right of the Company to
procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against
Expenses actually and reasonably incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company. Notwithstanding the foregoing, no indemnification
against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as
to which Indemnitee shall have been adjudged to be liable to the Company unless the Delaware Court
of Chancery or the court in which such Proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the circumstances



3









 




of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses
which the Delaware Court of Chancery or such other court shall deem proper.




     6. Indemnification for Expenses of an Indemnitee. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a
party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified
against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee
is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to
one or more but less than all claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or matter. For purposes of this Section
6 and without limitation, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.



     7. Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a
witness in any Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.



     8. Advancement of Expenses. The Company shall advance all reasonable Expenses
incurred by or on behalf of Indemnitee in connection with any Proceeding within 20 working days
after the receipt by the Company of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include, be preceded by or accompanied by, as the case may be, the following:
(i) a written affirmation of the Indemnitee’s good-faith that he has met the Standard; (ii) an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall be determined
that Indemnitee did not meet the Standard or that Indemnitee is not entitled to be indemnified
against such Expenses; and (iii) a determination that the facts then known to those making the
determination would not preclude indemnification under the DGCL.



     Indemnitee understands and agrees that the undertaking required by this Section 8(ii) shall be
an unlimited general obligation of the Indemnitee.



     9. Indemnification Procedure.



          (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a
written request, including therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that Indemnitee has
requested indemnification.



          (b) Upon written request by Indemnitee for indemnification pursuant to Section 9(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto
shall be made (i) by the Board by a majority vote of a quorum consisting of



4









 




Disinterested Directors; or (ii) if a quorum cannot be obtained or, even if attainable, a
quorum of Disinterested Directors so directs, by (a) Independent Counsel in a written opinion; or
(b) by the stockholders of the Company. If it is determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within 10 working days after such
determination. Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination.




     10. Presumptions and Effect of Certain Proceedings.



          (a) If a Change of Control shall have occurred, in making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making such determination
shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in connection with the making
by any person, persons or entity of any determination contrary to that presumption.



          (b) If the person, persons or entity empowered or selected under Section 9 of this Agreement
to determine whether Indemnitee is entitled to indemnification shall not have made a determination
within 60 days after receipt by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled
to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee’s statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period may be extended
for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making
the determination with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of Section 10(b)
shall not apply (i) if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 9(b) of this Agreement and if (A) within 15 days after receipt by
the Company of the request for such determination the Board has resolved to submit such
determination to the stockholders for their consideration at an annual meeting thereof to be held
within 75 days after such receipt and such determination is made thereat, or (B) a special meeting
of stockholders is called within 15 days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within 60 days after having been so called and
such determination is made thereat, or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 9(b) of this Agreement.



          (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not act in



5









 




good faith and in a manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.




     11. Remedies of Indemnitee.



          (a) In the event that (i) a determination is made pursuant to Section 9 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is
not timely made pursuant to Section 8 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion within 90 days after
receipt by the Company of the request for indemnification, (iv) payment of indemnification is not
made pursuant to Section 5 of this Agreement within 10 days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within 10 days after a
determination has been made that Indemnitee is entitled to indemnification or such determination is
deemed to have been made pursuant to Section 9 or 10 of this Agreement, Indemnitee shall be
entitled to the arbitration remedy contained in Section 24 of this Agreement, of his entitlement to
such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking
an adjudication within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 11(a).



          (b) In the event that a determination shall have been made pursuant to Section 9 of this
Agreement that Indemnitee is not entitled to indemnification, any arbitration proceeding commenced
pursuant to this Section 11 shall be conducted in all respects as a de novo trial on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control
shall have occurred, in any arbitration proceeding commenced pursuant to this Section 11, the
Company shall have the burden of proving the Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.



          (c) If a determination shall have been made or deemed to have been made pursuant to Section 9
or 10 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound
by such determination in any arbitration proceeding commenced pursuant to this Section 11, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law.



          (d) The Company shall be precluded from asserting in any arbitration proceeding commenced
pursuant to this Section 11 that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such arbitration that the Company is bound by
all the provisions of this Agreement.



          (e) In the event that Indemnitee, pursuant to this Section 11, seeks arbitration, involving
the Company, to enforce his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company
against, any and all Expenses (of the types described in the definition of



6









 




Expenses in Section 1 of this Agreement) actually and reasonably incurred by him in such
judicial adjudication, but only if he prevails therein. If it shall be determined in said
arbitration that Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by Indemnitee in connection with such
arbitration shall be appropriately prorated.




     12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.



          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote
of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of
this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to any
action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or repeal.



          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, agents or fiduciaries of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company, Indemnitee shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of the coverage available
for any such director, officer, employee or agent under such policy or policies.



          (c) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.



          (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or otherwise.



          (e) The Company may, to the full extent authorized by law, create a trust fund, grant a
security interest and/or use other means (including, without limitation, letters of credit, surety
bonds and other similar arrangements) to ensure the payment of such amounts as may become necessary
to effect indemnification provided hereunder.



     13. Duration of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) six years after the date that Indemnitee shall have ceased to serve as a director,
officer, employee, agent or fiduciary of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the
request of the Company; or (b) the final termination of all pending Proceedings in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses hereunder



7









 




and of any proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement
relating thereto.




     14. Gender. Use of the masculine pronoun shall be deemed to include usage of the
feminine pronoun where appropriate.



     15. Exceptions to Indemnification Rights. Notwithstanding any other provision of this
Agreement, except for Indemnification or advancement of Expenses in a Proceeding to enforce or
claim therein to enforce the provisions of that Agreement, Indemnitee shall not be entitled to
Indemnification or advancement of Expenses with respect to any Proceeding, or any claim therein,
brought or made by him against the Company. Provided further that no right of indemnification under
the provisions set forth herein shall be available to any Indemnitee unless within 10 days after
the later of institution of or learning of any such Proceeding he shall have offered the Company in
writing the opportunity to handle and defend such Proceeding at its own expense.



     16. Successors. Subject to the provisions of this Agreement, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.



     17. Severability. In the event any parts of this Agreement are found to be void, the
remaining provisions of this Agreement shall nevertheless be binding with the same effect as though
the void parts were deleted.



     18. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument. The execution of this Agreement may be by actual or facsimile signature.



     19. Benefit. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their legal representatives, successors and assigns.



     20. Notices and Addresses. All notices, offers, acceptance and any other acts under
this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered
to the addressee in person, by Federal Express or similar receipted delivery, by facsimile delivery
or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows:



	 	 	 
	To the Company:
	 	PharmaNet Development Group, Inc.
	 
	 	504 Carnegie Center
	 
	 	Princeton, NJ 08540-6242
	 
	 	Facsimile: (609) 514-0390
	 
	 	Attention: Chief Executive Officer
	 
	 	 
	With a Copy to:
	 	Morgan, Lewis & Bockius
	 
	 	502 Carnegie Center
	 
	 	Princeton, NJ 08540
	 
	 	Facsimile:  (609) 919-6701
	 
	 	Attention: Denis Segota, Esq.






8









 





To Indemnitee:



or to such other address as either of them, by notice to the other may designate from time to time.
The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of
successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery
in person or by mailing.




     21. Attorneys’ Fees. In the event that there is any controversy or claim arising out
of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any
action or proceeding relating to this Agreement is filed, the prevailing party shall be entitled to
an award by the court of reasonable attorneys’ fees, costs and expenses.



     22. Oral Evidence. This Agreement constitutes the entire Agreement between the
parties and supersedes all prior oral and written agreements between the parties hereto with
respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or termination is
sought.



     23. Governing Law. This Agreement and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its execution, its validity,
the obligations provided herein or performance shall be governed or interpreted according to the
internal laws of the State of Delaware without regard to choice of law considerations.



     24. Arbitration. Any controversy, dispute or claim arising out of or relating to this
Agreement, or its interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by submission by either party
of the controversy, claim or dispute to binding arbitration in Mercer County, New Jersey (unless
the parties agree in writing to a different location), before a single arbitrator in accordance
with the rules of the American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The
decision and award made by the arbitrator shall be final, binding and conclusive on all parties
hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction
thereof.



     25. Section or Paragraph Headings. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to
interpret in whole or in part any of the terms or provisions of this Agreement.



9









 





     IN WITNESS WHEREOF the parties hereto have set their hand and seals the day and year first
above written.



	 	 	 	 	 	 	 
	 	 	PHARMANET DEVELOPMENT GROUP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jeffrey P. McMullen,	 	 
	 

	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE
	 
	 	 	 	 	 	 
	 	 	 






10